In Their Own Words: Recent Episodes

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What happens when an organization gets so focused on results that it forgets why it exists? Andrew Stotz and Balaji Reddie dig into the first of Deming's 14 Points, constancy of purpose, using stories like Harvard's answer to Deming's challenge to define a business and Indian manufacturers who pivoted to build PPE during the pandemic. This conversation may change how you think about success, profit, and the real aim of a business.

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 Balaji Reddie, an educator and trainer in the teachings of Dr. Deming and quality management generally. I'm really excited for today's topic, which is the 14 Points. Take it away, Balaji.

0:00:27.5 Balaji Reddie: Thank you. Thank you, Andrew. So the last time we spoke, we had discussed all the four sciences that Dr. Deming put together. In a nutshell, we said his words, appreciation for a system. That means appreciating that there are no events, there are eventualities, and there is a huge myriad or a huge system of myriad components that create these outcomes. So we need to understand that. We need to appreciate the fact that these are all interconnected, interdependent, these components. Right. And we saw some other attributes that when they interact with each other, the cause and effect are not closely related in time or space. Seemingly disconnected events then turn out to be connected. There exist synergistic relationships. So you can't just straightaway say, "I know." You can say, "From what I understand or what knowledge I have right now about the system, I think."

0:01:34.7 Balaji Reddie: And you always dig deeper. Right. And that gave us the next thing, that the performance of any system, the outcomes are subject to Variation. You will never get the same outcome every single time. It keeps on fluctuating. And then we realize there is a difference between normal and abnormal fluctuations. The typical term that Walter Shewhart said was Variation, and Deming took that forward. He said, "Understand Variation." I would say learn how to think statistically. Right? And statistical thinking is about knowing when to act and when to leave a process alone. Okay. So we said understand the Variation, and you should know when to... There's that normal fluctuation, you would need to work on it continually. But abnormal fluctuation is a little easier to understand, isolate, and take immediate action. So the low-hanging fruit comes from the abnormal fluctuation, what he called as special causes or assignable causes, as Walter Shewhart said.

0:02:41.0 Balaji Reddie: And once you work on them, then your long-term work on the process continues. That never stops because it helps you understand the process much, much better. Right? But there you are faced with the dilemma sometimes. There's so many complications there, and you just need to understand them if you want to know completely what happens in a system. And that's why he said the complete knowledge is never... Is unknown and unknowable. But he said there's a way of doing that, and that's where the Theory of Knowledge came in. We needed to understand that we build upon what we have right now. We start asking questions, and you begin with theories. "I think, I believe." And once you start doing that, you start unraveling the mysteries of the system under study. And last bit here is all this, of course, he was speaking about man-made systems, organizational systems, which all this work is being done by people.

0:03:38.0 Balaji Reddie: And he said that's where the best part comes in. You can never do things all by yourself. You need to cooperate with others. Each one comes with their own theories, and each one has their own system of learning, their own way of thinking. So we need to understand that, whether you are employees inside a company, whether you are people outside the company contributing in the sense of suppliers, or people who are recipients of this in terms of consumers. So everyone, you need to understand people, that they're a part of this entire system. And that's where Psychology comes in. Of course, I used the word empathy. I said understanding them and on. And on a lighter note, I ended by saying that if you really want to sharpen your empathetic skills, you need to either understand your pet or a baby, because these are people who can't express what they want and you just have to have your own theories and then understand them better.

0:04:34.9 Balaji Reddie: But that's what we saw last time. Now we're gonna get to, funnily, what he espoused as his philosophy [chuckle] when he first presented it in the United States in a structured form, right? These were the 14 Points. Now, first of all, the 14 Points are not his philosophy, but they're 14 consequences of his philosophy. You can never really set out to say, "I'm gonna do these 14 Points." But when you start, how do I say, asking the right questions and want to gain Profound Knowledge of what's happening and start looking at things differently and start asking questions, the right kind of questions, just like I said, "What is the purpose of the system? What are the components? How are they connected? How do they work? What is happening right now? Does this normally happen? Is this abnormal?" And then, of course, what are better ways of explaining or expressing what I'm seeing right now?

0:05:43.9 Balaji Reddie: And then finally, taking help from everybody else and bringing their thought processes. When you start asking these questions and start structuring and understanding the organization much better, you eventually see the 14 Points. So they are consequences of his philosophy. They are not his philosophy. You end up with the 14 Points, you don't start with them. Right? Having said that, does that mean we just go through this and be done with it? I said, "No." Now let's understand how he structured these and why he structured it the way he did. Now, they are in no order of preference. In fact, I remember speaking to Bill Bellows about this, and he said when he asked Deming, "Which of the 14 Points are the most important ones? Where do I start?" and he said, "All of them." He said, "Where do I start?" "Start anywhere," he said. You could start anywhere, eventually they're all connected.

0:06:40.7 Balaji Reddie: So the 14 Points are a system themselves. They are all connected to each other. You could start anywhere and you end up with the 14 Points in any case. But since we have to follow a kind of the sequence in which he wrote them, which he presented them, I'm following that sequence to begin with. Now, I'm gonna start with the 1986 edition of the 14 Points, which are there in his book, Out of the Crisis. But in 1990, he updated the wordings of the 14 Points. So I shall pull up my document right here so that I can read out the 1990 edition. Just give me a minute.

0:07:36.0 Andrew Stotz: Just for the audience, go out there and get yours in your hand. Get ready. I'm just going through and getting mine ready.

0:07:42.8 Balaji Reddie: Yes, so. Okay, so here it goes. Let's get to the 14 Points. So here we are. Right. And in what I normally say here, that he often said too, that when you apply Profound Knowledge, the 14 Points help you apply this in the most structured manner. So here we go. So the first is the 1986 edition, point number one, where he says, "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." I think this is an amazing set of words which he's brought here, especially saying to provide jobs, where he said that quality is a ways and means of really contributing to society and not sucking the worst 10%, but adding something more to it to provide more jobs. Now in the 1990 edition, right, now the commentary for this, if you read Out of the Crisis, I've taken an excerpt from there, "Management must demonstrate unshakable commitment to quality, productivity and continual improvement.

0:09:09.8 Balaji Reddie: Your customers, your suppliers, your employees need your statement of constancy of purpose, your intention to stay in business by providing product and service that will help man to live better and which will have a market." So this was his definition of quality. A product or a service possesses quality if it helps someone live better in every way and enjoys a large and sustainable market. So for him, quality had two aspects. One, it must make someone's life better. Whatever you do, whether it's a product or a service, service being an activity. Right. So it should add value to the customer's life. It should make that person's life better. But it should be at a price the customer is willing to pay. Right? So that's the way he looked at it.

0:09:55.2 Balaji Reddie: Now, he changed this in 1990 to this, "Create and publish to all concerned a statement of the aims and purposes of the company or other organization. Management must demonstrate constantly their commitment to this statement." Now he says to publish the statement. And he says not just purpose, but aim. So aim, I think this came from his definition of a system, where he says that a system must have an aim. Without an aim, there is no system. So the aim provides a direction and purpose provides the reason why the system exists. So they go hand in hand. You can't separate these two. But now the commentary for this is, "A system must create something of value, in other words, results. The intended results, along with consideration of recipients and of cost, mold the aim of the system. It is thus management's task to determine those aims, to manage the whole organization towards accomplishment of those aims.

0:11:07.1 Balaji Reddie: It is important that an aim never be defined in terms of a specific activity or method. It must always relate to a better life for everyone. The aim precedes the organizational system and those that work in it." So...

0:11:23.4 Andrew Stotz: What was that part? "It's important that it's not" what?

0:11:27.2 Balaji Reddie: Yeah, that it's not an activity or a product. It should be something broader than that. It's about adding value to someone's life. Now, you can't go into the other extreme and come up with a motherhood statement like "I want to boil the ocean" or "I want to solve the world's poverty problems," alright? But it must translate into something doable, alright? And it should tell where the organization is heading. But the key word here is "publish it," right? And he says, "and other organization," that means "of the company or other organization." So I believe he started envisioning that in the future it's not gonna be one company, but a family of companies working together, which very simply today we use the term "supply chain" to express that. And I think, I think I mentioned this before in one of my earlier chats that I don't like that term because. It falls woefully short to explain what actually is happening there.

0:12:29.2 Balaji Reddie: I like to use the word provider network. Right? It's a network. It's not just a chain. Chain is more linear. Network is more lateral, all over the place. And these are not just suppliers. These are providers. So, right, he talked about a supply chain in those days. And he also says publishing, that means it should exist in some hard form, right, so that people see it, read it. Okay. Now this kind of, I thought was quite amazing because if you know about, for those who are into ISO 9000, the standard, of course, the latest one which is coming out this year, I'm not well-versed with what they've written or what they've changed in it, but up until 2015, the ISO insisted that companies have a documented statement of their policies, right, a quality policy and objectives. It should be written down. So to say that they could have got this idea from here is not fair, but I guess that you can see the parallel in what he was saying.

0:13:44.8 Balaji Reddie: So publishing. Now, in 2007, this is what I wrote after talking to many, like I said, who attended or helped Dr. Deming in his seminars till the day he passed on, right? And they said, of course, because I was quite intrigued, initially his four-day seminar had a perfect structure and everyone knows who attended that on the second day after lunch you had the red beads experiment. So that never changed even after Profound Knowledge came in. So anyway, coming back to what I was just saying, so initially he spoke a lot about the 14 Points, but after he professed Profound Knowledge, the stress on the 14 Points came down, but it did not disappear altogether. And this I heard from many of those and I asked what he would speak of. So based on that, I just came up with these words. The words are all Dr. Deming's, I've just edited and put it together.

0:14:50.1 Balaji Reddie: So create a statement of the aim and purpose of the organizational system. It must bring out the long-term vision of the organization, preferably stating how it intends to stay in business by making life better for all those impacted in any way. So there could be a direct or an indirect impact. Stakeholders is the term we use right now, right? So purpose describes why you exist. And if you go deeper to find out why a company exists, it has to last beyond the founding father's vision, right? So the statement of purpose must be very clear. Like Walt Disney, we spoke about this, he said, "I'll do anything to make a child smile." That was his purpose, and that's how everything stemmed from that, right? So if you start looking deep, why are we here? Why do we exist?

0:15:46.3 Balaji Reddie: Then once the company starts growing, you don't forget why you set up the company in the first place. You go back to your roots and the statement of purpose is like a North Star. It reminds you of where you're supposed to be, where you started, what you had in mind, right? So it's not that companies don't have it, but we need to revisit it from time to time. And sometimes you need to, it may undergo a change because things don't remain the same, right? Systems keep changing and if everything keeps changing, then you have to revisit the purpose. You don't do it every day though, because it's something that you spoke about and you say that it took me time to come out with this statement of purpose. So I was trying to understand even Apple's statement of purpose where Steve Jobs said making technology accessible, making technology simple, making technology productive is what we are supposed to do here as a company. Right.

0:16:46.4 Balaji Reddie: So he always believed in simplicity. He believed in seeing that people are more productive with the work, the software, or the products that they offer. Right. And it should be something that at times goes beyond just what the customer expects so that that one part is always there. So that's point number one, the statement of purpose.

0:17:11.3 Andrew Stotz: Can I ask a couple questions about that?

0:17:14.2 Balaji Reddie: Yeah, sure, sure, sure.

0:17:15.3 Andrew Stotz: Before we go on, I'm assuming you're gonna go on to number two.

0:17:18.4 Balaji Reddie: Yes.

0:17:20.5 Andrew Stotz: So a couple of things. First thing is about aim. You know that statement, "the purpose of a system is what it does," meaning that ultimately every system, there's an aim. It just may not be the aim that you think it is or that you want it to be. So part of this idea is recognizing that we have to state the aim or else people just, they're gonna just do things the way they've done them. Am I correct in saying that?

0:17:51.2 Balaji Reddie: Yeah. And it brings clarity to whatever you are doing. You start realizing, okay, I thought that we were actually doing this when we should be doing something else. For example, in Out of the Crisis, he gives that example of that trucking company. And he said when that gentleman took Dr. Deming's four-day seminar and then went back to his company and asked his employees, "What business do you think we are in?" Because that's what he used to ask, "What business are you in?" He used to ask that question, right, to the audience. "Any CEOs here? What business are you in? What business do you need to be in? What are you gonna be doing five years from now, ten years from now?" Right. So these are questions which I think you need to look at. If you want a list of questions, then in Out of the Crisis, there is a chapter on just the questions. Right.

0:18:57.0 Balaji Reddie: And that's, if I believe, let me just check. It comes after chapter seven. Is that where it comes in? No, I think... Yeah. Diseases and Obstacles. Okay. It's chapter five, "Questions to Help Managers." So you can find a host of questions there. These are rhetorical questions, most of them, telling you to focus on the job you have on hand. Right. And helps you define your purpose and your aim, both. And it gives clarity. Like I said, sometimes it gives clarity to yourself. What exactly am I doing here? All right. You always begin by saying that. I mean, if you ask people who set up businesses, they'll start by saying, "I did this because I was good at it," and the money came, but "I was good at doing this." And why did you do that? What do you mean by good? "Well, when I did this, I saw people feel happy." Right. And that's why I wanted to do this.

0:20:06.8 Balaji Reddie: And I thought this is the best way for me to earn my money, but the purpose was mainly to make them happy. Right. And then the money came. So that should be the focus. I think I mentioned this once when 1983 was when Harvard Business School was celebrating 75 years of existence. And everyone knew at that time, because Deming had just been rediscovered in America, and he was hot property. But everyone knew his ideas about Harvard. [chuckle] He was scathing. He said they prepared managers for the past and not for the future, and blah, blah, blah, blah, blah. He was very angry. But when they sent him a letter saying that we are making a souvenir of sorts, so can you pen a few words for us? So he was quite lavish in his comments and in his praise. He said, "It's not easy to run a business school and y'all have done it for 75 years. So all credit to you." But he said, "I have just one question for you.

0:21:18.7 Balaji Reddie: In these last two, three years that I have come back into American industry, I see with pain that many people do not understand the purpose of their business. And I see that Harvard has not defined the purpose of a business. Could you define the purpose of a business?" And Harvard came out with an answer which went, "The purpose of a business is to create value at a profit." So the sequence of the words is so beautiful. Create value at a profit. Right? And for a business, you need both. If you're only creating value and no profits, that's not a business. That's social service. And if you only want profits but no value, then that's not a business either. Then you might as well go loot a bank, get 100% profit and no value. And I remember Myron Tribus writing about this at the Kobe shipyard in Japan, right? And this was before Deming landed there, apparently, because there was someone sitting at Kobe who later on had taken Deming's lectures on statistical quality.

0:22:39.4 Balaji Reddie: And then of course, the leadership thing, right, where Deming spoke about the flow diagram. And he said that, he said the light bulb went on because they had a statement there at the Kobe shipyard, "We shall make good ships. At a profit if we can, at a loss if we must, but we shall make good ships." And later on, apparently some American gentlemen came to take over and they changed that and they said, "No, no, no, remove all that profit and loss and just say, 'We shall make good ships.' That's it." So there were times when things started going wrong, right? They went in the wrong direction because they were not looking at it in the clear manner. When they had problems, they said, "No, just make the ship. Just ship it out. It's good." And things went wrong. So they had to reassess and come back. So that was the kind of the idea that we're looking at, the aim and the purpose, and that could change. Right?

0:23:45.6 Andrew Stotz: And I want to add for the listeners out there, in the world of finance, profit is, we also call it cash flow. The cash flow is the numerator in the calculation of value. The denominator is risk. So when we think about what's the objective of a person running a business, it's to maximize value, which many people think means maximize profit, which it does not. It means maximize risk-adjusted profit. So, for instance, if you were breaking the law and doing bad things or mistreating your people ultimately you're raising the risk. Though your cash flow or your profit may be strong, you're raising the risk of that profit or cash flow. And so that's a distinction I like to help people understand, because there are people that just think that the objective of business is maximize profit. No, it's to maximize value. And mathematically we can prove that in the world of finance.

0:24:57.2 Balaji Reddie: Yeah. So I'd just like to paraphrase, when I said that what Harvard said is purpose of a business is to create value at a profit, I'd just like to add something more to that. Create value at a profit in the most ethical way, right? We have to be very ethical about it, because if you're doing wrong things to get your profits and add value, it won't last long. You won't last long as a company. It'll always catch up to you.

0:25:27.4 Andrew Stotz: And I use the word sustainably. That's a kind of a nonsense word these days because everybody talks about sustainability and all.

0:25:34.5 Balaji Reddie: Yeah, they talk in terms about, in a very different context.

0:25:37.8 Andrew Stotz: But the point is, is that are we generating profit in a sustainable fashion? Now the other, I had one more question on this one, and that is if we go back to the words, he talked about the create constancy of purpose for improvement of product and services. And my question to you is, when he talks about aim, sometimes people can get confused, including myself sometimes. And for instance, Clifford Norman and David Williams have been on the show talking about their book Quality as an Organizational Strategy. And so as I've looked at his teachings over time, I've had a question in my mind of is what he's saying that the aim is to improve the business through this focus on quality? In other words, quality is the aim? Or is the aim whatever a company says, "We want to do this, our aim is that"? I'm just curious how you understand those things.

0:26:52.8 Balaji Reddie: I would say quality, but his definition of quality, right? Help someone live better and there must be a market, right? And it must be sold at the right price. So he's been practical, if you look at it. He says that if what you're doing is not making anybody's lives better, then why do it at all? Right? So you need to... You need to look at it from his viewpoint of quality, if I may put it that way. Not that narrow focus on quality of product in terms of free from deficiencies, [chuckle]

0:27:28.9 Andrew Stotz: Yeah.

0:27:30.1 Balaji Reddie: But in a very broad sense what he thought quality is. And also, I found something on the internet, so I'd like to again add that in, that the entire thing is his whole thing is to have happier people. Happy customers... And he doesn't say satisfied, he says happy. So happy customers, happy employees, happy suppliers, society being happy, and the owners. Okay. So what the Japanese interpreted this as, which they call as total quality, is owners, employees, customers, suppliers, and society. When all five are simultaneously satisfied, we call it as total quality. Whereas if you look at it from Deming's point of view, when all five are happy simultaneously, then you attained constancy of purpose. And the longer you can do it, the better it is. So that's his constancy. So the aim and the purpose should be about that. It should be about happier people at work, happier people in the market, consumers, customers, the suppliers, because they should feel a sense of pride...

0:28:56.9 Balaji Reddie: That they're learning something from this company, that growth is happening. Society should feel that this company not only serves their targeted audience, but does not cause harm or is also adding some kind of oblique value to all of us here. We all feel happy interacting with these people in some form or the other. Not necessarily being philanthropic or something, but in a very different sense. We're not getting harmed by these guys. So that, I think, in the broadest sense is what Deming was trying to say to run a company based on constancy of purpose.

0:29:35.4 Andrew Stotz: And the reason why I'm asking is because one of the lessons I've learned just in life in general, certainly from the teachings of Dr. Deming, but just in general, is that if you pick a particular thing or area and you decide that I'm gonna improve this and I'm gonna keep working on improving this, you're gonna end up with something incredible that nobody else has as long as you stick with it. And so that's where this idea of, and if you know what quality means, which is the five groups and things being happy, more jobs, create opportunity, all of that, once you understand that, then quality is driving toward that better outcome. I guess what I'm also thinking about is could a person who's never heard of Dr. Deming just say, "That's my aim right there. I'm gonna take it straight out of what he said, constancy of purpose in relation to improving the product and service with the understanding [chuckle] that that improvement means that." That's it. It's not the aim of "We want to provide transportation vehicles" or something like that. That's more of kind of a corporate communication or. That's where I really want to hear your thoughts on that.

0:30:53.3 Balaji Reddie: Yeah. So when you say that "I want to do this through this product that I am giving," and right now my understanding is that this is the best way to do it, but as the world evolves, obviously there could be many different other ways of doing it and I need to keep revisiting this. As long as my purpose is perfect, I know I'll be able to adapt and adopt very quickly. Right. Otherwise you'll be left behind. What exactly am I here for? Many of the people set up businesses, ancillary units here in my hometown, Pune. They set up, they were basically employees in the parent company and then they saw an opportunity. They saw they were good at this. "I can make this better." So they set up the company to serve the parent company, not realizing that suddenly there could be somebody else coming in. Right. And they were preferred because they understood what the parent company wanted.

0:31:53.5 Balaji Reddie: But if they had just set up by saying, "No, why am I setting up this business? Because I see an opportunity. I can do this well." Okay, then can I do anything else well? What else can I? Why just this product? Why not any other product? Right? I think during the pandemic, many of the manufacturing companies realized that. They said, "We are very good at assembly, so why don't we start assembling PPE kits?" here in India, because PPE kits used to be imported. And I know this firsthand. My student was working in one such logistical company and he said we were importing. 300,000 PPE kits per annum. That was the requirement.

0:32:38.8 Andrew Stotz: What's PPE?

0:32:40.2 Balaji Reddie: Personal protection equipment, which you have to wear, the doctors, et cetera, the health workers during the pandemic. They had to wear that and serve, because we didn't know what was happening. So instead of just masks, just protect themselves completely. In labs, doctors, nurses, they all wore that. Right. So this personal protection equipment, we were importing 300,000 such kits per annum from, I think somewhere in Belgium. And because that was the requirement, but during the pandemic, the requirement went up. And so many of the companies, automotive manufacturing companies, decided that, let's get into this because we know how to do these things, right? We know how to assemble. And within a matter of 45 to 50 days, they built capacity. And imagine this, we were consuming, I am not joking, at the rate of 200,000 kits per day.

0:33:39.4 Andrew Stotz: Yeah. Then you can become a global supplier.

0:33:46.5 Balaji Reddie: And so they had to. But now, see, they did it for that much time because they said, our core business is something else, but we understood our purpose, so let's contribute in a very different way. The other one which they did was many of the manufacturing companies started assembling ventilators. And some of them which were running without electricity, they ran on a mechanical device so that the need for power, et cetera, et cetera, be superfluous. So when you know your purpose, then you can always adapt and adopt very quickly. And I think the pandemic gave us that opportunity to see how many of the companies responded in a very positive sense. In one way to look at it is, "Oh my God, this is it, this is my fate, and we're gonna shut down, we have nothing to do." But the other way is, "No, wait, why are we here? And let's use our expertise in a very different sense. So let's get to action."

0:34:41.3 Andrew Stotz: Interesting. I feel like we can spend a whole episode talking just about one of the 14 Points.

0:34:46.9 Balaji Reddie: That's why I said two episodes for the 14 Points. [laughter] If you don't mind, three also. Because many of the points have been either not discussed in detail or misinterpreted. And there have been changes. Deming himself brought a change in the wordings. That's why I wanted to keep this section, this session separate.

0:35:07.9 Andrew Stotz: Okay.

0:35:12.5 Balaji Reddie: Now you can see why, because I was just setting the scene for the 14 Points. If you want to ask me, it's all profound, very, very profound. [chuckle]

0:35:16.9 Andrew Stotz: Yeah, and I have a lot of questions, so that's good. I've got some clarity now for point one. I think the listeners and the viewers will also get some of that clarity, so that's great.

0:35:26.4 Balaji Reddie: Thank you. And I have been, I still, I just scratch my head about many of the things that he said. Because if people are reading Out of the Crisis, oh my God, you gotta read the text for point one. It's brilliant. I mean, I can't just, you can't just read it out right now. [chuckle] It'll take three episodes just to. But just, many people just say he did give us a method. I think I told you this two episodes ago. He was very clear. We didn't see it. We didn't see it. And he's so clear about what he wanted in innovation. That, of course, I thought that there was a slight difference, I think we spoke about this, invention and innovation. So invention is something new and innovate is to use something differently. Right. So that innovation, I think he confused the two terms, if I may say so. Too brave to make a statement like that. But anyway, he says here that you have to keep improving, innovating, and this obligation never ceases.

0:36:36.6 Balaji Reddie: It's that very clear. And if you see here, there's one, there's a paragraph here, he says, "It's a mistake to suppose that efficient production of product and service can, with certainty, keep an organization solvent and ahead of its competition. It is possible and, in fact, fairly easy for an organization to go downhill and out of business making the wrong product or offering the wrong type of service, even though everyone in the organization performs with devotion, employing statistical methods and every other aid that can boost efficiency." So I think he was highlighting the limitation of the statistical methods, that 97% versus 3% thing, that we are only trying to improve this, but the whole thing comes from the top, that are you providing the right product? I mean, you can't set up a company today making the best typewriters in the world. [chuckle]

0:37:35.4 Andrew Stotz: That's true.

0:37:41.5 Balaji Reddie: So he keeps saying this again and again, that you should publish a resolution that no one will lose his job for contribution to quality and productivity. So I think what we're coming to the end of this session today, we just discussed point one. [laughter] That's the best part. I heard from Henry Neave once that they all formed a kind of a team. Henry had come down to America and they started, they decided to meet Myron Tribus and just about everyone, Nida Backaitis, Barbara Lawton, the gang, and they were so happy to, the stars, right? Gipsie Ranney, I forget the other names, but they were all together and then they decided, let's discuss the 14 Points. And then point one, and it went on beyond lunchtime. They started in the morning. [laughter]

0:38:36.6 Andrew Stotz: That's great.

0:38:46.1 Balaji Reddie: It seems Dr. Deming was so happy. He was just sitting back and just listening and listening and listening. Then they met again the following day and the next day, and then they only came to point number four. And then finally, Brian Joiner, I think, said, "I think we're wasting too much time here. Let's just stop this." And it seems Deming was so upset because he said that Brian Joiner said, "Let's give ourselves 45 minutes for this point and that's it." [laughter]Deming said, "Don't set a target." [laughter]

0:39:22.9 Andrew Stotz: That reminds me of Bill Scherkenbach showing a picture of Deming at the, I don't know, National Education Committee meeting. And he said that they met all day or for two days and they still couldn't come up with the aim of what education, the aim of education in America was at the time. So, yeah.

0:39:42.9 Balaji Reddie: Yeah, I had this problem. It happened at a seminar here in Pune. It was Education for the Future or something like that, Engineering Education: The Next Five Years, blah, blah, blah, I don't know what it was. And there was this one gentleman making a presentation from a school in a city called Bangalore in India. And his topic was Six Sigma in education. And when he came to present, he started by saying, "Six Sigma is 3.4 errors in a million." And I said, "Oh, no." Anyway, then he went on to say, "Okay, so we decided our 10th, grade 10 is a public exam in India. It's a very big deal for a child to sit for that exam, right?" And he said that, "We want to have flawless results. And we've had flawless results for the last eight years. We have so many students, so many, so many students every year, blah, blah, blah, blah, blah." And so if you multiply and all that, and then, "So how do we get this?" Now here came the best part. He said, "In grade nine, all..."

0:40:48.9 Balaji Reddie: All those who had failed or had not reached a certain grade, we threw them out. And so we had flawless results. And I could see people squirming in their chairs because they were all sitting in the audience were teachers. They were squirming in their chairs and then one guy could take it no more. He put his hand up. And I was chairing that session, by the way. You can imagine what was happening to me. Anyway, this gentleman put his hands up and he says, "How can you say that? How can you say that?" He was very agitated. And I could realize, I just stood up and I said, "Okay, Professor so-and-so, please sit down. I get your, I get your sentiment, but we need to do this differently." So I turned to this... And he was a principal, this gentleman... I said, "What is the aim and the purpose of an educational institution?" And this man said, "Results."

0:41:42.4 Andrew Stotz: Yeah.

0:41:45.8 Balaji Reddie: Then I said, "Let's throw this question open to everyone." And I said, "Let's stop." I asked the people organizing the seminar that could we take a small detour here? Let's just stop. Let's not stick to your timetable because I know you're here on a leash. So they said, with permission from the chair and the host college... They were sitting there, the main people... They said, "No, we want this question answered now. What is the purpose of an educational institution?" And there was a lot of goading. I was bringing in Profound Knowledge and I was throwing up questions. And finally we came to the conclusion that the aim of any educational institution is to create a well-rounded individual that contributes positively to society.

0:43:33.9 Andrew Stotz: All right, so on behalf of everyone listening, I want to thank you again for the discussion. And for listeners, remember to go to deming.org and jump into DemingNext to continue your journey. 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." As we're talking about how do we build that for the future.

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"Every time this child was proven wrong, he learned something new." In this episode, Andrew Stotz continues his conversation with Balaji Reddie as they explore two essential elements of Dr. Deming's System of Profound Knowledge: the Theory of Knowledge and Psychology. Through the memorable story of a young boy trying to understand how his father's scooter starts, Balaji illustrates how we build theories, test them through experience, and improve them through learning. The discussion also explores why PDSA begins with theory, why experience alone is not enough, and why understanding how people learn is fundamental to leading improvement. Whether you're new to Deming or deep into his work, this episode offers practical insights into how better questions lead to better knowledge and, ultimately, better management. Are you ready to learn more about the System of Profound Knowledge? Check out DemingNEXT online learning! https://deming.org/learn/demingnext/ 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 discussion with Balaji Reddie, an educator and trainer in the teachings of Dr. Deming, and quality management generally. The topic for today is: The theory of knowledge and psychology. Take it away.

0:00:29.8 Balaji Reddie: Well, thank you. Good morning, Andrew. And it's great to continue our series. So the last time we met, we had begun with the Profound Knowledge, where we said that Dr. Deming brought together four, seemingly disconnected, sciences. He never invented any single one of them, but he saw the connections, and he created, what you could say is, a bootstrap theory of management, if I may say so, a very all-encompassing view of things happening around you. That's why he had no other word to describe it except profound. Because you see things that you normally would not see. That's what we said the last time. And when he proposed that, all of a sudden, I told you the funny thing was that experts in each of those sciences jumped in. I think they realized that they were caught napping, that they did not see the connections, and they did not see a bare minimum set of competencies that you need to have in order to understand things in their entirety. It was very, very... It was amazing that he actually could put that all together.

0:01:44.3 Balaji Reddie: So we started off with the four sciences, in no order of preference. We said here... His words were appreciation for a system. That means, taking into consideration the fact that everything... Having a holistic view, that what we see is not an event but an eventuality, that there's a huge big system behind it. Whatever we get to see in front of our eyes, we're just getting to see the effect. So appreciating that, that's what he said, for a system, a systemic view. I just used a different word, I said connectedness. And I said that from now on, we say that there are no events, there are only eventualities. Which means when something happens in front of our eyes, we always question... We bring in the concept of time and space; that the origins of this, what I'm seeing in front of my eyes, lie somewhere else and maybe actually in a different time frame. So I need to study deeper in order to understand why I'm seeing this in front of my eyes. And you gave that fantastic example of coffee beans, where you said everything has to happen at the right time. So that was the first one.

0:02:54.1 Balaji Reddie: Second one, was about understanding variation. And I would say, that's statistical thinking. I think around 1998, I saw someone come out with the definition of statistical thinking. And they said that it's a holistic view of looking at a process, that everything in the world, happens in the form of a process, and all processes are subject to variation. And understanding and reducing that variation, is synonymous to increasing quality. Now, I'd just like to make a slight change there. Yes, all processes are subject to variation, but talking about reducing... I think, understanding and managing that variation, would lead to better quality. And his entire insistence was understanding variation. Although, let me tell you this, in Henry Neave's book, he wrote about this, where he said that in one of the weekend chats that they had with Deming, he made a statement that if I had to reduce my message to managers in two words, I would say: reduce variation. And this, I've heard from both Henry Neave and David Kerridge. For those who are unaware of who David Kerridge was, because he passed away, I think, around 2018 or 2019, I can't remember... Or maybe before. I'm forgetting the year.

0:04:32.1 Balaji Reddie: But this was... He was from Aberdeen, Scotland. And people used to say, he's like an unofficial person who could be the successor to Deming. So he wrote a lot of wonderful papers. So David Kerridge, Henry, and I, were sitting together having dinner, and they were talking about Deming, and they said that, yeah, he did not... There were some things where he could get really, really upset about when he... About performance appraisals. But there are some things when he spoke of Shewhart, Walter Shewhart, he spoke in a very different tone. And then came this topic, that when we told him that you said reduce variation, he said, "I never said that." They said, "But you said it. We have it... We wrote it down, both Henry and I." And he said, "I could have said that in a context, but I don't think I meant it in that way." So for the record, yes, he uttered it; but he meant it differently. I'm quite sure he said to understand and manage that variation.

0:05:35.4 Balaji Reddie: So what is that managing variation? Okay. We saw this last time, in the very narrow sense of the term, that is when Walter Shewhart invented the control chart. He said there are two kinds of variation that exist: natural variation and unnatural variation. And to distinguish between these two, he created the control chart, which was based on... It was an empirical formula, and people confused it to be a statistical thing. He demarcated, brought in two lines, what he called as the upper control limit and lower control limit. And he said as long as the outcomes of any process or system, if you could measure them and you're plotting them on a graph, as long as they lie within these limits, well, that's the natural behavior of the process or system under study. And the moment their performance crosses the limits, one of these limits on the higher side or the lower side, then you can say there's something unique, special, that has happened. So he used the term, random variation, and assignable cause variation. Because he said you could assign a particular cause to the points that lie outside limits. But when you are studying the variation that lie within limits, the variation that lies within limits, then you can't ascribe a particular cause. There is a system of causes acting. This particular difference in approach...

0:06:58.1 Andrew Stotz: That's a great point. The assignable thing is a great, great point. It really helped me just understand it better.

0:07:04.7 Balaji Reddie: Oh, yeah. Because you could assign a particular, that's why he said assignable. And this is random. Assignable, has its advantage that you can isolate it. And initially, he said you could isolate, and you could eliminate, that cause because it is something which is alien to the system under study. And one by one by one, when he said you eliminate all those causes, you land up with a system or a process that fluctuates only within limits, and he called that as a statistically controlled process. Now, he said your real work begins when you start looking into the reasons for each of those points lying within limits, and I made that statement. You don't have one cause, you have a system of causes. Here's where we studied systems the last time, and I'm just refreshing all of this. I said that in a system, you have interconnectedness, you have interdependencies. And then cause and effect are not closely related in time or space. You have synergistic relationships. So when you start studying, it becomes very, very complicated. Because the performance of each of those causes is also subject to variation. So you can never, ever tell with absolute certainty, what is causing the system variation. Because each of the causes is part of a bigger system. So he made that statement that the complete knowledge of any process or system, is unknown and unknowable. He was not being pessimistic; he was being realistic. We discussed this the last time. And so I said, what do we do then? Yeah, we'll come to that. But now comes the other part, which gets really, really interesting.

0:08:46.7 Andrew Stotz: By the way, I want to... Before you move on from the variation, I want to add something. But continue on.

0:08:55.2 Balaji Reddie: Okay. So he said the reason for the point lying outside... And I said it's assignable, what Dr. Deming called as, special cause variation. You can assign a cause, and I said it's alien to the system under study. And I started by saying you can eliminate it. And even Walter Shewhart began by saying, eliminate it. But now, I'm going back on my words slightly. If you eliminate that special cause, it could be a special cause for the system under study, but it could be the common cause of another system which is related to this. And so what can you do? Well, here's the best part that comes in. You reduce the effect of that cause, to the extent that it does not cause any harmful variation here, to the system under study. And that, Andrew, is optimization. "I want this, and I want that", not, "I want this, or I want that." So I need that.

0:10:01.0 Balaji Reddie: Because I can begin with eliminating, but then I have to keep my eyes and ears open. Because this is what I did in my own company when I started implementing all of this. I'll be honest, I drew a control chart, and when I found points lying outside limits and we discovered causes, I used to eliminate them. But since I was exposed to Profound Knowledge, and what Dr. Deming said about optimization, I kept my eyes and ears open to any change that we observed in the company, anywhere. If I... Even if I got a feedback within a day, two week, month later, saying, "See Mr. Reddie, this is what's happening," and I said, "Wait, wait, wait. Let's see the connection." And invariably, the systems would be connected. And so we could not eliminate, we had to reduce. So we had to go back and check. And that's optimization. Because what happens is if you just keep eliminating... Which is a good place to start... The system under study could get attacked by that interrelated, the other system which you have just actually disturbed. And the problem would resurface with a new face. And you would then say, "Wait a minute. We had solved this problem. Why is it back?" So here's where Profound Knowledge comes in. And that's why the word is continual, it's not continuous. You gotta keep at it, you gotta keep learning. So when he said, yeah, that for common causes, or what he called as random causes, they're so complicated... And for these special causes too, they become complicated... Then how do we understand, and what action do we take? Do we just wait on our haunches and do nothing? That's where he brought in the Theory of Knowledge. And I'll begin with his...

0:11:44.1 Andrew Stotz: And maybe I can add something.

0:11:46.3 Balaji Reddie: Yeah, sure. Now you could. Yeah.

0:11:48.7 Andrew Stotz: The first thing I was thinking about, a special cause, or an assignable cause in a factory, particularly in Asia... But maybe also in the US and maybe more in Europe these days... Is a fluctuation in the electricity. Not necessarily a blackout, but that can be a special cause.

0:12:12.1 Balaji Reddie: Right.

0:12:13.6 Andrew Stotz: But just fluctuations in electricity, can cause an impact on a system, so it can be a special cause. And then once you understand it, you may decide, "Hmm, is there a way we can smooth this? Is there a way we can think about the electricity input into this system, which is really critical for this system, by putting something in between the electrical source and this particular system?" So that's an example of the idea of a special cause, potentially, that is just a common cause, possibly, of another system.

0:12:55.3 Balaji Reddie: That's right. In fact, in India, we did have this problem in the 1990s, when the whole world descended into India because of the cost advantage. The rupee got devalued, the dollar really sprung up. And so people found India as a gold mine, when it came to establishing organizations. And what they would do is bring in much of their semi-automatic technologies that they had in the US, or wherever, Europe at that time, into India, which were largely electronic, had components which were electronic. And in India, the temperature conditions are... I mean, you're in Thailand, you know how it is. It's extreme.

0:13:35.1 Andrew Stotz: Yeah.

0:13:36.9 Balaji Reddie: And so it was not ready for that. And we would have these problems with the components conking off. We had to come out with some remedial stuff, some short-term stuff. And then we started discovering things, we started inventing things. And they almost started losing the cost advantage. Then they said, "Okay. Let's get a little smart." When the next set of machines etc., started coming to India... This was in '91-'92, if I remember right. By '93-'94, that realization came in and so they said, "Why don't we send it in with a cooler," the cooling system, "so that no matter what happens outside, the components would be unaffected." But that led to another problem in cities like Mumbai, where you had extensive humidity.

0:14:24.2 Andrew Stotz: Yeah.

0:14:25.3 Balaji Reddie: And that would cause droplets, which would short-circuit the electronic components again. And so they came up with climatizers. It was crazy.

0:14:34.4 Andrew Stotz: Round and round you go.

0:14:36.7 Balaji Reddie: Yeah.

0:14:38.5 Andrew Stotz: That's interesting.

0:14:39.8 Balaji Reddie: You see, when I was exposed to Profound Knowledge for the first time, and when I wanted to teach it, I remember, I used to want to look out for examples; but I found none. And then when I started digging deeper and deeper, I said, "Wait, I do have examples. It's just that I didn't know that I was looking at it differently." And so it was amazing. Like I said, what Dr. Deming said, you see things that you normally would not see. And I began seeing things in retrospect.

0:15:09.4 Andrew Stotz: Yeah. And that's sometimes... I think the teachings of Dr. Deming have made me a very calm and relaxed guy. I no longer freak out over, what I now know, is just normal variation. And I feel like it's a world of people, that you have to react. If you don't react, you're not doing something. And it's almost impossible for most people to see that the next outcome of this, is not a special cause. And I spend a lot of time in my ethics class trying to help young people understand, that there's just normal variation. Which brings me to my last point I wanted to make with what you said. It reminded me of my studies... Which are limited... Of insight meditation, concentration meditation, or Buddhist... What the Buddha taught. And I remember sitting in a temple in Los Angeles many, many years ago, and I thought, "I'm gonna try to learn from this monk."

0:16:24.6 Andrew Stotz: And I left there thinking... So we did meditation, and he said, "Just try to clear your mind. And just..." And so I left that meditation going home thinking, "My brain was on fire," and there's so many things going on. So I went to him, and I studied more, and I learned more. And I realized that I had misunderstood. You're not trying to control your thoughts, or reduce your thoughts. You're trying to observe your thoughts. And once I started to realize, just observe, then I started to make progress in really understanding that reduce will come over time; maybe, maybe not. But observing was really the step. Because once you observe something, particularly with your mind, if you observe thoughts coming out, then that actually means you're somewhat disconnected because it's hard to observe something that's happening. So therefore, you're starting to look at it from a different perspective. And that's what I thought about when you were saying, it's not just reduce, reduce, reduce. It's first, observe.

0:17:40.1 Balaji Reddie: That's right. Yes, understand, see what's happening, ask the right questions, "Does this happen every day? Or has it happened only today?" things like that. And then you could say, "Okay. If it's happened only today, why did it happen only today? Is today a special day?" So that's the understanding of variation in the broadest sense. And that's why statistical thinking is about asking the correct questions, even in the absence of data. It's thinking, statistical thinking. Don't confuse it with statistical methods, where all kinds of mathematical mumbo jumbo come in. This is thinking statistically. And that's where theory of knowledge, where Dr. Deming said, comes in to help us, first, enlist what's unknown. And then from that, you start pinpointing, or segregating what is knowable, faster. And then you... Once you do that, then you start recycling your thoughts and trying to understand those systems much better. And that's the theory of knowledge.

0:18:45.5 Balaji Reddie: Now, just a statement which he said, what is a theory of knowledge? He said, "A statement conveys knowledge, if it relates some cause to some effect; It fits without fail, all the observations of the past; It helps us predict the future with the risk of being wrong." So I'll repeat the whole thing. He said, "A statement conveys knowledge, if it relates some cause to some effect," it provides us information, it relates some cause to some effect. "It fits without fail, all the observations of the past; It helps us predict the future, with the risk of being wrong." Now, if you go through this step by step, when you say here, take this example of a small five-year-old child. At least this is a very, very Asian and an Indian kind of an example, but I'm quite sure people all over the world will relate to this. A five-year-old child, here in India or in Asia, watching his father go to work every day. Father goes to work on, what we call as, a two-wheeler, a scooter as they call it. And if you know, in the old days, you could kickstart the scooter. We didn't have push-button starts, we used to kick the lever. And so this kid is very intrigued as to how does this scooter start. And he knows that he's at that age, if he keeps asking questions, he'll be told, "You'll learn when you grow up," or "Don't waste my time."

0:20:18.2 Balaji Reddie: And so he decides to observe and learn. And so he starts observing his father every morning from the small little balcony that they have. The daddy brought the scooter out into the compound and then put it on stand. And he did a big ritual around the scooter, and then he kicked the lever and the scooter started. And so he would write down. This is happening every day. And then he noticed that the scooter wouldn't start till he kicked the lever. And so he wrote down his first theory: kick is equal to start. Now, he decided to test this theory. A couple of days where he wasn't even in the balcony, he would sit inside the house and he would hear the kicking sound, and he would tell his mother, "Now the scooter's gonna start." And guess what? The scooter started. So this theory can't be wrong. Now, he decided to test the theory differently. He decided to start the scooter one day. So there was nobody at home, he goes to the garage where the scooter is there, and he gives the lever a mighty kick. But it doesn't start.

0:21:23.3 Balaji Reddie: Now, he says, "This is crazy." So he goes and reads the notes that he made. And then he saw a lot of funny things that were happening. His father was taking a bag off his shoulder, putting it on the handlebar, and touching the scooter two, three places and then kicking the lever. So he went and brought his father's bag, put it on his shoulder, took it off, put it on the handlebar, did that whole ritual, and then kicked the lever. But the scooter didn't start. He said, "Now, what's wrong? Maybe I've not observed properly." So the next day, the whole system came under scrutiny. But he didn't observe anything special at all. But then again the next day, and then he said, "Wait, wait, wait, wait. There is something he's doing there. He takes the bag off his shoulder, but then he touches the neck of the scooter on the inside, and then he kicks the lever." So what could that be? And then when he observed the next day, he saw there was a key he was inserting and twisting it. And he said, "Oh, damn." So he wrote down his provisional theory: key plus kick is equal to start.

0:22:23.7 Balaji Reddie: And so again, he tests this when there's nobody at home. He gets the key, inserts it and turns it, then he kicks the lever and the scooter starts. So here's where his theory becomes a little more elaborate: key plus kick is start. Now, this works very well till, months down the line, he hears kicking, kicking, kicking, but the scooter's not starting. And so he comes out and looks at his father. His father's desperately kicking away. And he says, "Looks like the old man's got it wrong." So he comes down and asks his father, "Have you turned the key?" And he says, "Oh yeah. You're trying to teach your father how to start the scooter." "Then why isn't the scooter starting?" "I don't know." So they take it to an elderly gentleman staying nearby. "Look, the scooter's not starting." So that elderly gentleman is quite unperturbed. "Oh, no problem." He does something totally out of the playbook. He runs with the scooter, jerks it into motion, and the scooter starts.

0:23:20.4 Balaji Reddie: So key plus kick completely collapses, and this kid is flummoxed. He asks his father what made the scooter start, and that's where he gets the answer, "You'll learn when you grow up." Now, this kid grows up with the question in his head, "How did the scooter start that day?" And he reaches seventh grade where they're having a subject called science, general science. And the teacher that day in class is discussing Newton's laws of motion. And she starts, "Body continues to be in a state of rest..." etc., etc. "And to every action there's equal and opposite reaction," and, "rate of change of momentum is equal to force." And the moment that kid hears that sentence, "Rate of change of momentum is equal to force"...now here's the point I'm making. To every child sitting in that classroom, this was just information. But one of those things answered a question; it became knowledge. He suddenly realized when his teacher said, rate of change of momentum is equal to force, that's when he said, "When you're running with the scooter or kicking that lever, I'm generating a force which is making the scooter start."

0:24:32.2 Balaji Reddie: And soon, of course, when he grows up, he inherits the scooter, and every time he has a problem, he runs with it, jerks it into motion. But one day he's doing that and then the scooter is just not starting. So he takes it down to the motor mechanic, and the mechanic does something very funny. He goes underneath the scooter and comes out with a contraption called the spark plug and shows him how dirty it has become. Then cleans it, puts it back and then kicks the lever and the scooter starts. So now he's got a big elaborate theory. When I kick that lever or run with the scooter, I'm generating a force, the force ignites a spark, the spark ignites the fuel, and the scooter starts. Now, I know this is not how it happens, but I think I made my point.

0:25:13.9 Balaji Reddie: But if you go through this entire narration that I've just made, if you realize something, that every time this child was proven wrong, he learned something new. And he was proven wrong because he had a theory. It may not have been correct, but it was a theory. So theory is not the opposite of practice; theory is a guide to better practice. And the more your theory is proven wrong, the more you learn. And the theory is based on what you have seen, what you see before your eyes. You liken it to something, an experience, something you've seen, something you watched. And that's how theories are generated. And that's when Dr. Deming said, if you want to understand the complexities in a system, you begin with theory. "I think. I feel. Let's try this." It worked? Great, "Let's do it again." If it did not work? Great, "Let's see under what conditions it would work?" And that's why he said we need to cooperate to understand the system, because when we sit together, each one comes out with a different theory based on what our backgrounds are. I think once we had this discussion, like if I were to start describing to you the road reaching to my place, you already start constructing a mental picture based on whatever you've seen in life. And that's your theory.

0:26:50.3 Balaji Reddie: Now, when you actually land here, you say, "Oh, I thought this and I'm seeing this." So that's what happens with Plan-Do-Study-Act. We're all born with this. It's a natural way of learning. It begins with a theory: I think; I believe; Let's try. And then you actually carry out that set of steps which you think would give you the result. And then you study. "Did I get the result? Did I not get the result?" And then you act. "Maybe I need to modify my theory. Maybe I need to add to it. Maybe just abandon the theory."

0:27:23.6 Balaji Reddie: I remember once somebody asked me this question, "That if we abandon the theory, what happens?" Well, you get to know the limitations of your existing theory. And the more you know where your theory fails, the more powerful it becomes for you. If you can predict failure, you have really understood the process. So when you know that this is gonna fail, then you've really understood this. So this theory, this is a system of learning, and all of us are born with this. We all have this natural inclination of asking questions. So that system of learning which leads to theory, we're born with it. But the problem is this: there are some people who learn by watching, some people who learn by doing, some people who learn by reading, some people who learn by writing. For some people, one word is enough. For some people, you have to keep repeating the theory till the person says, "Okay. I understand it."

0:28:22.9 Balaji Reddie: Now, is this wrong? We're just different from each other. And that, is what Dr. Deming said, is the understanding of psychology. You need to understand the learning process of a person, and then you need to interact with that person. So whether it is an employee in your company, whether it's your customer, whether it's your supplier, you need to understand. And I would reduce that word to being empathetic. Understand, be empathetic, and not just understand what makes that person tick. Broadly, we say learning process. Now, a lot of corollaries that come out of this, that you cannot copy an example without understanding the underlying theory behind it. It's not how that person has been successful, but why. And for that, you need to... Because we come from so many different backgrounds, that's why Dr. Deming said, you need to have operational definitions before you start communicating to each other. So all of these are an outcome of the Theory of Knowledge. One is the concept of experimentation. That means the more you fail, actually, the more you learn. But management rewards only successes. The appraisal system works only on successes. We need to also recognize failures, because that's where you know where it failed and what you need to do next. And as they say, failures are the stepping stones to success, etc. Fine. But if you're doing it in a very structured scientific way, your rate of success would go faster.

0:30:05.1 Andrew Stotz: And I think that's an important part, is the structured way. Because one of the things... I was just teaching a management team, about 35 people, yesterday. And I was teaching them about corporate strategy, and that there's many ways to win in corporate strategy. Could be the low-cost leader, or whatever. But one of the ways I describe, is what I call, know-how. That your firm has some special knowledge, or some special skills, or expertise, that you've accumulated over time. And this brings us to the point of... Because many times, I've thought about the Theory of Knowledge, and thought, "Yeah, we do that." We casually do exactly what you said. We ask a question, we have a little theory, we test it. But the problem is, many companies think that they have know-how as a competitive advantage, until the person with the know-how leaves. And then they realize, "Oh, we just had one superstar." The question is, do we have a formal or structured way of acquiring and disseminating knowledge, till it becomes common knowledge in our company? And that's where the Theory of Knowledge, and the PDSA, I see brings a lot of value.

0:31:36.2 Balaji Reddie: Yeah. So that's why the joke going around is know-how, know-what, but more important now is know-when and know-who. Even if you know who, it leads to the when, what, and how. Sometimes, you tend to thank the person profusely because that person says, "I know who knows to solve this," and then it takes you right there.

0:32:01.7 Andrew Stotz: Here's a fun thought exercise that I like to think of, is that... You and I both read physical books. And I've got thousands of them surrounding me in my office. But we're in a point in time where the future generations are not gonna read physical books. They're gonna read books that are online and...

0:32:27.0 Balaji Reddie: Right.

0:32:29.0 Andrew Stotz: And then we look at someone's house in the future. There's not gonna be books in their house. It's gonna be on their pad, on their phone, in the cloud. Now, one thing that's kind of interesting is, think about... Imagine that there's a solar flare hits the earth and wipes out all the books. They're all gone. In fact, all of our accumulated knowledge, of research studies, and everything. For the first time in human history, there's like this moment where everything's gonna... It wouldn't happen nowadays because people still have a distributed libraries, distribution of the knowledge. And all of a sudden, you could be without knowledge. And so this is part of the reason why, in a company context, it's important to have a method for acquiring, but also a method for consolidating, and collecting, and building knowledge, and upgrading it. Anyways, that was just some fun thing that I've been thinking about in my head. So anyways, keep going.

0:33:35.7 Balaji Reddie: Yeah, no. That's what's going on right now with the HR departments in companies, knowledge management, because they say, like you said, the person leaves and everything leaves along with them. So apparently, what happens is, when they are debriefing after a successful project... And this implementation thing which I read in Dr. Juran, he used to call it the Santayana review, George Santayana, who made that famous statement, "Those who forget the past are condemned to repeat it." And so he would say at the end of the entire project, y'all sit together... And like from the defense, you have this thing called, debriefing. You narrate everything, and it's verbatim. You take down what you went through so that that remains on record. And so we used to do this in our company. At the end of the project, we used to have the last meeting, and the last document that we used to put on the file, which used to close the file, the improvement file, was "Things Gone Right, Things Gone Wrong."

0:34:37.7 Balaji Reddie: And without that, no project file was completed. No project was completed. We used to have that last meeting, and the new team coming in would ask for the recently completed projects, and begin with reading that document first, because we don't want to repeat the same mistakes. And this is the only way. So nowadays, I've seen this, that the HR person also sits around in that meeting and asks the question, "Okay. You took this decision, but what made you take that decision?" Because they want that to be replicated. Turning tacit into explicit. So that that comes from here. If you understand why Juran explained... That's why I keep saying this, that I could understand Juran because I read Deming; and I could implement Deming because I read Juran. They're not mutually exclusive. And so when people get into this stupid argument of who was better, you're losing out on their learning by getting into that silly argument. They were very compatible. Maybe, they had different ways of expressing themselves.

0:35:51.7 Balaji Reddie: And so coming back to what Deming said, he said that this is Theory of Knowledge, and so you are in a continual state of learning when you're dealing with, what you call as, random causes. But in a state of assignable causes, that's the low-hanging fruit. It gives you the instantaneous results that management wants to see. But at the same time, if you're exposed to Profound Knowledge, you know that if you take such drastic steps of elimination, etc., etc., to show those results, the low-hanging fruit, a person with Profound Knowledge would keep his eyes and ears open to note any kind of changes, anywhere, in either a related or an unrelated system. And then make changes accordingly. You can't just leave it at that.

0:36:44.4 Balaji Reddie: So my experience in my company when I started implementing this... Because we had... What? 77 different interconnected processes which were running to make the company... Well, from start to end. Which included some manufacturing, some finance, some personnel. So these are all interconnected. And we found that if you're making changes, they would affect the other processes, sometimes directly, sometimes indirectly. So you have to keep revisiting those processes again and again, and seeing how you can optimize. And my estimate, is that it takes around three, to three-and-a-half years to actually attain some kind of predictability in the entire organization, if you're using good teams and using Profound Knowledge. If you are not using Profound Knowledge, you will gain some very good... You'd have some very quick gains, no doubt about it. But then the other problems may resurface. And if you've seen the path of frustration that Dr. Deming has drawn in, 'Out of the Crisis,' there's a diagram that you reach... You expect improvement and you don't, and it stagnates. And that's exactly what happens when you don't have Profound Knowledge. You tend to stagnate, and in fact, you start going the opposite direction. If you see it as a better way of learning and understanding your processes, then definitely, things can get much, much better. That's how I look at it.

0:38:28.8 Andrew Stotz: Excellent. Right.

0:38:29.9 Balaji Reddie: So in my own company, it took three-and-a-half years, to see things. And then we saw the effect of all this when we had to grow as a company, and from having something like 30-40 people, to close to 300. The growth was crazy. But because we had been exposed to all this, things became easier, let me put it that way.

0:38:57.4 Andrew Stotz: Yeah. It's funny because what I was just thinking about... Normally, when we say, "You have to grow," we're talking about like growing revenue, growing market share. But what you're also talking about, is you have to grow in your knowledge.

0:39:11.0 Balaji Reddie: Yes. You have to.

0:39:13.7 Andrew Stotz: Otherwise you can't manage it.

0:39:17.4 Balaji Reddie: Right.

0:39:20.7 Andrew Stotz: And anything else you want to add on this topic?

0:39:24.1 Balaji Reddie: Well, this is... So this is where you have all the four sciences acting together. So if I were to, in a nutshell, put together what we have just discussed of all the four sciences, I'll just pull up a list of points, and if we can sometime do perhaps a video call... Excuse me... Then... Just give me a minute.

0:39:55.5 Andrew Stotz: Yep.

0:39:56.5 Balaji Reddie: Okay. So here we are. So let's get to Profound Knowledge. Okay. So let's begin.

0:40:07.5 Balaji Reddie: So understanding... So appreciation for a system. The points you need to look at: that cause and effect are not closely related in time and space; that outputs are the results of a myriad of inputs; there exist synergistic relationships among the inputs themselves; And we need to understand the importance of a common aim and purpose for a system to function well. We come to understanding variation. That's learning how to think statistically, that is how to distinguish between matters that require immediate attention, what we call as, assignable cause variation; versus matters that require constant attention, which is what we call as, random cause or common cause variation., And understand that taking cognizance of and managing this variation, is synonymous to better quality. About Theory of Knowledge: the importance of theory; using theory to interpret observations; and experience is not doing the same thing again and again, but doing different things and learning from your failures. So you keep doing... Even if a person says, "I've got 30 years of experience," it could be... I don't say it's always... It could be the same thing being done for 30 years. But doing different things in 5 years, you could gain a lot more experience than doing the same thing for 30 years. And then you understand how to learn faster. The day you discover your learning process, is the greatest day of your life. And the funny thing is you can't discover it yourself. You need outside help. And that could be a mentor, maybe a teacher, maybe a friend, I don't know, it could be anybody. And understanding of psychology: okay, that people are inherently good; they want to do a good job; they learn differently, therefore they think differently. Working on people's learning systems and processes, rather than trying to exhort them, that would be better, learning their processes... And ranking... You cannot compare one person's learning system with another. Each one has their own learning system. You have to learn how to appreciate that and hone it, and make a person better at what they do.

0:42:40.2 Balaji Reddie: So these are the four sciences acting together. And that gives you Profound Knowledge. And we said here when we started, that when you have Profound Knowledge, you ask different questions. So when you start looking at things happening around you, and you start asking these questions... Because Dr. Deming said that people are the only living parts of any organization, and so you need to understand them. So I keep joking about this sometimes, that how do we learn this theory and psychology? The best thing is to... If you have a pet at home, if you can predict the behavior of your pet, then you really have Profound Knowledge. Because here is a living creature who can't communicate to you what they want, and if you can understand that, that's real empathy. When you understand your pet, or whatever.

0:43:43.5 Andrew Stotz: That's competitive advantage.

0:43:45.6 Balaji Reddie: Yes.

0:43:49.2 Andrew Stotz: Fantastic.

0:43:50.4 Balaji Reddie: Also, I keep saying this, when the womenfolk, they take a break when they are expecting. And then they come back to work after they've had their children, they had a child or something, people say that they've come back to work. I said, "Oh, they have not been away from work." They've done work which is so different right now. They've learned so much. So it's unfair to say that you've taken a break. I think women are never on a break. Whether they're in the family way, whatever, they are working. It's just that we define work as something that you do at a place of work, that is an office where they're doing work. Even when they're with a child trying to understand what that damn child is trying to say. I mean, just imagine, they learn how to... What that kid is going through, even though that kid can't communicate. And somehow, they have that instinct. So they have it more than us. I mean, of course, when you have parenting, which is done by both men and women now... During our time, of course, it was more women-oriented. We came from a different generation. But I see that change now. And so I keep saying this, that if you spend time trying to understand babies, or trying to understand your pets, I think you become more empathetic. And automatically, your Theory of Knowledge bit, and your psychology, starts getting stronger.

0:45:21.7 Andrew Stotz: Yes. I'm gonna test the theory. If I give my child this, they're gonna be quiet. Yeah. There you go, Theory of knowledge.

0:45:33.5 Balaji Reddie: There you go.

0:45:34.4 Andrew Stotz: Fantastic. Well Balaji, let's end it there. And on behalf of everyone listening, I want to thank you again for this discussion. And for listeners, remember to go to deming.org and jump into DemingNEXT to continue your journey. There's so much there now, it just keeps growing. So, this is your host, Andrew Stotz. And I want to leave you with one of my favorite quotes from Dr. Deming, I just can't stop saying it: "People are entitled to joy in work."

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What if the best leaders are not the ones with the biggest ideas? In this episode, John Dues argues that the leaders who make the greatest impact are the ones who create the fastest learning cycles.

John and Andrew Stotz explore why small tests often outperform large initiatives, how PDSA builds real organizational knowledge, and why improvement is a learning process, not an implementation process.

If your organization is launching new initiatives, this conversation offers a different question to ask: What's the smallest test we can run to learn whether this idea actually works?

TRANSCRIPT

0:00:02.3 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 John Dues, who is part of the new generation of educators striving to apply Dr. Deming's principles to unleash student joy in learning. The topic for today is the Fastest Way to Learn What Works. I love that title, John. Take it away.

0:00:30.0 John Dues: Hey Andrew, it's good to be back. Yeah, I was thinking about talking about leadership today, and I was thinking about who are the leaders that we tend to admire? I think the typical person would say these leaders with big, bold ideas. In my world, a superintendent launches this district-wide initiative, or maybe it's a principal has this sweeping school improvement plan that they've put in place. In your world, maybe some CEO unveils this new strategic direction. We think about these leaders, if they're described, they're visionary, decisive, courageous. But I think, as I've done this study, I've become increasingly convinced that we're paying attention to the wrong leaders in a lot of cases...

0:01:31.6 Andrew Stotz: So the right leaders are the ones that have their pen over their right ear.

0:01:36.9 John Dues: Always. That's the mark. That is the mark...

0:01:39.6 Andrew Stotz: I think I see that on you.

0:01:43.9 John Dues: I'm definitely not describing me. I'm just an observer, observer of the world. But I think these leaders make these big promises, but I'm increasingly convinced that the leaders who we should be paying more attention to are the ones that create these fast learning cycles. So in a typical place, a company or something, a school, they're faced with a problem. These leaders don't immediately ask, "How do we scale this? How do we scale this idea?" I think they're turning to a different question, and that's, "What's the smallest test we can run to learn whether this idea actually works?" It's a very different, very different question. And I think it's tough because this is a question that's not gonna make headlines, but I think it's one of the more important questions that a leader can ask...

0:02:49.9 Andrew Stotz: Isn't a great leader supposed to be doing the big things? You're talking about the smallest.

0:02:52.8 John Dues: The big things, right, the large initiatives, that's what gets attention. But I think the larger the initiative, the problem is the longer it takes to learn whether that thing, that idea, is helping or hurting or maybe having no effect at all. And I think what happens is, and what I've seen in schools repeatedly, I'm sure it's probably the same in the private sector, is oftentimes by the time the evidence actually arrives, if it ever does, so much time, money, and goodwill has been spent that it almost doesn't matter whether the idea itself was successful. All this cost was sunk into training people, all these new expectations have been established, and then we almost become more invested in proving the initiative was the right decision. And then once that happens, it's almost impossible to go about learning if it's actually having the effect that we intended to. And I think a lot of this has to do with many improvement efforts that I see. They start with a solution. They're sort of starting with not a clear definition of the problem, but this idea that they think is gonna have an impact, whatever that is. It could be a new curriculum in a school, an attendance campaign because attendance has been a big thing lately, some type of new evaluation process that they're gonna use with teachers or workers, whatever. But the point is that the assumption is that the solution's known at the beginning and that success really just depends on implementation. But I think the problem I see is that no one stops and thinks, "What if this solution actually doesn't work in our system?" We copy these ideas, we've seen this thing, whatever it is, work somewhere else, and we almost don't even consider whether the context matters. And it's maybe the most important thing to consider.

0:05:11.7 Andrew Stotz: I think about Deming, Dr. Deming, saying, "How would they know?"

0:05:16.0 John Dues: How would they know? Yeah. And I think, again, so much gets sunk into the initiative, all that training, all the money, all the resources, whatever. At a certain point, the organization is so invested that they almost sort of solidify into defending the idea rather than trying to learn whether it's actually working. That tipping point, I think, can happen pretty quickly, especially if it's a large, organization-wide initiative.

0:05:50.5 Andrew Stotz: Yeah, and I can imagine a new person coming... A superstar coming in from another place where they implemented something that really worked, and now they're going, "Let's do it in our..." and that may or may not have the same impact in that new location that that person's responsible for.

0:06:09.6 John Dues: Yeah. And I think almost immediately the conversation then shifts from learning whether the idea is working to confirming what everyone hopes will happen. I think that might be the most dangerous moment in an organization. And so the purpose that I'm talking about, testing on a small scale, is not actually to verify the idea. The purpose is to learn whether the idea survives contact with reality. A good scientist, for example, their first step when they have a hypothesis is try to falsify it. And I feel like if it was ever taught to education or business leaders, that idea has been completely lost to history. And maybe even in some respects in the science world too, that falsification principle is sort of... That's the first step when you're testing an idea. That is not what I've experienced as an educator. I don't know if you've had that same experience in the business world.

0:07:21.9 Andrew Stotz: Yep, yep. I'm just thinking about that quote about no plan survives first contact with the enemy. I know von Clausewitz said it. There was another guy that said it, I think, before him, but it's just so, so true.

0:07:41.2 John Dues: Yeah. And I think this other way of thinking that I'm talking about is so counter to how most organizations operate. Once that solution is selected, whatever it is, the focus completely shifts to implementation and adoption. But the thing is, improvement, at its most fundamental level, it's a learning process. It's not an implementation process. And so... So often we're asking, how do we roll this thing out? I think a good leader, what they're gonna ask, is how can we learn more about this idea as quickly as possible? Right? This other way of thinking, this small testing, it reduces risk, generates feedback, reveals obstacles that you're blind to initially. But most importantly, it creates knowledge, like real working knowledge in your system, in the context where this idea is eventually... When it does roll out system-wide, where it's gonna have to work. And the thing is, is if it works at that small level, you can expand it. If it fails, you can cut your losses when not much has been lost in the way of time, resources, that type of thing. But either way, the organization is gonna learn from that small test...

0:09:09.2 Andrew Stotz: I found it, by the way.

0:09:10.6 John Dues: Oh, go ahead.

0:09:11.9 Andrew Stotz: Helmuth von Moltke the Elder, a Prussian field marshal and military strategist. The closest translation was, "No plan of operations extends with certainty beyond the first encounter with the enemy's main strength." Or summarized as, "No plan survives first contact with the enemy." So it wasn't Mike Tyson who said it first when he said, "Everybody has a plan until you get punched in the face."

0:09:45.3 John Dues: Yeah, right, same idea. I think the Prussians had quite a bit of revolutionary ideas coming out of their military prowess. I think the organizational structure maybe came even from Prussian military hierarchies and stuff like that.

0:09:54.0 Andrew Stotz: Definitely.

0:10:02.8 John Dues: Yeah, but I think, going back to my original sort of statement about which leaders get branded as outstanding or great or leaders to pay attention to, is those large initiatives attract attention, right? And we tend to celebrate those leaders with bold visions or these big plans, sweeping announcements. They're decisive and courageous because when you make those pronouncements, it appears as if they know exactly where the organization could go next or should go next. I think the problem here is that confidence can so easily be mistaken for knowledge. And often, especially in the world that I live in, not just schools but urban schools, the average superintendent is only in their seat for three or so years. Some a little more, some, a lot, a lot less. And so by the time you find out whether the thing worked or didn't, the person's gone. They're on to the next thing, and no one remembers what exactly they promised to do when they got here three years ago...

0:11:18.7 Andrew Stotz: He was really good. "I liked him. He was nice. I thought he had some good ideas."

0:11:21.5 John Dues: Right, right.

0:11:24.4 Andrew Stotz: "Who's our new boss now?"

0:11:27.4 John Dues: Yeah. And so they get this recognition for these big announcements, and it's before any evidence exists that this thing works, right? And so meanwhile, there's these other leaders who I think deserve more attention, are frequently doing something that's much less visible. And what they're doing is building a system that learns.

0:11:40.2 Andrew Stotz: Mm.

0:11:53.1 John Dues: And so instead of asking people to just trust their ideas, they're really thinking about ways to design tests of those ideas. So they're not really trying to prove themselves right like this first camp of leaders is. What they're trying to do is discover where they might be wrong. And that's just not as flashy. It just doesn't garner the same type of attention as that first type of leader. But I think if we really want to improve organizations, schools in my case, or businesses in your case, the thing is, if you're really gonna improve, it depends on actual knowledge, not just enthusiasm, not just charisma. When I think about a promising idea, that's not the same thing as a good idea. And a good idea, even a good idea, is not the same thing as an idea that works in your system, right? And so what we're trying to do is learn, learn, test, not confirm, learn what actually happens when we put something to the test in our system.

0:13:04.7 Andrew Stotz: It makes me think about what I mentioned to you before we turned on the recording, which is that I've been starting to do PDSAs with my accounting and inventory team. Every month I go and sit down with them after they've closed the books, and I've designed a simple format for them. And the way I've explained it to them is that imagine that you want to lose weight, and you think, okay, there's three things I read on the internet: get good quality sleep, eat less carbohydrates, and walk every day. If we do all three of those things, we're probably gonna lose weight. And as an individual, that may be good enough. But if we do them separately, we'll actually acquire knowledge as to which one has the biggest impact. Now, it gets even more difficult because if you do them consecutively, it's harder to make an impact as you start to lose weight. But the point is, is that... And the reason why it's important is because we need to think about how we as an organization are acquiring knowledge. And so I've got a golden three-ring binder, and each of the PDSAs we put in there, and then we're starting to collect them. Once a month, our impact that we're expecting from that PDSA may take six months to occur, but we're revisiting and discussing and deciding, do we continue with this or do we improve it? And we just have two things that we're focusing on, the accounts receivable and also reducing the amount of inventory that we have in the business. And those two things, the beauty of doing PDSA with accounting is that it's a repetitive cycle. Marketing's not a repetitive cycle. Sales, not necessarily a repetitive production, but accounting is the same thing over and over again. So what a great opportunity to improve.

0:15:10.8 John Dues: Yeah, and that's really interesting because a lot of times financial or accounting functions in businesses sort of get left out of the improvement equation. And that's a big mistake, I think, because especially if those people are sort of left to their own devices and the sole focus is on the bottom line, right? And so you could cut cost in an area and actually cause the business, obviously, great harm if you don't have the full picture in mind. So I think that's a great...

0:15:44.0 Andrew Stotz: And that's a whole another area of misusing finance. But the point that I'm thinking about as I'm going through this, because I was thinking about where is the best place to really start strong implementation of PDSA, and my conclusion is accounting. Because accounting is not even like finance saying, "Oh, we need to hit this target" or something. They're just cranking through a process over and over again. And I told my accounting team, I said, because it's a pretty big team of people in both accounting and inventory, I said, "We're gonna work on this for 12 months until we've got the format, the structure, everybody understands it, we have it all translated into Thai from English so it's very clear." I said, "And then you guys are gonna then teach the rest of the organization how do we do PDSA."

0:16:34.0 John Dues: The accountants are, huh?

0:16:36.1 Andrew Stotz: Which is pretty exciting.

0:16:38.4 John Dues: What's... How are they receiving it?

0:16:40.8 Andrew Stotz: It's confusing. It's hard. They're thinking about things and writing stuff down. The first few ones, they realize they didn't really make it that clear, so it's a struggle. And I can say for myself, being an expert in this area, that bringing it to them in a simple way, not easy. And it's also easy to abandon. And I suspect that many employees would think, "Okay, this is the next initiative," versus something that I'm just gonna, every single month, review, work with them on, and keep improving. And then we want to build that competency to understand what works. Because if we can test things one at a time, they also can see how you really got to narrow it down.

0:17:30.8 John Dues: Yeah, that's a great application of continual improvement where you're learning by doing. There's no better way. It's gonna feel clumsy at the start, the first few cycles that you go through. But I think once people see it's not a test, it's not an evaluation especially, it truly is a learning process that can have a big impact on whatever the problems in your area are. That's what I've found. After people go through this a few times, and you make the predictions, and people think they're gonna get judged on their predictions, or the predictions are gonna be wrong, especially at the start, I've continually had to tell people, "No, you're not failing. Yes, your prediction may have been off quite a bit, but that's in the first cycle." We do this a few times, and you're gonna get your sort of understanding of reality and that gap is gonna get closer and closer as you run those cycles.

0:18:28.5 Andrew Stotz: Yeah, and I've been teaching more and more on corporate strategy, and I've identified what I call 11 Ways to Win, how great companies win. And so I've kind of tried to narrow it down to what I think are the core ways that companies win. And one of them is know-how. And Toyota is a good example.

0:18:40.2 John Dues: Yeah.

0:18:52.0 Andrew Stotz: And part of the question for know-how is, does this company have a method of acquiring knowledge? Because know-how can't just be, "We got a couple really smart guys," because when they leave, that competitive advantage is gone.

0:19:00.4 John Dues: Yeah.

0:19:08.8 Andrew Stotz: And that's where the process of how do we acquire knowledge, this idea of narrowing it down as you're talking about, yeah, exciting.

0:19:19.8 John Dues: Yeah, that is exciting. And the PDSA is a great, I think, technique to use to introduce people to continual improvement methods. Because I think after you've gone through it a few times, it becomes pretty intuitive pretty quickly. And it basically combines all the elements that Deming taught into a single sort of learning process. You get the psychology in there, the systems thinking is in there, understanding variation, obviously the theory of knowledge, the PDSA is core to that. So you get all four components right there with the PDSA.

0:19:55.1 Andrew Stotz: Well, shall we wrap this up? What do you want to leave people with?

0:20:13.3 John Dues: Yeah, I think one thing I was gonna say right before the wrap-up was one of the areas that we're trying to do this actually in is actually strategic planning, which is a broad area of an organization that's sort of comprehensive. But we've, I think, tried to incorporate that same sort of PDSA thinking into our strategic planning process. Because schools, like any organization, they're dynamic and the conditions are unpredictable, especially over an extended period of time. And so what we're thinking through is how do you have sort of this combination of a long-term constancy of purpose, because you have to have that, what's our long-term purpose, our long-term aim? But then how do we also continually adapt? And we've tried to build both of those things into our strategic plan. So I think that's sort of a unique approach, a unique way of thinking, even down to the fact that the strategic plan document itself, what we used to do is the culmination would be this color spiral-bound document that looked really, really nice when the consultant would hand it off to you at the end of the process. Now we're doing this all internally, and the strategic plan is in a Google Doc, and it is literally continually updated as we learn through the various tests that we're running over the three-year period. So it's more like a management system than a static document. So even a thing like a strategic plan, which of course there are components that we have locked in for the three-year period, these are some long-term priorities, but there are some annual and quarterly things that we're updating all the time based on what's actually happening on the ground and what the data is telling us. So you kind of have to sort of do a hybrid of both those things in certain areas of your organization, I think. And I think the most important thing is that we're creating a system that's capable of generating knowledge that we're learning over time, all while focused on a sort of clear long-term aim. I think that's kind of the key thing. So...

0:22:15.2 Andrew Stotz: Excellent. I don't think I can add anything to that. So 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 and jump into DemingNEXT 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, and that is that "people are entitled to joy in work."

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What if better management starts with seeing connections that were there all along? In this conversation, Balaji Reddie and Andrew Stotz unpack one of the most powerful and overlooked ideas in management: that everything is connected.

Drawing on Dr. W. Edwards Deming's systems thinking, he explains why the problems we face today were set in motion long before we noticed them, and why the solutions are rarely where we think to look. Along the way, a cup of coffee becomes a window into five years of invisible effort, hydrogen and oxygen defy everything we'd expect, and a classroom game reveals that cooperation isn't a soft ideal — it might just be human nature. Whether you run a team of two or a global organization, this episode will quietly shift the way you read a situation, ask a question, or respond to a problem. 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 Balaji Reddie, an educator and trainer in the teachings of Dr. Deming and quality management generally. The topic for today is connectedness, which will help you see things you normally would not see. Balaji, how are you?

0:00:30.7 Balaji Reddie: I'm good, I'm fine.

0:00:32.5 Andrew Stotz: Nice to connect with you.

0:00:34.1 Balaji Reddie: Yes, same here.

0:00:35.3 Andrew Stotz: Connectedness day.

0:00:36.5 Balaji Reddie: Yeah, connectedness, absolutely. Yeah, we chose this term very carefully, right?

0:00:42.6 Andrew Stotz: I suspect you have, given your precision.

[laughter]

0:00:47.4 Balaji Reddie: Yeah, to see things that you normally would not see, let me attribute this to Henry Neave, who said that he heard Deming say this during his last three or four seminars in England, right? In Britain rather. Yeah, I think it was mostly in England. And he said, when he heard him say that, he said, "I am not here to teach you anything new. I'm here to make you see things that you normally would not see." And I would like to just expand on that and say when you see things differently, obviously, you observe, you record different things. And when you record different things, you ask different questions. When you ask different questions, you get different answers. And when you get different answers, you draw different conclusions. When you draw different conclusions, you take different decisions. And when you take different decisions, you get different results. It's insanity to expect different results by asking the same questions every single time. So management is not so much about giving the right answers as much as it is about asking the correct questions. And I think Dr. Deming helps you do that. He helps you ask the correct questions.

0:02:02.2 Balaji Reddie: Now coming to the word connectedness. We spoke about the System of Profound Knowledge, a unified theory of leadership and management, where Dr. Deming brings together four sciences. And the first one he says about systems thinking, or what he called as appreciation for a system, appreciation for a fact that everything is systemic. There's nothing that happens in isolation, right? And the second one, of course, he said was understanding variation, then understanding theory of knowledge and understanding psychology. But he said, all four are equally important, et cetera. And then comes the, I won't say contradictory, but a chapter before Profound Knowledge on systems especially. So that's where I decided to use the word connectedness, that all these are connected. What did he mean by that? So I believe he wanted people to learn about connectedness and systems first.

0:03:01.6 Balaji Reddie: So let's dive right there. What did he always say about systems, or connectedness as we say here? And let's get into his definition for system. And he says that "a system is a network," right, "of interdependent components that work together to achieve the aim of the system." And then he says "every system must have an aim. Without an aim, there is no system." And very well articulated throughout this book which he wrote, he always began with aim of the chapter. Even in Out of the Crisis, he always started with aim of a chapter. So network of interdependent components. So let's just break it down, because the three important words are network, interdependent, and aim. And he says aim comes first because without the aim, there is no system.

0:04:00.6 Balaji Reddie: Right. And he goes on to tell us what the aim of a system should be. Okay. He says here that the recommended aim should be for everybody to gain. Now, in one of the paragraphs there, management's job, where he says should be to make it clear, the first step is clarification. Everyone in the organization must understand the aim and how to direct their efforts towards the aim, right? And everyone must understand, okay, this is important. The danger and loss to the whole organization from a team that seeks to become a selfish, independent profit center. Right. So he says here we need to give both, why we need to do what we need to do. And he says the aim precedes the system. Now, I would like to leave this discussion right here. We will cover this in our 14 Points, our session on the 14 Points, because I believe the word aim and purpose are, they go hand in hand. Aim gives us a direction and purpose gives us the reason why we exist, right? And so the direction of all the efforts, you can see the development. He says here, he gives some examples that the system must create something of value. In other words, results. The intended results along with consideration of recipients and of cost mold the aim of the system. So he said it should be something that makes life better for everyone.

0:05:39.8 Balaji Reddie: Now, he was talking about a man-made system here. Remember, he wrote this for organizations, but I think I mentioned this before that this can equally be applied to natural systems, if you want to really study them in detail. I remember talking to Barbara Lawton about this, and I said, "Natural systems, they do have an aim. It's just that we've not understood it." The purpose and aim of, in fact, that was the basis for my paper, which I delivered at the Deming Research Seminar in 2002. And the title of my paper was Deming and Ecology. And I was trying to put together the thoughts of the physicist Fritjof Capra, who wrote some wonderful books like The Tao of Physics, The Turning Point, The Web of Life, and The Hidden Connections. And The Systems View of Life is also one of the sub-books or booklets that he came out with. But these were his wonderful books. At the time, he had not yet written The Hidden Connections, right? So based on his three books that I had read up until then, of course, one was called Uncommon Wisdom, where he reproduced some of the interviews he had with some systems thinkers in the world, including people not from conventional systems thinking. For example, he also reproduced his interaction with the then Prime Minister or the ex-Prime Minister of India, Mrs. Indira Gandhi, and how he spent time with her, because he was over here in India for quite some time studying the language Sanskrit and studying the texts over here, because he learned about systems thinking even deeper.

0:07:25.1 Balaji Reddie: So over there, he wanted to, he raised a question, what is the purpose? So I wanted to use Dr. Deming's theories to understand the purpose of a natural system and what is the purpose of man [laughter] in this natural system. So that was my theory. And that's when this aim thing became more and more clear. And Barbara said, "No, you're right. There is an aim. It's just that we're trying to understand it. Without that, you won't have the system working so beautifully. There is something that is at work." Right. And he says here, management of a system. And then he says that a system includes the future. And now here's where, when you talk about system includes the future, he mentions Peter Senge in his book, if you know about The Fifth Discipline: The Art and Practice of the Learning Organization. And that's where this fantastic statement comes in because he says delayed effects. So although, Deming never used these words directly, but here I am putting among the first principles of systems thinking is that cause and effect are not closely related in time or space. Right. And that gives a lot of frightening conclusions, or inferences that you can draw from this. If I say that, by the way, that cause and effect are not closely related in time or space, and if I ask you what you understand by this statement, your first knee-jerk reaction would be what I do today, the consequences would be felt in another time at another place. Absolutely right. That's exactly what this means. But the converse is also true. What we get to see in front of our eyes, the origins are at another time and another place.

0:09:15.9 Balaji Reddie: So we only see the event, but systems thinking teaches us there are no events in this world. There are only eventualities. Now, this comes into play when you start doing a study, typically when people learn about quality, and then the first thing they learn is to, okay, identify a problem and try to solve it, right? And then they start asking the question, "Why did this happen?" And then you draw a fishbone diagram, which is, you know, one of the most popular tools. But the problem there is you need to arrange the causes logically and not categorically. And you also need to take into account that these causes are also related to each other. You can't isolate them. And the fact that, there could be an element of time over here, right, that this is a delayed effect that you're seeing. So the effect comes much later. And sometimes it could be weeks and months. So you have to take that into account, right? So the cause and effect are not true, which means then the next corollary from this statement is that seemingly disconnected events turn out to be connected. And so when you are studying something that's happening in front of your eyes, very quickly you ask the question, "What else happened a month ago, a week ago, that we seem to have missed? Are we missing something here?" So that's one of those things that we need to get into, right? We need to go backwards in time and not look at the localized stuff here. We need to look in space all around and try to figure out where and how we need to change things.

0:11:06.1 Andrew Stotz: It's also interesting to think about all the things that have to have happened for an outcome to occur today the way you want it, that is the right outcome.

0:11:19.8 Balaji Reddie: Yes.

0:11:21.4 Andrew Stotz: And a good example I use for that, and I was just talking two different times this week with my team, is coffee. Coffee is a really interesting one, because when you go to a coffee shop, they make you a cup of coffee, they give you a cup of coffee, but what you don't realize is that there was a farmer, took him five years to grow that tree. And then they had to pick it at the right time. You pick it at the wrong time, it goes wrong.

0:11:47.4 Balaji Reddie: Oh, yeah.

0:11:48.3 Andrew Stotz: They put it into some water. They leave it in too long, it's fermented. They leave it in too short, it doesn't, the shell doesn't come off. And then if they, once they've worked on it, if they have their grinders that are getting off the mucilage off of it, if they're too tight, well, then you're going to get a little slice off the top of the bean. And then when that goes to the roasting machine, that's going to burn right there because there's no protection in that area. But they got to get all of those things right all the way to that barista. And if that barista just basically doesn't check the water temperature, it's done.

0:12:29.5 Balaji Reddie: It's done. [laughter]

0:12:29.9 Andrew Stotz: You throw it away. And when you think about it, I have another lesson that I give to young people about capitalism, that how all of these decisions are happening all along the way. And when that happens, there's waste in the system. And that waste goes back all the way back to the effort of the farmer five years ago when they planted that tree.

0:12:51.8 Balaji Reddie: That's right.

0:12:52.3 Andrew Stotz: And so reducing waste is not only good for you and good for costs in general, but it has a respect for the process, a respect for the system.

0:13:04.0 Balaji Reddie: Yes. Connectedness. Reconnected. [laughter]

0:13:07.6 Andrew Stotz: Well, and the other thing I tell them is I say, and here you have a coffee bean coming from this country that's then being shipped to this country. They never met.

0:13:16.8 Balaji Reddie: Yeah.

0:13:17.1 Andrew Stotz: And that's capitalism. You trade. In fact, they may not speak the same language.

0:13:23.1 Balaji Reddie: Absolutely.

0:13:23.5 Andrew Stotz: Or they may even be enemies. They may hate each other.

0:13:26.9 Balaji Reddie: Yeah.

0:13:27.4 Andrew Stotz: And yet they trade.

0:13:29.5 Balaji Reddie: Yeah.

0:13:31.1 Andrew Stotz: And so it's a voluntary connectedness that happens through capitalism. Anyways.

0:13:37.2 Balaji Reddie: Yeah. The right quality and uniformity are foundations for commerce, prosperity, and peace. [laughter] That's Deming for you.

0:13:46.1 Andrew Stotz: Yeah.

0:13:46.3 Balaji Reddie: I think he chose that sentence so beautifully. It goes into the Deming Medal. He knew what he was talking about. So he was talking about systems, and I think profound knowledge came towards the end of his life, and rightly so. It came as a revelation, as a catharsis. I think he went through all of that, especially, I think it was between '88 and '89, if I'm not mistaken. Jaki Graham talks about this very, very funnily. She says that they were giving him pure oxygen and maybe that made his brain cells go alive. [laughter] And he could think so clearly. He was getting pure oxygen. And so his thought process...

0:14:31.0 Andrew Stotz: By the way, for the listeners out there, you may feel like I feel when I think about how Dr. Deming didn't really come out with the System of Profound Knowledge until he was, early '90s, let's say, '90s. You think to yourself, okay, I still have time to come up with my incredible insight on...

0:14:52.4 Balaji Reddie: Correct.

0:14:52.9 Andrew Stotz: Bringing together all my experience.

0:14:55.1 Balaji Reddie: Yeah. So because I think I shared this with you before that when you read Mary Walton's book and he says, "No, I don't think I'm ready to establish an institute," and he only did it one month before he passed. So I think by that time he was quite sure what he created was quite amazing, and it'll stand the test of time, right? And although, the title of the book is The New Economics for Industry, Government, Education, I believe it is industry, government, education, and healthcare. Because when he was in Japan, he said Japan must see itself as a system. And when he got the Deming Medal, that's what he said. Oh, sorry, when he got the Emperor's Medal, the Second Order of the Sacred Treasure. And he was talking to the Japanese Prime Minister. And he said, "You all must see yourselves as a system." And the four sectors of industry, government, education, and healthcare must work together. So he meant it as in the broadest sense of the term, right? And that's why this word system. So the first thing, of course, cause and effect are not closely related. Seemingly disconnected events turn out to be connected. The third important thing here in systems thinking is the reductionist thinking that we have.

0:16:12.0 Balaji Reddie: We believe the word analysis means dissection. And if you look deeply and read the book Mind and the World Order, what is the purpose of analysis? The purpose of analysis is not dissection. That's just the act of breaking a system down. But the purpose of analysis is interrelationships, establishing the interrelationships or understanding the connectedness. And I find it quite funny because people say analysis is dissection, and so they came up with a new term, really not necessary, synthesis, bringing it all together. There was no need for that term. You're not engaging in what, tautology? [laughter] You didn't need that. Analysis itself means dissecting and understanding relationships, right?

0:17:02.2 Andrew Stotz: Hmm.

0:17:03.3 Balaji Reddie: And so he said here, we have that reductionist thinking, but we forget that in a system, you have what are called synergistic relationships. You cannot understand a system by breaking it down into its components and studying the components separately and then believing that the components and their attributes and what they do gives the output of what we see. No, you could be completely wrong here. It's not what they do separately. Okay, it's a good thing to understand the components of a system and study them and maybe even establish connectedness, but sometimes what the results you see are quite contrary to what they could be giving separately. I'll give you an example here. Take the case of water. Water is composed of hydrogen and oxygen. You cannot study and draw conclusions about water by studying the attributes of hydrogen and oxygen separately. You'd be making a mistake, a grave error. Okay, let's do that. Hydrogen, a highly inflammable gas, catches fire like this. Oxygen feeds fire. But you put them together and they give you something that quenches fire. Hydrogen is not wet. Oxygen is not wet. But water is wet. [laughter] How do you explain this?

0:18:25.9 Balaji Reddie: All right. If you take the case of sugar, it's a hydrocarbon. Try tasting hydrogen. All right, try tasting carbon. Now put them together and see what you get. Now, can it not be then that you are studying a system and when you break things down and you're studying the components separately, you could be making the same error? It's not what they do separately, it's what they do together. It's the same with sections in a company, departments in a company, companies themselves. Today, we use this sophisticated term, supply chain, call it what you will. I love to use the word provider network. I don't like using the word supplier any longer. I like to use the word provider, because today we're living in a different world. We're getting activities done by someone else, and you can't say he's supplying me this activity. He's providing me this service, right? So provider is a better term to use than supplier. And it's no longer a chain. It's a network, right? It's more lateral. It's all over the place. It's not linear. You're doing a huge disservice by using the term supply chain, because it's not bringing out what exactly is happening right there.

0:19:38.3 Balaji Reddie: And today's supply chains or provider networks are globally dispersed. So you need to have something that connects them. You just said that, the farmer could be in a different country, speaking a different language, maybe he didn't even know where it is being used, and they could hate each other, but they have to work, [laughter] you need to work together. So there's some kind of connectedness that comes in once again. But here's where people make mistakes. So you're talking about synergistic relationships. So sometimes in a team, now here's where all that incentive pay and choosing employee of the month can destroy a system.

0:20:18.8 Balaji Reddie: It could have been the entire team that did well, and they did well because they worked as a team. And it was synergistic, where some components had to, I can't use the right word, but maybe had to underperform so that the system came out ahead. It's like the organs of the human body, right? That's an interconnected, interdependent system. You have a primary function of each of the organs, but there are many other functions we are still discovering, right? For example, if you take the case of ears, besides hearing, they're responsible for balance in our body, right? Eyes, besides sight, they are also responsible for balance in our body. If you try this yoga position, you know, there's a yoga, so to say, yeah, you stand on one leg. And then you lift one leg off the ground and put the ball of your heel on the knee, the other leg's knee. And then you hold your hands above your head to form like a namaste or a triangle. As long as your eyes are open, you stand upright. Shut your eyes, you fall. It's a system and we don't even realize it, right? So this is something we're still...

0:21:38.3 Andrew Stotz: You also fall in that posture when your teacher says, as mine did once, "Now you're in the position. Now raise your other leg."

[laughter]

0:21:54.5 Andrew Stotz: My yoga teacher didn't come yesterday, but I did my sessions every day. But I haven't been able to do that one yet.

0:22:03.6 Balaji Reddie: We had that joke in school. Why does the crane stand on one leg? [laughter] 'Cause if it raised the other leg, it'd fall. [laughter] So it continues standing on one leg. So yes. So you have the synergistic relationships which exist, all right? And it's so difficult then to establish these interrelationships. And sometimes they're visible, sometimes they're not, all right? And sometimes you get to see the results right up front. Sometimes you get to see them in time delay. And that is why Deming said continual improvement. It never stops. Continual learning. You can never say you have complete knowledge of a process or a system. You can never say that, right? And now comes the best part. When you say here that all these are interconnected and there's synergy and then there's cause and effect not closely related in time and space, the output of a system, that is why, is subject to variation. And that's why the study of variation becomes important, right?

0:23:16.2 Balaji Reddie: And when you draw a diagram saying, suppose you say this is a system and all the components are there and you draw the interconnectedness and you draw an arrow and you say, "Okay, you're getting the system is subject to variation," right? Can you with absolute certainty say that because here, because the funny thing is each of the component's performance is also subject to variation, right? So can you say that, this combination gave me this output? You can never say that. You can only say it's probable, might be somewhere here. And so I think Walter Shewhart's greatness was in recognizing that what is natural to a system and what is not natural. When do you start asking the question, "What do I know about this?" When you cannot predict. When you can predict with a certain amount of certainty that this is going to happen.

0:24:14.6 Balaji Reddie: It is between these two limits. Well, then that's when you say, "Okay, I think I know quite a bit about this, but I don't know much. I want to reduce those limits, because I want to be as certain as possible when I make a prediction." And that was what was continual learning. It was not so much about cost. It was as much as it had to do about understanding and predicting. I know what's going to happen next. To a certain extent, this will happen. This will happen, right? And that's where the understanding of variation comes in. Okay, and then he brought in the third, that in variation, you saw that there were what he called as random variation and assignable variation, or what Deming had common and special cause variation. Common causes belong to the system and special causes are alien to the system under study, right? And so say it's easier to identify the special causes because they tell you something is not right. And so you can say, "I know it happened." You can isolate and say, "This is the cause," right? It makes it easier for you then to isolate that, study it, but...

0:25:30.1 Andrew Stotz: I just had that happen this morning.

0:25:32.4 Balaji Reddie: Okay.

0:25:33.7 Andrew Stotz: I'll give you an example.

0:25:35.2 Balaji Reddie: Yeah, sure.

0:25:36.0 Andrew Stotz: I've been working with my accounting team and what we're trying to do is make sure we have on-time and accurate monthly financial statements. And I've chosen those words very, very carefully. And what I've done with the team is ask them, there's no pressure in this. All I'm asking you to do is pick a day that you think we will be able to have on-time and accurate monthly financial statements. And then they pick their days for each month to the end of the year, which pretty much certainty accounting is a repeating of a similar function. And so then as I was talking with them throughout that day, I said, "Why are these boxes piled up around here?" And they said, "Well, the room that we store them in is getting full." The paper, 'cause you have a regulation in Thailand, you have to have your accounting documents for up to six or eight years on premises in case the revenue department comes. So I said, "Well, show me that room." And we went to the room and it was an absolute mess. It's like people have been dumping boxes and papers in there for five years.

0:26:51.6 Balaji Reddie: Wow.

0:26:52.6 Andrew Stotz: And I said, "Okay. You got to clean up this room this month." They're like, "Ah, it's going to take us two months." I said, "Look, this is critical." And they agreed. And so they have now completed that task, but it consumed so much of their time to do that. And it looks beautiful now. But they're two days late on the on-time and accurate monthly financials. And if we were to look at that on a control chart, we would see that it's a big deviation from what they've been able to do. But that special cause is almost meaningless, just as meaningless as the random variation in the sense that this was just a simple situation where there was a trade-off, they made the trade-off, and it's an acceptable trade-off.

0:27:43.1 Balaji Reddie: Yeah, I'd like to put it this way. When you know why it has happened, it's not that harmful, right? As long as you can predict when we do something. It's the unpredictability that makes a special cause harmful. And that's why when I used the term that Deming's thinking was about reducing or eliminating harmful variation, that is things which get out of your hand and you usually don't know why it's happening. So once you get to know, I believe that this could be connected, yeah, that's a good place to start, right?

0:28:15.7 Andrew Stotz: Yeah. Now, someone that doesn't understand the situation and look back over time may not understand what that cause was, which I'm thinking that I want to develop kind of a note-taking system where we actually write down what was that so that we have a record and an understanding of it. But...

0:28:37.1 Balaji Reddie: Yeah. And so when you say here that there's so many, that complete knowledge is not possible, and that's where you start thinking that was Deming being a pessimist to say complete knowledge is not possible, unknown and unknowable. But no, he was just being realistic. But he did not leave us right there. He said the way you can make the unknown as known as possible is through the theory of knowledge. And that's how the whole thing is. It's beautifully done, what the theory of knowledge is. But he says here, very simply, one of those exercises which you see in the new edition of The New Economics on page 58. But if you go to the old edition, right? That's, I believe, on... Where would that be? Page 84. The example he gives there, effect, the plans and their effect, area A, B, and C, the matrix diagram, if you see that?

0:29:50.0 Andrew Stotz: Yeah.

0:29:50.5 Balaji Reddie: That he says was devised by Henry. And then, of course, he picked on that and put it into his book. I got a chance to actually work on this in the form of a game. And the game, I would break up the audience into four or five groups of five people each and then say, "You're department A, department B, department C," and then have a host of projects lined up for them. And I say, "Now you're going to be ranked and rated based on how you do as a department." And so they would choose those projects where only they were benefiting, right? And obviously, that's what you see in the first table. A chooses three projects, and B chooses two projects, and C chooses three projects. And you see the plus signs there indicating that it's for them, for them alone. And then they are exposed to the fact that, wait a minute, now we're going to give you some extra information. You chose these projects because they were good for you, but now we're going to tell you that these were bad for the others, right? And only one of them was good.

0:30:59.9 Balaji Reddie: And I say, "Okay, now here's this extra information you've been given. Now what are you going to do?" All right. And I said, "I'm giving you five minutes to... Because the company is going to do badly, right? And even though you get a good rating, but the company does badly and eventually the company might have to shut down. So what would you want to do now? I'm giving you five minutes to rectify this." You know, Andrew, not even five minutes was necessary. They would come back within two or three minutes and say, "Let's just choose those projects where everyone gains." And I was surprised the first time that happened. And that's why Deming said cooperation is the key and it is natural. It's just that we have brought in this competition thing. So competition is not natural. He says cooperation is natural. [laughter]

0:31:53.9 Andrew Stotz: And that, in Asia, and I can speak to Thailand, what I like to tell people here in Thailand for managers and people running business is that the core strength of Thai people is that they want to work together. So when you break them up and you put them into groups and then you incentivize them either by group or by individual, you destroy one of their core strengths.

0:32:28.7 Balaji Reddie: Right.

0:32:29.1 Andrew Stotz: That's not a core strength of American. A lot of Americans don't want to work together. They just want to do their own thing. Right? They've been trained to be independent and they don't want that hassle. But in Asia, particularly in Thailand, where we're struggling to bring more and more value, what's happened is the KPI mentality of divide and conquer really is damaging. And it brings me to another point or question that I wanted to mention, and that is about the natural... My mom has a saying, and it's "inch by inch, it's a cinch, yard by yard, it's hard." And what she was telling me was to break things down into manageable parts and then work on the next right part, and then you will start to make progress. And we have studied under Adam Smith and the concept of how division of labor brings value, can increase output. And so there's a whole side of things. And then we're incentivized as individuals, particularly in the West, but let's say generally that, if it's to be, it's going to be up to you and you got to make yourself performance and your department's performance. I don't care about the others. I care about what you're doing with yours.

0:32:54.6 Andrew Stotz: So there's an accountability aspect and it all comes together to give people the perception that, hey, I need to break this down into smaller parts. And so there's just this natural inclination to do that. And if you were to say to people, you can't break it down into individual parts, that also doesn't work. You have to be able to understand the different parts and their interconnectedness, going back to what you're saying.

0:34:26.8 Balaji Reddie: Yes.

0:34:27.1 Andrew Stotz: But there's a lot of different things that I'm saying here. But I think the thing that I'm saying is that the pressure on most people is to divide and conquer, to say, "I'm going to go and look at this department and you and your performance." And what Deming was saying was, you've got to look wider than that if you're really going to be successful. Tell me where I'm right or wrong or give me some guidance.

0:34:53.5 Balaji Reddie: Yeah. I mean, that's exactly how it is. And I just told you that when I saw this happen, it was like an eye-opener. And then what happened after that was, okay, there were some other projects which where we were not going to do well, but the company's going to come out ahead. So why don't we choose those? And that's exactly what you see in the table, that they choose certain projects where they themselves are... Now that's real optimization, right? That's getting the best for everyone.

0:35:23.4 Andrew Stotz: Yeah.

0:35:24.8 Balaji Reddie: And today it's become an overused and abused term. For anything they use the word optimize. I think Deming was way very clear about this 30 years ago when he came up with this idea. And he said it's for everybody to gain. It's not compromise, it's optimization. Right? So I, of course, have a different take on optimize and we'll see that next week when we come into four parts of profound knowledge. So I'd like to end here with talking about cooperation is the key and I think we realized why.

0:35:59.1 Andrew Stotz: Okay.

0:35:59.8 Balaji Reddie: Deming says it's not about each other, it's win-win. The system should... And he gives that lovely example in the same chapter, the last example, where he talks about the truck company, the two truckers who used to keep their establishment open. Alternately overnight so that both could gain and they would use each other's resources. He said, "I was surprised when I called the pickup truck and I saw that the truck was from his competitor. He sent his competitor's truck to pick up my car." That was a classic case of cooperation. So since he ends with that, he ends that chapter, I'd like to also speak about that. Cooperation is the key because we are dealing with something very complex, right? And none of us is as strong as all of us. It's not just about, like you said, because cause and effect are not closely related, it is imperative now that we need to work together. So that was with systems thinking. Cause and effect are not closely related. There exist synergistic relationships. Seemingly disconnected events turn out to be connected. And outputs are the result of a myriad of inputs. You can never say you know everything. So that was systems thinking for you as they apply to the elements of profound knowledge as well.

0:37:33.3 Andrew Stotz: Great.

0:37:33.7 Balaji Reddie: Next week, we'll get into profound knowledge.

0:37:37.1 Andrew Stotz: You know, I think my ending thought on this goes back to the concept of meditation.

0:37:45.4 Balaji Reddie: Okay.

0:37:45.9 Andrew Stotz: Concept of insight meditation or Vipassana or...

0:37:52.6 Balaji Reddie: Vipassana.

0:37:53.7 Andrew Stotz: Yeah. So part of what I understand about meditation is the idea of clearing our mind in this moment. It may also be just observing our mind and just observing all that's happening and going on, which is fine. And let's say that a meditation master may be able to clear their mind. But let's just say that what we're trying to do is come down to this instant, this moment. And I remember during COVID when a lot of pressures were on in my business and stuff, I used to meditate and focus on one saying, which is, "I'm okay right now at this moment."

0:38:36.7 Balaji Reddie: Right.

0:38:37.1 Andrew Stotz: And why this is interesting is because let's say this moment is time zero. What you've just explained is that there's about 50 million things before time zero that have been connected in one way or another that got you to time zero.

0:38:55.1 Balaji Reddie: Yes.

0:38:55.3 Andrew Stotz: And you also said that a system, as Deming said, is a system includes the future.

0:39:00.2 Balaji Reddie: Future.

0:39:01.2 Andrew Stotz: And that's going to be a function of all the different things that happen after time zero, the interconnected things. And it just made me realize, ah, so the value of meditation, I can see it even more now when I think about all the connections on both the future side and the past side. And so it just helped me think about it from that perspective, a little bit different, but anyways.

0:39:23.4 Balaji Reddie: Yep.

0:39:24.9 Andrew Stotz: So I just want to thank you for taking the time. And in fact, what I was thinking is that I need to do more interviews with our advisors and other board members of the Institute, including yourself, because they've all got a lot to say. And I've got some discussions going on with that right now. So I'm looking forward to that. And so I appreciate the discussion and the journey that you're taking us on. And just for the listeners out there, remember to go to deming.org and jump into DemingNEXT to continue your journey.

0:40:03.8 Balaji Reddie: Yes, absolutely.

0:40:05.3 Andrew Stotz: There's so much, so much to learn and explore. So I'm going to wrap it up there. 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," that includes you...

0:40:21.7 Balaji Reddie: Yes.

0:40:22.4 Andrew Stotz: Are entitled to joy in work.

View Details

"I'm not here to teach you anything new. I'm here to make you see things that you normally would not see." — Dr. W. Edwards Deming

In this episode, Deming educator Balaji Reddie reveals the practices that are hiding in plain sight within most organizations. Practices that feel normal. That get celebrated. And that quietly undermine everything you're building.

One example: arbitrary targets. An employee collected 2 million rupees in a single day — four times his target. He told no one and did nothing for four days. Because he knew his manager would just raise the bar. That single moment of silence cost the company a genuine breakthrough.

This is what Deming called a "faulty practice." And there are many more where that came from.

Host Andrew Stotz and Balaji dig into Chapter 2 of The New Economics — Deming's most overlooked chapter. They cover why ranking employees is built on a mathematical illusion. Why chasing quarterly results destroys long-term value. And why the best leaders, from Steve Jobs to Walt Disney, ignored the pressures that trap most organizations.

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 discussions with Balaji Reddie. He's an educator and a trainer in the teachings of Dr. Deming and quality management generally. And the topic for today is becoming aware of faulty practices. Take it away, Balaji.

0:00:26.0 Balaji Reddie: Good morning. Thank you, Andrew. So part three of our series, what we're looking at. So last time we met, we spoke about essentially Point number 14, because we outlaid his profound knowledge. And then I always said that he gave us a lot of clues as to what needed to be done. So I started out by reading some of the excerpts from the book, which we tend to ignore. And then he said, "Here's what I expect." So he expected leadership, a critical mass to be created, and then he gave attributes of a leader. So we listed 17 of those points, which we said principles of leadership. And now once you've created that critical mass and there's someone who's taken the lead and there are a bunch of leaders, maybe, so what do we do next? So when you start becoming aware that you are now in a prison, so to say, because that's what he said here, that they feel it's a fixture, and this is the way things are, this is how things always have been. So he says, "No, you need to understand that these things are wrong." Right? And you first need to become aware, and then we need to look at what needs to be done, perhaps. So he's given some suggestions, and you could always adapt and adopt this. So most of this would be taken from the book, The New Economics, chapter two, which he has titled as "The Heavy Losses." Now, remember, when he wrote this book, it was after the other book, Out of the Crisis, where he had listed his 14 Points. Yes, but he also listed diseases and obstacles. And people tend to ignore that.

0:02:18.9 Balaji Reddie: In fact, I remember having a chat with Bill Bellows on this, and I said, "Diseases and obstacles." And he said, "Obstacles?" I said, "Yes, he has listed 16 obstacles in Out of the Crisis." And he said, "Oh, wow." And he took his copy and he said, "Oh, yeah, you're right. There are 16 of them." And so sometimes you see things that you normally would not see. So when he wrote this, initially, I think many people thought that it was just an extension of those Diseases. But when you start looking deeper, you'll find that he became more elaborate in what he listed as the heavy losses. So he says here that these are things that you start observing and you say, "This is not normal." So the language that he's used is pretty, pretty clear. Present practice, so faulty practices. The present practice, and he says these are only reactive. You only need certain skills and not nearly any theory of management. Whereas when you opt to go to a better practice, you need a theory. So let's start with the very first faulty practice. And this stems from his 14 points too. He says, "Lack of constancy of purpose, short-term thinking, and emphasis on immediate results. Think in the present tense, no future tense." And then he becomes more elaborate and says, "Keep up the price of the company's stock and maintain dividends."

0:04:02.0 Balaji Reddie: Which, well, okay, it seems like you should not do that. No. He says here, you fail to optimize through time. Make this quarter look good, ship everything on hand at the end of the month or quarter, never mind its quality, mark it as shipped, show it as accounts receivable, and defer till the next quarter repairs, maintenance, and orders for material. Just a word here, in the new edition of The New Economics, there's been a spelling mistake there. So if anyone's listening, you can just correct it in the next edition that comes out. Instead of "defer till the next quarter," he's written "defer toll the next quarter." So we need to correct that in the next printing. Now he says here, a better practice...

0:04:52.1 Andrew Stotz: And before you go to there, can we just talk about this for a second?

0:04:56.1 Balaji Reddie: Sure.

0:04:57.8 Andrew Stotz: One of the things that, having been a financial analyst all my career, we get quarterly results from companies in the stock market. And in my own business, of course, I look at monthly results because we close the books every month. And it's definitely one... Donald Trump recently came up with the idea of telling companies not to report quarterly results. And I believe the Singapore Stock Exchange also came up with the idea of maybe we'll reduce the amount of reporting to maybe half-yearly, because we do have half-yearly reporting in some countries, right?

0:05:39.6 Balaji Reddie: Right.

0:05:40.9 Andrew Stotz: But having learned the teachings of Dr. Deming many years ago, long before I became a financial analyst, I always thought, I never really got this one because I thought, what an idiot you would be if you're running a company and all you could see was the market's demand for quarterly performance. And I've always admired those people, I think Jeff Bezos was one that really made it very explicit. "If you're here for quarterly performance, you're not gonna get it." And so I always have said to CEOs, having seen analysts and fund managers, I've visited, taken fund managers more than 1,000 times to meet with CEOs, and CEOs ask me, "What's your advice from seeing all that?" And I said, "Don't listen to this too much." Take it on board, what the discussions are about, but you're the CEO. Your job is to optimize the value of this business. And that means, that doesn't mean making quarterly numbers, manipulating things to make quarterly numbers. So part of what I've said to people is, "Get a backbone. Don't come and complain to me, 'Oh, yeah, but the pressure of the market's quarterly.' Come on." You know and I know that the job of a CEO is to maximize the value of the business, not the quarterly result. So anyways, that's my little pet peeve.

0:07:13.6 Balaji Reddie: Yeah. Yeah, that's right. And if you look at even Jobs, Steve Jobs, when he came back as Apple CEO, he had the nerve and the spine, like you said, to tell the board, "Don't judge me on this. It's gonna take time. And believe me," he said, "someday you will see results." Now, unfortunately, he was not there to see what he's created, but I think anyone in Apple can safely say that they're growing because of the foundation that he laid so long back, right? And I think that was one of the major reasons why he did not make Jonathan Ive as the CEO, because he wanted him to focus on the product and the customer rather than the quarterly results. And I don't think Apple ever played it by quarterly results.

0:08:04.9 Andrew Stotz: Yeah. And here's a good book called Competition Demystified by Bruce Greenwald. And there's a passage in here that's interesting because he published the book back in 2005, so it was long before Steve Jobs really made the company profitable. And he had basically gone through and explained the situation at that time as a strategist looking at the company. And what he said, it says, he just said that "Jobs had managed to restore operating margins, but Apple survived, it had hardly prospered, its future does not look bright." And I use this as an example in my strategy class to help people understand that when you're building strategy, you're thinking long term. And the ecosystem that Steve Jobs created, the value of that ecosystem didn't really truly appear until many years after he was working on it. So anyways.

0:09:06.6 Balaji Reddie: Yeah, so that's a classic case here.

0:09:11.1 Andrew Stotz: Let's keep going. You're on a roll.

0:09:14.5 Andrew Stotz: Oh, that's okay. So now better practice, he says, theory of management. Now see what he writes here. He says, "Adopt and publish the constancy of purpose." Now, that's one of the things that he also changed in his 14 points in the 1990 edition, which he never really published in a book but he gave as handouts in his seminars. Earlier on, it was "Create a constancy of purpose," but he says now, "Publish it." And it should be a proper statement, right? And he also said not just for the company, but for other organization. Now, he perhaps was envisioning or he already saw what is happening in the world today, that it's not one company against another, it's a family of companies against another family of companies, if I may say so. And these companies are globally dispersed, so there has to be something that binds them together, and that's the constancy of purpose. And purpose is why we exist, right?

0:10:13.4 Andrew Stotz: And I want to ask about this.

0:10:15.3 Balaji Reddie: Right.

0:10:16.2 Andrew Stotz: Professor, can I ask you about this?

0:10:18.4 Balaji Reddie: Sure. Right.

0:10:21.0 Andrew Stotz: Because if we go to Out of the Crisis, he has his section, and this for me is on page 24, but I don't know what edition I... Maybe I have an old edition, but it's the chapter "Principles for Transformation." He's gonna talk about the 14 Points, and I want to talk about the first point. And the first point is "Create constancy of purpose for improvement of product and service."

0:10:45.8 Balaji Reddie: Yeah. This is the old edition, 24.

0:10:48.6 Andrew Stotz: And the question that I have is that was he saying... Because now you've said in The New Economics he says constancy of purpose. He just states constancy of purpose. He doesn't say "for improvement of product and service." So my question to you is, is he saying that the constancy of purpose should be about improvement of product and service, or is he saying your constancy of purpose could be any purpose, but you just need a long-term purpose?

0:11:22.8 Balaji Reddie: Yeah. And he says that anything that help people to live better and have a market. That's on page 25. So whatever you do, your purpose should be to make life better, right?

0:11:40.2 Andrew Stotz: Right.

0:11:40.7 Balaji Reddie: And the product is just the manifestation of that. It's the outcome, correct? For example, if you talk about Walt Disney and his statement of purpose, he made a very telling statement, right? And how he came to write that down as a very fascinating tale. But he said, "I'll do anything to make a child smile. I'll do anything to make a child smile." So all that you see was aimed at the child, right? Whether it was the merchandise, whether it was the animated films, whether it was the actual non-animated films, if I may say so. And then, of course, coming out with Disneyland and then Disney World. So whatever he did was for the child. And then after he passed away, they lost that. I think they wanted to just sustain what they had attained, but there was nothing new coming out of Disney. And slowly people started encroaching on their turf, so to say. You had someone like a Steven Spielberg who made ET, and that really pulled the rug under their feet. And before they knew it, there was Goonies and Gremlins, and they were really crumbling. And they thought, "Let's join hands with the devil," and so they hired him to make a film. And that did very badly.

0:13:01.9 Balaji Reddie: We also know that Hook, which was supposed to be on Peter Pan, et cetera. And then they were in a crisis and said, "What do we do now?" And most of the top people were just washing their hands of everything. They were the employees who were left, many of them who had worked with Disney, and they said, Sony was very keen to buy them out. And they said, "We need to keep them out, and how do we do that? The only way we can do that is to make a comeback and let's make another film. And we've not been doing anything original, so let's go back to the drawing board." But they said, "We need something to guide us." And that's when they discovered what Walt Disney had written, "I'll do anything to make a child smile." And they said, "What a shame. We forgot the child. We hired the best, but we didn't do anything for the child." And they added one more sentence there. "Anything to make a child smile, and there's a child in every adult." That's how they created Honey, I Shrunk the Kids. Unique idea.

0:14:03.0 Andrew Stotz: Right.

0:14:03.9 Balaji Reddie: You can see it's a statement of purpose that brought them back.

0:14:07.6 Andrew Stotz: Okay. That helps me to understand that what he's talking about, according to what you're saying, is come up with your purpose.

0:14:14.4 Balaji Reddie: That's right.

0:14:15.3 Andrew Stotz: Okay.

0:14:15.6 Balaji Reddie: And he of course also added the word "aim" later on, which is that direction, because he says there, "Where do we wish to be? And then by what method?" So you should know whatever you do should go in the right direction. So that's the first faulty practice, and also giving us a theory of what we need to do. So go back and try to rediscover your purpose if you don't have it, or maybe just come out with something and see what really ignites you, what really drives you forward. And he's given some bullet points here. No number of successes in the short-term problems will ensure long-term. Short-term solutions have long-term effects. So that's that statement where he said cause and effect are not closely related in time and space. Of course, management must work on short-term problems as they turn up, but it's fatal to work exclusively on short-term problems. So he tells us that there has to be some place where you need to stop and start focusing on the big picture. So that's the very first faulty practice. Now the next one is a real, real bucket of water on your face. "Present practice, ranking people, salesmen, divisions. Reward at the top, punishment at the bottom. The so-called merit system." At the top and bottom. It's an artificial creation because no matter what scale of measurement you use, there will be an average measure and there will be 50% above the average and 50% below the average. That's exactly what the word average means. So making these stupid claims that this is an above-average person or a below-average person does not really mean anything.

0:16:07.8 Andrew Stotz: Because what you're really doing is rewarding or punishing common cause variation?

0:16:14.9 Balaji Reddie: Well, that's one. But when you're artificially creating something which doesn't even exist, right? You're saying top half, bottom half. In fact, that funny statement where there's a headlines in England, this happened in England, which said studies have shown, and they spent half a million pounds on carrying out the study, that 50% of the children in England are below average nutrition level. You don't need to spend half a million pounds to figure that one out. That's the law of averages. And using that to judge people is crazy on some arbitrary scale that you've invented. And he goes on to...

0:17:06.7 Andrew Stotz: So the first question I asked was, is this just a frivolous or tampering with common cause variation? Or the other question that... Or is this part of psychology and the idea of demoralizing people through this type of behavior? Where does that fall in from the System of Profound Knowledge, let's say? Is it variation, psychology, or is it both?

0:17:34.5 Balaji Reddie: It's a bit of both.

0:17:36.4 Andrew Stotz: Yeah.

0:17:36.6 Balaji Reddie: Because if you talk about understanding psychology, what he meant, I think I used the word empathy, that we need to be empathetic. When you're talking about employees, what do you mean by empathy there? Well, we need to understand their learning processes. Each one of us has a learning process, but we have a different kind of a learning process. And then when you understand the learning process of a person and then put that person in the right job, you'll have to stop that person from working. That's joy in work. He says that when you... And that takes time. And the ranking system or the merit rating system is an excuse for not having understood or making an effort to understand your employee. You're becoming lazy. You put the onus on them when actually the onus is on you. You have to find out what makes that person tick, if I may use the word resonates. What resonates with that person, right? And then put that person in the right job. He's been saying this from the beginning. It's fascinating that he said this in Japan when he was teaching the control charting there.

0:18:42.3 Balaji Reddie: He said if you draw the control chart for performance of a worker and then it's all within limits for a long period of time, despite all the training and all the lessons that he or she has been given, then he said, "I think it's time to move that person out from that job and give them some other job." Because they've reached statistical control. Any amount of effort put in will not result in a better output. You're gonna get the same thing. And if you want something else, then you need to shift them or maybe give them some better job, whatever it is. So he always had this, that we need to use these in tandem. And in any case, it's a System of Profound Knowledge, so all the four sciences work together, right? And if you want to ask me, when a person understands their purpose, I'm extending the statement of purpose here to the person, when a person understands why they're doing something, they always do the job better. So that statement of purpose needs to come in here too. Instead of ranking them, sit down with them and have a heart-to-heart with each one of them. This is back again to the 17 principles we discussed last time, that you have to spend some time with them.

0:19:57.9 Andrew Stotz: Okay.

0:19:58.3 Balaji Reddie: And understand what makes them tick. So he says "the better practice is to abolish the merit system and manage the company as a system. The function of every component, every division under good management contributes towards optimization of the system. That is, it's not compromise, it's optimize." We don't say either-or, it's and. And he says "differences there will always be, but the question is, what do the differences mean?" So that's where you can use control charting to figure that one out. And I told you how I did this in my company and I got the HR lady to finally say, "I think we need to remove performance appraisal." Performance management, yes, of course you need to have a system in place because I need to know where I am. Even when we later on come to the 14 Points, one of his most, according to me, most misunderstood points is point number three, cease dependence on inspection. But that doesn't mean you stop inspecting.

0:21:02.8 Balaji Reddie: And we will read that when we come to that as to what he meant. So you need to know what is happening, definitely. For that reason, you do need to have some system in place, but you cannot judge a person based on that. And so he says here that "ranking is a farce. Apparent performance is actually attributable mostly to the system." And a simple equation, that's my favorite, that's what we discussed last night too, Tim Higgins, when he said x + (x * y) = 8. And you've gotta solve this equation when you don't even know both. Both are unknowns. Then how can you figure out what is x and what is y? So the other factor, the Pygmalion effect, right? I think for those who are not conversant with the Pygmalion effect, the play by George Bernard Shaw, Pygmalion, which was made into the movie My Fair Lady, where he picks up a lady from the streets who was a flower seller, a flower lady, a flower girl. And he accepts the challenge of teaching her how to speak good English rather than what they call as Cockney English. And then it's like an experiment and a challenge and he starts teaching her. And then to test himself, he takes her to a party. And there she has one drink too many and she gets a little bit tipsy and then goes back to her old way of speaking, which really shocks the guests in the party.

0:22:41.5 Balaji Reddie: And he's very upset when they come back home and he said, "You'll always be a flower girl." And then she makes a statement, "Treat me like a flower girl, I'll behave like a flower girl. Treat me like a lady, I'll behave like a lady." And that's the Pygmalion effect. You start treating people that they're failures and then they have to live up to that reputation, right? So they continue being failures. You treat them well, so the Pygmalion effect comes into play. And of course, he talks about his red beads. That's an excellent experiment in bringing out many of his principles. Though he did not design it originally for this, that came much later. In fact, in Japan when he carried out the red bead experiment, it was purely for sampling. He invented that experiment for sampling. And he said that he broke down barriers and made things so simple for people. I think the lessons of management came much later at Hewlett-Packard where while he was explaining sampling and then when he went to what he was trying to teach them about management, someone jumped up, I forget the name of the person, who said, "But this is... So this is what you're trying to teach us with that sampling experiment." And then he suddenly realized he could use this. And of course, the so-called, and then raises in pay, et cetera. Yeah, whom to raise? Everybody within the system, blah, blah, blah.

0:24:13.4 Balaji Reddie: So I think last time I explained this about the roles, responsibilities and objectives, right? I borrowed this idea from another company in India where I saw this happen. When we removed the performance appraisal system, we came out with something which was quite different. We used to sit down with the people and explain to them what we intend to do as a company for the next four or five years and what their role is and what we expect them to... How do we expect them to contribute? But then came the next question. We turned around to them, "What do you expect from us as a company to help you grow in this direction or anything else?" And so they would give us certain expectations. And so we negotiated, came down and wrote things down. And then came the best part. We said we're gonna meet not once a year, but every month and as often as possible to discuss. That's why I loved it when the Deming Institute came out and were doing it, I'm sure they're doing it even now, in the two and a half day, from "me" to "we". So when we met every month, we used to ask the question, "How are we doing?" Not "What have you done?" "How are we doing?"

0:25:33.0 Balaji Reddie: And so when I heard that, I wanted to tell Bill Bellows I've been doing this since 2004. And when I heard the "me" to "we" thing, which was around 2017, '18, I think I saw that happen and I was, "Wow. All right." So thinking on the same lines. So the faulty practice, all right, when he talks about this, the second one and what needs to be done. Yeah, he gives some other advice also that if you're faced with problems, cut the dividend, cut it out. And that's, of course, when you're having hardships in the company. So he's given us a set of steps there too. And he says finally, if necessary, cut pay, but nobody loses a job. So, of course, those are extreme cases that we need to do, but he gives us advice what needs to be done. Now, the third faulty practice is incentive pay, pay based on performance. And I think that this has a lot to do with the arbitrary numerical targets that are set, right? And then, "If you do this, I'll give you that." So he says that the performance of an individual cannot be measured except maybe on a long term.

0:27:04.7 Balaji Reddie: He said reward for a good performance may be the same as reward to the weatherman for a pleasant day. He's got no control over it. And he says, "Abolish this incentive pay and pay based on performance. Give everyone a chance to take pride." I think you were talking about this last week too when we said about these arbitrary targets that lead to all of this, where somebody made a statement to me that, "The targets were a distraction to me from what my actual job was. My job is this. The target is just distracting me from my job." So very often people feel that way, right? And pay for performance, "I'm supposed to do this," right? And he gives an example. The top salesman may be a heavy loss to the company by overselling, selling to a customer a bigger copying machine than he, the customer, needs, right? And selling a bigger or fancy insurance policy than the customer can handle, promising immediate delivery, promising unauthorized discounts, et cetera, et cetera, right? It's the same thing, when one of my students was doing this, his internship project, he found that there was excessive inventories that were stocked up at an automotive company, at the authorized service stations and the sellers, and they had excessive stocks of components and that's why the sales had dipped over a period of time.

0:28:42.3 Balaji Reddie: Why were they holding so much of stock? Because the previous purchasing guy, or rather sorry, the marketing guy, forced these guys to buy extra, saying that, "I'll give you a discount," and things like that. And so they overstocked themselves to a point where they did not need anything because he had to meet a target. So he pushed it down their throat without really understanding what repercussions this would have. All right? And the problem with that pay for performance, it sounds good. Get what you pay for, pay what you get for. But the funny thing is you'll get only that much. Another case which I can tell you is how this student of mine was... His job during the internship was to collect receivables from the shops that were buying stuff. This was in the appliances, home appliances industry. And after they trained him to do that, how to call up the retail outlets and outstanding statements and then go collect the money, and his target was 500,000 rupees a day. 500,000 rupees a day collection. Now, one day he collected 2 million. My question is, do you think he reported it? Well, he did. And for the next four days he did nothing.

0:30:22.6 Balaji Reddie: Now, there's also a reason why he didn't report it. Because when you don't have Profound Knowledge, if he reported that he collected 2 million, immediately the manager would have said, "From tomorrow, your target is 2.1 million." Now, this is what happens when you don't understand variation. If you drew a control chart and you said that, "Okay, the average is so much, so I'm telling him to collect 500,000," and he's collected 2 million, he's done something special. As a manager, I'd call him and ask him, "Could you please tell me what exactly you did? Because you've not done what I taught you, otherwise you wouldn't have gone to this extent." Sometimes you don't know why you've been successful. The theory comes from the outside, right? So a manager with Profound Knowledge would sit down and have a talk and say, "Okay, you did this right. Now try doing this again." And he goes the next day and collects 2 million again, and then the next day and 2 million again. And then he comes and says, "Okay, boss, I'm ready for a new target. Raise the bar." Now what have you done? You've improved the system.

0:31:24.9 Andrew Stotz: We have new knowledge.

0:31:26.3 Balaji Reddie: We have new knowledge. And that's why, answering the same question what you asked me, it is a bit of both. So you need to understand that it's beyond... And we need to help the people understand why they've been successful. So better practice, here you go, is "abolish incentive pay, give everyone a chance to take pride." So when they start realizing, like this child, this student of mine, why he hit 2 million rupees that day, it would have been great. Instead, he just kept quiet. So see, you've lost an opportunity to really learn, to find a leverage point in a process which can take the process to another level. The next one he talks about is failure to manage the organization as a system. Instead, components are individual profit centers, everybody loses, right? And I think we have these separate business units, and he says here that they don't optimize for the aim of the whole organization. I think this is again, if you look at his Points number 9, 10, and 11, he very clearly mentions these because one thing leads to another, right? Break down the company into silos, each one focuses on what they're doing, and there's no communication, and they don't know their understanding the relationship of their work with the work of others.

0:32:54.9 Balaji Reddie: They don't even talk to each other. And he says here that "enlarge the boundaries of the system," but that comes when you understand your companies much better. And the system must include the future. Definitely, you start with theory. If this is what's happening in the world right now, this is how the world is going to change. Now he says, encourage communication. Now this part, a lot to do with Point number eight, drive out fear, where he says make physical arrangements for informal dialogue between the various components of the company regardless of level of position. That's a very telling statement. Encourage continual learning and advancement. Some companies have formed groups for comradeship in athletics, et cetera, all right, which provided facilitation for study groups. The company can well afford to underwrite the cost of social gatherings in outside locations. I can give you my personal example here. One of my college friends, and this was the time in the '90s when she came to America to do her Master's and then eventually started working in Ford, right? She did her Masters in applied electronics and she joined there as a design engineer. And that time, the world was a different place, and we Indians from India, we tend to be very, very conservative about a lot of things. We don't want to step on people's toes. So when someone says something, we, instead of opposing it, we keep our mouth shut.

0:34:32.6 Balaji Reddie: And so in meetings when they used to discuss and somebody brought up something and she said, "No, I think there's a problem," and they said, "What's the problem?" and she decided not to say anything, but eventually it turned out that she was right. And so the team members had a grouse against her that she doesn't share and she doesn't talk, she doesn't open up. Now what had happened was the HR lady in Ford, when she'd given her resume, when she asked about her hobbies and activities, one of the things she wrote there was dancing. Now she was learning a form of classical dancing here in India and obviously she could not continue pursue that in the United States at that time. So when that lady read dancing, she said, "You know, Ford sponsors ballroom dancing classes. So would you like to go for that?" So she said, "Oh wait, I learned a classical dance form in India. This has nothing to do with this." So she said, "Well, dancing is dancing. Why don't you just go? And we're paying for it, so why don't you go for it?" So she said, "I just enrolled in that class." Now, the first day when she went for the class, I don't know if you've seen the movie Shall We Dance, Andrew, but Richard Gere and Jennifer Lopez, and if you remember the first day, they tell you to hold your partner's hands and you're blindfolded and you follow your partner. It's about trusting the person in front, right? So she said when she went through that and she had to hold a stranger's hands, the whole barrier was broken.

0:36:08.2 Balaji Reddie: And she said, "I don't know, I had a different kind of a feeling when I came back to work." And she started trusting a lot more and it had an impact. Now, who would have dreamt that a ballroom dancing class could have changed my friend like this? That's Point number 13. You just have a theory that this will make that person a better person. You don't really do things to get a return on investment, but it works. So I think this is a beautiful paragraph by Deming where he says that there are ways and means of doing it and give it a shot. You have nothing to lose, right? Now he comes to the next one. Now this one, I think a lot has been spoken about this, MBO. But very clearly, he says "MBO as practiced." He does not blame Peter Drucker at all. In fact, he says Peter Drucker was clear that the objectives are interdependent and they're not mutually exclusive. He says, "Unfortunately, efforts of the various components do not add up. There is interdependence. Thus, the purchasing people may accomplish saving of 10% over the last year and in doing so raise the costs of manufacture and impair quality.

0:37:31.3 Balaji Reddie: They may take advantage of high-volume discount and thus build up inventory, which will hamper flexibility and responsiveness to meet unforeseen changes in the business." Peter Drucker was clear on this point. It's unfortunate that many people do not bother to read his work. In fact, let me just make a note that it was even Juran who said this, that having these kind of disjointed objectives can lead to a lot of problems. He said, of course, you can't be devoid. And that's why I think Deming has been very clear in chapter one of The New Economics where he says there are some things called as facts, right? Facts of life. So giving an arbitrary target is not a fact of life. He says here how he needs to improve that. So setting numerical goals, arbitrary numerical goals, I would say, right? Work on a method for improvement of a process. By what method? I think even Brian Joiner says that when you set this arbitrary goal. And now he goes on to explain that even further where setting a goal beyond the means of the process, they either distort the systems, distort the data, or distort both. Then management by results.

0:38:56.7 Balaji Reddie: Okay. Take immediate action on any fault, defect, complaint, action on the last data point. I think this again brings to the fore the understanding of variation where you need to look and ask questions and where you say, "Okay, I know this normally happens." So understand and improve the processes that produce that. Understand the distinction between common causes and special causes and understand the kind of action to take. So common causes, most of the time you need management to take action. There's a change in system. Yeah, there are some times when it is when a person close to the process can take that decision. Likewise, a special cause can be taken care of by the person closest to the process, but sometimes you need management action too. So that will always be the case, but it's rare, right? And so he talks about Sears, Roebuck, et cetera, and working on improvement of the process. The other one was buying materials and services at the lowest bid, right? Which he goes back to his Point number four, where he says here that it does not take brains to work with the cheapest. It takes brains to choose the best. Right?

0:40:23.4 Balaji Reddie: And estimating the total cost of materials and services, purchase price. Don't go by purchase price alone. And if I know right, Andrew, this was a point he was working on till the end of his life. You see the lady who was actually looking into the publication, the second edition of The New Economics, Elizabeth DiLorenzo. I was in touch with her because in my early days of my introduction to the Deming world, because I was quoting a lot from Out of the Crisis and The New Economics, and she was working for MIT Center for Advanced Engineering Study that used to originally publish his books. And she told me a very funny tale of how she was expecting her twins and at the same time she had to release this book. So the joke at MIT was, "What's gonna come out first, the twins or the book?" And since Deming was no more, she had to release that very quickly. So March '94 is when she released the book, and she said her twins were born some weeks later. So they are as old as this book. Now, she was telling me that till the end, the one aspect of what he was working on was, if you see the notes in the appendix and purchase of supplies and service. So continuing purchase of supplies and services, World 1, World 2, World 3 and World 4. He made this so clear. I think nobody has made it clearer. Okay, World 3, sorry, there's no World 4. So he talks about this and he talks about how practical you need to be about this, right?

0:42:18.7 Andrew Stotz: Yeah, and I underlined something in there from a long time ago that said, "Sudden jump to a single supplier is inadvisable."

0:42:28.8 Balaji Reddie: Right. He says there's a method of doing that.

0:42:32.5 Andrew Stotz: Yep.

0:42:33.2 Balaji Reddie: And I teach that method, by the way, where you start with the product, then go on to the process, and then go on to the system. And that takes time. You just can't get up one fine morning and say, "You're my sole supplier." It doesn't happen that way. It takes a lot of effort and a lot of doing, right? The next faulty practice is delegate quality to someone else or some group. And this is, I remember my interaction with Dr. Juran on this, right? I had just received my certificate for ISO 9000, I became a lead assessor, and I quite liked the new standard that had come out at that time in the year 2000 because it had a lot of Deming flavor to it. Plan-Do-Study-Act had come in and things like that. I was quite happy, the definitions and this. I said, "It's better than what it was." It's not, they had a long way to go, no doubt about it, but I said at least they've broken away from the defense mode where they copied the whole document from, right? And when he asked me the question that, "What's the status of quality in India?" and I said, "Well, earlier on it was a lot of standards-oriented and ISO 9000 played a huge role in that," and he just raised his hand as to tell me to stop and he said, "I am very disappointed with the ISO." And then he made this statement, "The ISO 9000 is a standard for mediocrity splendidly marketed by the ISO." And I just stared at him. I said, "What?" because I had just received my certificate, so obviously I was very touchy about it. And I said, "Dr. Juran, a little harsh." He said, "I've just begun."

0:44:26.4 Andrew Stotz: Yeah. And the problem is, is there's a lot of money to be made from it and it's an ingrained system.

0:44:30.5 Balaji Reddie: Yeah. So I just asked him, why would you say that? They made a lot of changes. He said, "Yes, but two things are missing." And one of them, he said, is something about leadership. Go back and read it. And then I went and read the standard again, and I realized what he was trying to say here. There was a lot of work that they were delegating to a person called the management representative, and he says, "Sorry, you can't delegate this to someone else. It begins at the top." Ed Deming also said that. He said, "It begins at the top. Only they can do this."

0:45:10.5 Andrew Stotz: I have a little story on that.

0:45:13.5 Balaji Reddie: Sure, sure, sure.

0:45:14.8 Andrew Stotz: In my coffee business, maybe 15 or 20 years ago, we got a big, big customer, and overall, they were a very good customer. But they picked us over all of our competitors. And then they told us, "Okay, in a month we're gonna come and inspect your factory, and if you get below 80%, then you're not gonna be our supplier." And so we said, "Well, I study with Deming, and I know quality, and we've never had a problem with quality ever." And my business partner, Dale, is very focused on the principles of quality. So they came, we were quite proud, and then by the end of the day, they had 600 questions they went through. And by the end of the day, we were like, "Yeah, what's our score?" And they said, "65. You're fired." They said, "You have 10 weeks or five weeks to fix these top 10 things." And then at that moment, we had a revelation, which is, oh, to them, paper is quality. And what I've always said, what I learned from that, was that it wasn't a big deal. We did the paperwork that they asked for, and then we got the job. And they were a customer for 16 years and a very good customer. But what we learned, one of the things I say, is that we had the heart of quality. They asked us for the paperwork that they thought represented quality. That's not such a big deal. But could you imagine having been trained that paperwork is quality, and then you have to try to develop the heart of quality? Very difficult.

0:47:01.9 Balaji Reddie: Very difficult. And now I come to this picture that he's drawn on page 37 of The New Economics, the old edition. I think the new one, let me just see what that is. Okay, that's on page 27. So he says here that unique processes that produce figures, all these principles have been applied to just 3%. Now, I have my own version of this particular picture that he's put here. Imagine an X and a Y axis, all right? And on the X axis, you can put down measures that are known. Close to the origin, you can write "known", and then as it goes away from that, "unknown", right? And then you have on the Y axis "measurable", and as you go up, "unmeasurable". So because he said that most of the things are unknown and unknowable, and among the known, you have only some fraction of those which are measurable. So the 3% deal with those factors or those parameters which are known and measurable. There are many parameters, he says 97%, which are unknown and unmeasurable, but you still need to manage them.

0:48:26.5 Balaji Reddie: And that's where he gives us a lot of advice that comes after this. Okay, when after this diagram, beautiful paragraphs in his book. "Beware of common sense," he says. And of course, he gives the example of Gallery Furniture, salary instead of commissions. Also goals, aims, hopes, facts of life, futility of a numerical goal. And a picture may help, where he talks about the goal being beyond the capability of a system. And will the goal be achieved? And he says redefinition of terms and distortion, et cetera. Gives a lot of examples there. And then he goes on to give even more examples. Okay, if you say merit pay, et cetera. Need to manage by results, wrong. And the last bit, the note where he says America 2000 was originally put together in December 1989 at the educational summit between the President and the governors of the 50 states. These goals were published in February 1990 by the White House, later incorporated into America 2000. This job may be an example of an enlargement of a committee. We shall learn in chapter four, he says, that the enlargement of a committee is not a way to acquire profound knowledge. How could they know?

0:49:57.7 Andrew Stotz: Yeah, and so what's happened to education since then in America?

0:50:00.6 Balaji Reddie: Oh, no comments. And we in India are almost going the same way. Of course, in some cases they've gone back to the roots saying that, no, we need to get back to our original way of educating people, right? We had this thing of exposing a child to all the different kinds of subjects, right? Like you have history, geography, languages, mathematics, science, just about everything. But the idea was to very quickly identify which child is resonating with what, because we need these different kind of people to work together. Some people are good at memorizing, some people are good at analyzing, some people are good at imagination. And so you throw all this out and then you cast the net and then you say the job of the teacher is to identify, okay, you're good at this, you're good at this. The problem is when you start saying if you're good at this, you are intelligent, and if you're not good at this, you're not. There are different kinds of intelligence. I would say the problem is more with the teachers and not with the system.

0:51:16.5 Andrew Stotz: We should wrap up at this point.

0:51:18.9 Balaji Reddie: Absolutely.

0:51:19.6 Andrew Stotz: How would you summarize what you want people to take away from this discussion?

0:51:24.0 Balaji Reddie: Sure. Go back and read chapter two in The New Economics. Dr. Deming has very clearly shown us why we need to do what we need to do. You're gonna be seeing things differently. As he used to say towards the end of his life, "I'm not here to teach you anything new. I'm here to make you see things that you normally would not see." And now he's just shown us what we thought was normal in the working of a company is actually detrimental to the running of a company over the long term. So my advice is go back, read this. You could watch some of the videos of the Deming Institute, especially on the 14 Points. We will be covering the 14 points later, but I would say that this is a real elaboration of his Diseases and he's given us what needs to be done. Not just pointing out what was wrong, but he tells us what needs to be done. That's why the heavy losses form an integral part of the preamble to actually what is the next step that you're taking your foot off the brake, so to say, trying to identify things that are pulling your company back.

0:52:37.8 Andrew Stotz: Well, Balaji, I want to thank you for this discussion. And recently I have been reading chapter two and I saw a lot of new stuff. It's funny how you just keep rereading. And then today you've just made me realize I gotta go back and read that chapter two because he does really the way he did the tables. I kind of forgot all about that. When I went back to it about three or four weeks ago, I was like, oh, this is really great. I kind of forgot about it. And now as you go through it, it's the tables was what I was focused on, but now I'm also seeing the text in between that you're highlighting that's valuable. So for everyone out there, grab your book, go to New Economics, go to chapter two. It's just gold. It's gold.

0:53:30.7 Balaji Reddie: It's gold.

0:53:31.0 Andrew Stotz: So, and for listeners out there, remember to go to deming.org and jump into DemingNEXT to continue your journey.

0:53:37.7 Balaji Reddie: Absolutely. Absolutely.

0:53:39.9 Andrew Stotz: Yep. And 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."

0:53:52.2 Balaji Reddie: Absolutely.

View Details

What does great leadership actually look like? Can you make a difference even if you're in the middle of the hierarchy?

"If you think you're too small, you've not spent the night under a bedsheet with a mosquito."

In this episode, educator and Deming practitioner Balaji Reddie explains why W. Edwards Deming was far more practical about leadership than many people realize. Drawing on both The New Economics and Out of the Crisis, Balaji shares stories and examples that bring Deming's 17 principles of leadership to life.

From creating trust and joy in work to understanding variation, coaching people, and improving systems, this conversation challenges conventional management thinking and offers a clear path toward transformation.

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 Balaji Reddie, who is an educator and trainer in the teachings of Dr. Deming and quality management generally. And the topic for today is Principles of Leadership. Balaji, take it away.

0:00:27.9 Balaji Reddie: Good morning. Thank you so much, Andrew. We had left our last session with that, we'd be dealing with this. And of course, Dr. Deming gave us the outline of Profound Knowledge and he gave us 14 points. He also gave us the deadly diseases and the 16 Obstacles. So people often talk about the diseases, but very often they forget the obstacles. And there are 16 of them which he highlighted for us. And if you think that they're outdated, they're as relevant as they ever were. So you need to keep revisiting those. I think if you start working on removing the obstacles, it's like you're taking your foot off the brake rather than pressing on the accelerator.

0:01:11.3 Balaji Reddie: So you're removing the things that actually stop you before you actually take things forward. But nevertheless, we start with point number 14 where he says, take action to complete, to make the transformation. And he says that there should be a critical mass of people that you need to educate and train and get them on the same page as you are. I'm gonna quote Hazel Cannon here, who is current president of the British Deming Forum. And she talks about the time when she was very young and she attended the Deming four-day seminar, I think in Birmingham. And at the end of those four days, she was overwhelmed as you normally are when you hear how the man speak. And he spoke... He wanted you to make drastic changes. It's not just tinkering here and there.

0:02:08.2 Balaji Reddie: And so she went up to him and she said, "I'm really taken up by what you just said." And then she made a statement, "I'm too small to make these changes in my organization." I believe she worked as a lab assistant in a chemical manufacturing company. They used to make chemicals for cosmetics. So she said, "I'm too small." And Deming just interrupted her and said, "Never think you're too small. If you think you're too small, you've not spent the night under a bedsheet with a mosquito." So make a change where you are and take it from there. So I would like to now quote Dr. Deming from Out of the Crisis. This is Plan for Action: Take action to accomplish the transformation. So he writes there, there are three points and then I'll come to what he writes below that.

0:03:01.8 Balaji Reddie: So he says, "Management in authority will struggle over every one of the above 13 points, the deadly diseases, and the obstacles. They will agree on their meaning and on the direction to take. They will agree to carry out the new philosophy. Management in authority will take pride in their adoption of the new philosophy and in their new responsibilities. They will have courage to break with tradition, even to the point of exile among their peers." So he talks about courage. He talks about courage of conviction. And then he says, "Management in authority will explain by seminars and other means." So I think he leaves it to people of the ways and means. And now today there are a lot of means of doing that. DemingNEXT is one of them. And he says, "To the critical mass of people in the company why change is necessary and that the change will involve everybody."

0:04:00.9 Balaji Reddie: Now he writes something very interesting. He says, "This whole movement may be instituted and carried out by middle management speaking with one voice." So he gave instructions. Why are people saying that he did not tell us what to do? It is just that he expected maybe a lot. And now let's get to that middle management and what he expected. He says here... Let's see here. I'm coming to chapter four now in The New Economics where he says, "A System of Profound Knowledge. The aim of this chapter: the prevailing style of management must undergo transformation." So we just heard that, that what we need to do. And he says, "A system cannot understand itself. The transformation requires a view from the outside. The aim of this chapter is to provide an outside view, a lens that I call a System of Profound Knowledge.

0:04:59.7 Balaji Reddie: It provides a map of theory by which to understand the organizations that we work in." Then he says, "The first step is transformation of the individual. This transformation is discontinuous. It comes from understanding the System of Profound Knowledge." Then he says that "the individual, once transformed, will set an example." So setting an example, I believe, is doing the right thing under adverse circumstances, when you stick to your principles despite the fact that there is an easier way out. As they say, choosing a path between good and bad is easy, you choose good. But good and better, you need to make the right choice. And that needs profound knowledge. "So be a good listener," he says, "but will not compromise. Continually teach other people and help people pull away from their current practice and beliefs and move to the new philosophy without a feeling of guilt about the past."

0:06:02.7 Balaji Reddie: So he explains to us what was needed here, right? And he says this is what we actually need to do. Now I'd like to, I mean, I'll be referring to a document. I don't know how we're gonna get this to people, but for the Principles of Leadership. All right, I think I'll have to send this over to you later, but we will do that. So in the Principles of Leadership, just come to them. I am quoting again from both Out of the Crisis and The New Economics. So you will find this there when he speaks about what needs to be done. Modern Principles of Leadership. And he says, "The modern principles of leadership will replace the annual performance review. The first step in a company will be to provide education in leadership." So that would be introducing people to profound knowledge from what we just heard. Then he said, "The annual performance review may then be abolished." Of course, that will take time. "Leadership will take its place, and this is what Western management should have been doing all along."

0:07:12.6 Balaji Reddie: So he says, "The annual performance review sneaked in and became popular because it does not require anyone to face the problems of people. It is easier to rate them, focus on the outcome. What Western industry needs is methods that will improve the outcome." And he says, "Suggestions follow." So first, institute... The first principle. "Institute education in leadership: the obligations, the principles, and methods." And so I think introduction to the System of Profound Knowledge will help. And then after profound knowledge has been sort of brought to the notice of... Of bringing to the notice of the people then you get into perhaps teaching them about 14 Points, et cetera.

0:07:57.8 Balaji Reddie: Comes the second principle. He says, "Ensure more careful selection of people in the first place." So choosing the people, he says again, now here's where it requires you to understand the purpose of what you're doing, purpose of your organization, purpose of the people you're looking out for and making this change. Because when you know your purpose, you know the aim, then you can choose people in the right way. And I believe he said this somewhere, it's a combination of education, training, skills, and experience. So we need to combine these four factors in choosing the right people. Then he says, after selection of the people, ensure better training and education. So we fine-tune all of their... He says a complete background. He said their aspirations, their goals.

0:08:54.2 Balaji Reddie: I kind of borrowed this idea from a company here in India where they had this thing called roles, responsibilities, and objectives. And they used to meet once in a month, but once in a year they used to decide. So the top management, the HR, would sit down with each and every employee and say that, "In this calendar year, this is what we intend to do and this is what we expect from you." And in turn, they used to ask the employee, "What do you expect from us? Because this is what we want from you." And then the employee had a chance of putting forth what he or she wanted, the management, what help they needed. And I think this is where we have to be... It's a give and take. And they didn't just meet once a year; every month they would meet and the question was, "How are we doing?" not "What have you done?"

0:09:51.1 Balaji Reddie: So I think it wasn't a traditional appraisal. If there was any appraisal, it was appraising what top management were doing or intended to do and not so much the employee. I thought that was a good move. So that's what we need to do here: better training and education. Principle number four states: "A manager understands and conveys to his people the meaning of a system. He explains the aims of the system. He teaches his people to understand how the work of the group supports these aims." Now, here's where, you know, when you talk about, say, hiring people in the first place, when you bring in new employees, I believe that there should be a special session by people inside the company who have stayed the longest, who served the company the longest, especially during their bad days. Because the employees need to know what really happened and how the company survived and how we were resilient, we came back despite all the problems that we had.

0:11:00.7 Balaji Reddie: And the historical perspective, especially if there's someone who's in touch with the founding members, that would be a great boon. I know nowadays we talk about the older companies, obviously none of the founders are there, but if there is such a person, exchanging those ideas with the young employees would definitely make a difference. So they would then understand the purpose, the aims, and how your work supports these aims. I think it's the best way to do that. But what I see right now in companies and I'm being very specific about this, because today when new employees join the company, they have an orientation, they have onboarding, as they call it, but that's done by a rookie, someone who's just joined the company and is just making...

0:11:46.8 Andrew Stotz: [0:11:46.8] Following a checklist?

0:11:48.1 Balaji Reddie: Exactly. Like a PowerPoint presentation. They don't talk about the history of the company. And I think there has to be an emotional connect before there is a logical or an intellectual connect. That emotional connect, I think, then makes you feel that pride and you feel good about coming to work and you say, "Oh, I did not know." So I believe this fourth principle is important in that sense, in the way to do that. Now, he says that... Principle five says he helps...

0:12:19.7 Andrew Stotz: By the way, do you know what chapter are you in?

0:12:23.9 Balaji Reddie: Oh, I have combined.

0:12:27.9 Andrew Stotz: Okay.

0:12:29.4 Balaji Reddie: I took some of the text... Okay. If you want to see here, this is management of people, all right? In that chapter. So I've taken... There are 14 principles there, management of people. In the new edition of The New Economics. It appears...

0:12:48.2 Andrew Stotz: So chapter six.

0:12:50.2 Balaji Reddie: Chapter six, yeah. That's chapter six...

0:12:51.8 Andrew Stotz: Yep.

0:12:52.6 Balaji Reddie: All right. And he talks about pictorial effect of transformation, and then he talks about management of people, role of a manager of people. So there were 14 there, but in Out of the Crisis, the first three which were there, he did not include here.

0:13:10.0 Andrew Stotz: Okay. I just just asked...

0:13:11.0 Balaji Reddie: So I just included those. Yeah. No, so that when people read the book, they could read it clearly, right? So, yeah. So he says now principle number five, which in Economics is principle number two or three, right? He says "he helps his people to see themselves as components in a system, to work in cooperation with preceding stages and following stages toward optimization of the efforts of all stages towards achievement of the aim." So we want optimization, not compromise. So you need to sit together. Just if I were to ask a simple question to you, Andrew, and without thinking, if I were to try to answer this question... Okay. I presume you know how to make a cup of tea.

0:13:58.7 Andrew Stotz: Yes.

0:14:00.1 Balaji Reddie: So what is the first step?

0:14:02.7 Andrew Stotz: For me, boil water.

0:14:04.6 Balaji Reddie: Boil water. And what if I say that's not the first step?

0:14:12.0 Andrew Stotz: Well, first of all, I think you probably have more experience with tea than I do, but I have more experience with espresso, probably. But anyways, go ahead and tell me.

0:14:20.9 Balaji Reddie: Okay. The first question is, whom am I making a cup of tea for? So what I just tried to convey is it's not natural to think about the customer. And so the first step is, for whom is the cup of tea? If it's the person...

0:14:30.8 Andrew Stotz: Grandma.

0:14:40.7 Balaji Reddie: That's right. If she's diabetic, then you would not need sugar. So you gather the ingredients accordingly. If he wants black tea, you don't take milk, right? And that's the point he's trying to say here. When you look at different stages, every every person has a customer. So the first question is, who is my customer?

0:15:07.1 Andrew Stotz: Right.

0:15:07.4 Balaji Reddie: And that part of profound knowledge, understanding psychology, I mentioned this last time, is empathy. The word empathy captures this. So you go to the next process as, "Whom am I doing this work for?" and sit down with that person and say, "What do you expect from me? How may I help you?" And that's what decides what you're gonna do. So this this fifth principle here, that he helps his people see themselves as components, I think this is important. The next process is your immediate customer, and the rest of them are customers in a very oblique sense. But what you do is critical to the next person in line, right? So you always spend extra time with that person and of course the other people down the line who your work is gonna be impacting over a period of time, right? But these are the... This is the first step you find out. So who's my customer? So that's principle five.

0:16:09.0 Balaji Reddie: Principle number six: now this comes under psychology again, that a manager of people understands that people are different from each other. He tries to create for everybody interest and challenge and joy in work. Now, if you look at the theory of knowledge, what exactly did he give us when he brought that component of profound knowledge into play? He says that theory is a statement that conveys knowledge by relating cause to effect. So I repeat, theory is a statement which conveys knowledge by relating some cause to some effect. It fits without fail all the observations of the past and helps us predict the future with the risk of being wrong.

0:17:04.7 Balaji Reddie: So I'm gonna repeat this whole statement again. Theory is a statement which conveys knowledge. How? By relating some cause to some effect. It fits without fail all the observations of the past and helps us predict the future with the risk of being wrong. So no amount of examples can establish a theory, and even one example can lead to either abandonment of the theory or modification of the theory. That's what he kept saying. Now, how does this work? So he says it's a system of learning, and all of us have this built in, right? Now, he came from the school of Clarence Irving Lewis, Mind and the World-Order. And if you read that book, Lewis says all knowledge is a priori, it's based on what you already know.

0:18:00.9 Balaji Reddie: For example, let me take this example here. Now, suppose I were to start describing the road to my house. Now, you've not been here, but if I start saying that the road bends towards the left and then there is a command you get to see, now you start constructing a picture in your head based on what you have already seen. It's not the same. That's your theory, right? And then when you actually visit, you say, "Oh, it's the difference between theory and what I actually saw," and then you change your theory. So theory is... It's natural. All of us think naturally like this. And that's why he says here that people are different from one another and we need to celebrate those differences. All of us are born with the system of learning, but not all of us learn the same way.

0:18:49.8 Balaji Reddie: There are some who learn by watching, there are some who learn by doing, there's some who learn by reading, there's some who learn by writing. For some people, one word is enough. You utter a word and they say, "I got it." And for some people, you have to repeat the statement maybe 10 times, 11 times, and then the 12th time you repeat it, they say, "Okay, I got it." Now, is that wrong? We're just different, right? And that's why he says here that we need to understand the learning process of people. And when you understand the learning process of a person and then put that person in the right job, you'll have to stop that person from working. That was his definition of joy in work. People enjoy their work when they realize it resonates with them.

0:19:40.4 Balaji Reddie: And how does that resonance come in? When you under... And because this is so difficult to do, we just throw the responsibility on them by saying, "Here's the target." So the target actually distracts them when actually you should be working on understanding their learning process. So it's a lot of hard work. And sometimes people are motivated enough to discover it themselves, which is great, but we need to create that atmosphere for them to enjoy their work. So interest, challenge, et cetera, he tries to optimize. Now, here's the key. This is beautiful. He tries to optimize family background, education, skills, hopes, and abilities of everyone.

0:20:21.7 Balaji Reddie: So this is not ranking people, very clear. It is instead recognition of differences between people and an attempt to put everybody in a position for development. I think this is one of the most important principles in getting things done. When I teach this to the HR students in my college, I keep saying that I don't think you should call this science as human resource management, because the definition of a resource is obtain it, shape it, use it, and throw it away. We don't wanna do that. I think we should change the title of that department to Department of Learning, because that's what exactly this is all about, and it's learning in both ways where you are trying to understand their process of learning and in effect, you're trying to understand how the company is going to be learning.

0:21:17.0 Balaji Reddie: So you put this in... So this principle, he says, combine all of these things: family background, education, hopes, I love that word. Because if you see one of the things that people talk about, customer satisfaction, I think Deming was the only person who said customers should be happy. Not just satisfied, happier, right? Now comes the next principle. "He is an unceasing learner." So you can never say, "I know it all." Unceasing learner, he encourages his people to study. And I think this fits Dr. Deming himself. He made no excuses to learn. "May I not learn," he would keep repeating that. And I remember Bill Cooper getting irritated and said, "The last time I met you, you said this, and now you're saying this. I got that on tape." He said, "Well, you got this on tape now." He said that, "I do, I learn. And as I learn," he said, "that could have been under different circumstances that I said that, but I'm saying this."

0:22:22.4 Balaji Reddie: And so you keep learning. And he encourages his people to study. The word is study. And he provides, when possible and feasible, seminars and courses for advancement of learning, encourages continued education in college or university for people that are so inclined. So I think this bit is in many places getting to be a part of the systems in most companies. I've seen that happen now, which is a good sign. But it doesn't end there, there are a lot of other things to do. This was the Principle 7 in the list of 17. Now comes Principle 8, and this is so difficult to look at. He says "he's a coach and a counsel, not a judge." You judge people, they shut up.

0:23:15.4 Balaji Reddie: So he says coach and counsel. When they need help, guide them, show them the path. Sometimes maybe you need some help in doing that, well, go ahead. So that was principle number eight. Principle number nine says "he understands a stable system. He understands the interaction between people and the circumstances that they work in. He understands that the performance of anyone that can learn a skill will come to a stable state." Now, this is amazing. He said this way back in the 1950s when he was in Japan teaching them the control chart, where he took one example where he says that further training to the worker and the process was still in control. And he says, "I think he's reached the limit of his learning. He perhaps needs to be taken to another process or maybe given something more challenging so that we can develop the learning process."

0:24:17.6 Balaji Reddie: So he was speaking about this way back in the 1950s, which today you can say comes under understanding psychology through variation. And he says, upon which furthest the lessons will not bring improvement of performance, and a manager of people knows that in this stable state, it is distracting to tell the worker about a mistake, because he says you'll actually then demotivate someone. So these three principles...

0:24:44.1 Andrew Stotz: Because a mistake may be just normal variation, or are you saying... Okay. Yep. Okay.

0:24:51.0 Balaji Reddie: Yeah. I mean, it could be anything, right? But if you are highlighting that when he's already reached a stable state, it could just work in a detrimental way, the opposite direction.

0:25:05.4 Andrew Stotz: Ultimately you've reached your goal. A steady state is fantastic.

0:25:07.4 Balaji Reddie: A steady state. And then now you say if you want him to... Anything better here, I think you need to move him out from there, since maybe he needs to be given something either more challenging or whatever it is. But use of psychology and variation together. If people are saying that he spoke about this in the 1990s, he actually spoke about this in the 1950s in Japan. And I have proof. If you go and check Elementary Principles of the Statistical Control of Quality, the series of lectures that he gave in Japan, you will see this in one of the chapters, very clearly stating what needs to be done.

0:25:47.9 Balaji Reddie: Now we come to the next principle, which is... I don't know how to explain this, but it's amazing. He says that "the leader has three sources of power: authority of office, knowledge, and personality and persuasive power, tact." So authority, that's your title, knowledge, and personality. Now, personality, persuasive power, and tact is more of a personal thing. It is something that is an attribute. Authority is the title you're given. I think the only thing that you can really work on is your knowledge. And he says that a successful manager of people develops knowledge and personality and persuasive power, does not rely on authority of office. He nevertheless has obligation to use his authority, a source of power, for him to bring changes. He says that maybe some drastic changes to equipment, to materials, to methods, and to reduce variation.

0:26:55.0 Balaji Reddie: So he attributes this to a gentleman, Dr. Robert Klekamp, or Klekamp, I don't know how to pronounce that. So he says, "He in authority, but lacking knowledge or personality, must depend on his formal power. He unconsciously fills a void in his qualifications by making it clear to everybody that he's in position of authority, his will be done." So I think he said if things needed to be done and if he's being guided the right way, then he has to bring his authority into power. I think this brings me to one of the interactions he had with... Was it James McDonald at Ford? When he made him stand up and asked him, "What is your job?" And he said, "I'm vice president, manufacturing," and he sat down. Deming said, "Stand up. That's your title, not your job." And then for the next half an hour, he grilled him on what his job was. And after half an hour, he still didn't get an answer. He said, "You don't know what your job is. Do you think other people in the company know what their jobs are? I think you're running a mess here."

0:28:02.2 Balaji Reddie: So Jim McDonald, instead of feeling insulted, took it in a very different way. Though he said, "I did feel that I wanted to resign and just walk out of there," but he said, "I knew this man was onto something." And that kind of thing of authority of office, I think he did not like if people used it for the wrong reason, but he wanted them to develop knowledge, personality. Personality, well, I think again, on the soft side, persuasive power tact. Not all of us have that, but I think we are living in a knowledge economy, so knowledge would be the key here. And he also says that if you're in a position of authority, use this to get the right work done.

0:28:47.3 Balaji Reddie: Then next he says "he will study the results with the aim to improve his performance as a manager of people." So when the system is not getting what it's supposed to do, then he does not put the blame on the people. He says, "I have... I may be going wrong somewhere." I'd like to share an example of my father in Japan. My father was in Japan in 1964, I said this last time. And he was on this Asian Overseas Technical Scholarship, AOTS. And they run these courses even today. They have three-month, six-month, nine-month, and one-year courses. And from what I remember my father telling me, it's integrated in the sense, I think he was there for six months. So during the morning sessions, they used to have classroom training, sitting in a classroom. And in the afternoon, post-lunch, they would go and work in a company, and that was like their intern. And so it was a combination of theory and practice taking place almost every day.

0:30:02.4 Balaji Reddie: Now, what happened there was on the first day... And that's where he started working with Showa Electric, and said they were called the interns. So on the first day, he was taken to the company and was introduced to his supervisor. The supervisor took him on the shop floor and introduced him to the team that he would be working with. And then, while he was leaving, that supervisor said, "I just need to tell you this, that we also form what is called as a quality circle." And this was... The quality circle movement started in 1962, so '64, the quality circle. And so my father said, "I don't know what you're talking about." And he said, "Well, this is something new. So would you like to be a part of it?" Because quality circle is voluntary, not mandatory. They make you a part of the quality, so if you want to be a part of the quality circle. It's not imposed on you.

0:31:05.0 Balaji Reddie: So my father said, "I need to talk to my teacher, my sensei, at the class." He said, "Yeah. You can talk to him." So he went back to the class the next day in the morning, he asked the teacher, the sensei, that this is what they said. He said, "Oh, it's a very good system. You can become a member of the quality circle." So on the second day, he said, "Yes, I'll be a member of the quality circle." "Great," he said. Now, on the third day, his actual work started. Now, they used to make television screens, CRO, et cetera. And one of the steps there was soldering. They had to solder. And the soldering was the dip soldering. You had to take the printed circuit board and dip it into the solder bath and take it out. Of course you were to... There was a technique.

0:31:52.8 Balaji Reddie: And so his job was that. His first job that he was assigned is to do soldering on these PCBs. And so the supervisor himself sat with my father and demonstrated 10 to 15 times how to do it. Then he told my father, "Now you do it." And then he was guiding him, and he made him make around 10 pieces until he said, "Okay. Now you're getting it right." Okay. Now he said the ground rules. If by any chance you press it down too hard or you keep it too long because of the extreme heat, there will be a superficial crack on the PCB. And that would not be something that affects the customer right away, but over a period of time, it can result in the board cracking and the radio not working. So when you see a superficial crack, you're supposed to pull the cord. There was a cord there. And when you pull the cord, the supervisor will come and help you. Fine.

0:32:56.1 Balaji Reddie: Now my father started doing his work, and his fifth or sixth piece developed a crack. Now, he said, I don't want to sound derogatory, but the Indian in me caught up. Should I report this? What would he think? I hardly left this man alone, and his fifth piece is a rejected piece. And he said, I did not want to pull that cord. But then... He said that, he told me, "Please pull the cord," I decided, let me go ahead and pull it. So when he pulled the cord, a red lamp went on there, and there's a big siren that went on. And the supervisor came running and turned off the siren and turned off that lamp and said, "What happened?" My father showed him the crack. So he said, "Okay, no problem." He put it aside. He demonstrated to my father 10 times again how to do it. And then he made him do it 10 times till he said, "Ah, see, you did this." And he got it right. Now he said, "Let's continue production."

0:33:58.8 Balaji Reddie: Now they went away and now my father got it right. After an hour or so, or maybe two hours, they had their tea break. And they were sitting around a table. Now, this was the quality circle. So the supervisor got up and started speaking in Japanese. Now, this was my father's third day there, so obviously he did not understand what was going on. The only thing he knew that they were referring to him because they could not pronounce his name properly. So instead of Reddie, he was being called Leddie. So Leddie-san, Leddie-san, Leddie-san. So my father said, "I knew he was talking about me." And he said, "I felt so ashamed, I was looking down at my cup of tea rather than looking up." And then when I looked up, he said, all of them were looking at him in admiration and the thumbs up sign. And he was wondering what the hell just happened.

0:34:51.0 Balaji Reddie: And at the end of it, when that supervisor stopped speaking, they all clapped. They clapped. And as they dispersed, each one came and held his hand and they went away. And now my father told the supervisor, "What did you tell them? Did you tell them I made a mistake?" He says, "Yes, yes, I did tell them that." He said, "Then why are they complimenting me? Why are they... Why did they clap? Why did they clap for me? Why are they shaking my hands?" He says, "They're shaking your hand, they're clapping, and they're complimenting because you pulled the cord." So he said, "What do you mean?" He says, "Well, we have a saying here, here in Japan, if after explaining to a person 10 times how to do something, if the person still makes a mistake, then there's something wrong in the way I explained it." So this bit over here is he will study results with the aim to improve his performance as a manager. Don't blame the other guy. What am I doing wrong?

0:35:54.0 Andrew Stotz: You hired him, you train him.

0:35:56.4 Balaji Reddie: Yep. So when Jack Welch used to say, "Sack the bottom 10% of the people every year," and he called them dead wood, well, I would say when you hired them, they weren't dead. You killed them. So that was principle number 11. Now principle number 12 is where he combined both variation and psychology together. He said "he will try to discover who, if anybody, is outside the system, in need of special help." So he draws a normal curve. I'll pass on this document to you so you could share it along with the podcast. And he says here that people belong to the system. These are people who need not be ranked. But a person outside the system on the lower side needs special help. People outside the system on the higher side, well, we need to take the system to that level to improve the system.

0:37:08.4 Balaji Reddie: So he talks about that. He says this can be accomplished with some simple calculations. If there be an individual with 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%. He's clean outside that distribution. So he's trying to use the understanding of variation in a very different sense to understanding people. And he says that we try to reduce that variation in performance between people. That's the job of the system. So this is principle 11 and 12.

0:37:51.0 Balaji Reddie: Now you come to principle 13: "he creates trust." And that creates trust, I would believe, it's a two-way process. And he creates an environment that encourages freedom and innovation. That is the environment where people are unafraid to make mistakes. Because we learned that theory is not the opposite of practice; it's a guide to better practice. And we need all of us working together. And that trust, I think, has got a very funny meaning in my country. I keep joking about this. In India, trust is we will lie a little less to each other. But that's not what this is. We need to be straight honest with each other. And honest is you can only do that by example. Like what happened in my case. I remember when we had installed the ERP system in our company, and there are interlocks. And I remember there was a backlogged order. And I knew that because when we did not deliver the order on time, I negotiated with the customer and I got the delivery date postponed.

0:39:08.0 Balaji Reddie: Now I was trying to test the ERP that month. So I said, let me see if the ERP can capture this because it should show it as a backlogged order. But it showed it as an order that was to be delivered on the new adjusted date. And I said, "How did that happen?" Because that should not have changed. And so I called my assistant. I said, "This should be in backlog. Why is it showing me as a spillover order?" And he said, "No, I changed the date." I said, "Why did you do that?" And he said, "No, because the finance guy will get angry with me." And I said, "That is my problem." I said, "When I told you you're not supposed to change that date..." And I removed his administrative powers in changing the date so that he could not change the date in the system.

0:40:01.7 Balaji Reddie: I removed his powers. And he apologized profusely and said, "Please let me." I said, "No." So till the day I resigned, I kept it. I said, "You're not gonna be doing this because it's not a question..." I said... If I had succumbed to that Andrew, they would have lost my trust. They would have thought that, "Oh, Balaji just talks. He doesn't walk the talk." I said, "No, you're not supposed to do this. We are trying to go by a system. Let's go by the system." So I think you can only create trust through example, through demonstration, if I may say so, and especially under adverse circumstances that you need to demonstrate this.

0:40:46.1 Balaji Reddie: Principle number 14: he says "he does not expect perfection." I think that even he said it in principle of variation. Principle 15: he says "he listens and learns without passing judgment on him that he listens to." This is an extension of the previous points. Principle number 16: 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, their hopes, and their fears. This meeting will be spontaneous and not planned ahead. So there should be no bias, like an audit.

0:41:41.5 Andrew Stotz: Right.

0:41:42.2 Balaji Reddie: And lastly, principle number 17: "he understands the benefits of cooperation and the losses from competition between people and between groups." So these were the 17 principles of leadership, the beginning of transformation. I think there can be nothing more to do than this. He was so clear in what he wanted us to do. I wonder why people say that there was no method.

0:42:16.5 Andrew Stotz: Yeah. He definitely outlined a lot of stuff there. One of the questions I had for you on that list is, what do you say to people that say that he's kind of a dreamer? The idea that you can sit down with your employees and have this time and everybody's so busy and just talk about your fears and your goals and all that stuff where we live in this age of, we've gotta get the result, we've gotta be focused. How do you respond to that?

0:42:51.1 Balaji Reddie: Well, I say give this a try. All right? You've done it your way, right? You've done it... Let's just forget about it, and you're seeing what's happening. You want a change, you gotta do something different. So why don't you go by what this man is saying? And if you say that, you know, a dreamer or whatever, well, I'd like to quote John Lennon here: "You may say I'm a dreamer, but I'm not the only one."

0:43:16.8 Andrew Stotz: Yep. Yep. Yep. And what do you say for people that feel that you gotta have these targets and goals and KPIs to get the most out of people? And when we think about what Deming's talking about, we're talking about this intrinsic motivation. But it's scary for people to think. It's a lot more comfortable to have these goals and structures than what you could argue is a little bit more unstructured. And how do we balance that? And obviously Deming wasn't saying don't have goals.

0:44:02.1 Balaji Reddie: Yeah, yeah. I think Henry addresses this very well in his 12-day course where he has a specific section on goals, et cetera. And he talks about how Deming said that there are some things called facts of life. Facts of life is, okay, we need to turn out, we need to generate so much of revenue this year because we need to pay for all our salaries and blah, blah, blah, blah, blah, and then we need to have some money for the future. So we need to make so much of money this year. Now that's not a goal, that's a fact of life. But when you are bringing that number out and showing that to everyone, please also indicate to them how we intend to achieve that. Don't just leave it to them and say we need to do this.

0:44:54.4 Balaji Reddie: Okay. I'll give an example here. I don't want to sound... It may sound a little self-serving, but okay, take it in the right spirit. I remember when we had our first strategic meeting at my company, and my boss... Okay, was... He said... I think 20 of us sitting in the room and he said, "Last year, our target was 30 million and we're getting there and we're doing a great job. So this year we're gonna aim for 45 million." Now when he said that, I just put my hand up and he said, "Yes." So I said, "Why 45 million?" And he just stared me down and he looked up at everyone and said, "That's it. Meeting dismissed." He just walked out. These are those days when you had... You know the OHP? You know the overhead transparencies, the projector?

0:45:56.9 Andrew Stotz: Oh, yeah. Overhead transparencies, yep.

0:45:58.8 Balaji Reddie: Yeah. So he had the transparencies, and he just took them and walked out. And all the guys came to me, "Are you mad? You're questioning the owner of the company? Are you nuts?" And I was thinking, "God, what did I say wrong?" And then we started going back to our cabins, and when I sat down at my desk, the phone rang, and it was boss. And he just uttered one word, "Come." So when I was walking towards his cabin, I was thinking to myself, "Nice company, nice friends." And then I knocked on the door, and he said, "Yeah, yeah. Come in." He said, "Sit down." And then he said, "Shut the door." He said, "What the hell were you trying to do today? Are you trying to mock me?" I said, "Please, why would I want to mock you, boss? I wouldn't want to mock you. I just wanted to know why 45 million."

0:46:52.9 Balaji Reddie: He says, "All right." And so he took out what is called the blue book, where we have the yearbook, what happened in our country in the last one year. We have these books that get written, right? So he said, "Look, this is growth in our country in industry. This is our... Sector that we are in, and we are in the organized sector in this industry. And the year-on-year growth for the last five years has been this, and this year the expected growth is so much. And can I expect at least 3 or 4% of that growth?" I said, "Of course, why not?" He said, "That, son, is 45 million." So I said, "Why didn't you tell me this? That's all I wanted to know." He said, "You think these asses..." He was referring to my other colleagues... "Would understand?" I said, "Boss, if I can understand, they can understand. It's one and the same." "Okay. Let's meet tomorrow."

0:47:52.1 Balaji Reddie: So the next day we met again. And he said, "Yesterday, when I uttered 45 million, this genius asked me why, and so I'm gonna tell you why." And he went on to explain. After he finished explaining, my sales guy... Sorry, my marketing guy got up and he said, "I have something to share." "Okay, please come forward." He put the transparency. And he had listed there the top 10 selling items in my company based on revenue, based on profits, and based on quantities. Top 10 for each. There were three products that were common to all the three. So obviously he was sending a message to us, that we had to attain our targets, at least by focusing.

0:48:44.8 Balaji Reddie: The moment he showed that, he underlined these three, the sales guy put his hand up and said, "Yes." "That second product you underlined, our competitor is selling it as a package with another product, but we don't seem to have that on our list." So the R&D guy got up and said, "Could you tell me what the part number..." And he says, "It's part number so-and-so." He said, "Hang on, I've already developed that." You know what was happening, Andrew? We were talking to each other. And that meeting went on for three and a half hours. And at the end of the three and a half hours, all of us knew how to attain 45 million.

0:49:23.8 Andrew Stotz: I thought you were gonna ask a question on the second day, "Hey, boss, so 45 million, why is there no market share gain of our business that we're growing faster than the industry?"

[laughter]

0:49:41.4 Balaji Reddie: So anyway, but this was... This is what I think goals should be transparent in this sense, that why are we giving you this number? And more importantly is the discussion that happens is how are we gonna do this? It just doesn't happen by itself, right? And if you leave it to people, they start distorting numbers, right?

0:50:03.8 Andrew Stotz: Yeah.

0:50:04.2 Balaji Reddie: As Brian Joiner said, "Distort the data, distort the system, or distort both."

0:50:12.2 Andrew Stotz: Yeah. And we're working on a growth plan for my coffee business.

0:50:19.0 Balaji Reddie: A growth.

0:50:19.6 Andrew Stotz: And really what it comes down to is three things. Number one, are we as the owners gonna hire more salespeople? Because salespeople bring in revenue.

0:50:36.3 Balaji Reddie: Right.

0:50:37.0 Andrew Stotz: Number two, are we as the owners going to develop together with the rest of the team a higher value-added offering...

0:50:50.6 Balaji Reddie: Wow.

0:50:50.8 Andrew Stotz: That we can bring more value than what we're bringing right now, which would bring potential customers to us and allow us to sell more easily. Or are we as the owners going to buy another company?

0:51:07.8 Balaji Reddie: Oh, okay.

0:51:09.2 Andrew Stotz: So those are the three things. And Dale and I have been discussing each one of those in a lot of detail, testing out and debating and discussing. But those are the type that... When it comes to growth, that's just... We know the growth we can produce with no change. And that's in line with the inflation rate or whatever the economic growth, for sure. But as long as we don't lose people on our team or something like that. But to go to our team and say, "How are we gonna grow faster?" Well, that whole point is we can see. Also the other thing is that we can see bigger about the industry sometimes. Sometimes they see something at a small level that they bring back to us and think, "Whoa, wait a minute, that's something valuable." And yeah, so we're getting ready for our final decisions on where we're gonna go with that. But yeah, without that type of change, we're not gonna reach the type of growth that we want to get. And really our idea is 5x growth in five years.

0:52:19.9 Balaji Reddie: Okay.

0:52:20.5 Andrew Stotz: And in order to do that, we have to have a completely different level of quality, service, product, thinking. And so, yeah, it's fun... It's challenging. Anyways...

0:52:32.9 Balaji Reddie: Right.

0:52:33.2 Andrew Stotz: So how do we wrap this up? What is it you want people to take away? You've shared a lot of different stuff. What would you like them to take away from it?

0:52:42.0 Balaji Reddie: Yeah. One, I'm trying to shatter that myth that Deming did not tell us what was to be done. I think he was very clear and we need to reread and reread. And we have to take these as guidelines. You may come up with your own method, but see these as a guideline by and large to put you on the right path. And once you do that, you may develop something which works for you, and that's what he wanted. But let us not just say that he only philosophized about things. I think he was very clear in his head. He just wanted us to do things our own way because nobody understood our problems better than we ourselves. And he was just showing us how to understand things around.

0:53:32.6 Balaji Reddie: He wanted us to know, to understand what we do not know. Through these principles, we can address some of the gaps. Perhaps we were getting a few things wrong. So point number 14, take action to accomplish the transformation. I think it begins with leadership. So point number seven comes into the picture. It begins with training and education. Point number six comes into the picture and it also brings in point number 13, which is learning and development. And education and training is different from learning and development. Training can be very company specific and you can measure the outcomes of training, but you cannot measure the outcomes of development because that takes time.

0:54:19.8 Balaji Reddie: So you need to have some things going in your favor. And for that you need to choose, and he told us how to do that. And yes, he wanted top management to be a part of this because he said those in authority need to do this. But that one sentence that middle management can commence, it can commence there, is a telling statement. So he knew it was possible.

0:54:45.0 Andrew Stotz: That's great. And I like that. Commence. That there's... It's not necessarily gonna be completed by middle management, but middle management can start right now, right where you are. So that's a great way, that's a great way to end with the start. So, Balaji, I want to thank you on behalf of everyone at the Deming Institute. And it's an interesting discussion and I'm enjoying it very much. And for listeners out there, remember to go to deming.org and also there, jump on DemingNEXT to continue your journey. 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."

0:55:32.1 Balaji Reddie: Oh, yeah. Andrew, I think saying thank you on behalf of the institute, I am also a part of the institute.

0:55:38.5 Andrew Stotz: Of course. Of course. You are. I appreciate it. Okay.

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Why do more pressure, more meetings, and more accountability so often produce the same outcomes? John Dues and Andrew Stotz explore Deming's overlooked insight that results are created by systems — not effort alone. Learn why reacting to variation often makes performance worse, how leaders unintentionally create noise through "tampering," and what it takes to build improvement that actually lasts.

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 John Dues, who is part of the new generation of educators striving to apply Dr. Deming's principles to unleash student joy in learning. And the topic for today is why reacting to results won't improve your system. John, take it away.

0:00:25.6 John Dues: Hey, Andrew. It's good to be back.

0:00:28.6 Andrew Stotz: Yeah, it has been a while.

0:00:30.5 John Dues: It has been a while. We missed a couple months for scheduling stuff, so we're fitting it in on Memorial Day here.

0:00:38.1 Andrew Stotz: Hard working. Even on a holiday.

0:00:41.1 John Dues: Even on a holiday, yep. No doubt. I stumbled across this, I'd seen this a number of times, but I thought I'd start with this quote from Deming. He would often sort of pose this simple question at his seminars. He would, you know, kind of ask the crowd, "what will it take to take an organization to unprecedented levels of quality?" And he was, you know, truth be told, he was kind of setting the crowd up because he knew inevitably someone in the crowd would say, you know, by everyone doing their best. And he would immediately respond then, "they already are, and that's the problem," right? So that's kind of the focus today. And, you know, that sort of exchange to me exposes a belief that still shapes in my world how many schools are led today, and I'm sure many businesses as well. And that is this idea that when results fall short, the instinct is to push harder, you know, respond faster, demand more from people. You know, it feels responsible, it looks decisive, but it rarely, very rarely produces better outcomes, especially on the long term. You know, in many schools, you know, leadership revolves around reviewing outcomes.

0:02:05.8 John Dues: You know, just like probably in your business, you know, we're examining test scores, attendance rates, discipline data, you know, lots of other types of indicators, and we're often comparing those results to what came before. And then we have all these meetings and we have charts and explanations and action steps. And, you know, despite all this attention, all these best efforts, results often remain unchanged.

0:02:30.3 Andrew Stotz: Yeah, it made me think about when, you know, let's just say that a tragedy happens and then everybody wants the government to tighten the laws. And then they're oftentimes responding to a short term, or let's say, normal common cause variation. And next thing you know, you have 10 laws coming down on society that nobody can untangle.

0:02:56.3 John Dues: Yeah.

0:02:56.8 Andrew Stotz: And if you were to actually stand up... And this is, I think, to me, some of the crux of what made Deming different and difficult, was that if you were to actually stand up and say, "my proposal is to do nothing."

0:03:04.0 John Dues: Yeah.

0:03:16.3 Andrew Stotz: Everybody wants action.

0:03:17.3 John Dues: Yep, everybody wants action. It's, you know, the issue is certainly not a lack of effort. You know, I mean, I see it every day, you know, leaders, educators, they work hard. The vast majority, you know, work very, very hard, which is probably the case in most businesses. And you know, in most cases people are already doing their best. And that's kind of the point, right? The issue is that the results are those outputs of those systems. You know, they're produced by the system and they can't be improved directly, the results, that is. You know, but that's what we focus on. As leaders we focus typically on results and, you know, we end up reacting to what the system produces rather than changing, you know, how that system works. And I think that's probably, if not the, one of the key lessons that, you know, Dr. Deming taught in his four-day seminars. And it's just like what you said, you know, that reaction, it feels like action, but it doesn't change, you know, the performance of the system. So, you know, over the past several months, I've argued, you know, as I've been writing about this, that leaders often respond too quickly.

0:04:32.4 John Dues: Just like what you were, you know, talking about in your example there. When the numbers change, it's so often just that common cause, that routine variation, and they don't have any tools to distinguish signal from noise. That's sort of one characterization. So, you know, what happens is these common cause patterns just remain. And when results are not where we want them to be, we just respond to the data itself, right? Instead of actually working towards the system. And we, you know, in my world, it's lots of meetings, you know, we ask... As leaders, we ask for explanations. I definitely did this before I discovered this methodology. We adjust expectations. You know, we in education are sort of notorious for new initiatives piled on old initiatives, but none of these actions, none of these things, it feels productive, but none of them are actually changing that underlying system. And I think that's really where the problem lies in my mind.

0:05:39.5 Andrew Stotz: Yeah, the concept of tampering is such an interesting one, you know, that he talks about, about tampering with a system, you know, just does more damage.

0:05:49.2 John Dues: More damage. Yeah, that's exactly right. That's kind of the irony or the paradox that you often find in the Deming philosophy is that until people actually stop and think about it, you know, if they stop long enough to consider what he was saying, then they start to sort of come around to those ideas. But we often don't slow down enough to actually do that, right? And so, you know, it begs the questions, if reacting to results is ineffective, and we've said that, you know, here before, what is it leaders should do instead? And I, you know, I think a really useful, different starting point is a question to ask yourself. And you know, that first question is, is the process that produced this observation the same as the process that produced the others, right? Is this actually something different being produced in our system or, when we really stop and think about it, is it more of the same? You know, and the answer to that question is going to dictate your next steps. But the key thing is that that question shifts attention away from the most recent data point and toward the system that generated it. You know, it forces you to look back more than just, you know, last month or last year.

0:07:07.7 John Dues: Now you're looking at what's happened the last several months, what's happened in the last several years in this system. You know, I think then if the process has not changed or the system has not changed, I kind of use those interchangeably, then what you often discover is that the results are likely consistent with what the system has been producing all along. And so in that case, which is again so often the case in a common cause system, asking for explanations or making immediate adjustments doesn't address that underlying issue. And it, just like you were saying, it's what Deming called tampering. And it actually makes things worse. All this action, all this activity, it feels good in the moment, but you're actually making things worse in your organization by overreacting or reacting to the wrong things. Now, on the other hand, if the process has changed, then there might be something to investigate, but the goal is not to explain the result, it's to understand what is different in your system. So in either case, whether it's a change or something hasn't changed, I think the key thing is the focus moves from the data to that underlying process or that underlying system.

0:08:29.4 Andrew Stotz: It's... I've been working at my coffee factory with the accounting team using the accounts receivable days and the inventory days as a measure that we can track over time. And then I've, you know, developed a pretty simplified PDSA for the team, considering they've never heard any of this stuff. And so, and then, you know, first thing we saw when we looked at the data was that the inventory days really went down a lot in December. We're like... And that was because we wrote off a lot of inventory at the end of the year that was obsolete or whatever. So there was a... And that's where I could say there is an example of a special cause. There's no sense in changing the system because of that one write-off, although that can give us some indication like, we need to be better in some other areas. But to look at that one special cause as unique wouldn't make sense.

0:09:35.7 John Dues: Yeah. And in that case, is the data point from December being produced by the same system that the other data points came from.

0:09:45.6 Andrew Stotz: It's the same system except there's an extreme adjustment to the system.

0:09:53.1 John Dues: Right.

0:09:53.3 Andrew Stotz: Which is the write off.

0:09:55.5 John Dues: Does that happen every year?

0:09:58.3 Andrew Stotz: Yeah, it's gonna happen in every business that has a warehouse and production because, you know, there's gonna be waste, there's gonna be obsolescence, there's gonna be mistakes, and you... It's just very hard to get it perfect. My first job at Pepsi was counting the inventory, basically, and I ran a team of seven people that counted the inventory every single day. And you know, you just, you know, you can see the whole concept of, you know, that you're never gonna get it perfectly right. But the objective is to minimize and minimize and minimize that, you know, variation. We don't really want a large, the reason why a large hit happened at the end of the year was ultimately because of the management decisions that we made throughout the year to either avoid it, not take, you know, not write it off, or not try to sell it at a discounted price or something like that. So yeah, there's lots of different factors.

0:10:58.3 John Dues: Yeah, sounds like some seasonality in that case is probably the primary driver. Yeah, and I think that's a good segue into this idea that I think when we've talked about systems, you know, they all have sort of a certain level of performance they're capable of producing at any given time. And you know, the key thing is looking at that capability not just at a single point in time, but over, you know, an extended period of time. And then by seeing the patterns that sort of emerge over time, you sort of start to really grasp what the capability of your, you know, your system is. And then, you know, at the same time as an organization we have expectations for those processes or systems, what the results should be. And I think the starting point for improvement is where you start to compare those two things. You know, what is the system currently producing, what do we want it to produce? And then what's the gap between those two levels? And that's where we, you know, often that's where the goal setting and things like that, you know, where our expectation setting falls off track because we've set those goals without studying, without understanding that capability.

0:12:14.0 John Dues: You know, we've talked about this here, it's so often leaders are establishing targets based on aspiration or pressure or, you know, external demands without understanding what the current system can actually deliver. And so then when those results fall short, the response is often to push harder or react more quickly, you know, reactive. We got to do something. Don't just stand there. You know, these are all things that we've talked about multiple times. I think, however, you know, that gap between current and desired performance, it can't be closed by reacting to outcomes. That's the whole point. It can only be closed by changing that underlying system that produces those outcomes. And I think that's what Deming was talking about when he said "substitute leadership." Right. Leadership is about understanding the system, understanding what the system is capable of. And you're a part of that system, you're a part of that understanding. And so you have to sort of lead that understanding, lead that capability understanding, and then start to help lead with the changing of that underlying system. It's not just the frontline workers, you know, in our case, the teachers, they can't be left to their own devices because they don't have control over so much of the system just like, you know, the production workers in your Pepsi example.

0:13:36.0 Andrew Stotz: Yeah, it's interesting because I've been working with this, my accounting and finance and inventory team, and you can definitely see, like, they cannot produce a different result than what they're producing right now. Like, I just can see that. And even thinking about how do we do that is a challenge. It needs some time. But I also don't want to come in and give solutions. I want to teach them how to use PDSA and how to think about, you know, the variation. And so, you know, but I did, like, I told them a story about, I went to visit a credit card collection company and they were very successful in Thailand and they were a Japanese company. And the way that they did it is they set up the collection date was the 15th, starting, or your credit card, basically you gotta pay on the 15th. And their goal was, of course, to be at 100% collection by the end of the month. So they made a whiteboard, and they just marked down each day from 15, 16, 17, all the way to 31. And then they had eight teams, and each team each day would post the percent collection.

0:14:52.8 Andrew Stotz: So one day they had 50%, you know, 50% of people just pay, and then 60 and 70. And so there's a natural, you know, increase as people are paying their bills. But then they start doing calls and other things, and then they can look at other teams and see how's each team doing. And I asked the Japanese manager of it, this was in Thailand many years ago, and I asked him, what do you do if one team's doing really well and the other one's collecting, you know, a lot less? He said, well, we have the better team help the weaker team.

0:15:23.6 John Dues: Hmm. Imagine that.

0:15:25.2 Andrew Stotz: And I was like, that would just never happen in America.

0:15:27.6 John Dues: Yeah.

0:15:31.9 Andrew Stotz: It's like, not my problem, dude. You're not doing it.

0:15:48.6 John Dues: Yeah. You know, when you're talking about, you know, a special cause, you know, a key point is that a special cause could be positive, you know, that positive deviance. And so what do you do? Exactly what you just said. You study it, and then you share it with, with, you know, with everybody else, right? And it's not in a gloating way. It's just like what you described, you know, they were helping another team because, you know, a few months from now, maybe it's this, you know, the team that needed help, they may then be, you know, helping others. And that's such a much better way to sort of operate, you know.

0:16:08.3 Andrew Stotz: Yeah, by giving some ideas like that. And this is why I love reading and I love podcasts, and I love that because, you know, you hear different ideas and you think, hmm, I wonder, you know, why don't we... We could do a PDSA on that and say, what could we track on a daily basis that would keep us all kind of seeing the progression? Would that help? Maybe not.

0:16:30.9 John Dues: Well, at least it puts it in front of you. So everybody sort of, you know, closes that feedback loop, it makes it visual. We're actually doing something like that right now with our student recruitment department, where we have a weekly meeting, we have a board where, you know, all of our sort of leading and lagging indicators are visualized, and we can see right away, like, where are the gaps. And then immediately with that team, we're problem solving. Okay, this campus wasn't able to make, you know, or spend as much time on recruitment, like what's getting in the way, and then they can immediately problem solve with some of their peers from other campuses that are doing the same work. It's been really powerful to sort of operate like that.

0:17:09.2 Andrew Stotz: Yeah. And some people may look at it as just a torture to say, why is this up? Why is this down? You know, as you're talking about reacting. That's not the purpose. The purpose is... And I think for the purposes in my own situation, the purpose is awareness.

0:17:23.1 John Dues: Yeah, yeah. And it's in our case, you know, this is not a gotcha. It's not an accountability measure where, oh, you didn't hit, you know, a certain target. It's not like that. It's more along the lines of what got in your way, what didn't allow you, you know, we, we kind of, especially with the process-oriented targets, we kind of came up with them based on the end goal. So how much work do we need to be doing now in different areas to hit the end goal before the new school year starts? And we know that that requires a certain amount of, you know, hours, a certain number of calls we have to make, a certain number of doors we have to knock on, and those types of things. And so, you know, if we wait weeks before we sort of attend to some of the gaps where we're seeing instead of, you know, doing it immediately, then we're just gonna fall farther and farther behind from our goal. And so that's, you know, again, part of the power of doing it like what you're describing. And I think it really just goes back to this idea that, you know, better results require a better system.

0:18:22.9 John Dues: And then that means that the improvement work has to focus on how the system is operating. And we're talking about ways to visualize what the system is producing and in a very quick way then attend to those areas where things aren't where we want them to be. You know, so there's all kinds of ways to do that. But, you know, the key is the leader is not walking in and saying, why aren't the results where I want them, that's the key here. There's so many other things that we can do, kind of like what you were just talking about. We can, you know, study how the current system functions. We can identify areas in the systems where the performance is being limited. We can test small changes through a PDSA to improve outcomes. You know, we can repeat those cycles of learning to, you know, build knowledge. So there's many other things that we can do besides just applying pressure and say, you know, I don't know how you're gonna do it. I don't care how you do it. Just figure it out and get it done. You know, that's sort of the opposite of what Deming was talking about.

0:19:26.3 Andrew Stotz: Yeah. And when you work with them on it, you create lasting change.

0:19:31.9 John Dues: Well, I think, yeah. And when you're working with people on it, you know, they're much more likely to be bought into it, and the change is much more likely to stick because they were part of producing that solution in the first place, right? We're not trying to force better results, but we're trying to design a better system that regularly is capable of producing those results. That's kind of how I think about it.

0:19:55.7 Andrew Stotz: So what would be your parting words to the audience here?

0:19:59.4 John Dues: Yeah, I mean, I think most of what I've seen is that improvement efforts also often fall short, you know, when we are focused on results instead of that system that produces them. So there's sort of three big ideas for me when I'm thinking about this other way of doing things. So big idea one would be we have to realize that results are produced by systems, not individual effort alone. And so pushing harder on outcomes does not change system performance. I think that'd be big idea number one. Big idea number two would be reacting to results, whether they are surprising or stable, does not improve capability. It often creates more noise without addressing the underlying causes. And then big idea number three is that improvement requires understanding current system performance and redesigning the system through disciplined experimentation. Deming's preferred method, the one we've talked about, is that Plan-Do-Study-Act cycle. And so I think when leaders shift their focus from reacting to results to improving the system, that's really when we move from activity to learning and from effort to effectiveness. And that's just what I've found as I've continued to try to apply the Deming philosophy in my own work here in Columbus.

0:21:21.2 Andrew Stotz: Yeah. And for the listeners out there, imagine if each of the challenges you faced, you created a permanent solution to through the process of, you know, not reacting, understanding variation, right, maybe using PDSA. But what happened was you permanently dealt with that particular issue. Imagine where you would be if you never had to deal with the same problem twice.

0:21:51.9 John Dues: It's learning your way to a better system.

0:21:54.4 Andrew Stotz: Yeah. Just imagine, I mean, you would be at the moon by now. So, but instead, most of the time people are stumbling through. So, well, on behalf of everyone at The Deming Institute, John, I want to thank you again for the discussion. And for listeners, remember to go to deming.org and jump into DemingNEXT 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, and that is, "people are entitled to joy in work."

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What if the problem isn't your strategy, your people, or your tools, but the lens you're looking through? In this first conversation with Andrew Stotz, quality educator Balaji Reddie explains why so many organizations chase Deming's 14 Points and prizes but miss the philosophy underneath. He also gets into what changes once you start seeing your organization as one connected system. There are a few surprises along the way, like why his employees actually celebrated the day he got rid of performance appraisals.

0:00:01.9 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 here with featured guest Balaji Reddie, who is an educator and trainer in teaching of Dr. Deming and quality management generally. Now the topic for today is a deeper perspective of the teachings of Dr. Deming. Balaji, how are you?

0:00:29.6 Balaji Reddie: I am fine. It's wonderful to see you this morning. I have been looking forward to this for quite some time now.

0:00:37.0 Andrew Stotz: Yeah. In fact, we've been talking back and forth in the past and then we had a meeting recently to get going on this because you've got so much to share. And one of the things I just said is a deeper perspective on the teachings of Dr. Deming. Maybe you could just give a little background of yourself for those people that have never heard of your journey. Maybe tell us a little bit about your journey, the Deming journey, as well as what you're doing now.

0:01:02.2 Balaji Reddie: All right. So I am an electrical engineer by profession and my first job which I got was in a lamp, a bulb manufacturing company which made automotive lamps. And that's where I chose to be in the quality department because I was being shunted around in all the different departments and the owner of the company asked me, "Where would you like to be?" and I said, "Quality." I don't know, when I look back why I chose. I think it appealed to me as an engineer and also the fact that I wanted to be a manager. It combined engineering and something to do with managing people. I don't want to sound dramatic, but I don't think I chose quality, I think quality chose me. But what I did after that was conscious. I did a postgraduate diploma in quality management, the first structured course in the country, and then went on to a Master of Science in quality management here in India.

0:02:00.2 Balaji Reddie: So that's been my journey here as far as working. I worked a lot. I used to teach part-time, but I made this switch 20 years ago to be an educator primarily and decided to put all my focus into creating the next gen of managers. At the same time, during the bit of a free time that I have, I do consult, but that's not the core profession of mine. So, yes, I'm an educator and a trainer. You can say that. I teach quality management, anything to do with operations, supply chain, et cetera, but there's always been a Deming slant to it. Along with that, I've also liked to... Because I went into the works of Dr. Juran, I got a good chance to meet with him and be in touch with him. It was only the last six years of his life, but I think he had very little time to give me, but he gave me time. So I have a good perspective of both these gentlemen. And if you know quality, they're the pioneers.

0:03:01.5 Andrew Stotz: Yeah. And I'm curious, when you first started out with the degrees and the, as you mentioned, getting a diploma and then a master's, was Deming front and center in there or was that a secondary thing? What was it like in the beginning?

0:03:19.6 Balaji Reddie: Oh, my entire focus was actually Deming. I needed to be qualified in that. I wanted to qualify myself in quality, that's what I meant here, because there was no... I was looking for a structured course on the subject. You had these training programs, certificate courses, but this one caught my attention when they said we have a diploma in quality. And part of the course was we had to, there was a project like a dissertation, and we had to show how we implemented this in our companies where we were working. And for those who were not working, they were provided companies where you go and actually implement these. So it was a win-win. So the company gained and you gained. That's how it was. That's what I liked about that course. Same with the masters. It was a complete two-year course. This was a year-and-a-half or three semesters. That was more elaborate, the masters. So, yeah.

0:04:18.0 Andrew Stotz: And what is the state of Deming and the teachings of Dr. Deming in India? We know that many companies in India have implemented the teachings of Deming over the years. But of course, there's a lot of people that just know nothing. I'm just curious, what is the state right now as far as the teachings of Dr. Deming?

0:04:40.3 Balaji Reddie: Oh, I'd like to... Just a slight correction there. We have the highest number of Deming Prize winners, but that does not necessarily mean that they're implementing the teachings of Dr. Deming. In fact, many of them after having got the prize... I worked in a company, we were suppliers to one of them. And when they came to do a vendor assessment to our factory, obviously there's a lot of buzz. Everyone in the company, they called me the Deming man. They used to call me that. And so when these guys came down and they were talking and when they gave their business card which had the Deming Prize logo, so they said, "Oh, we have... You know, Balaji is here and he's our Deming man." So who's he and what is this? And so they came and met me and they said that, "We got the Deming Prize." I said, "Excellent." But I said, "Just because you got the Deming Prize, I mean, have you worked on the Deming philosophy?" "Isn't this the same?" And I said, "No." And I, of course, joked with them, and they said, "So how do we learn?" And I said, "Pay me." [laughter] Anyway, yeah, then we got talking and they realized that there was such a big gap in what they were doing. For instance, when I spoke to them about performance appraisals and having quotas and things like that, they were like, "What?"

0:06:04.9 Andrew Stotz: Interesting. And when we talk about the Deming Prize, when I asked you that, we're talking about the Deming Prize which is offered by the Union of Japanese Scientists and Engineers through their Deming Prize Committee. This isn't something done through the Deming Institute.

0:06:12.3 Balaji Reddie: No.

0:06:19.7 Andrew Stotz: Yep. Okay. And do people study Deming there in India anymore or is it fading out or...

0:06:26.7 Balaji Reddie: Well, yeah, that's what I said, they do know. The good part is that because of the fact that the Deming Prize winners are there, at least they know about Dr. Deming. And then they're curious to know, "Oh, what did he teach?" Because again, they've been given that perspective that he taught, well, wrongly, PDCA, and he focused on the 14 points. And then when they read the 14 points and then they get... Because when you read it just without understanding, you can actually... It can put off certain people. You may get a little repulsed and say, "Oh, my God, what's he saying?" But then there are certain people who get intrigued and say, "Wait a minute. This is challenging. He's saying that we need not have quotas? Then how are you going to get work done?" And that's where the questioning begins. And there have been normally these trends where some companies where they called me over, I shall not name one of them, one of the students I was teaching in class and I was talking about the 14 points, and then she comes up to me and she says, "I've spoken about you to my father, and he's working in this company, and they're going for the Deming Prize. He wants to meet you." And then she brings him to the college the next morning and then we had a lovely discussion. And he said, "We've been discussing the 14 points." And I said, "You know what? You're putting the cart before the horse. You need to discuss profound knowledge first." So he said, "I'll put you in touch with my HR, the human resource." And then that lady got in touch with me, then we had a good chat and I explained to her and she understood very quickly. Incidentally, Andrew, that's something very amazing, when I speak about these things to the HR people, they take to it like a fish takes to water. They say, "You're right. What can we do about appraisals? Appraisals are wrong." But they also know they're shackled. They do not have the authority to break and come out of it. There have been some cases where they've been bold enough, but many of them... That's one of the things I've seen over these last 20 years that I've been teaching, that everybody principally agrees, but they also say that we're bound by it.

0:08:37.6 Andrew Stotz: That reminds me when I attended my first seminar when I was 24, and I was very intimidated by all the people in the room. I was just fresh out of university, working at Pepsi in Los Angeles. I flew into Washington, D.C., and so I sat right in the front row and I just decided I'm not gonna look at anybody behind me because they're all bigwig executives. But then when I heard Deming really show no mercy and really be tough to them, I was like, "Wow, wow, this is interesting." And he was getting to the... As a factory supervisor, which is what I was at Pepsi, I could just see he was getting to the heart of the matter. And so, yeah, a lot of things are very obvious to people in the factory, but then it's the leadership that is an issue. I'm curious when we think about... Let's imagine that someone listening to this has never heard of Dr. Deming and it's their first time, they stumbled upon this, they're hearing you speak. They're gonna ask the question, "Why does this matter? What benefit do I get from this?" How would you describe that to someone who knows nothing about Dr. Deming and his teachings?

0:09:59.3 Balaji Reddie: Oh, well, when you start getting aware of what this man had to say, let me tell you, when you start actually getting to it, you'll find that what you've been missing all this time in life. And then when you actually get to implement this, it'll be way, way better than where you are right now, sometimes totally in a very, very different direction. And you begin to realize that you had an illusion of knowledge, that you thought you were correct, and then suddenly a new perspective comes in. Just to make a point here, I don't want to be boastful about this, but I'm really proud to say this, that in all the companies that I worked, I removed performance appraisal. None of the companies I worked in had performance appraisal. And the day we removed it in one of the companies, there were actually celebrations.

[laughter]

0:10:56.7 Andrew Stotz: Yeah. Which for many people listening that don't know anything about the teachings of Dr. Deming may think, "That's crazy, because I thought that we run business through performance appraisals, KPIs, and the like." One of the ways I was thinking when you were just speaking was it's a little bit like Deming's... You're a fish, and Dr. Deming is a guy that's gonna come up and tell you, "Oh, by the way, you're surrounded by water." And you're like, "Wait, what do you mean? What's water?" And then all of a sudden he brings this awareness like, "What am I swimming in? I am swimming in something, and it's called water." And it's like everything that's going on, the concept of how we learn, the concept of variation, the concept of psychology, it's like all of these are foundational things that we've been swimming in, but we really haven't been paying attention to. And I think he woke me up to a lot of that. So what should we talk about today? What do you got on your mind?

0:11:55.7 Balaji Reddie: Well, I presume that the audience would be someone who's read about Deming, or if they have not read, I can go it either way.

0:12:05.9 Andrew Stotz: Yeah, I mean, I would say just let's go into what your learnings are and what you want to teach us today and share with us, and then people can follow along.

0:12:17.4 Balaji Reddie: All right. So let's begin with what he meant by Profound Knowledge, because that was something he put together only towards the end of his life. I'm reminded of a few things that led to me thinking about these things. One of the very first books that was written on him was by Mary Walton, The Deming Management Method. And with due respect, she was an excellent journalist, and so she followed him around. Everyone was intrigued to know who this man is because he had just gained popularity. If Japan Can... Why Can't We? And so she wrote this book, I think as early as '84, if I'm not mistaken. And she followed him around for almost three years before she actually published the book. So she attended four-day seminars, and she's trying to understand what this man was. So the biography bit of it was very nice. But if you go there in the preface and in one of the chapters, there's a very interesting conversation where she says, "I asked Deming that why don't you set up a body, an organization? Why are you doing this all alone?" And he didn't say a word to her, and he just mentioned to her, "I'm good." So I believe he was still looking for the answers to offer something to the world. He had it all in uncoordinated stuff here and there, but that came much later, I think in 1989, when he finally put it all together and called it Profound Knowledge. Because that was when a year, a month or so before he passed away, he set up the Deming Institute. I think he thought he was ready now to leave behind a legacy that others could build upon, right?

0:14:08.0 Balaji Reddie: And so that he called it... Again, I'm looking for the missing link here—. Apparently, when he wrote it, as he called it deep knowledge, but it was someone who gave him the word profound, and that's how the name stuck. So I'm still trying to find out who did that. I saw this in one of the letters to Henry Neave, where he was writing to all of his colleagues, he called them, and taking feedback from them. And in that, he said that, "I profess this is deep, this is wide." And somebody said, "It's profound." I forget. I really want to find out who it is. I asked Bill Scherkenbach, and he said, no, it wasn't him. Henry, of course, no. I asked Bill Latzko, and he said, "No way. I never said that." So I really don't know who said it, but he christened it "profound." And we all know now, it sounded very pompous to begin with when you hear profound, and then you say, "Wait a minute." When you start getting into it, you say, "He's right. There's no other word to describe this. It is profound." So what exactly is Profound Knowledge? Now, it's a different way of looking at things around you. And especially he designed this or created this for man-made systems, organizations that you and I work in, helping us to look at things differently, right? And that's why he said it's a different lens. And when you see things differently, you ask different questions, right? When you ask different questions, you get different answers. When you get different answers, you draw different conclusions. When you draw different conclusions, you take different decisions. And when you take different decisions, that's when you get different results. It's insanity to expect different results by asking the same questions every single time. All right.

0:15:53.8 Balaji Reddie: Now, what exactly is, again, what do you mean by this whole thing, the lens? He brought together four seemingly disconnected sciences, right? He never invented any single one of them, but he saw the interconnections. All right. And the four sciences, he felt that if you had good knowledge, working knowledge of these four sciences, you need not be an expert in them, just enough for you to understand what's going on around you. All right? And in no order of importance, he had his title for each of those sciences. One was he called it appreciation for a system, which I would like to say very simply is connectedness, right? Because when people say systems thinking, okay, then you have the systems thinking experts who jumped into the picture. And I think they were caught napping. To be quite honest, Andrew, I think the people from the world of management were suddenly caught napping, and the experts were completely caught napping because they realized they'd missed the bus. Here's this man who caught everything together and put it into place, right? And so when they were... When they said systems thinking, so the systems experts came in and started trying to find out, "Oh, but he missed out on this, and he's confusing this with that." That's where it is. Dr. Deming knew where to start. All right? He said, "Yes, of course, it's all about systems, appreciation for a system, the fact that nothing exists in isolation." So I would like to say connectedness. Everything's connected to everything. When you start having that systemic approach, you realize you're not dealing with events, you're dealing with eventualities, and that there are always a huge myriad of inputs that create the outputs that you see in front of your eyes, right? And there's so many other attributes that they're separated in time and space, et cetera. We can talk for this forever. But the short word here is connectedness. Second...

0:17:56.1 Andrew Stotz: And I would say that the systems experts retreated soon after because they're nowhere to be found when we look at it these days, because everything's divide and conquer.

0:18:07.6 Balaji Reddie: Yes. Yeah, because there were people like Russell Ackoff, Stafford Beer was mentioned many times, and then their books. Now, I went on to read their books and I found, yes, they were going deep, but Dr. Deming knew where to draw the line and said, "That's it. Please don't go beyond this," and it depends on where you are, what you want to study. So draw your line around that and say that's it. And I think that thinking came from the next science which I'm talking about, which is understanding of variation, right? Now, although we say understanding of variation and people talk about the control chart, I think that's just the manifestation. If you look at the philosophy behind it, what Walter Shewhart actually was trying to do was to draw a line between when to act on the process and when to leave it alone, right? He came out with... He demarcated, and that's where it turned into the control chart with data. But broadly, Deming started applying this everywhere, right? He said that there are some things which are in my control and some things out of my control, and so he drew a line. And same with systems thinking, that how big and how deep should I go? And that's why he said every system must have an aim. Without an aim... So the aim and the purpose decide where you're gonna stop. You can't just keep on saying, "Oh, yeah, finally, okay, the whole world is a system." Fine, great, I get that. But I'm trying to study this, okay? My company, my organization, this process, these people. So you draw the line and say, "This is my purpose, so let me restrict." Again, I repeat, he knew where to stop. People tend to go overboard. And so he always said, "Begin with the aim, begin with the purpose." The purpose is the reason the system exists, and the aim is the direction in which you're headed. So you keep going there, keep revisiting that to let yourself remind yourself that I need to stop right here. Okay, and that's it. When I come to it later, because he said... Coming to the third part of Profound Knowledge, where he said you must have a theory of knowledge.

0:20:13.4 Balaji Reddie: Now, when people hear the word theory they get very put off. At least in my country, the broad doctrine is that theory is the opposite of practice. And so they think that theory belongs to the books and theory belongs at home. And when you come into the company, we all believe in being practical, right? And as you go through what Dr. Deming had to say about theory, you realize theory is a guide to better practice. And all the great practitioners are actually theorists. It's just that they don't know it, and we need to remind them. I've had enough of experience on this in my own company. And I remember when I turned on the light bulb for one of the very, very senior people in my company, he went completely quiet. He did not say anything, but I loved the way he reacted or responded to this when he started doing things very differently after the interaction that we had once. So that's with theory of knowledge. And...

0:21:19.9 Andrew Stotz: And would you say that theory of knowledge, would you correct my description of it, which is that you need to have a method of... You need to understand how you acquire knowledge?

0:21:40.1 Balaji Reddie: Yeah.

0:21:40.2 Andrew Stotz: And you gotta figure out, because acquiring knowledge, for instance, as an individual, we can play around lots of different ideas and experiments and stuff like that, but acquiring knowledge within an organization is a much harder thing. And so first is the idea that there's a level of rigor that you need in an organization to make knowledge stick.

0:22:06.9 Balaji Reddie: I think it's more about awareness. When you become aware of how you're converting information into knowledge. When you... He makes you aware of that, right? Dr. Deming gets you aware, he makes aware, "Okay, okay, wait, what's happening here?" Now, that method and all turned out to be the Plan-Do-Study-Act, whatever you call it. But he helped you understand how you're doing this, right? And you become cognizant. You get your cognitive behavior, you get very aware of things happening around you, right? You start asking the question, "Why? Why is this happening?" And then you get to the bottom of it. "Oh, when I do this, I get this." And that's when it becomes powerful for you. And then you also, "When I do this, I do not get this." And the more the theory fails, the more powerful it gets for you, because you know where it fails. So that's the awareness thing. So connectedness, being aware of the fact that it's beyond just numbers. It's about where, the variation bit, the third bit is about awareness, like I said, about learning, and the fourth, of course, about people. And he said here that all of us are born with a learning system, right? Each one of us has a learning system, a system of learning, but every single one of us has a different system of learning. We learn differently, and we learn at different speeds, at different paces, right? And so understanding the learning process of a person and then putting that person on the right job, right? He said you have to stop that person from working, and that's where joy in work comes in. People enjoy their work. I think the bottom line there is empathy when you start understanding why people do what they do, whether it's your people in the company, the customers, your suppliers, the entire system. So he says the learning process of every person needs to be understood. You want to control the market, you need to understand what makes the customer tick. You want to keep the suppliers with you, you want to understand what makes the suppliers tick, right? And what makes them tick.

0:24:23.3 Balaji Reddie: So that's the fourth part, which I would put as the word empathy. Trying to empathize. So putting this all together, he said that's what he called as Profound. So if you look at it in a broad sense, connectedness and empathy are very philosophical, and the variation and theory are very scientific. So he wanted us to be scientific and philosophical simultaneously. It's not either-or, it's and. And that's difficult to do, right? You have the big divide. You have a set of people who say, "Oh, I believe only in data. Show me the data, show me the results." And then there's a whole other set of people who says, "You gotta feel. You gotta feel for the company. Motivate." Yeah, but neither is wrong, but neither is complete. And this is complete. So this is where I found that I think we could begin, that we need to look at all these four sciences together. And of course, then came the 14 points which he laid out for us. Now, these 14 points, now if you look at them, because I just discussed the four... Of course, I've not gone into depth of each of the sciences, but I think good enough to understand what we are trying to deal with here, then you'd see that the 14 points are actually 14 consequences of this way of thinking. That you don't try to do the 14 points. When you start thinking this way, you end up with the 14 points, right? And there are some things which need to be done, right, and we need to start somewhere with this. And one of the main things that he always said is that people need to be educated about this, that people need to learn about this. And so education and training is important even when it comes to profound knowledge. And he said someone has to take the lead, all right? Someone has to get things done. And so that was his point number 14, that create a critical mass of people in the company that understand, believe, and will work towards these 14 points, right? So I'm gonna begin right there.

0:26:43.1 Andrew Stotz: I was just thinking about his saying, "One need not be an expert in any one point, [chuckle] any one of these areas." With the System of Profound Knowledge, the more I've studied it recently, which I've been working on a project recently where I had to go back to the System of Profound Knowledge, you really see that he's trying to provide a coherent, holistic system.

0:27:16.1 Balaji Reddie: Yes. I call it as a theory of leadership and management.

0:27:23.6 Andrew Stotz: Yeah. And then you start to realize that if you can understand these four things, which isn't that... It doesn't have to be that complex, it can be pretty amazing. And I know one part of my business is investing, which I do on behalf of my clients. And one of the things that makes me stand out as unique is that I don't get distracted by the random variation in the markets. And so that doesn't mean that I'm gonna get it right all the time, but what it means is that my mind is much more clear when I understand. And as I tell people about variation, I say, if you think about just your birth, the beginning of your life is a random event. You had no influence over that, who you were born of. And therefore we at least know that randomness plays one role in your life. But when you start exploring the possibility that randomness is all around you just like water, it just wakes you up and you start to realize, "Aha, I've been reacting to things," and punishing and rewarding and all of that stuff that's happening in companies. And what I'm really doing is I'm just chasing my tail. Or as Dr. Deming would say, putting out a fire. A man could run... A manager could run... Could put out fires their whole career and never improve the system.

0:29:02.8 Balaji Reddie: Yeah. A lot of activity, no work.

0:29:04.5 Andrew Stotz: Yeah.

0:29:06.2 Balaji Reddie: Okay. Incidentally, when you said about investing, one of my students who did something fascinating, I've yet to get to the bottom of it, I never sat down and asked him how he did it, but he used control charts for the stock market. And one day he explained to me, he was trying to rather, because I never... I'm not into all of that investing. That's done by my wife. I just sign the papers and she puts it in. So I... I mean, I might as well be shown the Constitution and say, "Okay, this is what it is," you know? But yeah, so he... I remember sharing with him and he said, "Can I use this for stock market?" I said, "Look, son, I don't know how this works, but I presume what you can do is this. If you had yesterday's Sensex numbers and you have today's, then you can draw a control chart for the differences, you know? And then you get an upper limit and a lower limit. And then if today's closing is so much, it can rise up to the upper control limit, that is the difference. You can add the difference to today's closing and say it can rise to so much, it can fall by so much, and likewise to the lower control limit." And then his eyes just lit up and he said, "I know what to do." And that was it. And I didn't meet him for a week. And a week later, I meet him and he says, "I want to show you something." And he opened his laptop and there were control charts all over the place and I just couldn't figure out, "So what was all this?" And then he said, "I've been following these. There are some blue chip companies and there are some..." I don't know, I don't understand these things much, but he said that, "I'm drawing a control chart for these and so I know that when it crosses the upper control limits, that's the max I can get for the share, so I sell."

0:30:55.7 Andrew Stotz: Yeah. I mean, the hard part... The stock market is purely random most of the time and it's a challenge. But one of the things... I gave a speech to my investors and I did control charts and I did it as a way of helping them understand the markets.

0:31:04.2 Balaji Reddie: Okay.

0:31:12.7 Andrew Stotz: To predict the markets is hard.

0:31:15.7 Balaji Reddie: It's hard.

0:31:16.4 Andrew Stotz: But the control chart allows us to kind of.. It allows us to understand that most of the variation is just normal ups and downs.

0:31:24.8 Balaji Reddie: Yes.

0:31:26.5 Andrew Stotz: And so don't freak out about it. That's the first thing that really helps me. So that area of variation I find very fascinating.

0:31:34.7 Balaji Reddie: Very fascinating. I used it for COVID data, by the way. And there was a lot of criticism about that, but I knew I was going in the right direction because I was plotting the charts for the percentage positive and not the number of cases that were being tested positive every day. And so if the percentage positive lay within limits, then we were safe. I mean, everyone wants a zero, I get that. But I'm just saying here, having said that we're collecting the data and we are turning out so much of positive every day, then it should lie within certain controllable or predictable limits. And when it crosses the limit is when we get a little worried. And that's what I used this for initially. I remember it was Lloyd Provost who stood by me, whereas the other practitioners were saying, "No, you cannot use control chart for COVID and for data and for epidemic and pandemic." Whereas Deming himself used it for an epidemic of cholera somewhere. I read it in his work and where he used the c-chart and he saw that areas where the points were outside limits and then they tested the water and well, well, whatever it was, it turned out to be that he found the special cause and blah, blah, blah. So that's what gave me the idea of using the control chart for COVID and it was quite fascinating.

0:32:56.5 Andrew Stotz: Yeah. Yeah, unfortunately there wasn't a lot of independent thinking during that time.

0:33:02.5 Balaji Reddie: Yeah. [laughter]

0:33:03.0 Andrew Stotz: Real serious groupthink at that time. So I had my experience in my PhD research and my job as an analyst all my life where... And I teach my students believe nothing, believe no one, demand evidence. And so I'm constantly digging and that's just the heart of being an analyst. But when I go back... I want to go back to when I was starting at Pepsi. The reason why my boss recommended me to go to the Deming seminar was simple because I knew how to work a computer. And that was 1989 when I went to work at Pepsi. And what I had, all of these loaders that were loading up trucks with Pepsi each night. We would load about 80, 90 trucks each night. And in the heat of the summer, we would work till 2:00 or 3:00 in the morning, but generally we would finish at 11:00 or midnight. But they were just... I would go to the drivers in the morning and then the drivers would come back in the afternoon and complain that the product that they needed was not on the truck. And there was just... And I went to the loaders, they go, "I put it on the truck. I don't know what you're talking about." And so there was this battle between the night loaders and the truck drivers. And so what I just did originally was I just started... I did inspection. The first thing I did is I said, "Look, before you close the doors on the trucks at night, I just want to count myself to understand what's happening here." And then I started keeping a record of that and I put that in Excel, it was Lotus 1-2-3 at the time, and then I put up charts of each person's error rate each night. And so we had a long chart. And I never actually even told them what I was doing, I just put up on the wall. And then they started looking at it over time and talking about it and then asking me questions. And it wasn't for the purpose of blaming, it was the purpose of just understanding.

0:35:01.2 Andrew Stotz: But then what we really started to see was that some people were much more accurate than others. And then we started to ask the question, "Well, how are they doing it?" And then they explained how they kept records of what they were doing and all that. And so we started to see that we could improve this. And we started to improve those numbers quite dramatically until we got to the point where I told the loaders when they were done that they were to lock the trucks and seal them and the drivers were not allowed to open them. They had to take them as is. And when everybody realized we really have to build from the beginning that this is loaded right, then we started to have massive efficiency. In the number of... Let's say you have 50 or 100 truck drivers that come in at 5:00 in the morning. It could take you till 9:00 AM to get them out the door if they've got problems and they're checking their trucks and all that. But if you've got it set right and you've done it right, we were able to rush people through the door and the drivers would get out to the LA freeways much earlier and that makes a difference for the whole day. So that was my first experience with it all. And then my boss just said, "Well, seems like you know about statistical quality control." I said, "I have no idea. I have no idea what that is." But he said, "You should go to Washington, D.C. And study with Dr. Deming." And that's my little story.

0:36:20.4 Balaji Reddie: Oh, wow. Okay.

0:36:21.6 Andrew Stotz: So how would we... What's the best way to wrap this up and think about what somebody who doesn't really necessarily have experience with the System of Profound Knowledge, you've given them some good overview. What would you like them to take away from this?

0:36:39.2 Balaji Reddie: Well, if you have now come to know about what this is, I think you could go to the W. Edwards Deming Institute website and you could subscribe and start looking into the learning pathways, systems thinking, there are a lot of catalogs available there and they've done a great job of putting things together. So they could do that reading, of course, you need to start reading, but the danger in reading Dr. Deming's work is it could put you off sometimes. And I would recommend a good place to start reading and understanding the Deming philosophy would be Henry Neve's book, The Deming Dimension. It's a very good start, one of the best introductions. You could always build upon that. So along with having Out of the Crisis, The New Economics, and Essential Deming, which was put together by Joyce Orsini, these are the three essential Deming books which contain papers, his own works, and then use Deming Dimension as a guide, so to say. You could read the books together and you could read profound knowledge to begin with. And once you get a good idea about what there is, then the question comes is where do we start? And that's where I just ended by saying that we start at point number 14 about creating a critical mass and take on leadership, right? So somebody has to take the lead. So what we could do is, I think the next time we meet, we could begin with that, how do we start? So we'll talk about the principles of leadership that W. Edwards Deming spoke of and what did he expect the leaders to do once you've decided or you've started seeing things differently and you say, "No, I need to do something about this. I need to start somewhere." And so we'll start with the principles of leadership. That's the way I look at it.

0:38:44.5 Andrew Stotz: Fantastic. Well, I look forward to our next conversation, how we can start to think about how we take this information and make a better world and make a better company, feel better. And so from everybody at the Deming Institute, I want to thank you again for this discussion. And for listeners, remember to go to deming.org and jump into DemingNext to continue your journey.

0:39:09.7 Balaji Reddie: Yes.

0:39:11.1 Andrew Stotz: It's an exciting tool. And 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."

View Details

What if your sales problem isn't your people — but the system they're stuck in? Mike Carr spent years doing what everyone told him to do: commissions, quotas, performance plans. Every new hire came with the quiet assumption they'd be gone in a few months. He even optimized onboarding to make firing faster.

Then he did the math: it was costing ~$75,000 every time. He called it "Burning the Porsche."

His friend Travis Timmons — who'd been applying Deming's principles — kept nudging him to look at it differently. Mike's first reaction? "This is crazy talk."

In this episode, they walk through what changed, what didn't work at first, and why the biggest shift wasn't the system — it was the psychology. If you've ever felt stuck trying to fix your salespeople, this will change how you think about it.

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 we have an interesting discussion. I'm going to be continuing my discussion with Travis Timmons, who we've been talking about all kinds of things, including offsites, which I've found very, very valuable. I know the listeners have, too. But we're also joined by Michael Carr, who is a business owner who found the teachings of Dr. Deming about 10 years ago and has been trying to implement it ever since. Why don't we kick it off with you, Travis? Tell us a little bit about how you came across Michael and what your relationship's been like over these years.

0:00:43.5 Travis Timmons: Yeah, thanks, Andrew. Great to be here again. Yeah, Mike and I met, I'll say it's probably 14 years ago, something like that. 13, 14 years ago, a business organization he and I were both part of and sat around a table of other business owners working on problems together. And long story short, and part of the problem solving, got to know Mike a little better and had some individual conversations about how Dr. Deming and the Deming approach was having such a positive impact on my business. Might be of interest to some of the things he was working on in his. And encouraged him to attend the Deming two and a half day. But that's kind of how we met, working on business problems together, having some of the same frustrations that even though we're in different industries, the problems seem to look eerily similar across businesses. So, yeah, that's kind of how he and I met and encouraged him to maybe explore Deming and see if it'd have a positive impact on him like it did for us.

0:01:49.2 Andrew Stotz: We were talking before we turned on the microphone about the idea of how do we reach the young man or woman out there who's looking for answers. And we know Deming has a lot of those answers. So I'm really interested to learn more about you, Mike, about not only, of course, your Deming journey, but maybe tell us a little bit about your business and your experience so people can kind of put you in context, in particular where they are and thinking about where you are and where you were.

0:02:17.8 Mike Carr: Sure. Yeah. I came into business about 25 years ago and I did it kind of accidentally where while I was in grad school, I started a campus chapter of Habitat for Humanity and I had more volunteers than I could handle. So over a weekend, I wrote a small piece of software to let people kind of sign up online. This is before the days of SaaS and everything that we're used to today. And that actually took off so quickly that I was supporting it for free, I was giving it away for free to other organizations - nonprofits. And eventually my wife said, this is taking so much of your time, you either need to start charging for it or shut it down and spend some more time with the family. So I quit my full-time job at the time, put all my effort on what became the business, and quickly found myself running a business with no business background or training because my training was in electrical engineering. So I hired my first salesperson and not knowing sort of how traditional business works, I hired the person on salary, fixed salary, and sort of set up a system for her to sell within.

0:03:39.3 Mike Carr: And again, not knowing Deming, not having any business background. And so I kind of accidentally set up sales the way Deming would have recommended because that's just what I thought made sense. Then later on hired a director of sales who had a lot of success in sales, but traditional sales, and he seemed to know what he was talking about. So we completely switched our sales to more of a traditional sales approach based on his recommendation. And that's when problems really started. Because as we're aware on everyone on the call here, the commissions, quotas, and that kind of thing cause a lot of unintended consequences. So at the time that I met Travis in the peer group that we belong to, I was having a lot of issues with sales. I couldn't figure out how to get sales to work. We were hiring and firing people rapidly. And Travis mentioned Deming to me and the Deming two and a half day training which I attended. And I had become so steeped in traditional sales at that time that after the training I literally said, this is crazy talk, this Deming stuff.

0:04:55.4 Mike Carr: It doesn't align at all with traditional sales techniques. But I gave it a shot and over the next year or two we started implementing it. We started trying things. I kept learning about Deming and at some point I realized this is actually the way I was doing it in the beginning when things were actually kind of working back then. So it was funny how I had come full circle from where I had started.

0:05:23.0 Andrew Stotz: And plenty of people that are listening have commission-based salespeople, bonus incentives, all kinds of different things. And they're like, that's the way you do it and the problems that you face are just part of it. And they couldn't see any other way. And it's way too much risk in their mind to even experiment with another way. So what were the problems that you were facing when you talked about I was facing these problems from the way I was compensating my salespeople? I want to make sure that we connect with people who are like... I don't want someone to say, well, that's not me. I want someone to understand exactly the problems that you were facing and then so they can think, okay, yeah, I probably have that problem.

0:06:11.7 Mike Carr: Right. So it was a lot of... So I'll describe sort of the sequence that we would go through. We would hire someone who seemed really qualified. We would give them a day or two of training, we would give them a telephone and a computer, and we would say, "Okay, you've been trained, you have the equipment, go do some hunting and get some sales," and basically leave them alone to go and do that. Of course, they would sort of rapidly fail because they didn't have the support they needed. They didn't have a system to work within. And so we would start applying pressure, we would start messing with compensation and apply incentives, and then we eventually get to a PIP, a performance improvement plan, and then we would eventually let them go and then do all the offboarding and then start from square one. And we did that so many times that we actually started optimizing our process for rapid hiring and firing. At one point, I moved to these thin client PCs so that we didn't even have to send an entire PC to the person.

0:07:25.7 Mike Carr: We could just send the thin client and put their desktop up in the cloud so that when we had to fire them later, it was just a lot quicker to get all your equipment back. So we optimized for that rapid hiring and firing, and we were literally going into most hires with the assumption we're going to fire this person within a couple of months. And so obviously you can imagine the stress that creates for the person we hired, obviously, but also stress on the part of management because we're just constantly failing all the time. Not to mention the business isn't getting revenue and we're missing all the opportunity that we could be capturing. So one day I said to the management team, let's add up how much it costs us to go through this entire cycle beginning to end in terms of man-hours and salary and so forth and missed opportunity. And the number we arrived at was something like $75,000. 75,000 to $100,000 every time we go through the loop. And so to put this in context, I said to the team, this is as if we had gone and bought a Porsche and then just poured gasoline all over it and lit it on fire every time we go through the loop. So I started calling it Burning the Porsche. Let's just burn the Porsche again, guys. And so we got to call it Burning the Porsche. We were optimizing for rapid hire and fire, and obviously stress levels on all sides were just skyrocketing. So those were the problems that we were facing.

0:09:10.0 Andrew Stotz: And I can hear a skeptical person say, oh, you just didn't know about how to train. I know how to train my salespeople, and I put them through this intense training, then I apply all those incentives and it works. What do you say to that?

0:09:27.4 Mike Carr: So, yeah, we tried all of those things. So we gave them piles and piles of written materials, we made training videos, and of course we wanted to hold them accountable for those things. So we had quizzes at the end of each training section, and assuming they passed the quiz, which was five or 10 questions, written questions, we would check the box. And we would later, when they began to fail, we would point back at the checkboxes from the training and say, "Hey, you were trained on this. We checked the box. Why are you not doing the things that you were trained on and the box was checked?" So, yeah, we tried a lot of different varieties of training and different accountability techniques, and just nothing was sticking. And I think everyone was just getting more and more frustrated. On the part of the person that we were hiring and firing, let's not forget about them. I mean, they're going through this three to six month process that's very anxiety-producing in the system that we had, and it can't feel good for them.

0:10:37.1 Andrew Stotz: Yeah, it's interesting because when you're in that situation, as many people are, there's no way out. It's just tightens the screws tighter. Every book you read, everything you see, every person you talk to, it's just you've got to engineer your KPIs better. That's what it is. We need more granularity in KPIs and all of that. And did you feel at some point, before you met Travis and learned about Deming, did you feel at some point like there's no other choice, I just got to do it this way, or what was going in your head before you came upon Deming?

0:11:24.5 Mike Carr: Yeah, I mean, that's exactly how I felt, is that other people are getting this to work somehow. So it must be that I'm just not applying enough pressure or my compensation structure isn't correct. We need a different mix of base salary and commission, and we need different quotas because other companies seem to be making this work somehow, and I just don't know what magic they're using. So that made me even double down to say I just need to look around and look at more companies and how are they structuring their commissions, how are they holding their people accountable? I started reading a lot of business books on the topic, lots of sales management business books that reinforce that thinking. You just need to get your compensation structure right and everything works. But for me, nothing worked.

0:12:21.5 Andrew Stotz: It kind of reminds me of an AA meeting as I imagine Travis sitting down next to you and then hearing the struggles that you're going through. It's like, yeah, been there. And maybe Travis... Now that we understand the background of kind of where Mike was coming from, let's talk about maybe on that day that you first met or in your first conversations, what were the things that stood out?

0:12:48.3 Travis Timmons: It was probably several months in because we'd meet monthly at that business peer-to-peer. But yeah, to your point, it's like, hey, I struggled with similar things. Mike is pretty humble. He's a super smart guy, PhD in engineering, so he doesn't lack intelligence. So he can figure stuff out, but just like me, was not trained in business. And there's a lot of things out there that just seem to make sense when you read them, but they're not applicable. And nothing seemed to take the entire system into consideration or make an assumption that people were good. That was the other thing that jumped out at me and I had the assumption that would align with Mike's worldview because as he's already said there a few times, he knew he was putting these employees through the ringer as well and he didn't like that. So it just got to a point where I'm like, hey, I found something that is different. It takes a system view and for me, it took the stress off and gave me a construct with which I could work within.

0:14:04.5 Travis Timmons: And with his background in engineering, he obviously knows how to put stuff together, so I thought this would be a good fit for him to at least explore it and look at something different than what the traditional business approach was out there. And it just kind of went from there. He finally got tired of me bugging him about it, I think, and said, yeah, I'll go to this two-and-a-half-day so Travis stops bringing it up. But it's the same thing I was doing before finding Deming. The same problem kept coming up in my organization, and I'd read a book about it or I'd have somebody tell me, "Hey, have you tried this," "Have you tried that?" And it wasn't taking an entire system view to how to solve the system for the business. So that's where I introduced it to Mike and said, "Hey, go check this out. You're a smarter guy than I am. See what you think about it."

0:14:54.7 Andrew Stotz: It kind of reminds me of AI these days because we all use AI in different ways, but I get on the TV, on the internet, talking to friends, like, oh, I'm doing all of this and I'm doing all that and I've redesigned everything. I'm like, so how much more money is in your bank account? Are you really? And it's like there's this excitement that everybody's talking about, but I'm not able to get that. Am I missing something? I'm just not smart enough. But I'm like, "Wait a minute, I'm smarter than those guys. I know that." And that guy he doesn't.... And so maybe you can talk a little bit, Mike, about your journey, your discovery, the seminar, and kind of how it started for you and where did it go?

0:15:48.7 Mike Carr: Right. Well, so let me start at the end of the journey, and then that will illuminate the beginning. So what I realized today, and I volunteer a lot with scouting because of this, is we don't really have, we don't really train young people in leadership. Most schools don't have a class on leadership. They might have some introduction to some type of leadership, say, in sports, but we don't really train people to lead other people or to manage other people. And so what I think happens, my theory is most leaders in business, specifically, lead by copying what they see other people doing. It's a Xerox copy of other leaders, and probably in the same business, in the same company, even. And so I think what we have today is we have a lot of people who want to be good leaders, they want to be good managers, but all they have to go off of is copying from what they see other people doing. And unfortunately, that's a lot of these sort of accountability techniques and pressure techniques. And so going back to the beginning, when I got into business, my background was engineering.

0:17:14.6 Mike Carr: And I had no business background, no business training. I had been in Scouts, but Scouts doesn't teach you really how to manage, how to be a sales manager. And so I was just lacking any kind of a background. So that's where I went wrong at the time, and I looked around to copy other people. How are they doing sales? And for me, I think what I took away from the two-and-a-half-day was here is a framework not just for sales management, but here is a framework that finally gives me sort of the perspective that I could use to develop my own leadership skills in a way that makes personally a lot more sense to me. And I come from an engineering background, and Deming was also an electrical engineer. And so I think it just kind of resonated with me because the techniques and the concepts he was talking about felt very familiar from my engineering training. Let's think of this as a system. Let's look at root causes. And let's think about how changing the system, how is that going to change outcomes?

0:18:22.4 Mike Carr: All of that sort of aligns with a lot of electrical engineering. And so it kind of made sense. But then I said, what Deming's really proposing here is that we take these concepts that are applied to electrical engineering and we extrapolate them to business management. And I thought that's a really interesting idea because I hadn't really thought about that before. And once I made that connection, that leadership framework just kind of came together naturally because now I have a leadership framework that I can build off of and that I understand and that seems to make sense.

0:18:57.6 Andrew Stotz: And how would you summarize that for someone who doesn't know Deming? What are the top three things that you got from it that you really have incorporated into your leadership style?

0:19:11.8 Mike Carr: Well, the number one is the psychology piece. If you're copying off other people for sales management specifically, you're copying a lot of high stress, a lot of judgment approaches, rankings, measuring personal performance, measuring individual performance, not as a team. So you have all of these sort of tricks that people do in sales management. And so the number one thing for me was the psychology piece, which is, no, no, no, let's just start with the assumption that people want to do a good job. And in my case, we're selling software that helps nonprofits. So why are we using these high-pressure techniques? People naturally want to help nonprofits do better. Let's just find those people that have an intrinsic motivation to do that, of which there are many, and then let's give them a system within which they can do that. They can go out and help nonprofits solve problems. And so that was the number one thing is just moving away from the manipulation and persuasion techniques that you see in business books and copying from other business leaders and moving toward the intrinsic motivation piece.

0:20:28.3 Mike Carr: So that would be my number one for sure. And then the number two is thinking, which is Deming's number one thing, is just thinking of everything as a system and a collection of subsystems and understanding. One thing we did early on is previously we would send out a memo across the company whenever we made a sale and we would congratulate the salesperson who closed the sale. And I said, well, it's not... Once we implemented Deming, I said, it's not just the salesperson that made this sale. This sale was the result of everyone in the company working together to produce a good product and provide good support to our customers and do good marketing and all the stuff that's required. It's all of us working together. So we just said, "Let's stop congratulating the one person and let's celebrate the sale across the entire company and congratulate everyone." So it's these kinds of things that sort of just seem natural to me and that just aligned with sort of my worldview.

0:21:34.8 Andrew Stotz: And how do you handle that for the salespeople? Is it the case that in your type of style, in the Deming style, that really only a certain type of salesperson can work in that environment and the rest of them are gonna say, "That's not for me. I want to get the commission dollars and I made that sale, and everybody else's job is to produce and deliver?" It starts with the sale.

0:22:03.1 Mike Carr: No, you're absolutely right. There are people like that, and in fact, we changed our recruiting process. And right from the first screening call now, we start talking about the fact that we pay a fixed salary and we don't have commissions and we don't have quotas. And initially, I thought that would be really appealing to people. I thought everyone we talked to would be like, "Wow, that's exactly what I want." But we actually found and experienced a number of people that when we explained that, they said, "No, that's not for me. I want the commissions and I want the quotas and I want the celebration that comes with closing a sale and I want those things." So we just make it... Today, we just make it very clear up front because we're more about finding the person that's gonna be a good fit and has the intrinsic motivation for what we're doing. And so we're very upfront about it early on.

0:23:08.2 Andrew Stotz: And that makes sense. There are some rainmakers out there who can bring in a huge amount of sales, who are very skilled at it, and they know the game very well. And so they say, "I don't want my compensation tied to anything to anybody else." And they have plenty of places to go work. But for the people that are different from that, that say, "I want to be part of an overall system and I want to contribute to this company," and all that, there are people that also see the value of that. And then I guess from an overall business perspective, when you change the way you looked at the way you're hiring salespeople, the way you're incentivizing them, and the way that you're getting people working together, what are some... Some people say, "Yeah, you're gonna lose some good salespeople. Your sales may even go down if I take all of my great performers and I say, "All right, we're going on flat salary plus some bonus for the whole company when we do well." I'm gonna take a hit in my revenue for the next six months. But what benefit on the other side do I get?

0:24:19.0 Mike Carr: Right. And that's exactly what we saw. Initially, sales went down and we did have some people leave, and we did have some people that we had to ask to leave, unfortunately, because they had been hired under a different system, the pre-Deming system, and they weren't really a good fit for the way we were doing it now. We did have some people stay as well. So it's kind of a mixed bag there. But it did take a number of years to stabilize. And to be honest, Travis probably heard me... Every time I would come to the meeting that we had together, it would be always the same problem: "I can't get sales working." And for the first couple of years, it was always pre-Deming, "I can't get sales working." And then Travis sent me to the two-and-a-half-day training and I implemented all that, and the next two years was, "I can't get sales working." But eventually, it did start working. And also, it's not easy. Deming is not easy. And even Deming himself said there's no instant pudding.

0:25:32.5 Mike Carr: So it does take a lot of study, a lot of learning. There are good resources out there, but there could be more. I think this podcast is one of them that's a really good resource I learned a lot from. But sometimes it's a little bit hard to find resources to help you get up and running. So it takes some time to sort of figure all this out, get all your systems re-implemented from scratch. And so that's why today, when I meet people and suggest Deming, I always suggest just try this one thing or try this one thing. Don't try to just immediately jump in the deep end with both feet.

0:26:14.4 Andrew Stotz: Yeah, I want to come back to that in a second, but I want to go also to Travis because what Mike's talking about is I'm sure all kinds of stuff you faced and dealt with related to incentivizing and all of that. Maybe you can talk a little bit about your experience.

0:26:30.7 Travis Timmons: Yeah, one of the things kind of to circle back, like you said, there are some rainmakers out there. And I think the consistent thing I've heard from smaller businesses under, I don't know, under 10 or 15 million in revenue and under, it's hard to afford what the rainmaker wants to be paid. So when you have that reality as a small business owner, it'd be great to have a rainmaker. You can't afford a rainmaker, but you're trying to put a system in place for non-rainmakers that works for rainmakers. And I don't even... I'm not saying that Deming doesn't work at large organizations, because it absolutely does. But I think that's the reality of... I think who we're trying to reach is the small business owner out there that doesn't have their MBA from Northwestern and doesn't just have any kind of. Like Mike and I, we had zero business experience, but the reality is you need a different approach to have the sales piece work. Yeah, we never really had a sales team in our world, so I didn't have that problem to solve in my organization just by the nature of kind of how we were structured.

0:27:48.3 Travis Timmons: But we did have other issues in terms of the system thinking. And that's where realizing to Mike's point, the one big thing we had to tackle early on was like, hey, if we have a good client visit, it's not just because the physical therapist crushed the visit. The front desk had to have a good experience. The billing team had to get the bill out clean. Everything had to happen correctly for that visit to go well. And in our world, that would be, I guess, our sale. So the system thinking, how do you get the entire team to understand what direction you're going in? So you have to be a team player minded person. I think Mike would agree with that to work well within Deming. But yeah, we didn't have the sales... Now, I've heard plenty of stories over the years in different organizations I've been part of that had the same problem Mike did. And I've heard at Deming seminars time and time again, organizations that made the switch and it was a game changer for their organization. And it doesn't happen in two months, to Mike's point.

0:28:54.4 Travis Timmons: But it has a way to approach things in a systematic and methodological way. If that makes... Does that kind of align with what you'd say, Mike? The system approach and collaboration for the entire team to understand, here's where we're going, rather than sales doing this and development doing this and marketing doing that and accounts receivable doing this, like nobody's trying to get the same thing accomplished at the end of the day until Deming helped me see that in a different light.

0:29:26.3 Mike Carr: Yeah, I would agree with all of that. But I would also say while you're also learning Deming at the same time, so it's a little tricky to learn it all and implement it all at the same time. I explain it to my team as if you're driving a car at 70 miles an hour on the freeway and fixing the car at the same time. It's hard to do both.

0:29:50.3 Andrew Stotz: I thought you were going to say and climbing out of it into another car while you're fixing both.

0:30:02.3 Mike Carr: Yeah. Similar. Yeah, fixing both. So yeah, because that's a good point because you're still running the company you had, you're trying to transition to the new sort of company under the new system, and you're learning about it all at the same time. So it is not... There's no instant pudding, but I would say it's worth it at the end of the day.

0:30:14.3 Travis Timmons: I would say...

0:30:17.0 Mike Carr: I want to... Sorry. Go ahead.

0:30:18.7 Travis Timmons: And Mike, you can tell me if you would disagree with this, I'll just go observationally because you said, "I listened for two years, you complain about sales," and that's true. And then on the flip side of that, when you implemented Deming, it took about two years. I don't think it was that long, but it did take some time. What I think would maybe be interesting for the audience to wrap their head around, and Andrew, you probably could tease this out better than I can, but you've stuck with it. What would be the reason you stuck with it versus everything else you tried for a few months and then switched? And you kind of explained that with the system view, but I think that's the powerful thing is there is a lot to learn with Deming and it's a constant journey. It's a journey. I'm still well over a decade into this and I'm still learning. But what made you stick with this approach versus the whack-a-mole that you were doing prior, if that's a fair way to look at it?

0:31:21.4 Mike Carr: Yeah, I mean, it's really just the way it aligns with my worldview and my engineering background. The systems thinking just sort of makes sense to me. And so I said, it all just lines up so well, and it just seems like it ought to work. I just need to sort of figure it all out and get it in place. And I just didn't want to go back to sort of the high stress, rapid hiring and firing. I would rather put my effort toward bringing value to my customers than spending hours and hours debating how our compensation structure should balance base salary versus commission. I was spending so much of my week fiddling with the commission structure, and I wasn't doing the things that were bringing value to the customer at the end of the day. So now I feel a lot more productive, even if it takes some time to get it figured out. I feel like it's... My time is spent more productively in the things that I do now, figuring out the system.

0:32:34.0 Andrew Stotz: I'm curious because if you objectively look at it, people understand system. In biology, we learn about system. Doctors understand the human body and interactions. And yet we kind of blindly... If I think about it... I take care of my mother, she's gonna be 88 in a couple of weeks. And when you take care of someone that's fragile, everything has a secondary effect. And so it's easy, for instance, if she has to go to the hospital for something and then they see something and they think, "Oh, well, we should just give her medicine for that." Well, okay, have you thought about the fact that that medicine may help her with that, but she could fall because of the dizziness she's gonna get from that, and that fall could pretty much end her life? And also have you thought about the fact that what we're optimizing for is not necessarily what you're optimizing for? We're not optimizing for longevity. We're optimizing for today being the best day it can be. So when I look at, even in the case of my mom, for instance, with blood pressure, one of the things I use is I went out there and I found beetroot, and I basically make a beetroot drink, measure blood pressure before and after and throughout the day.

0:34:09.8 Andrew Stotz: It probably lowers blood pressure more than any pill. And I'm monitoring everything as an analyst, which is my background. And the side effect is good health of drinking... If you drank too much beetroot juice with carrot and other things I mix in with it, that's a side effect. But yet my mom is, "Just give me the pill." And I'm just curious, what kind of world are we in where we do know systems thinking, but it's like it's crushed out of us. It's not even crushed out of us. We know. And if we look at all the things that we do in society, whether it's disease or whatever, it's just constantly, we don't follow it. And I'm just curious, what are your thoughts on that? Or am I wrong? Many people just simply don't understand systems thinking.

0:35:08.8 Travis Timmons: Well, I think it's complicated. I think it's complicated, A, because to Mike's point earlier, we're not taught about this through a traditional structure, or if we are, we're taught about it... Like, I had a background with military training, and it doesn't get much more command and control than that. And that doesn't work in the real world, so to speak. So there's not a lot of training mechanisms out there that prepare you to deal with. I love the fact that Mike, as the engineer, said the most important thing to him was the psychology. I think that speaks volumes to how powerful, when you get the entire system working well, it gets back to the joy in work.

0:36:00.5 Travis Timmons: And Mike might correct me on this, but I think one of the reasons he continues to dive in, as do I, with Deming is it doesn't suck energy away. It just... You have more energy because you have a method and a system to work within that makes sense. Like if I do this over here, if I know that there's an entire system involved, to your point with the blood pressure medication, if I do this, it's gonna have a consequence. And if you have that worldview of your business, if I tamper with sales but I don't fix the product, it's gonna be hard for the salesperson to get sales because my product isn't good. Or that whole system view. But yeah, I think it's awesome that a PhD electrical engineer, super smart guy, the most important takeaway for him was the psychology and energy piece. I think that speaks volumes to what Dr. Deming does.

0:37:02.5 Andrew Stotz: I wrote it down and I wrote down intrinsic motivation. But also, this is another... When Deming tells the story about the girl who makes a Halloween costume with her mom and they don't have much, but it's something nice. And then they go to a Halloween party and then an adult comes up with the idea of having a competition. And of course she didn't win, but it was an amazing experience with her and her mom making this costume over time. And you just think, we understand intrinsic motivation very well, but yet very few people are optimizing for that and truly thinking about that. So both intrinsic motivation and systems thinking we know, but yet for some reason just isn't encouraged.

0:37:57.4 Mike Carr: That's because the first day of kindergarten you get the gold stars. And then it sort of goes downhill from there. But I have a business example of what you're talking about, Andrew, with the understanding systems thinking but not applying it. And I've brought this up with my team in the pre-Deming days. I used to ask, why do we pay the entire company a fixed salary except for these three people over here? What's different about those three people than everyone else? I don't pay developers per line of code written. I don't pay them based... I don't have a quota on how many bugs they're allowed to write per week. It's just not done that way. It's a fixed salary, and we give you some tools to work with and a system to work within. But for some reason, we have these three people over here that we have to treat completely differently from everyone else. Why is that? And the only reason that I could come up with is that's just how everybody else does it. So I think discovering Deming sort of answered that question for me, which was, you don't have to do it that way. You can just pay everyone in the same way because everyone basically is motivated intrinsically to do the job and feel like they're making a difference.

0:39:36.2 Andrew Stotz: One of the ways that we do it in our coffee business is we look at the results of the business every three months. And then I've developed a benchmarking system that looks at what I call profitable growth. Are we profitable and are we growing? And then I look at that relative to our global peers, and then I say, are we profitable and growing more than our peers? And it's a scorecard, but it's a scorecard for the whole company. And then what we do is every quarter we say, okay, we were profitable and growing better than our peers, and therefore we're going to allocate some of the profit that we make as a bonus. And then we do a compensation across the whole company split in a couple different ways. But our objective... And we've had different meetings and stuff, but there was something that triggered my business partner, Dale. I don't know what it was, Travis, but Dale just had his first kind of offsite and he listened to the podcast and he got a lot from that. And he even presented some of the Deming stuff because we've done lots of training, but he was like, many people in our business don't even really know it anymore because it was a while ago that we did a lot of that training and stuff like that.

0:41:16.3 Andrew Stotz: So I wouldn't say that we're implementing to a level that I would if I was running it, but that's also, you own companies and you run companies and you don't want to confuse those two things. But anyways, the point is that once we did that... And then we fly everybody in across Thailand, wherever they are, whether they're sales or technicians or whatever, and bring them together for a day to review the results. And that's the first kind of offsite where we had a very specific... And Dale and I had a meeting a couple of weeks before it, and I went through from what you talked about to help narrow it down, to help him think, "Okay, what do you want to get out of this?" Because I really started to understand that you were really focused and you were not overextending yourself as to everything that you wanted to accomplish. But the excitement that employees feel when they're all in it together, that's what we want more of. And like you said, it's the way we think, and that's the way we want to live. So, yeah, that's a little bit of my story there with what your influence was, Travis.

0:42:29.2 Travis Timmons: That's great. Yeah. And I think, I mean, you mentioned benchmarking and KPIs. And one thing I'd want to make sure listeners understand, because sometimes when we talk about Deming, they think, oh, you just rainbows and puppy dogs and everything's going to be fine. We do have, and I know you do too, Andrew, and I know Mike does, there's a lot of KPIs we look at. And we want to be industry leading. But when you have a different view, it's a long-view and it's a system view. And when everybody's working to optimize the system and understand if we do this well, we get to stay in business and maybe crush the competition along the way, that's kind of fun. But the KPI piece and the Deming system approach, it's a long-term view. So that's just something that came to mind. I've had people say this before, and I'm sure Mike's heard it, because, oh, you're just paying your salespeople a salary, how do you motivate them? How do you keep score? Mike has a KPI dashboard, I am certain. Fitness Matters has a KPI dashboard for sure. Andrew's coffee company has a KPI...

0:43:52.2 Andrew Stotz: No, we don't.

0:43:53.6 Travis Timmons: You have to track.

0:43:55.3 Andrew Stotz: What we don't use is, I just don't use.... We don't use that word KPI, because I hate the connotation of it. But we definitely track and use that for feedback, just like you guys are. But yes, I just it's just I have a pet peeve about that.

0:44:14.2 Travis Timmons: Yeah, yeah, no, I totally get it because it has all the negative connotations that go with how do you make those happen? But like for the common cause versus special cause and variation and all of that. But yeah, it's fun to see when you optimize your system and the entire team works. You have I've shared on the podcast here some of our data and it's just it's fun. It's work. It's work. Every day is hard. But you have a method by which to attack the work. And I think Mike could probably speak to that too with his experience. But that's why he's stuck with it all these years. Even though there was about a year into the process of Deming where he was still complaining about sales, he had a consistent process by which he was tackling it, and it got better along the way, I think.

0:45:08.6 Andrew Stotz: And the thing that I would like to wrap it up with is to just dig a little bit deeper into something that you said, which is it takes time to figure it out. And I would like you to talk about that little bit of learning and application journey because obviously if someone's able to go to a seminar, that's fantastic, but let's take someone in Europe, in Asia, wherever, that they may not have that access. Tell us a little bit about how you started that journey and what you've now seen and what you would recommend, which you already did give some recommendation. But maybe you can just talk a little bit about that because one of the things that's unique about this is that, number one, it's one guy, Dr. Deming. It's not a movement like Lean or something else that has certifications and these traditional things. And so it makes it harder to understand it. It makes it harder for it to spread. But maybe just tell us a little bit about your experience there.

0:46:19.1 Travis Timmons: I'll share my piece, and I'm sure Mike has great examples as well. But yeah, the down and dirty DemingNext is a tool that is available now that was not available when I started my journey. So you get bits and pieces through DemingNext. That's amazing. That was not around when Mike and I either one started our journey, I don't think. Second, if you could just have the concept of looking at your business as an entire system rather than pieces and parts. And then I always recommend people start in one of two small areas. It's either with the PDSAs, plan, do, study, act. That's a very easy, low-cost way to start somewhere in your business. Or operational definitions. Those are the two areas I think are very easy to implement, low cost. And when you apply that to a systems view, I think right there a lot of positive things can happen. And then the DemingNext that the institute has as a resource is one of the things that I think allows more people to get access to Deming and implement it.

0:47:34.3 Mike Carr: Yeah, I would reinforce all of that. The DemingNext program is really good. The two and a half day is really good. I would also recommend going to the two and a half day multiple times if you're able. And I would also recommend taking as many of your management team and C-suite as you possibly can and putting them through the two and a half day or whatever kind of training, DemingNext or whatever training you're using, because I've found that about 80% of Deming is having a shared vocabulary across the company so that you can have these meetings and you can say things like common cause variation and everyone knows sort of what you're talking about. If you don't have the shared vocabulary, it's kind of hard to make the improvements in the business. So whatever training you're using, and I would encourage people to just like sponge mode, just anything you can find, try to gather it all together from whatever place and share it across the company. But the number one thing that I would do if I were starting today is I would... This is one of the things where I think AI can really help you out because you can sit down with ChatGPT and you can just simply say, "Help me learn about W. Edwards Deming."

0:49:00.3 Mike Carr: And you can have a conversation and you can say just ask it, "How can I apply this to my company?" And that's probably going to start a really interesting back and forth. Of course, you need to make sure it's not hallucinating something along the way, but I think that could be a really interesting resource to help learn and relatively inexpensive, and you can get it for everyone in your team and use that as an onboard. You could even ask it, "What is something simple I could try tomorrow that I could see if it works in my company?" and see what it recommends. If I had to start over, that's probably where I would start.

0:49:35.6 Andrew Stotz: That's great advice. And I know also with like NotebookLM and things like that where you can upload the source documents and then have a discussion, AI is super critical now, and I think opens up a whole new opportunity for spreading the message. So that's a resource where you couldn't get it until you talk to Kelly Allen as an example, or others that know it, and here you have a huge resource. I want to wrap up there, but before we do, let's give you guys the last word. Travis, maybe you want to just wrap up your thinking on what we've just discussed and what you want the audience to take away. What do you want them to do? What's your call to action?

0:50:22.7 Travis Timmons: Yeah, call to action would be start learning one thing about the Deming approach and Dr. Deming. I think you'll be surprised how it looks at the business world differently. So I would just encourage people to, as Mike said, be a sponge, whether it's listening to these podcasts, taking a look at DemingNext, ChatGPT, there's all kinds of different routes. But just start to see why is this different. And then the podcast, DemingNext, just so many stories of businesses that were having a hard time and having kind of the life sucked out of the owner that found a different way. And yeah, just happy to have this opportunity to share. I think Mike and I are both passionate about getting the word out to as many business owners as we can because we know it's hard and we know it doesn't have to be. So I would just encourage people to start where they feel comfortable. There's no wrong or right place. You don't have to get a certification in Deming to do Deming.

0:51:06.3 Andrew Stotz: Right, Mike?

0:51:29.2 Mike Carr: I guess my call to action would be to take a step back from the things that you may have seen other companies doing. Maybe you didn't have that leadership training. Maybe you learned leadership and management skills by copying what you saw other people doing. And basically just ask yourself, is there a better way than what I'm seeing other people do? And just open that door for the learning that's going to come with learning Deming and give it a chance. Try something, give it a shot, see how it works for you with the understanding it's not going to work right off the bat. It's gonna take some doing and take some learning. But just try to see that maybe what other people are doing is maybe there's something better than what other people are doing and just allow for that opportunity.

0:52:25.3 Andrew Stotz: Yes. As one of the people in a 12-step self-help program said, you have nothing to lose but your misery.

0:52:38.0 Travis Timmons: Right. Right.

0:52:40.2 Andrew Stotz: So, Mike and Travis, I want to thank you on behalf of the Deming Institute for this discussion. Fascinating. And I really want to encourage listeners to take some action. Go to deming.org and jump on DemingNext. Get access. ChatGPT, NotebookLM, whatever's your tool, go for it. It's right there. And the results you get from it are enormous. Now, this is your host, Andrew Stotz, and I want to leave you with one of my favorite quotes from Dr. Deming, and really, it's what makes it all worthwhile, and that is, "people are entitled to joy in work."

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How do you run an offsite that actually changes performance — not just conversations? In this episode, Travis Timmons and Kelly Allan share with Andrew Stotz what happened during the Fitness Matters off-site. They discuss how a Deming-inspired approach helped their team tackle a critical business aim, align around system improvement, and turn employee engagement into measurable competitive advantage.

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 discussion with Travis Timmons, who is the founder and owner of Fitness Matters, an Ohio based practice specializing in the integration of physical therapy and personalized wellness. For 13 years, he's built his business on Dr. Deming's teaching. His hope is simple. The more companies that bring joy to work through Deming's principles, the more likely his kids will one day work at one of those companies. And we also have a special guest, Kelly Allan, who is a long term practitioner of the teachings of Dr. Deming. And he's also been instrumental in bringing the teachings of Dr. Deming to Travis and Fitness Matters, and particularly to this offsite. So the topic for today is how a Deming style offsite can strengthen your company's competitive advantage. Travis, take it away.

0:01:01.4 Travis Timmons: Hey Andrew, thanks again for having us and super excited to share with Kelly and your audience how our offsite went a couple of weeks ago. The short answer, kind of the upfront, is it was amazing. We had fun, number one, which is always important, but engagement from the team was through the roof. For four and a half hours straight. We worked on the work together and had Kelly there to make sure we were appropriately following Dr. Deming's teachings. Had Kelly there to facilitate and a couple of fun things we did. One was the red bead experiment, which I'm sure we'll talk about as we go through the conversation here. The short answer is I know in the last podcast we talked about the preparation that Kelly worked with myself and our leadership team on in preparing for a Deming focused and led offsite. We did that and it was just amazing. What were your thoughts, Kelly?

0:02:06.4 Andrew Stotz: I'm curious, Kelly, as an outsider helping them, observing, what are your observations of how it went?

0:02:14.2 Kelly Allan: I think there was just incredible energy and interest in figuring out some of the challenges ahead for the company. People came in well prepared and it showed. The interactions in the breakout groups, interactions in the full groups. Often when you're in a full group of 60, 70 people, folks are often, especially new folks, and the company's been growing and adding new people, new folks are often somewhat hesitant to speak up. But the culture of the people in that room, the culture of the organization is bring it on, let's have a conversation, let's hear what people have to say. Let's share theories, let's get down and debate and wrestle with some of these things that are not easy. There's no low hanging fruit here. It's complex stuff in a complex and highly competitive industry.

0:03:28.9 Travis Timmons: Some of the feedback we received, I think I shared last time, Andrew. As Kelly said, we've hired several new team members and they've all shared with me just a breath of fresh air from where they came from before. The power of this offsite with it being focused on some of the core teachings of Dr. Deming allowed them to see how is this different? They know they like it, they know the culture is different. They know they can provide care the way they want to. They know they can have a voice, have an impact on the system. But they didn't really know why they just liked it. Having a Deming focused offsite to explain a little bit, you can't fully explain Dr. Deming in four and a half hours, but we covered quite a bit. Make the system visible, operational definitions. What are a couple other ones with the red bead, Kelly? We did some tampering.

0:04:28.8 Kelly Allan: Making sure that we're not being confused by visible numbers alone. That what's important is how we work on the system so that we're not doing special efforts all the time to get great results. It's built into how we do things.

0:04:43.8 Travis Timmons: To Kelly's point, part of why our team, for four and a half hours we had over 50 people all in, sharing thoughts without hesitation because one of the things we talk about in the very beginning of the meeting, one of Dr. Deming's core philosophies, if that's the right way to put it, Kelly, correct me if I'm off base here, but 96% of issues within an organization are system issues, not people issues. When you put that out there, we're here to talk about the system and improve it and make it visible. We're talking about problems with systems and processes, not people. Then the gloves are off and let's dive in and we're gonna say whatever's on our mind and there's no drama, there's no feeling of any backstabbing or throwing under the bus. We just get to work on making the system work better for everybody. That's where it's fun and fast.

0:05:41.9 Andrew Stotz: What I'm hearing is that Dr. Deming, my favorite quote is "people are entitled to joy in work." And part of the key to joy in work is contributing. People want to contribute in life. I love that word because I think everybody wants to feel like they're contributing to a mission, to an aim, to a goal, to a team. And one of the biggest problems we have these days is siloing off people and getting them focused on this little area and missing the whole bigger picture. And so to some extent, you've proven through what you've done that people really do want to contribute. Throughout this discussion, what we're gonna be talking about is this concept of Deming style offsite. And I'm gonna push back at times to try to make sure that we're clear on what's a Deming style offsite. Because it's not to say that Dr. Deming said this is how you do an offsite. But what we're talking about is your interpretations of how do we apply this thinking to this particular meeting style and offsite and ensure that we're true to that.

0:06:56.6 Andrew Stotz: One of the first questions I would discuss is just the idea that maybe you just had a really open, caring environment. And so is that Deming or was that just that? Or maybe you did a lot of prep. You guys have done a tremendous amount of prep. That's what I was impressed about in our prior discussions. Maybe you prepped, maybe you focused on the one thing. Those types of things is what could go through people's minds. Why is it that you're calling this a Deming styled offsite?

0:07:34.9 Kelly Allan: Well, I think in part it starts with Deming's teachings and continued Deming's teachings. I think it might be useful to start with the aim, to have Travis talk about the time that he spent researching and thinking and what's going on in the industry. And even though we can talk later about their industry leading statistics and data and recognition etc, it's off the charts. It starts with the aim. And Dr. Deming said let's be focused on the aim. And so there are a couple, Travis, you wanna just talk about the content aim and then we can talk about even a more cultural Deming cultural aim.

0:08:21.1 Travis Timmons: That was one of my early learnings years ago, Andrew, was the difference of an aim versus a goal. And so from the perspective of this offsite through the Dr. Deming lens, our aim as an organization is to maintain one to one care because we believe that results in optimal outcomes. And it's very rare in our industry to have one to one care. Part of how we do that is we have to be industry leading in everything we do. And the thing that we are industry leading in, but I feel it was the one thing that we could improve upon was our arrival rate. Patients get better if they show up, team members are happy, they don't want holes on their schedules. Referring physicians are happy. Everybody wins. So that aim of a higher arrival rate was our aim of this offsite and conversation.

0:09:17.6 Andrew Stotz: Can you back up just for a second and define arrival rate for those that didn't listen to prior discussions on it?

0:09:23.9 Travis Timmons: Sure. Arrival rate is a visit we have on the calendar. Do they show up or do they cancel? And part of what we worked on and a little bit of an aside here is operational definition of what's a cancellation on our schedule to make sure we're measuring what we want to measure. A funny aside, competitors, we hired several new team members came from other organizations and they tout an arrival rate that is high, like 92% arrival rate. Right.

0:09:55.9 Travis Timmons: And I asked them in the meeting and Kelly will remember this, I said, I know your institutions claim a 90 plus percent arrival rate. Did you have a 92% arrival rate? And they said, absolutely not. But they had people on their team, for example, the front desk might have been bonused based on arrival rate. So how they would take visits off of the calendar would not negatively impact arrival rate. So we talked a lot about operational definition and our aim is to study what we want to study, not to tamper or. Kelly, you share your favorite saying. There's only three ways to get better numbers, and those are

0:10:39.6 Kelly Allan: Manipulate the numbers which you were referring to from another company. Manipulate the system that gives you the numbers. So that also kind of fits with, well, we're not gonna call that a late arrival or a late cancel or a non arrival. We're gonna call that something else so we can manipulate the numbers. And then the third way, which was Deming's way, which is how do we figure out how to improve the system so that late arrivals go down. So that they're a natural part of what we do when people show up, the patients show up when they need to.

0:11:14.6 Travis Timmons: Yeah. And I think that's one of the things to your point earlier, Andrew, is was it just a happy go lucky meeting because Travis and Kelly have great personalities. Well, we know that's not true.

0:11:26.9 Kelly Allan: Speak for yourself.

0:11:29.3 Travis Timmons: But no, I think anymore people know when they're working on something meaningful that's gonna have an impact on their lives or where you're just there to drink coffee and have snacks. People don't suffer fools, right? They want to be there. To have a team of 50 plus people leaning in for almost five hours doesn't happen just because it's a fun environment. To your point, it's the right question to ask. I appreciate you asking that. It comes down to they understand that we're a Deming organization. They understand that what we're talking about is gonna be implemented in a Deming way. We'll talk about that more as we go on, but that, to Kelly's point, was starting with the aim. Our aim is improving arrival rate. How do we do that? That's where the Deming offsite comes into play. Kelly and I and our leadership team worked on, okay, how do we best convey this problem and this aim to our entire team rather than just five or six leadership people working with Kelly and just coming up with our own ideas and then spitting it out to the team at a monthly meeting?

0:12:47.8 Travis Timmons: The power of them owning and seeing the problem and then working on system improvement is the power of that is unmeasurable, as Dr. Deming would say.

0:13:03.1 Kelly Allan: Yeah. I think we talked about the aim to be able to continue to do the one-on-one care with patients because most companies are doing two patients, one physical therapist, three patients. Locally here in Columbus, Ohio, where Travis and I are at, we sometimes hear about classes of five patients with one physical therapist. Physicians and insurance companies, these people are not getting better. Right? These people are... Or if they get discharged, 'cause that's a way to get a better number. "Oh, we got them out." But they come back because they're not really healed. They don't really know how to take care of themselves the way they do when they come out of Fitness Matters. One of those overarching aims has to do with building the culture even further so everybody understands the why behind the what. We could say the what is how do we increase those arrival rates, and then the meeting was about the how we're gonna figure that out, how to do that. But the overarching piece had to do with the why. Why does this matter?

0:14:16.9 Kelly Allan: How do we see...If we see the organization as a system and we use a fishbone chart as a way to visualize some of that, everybody can see handoffs. Everybody can see how different parts of the system, of that patient journey, that patient story, intersect and how what happens upstream affects downstream and how the feedback loop from the discharge point of a physical therapist discharging the patient, how that can wrap back into the understanding of the customer care coordinators and how they can work with that at the very beginning of that relationship with the patient. It's all a part of a system, all a part of continuous flow. We wanted to make sure that everybody, especially the new people, really had a visual, a view of the organization as a system and how they interact. Part of those weeks of planning, it wasn't every day all day long. You start with some ideas, you refine them, you get some research, you refine them, you refine further. Travis spent a lot of time on that. Part of that value is time for reflection, time to have the others on the leadership team weigh in, give their points of view so that we're really seeing this from a fishbone perspective as well.

0:15:44.5 Kelly Allan: So now we can go into that meeting with everybody, and their homework was in part the fishbone with some instructions on how to do that and some examples of how to do that. And that was pre-work. So people came into the meeting already successful. They had already figured some things out. This just gave launch, just gave liftoff to the energy. They'd done this work, to your point, Andrew, they're making a difference, and it just fed on itself. The output was stunning.

0:16:21.0 Andrew Stotz: Travis, I'm gonna write your company aim as I heard it from you, and that is, or from both of you, is maintain one-to-one care. It's best, it's rare, it works. And the off-site aim was different from the company aim. It was the number one thing that we can do to improve that company aim is improve our arrival rates. Correct?

0:16:51.4 Travis Timmons: 100% correct. And you talk, I think you used the term silos earlier, Andrew. Part of the aha moments and making the system visible and working on this and building culture and teamwork, when everybody sees the complexity within your organization and understands that, there's a lot more willingness to support, like, "Hey, we need to change this process at the front desk," even though it may not be optimal for the physical therapist, as long as it achieves our overarching aim and improves joy in work for the front or less friction for a client coming in. Now the team starts to see and understand, all right, that's a system win rather than silos or turf wars. The amount of energy that is spent on that in organizations is... I couldn't do it.

0:17:52.9 Andrew Stotz: Another thing I think that would be difficult for many people with an off-site is you just had one aim. If we were doing prep in the companies that I know and I own and others, we're gonna list out 17 things we want to talk about in that four-and-a-half-hour off-site. From your perspective, why is it so important to get this one focus, one aim? And then I want you also to tell us more about how it went. We've set it up now, so just one last thing on the setup is this idea of focusing on one thing when you've got 17 different problems in our company and we got everybody together and you're telling me just one thing.

0:18:40.5 Travis Timmons: Well, and Kelly can chime in here because he was instrumental in getting us from pre-work to meeting day. But part of it, that's why it's two-and-a-half, three months of work leading up to this. We had the aim of arrival rate. All right, what are we gonna do? A lot of different ways we could have tackled that. We landed on fishbone and making the entire system visible. And that turned out to be the right move. I think Kelly can correct me if I'm wrong.

0:19:15.0 Kelly Allan: I would agree.

0:19:16.0 Travis Timmons: So we started with the aim and it's like, okay, how do we get 50 people to work on this together? Dr. Deming says make the system visible. And so we chose to do that via a couple different breakouts of a fishbone. And to your point, Andrew, when we did that, now there's understanding of complexity and then where are the biggest opportunities? Because we have seven things we're working on to achieve that aim. There's gonna be three or four large PDSAs. We're doing a software upgrade, which in and of itself... And a funny aside, so our organization's been doing the Deming approach for 13 years. Right, Kelly? We announced that we're changing softwares at this meeting. Right.

0:20:13.7 Travis Timmons: Everybody was like, "Okay, let's do it."

0:20:17.4 Kelly Allan: Unheard of. I see a lot of companies, that's usually panic time.

0:20:23.5 Travis Timmons: And it was announced at the beginning of the meeting. Any questions? "Nope, sounds like the right move for our aim."

0:20:32.3 Kelly Allan: Well, Travis, you provided the why behind the what. The what was that we have to change the software. You provided the rationale from all points of view, including from internal people who deal with the software to making it even less friction for customers and for physicians and for insurance companies, etc. People understood the why behind that what, and now they're ready to work on the how.

0:21:06.4 Travis Timmons: And I would even argue, because I agree with that, and because we've done Dr. Deming and have had success and accomplished so many things that people don't believe we've been able to accomplish as an independent organization, having lenses to look through and "by what method?" That's one of my favorite Kelly Allan-isms. By what method?

0:21:33.5 Kelly Allan: That's a quote from Dr. Deming.

0:21:36.0 Travis Timmons: Oh, okay. We're good.

0:21:38.9 Andrew Stotz: We stand on the shoulders of giants.

0:21:41.6 Travis Timmons: Yeah. There's a high level of trust in our organization that we can implement change. I think that...

0:21:51.3 Kelly Allan: I agree.

0:21:51.8 Travis Timmons: I don't want to undersell that in terms of how powerful that is that I announce we're changing our entire operating software in a few months and the entire team was... And we told them why, to Kelly's point. But to make that announcement and then just have everybody say, "Okay. Cool." I think that's crazy to me. I believe it because of everything else I've seen happen over 13 years. But to have a way, by what method, using Dr. Deming's principles, PDSAs, operational definitions, system view, we're gonna diagram it. Everybody left there confident that, "All right, we can do this and we're gonna do it." Anyway, what would you add to that, Kelly?

0:22:40.9 Kelly Allan: Yeah. I would say that fulfilling the promises that have been made at previous offsites just builds the credibility that this leadership team gets it, understands it, and is interested in engaging people and making things happen and getting things done in a way that doesn't disenfranchise people, it doesn't beat up on people, it doesn't cause harm, but people work together because they wanna figure it out. It's fun to figure it out. Yeah.

0:23:17.5 Kelly Allan: It can be at times a little too much fun, a little too exhausting to figure it out. But we're born wanting to make a difference and people can come to work there and know that they have a voice, they're heard.

0:23:33.1 Travis Timmons: And I think that's our superpower that I've learned from Dr. Deming is if I'm the only one figuring stuff out, we're in trouble. We're in trouble. So the team knows that we're gonna bring stuff, we're gonna talk about it, and we're gonna solve problems collectively through the Dr. Deming philosophy. That's something that just popped in my brain, Andrew, because it was such a non-event. But in most instances, that would have been the entire meeting would have been about that, the side conversations, people coming up to me...

0:24:15.0 Kelly Allan: And Travis, there would have been a lot of discussions at a non-Deming company about, "How do we get buy-in?"

0:24:22.4 Travis Timmons: Right.

0:24:22.8 Kelly Allan: "How do we manipulate people into saying this is okay?" We didn't have any...We didn't spend a minute on that.

0:24:30.5 Travis Timmons: Not one person asked me about the software the entire evening at dinner. It was just like, "We're gonna do it." It just struck me because it was a non-event in the meeting, but I think that would have been rare had we not had our history of Dr. Deming's approach and how we presented it in the meeting.

0:24:52.9 Andrew Stotz: Kelly, you said something that made me think of a book that I read in the past by Richard Feynman called The Pleasure of Finding Things Out. Great scientist. You talked about contribution and the desire for contribution and you talked about how people were figuring things out. And that's fun, that's exciting. That's what people want to get out of their management team and out of their employees. In some ways, I feel like you're talking about recess, a playground. Put all that stuff aside, let's go out and let's build this thing. All the joy that we did have when we were young. Think about, "Let's make a sandcastle! Yeah, you do that, I'll do this." That excitement...

0:25:45.0 Kelly Allan: That's what it was in the room that day. Different breakout groups working on different parts of the fishbone and then bringing them together and debriefing around it. It was very exciting. The energy was high. Andrew, you mentioned something, I think in part you were channeling Dr. Deming there because he also pointed out about how we're born wanting to make a difference, to make a contribution. Then we go to school and that gets beaten out of us with grades and command-and-control teaching, et cetera, et cetera. But to your earlier question about what makes this unique, special in regard to Deming, Travis mentioned the complexity. And so we go right back to the core of Deming: understanding variation and special cause, common cause, the important few things versus the trivial many, and how do you sort through those? That makes it very Deming. It makes it very Deming. The other thing that you won't see, and I've been in a lot of them through the years, in most offsites is those conversations about the why. It's usually, "Competitor's doing this," or, "We gotta make more money," or whatever.

0:27:01.0 Kelly Allan: No, the why for Fitness Matters is to achieve those aims. Right.

0:27:07.1 Andrew Stotz: Some of the things that you mentioned: have an aim, what makes this a Deming style, have an aim, think system, not individual focus, understand variation and how that can help you think system, not individual focus. You talked about pre-work, taking it seriously, and I would say that kind of responsibility for your employees and the environment. I was blown away with the amount of pre-work that we talked about previously. You talked about some tools like fishbone as an example. You've talked about the why. Travis, why don't you give us a very high level... We arrived at this time, this was then, we did this first, then we did that, then that. So we can just understand the structure of this meeting a little bit.

0:27:59.5 Travis Timmons: Sure. We've been big on operational definitions. So the operational definition of start time is Travis will start talking at 12:30 to start the meeting. Learned that one over the years. And I...

0:28:18.2 Travis Timmons: It was at a new location, so we had a couple people go to the wrong place. We put the map inside of the homework, swim upstream, try to make this as easy as possible. But to answer your question, we had an operational definition of the meeting starts at 12:30, and that means the meeting begins at 12:30. Operational definition, we had name tags. From an efficiency standpoint, we had six tables when we were going to do breakouts. People picked up their name tags, it had number one through six on it, so they know what table they would be going to at breakouts. We did a quick intro of every team member and what location they work at because we have had a lot of growth. Put names with faces, introduced Kelly so that everybody knew who he was. There's probably 11 people that didn't know who he was in person introduction and how that was going to be diving more into Dr. Deming. I made it very clear up front that this meeting, we're going to celebrate wins from 2025, but I made it very clear we're going to go through those quickly, not because they weren't huge wins, but because we had a lot of work to do to make sure we stay on that growth and excellence trajectory.

0:29:38.2 Travis Timmons: So we went through all of our wins for 2025. We reviewed our BHAGs, and then we got into the aim. In 30 minutes, we introduced everybody, we went over our wins for 2025, we reviewed our BHAGs, one of which is to be the best, leverage technology better than any physical therapy practice in the country was one of our BHAGs. Then I dovetailed that into, and we're switching softwares in a few months. Any questions? No. We go right into, here's what we're going to be working on today, referenced they're going to be using their homework, so they brought their homework booklets with them. We had PowerPoint slides so they knew what the directions were for the first breakout group. Kelly and I got there early and some of the leadership team got there early. We had the table set. We had the, I call it newsprint, up on tripods ready to go. You want to be prepared. They hit their tables because of the name tag. We had leaders assigned for each table.

0:30:50.1 Kelly Allan: And they were trained in advance. Yeah. Facilitators. Yeah.

0:30:53.5 Travis Timmons: We had leadership.

0:30:54.7 Andrew Stotz: So there was an intro period and then you said, "This is our aim and now go to your tables," or how did that... What were you telling them to do at the tables?

0:31:06.0 Travis Timmons: We told them the aim, reviewed the aim. To your point earlier, Andrew, overarching aim is maintaining our one-to-one care model.

0:31:14.0 Andrew Stotz: Yep.

0:31:14.7 Travis Timmons: Our aim of the meeting is how do we improve our arrival rate as an organization to greater than 85%? One of the ways we're going to accomplish that is making the entire system visible. We're going to go to our tables and we're going to work on... We had the fishbones drawn at each table, but we wanted them to fill in the fishbone as groups from their homework because everybody brought different ideas to the table. We wanted some conversation around that.

0:31:44.2 Andrew Stotz: That was a general fishbone. I think I remember later you talked about then breaking it down into separate fishbones, but that was just a general one to review what they'd done.

0:31:54.8 Travis Timmons: General one, work on the work together. To Kelly's point earlier, just the energy around working on ideas or, "Hey, I hadn't thought about that," or, "I didn't even know we did that in our system." Right.

0:32:07.0 Travis Timmons: Just understanding the complexity and really just getting the juices flowing on, here's what we're going to be working on because the next layer is going to be diving deeper into each one of those.

0:32:18.5 Andrew Stotz: How long was that period of going through the first fishbone and looking at their homework, discussing it together? How long did that last?

0:32:27.7 Travis Timmons: That one was a half hour because they'd already done the pre-work, so we assumed most of it was already going to be done. It was just kind of...

0:32:38.4 Andrew Stotz: Did you have them present any of that or that's just, "Go through that and that'll prep you for the next thing"?

0:32:46.0 Travis Timmons: We had them spend 25 minutes on that and then we saved room for five minutes for them to have kind of sharings or learnings or ahas. What did this experience teach you? Do you have anything to share?

0:33:01.9 Andrew Stotz: They're doing that within their group or they're doing that...

0:33:05.1 Travis Timmons: We went table by table and had them share with the entire team. Table by table, we had the team lead or anybody at the table, "Hey, what'd you think? What'd you learn?"

0:33:14.3 Andrew Stotz: Someone may say, "I didn't even realize that this impacts that and I just realized that now after seeing it." Okay.

0:33:24.0 Travis Timmons: Yeah. What are some of the things you heard, Kelly? I heard, "Oh, this is complex."

0:33:29.8 Kelly Allan: I also heard things like, "Well, I know how to handle this, but I need to define a process so that if I'm out, someone else can do it." Right? It's those kinds of little aha moments. Others were just, "Oh, is there a way for us to systematize that even further?" Again, it was that thinking about the system coming out in their comments. I think another part of the appreciation was really recognizing that a lot of people have to win. Deming talked about win-win being very stable and win-lose is not. They wanted to make sure the patients and the clients win, the physicians win, that the insurance companies are getting what they need, that the PTs and the Pilates people and the MAT people, etc., and the customer care coordinators are also having joy in their work. Because when you have a joyful staff, customers, clients really appreciate that. They just know there's something different. There's something different.

0:34:42.0 Andrew Stotz: And one question is, did you have any drift at that point where people started talking about other things that were unrelated but were key problems they're facing, or was setting your aim and doing the pre-work really kept them on track?

0:34:56.8 Kelly Allan: Great question. Yeah.

0:34:58.5 Travis Timmons: They were focused. They were focused the entire meeting. One of the things I learned it from Kelly or Ray, or maybe you taught Ray, I don't know, but we have a piece of paper we put up at every off-site, Andrew, we call it the parking lot. So that if somebody does have an idea that's outside of what we're there to tackle, we just have them go up and write it down so that they're heard, and it could be important, for sure, but we're not working on that today. We gotta stay laser-focused on what we're here for. So we have a parking lot, which has been super powerful, but nobody went to the parking lot the first half of the day at all.

0:35:39.2 Andrew Stotz: That's good. That's better than the woodshed. Excellent.

0:35:43.5 Travis Timmons: Speaking of the woodshed, this is one of my... I think this is one of the critical learnings, one of the many critical learnings I've had with Dr. Deming and the approach to leadership's responsibility. For me as the owner, at the end of the day, the buck stops with me, is to create joy in work, to create engaged teams where they can do fulfilling work. So you talked about the woodshed. It reminds me another one of my favorite quotes. A lot of owners or leaders talk about, "We have a lot of dead wood around here. Have a lot of dead wood on our team." The first Deming off-site I went to, Kelly said, "Well, there's only two ways that could have happened. Either one, you hired dead wood, and if you did, that's on you with your hiring process. Or number two, you hired live wood and you killed it. Either way, it's on the owner and leadership."

0:36:52.4 Kelly Allan: And I stole that from Peter Scholtes.

0:36:55.5 Andrew Stotz: Okay, got it.

0:36:57.0 Travis Timmons: But that struck me in terms of, okay, responsibility's on Travis to ensure we don't have that. Can't point fingers anywhere else. It's not people coming in with bad attitudes. So anyway.

0:37:15.8 Andrew Stotz: Okay, excellent. So now you've had the general fishbone discussion, you've had people present what were their key learnings from it. What happened next?

0:37:26.6 Travis Timmons: Just some quick aha's, anything from the homework, stuff like that. And then from there we did a couple-minute break and then we went right into the...

0:37:37.9 Andrew Stotz: It sounds like a HIIT, like a high-intensity interval training here. We did a couple-minute break.

0:37:44.6 Travis Timmons: We had work to do, man. People were there to get work done and get on to dinner. We had snacks and water in there they could grab real quick. Restrooms were close. And then agenda, we've gotta stay... And the team understands we have to do what we're doing, we have to be excellent in all categories. So the next thing we did, we came back together as a team, the entire team, and Kelly did the red bead experiment in preparation for the next breakout. Super powerful. For those that have seen the red bead experiment and how Dr. Deming used that to show how the willing worker shows up wanting to get all white beads, right? And the white bead, it's the white bead company, but there's red beads intermixed. No matter how hard they try, or Kelly offered a hundred-dollar bonus to somebody if they would just only bring out white beads the next time they put their paddle in, and it just had that visceral, in-the-moment realization that people show up wanting to do a good job. And issues, so the red beads were what we called cancellations impacting our arrival rate. Therapists want their patients to show up. Front desk wants, the client care coordinators want their patients to show up. Physicians want their patients to show up. So what do we need to do? It can't be bonus them if they show up or just try harder. What's not working? So that was a great...

0:39:23.4 Andrew Stotz: Why don't we go to that for a second. We're gonna have Kelly, maybe you can tell us a little bit about what you observed from that, and then we'll continue on with the rest of the structure.

0:39:36.2 Kelly Allan: Well, the way we set up the red bead experiment was very much focused on the real challenges and real issues that everybody at Fitness Matters faces in terms of this topic of increasing the arrival rate and how complex that is. I think the red bead experiment demonstrates for not only the people who are the willing workers and the people who are the inspectors and the person who is the scribe who keeps the spreadsheet, they realize that the numbers alone are not telling us what's going on. They realize that unless there's a system improvement, process improvement, and people working together to make those happen, you can bribe people, you can incent people, you can threaten people, you can send them home, you can give them a performance appraisal, you can do every kind of command-and-control management, but you haven't improved the system in which people work. There's still red beads. There's still red beads. We have to reduce the friction, we have to change the paddle. We have to figure out how it is we can help make it possible and easier for clients to want to show up so that they can get healthy and so that they can really appreciate what happens when they don't show up, how they are a part of the system. Once they become a patient, they're a part of the system of Fitness Matters.

0:41:18.3 Andrew Stotz: I'm just curious if there was also anything different. You've done the red bead experiment a lot of times with a lot of different types of companies. Were there any observations you had of the way they interpreted that that was either the same or different? What were some of your observations there?

0:41:37.7 Kelly Allan: Well, we planned it so that Travis and his leadership team could really do more of the debriefing so that they would have the context for the people in the audience as well as for the people on the stage, versus just a more generic, which is still powerful, to talk about how the system's in control and is this a common cause system or a special cause, what's really going on. Travis and his folks were able to then bring that context to the red beads, which I think made it especially powerful for this audience, for this group.

0:42:16.2 Andrew Stotz: Excellent. Travis, why don't you continue?

0:42:22.0 Travis Timmons: As Kelly shared, the leadership team debriefed after the red beads of the learnings and how that might be. The red beads were the cancellations that we currently have. Then we introduced, "Okay, now what we're gonna do is go do a deeper dive into the fishbones." There's five primary parts of our system, five bones. Each bone we're now gonna break out and work on the granular details. We did a fishbone for each of the larger bones.

0:43:01.8 Kelly Allan: Why don't you give a couple examples of the bones if you have it handy?

0:43:07.3 Travis Timmons: First bone is what we call initial contact. The first time a client has an interaction with Fitness Matters. Could be website, could be a physician referral, could be a neighbor talking to them, could be driving by. Initial contact, that's bone number one. How does that entire process work at Fitness Matters? Where's the friction point? Are there people that we don't even get into our door efficiently? They're not coming in set up for success, for example. Next bone would be setting them up for the evaluation. Third bone is evaluation day. Fourth bone is every subsequent visit up until discharge. And the fifth and final bone is discharge to ongoing wellness and how do we continue to stay connected? Those are the five bones as you flow through as a client at Fitness Matters, and the five major gates, if you will, is how we looked at it.

0:44:07.8 Kelly Allan: Every one of those is filled with complexity. There are a lot of little details to reduce the friction for the clients and for the system, for the patients in the system. I think that was an aha moment for people as well because a lot of them are in the quadrant four of unconscious competence. They've been doing this job well for a long time and they tend to forget the complexity. We have to identify the complexity so we can work on it and make it less complex, more streamlined, and so new people coming in can appreciate why Fitness Matters makes informed, thoughtful decisions about how they do things. It didn't just happen. These have been thoughtful things that have been worked on for years, but they can still be improved further and we can document them and make them more visible. When people saw all those little bones coming off the main bones, it's like, "Wow, there's a lot of little things that happen and we can impact almost all of those."

0:45:18.1 Travis Timmons: In some of the work we've already done on the bones to already have industry-leading arrival rate, but I think we can do better. We're one of the few, maybe one of the few medical appointments people have in their lives, not just physical therapy, but in general, that you go to do a medical appointment, do you know what it's gonna cost you out of pocket before you show up? Generally, you don't. We've swam upstream to make that visible to clients, so they already are coming in knowing what the cost is gonna be and are we providing that value? Just an example of, okay, can we swim further upstream with that and make it easier to pay and make it visible on their insurance deductible and all of that?

0:46:05.9 Kelly Allan: Well, and also, Travis, I think... I was just gonna say in terms of how many times have people been to a doctor's office, they've had to fill out a whole bunch of forms either online or in the office and then nobody ever looks at it. Something that Fitness Matters has been a leader on for a long time, which is how many of these questions are really required? How are we really gonna use that information? Let's not have seven pages. Can we get it down to four? Can we get it down to three? And increase... Because remember Deming's teachings are quality goes up as costs go down. Quality goes up as we have to commit less time. Quality goes up as joy in work goes up. Right? So that's that Deming structure of, no, quality does not have to cost more. In fact, Deming said if you're doing it this way, quality will cost less. And that's in part how Fitness Matters can compete against these big, big companies and win. I think, Travis, you've gotta share some of the statistics about what makes Fitness Matters an industry leader. What kinds of things are measured that you and others look at in the industry?

0:47:17.8 Travis Timmons: One of the big things in the physical therapy industry, Andrew, is what they call outcomes. They're measurable questionnaire by body part that you have a patient fill out at evaluation day and at discharge day, and it gives you a percentage of... In our industry, they call it functional ability. Are you 100% able with your shoulder or do you have a 60% disability with your shoulder? For example, across all body parts, we're 30 to 40% above national average on our outcomes. Not even close. Because of the efficiency, our patients show up. Again, the one-to-one care model is why it's our true north, and everything we do has to support that because of those industry-leading outcomes. Our no-show rate is one of the other things we define. Again, something we're working to improve upon, but we're already nation-leading. Our definition of a no-show is 24 hours notice up into a no-show. Most companies in our industry only call it a no-show if the patient just doesn't show up. With our definition of 24 hours notice or less, we're at 4% to 5%. National average of true no-shows, just not showing up, is 15%.

0:48:45.8 Andrew Stotz: Yeah, I can imagine even probably higher than that, but 15, yeah.

0:48:49.7 Travis Timmons: 15 to 20% depending on the research. Just two examples there. The Deming approach to system thinking, team engagement, getting rid of silos, operational definitions. To Kelly's point, we worked years ago on that initial client intake. I used an example several years ago around the time we were working on that project. My one son, got him an Apple iPad for Christmas. Other son got an Xbox 360. One product we got out of the box and turned it on, it was fully charged and ready to go in about 37 seconds. The other product took all kinds of unpacking, had to plug it in, and as soon as it came up, it said software upgrade required, and it proceeded to spend the entire day of Christmas downloading the update. We just use that as an example of how hard is this? We want that same experience for our clients. How do we make it an unbelievable healthcare experience for our clients?

0:50:10.1 Kelly Allan: Well, and Travis is being way too modest here, so I have to jump in. I don't know if I have the numbers exactly right, but Travis will correct me. Let's say you have an injury or you're recovering from surgery or whatever it happens to be, and the industry average is it's going to take 17 visits with a physical therapist for you to be at some level of functionality. At Fitness Matters, it might be 13 visits. Travis, is that too high?

0:50:42.3 Travis Timmons: 10.

0:50:43.1 Kelly Allan: 10 visits. 10 visits. So cut it in half. They're getting better in half the time. That's Deming.

0:50:52.9 Travis Timmons: Yeah.

0:50:53.3 Kelly Allan: Quality goes up, costs go down. Which is why Travis then can... Insurance companies also love them, right? It's like, wow, these people are getting better and they don't circle back just because they were... Operational definition is they're well. Discharged by somebody else, oh yeah, they had their 17, 18 visits, 19 visits, they're well. No, they're not. They come back or they go somewhere else and they're claiming insurance again. Fitness Matters, they learn how to stay well.

0:51:22.4 Travis Timmons: And that brings in another important thing that we've learned over the years, Andrew, with the Deming approach. Our data is industry leading, and we've worked hard at that. And we've got a great team that works within the construct that we've created through Deming. To get back to the unknown or unknowable quote that Dr. Deming would use, our marketing costs are low because patients go back to their physicians and say, "Hey, this is the best PT experience I've ever had." And after they hear that four or five times with us and they get complaints when they send them elsewhere, all of a sudden we start getting referrals from these doctors we've not even heard of before.

0:52:07.6 Kelly Allan: Yeah. Yep.

0:52:08.9 Travis Timmons: How do you measure that? What amount of marketing dollars would have to be spent to get in front of... Like, we doubled the number of physicians that referred to us in the last year.

0:52:23.6 Kelly Allan: Yes. That's a double, Andrew. Unheard of.

0:52:27.5 Andrew Stotz: Yeah.

0:52:28.1 Kelly Allan: Unheard of.

0:52:28.5 Andrew Stotz: Incredible. So you got amazing outcomes. Let's now wrap up about where did you get to at the end of this? What did you personally and the management team end up with?

0:52:45.9 Travis Timmons: So we had some do-outs. Our closing PowerPoint slide was within two weeks we would report back with one to two updated operational definitions and probably three PDSAs that we were going to tackle. That was kind of our promise back to the team, that we would look at all the work. We have paper everywhere. People got to vote. We had a one-page paper on potential PDSAs, and we gave them little stickers to vote on where they think we should put our time and energy and resources. Our takeaway, our product, if you will, three PDSAs. One that has two under it is the new software. We're gonna start doing online scheduling, automated waitlists. I won't get into all the details, but PDSA one has software change. PDSA two, there was a lot of feedback on, "Hey, it would be great if we had kind of a scripted conversation point for the client care coordinators for these four scenarios: first phone call, first in-visit, how we take payment and make their benefits visible to them, how do we take a phone call and handle a cancellation when they do happen to ensure that it's a positive experience."

0:54:12.4 Travis Timmons: And then how do we handle kind of a no-show? Another PDSA is we're gonna have those client care coordinators create their first version of what they think the best script would be, 'cause they're the ones that do it all day. Why would I try to come up with that? And then have them send it to us and do some feedback there. Then we updated our operational definition of canceled visits so that there was clarity across the system to make sure we're measuring what we want to measure, which is how many people show up to their visits each day. We reported that back to the team last Friday, actually, to make sure we hit the deadline we promised to them. And then we let them know we're also gonna be working on kind of a third or fourth PDSA—I kind of lost track there of how we're counting it under the software—but training the entire team on what does it mean to have client engagement and what is our operational definition of client connection and client engagement. So they know we're gonna be doing that on a location-by-location basis at the March monthly meeting.

0:55:26.4 Travis Timmons: That was our takeaway. A lot of product to come away with, and they're gonna have all of the context from the team off-site to understand what we're getting ready to tackle, especially with the software change.

0:55:40.1 Andrew Stotz: My first reaction to that is, oh, those seem like kind of things that you could have figured out some other way, or there's not that many things, or there wasn't some stunning breakthrough. Explain why you're happy with what you got versus you prepared, you did a lot of work, you got those things. Some of it may be that, hey, we need to go through a process. I may have known some of those conclusions, but if we don't have a process of going through that, first we have the risk of maybe I'm wrong in what I think. And the second thing we have is that we have the risk that it's just a business run by dictate rather than getting real buy-in. I'm just curious if you could explain a little bit about that.

0:56:30.7 Kelly Allan: You said the bad word. You said the B-word.

0:56:34.5 Andrew Stotz: Buy-in.

0:56:35.4 Travis Timmons: Understanding, Andrew. Not buy-in.

0:56:38.4 Andrew Stotz: We're looking for buy-in. No. Okay.

0:56:40.8 Kelly Allan: We change it. How do we get... The conversation changes when you say, "How do we get understanding?" Now it's about the why behind the what that leads to the how, versus buy-in, which means, "How are we gonna sell this to somebody?" Sorry, Travis, I couldn't resist.

0:57:02.8 Travis Timmons: No, it's 100% true. And to answer your question, Andrew, my first answer and probably the most powerful answer we already talked about earlier, but it's very important to reiterate and maybe close with, is because of our approach and the time and investment we spent preparing for the meeting, doing the meeting, the fact that there was zero concern or stress around us switching our software system. The amount of engagement that there's gonna be, 'cause there's gonna be work to be done by all team members in preparation for that software change. I am confident I'm not gonna have to do any motivational speeches leading up to that. I'm not gonna have to bribe people. They want this to work because they understand why we're doing it, they understand the value it's gonna provide, and they understand, now that they have deep understanding of our system, they understand why we need to do this to continue to excel.

0:58:13.9 Travis Timmons: I don't know what that's worth. That's unmeasurable. But I know had I just announced this and not had any process, not a Deming approach, just, "Hey, guys, Travis thinks we need to do a new software and we're gonna change how you document, how you schedule," I feel fairly confident how well that would've gone. That would be my answer, Andrew, is the power of being able to present that to a team. They're already asking me questions about, "Have you thought about this in our system?" We have a shared Word document across the team. What questions are coming up in your system thinking? "How are we gonna message this to all of our clients so that they know they're gonna get new emails for their home program?" Great question. I had not thought of that. That is unmeasurable, but I know we're gonna be successful when we switch softwares because of our approach via Deming. What would you add to that, Kelly?

0:59:14.7 Kelly Allan: I think that's the essential nature of what happens. When you set out with a clear, healthy, thoughtful aim, you have conversations around that with your leadership team and what they can do then to filter that and start to talk about that with their teams at their locations, and then you have time to reflect and continually improve that, you're really creating a racehorse. Most off-sites, and Andrew, you've been to these, I know, they start... It's the 17 things. I thought of this when you mentioned it earlier. We start out, we have a racetrack and we want to have a racehorse. But by the time most companies get to their off-site, they've put so much stuff on that horse that it's now a pack mule. It will eventually make it around the track, but if you're competing with Travis, his racehorse, that team's racehorse has been around that track past you many, many times. You may get there, but they're already onto another track by the time you get to the finish line. You're finished.

1:00:36.7 Andrew Stotz: Yeah. You may even be releasing kittens and he's got a horse.

1:00:42.0 Travis Timmons: Kelly brings up another great point there. The other thing that gives our team confidence, because of our system view, 96% of issues are due to systems and processes, not people, the Fitness Matters team is confident that there's gonna be hiccups with a software change. They're confident they're gonna be able to talk about it in a system view quickly, and they're confident we're gonna implement change to rectify that. That goes into one of the reasons why I got zero shocked looks or zero sidebar conversations the entire day. The only feedback I've gotten is, "Hey, we're excited about it. We think we need to do this. And have you considered this as part of our system change?" I don't know what else as a business you could want.

1:01:40.4 Andrew Stotz: Kelly, I was thinking about a good wrap-up from you is to help the listener and the viewer think about how can they apply this into their business. Let's step back a little bit from Travis and think about the work you do and give us some hope, give us some guidance about, can we do this? How?

1:02:04.6 Kelly Allan: Yeah. Several things come to mind. One is that when you first start to learn about the Deming lens, the System of Profound Knowledge, his approach, it seems, it's different. It is different and it can seem to be, oh my gosh, that's so different. We'll never be able to do that. But the point is, the Deming Institute offers a two-day seminar workshop and they can learn not to be incredibly proficient or masterful in two days of how to go back and do Deming, but they know how to get started and they do get started. And then it just becomes part of, again, the Deming magic is as you start to work on these things, your costs go down, your quality goes up, and sometimes you can raise your prices because of the quality and sometimes you just are more competitive at the existing price, but you're taking work and rework and waste out of the system through the Deming approach, which allows you the time. That's the big constraint in most companies. I don't have time to work on improvement. I gotta fix this.

1:03:29.9 Andrew Stotz: Yeah. Right.

1:03:30.9 Kelly Allan: So that's a fix that's gonna fail. That's a fix that's gonna fail. So I think the message is you just want to read The New Economics. If you get the third edition, start with the new chapter. It's like 40 pages and it sums up a whole lot of what we've been talking about. Then there's DemingNext videos through the Deming Institute. You can get your feet wet there. You can then, if you want, attend a seminar or read more things or reach out and have conversations with people. But you just have to try it so that you can see that the payback is there, that the joy in work is there. And in a war for talent, they wanna work for Deming. People wanna work for Deming-based companies because they're not about manipulating people. They're about joy in work. They're about reducing the friction. So you just gotta get started and don't be just because it's so different doesn't mean you can't learn it quickly. You can.

1:04:36.7 Andrew Stotz: Yep. And Travis is a great example of that. In our prior episodes, he talked about the journey, about the pain and all that. I think that's exciting. I'm gonna wrap it up. I just have to laugh because I've been out of the corporate world for a while, just doing my own thing. But I was thinking, you mentioned about buy-in and then you said it means you're selling something. And I thought that's funny. I remember my father used to say, he used to get so annoyed because he'd say, "Yeah, let's talk around this," which was a common thing back in those days. But then I was also thinking another thing that we were saying was onboard. Let's get people onboard with this. What if you're onboard? It pretty much means you're drowning. And I just thought about those types of things that when we talk about fear and work or fear in what we're trying to remove fear and stuff, part of it is the way we speak and the way we communicate.

1:05:41.1 Andrew Stotz: Travis, I feel like I want to leave you with the last word. So why don't you bring us home?

1:05:48.0 Travis Timmons: Yeah, I think I would follow on what Kelly said is I would just the amount of joy, the amount of stress this took off of me as a business owner and as a parent thinking about things differently. And the first time you start learning about Deming's teachings and the System of Profound Knowledge, it seems a little off. Seems a little like this just doesn't seem possible. I've had several people I've talked to about that. It just doesn't work that way. To Kelly's point, I would encourage just try a couple things, whether it be do you have clear operational definitions? Have you done a PDSA? Do you know how to do a PDSA? But the two-day seminars is where you kind of do the deep dive into like, oh, okay, I need to think about things differently. So anyone struggling with a business trying the latest and greatest book that's been out or the latest and greatest compensation model to create ownership thinking within your organization or whatever the buzzwords are, this is a long-term path to clarity and to just an understanding of how you can make your organization a place that has a positive impact on the lives of your employees and your clients.

1:07:17.7 Travis Timmons: And man, if you get that right, everything else follows. Sales, profit, all the stuff that a lot of metrics look at. If you get the point of your job is to have a positive place for your team to work and how do you do that? Deming is the way to do that. Everything else follows after that, in my opinion.

1:07:38.6 Andrew Stotz: And on that note, Travis and Kelly, on behalf of everyone at the Deming Institute, I want to thank you again for this discussion. For listeners, remember, as Kelly and Travis have both said, go to deming.org, go to DemingNEXT. There's resources there so you can continue your journey. This is your host, Andrew Stotz, and I'll leave you with one of my favorite quotes from Dr. Deming. I constantly repeat it because I love it, and that is: "People are entitled to joy in work."

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What do you do when a new data point drops—and all eyes turn to you? In this episode, John Dues and Andrew Stotz explore the leadership discipline required when performance data changes. Instead of reacting to a single data point, they unpack how Deming thinking (understanding variation, avoiding tampering, and pausing to interpret patterns) can protect trust, stability, and improvement. A practical conversation for leaders who want wisdom—not speed—to guide their decisions.

TRANSCRIPT

0:00:02.3 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 John Dues, who is part of the new generation of educators striving to apply Dr. Deming's principles to unleash student joy in learning. The topic for today is when the numbers change and everyone looks at you. John, take it away.

0:00:28.4 John Dues: Yeah, it's good to be back, Andrew. I think this is sort of an interesting topic. Many of us that have been in leadership roles have been in this position where the numbers change, whatever they may be. For me, they're dips in attendance, they're assessment results changing, something like that, a subgroup's results changes from the previous year. Sometimes the changes are small, sometimes they're big. But I'm thinking about times when they're just large enough to draw attention in a meeting. And it's not even really so much the size of the change that's important, it's what happens next.

0:01:12.9 John Dues: So you can kind of put yourself in one of these meetings where you're looking at data and maybe you didn't even expect it, but people kind of notice. Then someone asks what went wrong? And then the next thing that comes is someone suggests some type of fix or solution, and then this pressure starts to build. Especially if they're all sort of looking at you, the silence can feel irresponsible. And so what do we do? We react in some way. We call another... For explanations, maybe from others. We adjust a plan that's already in place. We launch a new initiative or tighten expectations on people, whatever it may be. None of it's out of malice. It's done out of care, most typically, or at least in the settings I've observed this sort of phenomenon.

0:02:13.1 Andrew Stotz: Don't just stand there, do something.

0:02:15.2 John Dues: Don't just stand there, do something. But the thing is, very often it just makes things worse. Right?

0:02:21.0 Andrew Stotz: Don't just do something. Stand there.

0:02:23.8 John Dues: Right, right. The opposite. But even if you know that, it's very, very difficult in the moment to...

0:02:32.5 Andrew Stotz: The pressures.

0:02:33.6 John Dues: Yeah.

0:02:34.9 Andrew Stotz: Well, I have a little... Little thing happened last night when a friend of mine came to see my mom and me, and we went out for there's a restaurant nearby, so we got the walker and got mom going. And her natural inclination was to help mom in getting up and that type of thing. And I was explaining to her the difference between what I call a caregiver and a caretaker. And I was saying that most people are caretakers where they're just taking care and they want to just help. And she's like, "It's irresistible. I mean, in my bones, I want to help." And I said, "It's very hard to see that sometimes the best help is to let her struggle and use her legs to get up, not to help her on that." And that was like a revelation for her last night, it just made me think about that.

0:03:33.8 John Dues: No, that's actually a perfect analogy because her health is sort of a high stakes environment. Just like schools are high stakes environments or many of the businesses that people run that listen to this podcast have high stakes. In our cases, it's students and families matter, outcomes matter. There's a lot of different stakeholders that are interested in what's going on in schools. And when those numbers do change, it can feel like neglect if you don't do anything. We're expected to notice. We're expected to... Good leaders are supposed to respond. They're supposed to act decisively, right?

0:04:12.0 Andrew Stotz: Yeah, because there's another aspect to it too. Let's just say that you have a boss that understands it and you're like, "Yeah, it's just noise. It's not signal." But how many times can you say that? Right?

0:04:27.8 John Dues: Yeah, that's right.

0:04:28.5 Andrew Stotz: That's another kind of pressure in that situation.

0:04:31.6 John Dues: Yeah, that's like the second-in-command type person, right? So they have their own pressure. And what you can see happening, this like visible action is sort of like evidence of competence because you can see it. And so the reaction becomes the default. So just like in this example you're giving with your mom, that action to help is very hard to resist. Even though by doing so, like you were saying, she doesn't get the physical exercise and actually makes things worse in the long term for your mom's health.

0:05:10.4 Andrew Stotz: "Boss, why did Kevin get a promotion and not me?" "Well, Kevin's a man of action."

0:05:14.8 John Dues: Man of action, right. Exactly. Exactly. And there's all these risks for a leader that doesn't react right away. Are they disengaged? If they're asking questions instead of acting right away, are they just uncertain? They lack certainty? Are you ignoring the data if you are pausing or waiting? Again, under these conditions, which I think are prevalent just about everywhere that I've been, at least, reacting quickly feels like the safest move. But I think the conflation is speed and wisdom. But speed is not, definitely not the same thing as wisdom, right?

0:06:02.1 John Dues: In all of our organizations, the data fluctuates naturally over time. No different in schools, like we've talked about. Attendance rises and falls, assessment results bounce up and down, behavior incidents they spike and they dip. And it's not necessarily a sign that something's broken. It's often just how systems typically behave, the systems that we're paying attention to. I think the main mistake leaders typically make in that moment when they see that movement is that they think that automatically means something changed. And so you get these concerns if it's a bad move in the data. If it's a short-term increase, maybe we trigger some type of celebration. So this works both ways, actually. But the main point is that one data point becomes a story. It becomes the story of what's... We try to attach an explanation to this dip or this increase that's actually not grounded in any kind of reality. We would say they're just reacting to noise, kind of like what you just said. And the problem, though, is that there's a number of then very predictable things that happen. First, educators, and I felt this as a teacher. I taught in Atlanta Public Schools, a big district that was trying lots of new things in the early 2000s. You feel this whiplash. So priority shifts, guidance changes. Yesterday's focus is replaced by today's concern.

0:07:44.5 John Dues: And what happens in a setting like that, that I found, is that people start explaining instead of learning. Especially when there's a strong accountability system like there is in education systems, results are questioned immediately, often. And so the safest response at almost all levels of the organization is just to justify what's already happened, not to explore what might be improved. Very, very, very difficult. And that then leads to trust eroding. And over time, what I've seen is that educators learn that any fluctuation brings scrutiny. They become cautious, defensive, quiet. And obviously none of that improves outcomes. And again, just like in the example with your mom, it actually makes things harder to improve in the long term. So this overreacting to this routine variation then often increases variation, and so the system actually becomes noisier and not more capable. You get this vicious cycle. What's that?

0:09:00.5 Andrew Stotz: Tampering.

0:09:01.8 John Dues: Yeah, tampering. Exactly. That's what Deming would call it, tampering. When you intervene in a stable system.

0:09:07.3 Andrew Stotz: It's interesting. The one data point becomes a story is a great, great line. In the world of finance, everybody's trying to get the next wave. As a financial analyst, you're trying to think, okay. And all we do constantly is look at the next data point and say, "Does this confirm or not my view that gold's going to crash now, or gold's going to rise, or US stocks are going to X, or the dollar is going to... " And most of the time, we're just making one data point become a story, and then the next data point comes out and it's like, "Okay, so there's a different story here." And then...

0:09:51.3 John Dues: Yeah. That explanation there it's sort of... The key idea is reaction. It's literally seductive. It is seductive because it feels productive.

0:10:04.3 Andrew Stotz: In my finance work, when I help people with their money, what I do introduce what I've learned from Dr. Deming to say it really helps me separate the signal from the noise in the stock market, and therefore, I will never react. And I even set parameters where I rebalance my portfolio every three months. So when they go, "What are you going to do about such and such?" it's like, "Everything's set. I'm going to wait until the results are in, and I'm going to reevaluate on a framework, on a systematic way," which just helps me from getting whipsawed this way or whiplash this way or that way. And it's proven to be not only great for helping people feel like I have a deeper understanding and follow what I'm doing, but it also improves performance.

0:11:07.7 John Dues: Yeah. And you know, I'm definitely no financial expert by any means, but it makes me think of The Big Short, the movie, when I don't know how true to reality it is, but when the character played by Christian Bale, Michael Burry, is sticking to his guns with his shorting of the housing market and people are coming into his office and screaming at him. He's getting emails that are coming in one after another calling him an idiot, threatening him with lawsuits, and he holds. So that's like an extreme example of not reacting to noise. And you can see what it does to him in the movie, the intestinal fortitude, before sort of it comes to the conclusion. He got less and less certain even though he stuck to his guns, that he was doing the right thing. Right.

0:12:00.3 Andrew Stotz: I got to get that clip because I want to combine that with Mel Gibson in that movie, I can't remember, the Celtic battles in England where he's saying, "Hold the line! Hold the line!" What is it?

0:12:13.6 John Dues: Braveheart, probably.

0:12:16.3 Andrew Stotz: Braveheart. Yeah.

0:12:17.9 John Dues: Braveheart. Yeah. That's because when you're having a conversation like this and you talk about this leadership concept, just about everybody's going to nod along with you. But when you are actually in the moment, very few people hold the line, very few people hold the line. But at least if you have this grounding, at least you'll be more likely to hold the line because you have some techniques and some ways to sort of paint this picture that there's a firm logic. There's never certainty, but at least there's a firm logic for why you're holding the line in a particular situation. But it's very, very hard. Very hard.

0:12:58.2 Andrew Stotz: One question is, could there be such a thing like a mantra that the management team could have? Something like, "One point is not the full story," or something that they talk about in non-emotional times so that they've got it set. So when all of these numbers change and everyone looks at you, it's like, "Guys, remember, one point is not the story."

0:13:28.1 John Dues: Yeah, no, that's a really good idea. That would be a good sort of internal value or something marketing-wise that you could sort of, something sticky that would remind people of this, especially in those moments of anxiety or even panic, depending on the particular situation and the type of data that you're talking about. That's a good idea. I think the key thing is that activity is not the same as improvement. It feels good. It feels good to change something, introduce something new, new rules, new expectations, even though the system itself hasn't changed. And like you said, that's tampering. You make adjustments to a stable system based on something that's just routine ups and downs and it degrades performance. I think a lot of people are familiar with Deming's Red Bead Experiment. Less of them are familiar with the Funnel Experiment. He basically talks about when you are trying to hit a target through a funnel and you move it each time to sort of adjust for the variation from the mark. You actually, he called it going off into the Milky Way in terms of where you end up when you make these adjustments every single time.

0:14:46.1 Andrew Stotz: I thought that demonstration was so... I don't remember that he did it in the seminars that I attended. I remember the Red Bead Experiment. But that tampering is so powerful to understand the mess you can end up in.

0:15:05.7 John Dues: Yeah. And that was in The New Economics. I don't think he ever did it in a four-day seminar that I remember. But the interesting thing is generally the best choice is just to keep the funnel in the same place and keep going. But again, that's very hard. Especially let's say you're doing this as a group activity and group two, three, four, and five, you're looking over and they're making these adjustments every time, and you're just sitting there. And you're like, "Maybe they're onto something," or "Maybe I do need to move." But at the end of it, they're much farther away than you are.

0:15:43.4 Andrew Stotz: And I feel like the title you talked about, "When the Numbers Change and Everyone Looks at You," is evoking that emotion of, "Am I doing something wrong? Other people would do it a different way. Oh, they're making progress. I'm just sitting here." Those kind of emotions are the types of things that cause that tampering.

0:16:02.7 John Dues: Yeah. And then that shows up as initiative overload. You get these contradictory messages, constant course correction like in the Funnel Experiment. And the irony is you typically have a leader who cares deeply and they don't realize they're creating the very instability that makes improvement impossible. It's a tough realization. So what I would say is that when the data does change, the most important leadership move is not action, but it's interpretation. So instead of asking, "What should we do?" maybe a good first question is, "Is this shift within the range of what we should expect?" So just that question kind of slows the moment down. It shifts attention from reaction to understanding and it invites the group to look at data over time rather than point to point. It opens up this possibility that nothing is wrong even if the results aren't yet acceptable.

0:17:15.4 Andrew Stotz: Love that. Love that.

0:17:16.8 John Dues: Yeah, I think it's a really important...

0:17:17.5 Andrew Stotz: Is this shift within the range of what we would expect?

0:17:20.6 John Dues: Yeah.

0:17:21.1 Andrew Stotz: Answer's going to be "Yes, this is in the range." So next topic in a meeting.

0:17:28.5 John Dues: Right. And we've talked about this before. And it's possible when you've asked that question that the system itself looks stable, but it also may be producing outcomes we don't like. And so the key is even in those cases, reacting to an individual data point is not going to help. In that case, if you have stability but outcomes you don't like, you need thoughtful system redesign. But these sort of urgency-driven immediate fixes, overreaction, that's not going to help. That's not going to help.

0:18:06.9 John Dues: So the big thing is pausing before reacting. But that's often misunderstood. We talked about is he or she ignoring the data? Are they lowering expectations? Is that leader just indecisive? I don't think so. I think that's really what discipline is. And pausing, being that person that says, "Let's take a breath and pause here," it creates the space to study patterns rather than focusing on those individual data points. It allows leaders to separate stability from acceptability. It prevents unnecessary pressure then cascading through the system, which is what often happens. And so what I think is when you actually pause, what you're doing is protecting the people in your organization. When you do that, I think in an education system it protects teachers from being judged on noise they can't control. I think it protects leaders from... They are often then turning around and making promises that the system can't actually keep. It's sort of like a short-term thing, but you're hurting the long term. And then it protects students because they don't then undergo all these constant changes that disrupt their learning.

0:19:43.1 John Dues: So I think what a leader, a strong leader does that's different is they ask questions. What does this look like over time? Is this a meaningful signal from what we've seen before? What should we expect if nothing changes? Just some basic questions. I think resisting the urge to explain every up and down movement. And it's really at the end of the day what it comes down to is you're not trying to assign meaning to every data point, but what you're trying to do is understand the underlying system behavior. Now sometimes action is warranted, and in those cases, you're going to act in a deliberate way. When it's not, they're going to communicate that and communicate why we're going to wait in this particular scenario and why that's the responsible choice. So there's got to be this underlying logic whichever direction you're going to go. And I think if you've ever been around a leader like this, it feels calm. It just feels calm. It feels steady. And over time, the key thing is it creates this system that's trusting and then as a result, it's far more capable of improvement. It's far more likely that improvement's going to happen.

0:21:13.4 Andrew Stotz: That's amazing. And I was just taking lots of notes, but I wrote down pause, have discipline, protect employees, protect students. But I wrote down protect the aim.

0:21:27.0 John Dues: Yeah, protect the aim. That's good.

0:21:28.7 Andrew Stotz: Protect the aim of the system. Why are we here? And if we can't do that pause and look at it carefully, there's just no way we're going to achieve that.

0:21:43.3 John Dues: Yeah, no, I agree. And I think the thing is with these situations is that the most damaging decisions in schools are often made after the numbers change, but not because of the numbers themselves. Like even if they've declined, typically it's not to the point that it's catastrophic, but what's catastrophic is the series of decisions that are made as a result of the decline. And so in those situations again, this reaction feels responsible. But really what happens when you react without understanding is it creates more noise, more stress, more instability, and you still don't have the improvement at the end of all that consternation.

0:22:30.1 Andrew Stotz: Yeah, I would sum up my sum of this is the bad manager says, "That's a terrible result. Let's make it worse."

0:22:42.0 John Dues: And that's really what's happening. They're obviously not saying it, but that's exactly what's happening. Exactly. That's a really good summary. And I would kind of sum it up with three big ideas that would be helpful for listeners. I think the first one is that not all variation is meaningful. Most fluctuations actually are just routine, should not trigger action. The second one we've talked about, that overreaction creates instability. Acting on noise makes systems worse, not better. And then the third thing I would say is that pausing is a leadership skill and understanding must come before action.

0:23:30.2 John Dues: And I say it's a skill 'cause you actually have to practice it. I think you have to prepare yourself for what you're going to do when you get in front of a group and you're going to talk about results and those results maybe aren't exactly where you want them to be. You have to practice that, rehearse it. What are you going to say? How are you going to back that up? What's the logic? But I think when leaders learn to have that pause before reacting, they actually protect learning, they protect trust, and then they actually create the conditions for improvement. And I think that's the work that matters most when everyone's looking at you to make a key decision. Not easy, but certainly important work.

0:24:08.6 Andrew Stotz: That's a great wrap. I'm not going to add anything to it. John, 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 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."

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How do you design a team off-site that actually improves your organization? In this episode, Travis Timmons breaks down the mechanics of a Deming-styled off-site team meeting—from starting months early and setting a clear aim to using pre-work, fishbone diagrams, and PDSAs to drive real change. If you want a real-world example of how Deming leaders create focus, collaboration, and joy in work, this conversation is a practical place to start.

TRANSCRIPT

0:00:02.3 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 Travis Timmons, who is the founder and owner of Fitness Matters, an Ohio-based practice specializing in the integration of physical therapy and personalized wellness. For 13 years, he's built his business on Dr. Deming's teachings. His hope is simple; the more companies that bring joy to work through Deming's principles, the more likely his kids will one day work at one of those darn companies. Travis, how are you doing?

0:00:35.2 Travis Timmons: Hey, Andrew. Doing well, how are you?

0:00:37.1 Andrew Stotz: I'm really excited. We were just talking about the structure of today's discussion, and the topic for today is the mechanics of a Deming-styled offsite, which I... In today's session, we're going to be talking about the importance of starting early, setting an aim, figuring out and developing an agenda. Also homework, huh?

0:01:05.1 Travis Timmons: Right.

0:01:05.4 Andrew Stotz: Pre-work for attendees. I thought that's interesting as we were going through it. And then you talk about your activities, your outcomes and all of that. So why don't you get into it and walk us through the mechanics of a Deming-styled offsite. And by the way, one last thing. When we say Deming-styled, well, you're certainly getting a lot of support from a true Deming advocate, Kelly Allen, and your understanding of the teachings of Dr. Deming. And so you're doing your best to apply those things in this. Is it a perfect Deming offsite? Well, that's why we say Deming-styled offsite. Maybe the listener or the viewer would add in or subtract some things, but at least we've got the general structures. So why don't you take it away, Travis?

0:01:47.3 Travis Timmons: Yeah, no, happy to, Andrew. So yeah, we have our team offsite. It'll actually be 10 days from now. So from a big picture standpoint, one of the things I've learned is systems, process, organization, and none of that happens quickly. So every time we do an annual team offsite, it's about a three-month work-ahead process for myself and the leadership team. So we start a good three months before the meeting date just to start percolating on what do we need to talk about at this meeting? What's the aim? What do we want the outcome to be? And that doesn't happen with a week of preparation. So we've had to spend some time looking at our KPIs, where do we have an opportunity to have a positive impact on our system? So we have to study our current system, see where there might be opportunities for improvement, understand how do we want the team to engage with that. And for this year's offsite, our big aim... We have two aims for the offsite. One is to make the system visible. Everybody on the team. I've had some learnings through some newer leaders on our team that have been through the DemingNEXT and they've been on our team for a few years.

0:03:04.1 Travis Timmons: But they until going through the DemingNEXT, they didn't fully understand what system view meant. And that kind of hit me over the head like a ton of bricks. It's like, well, maybe that would be a good thing to spend part of our offsite making sure the entire team can visualize and see our organization as a system. And then the second aim from a mechanics, from a KPI standpoint, if you will, is we want to improve arrival rate for our visits. So basically, how many scheduled appointments show up is what we call arrival rate. To have a better impact on patient outcomes, joy in work for our team members, joy in the referral sources that send to us. So yeah, it was about a three-month process.

0:03:49.3 Andrew Stotz: And if I... Just curious, sometimes when I've done offsites or I've attended offsites, it's more general. Here you have a very specific thing, improve arrival rates. Why is it so specific and how do you come to that decision that this isn't going to be just an open discussion about things in our company?

0:04:14.4 Travis Timmons: Yeah. That's a great question. Some years they are a little more general. Like last year we spent quite a bit of time setting a new round of BHAGs, Big Hairy Audacious Goals. This year, looking at KPIs, looking at where the opportunities were to improve, where there were the most breakdowns and frustrations happening in our system that we were hearing consistently across our team. It's like, what's the one thing we can have an impact on that will, if we improve that, everything else will get better. And that was arrival rate. So then we started looking at, all right, how do we dissect that? How do we make it visible to the team so the entire team can work on it together? So that's how we came to that. And it's like, all right, this is a consistent issue. So if you do the control chart, it's like I can almost set my watch to what's arrival rate going to be every week. And until we change something in our system, that's going to be what's going to continue to happen and we need to have an impact on that this year. So that's how we came down to it. It's the one thing we can do that'll have the most impact positively across the entire organization.

0:05:23.1 Andrew Stotz: I often talk about a big company in Thailand that was a Deming-focused company for many, many years, and then a new CEO came in and he made it a different focus company. And the company struggled for years. Whether it's from that or not is a secondary item. But two weeks ago I was giving a lecture and a guy from that company, who is an older guy, was at the lecture. And afterwards we were talking and I said, "What's the difference between the prior guy and the new guy?" He said, "The prior guy set the direction and we all knew it. The new guy kind of has us set it or we go in a lot of different directions. It's not as clear." And so what I was thinking when you were talking about improve arrival rates, I was thinking, yeah, that's leadership. You've identified what you believe is the most critical element at this stage of the business right now, and there's a lot of knock-on effects of fixing that. Whereas if you went into that room and you say, "What's the biggest problem we have right now?"

0:06:35.6 Travis Timmons: Right.

0:06:36.3 Andrew Stotz: Yeah, you're going to get a long list, but as a leader you have to set the direction.

0:06:41.1 Travis Timmons: Yeah. Yeah, and with the leadership team as well. And yeah, where do we... The KPIs and the system, if you study it and look at the outputs through the Deming lenses, it becomes... It's not easy. You got to spend the work and have the tools in place and the discipline to track it all consistently so that you know what your true arrival rate is. I can get in... It's a whole probably different conversation, but tampering and all that kind of stuff. So we know what our data is because of how we've made very clear definitions on our arrival rate and how we don't tamper to get better numbers. But yeah, it's exciting. The team, as crazy as this might sound, we've done these for many years now, over a decade, and the team looks forward to them. And part of that is because we spend the time. I take this very seriously. If I'm going to ask people to come to a meeting for five hours, it better be good. And we better bring... We better have something we can work on as a team to come out of it. And if we don't, that's nobody's fault but mine. So that ownership of the system I take very seriously.

0:07:58.1 Andrew Stotz: A great song, by the way, by Led Zeppelin, Nobody's Fault But Mine. But I would also say that's why I think it's fascinating to continue to go through the structure that you've got, because I think it can guide all of us. So we've learned about starting three months early. I was also thinking about my Crock-Pot. I like to cook slow-cooking food and I put all these different tastes of an onion and a piece of meat, which doesn't really have taste in some ways. And I put them all in a pot and it's eight hours. And if I interrupt it at one hour, there's just, there's not much value there. It needs time to extract the tastes and also bring those tastes into each other until you end up at the end of eight hours. Like, whoa, that's amazing. So...

0:08:51.4 Travis Timmons: Right. Right. Yeah, as you're pointing to, that's kind of how the agenda evolves. So we have an aim of system visibility and arrival rate. Well, how do we put an agenda around that together? So myself, the leadership team, Kelly, we've been working back and forth quite a bit, several iterations of that. So that's part of why you need that three months. You work on it. That sounds great in your head. You put it on some PowerPoint slides and then you share it with folks and they're like, "I don't know really what you're trying to say there, Travis." So there's...

0:09:25.0 Andrew Stotz: It seems like an onion and a carrot.

0:09:27.0 Travis Timmons: Right. Right.

0:09:27.3 Andrew Stotz: But I don't get the taste of it.

0:09:29.6 Travis Timmons: Yeah, so it's just working through those iterations. So miniature, little PDSAs, if you will, of the agenda. But yeah, once we get it to a point where we feel like, okay, we know what we want to work on, then the next big thing becomes how do we get the team involved ahead of the meeting? Because if you... I found very clearly over the years, if the team's not understanding what they're going to be working on coming into the meeting, that you've lost so much opportunity to learn from the entire organization. Because that's where the real learning happens when we do these is stuff that's happening that I don't have visibility of or little workarounds or somebody has a great idea, but maybe didn't feel like it was the right place to bring it up. So just have another opportunity for people to feel very comfortable sharing what breakdowns are happening. But we have homework, right? So that's one of the other big pieces of, if we're going to work on the system, we better know what we're working on that day. And if I don't tell anybody what we're working on until the day of the meeting, we could spend two hours just defining a fishbone chart, which we can talk about later perhaps.

0:11:15.7 Travis Timmons: But the point of the homework is we spend a lot of time, hours preparing the homework booklet that we give to the team about two-and-a-half weeks before the meeting. And it informs them, here's where we're going to be diving deep. We need you to come with the ideas and questions and thoughts already in your head so that we can all just dive in aggressively. Because it's so powerful when they're just bringing the ideas, referencing their homework. You can get so much more done in five hours than if we weren't doing that. So that homework becomes critical and has to match the agenda. If it's disjointed, then you've already lost some trust with your team because they're like, "You had me do all that homework and then we just didn't talk about any of it at the offsite. Like, what are we doing here." So it all has to tie together from a system view, as Dr. Deming would want, hopefully.

0:11:43.5 Andrew Stotz: Yeah. And I don't know, for the listeners and the viewers out there, you probably feel the same way I do, which is kind of like, "Oh, gosh, I should have done more preparing for that last offsite." And also feeling that excitement like, "Oh my gosh, I can unleash a lot from my leadership team, from the company employees through this pre-work and all of a sudden all the mess I have sometimes in offsites of, I don't understand what you're saying by this and what do you mean by that? It could be this." And all of that's gone. And so it makes me... I'm literally thinking about my next offsite and thinking, okay, how am I going to incorporate what you're teaching? So keep going. [laughter]

0:12:26.5 Travis Timmons: Yeah. Yeah, no, it's... And I've learned from some of the best over the years, so it's... I've been very fortunate to learn some of these tools. But yeah, from the homework perspective, it'll accomplish one of our other aims, which is always an aim, but more pointed in this meeting is they start to see the entire system and the complexity that's within it and just start appreciating. "All right, here's everything that has to happen." And, man, we're doing a lot of things really well. And they understand at a deeper level, every piece on our team is critical. There's no silos, no one piece of the equation is more important than the other. If any piece of the equation doesn't happen well, then we're not successful. So that's what with the homework, it just starts making sure from a cultural standpoint and an understanding from the Deming lens, we're all on this together. We have to work on the work together. And the system visibility helps with that, with the homework. And the engagement is so high.

0:13:32.3 Andrew Stotz: Yeah, I'm sure. And that's part of what makes it exciting when I was listening you talk. And I think we're going to need to do a little pre-work on the concept of fishbone, because there are some people that are listening or viewing that may have never even heard of fishbone and fishbone analysis and all that. So maybe as we move into this next part, make sure that you do that pre-work so that we all can figure out exactly what it means, fishbone. And I think you may even have some diagram of that you can share.

0:14:03.4 Travis Timmons: Yeah, I could pull up. If you'd like, I could pull one up to share here. So did that come through for you there?

0:14:12.9 Andrew Stotz: We see it now.

0:14:14.8 Travis Timmons: So this will be... This is part of the homework booklet that we created. So we filled in what we call the main bones. And this is just the patient journey from first contact with Fitness Matters all the way through to a successful discharge. So we have the main bones, I'll call it. If you envision this being, there'd be a fish head at the far right, and then the tail would be at the left. But we just want people to start working on, okay, how does somebody first hear about us at initial contact? Well, they'll write in underneath initial contact, could be website, Google search, could be physician referral, could be my neighbor. So we start penciling in what's all of the ways people first come in contact with Fitness Matters? So we have an understanding of what that looks like. And is it a good first impression? Do we knock that out of the park? And then it just goes through all the major... We look at it as five major bones from first contact to discharge. Second is that initial contact with us to them, scheduling the evaluation. So how many times have they had to call us and leave a voicemail, or can they schedule online, or can they stop in the clinic and schedule, or how did the script come to us, do we capture their insurance data correctly? It just goes how quickly a lot of researching...

0:15:37.0 Andrew Stotz: So many ways to drop the ball?

0:15:39.6 Travis Timmons: Yeah, a lot of research to show if you don't schedule that patient within the first 48 hours of initial contact, the likelihood of them scheduling just plummets.

0:15:49.3 Andrew Stotz: Yeah.

0:15:50.0 Travis Timmons: So a lot of things we have to consider in technology and systems, process, tracking. We have a whole system of how we track how many times we've reached out. We have templates created on how we text message versus voicemail, because some people don't listen to voicemails anymore. Anyway, I could spend an hour just on this fishbone. And then it goes to evaluation day. So when they show up in the clinic, do we have their benefits ready to explain to them? Is the therapist ready for them? Have they looked at their medical history? Do they understand how much they're going to pay? How do they pay? Is it easy to pay? And then the next bone is the plan of care. So all the visits they do, how good are we at scheduling them? How good is the therapist at predicting how many visits they'll need? Is it clear? Do they understand what they owe every visit? So there's not a great experience and then they get this big surprise bill at the end and just ruins everything, right? So we work very hard to be transparent. And then a successful discharge into home exercise and our wellness services.

0:16:52.5 Travis Timmons: So that's what we want everybody to spend some time on with homework. And then at the offsite, this isn't easy to make a patient happy and have a successful outcome. And I think a lot of times in organizations, people don't fully appreciate or see the entire system and understand why this part up here. So if we don't fill out their insurance demographic correctly at the front desk and we rush them back to the evaluation because the therapist is in a hurry, well, now all of those claims aren't going to get paid.

0:17:27.9 Andrew Stotz: Yeah.

0:17:29.1 Travis Timmons: And now we've had a bad outcome for the company. So anyway, that's the fishbone chart. It really helps you diagram at a big level. And then you can dive deep on each one of these bones and turn each of the bone into its own miniature fish, we'll call it, and really dive deeper and deeper, which we'll be doing at our offsite.

0:17:46.8 Andrew Stotz: Yeah. And for the listener out there, think of your own business, what's the chronology of from first contact to delivering this successful experience? Delivering that experience that you're trying to deliver in your business or your school, wherever you are. And this breaks it down into kind of the stages or the phases of that on kind of a chronological order. And that helps you to visualize. And that's part of what you've talked about is the idea of trying to, one of the big goals is visualizing. So that's a great visual of it. Maybe, I think you can probably stop sharing that now. And then also that's, I believe, activity, what I would call activity part one is working on that. Maybe talk a little bit about the mechanics of, now that we understand the fishbone and all of that, what are you asking them to do and then how are they using that?

0:18:51.2 Travis Timmons: Yeah, so the first breakout, we're going to have six tables where they'll use their homework to start filling that in. It's conversation, it's collaboration. It's like, "Oh, this person over here had that on their homework. I didn't even think about that." So that's the goal is that 10,000-foot view, here's the entire system.

0:19:09.6 Andrew Stotz: And are they doing that on a wall together or something like that? Or how is it happening?

0:19:13.4 Travis Timmons: Yeah, we're going to have big newsprint, so it'll be up and big newsprint so everybody can see what's going on. And at the end of the day, we have a very large fish that we're going to have posted and we're going to fill it in with the final product, if you will. That's the entire fishbone. So that's the aim of the first one, is the big picture. Some collaboration, some understanding of the entire system of Fitness Matters and what the complexity looks like. It also allows, one of the things we try to do with this offsite and really in culture in general, Dr. Deming talks about is driving out fear. So newer team members, especially when they start seeing, hey, let's just start talking about stuff, they really start to have a deeper understanding of our culture. And yeah, we do want to talk about stuff. We do want to talk about ways to improve. And then a follow on to that, we're going to do another breakout later in the day. And by table, each table is going to be assigned one of the main bones we just reviewed there.

0:20:20.4 Andrew Stotz: Right.

0:20:21.2 Travis Timmons: And they're going to turn that into a fish itself and do a really deep dive. And what are all the pieces and parts of initial contact? What are all the pieces and parts of eval? So on and so forth. And the aim of that piece is then with that deeper dive into the complexity, the aim is to come away with probably three PDSAs of where do we need to improve our system? Based on that work, we'll have three, maybe four really clear ideas on, okay, we're seeing this as a sticking point. The team's talked a lot about it. How do we improve that? So that's where the PDSAs come from.

[overlapping conversation]

0:20:58.5 Andrew Stotz: So how do you end up figuring out? I mean, everybody's going to talk about, "We need to fix this area, we need to fix this area," or something like that. How do you then... Is it a collaboration, a discussion, is it a voting to say these are the three PDSAs we're going to work on?

0:21:16.7 Travis Timmons: Yeah, so we want it to be collaborative. There's little... Everybody will have little sticker dots. And on one of the breaks, once all these fish charts are filled out, we're going to ask team members to go around and put a sticker by the one that they think would be the highest and best use of our time and resources. So that's kind of an internal, quick, on-the-fly voting just to see where the team's heads at. And they can also have an understanding of how this is hard to... It's hard to choose. We can't work on 20 things. So where do you guys think we need to put the effort? And then at the end of the day, at the very end of the day, I have to decide based on all the feedback from the team and what our resources and capabilities are, then we have to pick three or four. But it's super powerful to have the team involved in that.

0:22:08.4 Andrew Stotz: Yeah, and one of the things about that type of voting is that sometimes people are voting on things that they think they understand what they're voting on and then you find out, actually, maybe not. So one of the fun ones to do in that case is say, okay, if you have one of your ideas up there that wasn't voted for, it could be, and you think it should be, it could be, maybe they didn't understand how you described it or how it's up there. And anybody that wants to make a pitch for that, go ahead.

0:22:37.0 Travis Timmons: Right. I like that.

0:22:37.4 Andrew Stotz: And you'll get a couple zealots saying, "I really think that this one should be up there in a higher priority." And then after that and say, "Okay, anybody want to move one of their dots?" And then that's a fun way.

0:22:52.5 Travis Timmons: I might steal that one. I like that.

0:22:55.6 Andrew Stotz: That's a fun way to say, there's always a second chance, but you got to make your pitch and it's got to convince people to move their dots. So, yep.

0:23:03.4 Travis Timmons: Yeah. I like that. Yeah, so that's how we work on the PDSAs. And it just really at the end of our meeting, I feel like the work we will have done with the homework and the how the agenda is laid out, because we spend a lot of time on the agenda and making some... So we have a timetable on each part of the agenda because my experience has been if you don't plan then things are going to go sideways. Like if you don't have a time commitment to it. And it also gives you a hard break on like, "Okay, guys, there's a couple other things we have to tackle today. This is extremely helpful, but we got to move on to the next thing." But at the end of the meeting, I have the agenda structured in a way that I feel like, I hope I'm not wrong, we'll find out next Friday. I feel like we'll have enough data, enough of the voting, enough of the conversation where I'll be able to report back to the team on like, "Hey this kind of aligns with where I think we need to put our energy and resources. Here's the top three PDSAs we're going to do." And if there was something that had a ton of votes, but we're not going to do that. I also want to be able to share with them why. "Hey, I understand that's big, but we don't have the money to do that one this year," or something like that. Because you don't want to do all this work and then just pick totally something different. And then because then you've lost total trust in your team and that's not good.

0:24:35.6 Andrew Stotz: Yeah. And also, one of the things that I learned after working at investment banks over the years and teaching ethics in finance is that there's firewalls between different parts of an investment bank because they don't want the employees communicating because they're kind of doing conflicting businesses. And so a person working in one area, as I was working in research, is different from a person that's working in investment banking. I may be doing research on a company and saying, "This company is a sell." And that that guy may be doing investment banking and say, "I'm going to help this company raise capital." And we have different objectives. And and they're both legitimate activities that are happening. And we're serving different clients. I'm serving the fund manager who's considering investing. And that person's serving in the investment banking, the CEO of the company and the ownerships and the shareholders of the company. We're serving different clients, but the important thing is that we're not really supposed to know, and we generally didn't, throughout my career, know what the other was doing. But as you go up to the next level of management, they are on both sides of that wall.

0:25:49.0 Andrew Stotz: They must be able to understand what's happening on both sides for various reasons, but most importantly, they have to make decisions about the overall organization based upon a level of knowledge that maybe the people at the lower parts of the organization may be extremely excited and confident and happy about what they're doing, but they can't necessarily connect all those dots. So that's the reason why I would explain in your case that you may have to override something and say, "Look, I've listened, but I do think this is a higher priority because what you guys aren't seeing is how this connects to the implementation of the software."

0:26:25.8 Travis Timmons: Right.

0:26:26.1 Andrew Stotz: "And you're not seeing it because you haven't been doing all of this stuff that I've been doing. And so I'm going to override that one and raise that one. But the other two, let's do those," type of thing.

0:26:36.2 Travis Timmons: Yeah. And that's kind of from a... Totally agree. And that's from a Deming, make the system visible. You also have to explain from a transparency standpoint, in my opinion, anyway, if you're going to go through all this work to your point, everybody doesn't fully understand what our budget is to spend on software next year, for example, and don't expect them to, but I need to know that. So just explaining to them why we're choosing the ones we're choosing, explaining that we can't boil the ocean, and then create the PDSA and we'll give them a promise that we'll report back within... Usually, I report back within a month at the end of the meeting, of the PDSAs build out, you know, what's the aim?

[overlapping conversation]

0:27:22.5 Andrew Stotz: That was my next question. How do you make sure that those PDSAs get done? Because I've left a lot of offsites. I've left them and thought, "Yep, that was interesting. Nothing's going to happen."

0:27:35.8 Travis Timmons: Yeah, no, that's where you start to lose trust from your team as well. It's like if, you know... So we revisit our meetings from last year. Like that'll be part of our recap. Okay, here's what we set out to do last year. So the beginning of the meeting is like, here's the things we talked about we wanted to do and here's what we did. Here's what we still have left to do. But yeah, with a deliverable like this, man, it would be a huge miss on my part if we didn't follow through with PDSAs.

0:28:05.5 Andrew Stotz: And are you managing those or you have one person in-charge of each one of those and then you work with them or what are the mechanics of that?

0:28:15.4 Travis Timmons: Yeah, I think the two larger ones, one of ours is going to include a software change. So that one will be in my wheelhouse for sure.

0:28:22.9 Andrew Stotz: Yeah.

0:28:24.0 Travis Timmons: But yeah, I could envision assigning a champion for two or three of the smaller ones and they won't really be small, they'll be company-wide. The software is a pretty heavy lift.

0:28:36.8 Andrew Stotz: It's interesting because now I can see you've talked about this driving out fear and sharing all information and all of that. And I think that now that I understand your process, I can see that when you get into the hard work of the PDSA, that's going to challenge assumptions, it's going to push the limits, it's going to be testing things that when you get there, everybody knows exactly why that's happening and where that came from. Maybe you can talk a little bit about this concept of one of your goals being driving out fear and using this event as one of the ways to do that.

0:29:17.0 Travis Timmons: Yeah, no, yeah, that's a big piece that I learned from Deming years ago is, people have a lot of fear. What's going on? We don't know. The transparency of this event in and of itself, my experience has been, like, "Oh, I guess we're just talking about everything here, huh?" Putting it out there just makes people comfortable knowing what's going on, what we're working on, what we're not doing as well as we could be and we're aware of it and where it's at in the priority stack. And then also, for five hours they're going to be seeing people speak up. And we call it, "Celebrate the Breakdowns." So from a Dr. Deming perspective, 96, some percent of issues within an organization are due to system issues, not people issues. So they'll start to see, like, hey, when you talk about systems and processes, you can really talk pretty intensely. Very hard to do if you're complaining about how people do things. Right? Because you're... So that system breakdown, we call it Celebrate the Breakdowns, just allows people to be more free and also understand, hey, everybody does show up wanting to do a good job.

0:30:30.7 Travis Timmons: And Travis probably assumes I show up wanting to do a good job. Let's talk about how to make this place better. So that drives out the fear just by making the system visible. And then with the PDSAs, I think it drives out fear from a standpoint of they know when we're going to make a change. This isn't just us shooting from the hip. It's a very organized, methodical, visible way that we know we need to change something. Here's how we're going to do it, and if we're wrong, we'll change it. So that's another way that the PDSA process, my experience has been it also drives out fears because they have a deep understanding of just seeing this entire process. They have confidence, like, "Okay, this isn't just flavor of the month. I'm just going to throw stuff at the wall and see what sticks. This is a big deal. We're going to work on it together. We're going to try it and if it's not going well, we'll try something different collaboratively."

0:31:29.5 Andrew Stotz: I want to wrap it up there and I think... Do you have anything final that you want to add to the process that we've talked about? Is there anything else that people need to know about as they're planning their offsite?

0:31:40.5 Travis Timmons: No, I think we covered quite a bit. I think the big takeaway is it's more work than I think I realized until I had exposure to Deming and some mentors in my life. And it's been a game changer on how much we can accomplish. So the time investment is worth it.

0:31:57.2 Andrew Stotz: And I think we're going to meet again later and talk, and I think we can get an update from you what went well, what do you need to improve, and guide us also as we think about our next offsite, which is pretty exciting.

0:32:11.5 Travis Timmons: Yeah, I look forward to sharing how it went. My hope is I'll report back on at least three PDSAs that we have ready to engage for 2026.

0:32:21.2 Andrew Stotz: I can't wait. Well, Travis, 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. 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."

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In this episode, Bill Scherkenbach, one of W. Edwards Deming's closest protégés, and host Andrew Stotz discuss why leadership decisions shape outcomes far more than frontline effort. Bill draws on decades of firsthand experience with Deming and with businesses across industries. Through vivid stories and practical insights, the conversation challenges leaders and learners alike to rethink responsibility, decision-making, and what it truly takes to build lasting quality. Bill's powerpoint is available here.

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 Scherkenbach, a dedicated protégé of Dr. Deming since 1972. Bill met with Dr. Deming more than a thousand times and later led statistical methods and process improvement at Ford and GM at Dr. Deming's recommendation. He authored the Deming Route to Quality and Productivity at Deming's behest and at 79, still champions his mentor's message: Learn, have fun, and make a difference. The discussion for today is, I think we're going to get an answer to this question. And the question is: Where is quality made? Bill, take it away.

0:00:44.9 Bill Scherkenbach: Where is quality made? I can hear the mellifluous doctor saying that. And the answer is: In the boardroom, not on the factory floor. And over and over again, he would say that it's the quality of the decisions that the management make that can far outweigh anything that happens on the shop floor. And when he would speak about that, he would first of all, because he was talking to the auto industry, he would talk about who's making carburetors anymore. "Nobody's making carburetors because it's all fuel injectors," he would say. And anyone who has been following this, another classic one is: Do you ever hear of a bank that failed? Do you think that failed because of mistakes in tellers' windows or calculations of interest? Heck no. But there are a whole bunch of other examples that are even more current, if you will. I mean, although this isn't that current, but Blockbuster had fantastic movies, a whole array of them, the highest quality resolutions, and they completely missed the transition to streaming. And Netflix and others took it completely away from them because of mistakes made in the boardroom. You got more recently Bed Bath & Beyond having a great product, a great inventory.

0:02:51.4 Bill Scherkenbach: But management took their eyes off of it and looked at, they were concerned about stock buybacks and completely lost the picture of what was happening. It was perfect. It was a great product, but it was a management decision. WeWork, another company supplying office places. It was great in COVID and in other areas, but through financial mismanagement, they also ended up going bust. And so there are, I mean, these are examples of failures, but as Dr. Deming also said, don't confuse success with success. If you think you're making good decisions, you got to ask yourself how much better could it have been if you tried something else. So, quality is made in the boardroom, not on the factory floor.

0:04:07.9 Andrew Stotz: I had an interesting encounter this week and I was teaching a class, and there was a guy that came up and talked to me about his company. His company was a Deming Prize from Japan winner. And that was maybe 20, 25 years ago. They won their first Deming Prize, and then subsidiaries within the company won it. So the actual overall company had won something like nine or 10 Deming Prizes over a couple decades. And the president became...

0:04:43.5 Bill Scherkenbach: What business are they in?

0:04:45.5 Andrew Stotz: Well, they're in...

0:04:47.0 Bill Scherkenbach: Of winning prizes?

0:04:48.7 Andrew Stotz: Yeah, I mean, they definitely, the CEO got the distinguished individual prize because he was so dedicated to the teachings of Dr. Deming. And he really, really expanded the business well, the business did well. A new CEO took over 15 years ago, 10 years ago, and took it in another direction. And right now the company is suffering losses and many other problems that they're facing. And I asked the guy without talking about Deming, I just asked him what was the difference between the prior CEO and the current one or the current regimes that have come in. And he said that the prior CEO, it was so clear what the direction was. Like, he set the direction and we all knew what we were doing. And I just thought now as you talk about, the quality is made at the boardroom, it just made me really think back to that conversation and that was what he noticed more than anything. Yeah well, we were really serious about keeping the factory clean or we used statistics or run charts, that was just what he said, I thought that was pretty interesting.

0:06:06.7 Bill Scherkenbach: Absolutely. And that reminds me of another comment that Dr. Deming was vehement about, and that was was the management turnover. Turnovers in boardrooms every 18 months or so, except maybe in family businesses. But that's based on the quality of decisions made in the boardroom. How fast do you want to turn over the CEOs and that C-suite? So it's going to go back to the quality is made in the boardroom.

0:06:50.0 Andrew Stotz: Yeah, and I think maybe it's a good chance for me to share the slide that you have. And let's maybe look at that graphic. Does that makes sense now?

0:07:00.9 Bill Scherkenbach: Sure, for sure.

0:07:02.2 Andrew Stotz: Let's do that. Let's do that. Hold on. All right.

0:07:15.8 Bill Scherkenbach: Okay, okay, okay. You can see on the top left, we'll start the story. I've got to give you a background. This was generated based on my series of inputs and prompts, but this was generated by Notebook LM and based on the information I put in, this is what they came up with.

0:07:48.6 Andrew Stotz: Interesting.

0:07:50.1 Bill Scherkenbach: Based on various information, which I think did a fairly decent job. In any event, we're going to talk about all of these areas, except maybe the one where it says principles for active leadership, because that was the subject of a couple of our vlogs a while ago, and that is the three foundational obligations. And so the thing is that quality, even though Dr. Deming said it was made in the boardroom, one of the problems is that management did not know what questions to ask, and they would go, and Dr. Deming railed against MBWA, management by walking around, primarily because management hadn't made the transition to really take on board what Dr. Deming was talking about in profound knowledge. And that is, as you've mentioned, setting that vision, continually improving around it, and pretty much absolutely essential was to reduce fear within the organization.

0:09:25.9 Bill Scherkenbach: And so management by walking around without profound knowledge, which we've covered in previous talks, only gets you dog and pony shows. And with the fear in the organization, you're going to be carefully guided throughout a wonderful story. I mentioned I was in Disney with some of my granddaughters over the holidays, and they tell a wonderful story, but you don't ever see what's behind the scenery. And management never gets the chance because they really haven't had the opportunity to attain profound knowledge. So that's one of the things. I want to back up a little bit because Dr. Deming would... When Dr. Deming said quality is made at the top, he only agreed to help companies where the top management invited him, he wasn't out there marketing. If they invited him to come in, he would first meet with them and they had to convince him they were serious about participating, if not leading their improvement. And given that, that litmus test, he then agreed to work with them. Very few companies did he agree to on that. And again as we said, the quality of the decisions and questions and passion that determine the successfulness of the company. And so.

0:11:40.0 Andrew Stotz: It made me think about that letter you shared that he was saying about that there was, I think it was within the government and government department that just wasn't ready for change and so he wasn't going to work with it. I'm just curious, like what do you think was his... How did he make that judgment?

0:12:00.0 Bill Scherkenbach: Well, it wasn't high enough. And again, I don't know how high you'd have to go in there. But quite honestly, what we spoke about privately was in politics and in the federal government, at least in the US, things change every four years. And so you have management turnover. And so what one manager, as you described, one CEO is in there and another one comes in and wants to do it their way, they're singing Frank Sinatra's My Way. But that's life….

0:12:49.3 Andrew Stotz: Another great song.

0:12:50.7 Bill Scherkenbach: Another, yes.

0:12:52.1 Andrew Stotz: And it's not like he was an amateur with the government.

0:12:57.5 Bill Scherkenbach: No.

0:13:00.3 Andrew Stotz: He had a lot of experience from a young age, really working closely with the government. Do you think that he saw there was some areas that were worth working or did he just kind of say it's just not worth the effort there or what was his conclusions as he got older?

0:13:16.9 Bill Scherkenbach: Well, as he got older, it might, it was the turnover in management. When he worked for Agriculture, although agriculture is political, and he worked for Census Bureau back when he worked there, it wasn't that political, it's very political now. But there was more a chance for constancy and more of a, their aim was to do the best survey or census that they could do. And so the focus was on setting up systems that would deliver that. But that's what his work with the government was prior to when things really broke loose when he started with Ford and GM and got all the people wanting him in.

0:14:27.0 Andrew Stotz: I've always had questions about this at the top concept and the concept of constancy of purpose. And I'm just pulling out your Deming Route to Quality and Productivity, which, it's a lot of dog ears, but let's just go to chapter one just to remind ourselves. And that you started out with point number one, which was create constancy of purpose towards improvement of product and service with the aim to become competitive, stay in business and provide jobs. One of my questions I always kind of thought about that one was that at first I just thought he was saying just have a constancy of purpose. But the constancy of purpose is improvement of product and service.

0:15:13.6 Bill Scherkenbach: Well, yes and no. I mean, that's what he said. I believe I was quoting what his point number one was. And as it developed, it was very important to add, I believe, point number five on continual improvement. But constancy of purpose is setting the stage, setting the vision if you will, of where you want to take the company. And in Western management, and this is an area where there really is and was a dichotomy between Western and Eastern management. But in Western management, our concept of time was short-term. Boom, boom, boom, boom. And he had a definite problem with that. And that's how you could come up with, well, we're going to go with this fad and that fad or this CEO and that CEO. There was no thinking through the longer term of, as some folks ask, "what is your aim? Who do you think your customer base is now?" don't get suckered into thinking that carburetors are always going to be marketable to that market base. And so that's where he was going with that constancy of purpose. And in the beginning, I think that was my first book you're quoting, but also, in some of his earlier works, he also spoke of consistency of purpose, that is reducing the variation around that aim, that long-term vision, that aim.

0:17:19.2 Bill Scherkenbach: Now, in my second book, I got at least my learning said that you've got to go beyond the logical understanding and your constancy of purpose needs to be a mission, a values and questions. And those people who have who have listened to the the previous vlogs that we've had, those are the physiological and emotional. And I had mentioned, I think, that when when I went to GM, one of the things I did was looked up all the policy letters and the ones that Alfred Sloan wrote had pretty much consistency of three main points. One, make no mistake about it, this is what we're going to do. Two, this is why we're going to do it, logical folks who need to understand that. And to give a little bit of insight on on how he was feeling about it. Sometimes it was value, but those weren't spoken about too much back then. But it gave you an insider view, if you will. And so I looked at that, maybe I was overlooking. But I saw a physiological and emotional in his policy letters.

0:19:00.7 Bill Scherkenbach: And so that's got to be key when you are establishing your vision, but that's only the beginning of it. You have to operationalize it, and this is where management has to get out of the boardroom to see what's going on. Now, that's going to be the predictable, and some of your clients, and certainly the ones over in Asia, are speaking about Lean and Toyota Production System and going to the Gemba and all of those terms. But I see a need to do a reverse Gemba and we'll talk about that.

0:19:49.6 Andrew Stotz: So, I just want to dig deeper into this a little bit just for my own selfish understanding, which I think will help the audience also. Let's go back in time and say that the, Toyota, let's take Toyota as an example because we can say maybe in the 60s or so, they started to really understand that the improvement of product quality, products and service quality and all that was a key thing that was important to them. But they also had a goal of expanding worldwide. And their first step with that maybe was, let's just say, the big step was expanding to the US. Now, in order to expand to the US successfully, it's going to take 10, maybe 20 years. In the beginning, the cars aren't going to fit the market, you're going to have to adapt and all that. So I can understand first, let's imagine that somebody says our constancy of purpose is to continuously improve or let's say, not continuously, but let's just go back to that statement just to keep it clear. Let's say, create constancy of purpose towards improvement of product and service with the aim to become competitive, stay in business and provide jobs.

0:21:07.2 Andrew Stotz: So the core constancy in that statement to me sounds like the improvement. And then if we say, okay, also our vision of where we want to be with this company is we want to capture, let's say, 5% of the US market share within the next 15 years or five or 10 years. So you've got to have constancy of that vision, repeating it, not backing down from it, knowing that you're going to have to modify it. But what's the difference between a management or a leadership team in the boardroom setting a commitment to improvement versus a commitment to a goal of let's say, expanding the market into the US. How do we think about those two.

0:21:53.6 Bill Scherkenbach: Well as you reread what I wrote there, which is Dr. Deming's words and they led into the, I forget what he called it, but he led into the progression of as you improve quality, you improve productivity, you reduce costs.

0:22:33.6 Andrew Stotz: Chain reaction.

0:22:34.5 Bill Scherkenbach: Yeah, the chain reaction. That's a mini version of the chain reaction there. And at the time, that's what people should be signing up for. Now the thing is that doesn't, or at least the interpretations haven't really gone to the improvement of the board's decision-making process. I mean, where he was going for was you want to be able to do your market research because his sampling and doing the market research was able to close the loop to make that production view a system, a closed-loop system. And so you wanted to make sure that you're looking far enough out to be able to have a viable product or service and not get caught up in short-term thinking. Now, but again, short-term is relative. In the US, you had mentioned 10 or 20 years, Toyota, I would imagine they still are looking 100 years out. They didn't get suckered into the over-committing anyway to the electric vehicles. Plug-in hybrids, yes, hybrids yes, very efficient gas motors, yes. But their constancy of purpose is a longer time frame than the Western time frame.

0:24:27.1 Andrew Stotz: Yeah, that was a real attack on the structure that they had built to say when they were being told by the market and by everybody, investors, you've got to shift now, you've got to make a commitment to 100% EVs. I remember watching one of the boardroom, sorry, one of the shareholder meetings, and it's just exhausting, the pressure that they were under.

0:24:55.2 Bill Scherkenbach: Yep, yep. But there... Yeah.

0:25:00.0 Andrew Stotz: If we take a kid, a young kid growing up and we just say, look, your main objective, and my main objective with you is to every day improve. Whatever that is, let's say we're learning science.

0:25:17.3 Bill Scherkenbach: You're improving around your aim. What is your vision? What are you trying to accomplish? And that obviously, if you're you're saying a kid that could change otherwise there'd be an oversupply of firemen.

0:25:38.5 Andrew Stotz: So let's say that the aim was related to science. Let's say that the kid shows a really great interest in science and you're kind of coaching them along and they're like, "Help me, I want to learn everything I can in science." The aim may be a bit vague for the kid, but let's say that we narrow down that aim to say, we want to get through the main topics of science from physics to chemistry and set a foundation of science, which we think's going to take us a year to do that, let's just say. Or whatever. Whatever time frame we come up with, then every day the idea is, how do we number one improve around that aim? Are we teaching the right topics? Also, is there better ways of teaching? Like, this kid maybe learns better in the afternoon and in the morning, whereas another kid I may work with works better in another... And this kid likes five-minute modules and then some practical discussion, this kid likes, an hour of going deep into something and then having an experiment is when we're talking about improvement, is the idea that we're just always trying to improve around that aim until we reach a really optimized system? Is that what we're talking about when we're talking about constancy of purpose when it comes to improving product and service?

0:27:14.4 Bill Scherkenbach: Well there's a whole process that I take my clients through in coming up with their constancy of purpose statement. And the board should be looking at what the community is doing in the next five years, 10 years, where the market is going, where politics is going, all sorts of things. And some of it. I mean, specifically in the science area, it's fairly well recognized that the time of going generation to generation to generation has gone from years to maybe weeks where you have different iterations of technology. And so that's going to complicate stuff quite honestly, because what was good today can be, as Dr. Deming said, the world could change. And that's what you've got to deal with or you're out of business. Or you're out of relevance in what you're studying. And so you have to... If you if you have certain interests, and the interests are driven... It's all going to be internal. Some interests are driven because that's where I hear you can make the most money or that's where I hear you can make the most impact to society or whatever your internal interests are saying that those are key to establishing what your aim is.

0:29:25.7 Andrew Stotz: Okay. You've got some PowerPoints and we've been talking about some of it. But I just want to pull it up and make sure we don't miss anything. I think this is the first text page, maybe just see if there's anything you want to highlight from that. Otherwise we'll move to the next.

0:29:43.0 Bill Scherkenbach: No I think we've we've covered that. Yeah, yeah. And the second page. Yeah, I wanted to talk and I only mentioned it when the Lean folks and the Agile folks talk about Gemba, they're pretty much talking about getting the board out. It's the traditional management by walking around, seeing what happens. Hugely, hugely important. But one of the things, I had one of my clients. Okay, okay. No, that's in the the next one.

0:30:29.4 Andrew Stotz: There you go.

0:30:30.7 Bill Scherkenbach: Okay, yeah. I had one of one of my clients do a reverse Gemba. And that is, that the strategy committee would be coming up with strategies and then handing it off to the operators to execute. And that's pretty much the way stuff was done in this industry and perhaps in many of them. But what we did was we had the operators, the operating committee, the operations committee, sit in as a peanut gallery or a, oh good grief. Well, you couldn't say a thing, you could only observe what they were doing. But it helped the operators better understand and see and feel what the arguments were, what the discussions were in the strategy, so that they as operators were better able to execute the strategy. And so not the board going out and down, but the folks that are below going up if it helps them better execute what's going on. But vice versa, management can't manage the 94%, and Dr. Deming was purposely giving people marbles, sometimes he'd say 93.4%. You know the marble story?

0:32:37.5 Andrew Stotz: I remember that [laughter]. Maybe you should tell that again just because that was a fun one when he was saying to, give them marbles, and they gave me marbles back.

0:32:45.7 Bill Scherkenbach: Yeah, yeah, yeah. Well, he said there was this professor in oral surgery that said there was a an Asian mouse or cricket, whatever, that would... You put in your mouth and they would eat all of the... Be able to clean the gums of all the bacteria better than anything. And described it in detail. And that question was on the test. Okay, please describe this mouse procedure. And he said all of the people, or a whole bunch of people except one, gave him back exactly step by step that he had taught. And one said, Professor, I've talked to other professors, I've looked around, I think you're loading us, that's what Deming said. And so he made the point that teaching should not be teachers handing out marbles and collecting the same marbles they they handed out. And so to some extent, he was testing, being overly precise.

0:34:12.8 Bill Scherkenbach: He wanted people to look into it, to see, go beyond as you were speaking of earlier, going beyond this shocking statement that there perhaps is some way that that really makes sense. So he wants you to study. Very Socratic in his approach to teaching in my opinion. And any event, management can't understand or make inputs on changing what the various levels of willing workers, and you don't have to be on the shop floor, you can be in the C-suite and be willing workers depending on how your company is operating. Go ahead.

0:35:12.0 Andrew Stotz: So let me... Maybe I can, just for people that don't know, Gemba is a Japanese word that means "the actual place," right? The place where the value is created.

0:35:23.8 Bill Scherkenbach: Sure.

0:35:26.2 Andrew Stotz: And the whole concept of this was that it's kind of almost nonsense to think that you could sit up in an office and run something and never see the location of where the problem's happening or what's going on. And all of a sudden many things become clear when you go to the location and try to dig down into it. However, from Dr. Deming context, I think what you're telling us is that if the leader doesn't have profound knowledge, all they're going to do is go to the location and chase symptoms and disrupt work, ultimately...

0:36:02.0 Bill Scherkenbach: Get the dog and pony shows and all of that stuff. And they still won't have a clue. The thing is...

0:36:08.6 Andrew Stotz: So the objective at the board level, if they were to actually go to the place, the objective is observation of the system, of how management decisions have affected this. What is the system able to produce? And that gives them a deeper understanding to think about what's their next decision that they've got to make in relation to this. Am I capturing it right or?

0:36:40.2 Bill Scherkenbach: Well there's a lot more to it, I think, because top management, the board level, are the ones that set the vision, the mission, the values, the guiding principle, and the questions. And I think it's incumbent on the board to be able to go through the ranks and see how their constancy of purpose, the intended, where they want to take the place is being interpreted throughout the organization because, and I know it's an oversimplification and maybe a broad generalization, but middle management... Well, there are layers of management everywhere based on their aim to get ahead, will effectively stop communication upstream and downstream in order to fill their particular aim of what they want to get out of it. And so this is a chance for the top management to see, because they're doing their work, establishing the vision of the company, which is the mission, values and questions, they really should be able to go layer by layer as they're walking around seeing how those, their constancy, their intended constancy is being interpreted and executed. And so that's where beyond understanding how someone is operating a lathe or an accountant is doing a particular calculation, return on invested capital, whatever.

0:38:47.5 Bill Scherkenbach: Beyond that, I think it's important for management to be able to absolutely see what is happening. But the Gemba that I originally spoke about is just the other way. You've got the strategy people that are higher up, and you have the operations people that are typically, well, they might be the same level, but typically lower. You want the lower people to sit in on some higher meetings so they have a better idea of the intent, management's intent in this constancy of purpose. And that will help them execute, operationalize what management has put on paper or however they've got it and are communicating it. It just helps. So when I talk about Gemba, I'm talking the place where the quality is made or the action is. As the boardroom, you need to be able to have people understand and be able to see what's going on there, and all the way up the chain and all the way down the chain.

0:40:14.4 Andrew Stotz: That's great one. I'm just visualizing people in the operations side thinking, we've got some real problems here and we don't really understand it. We've got to go to the actual place, and that's the boardroom[laughter]. It's not the factory line.

0:40:31.7 Bill Scherkenbach: Yes. Absolutely. And if the boardroom says you're not qualified, then shame on you, the boardroom, are those the people you're hiring? So no, it goes both ways, both ways.

0:40:46.8 Andrew Stotz: Now, you had a final slide here. Maybe you want to talk a little bit about some of the things you've identified here.

0:40:53.4 Bill Scherkenbach: Okay, that's getting back to, in the logical area of this TDQA is my cycle: Theory, question, data, action. And it's based on Dr. Deming and Shewhart and Lewis saying, where do questions come from? They're based on theory. What do you do with questions? Well, the answers to questions are your data. And you're just not going to do nothing with data, you're supposed to take action. What are you going to do with it? And so the theory I'm going to address, the various questions I've found helpful in order to, to some extent, make the decisions better, the ability to operationalize them better and perhaps even be more creative, if you will. And so one of the questions I ask any team is, have you asked outside experts their opinion? Have you included them? Have you included someone to consistently, not consistently, but to take a contrarian viewpoint that their job in this meeting is to play the devil's advocate? And the theory is you're looking for a different perspective as Pete Jessup at Ford came up with that brilliant view of Escher's.

0:42:47.1 Bill Scherkenbach: Different perspectives are going to help you make a better decision. And so you want to get out of the echo chamber and you want to be challenged. Every team should be able to have some of these on there. What's going to get delayed? The underlying theory or mental model is, okay, you don't have people sitting around waiting for this executive committee to come up with new things, time is a zero-sum game. What's going to get delayed and what are they willing to get delayed if this is so darn important to get done? Decision criteria. I've seen many teams where they thought that the decision would be a majority rule. They discuss and when it came down to submit it, they said, "no, no, this VP is going to make the decision." And so that completely sours the next team to do that. And so you have to be, if you're saying trust, what's your definition of trust? If the people know that someone is going to make the decision with your advice or the executive's going to get two votes and everyone else gets one, or it's just simple voting.

0:44:35.3 Bill Scherkenbach: The point is that making the decision and taking it to the next level, the theory is you've got to be specific and relied on. Team turnover, fairly simple. We spoke about executive turnover, which was a huge concern that Dr. Deming had about Western management. But at one major auto company, we would have product teams and someone might be in charge of, be a product manager for a particular model car. Well, if that person was a hard charger and it took product development at the time was three and a half years, you're going to get promoted from a director level to a VP halfway through and you're going to screw up the team, other team members will be leaving as well because they have careers. You need to change the policy just to be able to say, if you agree that you're going to lead this team, you're going to lead it from start to finish and to minimize the hassle and the problems and the cost of turnover, team turnover. And this is a short list of stuff, but it's very useful to have a specific "no-fault policy."

0:46:20.6 Bill Scherkenbach: And this is where Dr. Deming speaks about reducing fear. I've seen teams who know they can really, once management turns on the spigot and says, let's really do this, this is important, the team is still hesitant to really let it go because that management might interpret that as saying, "well, what are you doing, slacking off the past year?" As Deming said, "why couldn't you do that if you could do it with no method, why didn't you do it last year?" but the fear in the organization, well, we're going to milk it. And so all of these things, it helps to be visible to everyone.

0:47:23.0 Andrew Stotz: So, I guess we should probably wrap up and I want to go back to where we started. And first, we talked about, where is quality made? And we talked about the boardroom. Why is this such an important topic from your perspective? Why did you want to talk about it? And what would you say is the key message you want to get across from it?

0:47:47.1 Bill Scherkenbach: The key message is that management thinks quality's made in operations. And it's the quality of the... I wanted to put a little bit more meat, although there's a lot more meat, we do put on it. But the quality of the organization, I wanted to make the point depends on the quality of the decisions, that's their output that top leaders make, whether it's the board or the C-suite or any place making decisions. The quality of your decisions.

0:48:28.9 Andrew Stotz: Excellent. And I remember, this reminds me of when I went to my first Deming seminar back in 1990, roughly '89, maybe '90. And I was a young guy just starting as a supervisor at a warehouse in our Torrance plant at Pepsi, and Pepsi sent me there. And I sat in the front row, so I didn't pay attention to all the people behind me, but there was many people behind me and there was a lot of older guys. Everybody technically was pretty much older than me because when I was just starting my career. And it was almost like these javelins were being thrown from the stage to the older men in the back who were trying to deal with this, and figure out what's coming at them, and that's where I kind of really started to understand that this was a man, Dr. Deming, who wasn't afraid to direct blame at senior management to say, you've got to take responsibility for this. And as a young guy seeing all kinds of mess-ups in the factory every day that I could see, that we couldn't really solve. We didn't have the tools and we couldn't get the resources to get those tools.

0:49:47.9 Andrew Stotz: It just really made sense to me. And I think the reiteration of that today is the idea, as I'm older now and I look at what my obligation is in the organizations I'm working at, it's to set that constancy of purpose, to set the quality at the highest level that I can. And the discussion today just reinforced it, so I really enjoyed it.

0:50:11.2 Bill Scherkenbach: Well, that's great. I mean, based on that observation, Dr. Deming many times said that the master chef is the person who knows no fear, and he was a master chef putting stuff together. And we would talk about fairly common knowledge that the great artists, the great thinkers, the great producers were doing it for themselves, it just happened that they had an audience. The music caught on, the poetry caught on, the painting caught on, the management system caught on. But we're doing it for ourselves with no fear. And that's the lesson.

0:51:11.8 Andrew Stotz: Yeah. Well, I hope that there's a 24-year-old out there right now listening to this just like I was, or think about back in 1972 when you were sitting there listening to his message. And they've caught that message from you today. So I appreciate it, and I want to say on behalf of everyone at the Deming Institute, of course, thank you so much for this discussion and for people who are listening and interested, remember to go to deming.org to continue your journey. And of course, you can reach Bill on LinkedIn, very simple. He's out there posting and he's responding. So feel free if you've got a question or comment or something, reach out to him on LinkedIn and have a discussion. This is your host, Andrew Stotz, and I'm going to leave you with one of my favorite quotes from Dr. Deming, and it doesn't change. It is, "people are entitled to joy in work."

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What happens when an entire company learns to see its work as a system? In this episode, Travis Timmons reveals how his team uses Deming-inspired pre-work, collaboration, and the Red Bead Experiment to make their offsite energizing and impactful. It's a practical, engaging look at how clarity and shared purpose can transform improvement efforts and build a happy workplace.

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 discussion with Travis Timmons, who is the founder and owner of Fitness Matters, an Ohio-based practice specializing in the integration of physical therapy and personalized wellness. For 13 years he's built his business on Dr. Deming's teachings. His hope is simple. The more companies that bring joy to work through Deming's principles, the more likely his kids will one day work at one. The topic for today is bringing systems thinking to your next team off-site. Travis, take it away.

0:00:41.5 Travis Timmons: Hey Andrew, great to be with you again. And, yeah, looking forward to sharing a little bit about how we're preparing for our next annual team meeting. And focus for this meeting is going to be, well, a little back story, we had three of our newer leadership members attend some Deming learning, some Deming education. And the biggest comeback, the biggest aha moment they had was they now better understood what I meant by the system view and systems thinking, which got me thinking, boy, it would be great if more of our team fully understood what the system meant, how to visualize it, and then how that further dives into the Deming System of Profound Knowledge. So that's what we've been working on. Our offsite is January 30th, so about a month away. We're about six weeks into preparation for that, kind of going back and forth on what needs to be in there. And the biggest thing, the first exercise, they're going to have homework to do coming into the meeting. We're going to have them kind of diagram what they think the system is. What is the Fitness Matters system? And we're going to prime them a little bit.

0:01:51.7 Travis Timmons: We're going to be doing it via a fishbone chart is the method we've decided to do that with. So, yeah, very excited about that. And it's a great way to get the team working on the work together and making sure they have an appreciation, as Dr. Deming would say, an appreciation for the system. And if you don't know what the system means, it's hard to appreciate it. So, trying to make more team members understand that.

0:02:14.7 Andrew Stotz: And what you're describing, I think is like pre-work that you're asking them to do?

0:02:21.1 Travis Timmons: Yes, yeah. So we'll have we've been spending the last few weeks on making sure we get the right questions in there because we want them to come in prepared but not feel like it's overwhelming or not feel like it's too heavy, if you will. But we want them to do the work so that they can come in and we can dive deeper once we get into some of the teachings and making the visible system of what everything looks like for them. So, that's kind of what we're working on.

0:02:49.1 Andrew Stotz: Did you guide them on, "Here's a fishbone chart, here's how to use it," and then, "Here's the system"? Or do you want them to just understand the fishbone chart and how to use it, and then, "Okay, don't talk to anybody else, you come up with what your vision of the system is"?

0:03:05.0 Travis Timmons: Yeah, so we have a total of seven locations. So what we are going to put in the homework is a one-page definition on what a fishbone is, how to use it and maybe pre-fill in a few of the primary bones, if you will.

0:03:20.3 Andrew Stotz: Yep.

0:03:20.8 Travis Timmons: Just to give them a primer. But we do hope they work together around the lunch tables and the break rooms, and the local leadership will be there to kind of guide them. Because that's where a lot of the collaboration and culture starts to happen and continues to build. So yeah, there'll be some learning about what is a fishbone, how to use it, because several have probably not used one before. And then we'll prime it a little bit, but then we want them to work on it, kind of kind of work, struggle a little bit to see, like, "All right, what's been invisible to me that happens behind the scenes, and it just happens." And make sure that then we can kind of dive deeper into when we say somebody has a good visit at Fitness Matters, how does that happen? And it's everything from first contact to insurance, to in the clinics, to how they pay their bill. So, just making sure that somebody understands what piece of the puzzle they play and then how it all works together. So we don't have silos, is one of the things we try to avoid, having silos within the organization.

0:04:25.8 Andrew Stotz: So, just so that the listener and viewer can implement what they're learning from you just to be clear. So, you're giving them the fishbone chart, teaching them about it, maybe filling in some of the main bones, as you said. And then just to be clear, you talked about them discussing things. Are you saying when you're working on your fishbone, talk to others about it and try to figure that out together?

0:04:51.7 Travis Timmons: Yeah.

0:04:52.5 Andrew Stotz: Okay.

0:04:52.6 Travis Timmons: Yeah, we want them collaborating and there's going to be people who wear different hats in our company. Some are physical therapists, some are Pilates instructors, some are client care coordinators, some are billing managers. So it'll be interesting to see what they bring to the table. And part of it is we don't want them to struggle. We want to kind of prime the pump, but we also want them to see the big picture. So that's why we're doing the fishbone methodology is so we can see it when we get to the actual team meeting. And then we're going to work with them on, then you can do fishbones of individual processes or individual pieces of the system.

0:05:33.1 Andrew Stotz: And, I mean, the reason why I'm asking this is because something like a system, for some people, they understand it, but for other people, they'll just get lost. And then what they bring to the meeting is not really some deep thinking on the topic, but, "Here's my best idea of what you meant."

0:05:50.1 Travis Timmons: Right. Right. Yeah, and we assume like some people may not have the opportunity based on how their schedule works to do much interaction and collaboration, others will have more. It'll be interesting to see what each location comes up with. Our hope is it's similar because we do spend time with the onboarding process talking about Dr. Deming, but we don't currently have a full fishbone diagram in our onboarding manual, for example. And that might change after this offsite. We might add that. You might find that that's a very good idea.

0:06:23.8 Andrew Stotz: Okay, so you got them working on their pre-work, which is the systems thinking, lay out your system in a fishbone chart. What's next?

0:06:35.0 Travis Timmons: So they'll have about two and a half weeks to work on that, heading up to the team offsite. And then we have a four and a half hour agenda for the team offsite. And first part of the phase is we're going to have them break out into groups, six groups. We have a total of 50 people there. So, six tables, and we're going to have each of them with posty notes. We're going to have the fishbone, like the bones there, and they're going to use posty notes to kind of fill in the system. That'll kind of be activity one. We're going to talk about what their learnings were from the homework, what were their aha moments or things they hadn't considered or complexities they didn't realize existed. Talk about that for about a half hour, 45 minutes. And then we're going to take a little break and come back and Kelly Allen's going to be there. He's going to walk our entire team through the red bead experiment, which is one of my favorite in-person Deming exercises. So we're going to go through the Red Bead experiment. And if people don't, that's probably too long of a conversation to explain what that is on this conversation, but opportunity there then to show where there are kind of defects in the system, if you will. So the big thing we're working on for this team offsite beyond system view is how do we improve arrival rate? So what arrival rate is in our industry is how many of our scheduled visits, whether it be for personal training, Pilates, physical therapy, how many of the scheduled visits show up? So a lot that goes into why do they show up? Are they scheduled appropriately? Do they understand their billing? Do they have a good experience? Is it easy to do the scheduling? So that's what's going to be our example of a red bead in the Red Bead experiment. So yeah, going to spend about an hour on the Red Bead experiment. And then myself and our director of operations are then going to, at the end of the red bead, when Kelly debriefs what we just saw happen and people feel the angst of people that, you know, put the paddle in and keep pulling out red beads, even though they were offered bonuses and they just can't quite do it. Talk about how that correlates to our system.

0:08:55.9 Travis Timmons: What are our red beads and what can we impact within the system to have a positive impact on less red beads in the system?

0:09:05.5 Andrew Stotz: And just to go back to one thing, you mentioned a total of 50 people. Is this a total, this is a total company offsite or a leadership team offsite?

0:09:13.5 Travis Timmons: It's going to be the entire company. So what we've found is, I think there's just so much value in everybody on the team understanding what's happening. They don't have to be an expert in all of it, but they need to, using Dr. Deming's term appreciate the system.

0:09:30.9 Andrew Stotz: Yep.

0:09:31.4 Travis Timmons: And appreciate the complexities and appreciate their role in it and everybody else's role. And it also allows some opportunities for sure. There's going to be team members that could be brand new to us six months in. When we make everything visible, they're going to have some fresh eyes and point something out to us that we've always done it that way. So we're going to, let's keep doing it that way and they're going to point it out to us and say that's not a good idea.

0:10:02.7 Andrew Stotz: And you've chosen four and a half hours. Sometimes you could look at that and think, that's a long time. And other times you look at and think, that is such a short amount of time. How did you come upon the time?

0:10:15.2 Travis Timmons: So, a lot of feedback from the team, to be honest with you. So there were, early on there were years where we would do an all day. And I got feedback that, hey Travis, we know you love all this stuff. We don't love working on systems quite as much as you do. So how about a half a day? So a half a day seemed to be about right as long as we did the pre-work. So what we found is if we didn't do the pre-work, then there's just so much wasted time getting everybody kind of up to speed on what we want to work on that day. So the team is all kind of, we come to a mutual agreement of like, hey, if you guys will spend extra time on putting the pre-work together, you'll agree to do it. And then we'll agree to have a four and a half hour all-in meeting, gas pedal down and then we're going to, you'll have a celebration dinner at the end of the meeting. So that's what we do.

0:11:08.6 Andrew Stotz: Sounds like you're still getting eight hours out of them. I mean, when you think about it, it's hard to go into something without putting some time aside. And what I'm hearing here is that this is also a very narrowly focused event and that I could imagine the mistake that many people make is, oh, we want to talk about that and we want to talk about that. And don't forget about that. We got everybody together, we might as well talk about that.

0:11:37.0 Travis Timmons: Yeah. Yeah, it's hard to narrow it down to, okay, what are the two or three things that we need to make sure we accomplish in this meeting? So one of the things we have in our meeting, I learned this from Kelly and Ray Kroc, another mentor of mine. We have a big whiteboard that we call the parking lot. And if somebody brings up an idea that's a good one, but we don't have the time to tackle that day, we just go right on the parking lot and tackle it later in the year. But yeah, that's part of leadership's responsibility and feedback from the team is, all right, we got four and a half hours. What are the top one or two things we need to work on as a team? And then that pre-work from a culture standpoint, people tuning in if they're listening to this, one of the things I'm sure everybody hears, you have to have a culture where people have a voice. That's probably one of the things people get most frustrated about when we hire from other organizations. They don't have a voice. They just got to show up and whatever happens, happens.

0:12:42.5 Travis Timmons: And that can suck the life out of you pretty quick. So I've never had anybody do anything other than be excited about the homework. You'll see them in the break room talking about it. It just brings a lot of energy. And folks that have never done an offsite with us before, I always get the question, what are we going to talk about for four and a half hours? What could we possibly talk about for four and a half hours? And then at the end of that they're like, that was amazing. We didn't have enough time. So, kind of a delicate balance there, but we've landed on four and a half for our current size and what we try to accomplish.

0:13:20.9 Andrew Stotz: And the next question is I've sat through a lot of offsites over the years and you end it by going, that was awesome, now let's get back to work.

0:13:32.4 Travis Timmons: Yes. So we always do a wrap up on what are the deliverables. We let them know up front kind of the expectation of we may, we'll probably not have everything fully decided at the end of the day. The purpose of the day is to get feedback from the entire team. And then my goal, and we'll tell them this up front, or I should say aim, not goal. We'll get in trouble with Dr. Deming there, but is to have two to three PDSAs to walk away with. So we wrap it up, kind of report back on what we've all been working on for the day. And then we let them know we're going to report back in the coming one to two weeks on big picture items and then kind of continue to give the team feedback on here's what we did, here's what we worked on, here's what we're now going to implement. Because you're right, you go to a lot of these meetings, a lot of good ideas are tossed around and then absolutely nothing happens. And then when team members see that happen a few times in a row, then they just stop working on the work. So, yeah.

0:14:41.0 Andrew Stotz: I have a client of mine that he does offsites. I think it's every six months. And he does it only with his management team that's to be clear. And that's about roughly 15 people for his business. And he picks a pretty unique location each time. So it's... And it's usually a couple of days, which I would say with a management team, you maybe make more sense than with the whole company. But he has something interesting that kind of ties in with your work. He has me come occasionally and give a presentation and talk about either Deming or some other principles. But in the mornings at 7:00 A.M. they all meet at the gym. And he has trainers and then they go outside usually, if they're at the beach, they go to the beach. And then they have activities that they do together where they sweat and exercise all of them together. And I just felt like that was so unique. And I felt like, I don't know, if I was an employee, I would be like, oh, I don't want to, why do I have to?

0:16:03.4 Andrew Stotz: I could imagine that feeling, but I just felt like he really left the whole event every time as people really connected. And I just thought that was an interesting activity, it just made me think about.

0:16:17.8 Travis Timmons: Yeah. Yeah, no, I think one of the things I've learned over the years is the less I'm up speaking to the team and the more the team is working on breakout. So I plan on out of the four and a half hours, I hope to not be speaking to the team for more than 20 minutes. And just let the work happen because if I'm up there talking for three hours and they're just listening that's another great way to probably kill morale if they're not working on the work together.

0:16:49.6 Andrew Stotz: And so just to rehash what you're talking about, about a four and a half hour meeting, you got pre-work. It's focused on one thing, which is understanding the system. Then you're going to have people talk to each other with this pre-work and then come to it with their own ideas. You're going to put them in groups and do post-it note types of things to try to figure it out, you're going to do it in groups, I'm assuming, for the post-it notes? Is that what you said or is it everybody?

0:17:18.3 Travis Timmons: Yeah, we're going to have them stay with the same group of six because as we work through the process of the larger fishbone, then there's six key elements or six key pieces that I want to make sure we identify. And then I want to have, later in the day, we're going to do a fishbone specifically of each part of that and see if we can identify two to three PDSAs out of those six that we really can have a big impact on whether it's through technology optimization, better training opportunities, better defining operational definitions. Those are the three key areas that I'm assuming based on where I'm seeing things from my seat. That's, I hope, the direction I think we're going to go. But we'll see what the team comes up with.

0:18:09.3 Andrew Stotz: And one of the things that inevitably comes up with the concept of systems thinking is what's a system? You know, come on, for me, it's this and that and for another, it could be the whole world and we could, you know, how do you help them understand system, but also how do you guide what is the system?

0:18:33.9 Travis Timmons: Yeah, I mean, it's tough, right? Because there are things that are fully under our control within our system, like the software we use, the people on our team. So we talk about things in and out of our control. Things out of our control are health insurance companies. Right? But they're part of our, they are part of our system. We interact with them every day, but we have zero real control over decisions they make. Referral sources are another example of... So we talk about the inputs that are coming into our system but not part of Fitness Matters. So it's internal and external conversations, we get into that quite a bit. And then individual...

0:19:13.5 Andrew Stotz: What about people that are trying to narrow it to say, my system is a much smaller thing. How do I think about system?

0:19:24.0 Travis Timmons: Yeah, yeah, we get into that a little bit because you get a lot of that, right? People just want to optimize what they do and everything else will be fine. That's one of the hopes of making the system visible. We get into tampering, system capability and tampering is one of the ways we address that.

0:19:42.7 Andrew Stotz: Right.

0:19:42.8 Travis Timmons: So if somebody says, hey, I just want my little world to work this way and if the front desk could put patients on my schedule this way and I could make my schedule work this way, and I want a 15-minute break here and like, it's like, no, no, this has to work well for everybody. And when they understand an appreciation for how it all works together, then we found they're much more on board with working on being a part of a team, getting their head up a little bit and looking around and understanding patients don't come in just because you're a great therapist or you're a great Pilates instructor or just because the front desk process goes really well. They come in because everything works. And patients and clients can feel that. So we really try to educate them on just kind of that feeling of, is everybody here getting along? Does it feel professional in here? Does it feel like they care about me when I walk in? And it can't just be one person out of 15 in a building caring about them and paying attention to them as the client.

0:20:50.3 Travis Timmons: So I don't know if that answers your question, but we get into kind of why that system visibility is so important. And for them to be successful, the entire system has to be successful. And if you optimize it for one person, that just doesn't happen.

0:21:05.5 Andrew Stotz: Yeah, I like the system visibility that just brings that awareness. One other question is, you talked about a target, how do we improve the arrival rate and how many scheduled visits show up? You've already decided this as a core metric for the business before you've gone into this offsite. It's not something that's up for discussion in this offsite. Correct?

0:21:30.0 Travis Timmons: Right.

0:21:30.4 Andrew Stotz: Okay.

0:21:30.6 Travis Timmons: Yeah, it's the, kind of we... You know, there's a book out there, the One Thing, I think it's called. It's sort of like, what's the one kind of aim or target that we think we need to, from a system view, have a positive impact on in 2026? And that arrival rate is something we study weekly, monthly, daily, really. So we know what historical trends are. And if you look at a control chart view from Deming, the same thing happens every month. And it's like, okay, we have to do something different with our system if we're going to move that. And what are those two or three things we need to do? But yeah, to answer your question, myself and the leadership team came up with like, that's the one thing we got to tackle this year. We have to move that one because it's really been the same basic number, that arrival rate percentage since COVID hit. We really haven't had that fully recover since COVID. And it's like, okay, we've got to get that. We're already ahead of national average by a long shot but we can do better, I feel confident of that. So that's what our metric is.

0:22:47.0 Andrew Stotz: Yeah, that's interesting because you start, I'm sure with, how do we improve ourselves internally so that the experience internally and all of that. How do we have best practices in what we do? But then this one is, okay, how do we accelerate this pipeline feeding into our business? How do we make sure it's as smooth and as efficient as possible from the moment that somebody starts working with us? The easy stuff for us, meaning you, is doing the work at our location.

0:23:22.1 Travis Timmons: Right. And one of the things, just to make sure our team understands again from a system standpoint and Dr. Deming talks a lot about psychology, but we could have a great onboarding experience for a patient. First two or three sessions could be amazing. Greatest physical therapist, greatest personal training experience they've ever had. And then they get their first invoice and they're shocked or don't understand it, and then they stop coming in. So just making sure everybody understands all that goes into, again, our operational definition of a good visit means the entire system has to go well. And most people have a hard time wrapping their head around until they are shown it. I didn't fully appreciate it till I was shown, so, when you see it all come together I think they'll have a better appreciation for why we spend so much time making sure their benefits are understood by the patient. Because patients don't understand health insurance. They just don't. Everybody says, well, it's their responsibility. I'm like, well, that's nice, but they don't understand it. So, that's part of our system too, to your point earlier. Like, that's part of our system, patients don't understand their health insurance.

0:24:43.0 Andrew Stotz: One of the great questions to think about on this is, what if we never lost a customer? You know, what would our business look like today if we never lost a customer? You know, it may be that they're in the physical therapy business, the process is run, the person is improved. They don't need to come back. Great. You haven't lost them, you've achieved the goal. But we... And in the case of my coffee business, we lose a lot of our customers to competitors, and we're constantly back and forth, taking them from competitors, they're taking them from us. Whoever's gaining market share is getting a little bit more than the competitors because of what they've done. But what if we never lost a customer?

0:25:38.4 Travis Timmons: Yeah, that's a great way to look at it. And that's one of the other metrics that we really measure. And that's why arrival rate is the thing we're going after because there's a strong correlation between arrival rate. So they might cancel a visit but then come for all the rest, or they might cancel two, but then come for all the rest. Strong correlation to arrival rate and a high outcome and they go home and they're better, to your point.

0:26:04.3 Andrew Stotz: Yeah.

0:26:05.7 Travis Timmons: But the industry data right now is pretty poor in physical therapy, for example. Current data shows that 80% of patients that start don't finish their plan of care. That's horrible. [laughter]

0:26:19.8 Andrew Stotz: Yeah, it's not just that industry. I mean, I do a lot of courses that I moved online and if you do just a standalone on demand course, the average in the industry is 90% of people do not complete that course.

0:26:36.0 Travis Timmons: Wow. Yeah.

0:26:36.8 Andrew Stotz: And so I asked the question, how do we improve that? And I was able to get to about 50%, but it was basically designing a cohort-based course, guiding them, dripping content, holding their hands, holding them accountable, having all of those different things, but then my goal in my teaching is to deliver the transformation. It's not just to deliver the information. And this way I was able to get closer to my objective, which is the transformation, not the information. So, yeah. Well, if you want to wrap up, any last things you want to say about it and then we'll wrap up this great discussion.

0:27:20.4 Travis Timmons: Yeah. No, I mean, it's been fun working on this offsite. I think one of the things I've learned through the Deming journey, and preparing for these offsites as a leader, a lot of the work... Most of the work happens before the offsite. And I've been to offsites, I'm sure you have too, where there's a very little preparation put in by leadership. And just some slide decks put together. So that's one of the things I've found through the Deming journey, is appreciation and who's responsible for the system, at the end of the day, it's me, something I take very seriously. So the pre-work and having a process by which to, by what method, something I've heard many, many times, by what method are you going to have this offsite? But the pre-work, if somebody's out there looking at kind of starting offsite or they have had offsites and they haven't gone well kind of to your point earlier for your online learning modules or consulting that you do, it's like, but what's the outcome? So if these meetings don't produce meaningful outcomes, then it's a waste of time and resources.

0:28:42.8 Travis Timmons: So we take this very seriously leading up to the meeting. It's hours and hours and hours of prep time. And then the offsite day is kind of almost relaxing for me. I'm just capturing data as the team comes in, so it's fun. It's a lot of fun. Then we leave with a PDSA or two.

0:28:59.4 Andrew Stotz: This is great. Well, I really appreciate this discussion and getting down into the weeds is I think very valuable for all of us as we all try to continue to implement the teachings of Dr. Deming. So, Travis, 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. This is your host, Andrew Stotz, and I'll leave you with one of my favorite quotes from Dr. Deming, which is, "People are entitled to joy in work."

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Travis Timmons shares with host Andrew Stotz how a decade of frustration running his physical therapy practice turned into joy once he discovered Deming's philosophy and embraced systems thinking. Through PDSA cycles, clearer processes, and genuine team involvement, he transformed Fitness Matters from chaotic growth to a scalable organization getting stellar outcomes. His story shows how small businesses can create stability, joy in work, and remarkable results by improving the system rather than pushing harder. 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 here with featured guest Travis Timmons. Travis, are you ready to tell us about your Deming journey?

0:00:19.7 Travis Timmons: Hey Andrew, thanks for having me. And yeah, very excited to share our journey and how impactful it's been on both our company, but also me personally and my family. So, super excited to kind of share where we started before Deming and where we're at today. So I'll just dive right in if that sounds like a good...

0:00:39.9 Andrew Stotz: Yeah. And I think just for the audience here, I'll just mention that Travis is physical therapist, founder and president of Fitness Matters in Columbus, Ohio, going on his 27th year of business. And you know, you and I have had some discussions. You've had a lot of great things that you've written and we've gone through and I think it's really an exciting story, particularly for a small mid sized business owner who's just frustrated as hell that things aren't going the way that they want. And I think your frustration a long time ago was a driving force. So I'm excited for you to share your story. So yeah, take it away.

0:01:22.6 Travis Timmons: Yeah, very excited. Yeah, 2000 is when we started, January 2000. So coming up on 27 years, as you mentioned, do physical therapy and wellness. And the first 10 years I was in business, pretty good at being a physical therapist. Started my own business and had no idea how to run a business. I knew a lot about physical therapy, but just kind of shooting from the hip in regard to business. Spent about a decade struggling, frustrated. We were growing, but growing slowly, growing chaotically. No process, it was just a, it was a heavy burden, to be honest with you. We were growing, but it was kind of Herculean effort on my part.

0:02:10.1 Andrew Stotz: I'm just curious how you were feeling at that time. Like there's gotta be a better way or this is the way business is and I just gotta muscle through this or how were you feeling at the time?

0:02:21.0 Travis Timmons: I was feeling frustrated and isolated. Didn't quite know where to turn. Yeah, I guess that's how, and just a burden. Didn't want to let the team down, I did not want the business to fail. I knew we had something different to offer. Just really had no idea how to scale that in a professional way. And along the journey was very fortunate to have a client who had a very successful business, took me under his wing. Ray Crook is his name. Started mentoring me and as luck would have it, he was familiar with Dr. Deming and a very long story short, after several meetings with him over time, some mentoring, I'd read the book along the way, the E-Myth Revisited and had some learnings from that book that really jumped out at me and came to the conclusion, both with reading that book and some feedback from Ray of basically, hey, it's time to grow up and turn this into a real business. If you're going to do this, let's do it right. And at that, around that time he introduced me to Kelly Allen with the Deming Institute. And you know, so we were 10 years into some chaos, had really no process, just would try stuff, see if it stuck or didn't.

0:03:43.5 Travis Timmons: If that didn't work, didn't really have any way to measure if stuff was working well. So really just a lot of chaos. And became introduced to Deming through Kelly Allen about 10 to 11 years into our journey and man, was that a breath of fresh air in terms of like having a direction to go in. After a few meetings with Kelly, him getting a better understanding of what was important to me, I think him just really understanding that I was serious about wanting to turn our organization into a large, professionally run and well run organization that would have a positive impact on people's lives, both team members and clients. I think he kind of, I think that we were so bad off he took pity on me to begin with, just to be honest with you, and he was like, man, this guy needs a lot of help. He could do some good in the world with what the services they have to offer. But if he doesn't figure out how to run a business professionally, they're never going to scale.

0:04:44.0 Andrew Stotz: And it's interesting that you reached out. I mean, there's a lot of people that are stuck in that situation and they really don't, either they don't reach out or they're afraid to reach out or you know, maybe they think there's no solution or nobody's going to help me. And you know, certainly when you're small, you also don't have huge budgets to hire people to come in and fix your business. You know, I'm just curious, like what drove you to even reach out?

0:05:09.8 Travis Timmons: I think I was fortunate enough to, A, have the mentor with Ray. And then secondly, have always been a believer in you got to check your ego at the door and know that you don't know everything. I think I've seen Business owners that are afraid to admit they don't know everything and so they keep things insulated and that just doesn't get you anywhere.

0:05:35.7 Andrew Stotz: Yeah.

0:05:36.3 Travis Timmons: So I just was fortunate kind of how I was raised as arrogance isn't a good thing, so check your ego at the door and learn from, learn from people smarter than you. And so I kind of took that fully at heart and like, all right, I have no idea how to run a business. I need to learn how to do that from really smart people. Read a lot of business books over the years, but the Deming philosophy, when I was introduced to that at the two and a half day seminar, went to that. I got to the Deming two and a half day in, I think that was 2013. So I was 13 years into the entire journey by the time I had met with Kelly, done some learning. And then at a time where the Deming two and a half day was offered in Ohio to where I could get to it, to your point earlier, budget plays into things for small businesses. So I was able to drive to that one and that two and a half day seminar just opened my eyes up to things that I knew in my heart but had no idea how to make that happen.

0:06:46.2 Travis Timmons: And what I mean by that, Andrew, is one of the key things I took away from that first two and a half day is Deming's belief that roughly 96% of issues within an organization are not people issues, but they're process and system issues. And that aligned with my worldview of if you hire good people, which we did, they show up every day wanting to do a good job as long as they have a good system and process to work within something that's professionally put together. So that was takeaway number one that really resonated with me. And the person responsible for said system is me. There's no passing the buck as the owner. And that resonated with me. It's a big responsibility to own a business in terms of the people and clients you're responsible for. And there's no passing the buck. You're responsible for the system at the end of the day.

0:07:42.3 Andrew Stotz: Yeah. I remember when I was 24 attending Deming seminar, when I was working for Pepsi, and it was a little bit different situation than yours. I could see, though, the same thing resonated with me. I could see that people were hemmed in by the system. And even though many people in the factory had really good intentions and they wanted to do a better job, they literally couldn't because they didn't have the tools or the budget or the this or the that. And a lot of times it's easy for senior management, particularly in a big company, to say figure it out, your job is to figure it out. But that only goes so far and there's eventually a point of exasperation for people working in a company that, like, I just, there's a limit here and I'm not going to kill myself trying to do something that I can't change. And so it just, I was coming from a very different perspective as an employee in a huge company versus you at a perspective of, this is my company, I set the rules.

0:08:46.5 Travis Timmons: Yeah, can do whatever we want. And you mentioned something there. It reminds me of a quote from that first two and a half day, and it still sticks with me a decade and a half later. Almost a lot of businesses complain about the term. We have a lot of dead wood in terms of employees. And the quote, I remember Kelly sharing this, it's like, well, did you hire dead wood? Because if you did, that's on you. Or did you hire live wood and kill it and that's on you from your standpoint of, from a system. And I'm like, man, 100% true. And I hired, I had good people on our team, but we didn't have good processes to keep from killing that live wood I would say. So, yeah. And to your point on budget, yeah, I had and still do have quite a bit different budget than Pepsi. Right. So one of the other things that jumped out at me early on that made Deming very approachable and something I could engage with very easily as a small business owner was the concept of PDSAs, the Plan-Do-Study-Act.

0:09:58.5 Travis Timmons: That was a game changer for us because I was like, all right, I don't have to hire a big business consultant. We don't have to hire or pay for a bunch of software. There's very simple things we can do via the Plan, Do Study Act PDSA method that we can create systems or improve upon systems and those little experimental ways and not have to bet the farm. You know, you see a lot of businesses that try to go through these huge transformative activities, bring in a new software to fix all their problems. Things that are very expensive with no real way of understanding what their aim is, what their theory is, or even if it'll work. So, yeah, your comment on budget there, I think, is what makes Deming so approachable for any size organization, but the budget's really not a limit from the PDSA standpoint. So those were some of my key takeaways very early on on my first two and a half day Deming, it was an eye opener and just really resonated with how, how I saw the world in terms of from a human level. Just had zero idea as a physical therapist with no business training on how to implement and run a professional organization.

0:11:13.8 Travis Timmons: So as things evolved, kind of went from the kind of the term chaos to process. So after that two and a half day, I went back to our team, which was small at the time. I think we had, we were a very small company at the time. I think we had 10 employees, nine or 10 team members at the time and just presented to them like, hey, this is going to be how we run our organization. There's this thing I heard about this guy called Dr. Deming. Some of it's going to seem a little odd, but this is how we're going to do things. And just started out early on, like just with PDSA, educated them on what that meant and we're all going to work on things together. So immediately it started enforcing a culture of improvement and collaboration and voice. Rather than Travis just coming up with random ideas, we worked on them together, made the system visible and then put some experiments in place. I talked to them about operational definition. That was a new term to me and gave them some examples. We wanted every client to have a good visit with us.

0:12:29.2 Travis Timmons: What in the heck does a good visit mean? Right. We didn't have an operational definition of that, so we created an operational definition of this is a good visit at Fitness Matters. So those were some fun things early on.

0:12:42.3 Andrew Stotz: I'm curious. There's two things, the first one is for someone that really doesn't know anything about PDSA, the Plan, Do, Study, Act process or cycle. Could you give an example either of one that you did early on or one that you think is the best illustration of the application of PDSA so people can understand what you're saying, because I know it's a big part of what one of the, let's say, tools that you've used in your process.

0:13:10.1 Travis Timmons: Yeah, one of the early on ones we did that was fun to do with the team because it changed our pricing model for our private pay team. Quick example, like we do personal training and Pilates muscle activation technique. Traditionally in that world, people buy those visits one at a time or you'll buy a package of 10 or 20 at a time at a discounted rate, volume, volume pricing, right. So we had that, we had 10 pack and 20 pack of personal training. We had a 10 pack and 20 pack of Pilates, same for muscle activation technique. And we had clients that would do sometimes all three of those services, but for them to be able to optimize their discount, they had to buy a 20 pack of Pilates, a 20 pack of personal training, and then the same with muscle activation technique. So after learning some things with Dr. Deming at the two and a half day that Kelly presented at, it's like we got to be easier to do business with. Be easy to do business with and how can we do that? So our PDSA was how can we change our pricing model on the private pay services to be easier to do business with and optimize how clients can move in our system freely.

0:14:25.9 Travis Timmons: So part of the concept of PDSA is you trial it, you put your whole theory together of what you think will be true. How are you going to study it? How long are you going to try it? So we had four clients that we knew well, that we told them, we're trying this new pricing model. Would you be willing to experiment on this with us? So we didn't roll it out company wide. We just tried it with a small segment, and we called it Fitness Matters Dollars and the do the Fitness Matters Dollars package. Then the client could use that discounted bundle of money for any of our services. So the discount applied to any of the services they did rather than having to buy a bunch of different packages. So the beauty of it is you can try it small. Had we gotten it wrong, we could have thrown it out and only five clients would have experienced the error. And they knew they were part of an experiment and they were happy to help us improve. It was a big win. That was 12 years ago. That's still how we do our pricing today.

0:15:29.1 Travis Timmons: It makes it very easy for clients to optimize their health within our system and not have to spend a bunch of money with us and have a lot of monetary resistance moving about our system. So that's one example that comes to mind.

0:15:41.4 Andrew Stotz: That's a good one. And I think if you think about, let's say an accountant may say, well, but wait a minute, the cost of three different services is different and that's the idea of how do we simplify this for the client, and that's interesting. Now, did you write it down, did you go to a Whiteboard. How did you actually go through that process?

0:16:02.9 Travis Timmons: Oh, that's 13 years ago. You're testing my...

0:16:06.5 Andrew Stotz: Oh, well, you can think about a current one, too.

0:16:09.6 Travis Timmons: 12 years ago. Yeah. When we're doing a current one, we'll get together as a team. Like, we're having our annual team off-site the end of January. And we'll come up, we try to come away with three, maybe four PDSAs as a team, and we'll write it up on the whiteboard. What's the problem we're trying to solve? Another key quote I've learned from Kelly Allen over the years is "the problem named, is the problem solved." So we want to make sure we're naming the right problem first. What really is the problem? So we talk about that through our entire company so that I'm getting feedback from all pieces of the system and then we'll map it out. Sometimes we'll do fishbone charts to look where in the process are we trying to do an experiment? And then there's the PDSA kind of chart that we'll use for bigger ones so we can study it. What's our aim? What's our theory? What do we think is going to happen with this experiment? How long are we going to study it, and what's our expected outcome? So part of the PDSA magic, as you know, is what are you trying to accomplish by what method, in what time frame, and what do you think is going to happen so you can go back and test your theory after you've studied it? So, yeah, sometimes we, if it's something bigger system-wide, we put it down on paper. We have a PDF that's fillable for each new PDSA.

0:17:35.5 Andrew Stotz: And for some people listening, they may think, well, I mean, isn't that what business does? I mean like owner comes up with an idea and says, yeah, I think we could try this and see what happens. Right. And ultimately everybody's kind of poking in the dark in business. We're not given a manual nobody really knows what we're doing. What's the difference between the way that you are poking in the dark, trying to hey, let's try this, let's try that compared to the PDSA.

0:18:08.5 Travis Timmons: I don't think I learned that till my second Deming two and a half day. So the second time I went, I took some senior team members with me so we could get more eyes around what in the world is this Deming person, who is Dr. Deming? What's this System of Profound Knowledge? To answer your question, I think the realization I had that I didn't have before, kind of going down the Deming journey is I didn't view our business as an entire system. I lacked that awareness of system view versus pieces and parts view. Pre-Deming, there's a problem over here and you go chase that fire and then another problem pop up over here, and to your point like there's lots of books out there on how to solve problems or you know, you hear like there's books out there on ownership thinking. And you know, it's like, well, do you have a culture and a system and by what method do you give people the ability to have that ownership thinking? Yeah, I think that's was the big aha of looking at the entire system. Whereas previously I was looking at it in silos and only trying to solve problems when a fire arose rather than system operationally efficient, trying to get efficient and optimizing the entire system. So that was probably one of the big aha's for me. Didn't happen day one. But as I got to understand Deming more, the system view of how it all has to be working together for optimization just changes your lens totally.

0:19:51.5 Andrew Stotz: So you've talked about PDSA, you've talked about operational definitions, you've talked about systems thinking, three core principles. One last thing on PDSA is like, I wonder what percent of the total value of doing PDSA comes from doing PDSA. In other words, the actual part of forcing yourself to get people in a room to discuss what's the problem, the Fishbone diagram, think about what's our aim, what's our theory, what's our hypothesis? Let's write that down. How are we going to study that? How we know if our hypothesis was true and you know, that type of thing. And sometimes I, after listening to you, I was thinking it, I suspect that a large amount of the final benefit you get from a PDSA is really front end loaded in all the work that you do to set it up.

0:20:48.3 Travis Timmons: Yeah, yeah. Going back to your comment earlier Andrew, on when you were at Pepsi, if I heard you correctly, you didn't really have the ability to share voice or to have an impact on the system. I think you're spot on, the PDSA itself, a couple things, number one as a small business owner, you got to check your ego at the door. Your team sees stuff happening that you don't have visibility on and they're probably going to have better ideas on how to fix it than you might if you're removed from it a step or two. And then the culture of like, oh, Travis is going to listen to my ideas. I find value in that. And then when we implement a change, like nobody likes change. Right? But when you've worked on it collectively as a team and you're ready to move forward with it, that's a game changer. You're not pushing a string at that point. Everybody's leaning in because they understand they're part of the solution and you're allowing that. Where a lot of businesses are top down, command and control, that doesn't usually work very well. So yeah, I think you're spot on, Andrew.

0:22:02.5 Travis Timmons: I think that so much happens with the PDSA process from a culture and team involvement. And if you don't have that, you're going to have a hard time retaining team members, in my opinion.

0:22:16.9 Andrew Stotz: So you look like a pretty relaxed guy compared to probably what you were like many years ago when this all was going on. Maybe take us through. Okay, so you're implementing these things and what's happening, what changes are happening, what transformation is going on with you and with your organization?

0:22:36.9 Travis Timmons: Yeah, so it's a multi-year process that we went through. Still a lot of work, you know, it's not like, hey, this just solves every problem. It just changes all the lenses you look through and you have a by what method path. Here's how we are going to think about our business. So that got rid of a lot of confusion for me. I knew how we were going to go from this size business to my, we had a BHAG, Big Hairy Audacious Goal from Good to Great. We wanted to have four facilities. At the time I went through Deming, we had one. We wanted to have four facilities or more to see if we could replicate our high level of care, team member engagement, all those things. So we were working, I was working just as many hours then. It just was not frustrating, it was exciting. It was a lot of collaboration that was energizing and everything as we scaled got easier. I was not going to be able to scale our business with what I was doing because had I scaled it, the headaches would have just been out of control. The loss of revenue, like there would have just been so much inefficiency on our organization.

0:24:00.4 Travis Timmons: So I would say for that next from 2013 through 2018, we got really locked in. So we spent about, I was a little conservative at the time. I was also in Army National Guard, so had a trip across the pond and just wasn't quite at a point where I could financially roll the dice and start multiplying locations and stuff like that. But around 2018, 2019, we got to the point where the team knew Deming well. I felt like we put a lot of systems, processes in place that were replicatable and I'm like, all right, here comes a real big PDSA. We're going to go get another clinic, we're going to go do another location, and we're going to test it. So that was a big PDSA. A lot of the ones we had done up to that were small. At some point you got to go a little bigger. And we were very confident in our model. So we acquired a practice in our town and like, hey, 80% of what they do is what we do, 20% is not Deming and service lines and stuff like that. So our theory, our PDSA, was can we acquire and put Fitness Matters, culture and process in place and grow?

0:25:26.3 Travis Timmons: And we did. We were very successful with that. I had team member retention with that. You know, a lot of times when you buy out another business kind of, people head for the doors, including the owner. That owner is still working with us six years later, then we started growing. It's like, all right, here we go. We can do another one. We can do another one. Put leadership in place at each location that understand Deming. We have our processes written down. We have operational definitions written down. People know what PDSA is. If they're new to our team, it takes them about six months to figure out what all these acronyms mean. So now we're going quicker since, you know, since in the last four years, as an example, we've tripled our physical therapy volume and doubled our private pay wellness volume. And in the service line, that's fairly fast growth. Probably not fast in the IT world, but in the service line growth in a very competitive market with how physical therapy and referrals work. There aren't many private practices left out there because it's so competitive where we're thriving.

0:26:41.4 Andrew Stotz: It seems like a hard business. It seems like a hard business to scale because there's this personal aspect, there's this interaction. You know, think about the exact opposite. I don't know, let's say Instagram or whatever. There's zero personal interaction. It can scale to billions. What are the constraints to growth that you feel in your business.

0:27:03.3 Travis Timmons: So constraints are reimbursement from health insurance, referrals from physicians, because health care is consolidating. So a health care system buys up smaller organizations, physicians, and then they have physical therapy within those systems and then they're highly encouraged to refer their physical therapy in-house. So that's a big challenge for us. So we don't, we're not owned by physicians. So we have to, we have to be the best at what we do for physicians and clients to want to choose us. So one of the things Dr. Deming really big on at quality, right. You have to continually have a system that has improving quality as you grow. And the way we grow is we have our outcomes. So how well a patient does at the end of a plan of care is roughly 35% higher than national average. We're 35% above the competition because of our processes, our system, our clients, how we look at integrating our clients from the first visit, the first phone call, follow-on visits, the entire, again, thinking back to that system conversation. And I think a lot of businesses, if they haven't been exposed to Deming, they miss that very critical piece of, if your sales isn't aligned with your implementation, isn't aligned with your billing process, anywhere along that service line, going through that fishbone, if it's all not good, like we could give excellent physical therapy care, but if we have a horrible billing system, we lose clients, end of story. If we have a horrible process of answering the phone to schedule evaluations, we're out of business.

0:29:00.0 Travis Timmons: Could have the best physical therapists in the world. So, yeah, that's what it's allowed us to do from a scaling and fun standpoint. And kind of now almost 27 years in we're at a point where, one of the litmus tests I had, like, if we do this well, if we really are all-in on Deming and it's system process definitions and we have it mapped out, this should run without Travis. And I see a lot of business owners are the choke point. Like they want to be the problem solver for everything. Everything has to flow through them, slow stuff down. You're not getting all of the information from your team that could solve problems so much quicker. So one of my litmus tests early on was like, if this really works well, the business should run without me present certainly for weeks and weeks at a time. And we're there. So that's why I look Relaxed now. I didn't look this relaxed a decade ago. So, it's fun, it's fun.

0:30:11.5 Andrew Stotz: I was looking for my Out of the Crisis book, but I went online and I wanted to highlight two of the 14 points because it's something that you mentioned about improving your process and all of that. And the first one is the first point and you know, it's the first point for a reason. And number one is "create constancy of purpose towards improvement of product and service with the aim to become competitive and stay in business and provide jobs." And number five is "improve constantly and forever, the system of production and service to improve quality and productivity and thus constantly decrease costs." So how do you embody that in your business, this, because when I first read the "constancy of purpose," I originally thought it meant pick your direction and stay constant with that. But then I started to realize, no, no, it's about how are we improving our product and service.

0:31:18.9 Travis Timmons: Yeah. So if you're not evolving with, technology is everywhere. Right. So if you're not paying attention to that within how it impacts your business and constantly trying to optimize how technology interfaces with your business, you're in trouble. So, like, we're right now getting ready to, I'd say once a year we do something fairly large within technology. Next year we're going to probably be changing our documentation software because there's a newer one out there that instead of having four different softwares we have to interface with, there'll be one. So that cuts down on rework, that cuts down on learning time for a new team member. There's less resistance for clients to understand how scheduling and billing work. So I don't know if I'm answering your question, Andrew, but I think from a standpoint of, I think it was Jack Welch I heard say years ago in an interview, "there's two ways a business is going. You're either growing or you're dying." And that resonated with me, there's no sitting still because if you do, you're going to get run over. So that's always looking through, can we make it easier to schedule?

0:32:40.0 Travis Timmons: Like right now we don't offer online scheduling for physical therapy. We will in 2026. And if we don't figure that out, it could be a reason that we would eventually go out of business. So I just looked through that mindset. There's always somebody coming after you.

0:32:58.7 Andrew Stotz: Yeah, yeah, that's...

0:33:00.3 Travis Timmons: Complacency doesn't work.

0:33:01.3 Andrew Stotz: I like to think about when I was young and I took a break and I stood still. I was standing on the flat ground, no problem. But now with my 87 year old mother, if she goes one day, two days, three days without movement, she's going backwards and it's harder to catch back up. And I start to realize she's operating on a plane that has been slanted against her. And eventually the slant will win against all of us. But in the world of business if you think, well it's not about growing or dying, well, there's someone out there trying to take your business by providing a better product or service. And that's just the reality that actually is invigorating to know that, and as Dr. Deming said to have a great competitor is such a valuable thing. If you're just poking around and you're doing okay in market you're probably not going to improve as much. So that the focus on improvement is something that I just find really fascinating. There's another question that I have which is these days, way I look at like the job of leadership is that it's like imagine a very strong magnet ahead of you and you're constantly pulled to that magnet.

0:34:37.7 Andrew Stotz: That magnet is the average, the consensus what everybody's doing. And you can't help but feel that force. And if you don't realize that you're being affected by that force, you're just being pulled into it. And what I mean by that is if you say, well, what if we tried something different, a different way of doing something and then you go to customers, no, sorry, your competitor does this. If you don't do that, I'm not going to give you the business. And so you're naturally drawn towards the center or towards consensus, but what you're doing is trying to pull your business and yourself and your thinking and your team away from that and saying there's a different way. And how hard is that?

0:35:24.4 Travis Timmons: It's hard. You have to have a different lens. Comment earlier, the problem named is the problem solved. One of the things, I love that analogy. I've never heard it described that way. In physical therapy it's very common for a physical therapist to have two or three patients scheduled at the same time because the problem that was named by most organizations is poor arrival rate. And if you have holes in your schedule you're not getting paid. So they look at that as a revenue loss. So to answer your question, that's where our industry is. Like you got a double, triple book or you're going to have lower revenue. Well, what that does is it increases, in my opinion, increases the likelihood that people are not going to come because they're going to have a bad experience, they're going to have poor outcomes. Physicians are going to stop referring because their patients aren't getting better. So problem named is the problem solved? And we pulled, I like that magnet. I'm going to use that one. But pulled away and said, no, if we provide one on one care at a very high level and the entire system works well for the patient, they're going to show up, they're going to continue to show up.

0:36:49.0 Travis Timmons: They're going to be happy to pay for the service we're offering because it's going to be exceptional. And because they show up, they're going to get better. And because they get better, they're going to go tell their doctor and then more doctors are going to refer to us. And that's thinking much differently. So that gets to the problem name, problem solved. Or using your magnet example, we are like, physicians come and talk to us all the time. They're like, are you really only seeing the patients one-on-one? Are you really doing that? Because nobody else says they can do that. It's like, yes, we are. That's exactly how we're doing it. And that's why you're here talking to us right now. Because it's so much different. You can't, there's some things that are just immeasurable. Like Dr. Deming talks about that quite a bit. We don't have to market, we don't spend... I shouldn't say, we don't have to market. We don't spend nearly the amount of money on marketing that our competitors do because we have physicians saying, hey, what's different over there? That's invisible. Right? That's invisible.

0:37:56.9 Andrew Stotz: And they weren't saying that in the beginning, but over the time they got that...

0:38:01.4 Travis Timmons: Yeah, yeah. It's a process, but you know, like the flywheel. We use that flywheel example. And now it's like, we're having a hard time hiring enough team members to keep up with the growth. One of the other thing's, "joy in work." Dr. Deming talks about joy in work a lot. And that's to your question earlier about continual improvement and jobs. So we exist, there's a lot of burnout in healthcare. You can't hardly open a business article.

0:38:37.7 Andrew Stotz: Seems paradoxical.

0:38:40.4 Travis Timmons: But it's because two and three patients at a time burdened with administrative stuff. So we also exist because, man, it's so fun when you have a team member join you from one of those other organizations and we've had eight new team members we've hired since July. And I have what I call a fresh eyes lunch with them a month in. And every one of them has said, my spouse can't believe how much happier and more enjoyable I am to be around. If that doesn't motivate you to want to continue to grow, I don't know what does. So that's the joy in work piece that Dr. Deming talked about a lot.

0:39:24.6 Andrew Stotz: And let's now talk about one other thing, which is I was just talking, I gave a speech last night in Bangkok to some business owners and then we had a dinner out and I was explaining to them that like, there's a disease that's come from America, not from Wuhan, China, in this case. It's come America, it's spread all across Thailand. And you really have to be careful with this disease. It's a deadly disease. And I said, and particularly Thailand, where there's harmony. People enjoy working together. They want a fun environment, they want to make friends at work. It's a little, it's very different from a US work environment where it's like, go there, deliver, go home, separate lives. That's not the way Thai people see work. And the disease is, the disease of individual KPIs and saying everybody, by optimizing each individual, we are optimizing the whole. And I'm trying to get them to realize like, there's another way. And I'm curious I'm sure if you're getting people from the bigger institutions and stuff, they're being KPI'd to death. And how do you, how do you manage the idea that I don't want to optimize the individual, I want to optimize the whole system, but yet I also want employees to know they gotta do a good job. So how do you manage that?

0:41:03.2 Travis Timmons: It's hard when somebody comes, because you're right, there's a lot of PTSD. I've got an example from today. So we turned on, within our system, there's a net promoter score that can be sent out to patients automatically after their first couple visits with us. And we turn it off and on from time to time just to get the voice of the customer, right. I think Dr. Deming talks about the voice of the customer and who all. So it's like, hey, we haven't done that in a while. We're going to turn it back on. And there were several therapists that were like, wait a minute, you're scoring me? And then if I get a low score, I'm in trouble. So we have to spend a lot of time educating the team on some of that old head trash. It's like, no, this is to study the system and where we can improve either improving our operational definition, whatever it is, give the team member tools on how to handle a difficult client. But to your point, you have, people's brains are so wired in the way you just described. So part of it is we, we let them know up front, like, here's why we don't have employee of the month at Fitness Matters.

0:42:15.4 Travis Timmons: Here's why we don't have the parking lot for employee of the month at Fitness. Like, all of those rewards, how all of the negative unintended consequences that can go along with that. Like even giving an individual an award in a group setting. Like, we had a team who's one of my clinic directors, the business she came from before, they had like a WWE, like the heavyweight wrestling, big champion belt. They had one of those. And each week somebody would give the belt to whoever they thought was the best employee that week. And she didn't get it for like two months in a row. And she was crushed. She's like, people don't like me. So it's fun to talk about the negative unintended consequences of the individual reward, the individual competitions. We could talk for an hour about motivating via monetary motivation. That's probably a whole nother podcast. But to answer your question, we have to make it very known why we don't do those things. Because as much as people hate some of that stuff, they also expect it. Yeah, why don't, why don't we have employee of the month? You mean I'm not going to get in trouble if I get a low net promoter score from one patient?

0:43:34.3 Travis Timmons: It's like, no, we know we hire good people. We know you do your best job every day. They could be upset because their billing didn't go correctly. So we just need to know. So I don't know if that answers your question, but it's a big thing because you do have to still track KPIs or you're out of business. Like, you do have to know what's going on within your system to measure it. It's just that concept of we all are responsible for the output of the system and the system has to produce exceptional results.

0:44:06.7 Andrew Stotz: Yeah, yeah.

0:44:07.9 Travis Timmons: And we have to have a weight by what method. We have to have a system to create whether you're doing plumbing, electrical work. Like if you're going to scale a business, you have to have a repeatable product that can scale.

0:44:23.2 Andrew Stotz: Yeah. And one of the answers to that too is if you believe 94% of the problems come from the system, then even when an employee is identified as having a bad net promoter score, then the question is, does the 94% apply in that situation? Well, generally yes. And so let's dig in. I have some people that ask me like my, one of the guys last night at this event works for a bank and they have put KPIs into everything. And he was saying, I just can't escape. But another guy was like, well, I have my own business and I can do what I want. I've implemented KPIs, but what should I do? I said the first step in disentangling yourself from this individual KPI situation is just to disconnect compensation to the KPI. So just right there, there's still incentive for the employee to do something bad for the organization to do their best. But when you remove that compensation aspect, you've really taken away a huge part of the incentive. So even if you have to keep KPIs, take away the tie to compensation and then they say, well, that's the whole reason why we're supposed to do it is have the tie to compensation.

0:45:44.5 Andrew Stotz: And I said, yes, it's a little bit of a circular references cannot be resolved.

0:45:49.7 Travis Timmons: Right. Yeah. And I think we even give examples to the team as much as we can around why we don't do those type of things. Here's what would happen. And most people have worked in organizations when you point it out to them. So again, Dr. Deming talks about making the system visible. Point it out to them. If I bonused you like you see this, this used to be a thing at car dealerships. When you're buying a car, hey, you're going to get a call to rate your experience with me. If you don't give me a 10, it's going to impact my pay. And you're like, what? So we talk about that like hey, the net promoter score. If we did the same thing here and bonused you on every 10, then you're going to be bothering your patients to fill that survey out. Or if you're afraid they're going to give you low score, you're not going to, you're going to encourage them not to do it. And then me as the owner, I'm not going to hear about system breakdowns. So to answer your, I think it's an important thing that a lot of businesses like number one, don't tie compensation to your KPIs.

0:46:58.3 Travis Timmons: Like just, it's an output of the system and then explaining it to them and giving examples over time because their brains even though they hated it, like we don't do performance reviews, annual performance review. And people hate them. And I still get asked like hey, when are you doing my annual performance review? It's like do you want to do one? Well no.

0:47:21.2 Andrew Stotz: Yeah. We dropped performance appraisals in 2016 in my coffee business here in Thailand and we never looked back. We didn't come up with any particular stunning replacement. We just knew it was bad and we were willing to just walk away from what was bad. I want to wrap up and just get into the... What are the, let's talk about kind of extrinsic versus intrinsic. There's some external factors that we can say this Deming implementation provided these benefits to our company and then there's this internal or intrinsic benefits that you're getting. Maybe you can go through some of those benefits of where you're at now, what you're able to do now and we'll close it on that note of kind of what's the hope for somebody that's stuck in the situation. They're the entrepreneurial seizure, they're the technician, they're great at physical therapy, they start their physical therapy business and they're just scaling chaos basically. Tell us about, give us hope.

0:48:37.8 Travis Timmons: Yeah, no, happy to, the reason I have had the opportunity to speak in a lot of different settings about Dr. Deming and the reason I do it is because it's brought so much joy to me personally and to a ever growing team. It's having a positive impact on lives and the more I can do that, that gets to the intrinsic motivation. So the joy in work, there's a lot of bad organizations out there that just suck the life out of people. So that's my intrinsic motivation at this stage of the game of if Fitness Matters is bigger, so more jobs, there's more people having a positive experience in life and our outcomes being 35% higher, our community is getting healthier. So that's the intrinsic motivation at this stage. It's fun. I know again, we're not perfect. So continuous improvement to our conversation earlier. But the intrinsic motivation is the busier Fitness Matters gets, the busier Fitness Matters gets because of high outcomes and it's positive experience for more people in life. Extrinsically, I guess that gets to community outcomes. So that's intrinsic and extrinsic. You know, extrinsically, if you get this figured out, it's very easy to scale a business.

0:50:06.0 Andrew Stotz: And tell us about your scale, where are you at or where are your averages versus national averages? You know, what have you accomplished that's driving that external factors, let's call it.

0:50:19.4 Travis Timmons: Yeah. So a couple things. One, externally, a practice like ours nationally on average is growing at 9% to 10%. We're currently clipping along at 25% to 30%. So you know, that flywheel effect and chaos is no longer there. So we have process, so it's easier to scale. The other extrinsic piece is because of our outcomes and continuing scale, we're able to negotiate better rates with our insurance companies to reinforce our strong desire to keep one-on-one care model. So Deming talks about who all is part of your system. So insurance companies are part of our system and we don't have a lot of control over them. But because our data is so powerful externally, we have been able to negotiate higher rates than most of our competitors because our data speaks for itself.

0:51:23.2 Andrew Stotz: Faster growth, the ability to negotiate better terms because you're delivering better product and service generally means higher profit margins.

0:51:34.2 Travis Timmons: Yes.

0:51:34.6 Andrew Stotz: Fast growth with higher profit margins generally means you're generating more cash and you're no longer in cash crisis all the time and you have resources to decide, okay, now we want to expand or we want to invest or whatever.

0:51:50.9 Travis Timmons: Right.

0:51:51.4 Andrew Stotz: Is that...

0:51:51.9 Travis Timmons: Yeah, the cash crunch was real those first 10 years. So yeah, to your point, when you get to the other side of that and process is a big part of that so you're having a whole counting process, but yeah, you get to that size. But yeah, the intrinsic piece, one of the reasons I talk about Deming as much as I can. I've got two sons that are in college. My hope is there's more companies in the world today than there were 10 years ago that know about Deming, because that means there's a higher likelihood that my boys will work at a Deming company. And just seeing what a lot of companies do to people, we as owners have a big responsibility, I feel, we have a big responsibility to have a positive impact on our employees. And you're, as an owner, are responsible for that, in my opinion. And if you get it right, man, is it fun to look in the mirror or sit down with a team member or their spouse and be proud of, be proud of what you built. That's at the end of the day, the intrinsic motivation.

0:52:57.9 Travis Timmons: If you can be proud of what your product is and proud of the impact you're having on your team to where you're not sucking the life out of them, but actually intrinsically motivating them. There's not much else you can accomplish in business that was worth more than that, in my opinion.

0:53:18.5 Andrew Stotz: Yeah, wonderful. That's a great way to end it. What's the likelihood that our children are going to be working in a Deming company? Well, that's the whole reason why we are here talking about it. So, Travis, I want to say on behalf of everyone at the Deming Institute, I want to thank you for this discussion and of course, for listeners out there and viewers, remember to go to deming.org to continue your journey. This is your host, Andrew Stotz. I'll leave you with one of my favorite quotes from Dr. Deming, and I believe it's probably one of Travis's too people are entitled to joy in work.

0:53:56.0 Travis Timmons: Love it. Love it. Thank you, Andrew.

0:53:58.0 Andrew Stotz: Yep.

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How do we really know when improvement has happened inside a school or organization? In this episode, John Dues and Andrew Stotz unpack a clear, three-part definition of improvement and show why evidence, method, and sustained results matter far more than year-to-year comparisons. Their discussion offers a practical lens for leaders who want to distinguish true progress from noise and build changes that last.

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 John Dues, who is part of the new generation of educators striving to apply Dr. Deming's principles to unleash student joy in learning. The topic for today is, How To Define Improvement. John, take it away.

0:00:23.3 John Dues: Hey, Andrew. It's good to be back. Yeah, I think this is really interesting. Apologies on the front end. I'm a little bit under the weather, so I may sound a little raspy today. But you know, one of the things that's really interesting is there's lots of claims of improvement. In my world, there's lots of claims of school im- improvement. I would even go as far as to say that those claims are like a dime a dozen, something like that. And the reason I say that is not to be mean or anything, but you know, I think that a lot of these claims, they're not grounded any kind of reasonable evidence. And I think sort of even beyond that, that claims are often made without a logical definition of improvement. So I thought in this episode we could talk about a three-part definition that makes it really easy to tell when improvement has occurred and just as importantly, when it hasn't.

0:01:21.9 Andrew Stotz: Exciting.

0:01:23.2 John Dues: Yeah. When I talk about this, I always like to start with a challenge. So, you know, if I'm in a workshop, I'll say, you know, get out a piece of paper and a pen so the listeners could do this as well and think about, you know, the successful improvement efforts that you've led throughout your career. So in my world, maybe it's increase in state test scores or maybe you improved student enrollment in your school. Maybe you did a better job at retaining the teachers in your school. It could be any number of things. Maybe it's decreasing student office referrals or decreasing chronic absenteeism rates in your school or your school system, which are two things on everybody's mind coming out of the pandemic especially. And I tell people, just create a list of those instances. And I give them a few minutes usually. And typically, people come up with eight, nine, 10 or so instances of improvement, whether that's teacher in their own classroom or principal in their school, or a superintendent thinking about the whole system. Then I say to them, now what I want you to do is pause and think, what does it mean to improve?

0:02:46.7 John Dues: What do you mean by that? And that really brings us to this important question. What is improvement? You know, and this was... Full disclosure, when I started thinking about this, I stumbled across the definition in a book I'll show you here in a second. But when I stumbled across this, you know, there was some conviction. And I think that probably a lot of educational leaders or just, you know, leaders in general would say, actually, I never really thought about that. I don't have an answer for this seemingly simple question. And like I said, I didn't have an answer to that question when I really thought about it, when I stumbled across the definition, probably for the majority of my career, maybe the first 20 years or so, if I'm at year 25. So, yeah, the first two decades, I would not have had a clear answer for that simple question. Now, I turn to this seminal work in the field of improvement science called The Improvement Guide. I'm sure a lot of people are familiar with this. And I'll share my screen so people can see the book and kind of share an interesting story about the book. And, you know, when you're... Can you see my screen all right now?

0:04:06.9 Andrew Stotz: Yep.

0:04:08.1 John Dues: So you can see, if you're just listening, you can see the covers of two books. So on the left, a lot of people will recognize The Improvement Guide. But there's an arrow up there. It says, second edition. And a lot of people will recognize that book. Probably less people. Maybe some people that have been doing improvement work for maybe three decades will know this other book, the first edition of The Improvement Guide. It's this purple book on the right, if you're watching. But there's this interesting anecdote that I actually think I might have heard maybe on your podcast when some of the authors were on. And almost as soon as they wrote this first edition, this purple edition, they got this note from this professor in Brazil, and it said, I know you guys are really big into improvement, and you're really big on operational definitions, but you've written this whole book on improvement, and nowhere in the book have you defined what you mean by improvement. So, you know, talk about a swing and a miss.

0:05:15.0 Andrew Stotz: Yeah. And just for listeners out there, you can go to the podcast.deming.org and you can search for quality as an organizational strategy with Cliff Norman and Dave Williams. We didn't talk about The Improvement Guide specifically, but definitely it's worth listening to those two.

0:05:33.3 John Dues: Yeah, and I think... So any of us that feel bad when we come to realize, like, how obvious that question is when we've made claims of improvement and don't have a definition. So even these guys that were writing a whole guide about how to do improvement missed as well. You know, and it's pretty obvious when you think about it that The Improvement Guide, that a book like that should have a clear definition for the central concept. That's right in the title. But it should be just as obvious to leaders that they also need a definition of improvement. And that definition should really precede any improvement claims then. So I thought it'd be interesting to take a look at the definition that the authors came up with in their improved second edition.

0:06:20.9 Andrew Stotz: Improvement in their improvement.

0:06:24.4 John Dues: Improvement in their improvement guide. Right. And the definition is really easy to follow. It's got three parts, and now I've adopted it into my own improvement work. But what they've said is improvement is "a change that alters how work is done or the makeup of a tool that produces visible positive differences relative to historical norms and relevant measures and it's sustained into the future." So we can kind of break that three parts of the definition down now. So in part one of the definition, what you have to be able to do is point to a change that was made that led to better results. You know, that could be a new tool you're using, a new approach, a new framework, maybe it's a new staff role, but something has to change, a new method, something has to change in what you're doing. So that's sort of part one of the definition. Part two is performance improved after the change compared to past results. So that also should be fairly obvious. So you did something different. You noted when you started this new thing, and at some point in relative proximity to when you tried that new thing, the data improved.

0:07:54.2 John Dues: You know, it went up. If that's the direction of good or, you know, if it's like chronic absenteeism or office referrals, you want it to go down. But you see that in the data after you've made this change, that's part two. And then part three is that improvement after the change was sustained into the future. So it wasn't just a temporary thing because you were paying a lot of attention to it, but you made the change. The data improved over time after you did this new thing, and then it kept going into the future.

0:08:27.9 Andrew Stotz: Which is the hardest part, by the way.

0:08:30.1 John Dues: The hardest part, I'd say too. Assuming you could bring about improvement, then sustaining it into the future, especially as you maybe take your eye off it a little bit, and then work on something else, that's very, very difficult.

0:08:43.1 Andrew Stotz: Yeah, the initial seizure that you get into of making change can be really powerful compared to the energy, you know, devoted to sustaining it.

0:08:55.9 John Dues: Yeah.

0:08:56.3 Andrew Stotz: And you could also argue, if something's not easily sustained, was it really an improvement?

0:09:02.8 John Dues: Right. I think that's just right. And, you know, what I do in the workshop then is then after I go over the definition, I ask people, now, think back to your list of successful improvement projects. You know, and for the listeners, if you pause, then you created your own list and then you heard that definition. Then I just asked the participants, would you revise your answer after reading this definition of improvement? And ask people, okay, now how many things, how many items are on that list? And a lot of people, if they're being honest, are left with none, actually. You know, because this definition sets a really high bar. But I think it is the right bar if you're actually interested in improving outcomes in your school, in my case, or in your organization. And I think what you often run up against is, this is kind of a simplified version of most improvement claims. But in my world, you hear claims, something like, you know, our state test scores improved. Right. The translation is, this school's or this year scores are higher than last year's scores.

0:10:25.8 John Dues: But that claim falls really short of that definition. Well, okay, the scores are better than last year. Well, what did you do to make them better? Also, a single data point is probably not enough to back that claim up. Let's instead turn to an example that meets the definition, and it'll help you understand how powerful this can be in practice. So, you know, let's suppose that you've been working to increase some student outcome measure. Let's say we gather it on a monthly basis, whatever this thing is. So now I'm going to show you a visual that has some data plotted over time. And the three parts of the definition of improvement have been labeled right on that chart. And having this visual is very, very powerful. This is when this definition really clicked. So I'll go ahead and share my screen again with you. All right. Can you see that chart?

0:11:35.9 Andrew Stotz: Yep.

0:11:36.9 John Dues: Okay, great. So first off, if you're watching that, you can just see very quickly that the claim of improvement has been substantiated with evidence. So for the people that are just listening, we have some data plotted over time for the first 15 months and it's kind of traveling along around an 80% average. And then all of a sudden that data shifts up substantially to now it's humming along at about a 91, 92% average. And it's much harder to sort of internalize this without being able to see it. But I'll do my best to explain it. So the first thing was, part one. There's a clear point in time where a change was introduced. So that's labeled as part one. Right in between month 15 and 16, there's an arrow there on the chart where some change was made. If this is a teacher's data, maybe they made some type of change to how they were instructing the class.

0:12:55.3 Andrew Stotz: In research, sometimes we'll call that time zero.

0:13:00.6 John Dues: Time zero, absolutely. And then second again, there's this clear difference in results after the change was introduced as compared to historical results. So that's part two. So there's this positive, visible difference relative to historical norms. Now, you know, this is an example for illustration purposes and I wanted to make it very clear, like this delineation, this definition. But in reality, you know, if you're a teacher trying this new method, for example, it might be that even if the method is successful, you're not maybe going to see the results immediately. Right. But this illustrates, what you're hoping to see. And it makes it very clear. And then part three on here, that improvement was sustained in the future. So you see the bump in scores in this, whatever this outcome is in this hypothetical in month 16. But it wasn't just months 16 and 17, it carried forth for another 15 months at this much higher level. So you can very quickly start to see there's this profound difference between most improvement claims and one supported by this three part definition. It makes it very simple. When do we introduce something new? And then what does the data look like over time after an initial baseline period?

0:14:36.9 Andrew Stotz: It reminds me of something I often say to people, which is, do you ever make the same mistake twice in your business? And of course, everybody says yes. And I ask them, imagine if you never made the same mistake twice, how would that change the outcome of your business? And then we have a discussion about that. But the point is that most people just live in a world where they never are able to really sustain improved performance. They just fall back to the same things. And this chart is a good way of understanding, have we truly sustained improved performance?

0:15:24.4 John Dues: Yeah, yeah. And you have to have a method. You know, that's why Deming would frequently say, you can't just have a goal. You have to be able to answer the question by what method? So that's why part one of this definition was calling out whatever change was introduced. Because in this system, in that baseline period from month one through 15, while there are some ups and downs in that data, it's really just bouncing around that 80% average. And if you don't change something in that system, then you're very likely just to keep getting those same results over time. Some fundamental change has to be introduced so you have a stable system, but it's not satisfactory. So you got to change something. And then you're going to keep gathering the data to see if that change had an impact. So again, it's not rocket science. And it was pretty intuitive to see that definition in that improvement guide. And then actually this sort of chart I'm showing you with a three part definition combined with a control chart or a process behavior chart, I saw this in their latest book called Quality as an Organizational Strategy.

0:16:42.0 John Dues: And when I saw the visualization of the improvement definition, which was only in like text form in The Improvement Guide, then it all just clicked. Oh, this is so obvious what this definition actually means and how you could tell if something has improved or not. So I think anybody that's doing improvement work, you know, whether you're in schools or some other type of organization, and whether you're the superintendent of the entire system, the principal of the building or the teacher in a classroom, all of you can use this. A student could use this, an athlete could use this. This definition, it doesn't really matter. It's sector agnostic and can be applied, you know, pretty widely against different contexts. But it makes it very clear how to tell when things are getting better, how to tell if, you know, maybe things are going the other direction or if they're just staying the same. Makes it very, very clear.

0:17:36.8 Andrew Stotz: Yeah, I mean, it's a great thought exercise that you started with that, you know, got me thinking and I'm sure for the listeners and the viewers got them thinking, like, what changed? Where have we really improved? And one of the hard things in business, and I'm sure it's the same in teaching, is that ultimately personalities and ultimately it's about the people, whether that's business or teaching. And one of the things that you can say about people that's commonly said, whether it's true or not, I'll leave you to think about that. And that is people don't change.

0:18:19.8 John Dues: People don't like to change.

0:18:21.1 Andrew Stotz: They don't like to change. And I would argue that they rarely change.

0:18:25.9 John Dues: Yeah, yeah, no, I would agree with that.

0:18:28.5 Andrew Stotz: I mean, the whole mission of life is to get to a point where you don't have to change. That is the human body, the human mind is just like trying to get to that point.

0:18:42.6 John Dues: Yeah. Unfortunately, it doesn't work.

0:18:45.6 Andrew Stotz: Yeah. And then you die.

0:18:50.1 John Dues: Yeah.

0:18:51.3 Andrew Stotz: But it just gets me thinking too, about... And for everybody, here we are at the... We're discussing this on the 9th of December. So we're getting near the end of the year, thinking about what we're trying to do next year and all that. And in my coffee business, as an example, we've had our shares of ups and downs, but we've tried to right the ship as far as making sure that we've got the right balance of profitability, the right number of staff, cash flow and a buildup of cash so that we have the resources to go after markets. And the question is, that I always have in my mind is, how do we prevent ourselves from slipping back into some old habits of maybe spending on marketing and sales and then not getting the delivery of that, and therefore the costs go up, but the revenues don't follow? How do we ensure that the improvements that we're making right now aren't just lost six months from now? And this starts to give me some ideas that I'm thinking about.

0:20:00.5 John Dues: Yeah. I mean, and once you get that improvement, like, how do you sustain it? How do you have the discipline to do that?

0:20:09.1 Andrew Stotz: Well, I think the first thing that this raises is, are we clearly measuring, first, whether the improvement happened?

0:20:19.3 John Dues: Yeah.

0:20:19.7 Andrew Stotz: And second, whether it was sustained?

0:20:22.8 John Dues: Yeah. And even before that, you know, just having a baseline. Most people have the data somewhere, but they haven't plotted it like this so it's clear what the typical performance is currently, a lot of people don't even take that step. You know, it's just last year, this year. Last month. This month.

0:20:39.8 Andrew Stotz: Yeah, that's good point. That's a good point. That's something you pointed out to me a long time ago about looking at, you know, my enrollments in Valuation Masterclass Boot Camp and saying, well, you need to understand, you know, what's the system you're operating in, and therefore, you've got to understand what that system can produce before you start thinking about, you know, what's your next steps.

0:21:01.6 John Dues: Yeah, yeah. And like I said in the middle of this episode, you know, this is a very high bar. This is not easy to accomplish. It takes discipline. It takes continual improvement. Dr. Deming talked about he liked using continual versus continuous because a lot of this would be discontinuous. You know, you have a focus, you may be improving an area, then you have to change your focus. But you can't keep your eye totally off this other thing. Like you were just saying, you have to kind of keep your eye on multiple things to keep an organization going. And that's part of the challenge of running an organization for sure. Be it a coffee business or a school.

0:21:39.9 Andrew Stotz: Yeah. It's interesting that we're talking about the definition of improvement long after we talked about the method of improvement, like PDSA.

0:21:50.5 John Dues: Yeah, yeah. And that's probably the best method I've come across. So, you know, in this visual that we're looking at, for people that can see it, you know, part one, a change was introduced. The most powerful tool that I found thus far is the PDSA cycle. That's where you would document the change. And again, this is for illustrative purposes, but in reality you probably have to run multiple cycles and kind of learn your way to a better system rather than you're probably not going to see this. Now, there are some things where you may see this start improvement between month 15 and month 16, but the reality is, in most situations that's going to take multiple rounds of PSAs and where there's sort of a gradual improvement over time. Again, you know, there are some things where you could see an improvement like this, but most stuff, it just takes sustained effort over time and continual learning and continual improvement type stuff.

0:22:51.4 Andrew Stotz: Yeah, I mean, this really helps me, and I'm sure for the listeners and the viewers to put PDSA in a very clear spot, which is, it's the tool for sustained improvement. Because you could imagine that in this chart where we have time zero and we have the past, let's say that's our starting point. We don't have any future data, but let's imagine that according to PDSA, we decided that we would try out and test out one particular method. And we find after testing it, no improvement, no change. Okay, that wasn't what we expected. Now we got to go back and adjust and then run the PDSA again. And then let's say we do that again and we find very little improvement. Okay, that wasn't what we expected. And our goal is to really try to get to a higher level of improvement. And let's say the third round, we get to a point where we get, oh, now this has sustained, you know this has produced improvement way beyond the others. The question is, can it be sustained? And that also has to do with the constraints of the system.

0:24:01.0 Andrew Stotz: Because if you don't have the proper, let's say, electricity, steady electricity supply, or you have problems with employees coming and going, bad training or whatever, you may find that you did make an initial improvement, but you weren't able to sustain it, so you couldn't really call it an improvement, it was more like a test.

0:24:24.0 John Dues: Yeah, yeah. These are all things that make improvement work so challenging, especially in a complex organization. Very, very challenging. No doubt. But I think this is probably a good place to wrap up and summarize. But I think just having this clear definition for the concept of improvement, I think there's sort of these three big ideas that I think from this episode that can put you on the right track. I think one is just recognizing now kind of being listening for this in your organization that most improvement claims lack evidence. So when you hear somebody in your organization make a claim, this went up, or this got better, or that got better, you know, ask for some evidence. How do you know? Let me see. Show me what you're seeing. How do you know this is improvement? So I'd call that sort of big idea one is, this idea that you need evidence.

0:25:27.7 Andrew Stotz: Yeah. The other thing I would take away from it, too, is actually in the process, you end up narrowing in on one thing. That chart is about one specific outcome.

0:25:42.6 John Dues: Yeah.

0:25:43.6 Andrew Stotz: And once you get so narrow to one specific outcome and you're tracking it and following it, it gets you more focused. And I think that to really get sustained improvement, you have to focus. And it's so easy to be distracted by the 15 things that need to be improved that you see as you walk down the hall in a school every day or as you... But in the end, true improvement is really hard. You can't improve 15 things. You can probably only improve one right now.

0:26:13.2 John Dues: Yeah, you gotta have a focus area for sure. What's the most important thing or the most important few things? Yeah. So the big idea one is, you know, from what I've seen, most of these improvement claims lack evidence. You need evidence. The second big idea is very simple. You know, you have to have this definition, and it's got to precede any improvement claims. Whatever your definition is, that this is the one I would use, this is the one I do use. But you know, before you can make a claim, you have to have a definition that clearly outlines when the thing has happened and when it hasn't. And in my mind, big idea three, is use this three part definition because it makes it so easy to tell when things have improved again and when things haven't. Yeah, after you apply these three big ideas, you know, I think you'll be able to answer the question, have we improved with conviction. You know, it makes it very, very straightforward. I like very straightforward things. And this is very straightforward.

0:27:14.8 Andrew Stotz: Yep. Most improvement claims lack evidence. John, 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 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 my favorite quote from Dr. Deming, and that is that people are entitled to joy in work.

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What if more quizzes created more joy—not stress? Lee Jenkins shows host Andrew Stotz how Deming-inspired practices like random-concept quizzes, student-led charts, and "all-time best" celebrations turn classrooms into true learning systems that build confidence, motivation, and real understanding. A simple shift in method—massive shift in joy. (View the powerpoint referenced in the podcast.)

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 talking with Lee Jenkins, who is a career educator in public schools, completing his full-time work as a school district superintendent. During that work, he was introduced to the teachings of Dr. Deming and has been applying those teachings to his life and work since. In his business, Crazy Simple Education, he helps people apply Dr. Deming's principles in their schools to bring joy back to learning, to help kids learn more. The topic for today is how educators have applied Dr. Deming's ideas to learning. Lee, take it away.

0:00:42.8 Lee Jenkins: Thank you so much, Andrew. It's amazing what Dr. Deming taught in five minutes. I've been able to teach that for over 20 years. It's just amazing. And then you see in the next slide, it was Lou Rhodes. And this is just a short little review of what we did on the first podcast. But he's the one that said, I think you're going to enjoy this. Little did he know how much I was going to enjoy that in 1990 when he said that. And then in 1992, heard Dr. Deming in person as the statistician. And he described in five minutes just a little touch of what was different about a classroom as opposed to all the other systems that he was teaching. And so over time, you're going to see how it's been implemented with great joy with so many people. He taught that education should have a learning system instead of an inspection system. And that's what we have, is an inspection system. The state departments of education inspect the schools and the teachers inspect the kids. We don't have a learning system. So if you think about that distinction, it's truly a learning system. And you're going to see that as we go through this today.

0:01:51.2 Andrew Stotz: Lee, I was just... After listening to you in the last episode and listening to some of our other great guests on the show, I talked to my students about this. And one of my students, after I went through it and talked about the random sampling as an example of questions to understand the level of knowledge that students as a group are getting, one of my students at this prestigious university I teach at in Thailand said, "So why are you grading us? "

0:02:26.1 Lee Jenkins: Yes. Yes. That's it.

0:02:27.4 Andrew Stotz: And I said... Lee, I need help. I gave my best answer and that is, "I decided that right now, the fight with the university to change the way it's done is not a fight I'm prepared to take. But what I'm going to do is try to deliver the best experience I can in the room." Now, that was a bit of a cop out, but that's part of... People who are listening and viewing this are also caught in a system, in a trap, an inspection system. So it's just great to hear you talk about this and it can help us think about how we can handle it.

0:03:09.9 Lee Jenkins: People say that education hasn't been improved for 50 years. Then think about it. We've had an inspection system for 50 years. Maybe that's the problem, right? So here's what Dr. Deming taught. Tell them what you want them to know first week of school. Here it is. You're going to give them a weekly quiz. The quiz is going to be the square root of the total number of concepts you want them to learn. So a teacher teaching a second language, 400 vocabulary words, they had 20 words a week at random out of the 400. It's simple, but it's crazy that you don't... People say, "How can you assess them on something you haven't taught yet? " You can, if you have a learning system. And then he said to build a scatter diagram and a class run chart. And let's look at those two just to review. The scatter diagram, and if you can't see this, it's just across the x-axis on the bottom. It says 1 to 14, which is for half a year. The y-axis goes from 0 to 10 because there are 10 questions every week in this classroom. And we have a dot by how many kids got 0 right, how many kids got 1 right, how many kids got 2 right. And if you look at over a semester, you can see all the dots moving from the lower left corner up to the upper right corner. So that's the scatter diagram.

0:04:29.7 Andrew Stotz: That's all the students in the class. That's not one individual student.

0:04:33.0 Lee Jenkins: That's not one student. It's the whole class because you're the manager of the learning of a classroom. He taught that. And then he said graph the total correct for the whole classroom.

0:04:46.6 Andrew Stotz: So you just did what he said.

0:04:49.8 Lee Jenkins: Yeah, add it up. It is simple and it is crazy. I mean, all the coaches who are listening to this know when you go to a game, you add up the total for every athlete. You add it up to get a total for the team. Then that same coach is in the classroom on Monday and they never think about that this is a team of learners. It's the same thing. Add it up. And they love it. And they help each other and they contribute and they celebrate when a struggling student helps the class out as much as a student that's advanced.

0:05:24.2 Andrew Stotz: Yeah. I mean we're social creatures, right? We want to be part of a group. We want to contribute. It's just such a clear principle.

0:05:35.0 Lee Jenkins: Yeah, it's simple. So then here's the expansion. Here's different things that happened over time with the process, and we'll share those with you. One was people said, well, ya know, my problem is not... It's partly they don't remember what I'm teaching well enough, but they clearly don't remember the prior courses. So this is a high school math teacher teaching geometry, and so she has half of her questions are coming from geometry because they're teaching geometry. But the other half of the questions come from the four courses they had in math prior because she knows they don't remember it. And then there's a secondary science department. The same thing. They said half of our questions for every quiz have to be from the prior courses, not just the current one. Because students think...

0:06:29.6 Andrew Stotz: Wow! That's fascinating. And before you go for that, so let's look at geometry. You've got these buckets. Before geometry is algebra two, and before that is algebra one, and before that's pre-algebra, and before that is math seven. I remember my pre-algebra class at school with Dr...Mr. Tyler. He was the football coach, and that guy was a slave driver. Even if you got the question wrong, if you structured your answering process right, you would get half points.

0:06:58.9 Lee Jenkins: Oh, okay. Yes.

0:06:59.6 Andrew Stotz: He helped me learn the structure and the order of solving algebra problems, but if I didn't do that well or I didn't have him as a teacher, I could end up in geometry not actually knowing that. But what the heck is this geometry teacher supposed to do if they find out that the class doesn't really understand some of the prior core principles?

0:07:21.7 Lee Jenkins: Well, they, obviously, they need to teach it, and so part of it they do. The other part of it is the kids don't want to forget the prior courses. If you just throw all these into a bucket and they don't say where it's from, they don't... Well, okay, I missed a question. But when you say, you're in 11th grade in geometry, and you missed the 7th grade question, they don't like that. So it builds, it's a visual. It's right in front of the room every day. They can see, I need to know all of this. And the science teacher is the same thing. The kids say, I'm in chemistry now. I don't need biology. Why do I need that? Until you see it right there in front of you every day, and you think, oh, I'm supposed to learn this.

0:08:12.9 Andrew Stotz: Gosh, it just brings me back to when I was in high school, and I really got frustrated because the pace was really fast, and I felt like I didn't fully understand the prior material, and now I'm on to the next. And that was, and I felt like I was building on a shaky foundation, and this is a part of addressing that.

0:08:33.7 Lee Jenkins: It is, absolutely. So that's one of the changes that was made. Teachers took and expanded that to the whole curriculum as opposed to only the course they're teaching.

0:08:43.0 Andrew Stotz: And just to think about that, is that in order to truly do that, you really want to have the math, the pre-algebra, the algebra, the algebra 2, and the geometry teachers all working on the same playbook.

0:08:56.2 Lee Jenkins: Yes, yes. And when we do make those lists for each class, there's no duplicates.

0:09:02.7 Andrew Stotz: Right.

0:09:04.3 Lee Jenkins: I mean, like with the science, I remember the biology teacher saying to the chemistry teacher, "You teach that? I teach that also." And they'd been teaching next door to each other for 10 years and didn't know it. So they have to say, who owns that one? So it's all a system that's tightly designed.

0:09:25.1 Andrew Stotz: And in the academic world of universities where I've taught, there's this thing that they want to give you independence to teach what you want in the way you want. I don't know about what's happening in schools these days, but is the curriculum pretty much set and therefore the teacher can't veer from that and therefore this would not be a problem? Or is it that, hey, every teacher's doing something different and it doesn't all work together?

0:09:53.6 Lee Jenkins: Right. What's the "what." The essential "what", needs to be agreed upon no matter who's teaching it. Now, on these lists, we don't put trivia. And trivia should be in the classroom. It's fun. It's interesting, but they're not accountable for it.

0:10:11.3 Andrew Stotz: Right.

0:10:11.7 Lee Jenkins: So it's what's essential for the kids to know. And the teachers, when they have time, the principal sets aside a day and said, okay, science department, get together, get this listed, what you want. They like that discussion and the agreement of what's expected.

0:10:30.1 Andrew Stotz: Yep.

0:10:31.8 Lee Jenkins: The next thing that was added, Dr. Deming did not talk about students graphing their individual progress. So this is a student run chart, not a class run chart. So you can see...

0:10:46.3 Andrew Stotz: Yeah, that's interesting. Before you even go into that, it makes me think about the factory. It was kind of accepted that the statistics guys would kind of run the run charts and management would look at it. It would be public, it wasn't hidden. But the idea of really bringing the accountability to the people on the production line is what this reminds me of.

0:11:10.0 Lee Jenkins: It's exactly the same, and the kids like making the graphs. When you see, this is a younger child, but it's done by a high school child, not all of them, but some of them, but who like to doodle, they become very, it's kind of pieces of art, but they own it. They own that learning. They can see how they're doing, and they're so happy when it goes up, but it goes down at times. Why does it go down? They went down because bad luck, because it's random. Sometimes you choose the hard ones, but overall, you see a progress of going up and up and up, and so that's why it's not an inspection chart. It's a learning chart. It's showing a picture of my learning.

0:11:58.8 Andrew Stotz: And just to be clear, the first two charts we saw were looking at the overall classroom, but now the chart you're showing is one student mapping their progress throughout the quizzes.

0:12:11.7 Lee Jenkins: Yes, every student does their own, and if the teacher is scoring the papers to give them back to them, the results, they have to change, a slight change, instead of putting how many, they put a plus at how many correct, because you're graphing the number correct.

0:12:30.6 Andrew Stotz: Yep.

0:12:32.8 Lee Jenkins: And then another thing is kind of a celebration, a thank you, when students do better than ever before. So if a student had two right and then three right, and then they finally had five right, they never had five right all year long, they do something for the kid quickly to just say, yay, this child went and hit the gong. Just means I did more than, got more right than ever before. So what's the power of that? Dr. Deming wants every student to win. And I've been in classrooms six weeks after school started, maybe four or five in that time, and say, "Is there anybody in here who hasn't had a personal best? " I've never had a hand go up. They all have by then. Now, so you can be a struggling student, you can be an advanced student, but they all have a record of doing better than ever before, and we have ways of celebrating that.

0:13:32.4 Andrew Stotz: And that also is the idea of the objective really here is to improve ourselves relative to our prior selves.

0:13:43.7 Lee Jenkins: Yes, you're in competition with your prior self, that's it, yes. And I would say it's even 1% of the time that I saw somebody twist that and make it into a bribe. It's not a bribe, it's a thank you. I'm so proud of you, it's a thank you. It's a completely different mindset. They want to do that. And if we look at the next one...

0:14:09.8 Andrew Stotz: And just to understand this one last thing is that, are you saying that in a classroom when a student hits an all-time high, they go up and bang the gong or the teacher bangs it or what?

0:14:19.3 Lee Jenkins: No, the kid does it, the kid does it. Or whatever's done. One, you know that in sports where they make a tunnel and the athletes run through that tunnel of other athletes. There was a classroom that did that. The kids made a tunnel and the ones who had an all-time best that week ran through the tunnel. Okay? And there's...

0:14:41.0 Andrew Stotz: Yeah. And you could do simple things. You could also just say, if you did an all-time best, stand up.

0:14:46.6 Lee Jenkins: Yeah, it could be... But we try to make it something fun.

0:14:51.3 Andrew Stotz: Yep, yep.

0:14:52.3 Lee Jenkins: Something that's enjoyable for them. And it depends on the age. Here's one, another classroom, they wrote their name on a shape when they had a personal best. If you go to the next slide.

0:15:05.4 Andrew Stotz: Okay.

0:15:05.8 Lee Jenkins: You will see there's a collection of probably 200 shapes. With individual kids, they wrote their name on it when they had a personal best. And see, it's everybody. And it's a graphic in the hallway that lets all the other classrooms see, look how much we're learning.

0:15:29.9 Andrew Stotz: Right.

0:15:30.3 Lee Jenkins: Because every time you have a personal best, you put your name. This happens to be a star instead of a feather, but they put it up there.

0:15:36.7 Andrew Stotz: Yep.

0:15:39.1 Lee Jenkins: And then here's a middle school. When they have a personal best, they write their name on the whiteboard. And the kids have made kind of a Scrabble out of it, a crossword puzzle, where they can use the letters from somebody else's name to make their name. They love it. And they particularly like it because their friends who happen to be in that classroom but a different period, when they come in, they see their friends' names. Again, it's everybody. It's simple. Write your name on the whiteboard when you have a personal best. And then this is a high school. They had the game Kerplunk. And if anybody's not seen that, it's a cylinder. And it has holes. About halfway up it has a bunch of holes. And you put straws through the holes. And then you put marbles on top. When a kid has a personal best, they pull a straw out. When you pull enough straws out that all the marbles on top come crashing down, that's why they call it Kerplunk. And then the class does something for a couple minutes of fun. But it's everybody.

0:16:49.0 Andrew Stotz: Right.

0:16:49.8 Lee Jenkins: Then here is, they added the word all-time best. That was an addition.

0:16:57.7 Andrew Stotz: Right.

0:16:58.1 Lee Jenkins: And this is a class run chart, like I showed you last time, where you add up the total for the whole class. But when the class has more correct than ever before, it's an all-time best. We use that word for kids also, and you'll see in school that the initials ATB are very common in the schools.

0:17:22.1 Andrew Stotz: Right.

0:17:23.3 Lee Jenkins: It's one of the most common things. And you can't see it, but I'm looking at this when they had 28 quizzes in the year, and there are one, two, three, four, five, six, seven, eight times during the year out of 28 that the class had an all-time best. Also, if you look at the x-axis, it's 28. Dr. Deming said every week, and it was changed to 28 instead of every week.

0:18:03.6 Andrew Stotz: Right.

0:18:03.9 Lee Jenkins: That was a huge deal for me because I knew that every week was too much. There's snow days. There's things that happen, and you just... In the schools, it's too much going on for it to be every week. But I also knew that every other week's not enough. Not for kids to really prove that they're learning. Plus, they like them. They want...

0:18:29.6 Andrew Stotz: So, what does the 28 mean? Why 28?

0:18:33.5 Lee Jenkins: It's seven times a quarter instead of nine times a quarter. That's why.

0:18:37.1 Andrew Stotz: Okay.

0:18:38.3 Lee Jenkins: So, out of a quarter, two times they didn't. And actually, the complaint the kids had was, why aren't we doing one this week? And so, in a sub-sense, it's only for the teacher to just kind of a sense of... It just eases up a little bit. For the teacher, not for the kids.

0:18:55.8 Andrew Stotz: So, in other words, rather than strictly tying it to a week, you tie it to the number of quizzes that you're going to do, and then you manage that.

0:19:08.6 Lee Jenkins: Yeah, and I've never heard anybody say they couldn't get the 28 in. It's reasonable.

0:19:12.5 Andrew Stotz: Right.

0:19:13.1 Lee Jenkins: Yeah. It's a reasonable...

0:19:16.3 Andrew Stotz: Just for people that don't recall, like myself, I can't even remember what numbers of days in the classroom and numbers of weeks in a class and stuff like that, can you just remind me what that is?

0:19:29.6 Lee Jenkins: Okay, in a year, the school is divided into quarters, and there's 36 weeks in the year. So, there's nine weeks per quarter, and we're quizzing seven of those nine weeks.

0:19:42.8 Andrew Stotz: Perfect, okay, got it. Okay.

0:19:46.5 Lee Jenkins: Now, here is something else that has been added, and it is the goal. And so, Dr. Deming talks against numerical goals, and we agree with that. That goal is not an artificial number. It's the best from the prior year. So, it's a real number. So, the students are trying to outperform the prior years.

0:20:18.6 Andrew Stotz: So, this is the best that the system could produce in the past period?

0:20:23.8 Lee Jenkins: Yeah, are we smarter than the kids that you had the last several years? Are we smarter...

0:20:29.5 Andrew Stotz: Am I teaching better? Are you learning better?

0:20:33.5 Lee Jenkins: No, it's a challenge. It's a challenge, and they are so excited when they do better than the prior years. So, how did they get so high up there? Part of it is because there are kids who get, on the quizzes, they get perfect, perfect, perfect, perfect, and it's kind of boring for them. And so, we've come up with... When you get them all right seven times, it could be five, it could be six, we've usually gone with seven, then you don't take the quiz anymore in the room because you've proven you know it. And then we give you a harder one.

0:21:17.0 Andrew Stotz: Right.

0:21:18.3 Lee Jenkins: The class gets credit for the quiz you didn't take, plus how many you get on the next one. So, that helps it to go on up because you've got kids that are, the word we're using is they test out. They've proven they know it.

0:21:34.9 Andrew Stotz: Yep. Yep.

0:21:36.5 Lee Jenkins: We use the, when I talk with the teachers, the flip of the coin statistics. If a kid gets a perfect score, you have a 50% chance they're lucky, and a 50% chance they know all the content for the year.

0:21:49.7 Andrew Stotz: Yep.

0:21:49.9 Lee Jenkins: You don't know what it is. After seven times, you're up to 99% sure they really do know all of it.

0:21:56.3 Andrew Stotz: Right.

0:21:57.1 Lee Jenkins: Yeah. Oh, this day, this is a run chart from a middle school, and they had one more right than ever before. They are beyond happy. And you will see kids in the rooms doing a chest bump.

0:22:20.2 Andrew Stotz: Yep.

0:22:20.4 Lee Jenkins: A kid that's struggling, and says, it was me. I'm the one that put us over the top. If it hadn't been for my two questions right, we wouldn't all be celebrating. And of course, if you don't count it, you'd never know as a student or a teacher that you had your best. Nobody'd never know.

0:22:43.3 Andrew Stotz: Yeah. Yep.

0:22:44.0 Lee Jenkins: Count it out and graph it. Oh, they're so happy.

0:22:48.2 Andrew Stotz: Yeah.

0:22:48.5 Lee Jenkins: So that... And then here is a run chart by grade level. This is 16 classrooms together.

0:23:01.5 Andrew Stotz: What does that mean, 16 classrooms?

0:23:03.9 Lee Jenkins: There's four science classes, four English, four math, and four history. And we took all of those questions right from 16 rooms and calculated a percent correct.

0:23:19.2 Andrew Stotz: So in other words, how we're learning as a school or how we're learning all the subjects, how would you describe that?

0:23:25.9 Lee Jenkins: This was grade seven.

0:23:28.3 Andrew Stotz: Right.

0:23:28.9 Lee Jenkins: This was for the grade seven teachers. They wanted to have a total for their grade level.

0:23:35.5 Andrew Stotz: And so it starts off on quiz number one, that students got 16% correct. That's quiz number one.

0:23:46.7 Lee Jenkins: Right.

0:23:46.9 Andrew Stotz: Or quizzes number one.

0:23:50.7 Lee Jenkins: For quiz number one. Right. You can't say week one, it's quiz one.

0:23:53.2 Andrew Stotz: Yep, yep. Sorry.

0:23:53.8 Lee Jenkins: And this is for first semester, because there's 14 right there.

0:24:00.4 Andrew Stotz: Yep, yep. And then by the time they get to quiz number 13, that's, or quiz number 13 for all four subjects brought together into one measure, they're at, say, they've gone from 16 to 55.

0:24:14.5 Lee Jenkins: Yes. So you can say that at halfway through the year, the seventh grade class, 16 classrooms, but seventh graders know half of the content. And you know it's in their long-term memory. They couldn't study the night before.

0:24:31.9 Andrew Stotz: Right.

0:24:31.8 Lee Jenkins: Because you don't know what's going to be chosen at random. They know half of the content.

0:24:37.8 Andrew Stotz: And interesting that we see kind of a linear rise. I wonder if there's an exponential rise towards the end as the students get totally pumped up and into it and they're learning more.

0:24:47.8 Lee Jenkins: They are. They want to get as close as they can. It won't land on 100%.

0:24:54.0 Andrew Stotz: Yep.

0:24:55.0 Lee Jenkins: Somebody's going to miss something, but it gets really close.

0:24:57.7 Andrew Stotz: Yep.

0:25:01.3 Lee Jenkins: Now here's something else we've added. Because Dr. Deming talked about the classroom, this is a whole school. And they're all taking a math quiz. It's an elementary from kindergarten through fifth grade. On Thursday afternoon, the teachers go in to their computer on a Google Doc and they put in how many questions their classroom got right on the quiz that week. It's all set up in advance and there's a total. And then on Friday, the principal announces if they had an all school time best, all-time best for the school. And you can see...

0:25:45.8 Andrew Stotz: And the number here is 3878 I see in quiz number 28. Is that the total number of correct answers out of accumulating all the different quizzes of quiz number 8, all the different classes that do quiz number 28?

0:26:00.4 Lee Jenkins: Yes. On quiz 28, they answered 3,878 math questions correct.

0:26:06.2 Andrew Stotz: And somebody could look at this and say, "Oh, come on, kids are just going to game this, right? It's just quiz questions and all that." Now, I think I understand why that's not going to be the case. But how would you explain to somebody that says that?

0:26:21.4 Lee Jenkins: Hey, as the kids get older... Let's go back. This is math.

0:26:28.0 Andrew Stotz: Yep.

0:26:28.5 Lee Jenkins: So the concepts are the same, but the questions are different. So they can't game it. And other subjects where it's not math, teachers tell me that three different questions per concept is enough and they don't game it. They can't. But if you only had for every question for the year, I mean, for every concept, if you only had one question, they would game it. They just remember the answer to the question.

0:26:58.7 Andrew Stotz: Right.

0:26:58.9 Lee Jenkins: Yeah. As they get older.

0:27:00.7 Andrew Stotz: And what would you say to some people that may look at that and say, "Oh, you're just teaching to the quiz or teaching to the exam? "

0:27:13.3 Lee Jenkins: Well, we're saying, here's what you're going to learn this year. University professors give out syllabuses. A syllabus is what you're going to teach, which is different from stating this is what the kids are going to learn. And so when you list what you want them to learn, this is evidence they learned it. Now, yes, we're teaching to what we said we want them to know. It didn't come... When you teach to the test, that often means that somebody else made up the test that I've got to teach to that test they made up because there's high stakes.

0:27:55.3 Andrew Stotz: Right.

0:27:55.6 Lee Jenkins: But when we as faculty say what we want the kids to know, we're not teaching to the test, we're teaching to what we said we want them to know.

0:28:05.5 Andrew Stotz: Yep. Yep. And then the other thing I would say is when you get students so deeply involved in the whole process, ultimately young kids actually are not going to necessarily celebrate cheating.

0:28:22.8 Lee Jenkins: No, no, they're not.

0:28:25.5 Andrew Stotz: They understand right and wrong. They haven't gotten to the level where adults are, where we put a lot of gray area between right and wrong and politicians will lie about this and that to get in office or get money or whatever.

0:28:37.4 Lee Jenkins: Let me tell you a story about the cheating. There were three fourth grades in a row in a school. And in the middle between the other two fourth grades, they did cheat early in the year. They got a very high score. Then the teacher found out how they cheated and stopped it so they couldn't do it anymore. But they couldn't get classroom best because they had an artificial high score. So they're saying to her, "We cheated teacher, take it away that score that we cheated." She says, "No, you cheated." It took them till November before they could have a classroom best.

0:29:16.7 Andrew Stotz: Right.

0:29:17.4 Lee Jenkins: So they paid a price for it. Now, people have fun with random. This is out of the state of Delaware. It looks like a skeleton from Halloween and they spray painted lima beans, put them inside the skull, wrote numerals on them and you draw the numerals out and that's the concept you're going to quiz. So there's been fun with how you do random, fun with how we celebrate.

0:29:55.0 Andrew Stotz: Right.

0:29:55.2 Lee Jenkins: Fun with making the graph pretty with I get to put Google... I mean, I get to scribble on it and do different things that make it pretty. Yeah. And here is a... There is a styrofoam nose. I'd say it's a meter tall styrofoam nose. And the teacher had slips of paper with the concepts on them. And an eighth grader said, that is boring. Brought in a styrofoam nose and you put the slips up the nostril and that's where you pull out...

0:30:26.2 Andrew Stotz: Only kids are going to come up with that.

0:30:28.1 Lee Jenkins: Yes, I know. And this is a history teacher, world history. She has 65 concepts are going to learn during the year. She gave them the list, put the 65 on a tongue depressor, put them in a bucket. She pulls eight out each week and the kids have to put the eight in chronological order from memory.

0:30:52.3 Andrew Stotz: Right. That's interesting.

0:30:53.5 Lee Jenkins: But they can't do it in the beginning.

0:30:55.1 Andrew Stotz: Yep.

0:30:56.0 Lee Jenkins: But by the end of the year, you want every kid to be able to pull any eight you pull out and put them in chronological order, not because they know dates, but because they know history.

0:31:06.2 Andrew Stotz: Yeah. Yep.

0:31:10.1 Lee Jenkins: And then here from Saskatchewan is a teacher who hyperlinked the periodic table. It's up on the whiteboard. So in the bucket are the names of elements. So if a student pulls out the word potassium, they go up to the whiteboard and they click on the letter K. It's hyperlinked. When they click on it, up comes a question about biology. The question has nothing to do with potassium.

0:31:42.6 Andrew Stotz: Oh!

0:31:44.4 Lee Jenkins: It's just a clever way to do random.

0:31:48.6 Andrew Stotz: Yep. Yep.

0:31:50.1 Lee Jenkins: Okay. And then we celebrate as a whole class. This is a class that's celebrating doing the wave. They've been to athletic events. They've seen people do the wave at athletic events. When the class has an all-time best as a class, they do something quick to celebrate. They're doing the wave. This classroom, they have a spinner. And the kids chose 10 ways they wanted to celebrate. I said, "What's your favorite? " And they said, "Hamster ball." I said, "What's a hamster ball? " They said, "We've got a hamster in the room. We put it in a hamster ball, put it in the middle of the room and watch where it goes."

0:32:32.7 Andrew Stotz: Yep.

0:32:34.4 Lee Jenkins: Fun. This is the whole school again. Just celebrating. One principal, when the school had an all-time best, somebody came in and cut his tie off. And he had dads giving him all their old ties to cut off. Yeah. And then they like to do item analysis. That's kids doing that.

0:32:59.0 Andrew Stotz: Right.

0:33:00.1 Lee Jenkins: They like to tell you what it is we most need help with.

0:33:04.2 Andrew Stotz: So this is looking at errors to say what we're struggling with. What does that mean?

0:33:07.7 Lee Jenkins: Yeah, here's the most room, most missed item in the whole room, all the way to the right, the item that nobody in the room missed it.

0:33:15.8 Andrew Stotz: Yeah, like allusion. I'd miss that too.

0:33:21.1 Lee Jenkins: And then we made histograms. So it's taking the data from the scattered diagram and putting a different one together for each week. So the kids see an L-shaped curve in the beginning, a bell curve in the middle of the year, and a J-shape at the end of the year. And this was taken because they were so excited that they could see the J finally. They knew the J was coming, and there it was.

0:33:47.8 Andrew Stotz: Yep.

0:33:49.7 Lee Jenkins: Yeah. And then we used the information from the scatter diagram to calculate effect size and to see what's the effect of all of this compared to all the other things in the world that have been done. And we got six times the average of the effect size research from John Hattie. If you don't cram and forget, you actually just remember, of course, it's a lot higher. Duh, of course.

0:34:15.5 Andrew Stotz: Yep.

0:34:18.0 Lee Jenkins: And we did the scatter diagram that I showed earlier, we mentioned earlier, that's what we use. And when John Hattie saw the scatter diagram, he said, "That's what you need for effect size."

0:34:29.6 Andrew Stotz: Right.

0:34:30.3 Lee Jenkins: Because effect size is you increase the mean and you reduce the variation. I've been talking a lot about knowledge. I haven't been talking about skills. The same process works for skills. And this is the dichotomous rubric. It's on my website. It's blank. It's free. And we use the dichotomous rubric to measure skills.

0:34:53.4 Andrew Stotz: Yep.

0:34:56.6 Lee Jenkins: So this is my pastor. It was, school was starting, he called two kids up on the platform and he said, "What are you excited about school? School started. What are you excited about? " The girl says, "See my friends." And the boy said, "Quizzes."

0:35:09.3 Andrew Stotz: Yeah, making my charts, seeing the quiz, watching the progress.

0:35:13.3 Lee Jenkins: It's hard to believe, but that's exactly what happens. And there's the Jenkins curve, which is the loss of enthusiasm year by year through the grades. I would have never done this without Deming because he talked about graphs have to be long and skinny.

0:35:29.3 Andrew Stotz: Man, we just grind down the kids in a normal situation.

0:35:32.9 Lee Jenkins: Just grind them down.

0:35:34.4 Andrew Stotz: Yep.

0:35:34.7 Lee Jenkins: Every year, fewer and fewer kids love school.

0:35:37.3 Andrew Stotz: Yep.

0:35:39.9 Lee Jenkins: So podcast number three, when it comes up, will be the future. What can we do because of all this that we haven't done before? It'll be fun.

0:35:51.2 Andrew Stotz: Wow! That is a lot of stuff. If you were to take all that we just went through, which was really fun and exciting, what would be the one takeaway you want people to get from that?

0:36:04.2 Lee Jenkins: The takeaway is that we can keep the intrinsic motivation alive that children were born with. And when we keep it alive, the complaint in the staff room will be, I can't keep up with all these things that these kids want to learn.

0:36:22.3 Andrew Stotz: Yeah.

0:36:23.7 Lee Jenkins: Instead of complaining that they won't sit still, they won't do the work, we'd be saying, "I can't keep up. They want to learn so much. I'm overloaded with what they want to know."

0:36:32.7 Andrew Stotz: And the end result is they become lifelong learners.

0:36:38.0 Lee Jenkins: Yes, absolutely. Yeah.

0:36:38.2 Andrew Stotz: Yeah.

0:36:38.9 Lee Jenkins: Yeah.

0:36:39.2 Andrew Stotz: I'm going to wrap it up there. And Lee, on behalf of everyone at the Deming Institute, I want to thank you again for this discussion. It was fascinating and it was fun. So for listeners, remember to go to Deming.org to continue your journey. And this is your host, Andrew Stotz, and I'll leave you with one of my favorite quotes from Dr. Deming that ties directly in to what we've been talking about, and that is, people are entitled to joy in work. And I'm going to add in, learning.

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Ever wondered what Dr. Deming really meant by "profound knowledge" — and how it can still transform your work today? In this conversation, Bill Scherkenbach shares with host Andrew Stotz lessons from Dr. W. Edwards Deming on profound knowledge, systems thinking, and why "knowledge without action is useless, and action without knowledge is dangerous." Tune in for wisdom, humor, and practical insights on learning, leadership, and finding joy in work.

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 discussion with Bill Scherkenbach, a dedicated protege of Dr. Deming since 1972. Bill met with Dr. Deming more than a thousand times and later led statistical methods and process improvement at Ford and GM at Deming's recommendation. He authored the Deming Route to Quality and Productivity at Deming's behest, and at 79, still champions his mentor's message, learn, have fun, and make a difference. Bill, how are you doing?

0:00:36.3 Bill Scherkenbach: Doing great, Andrew. How about you?

0:00:38.6 Andrew Stotz: I'm good. It's been a while since we talked. I took a little holiday to Italy, which was. I was out for a bit, but I'm happy to be back in the saddle.

0:00:48.9 Bill Scherkenbach: Dove in Italia?

0:00:51.3 Andrew Stotz: Yes.

0:00:52.5 Bill Scherkenbach: Where in Italy?

0:00:53.6 Andrew Stotz: Well, I went to Milan for a trade show in the coffee industry, and then I went to Lake Como and relaxed and oh, what a paradise.

0:01:03.2 Bill Scherkenbach: Beautiful. Beautiful. Yep.

0:01:05.0 Andrew Stotz: And, of course, always great food.

0:01:09.4 Bill Scherkenbach: Yep, yep, yep. Well, you have a chance to use the PDSA on improving your mood there.

0:01:16.6 Andrew Stotz: Yeah, it was just... The resort I stayed at was a tiny little place on the side of a hill, and the food at this tiny little place was fantastic. We just didn't want to leave. Every single meal was great. So I love that. Who doesn't love that?

0:01:34.4 Bill Scherkenbach: They didn't have a food cart in the background.

0:01:38.0 Andrew Stotz: Yeah. In fact, they didn't really open for lunch.

0:01:39.8 Bill Scherkenbach: Like what they do over here.

0:01:41.3 Andrew Stotz: Yeah, they didn't open for lunch. They only served sandwiches at 2pm so we had to hold out. But we still, the sandwich was so good. We just thought yeah, just wait.

0:01:51.3 Bill Scherkenbach: Early lunch. Yep.

0:01:53.3 Andrew Stotz: Well, you've got some interesting stuff to talk about today, and I'm gonna share the screen, and then I think we can kick it off from there. So let me see if I can get that up straight here. One second in. All right, so hopefully, you see a white screen that says profound knowledge. You see that, Bill?

0:02:16.0 Bill Scherkenbach: Yes, I do.

0:02:17.2 Andrew Stotz: All right, well, let's... Yeah, let's. Let's get into it.

0:02:23.2 Bill Scherkenbach: Oh, okay. I'll go from the bullets that I've got, and we'll hear from Dr. Deming and how he couched it in a little bit, in a few minutes, but he recognized that leaders would say they had the knowledge. Oh, yeah, we do SPC. We follow Deming's philosophy, we do that. But they really only knew the buzzwords. And to an extent, and I don't know how he came up with the word profound, but I do know in speaking with him that he intended it to be a degree of expertise that was beyond the buzzwords. Now, he said you didn't have to be an expert in it, but you had to know enough to be able to understand it and in fact, use it, as we'll talk about in a little bit. And knowledge obviously includes, as he said, an appreciation for a system and variation and knowledge and psychology. And as we'll hear in the audio, he also didn't really limited to that when he said there was there... His point, main point was that there are a whole bunch of interrelated subject matters that are very, very useful in managing your business or managing any organization.

0:04:17.1 Andrew Stotz: You know, I was thinking about that word profound. It's oftentimes wondering exactly what is meant by that. This is helpful to help us understand. It's, number one, about expertise. And I think the thing that I've always also felt is like, when you understand appreciation for a system, knowledge about variation, theory of knowledge and psychology, it, like things click, like it comes together, it's a whole. And that's the way I've thought about it. But that's interesting about the expertise aspect.

0:04:51.8 Bill Scherkenbach: Yeah. And that's something Don Peterson at Ford spoke about. He gave a very good talk to our leaders with Dr. Deming in attendance. And he said that a lot of you have said, "Oh, yeah, we already do this at Ford, " but you have to come to grips with a lot of you have been promoted for perhaps the wrong reason throughout your career, and you're gonna have to change. The change starts with us. So that was very impactful for Dr. Deming to listen to that.

0:05:32.7 Andrew Stotz: Yeah. And I just thought about the idea of profound action. Like, once you get this knowledge, does that mean that you're going to also, you know, the way that you do things is going to change substantially.

0:05:47.3 Bill Scherkenbach: Yeah. I mean, that's been a philosophical question. In one of the slides, I quote Confucius. About 2500 years ago, essentially saying knowledge without action is useless and the action without knowledge is pretty dangerous. But that's been consistent with Eastern and Western. Aristotle did the same thing, and Mid Eastern folks did it as well. Philosophers dealing with, yeah, we've got knowledge, but everyone agrees, at least in the good thinker role, that, that you've got to take action, otherwise it's useless. Okay, so we've got, and the subject matters, as I said, are not new. And he coalesced on four, but the general thought was that. And you've got to remember Dr. Deming was a classically trained physicist in the 1920s. And because of that a lot of, although it had been a few years, but they were very aware that everything started in the both, the eastern philosophies and western philosophies. Everything started with philosophy. Science wasn't a separate subject matter. And so everything was connected on how people should live, on how the stars move, a whole bunch of stuff. It all was philosophy. And these various subject matters evolved over the years.

0:07:50.6 Bill Scherkenbach: So even though he stopped it for his general intent was that a whole bunch of things are interconnected. If you go study these various subject matters.

0:08:05.1 Andrew Stotz: It's interesting because I attended the seminars in 1990, 1992 and then I went to Thailand and then I did other things and I didn't really keep up with it because I was in the financial world and doing my thing. And then I got The New Economics years later and there was this discussion about System of Profound Knowledge. And then I think about also going back to your previous discussions of what it was like being in a classroom with Dr. Deming when you first met him and studied with him. You know, that these things were going on. Obviously he had a deep understanding of variation. He definitely understood about the theory of knowledge from his scientific background. But I'm just curious, as you... It's interesting what you said, these things are not new. It's the way he brought them together. I just find that, that fascinating. How do you see that journey for him going from when you first met him to a very full formed concept or theory of profound knowledge at his later years?

0:09:15.3 Bill Scherkenbach: Yeah, I think things just solidified or codified. I mean, when I first met him in '72 at New York University Graduate School of Business, he didn't have 14 Points. He didn't have the Deadly Diseases. So none of the stuff that were codified as he progressed. I mean the one thing that I've mentioned it a number of times, the most important thing I learned from him is that you never stop learning. And he epitomized that sense of continual learning in improving oneself. So he tried to learn from everyone. But, but yes, for instance, as I mentioned, he was a degreed physicist and ended up doing a whole bunch of. And that transitioned into statistics which was a relatively. Well, I'm going to say everything is relative. But new in operationalizing the use of statistics besides counting people and the experiments at Rothamstead for agriculture. I mean, that really was some of the... But the earlier stuff, yeah. Was helping their patrons gamble better.

0:11:02.0 Andrew Stotz: And so I often take comfort in your descriptions in the first episodes about how he hadn't put all of these things in place at the age of 72. And I think there's still hope for me, Bill, to figure it out and put together my grand thinking.

0:11:22.7 Bill Scherkenbach: Yeah. Oh, no, I understand. I mean, I'll be 80 in less than six months. But he really, he started out getting his foot in the water here anyway when he was 79 also. So there's a chance. There's a chance.

0:11:46.4 Andrew Stotz: There's a chance. All right, well, the next slide, you're talking about the connections.

0:11:51.6 Bill Scherkenbach: Yeah. Again, all the subject matters are, again, evolve from philosophy and they all are interconnected in many, many ways. So, yeah, if you could play what Dr. Deming's introducing, that might set the stage.

0:12:14.0 Andrew Stotz: Okay, let me play this audio. Hopefully it comes across. Okay.

[video playback] Dr. Deming: Let us begin our study of Profound Knowledge. Profound Knowledge. Provides a roadmap to transformation, not just change, but a roadmap to transformation. Nothing else will satisfy our needs. Not just change, a roadmap to transformation into a new state. The System of Profound Knowledge, appears here in four parts, all related to each other: first, Appreciation for a System. Which we shall study, we shall study a system, and soon, I won't keep you waiting. And Theory of variation and theory of knowledge and knowledge of psychology and add anything you please, sociology, anthropology, whatever you please. I present these four parts to Profound Knowledge. They are interdependent, they cannot be separated. One need not be imminent in any part of Profound Knowledge in order to make it, in order to understand it and apply it.

0:13:30.9 Andrew Stotz: That's quite a mouthful.

0:13:33.1 Bill Scherkenbach: Yes, it is. Yes, it is. What I've got to do is go back to the tapes and get the lead in and follow on to that. But yeah, that's how he introduced profound knowledge in his later seminars.

0:13:56.2 Andrew Stotz: So what would this have been? What, 1990, 1991, 1992?

0:14:03.8 Bill Scherkenbach: Well, probably, I would say, yeah, maybe '89.

0:14:10.6 Andrew Stotz: Okay.

0:14:11.9 Bill Scherkenbach: In there. Yeah.

0:14:13.8 Andrew Stotz: So I took out a little transcript of that and I want to just go through a couple quick points, if you don't mind. He starts off by talking about it's a roadmap to transformation, not just change. Why would he say transformation rather than just change?

0:14:38.6 Bill Scherkenbach: Well, he changed really, transformation. And he thought a metamorphosis would be better. There's a butterfly in there somewhere, but it needs change. And it's not just, I know he mentioned the western style of management, but in my travels, Eastern style of management is just as bad. And again, knowledge is, is literally encompasses space and time. Looking at the past, projecting or predicting the future, little space, great space. And when you look at Western philosophies or western style management, we have emphasized the individual. So restricted space and short term. And the eastern philosophy of management took a longer term viewpoint of things. And they said it's not the individual, it's the team, the family. In my opinion, you have to, everyone, no matter where you live in the world has to balance those two, being able to take joy in your work as an individual. To be able to take joy in your work as a member of the team. And, I mean, I've been asked years ago, how long would it take? And I would say, "Well, Deming says it'll take 30 years." So over here in the US it's going to take a long time, but it's not going to take a long time in Asia, it's only going to take them 30 years. So time is relative, so is space.

0:16:53.2 Andrew Stotz: And there's something else he said in here that if you could try to help me understand and help the listener understand it. He talks about, you know, he gives a summary, theory of variation, theory of knowledge, knowledge of psychology. And then he adds in this line, "add anything you please, sociology, anthropology, whatever you please." What does he mean by that?

0:17:16.6 Bill Scherkenbach: That's what I said before he came from the the school that everything started with philosophy and things broke off science and all of these various disciplines. What he's saying is he's gone to, his theory of profound knowledge is included these four. But the general message is any discipline is interconnected with each other. So you don't have to be restricted to these four. And you're going back to how knowledge was developed in the first place. And perhaps it could be full circle, although I'm not going to get bogged down with the potential of AI contributions. But you need to, you need to recognize that many, many subject matter are interrelated because they were spawned from the original Eastern philosophy and Western philosophy.

0:18:37.5 Andrew Stotz: And one last thing on this, he wraps it up with this statement that also, you know, particularly given his depth of knowledge of the subject, he said, "One need not be imminent in any part of profound knowledge in order to make it, nor to understand it and to apply it." Why do you think he had this need to explain that you don't really have to know this in super deep detail?

0:19:02.7 Bill Scherkenbach: Well, I think he was being off a little bit. The word profound scares a lot of people. And so there's again a balance. You need to go far beyond the buzzwords, but you don't need to be an expert in any of those fields in order to grasp and be able to in some cases, I think, contribute to them. So he's saying that he's trying to better explain or define the word profound.

0:19:48.8 Andrew Stotz: Yep. Okay, now the next slide is incredible. A lot of different things on here that you're showing. Maybe you can explain what you're getting across in this one.

0:19:57.9 Bill Scherkenbach: Yeah, this is a MEGO chart. My Eyes Glaze Over. What I tried and I'm. I'm continually updating it. The different colors are from the fields of statistics, the fields of epistemology, psychology and systems thinking. And I'm linking a whole bunch of them together to show that there are similar thoughts in all four of these fields that contribute to a better understanding and use of all of them. Now the next slide, hopefully is more visible. It should be. I'm focusing on a stable process, which is statistical concept. Stable process means you've got by definition of Shewhart. There's a... Deming would call them common causes. When common causes are... When a process is stable, you're able to do design of experiments. Some of the enumerative methods work very, very well or with some degree of belief with a stable process. The red bead experiment was stable. Rule one and two of The Funnel. Stable process. Common causes in theory of knowledge. There's comment, well, I've seen that before or no, jeepers, I've never seen that that hooks up to some other special causes and statistics. There's a concept in theory of knowledge where you're talking about general providence or specific providence that the storm just, it hit everyone and pick out anyone in systems thinking you can only have a stable process if you have negative feedback loops and negative feedback.

0:22:40.0 Bill Scherkenbach: Again, I think I had mentioned in a previous discussion with you, negative doesn't mean it's bad. It just means it closes the loop and it seeks a stasis so, and that's the only way you're going to get. I'll simplify just about the only way you're going to get a stable process. There's a negative feedback loop in there somewhere. Stable process leads to long term thinking versus short term thinking, the theory of knowledge, empirical knowledge is never complete. Knowledge is theory applied over time. Stable process over and over and over again. The theory matches the data or what you predict, you then have knowledge. So the point is that, that there are a number of specific learnings. Well, for instance, let me see here, what's on. I have to adjust this. Okay. From psychology you've got what the psychologists call a fundamental attribution error. And that is mistaking who, as Dr. Deming says, who, who did it, who did it, did the people do it? Or did the system do it? Did the process do it? And in psychology, although it's in a different place, you've got following Rule 3 of The Funnel is a psychological term called complementary schismogenesis.

0:24:42.3 Bill Scherkenbach: And that's easy for me to say, going back to the Greek schism of split in genesis of a birth of a split. What that means is in psychology it's two people trying to one-up another. I've got this example. Well, I can do it. I mean, who, yeah, and the move or the musical Annie Oakley. Anything you can do, I can do better. So, psychology has observations and subject matters that they didn't have a clue. That was rule 3 of The Funnel. So my point in looking at all of these is that as you dig into things, they are interrelated. Now I haven't dug through anthropology or started. I've just restricted it to the four things Dr. Deming spoke about. But that would be a challenge to our listeners. If you really know some of these sciences, some of these bodies of knowledge, how are they connected? Okay. The aim of profound knowledge, he says, has to have an aim. Confucius in the East, Aristotle in the West, and in the Mid east, someone essentially said knowledge without action is useless and action without knowledge is dangerous.

0:26:51.0 Bill Scherkenbach: And Deming said the aim of a system, of his System of Profound Knowledge is action. And as we discussed previously, it's a transformation of Western, I think it's a transformation of Eastern and Western style of management. And he, the way he pronounced it was metamorphosis. And I will have to check the OED, Oxford English Dictionary. I haven't done that yet. But he has been 100% right in his pronunciation and usage of the English language. So as I said, there's got to be a butterfly in there somewhere. But he's talking about a major, major shift, major rebirth if you will, management. Systems theory. A lot of this is obvious and these are what he mentioned in his, not Out of the Crisis, but The New Economics. A network of interdependent components that work together to try and accomplish its aim. And, and he, and this I had mentioned earlier, I think that in his work. Well, I've got... Going back to some things, this is a 1954 speech he gave in Rome and this is a 1940 speech he gave. And because he was a Renaissance scholar, they were talking about a Systems View before it was popular.

0:29:06.5 Bill Scherkenbach: Everyone knows that he introduced the improvement on the old: design it or spec it, make it, try to sell it. And he introduced his expertise, sampling theory to be able to check on the customers and see what they think about stuff and be able to create a system of production instead of just one way through. Now. And I'm sure anyone who has read any of his books knows he spoke about the interdependence. He said in the example he gave was bowling. You just add up the scores. In the orchestra, you don't use a bunch of soloists, but they have to work together to be able to make sure that the result is what the composer, well, we don't know, I don't think what modes are intended.

0:30:28.9 Andrew Stotz: One of the things that's interesting about that orchestra concept is even, you know, it's a relatively complex system, but there's a score, there's a rule book, there's a play guide, here's what we're going to play. But sometimes with business there is no guide particularly, you know, you're running your own business relative, you know, you're focused on your own development of your own business. And it's not like you wake up every morning and there's a manual that says, "Here's what you do, here's what you play today." Which makes it that interdependence even more difficult and the need for communication and cooperation even more challenging. I have a client of mine that they've struggled to get the team to work together. But what I've also found is that they never sat down as a team and really had honest discussions consistently to try to break down the barriers and figure out how we're going to work together for this aim. So I'm curious about how do you look at business compared to, let's say, that orchestra example?

0:31:36.9 Bill Scherkenbach: Well, yeah, and Deming made that exact same point, at the far end of complexity or just about is business. They are far more complex and require far more interaction than the orchestra. Now, in trying to operationalize Dr. Deming's philosophy, I've tried to emphasize. And we've got a process to be able to create a vision and it obviously is followed by mission, values and question. We covered the physical, logical, emotional a few talks ago. But, but you have to... Top management has to have that vision that will include everyone in its and all sorts of voices in its creation. And then you have to have a way to be able to master that vision or make sure that that vision is operationalized. And that requires a whole bunch of feedback loops, if you will, systems thinking, a whole bunch of being able to work with people. And so it literally needs the application of profound knowledge from the management's perspective. You need to be able to operationalize your vision, not just come up with the vision and put it on the bookshelf.

0:33:34.5 Andrew Stotz: And the final bullet, says "the obligation of any component is to contribute its best to the system, not to maximize its own production, profit or sales, nor any other competitive measure." Oftentimes in the world of finance where I teach and I work, a lot of stuff, people think that the objective is to maximize profit, but the reality is the objective is to maximize value. And so when we look at, for instance, the value of a business, it's two components. Number one, the profit, which you could consider is kind of in the numerator. And then we reduce the profit by the denominator, which is risk. So think about it. If you were to invest money in two projects. One, you invest $100 in two projects, and one is very proven and you're very confident that this is going to work, and the other one is brand new, very possible it doesn't work. We would reduce the second cash flow and say, "Well, yeah, the amount we're investing is $100, but the reality is the cash flows may or may not hit." So we would reduce the value by the risk. And I try to help my young students particularly understand that it's an intricate balance of profit and risk. And if you overemphasize profit, you could be increasing the risk, which actually doesn't increase the value of the company.

0:35:07.0 Bill Scherkenbach: Yeah. And Dr. Deming had a similar statement saying that the cost of something doesn't mean anything. It's the value of what you get for the cost and value is determined by the quality. My look at systems theory, especially the obligation this last one is to contribute its best to the system. What many people forget is as I mentioned in the beginning, everything is defined as in space and time. And Bill Ouchi who wrote the book Theory Z stated that... And this is an eastern management concept that you have to have, I guess, corporate knowledge because in order for someone to say, "Okay, this department, I'm going to..." Well, for instance, lunches, the corporate lunch room will lose money so that the corporation can make. So the people would stay on site and be able to contribute more work. But that's in the longer term. And so if someone steps aside today to let someone else get the kudos or the credit, the corporation needs to remember that. He called it societal knowledge or memory. And if you ended up being saying, "Screw you, I'm taking what's owed to me, " that also will be remembered. So you have to introduce the dimension of time to any systems theory view. Time and space.

0:37:36.3 Andrew Stotz: You mentioned about... Oh, go ahead.

0:37:40.5 Bill Scherkenbach: No, it's a statistician's attempt at humor before Einstein. Yeah.

0:37:49.6 Andrew Stotz: You mentioned about metamorphosis and you mentioned about transformation and I was just looking it up and let me maybe if I'll read out what I found. "Metamorphosis is a biological stage based change. Like a caterpillar turning into a butterfly. It implies a natural structured process. Transformation is a broad change in form, character or condition. It can be physical, emotional or organizational. In short, every metamorphosis is a transformation. But not every transformation is a metamorphosis."

0:38:26.2 Bill Scherkenbach: Good point. Understand.

0:38:30.7 Andrew Stotz: So let's continue.

0:38:35.0 Bill Scherkenbach: Okay. Variation. I think the first noble truth of Buddhism is "life is suffering." And Deming equated variation with suffering. So when I presented similar slides to my friends in Asia, I... Life is variation.

0:39:02.2 Andrew Stotz: That's great.

0:39:03.0 Bill Scherkenbach: Now there are two extremes in taking action on variation. Well, in taking action, I know this is in front of us, but Dr. Deming spoke about Shewhart's contribution. And that is the two mistakes that people can make with variation, while in taking appropriate action on variation. And one is mistaking common cause for special causes or special causes for common causes. And that's really the primary view. But Deming seminars showed that if you're going to take action, there also are two extremes in taking action. And one was every action taken tends to make things worse, which he used The Funnel experiment. And the other extreme is every action taken has no effect on the variation. And that's obviously the red bead experiment. And so he, those were the two extremes that he wanted to show and demonstrate to people in order to solidify the folks learning. Theory of knowledge. Okay, Management is prediction, temporal spread, space and time absolutely required, knowledge is built on theory.

0:40:50.5 Bill Scherkenbach: He got that from Shewhart and indirectly through C.I. Lewis and on knowledge being built on theory. And with that, that jogged my mind as far as coming up with my theory-question-data-action cycle, which is a bit different than the Plan-Do-Study-Act cycle. But in knowledge development knowledge is built on theory. So anytime any data that you see you and he asked, he told people, by what method did these data get to me? If you see data you have to ask that. If you see data you have to say what was the question that was asked? If you're a question asker, questions come from theory. They're connections of concepts in your mind. And so theory could be a guess or it could be as proven as scientific law, but everything, and that scares people away, but everything really starts with theory. Given a theory you can ask a question. You can tell people when you ask the question what I'm going to do with the data so they have a better idea of how to collect the data and what data to collect. And then you take the action and go back and revisit the theory. So theory, question, data, action over time generates knowledge. And with some other emotional and physical constraints and consistencies, you're going to gain wisdom.

0:42:58.8 Andrew Stotz: There's something...

0:43:00.4 Bill Scherkenbach: Go ahead.

0:43:01.5 Andrew Stotz: There's something that I always, I've questioned, I think you can probably clear it up in this part of our discussion is that Dr. Deming used to say something along the lines of without prediction or without theory there is no knowledge. Something along that line as I recall. And sometimes I understood that clearly and other times I question that. What would you say about that? How should I understand that?

0:43:33.1 Bill Scherkenbach: Well, it's something that he and Shewhart spoke about a lot. And let's see, in his 1939 book The Statistical Methods from the Viewpoint of Quality Control by Shewhart and edited and commented on by Dr. Deming, they speak about that, as far as. And again Shewhart was influenced by C.I. Lewis. And as an aside, when, when I was at Ford and we had a speaker who had studied under CI Lewis. I had to get Dr. Deming to speak with them. And I've put part of a video of their conversation on LinkedIn, YouTube, I guess. But knowledge is built on theory. Now can you explain it again? I might be able to...

0:45:03.0 Andrew Stotz: So let me get a quote from New Economics. He said "experience by itself teaches nothing. Without theory, experience has no meaning. Without theory, one has no question to ask. Hence without theory there is no learning."

0:45:19.0 Bill Scherkenbach: Yeah. Yeah, okay. He was getting to, and he had all sorts of examples on the, on the first statement that experience teaches nothing. If you're, you might have an experience that perhaps you were, you, you were picked on. And what are you going to do about it? Well, your theory could have been: well, they don't like me. It could have been that: well, that person was a bully. Could be a whole bunch of things. But without the theory, what are you going to do in the future to make that experience more to your liking? And so you have to go beyond the experience and look at what is the thoughts and motivations behind that, which is theory. And now I don't know why I mentioned that, but I mean a number of the way... Well, I'll leave it at that.

0:47:02.8 Andrew Stotz: Yeah.

0:47:04.3 Bill Scherkenbach: As the left and right dukes it out based on their own theories. Okay. Psychology, it's incomplete without knowledge of variation. You mention that if you know the red beads, you won't make the fundamental attribution error. I had mentioned schismagenesis earlier, which is rule three of The Funnel. It invites, it says helps us understand people as different individuals. In, again, my take on this part of psychology. And again Dr. Deming saying everyone is entitled to take joy in their work. And he spoke about extrinsic and intrinsic motivation. Well, I have looked at it for many years as each one of us has an internal voice of the customer. We are the customer. And what makes me take joy would make another person perhaps take despair. And so it's management's responsibility who manages the people, materials, methods, equipment, environment to know me as a customer and be able to, if this works for me, then the management would try to arrange things that would help me take joy because it's more congruent with my internal voice of the customer. Deming used a number of examples that I gather some psychologists call it overjustification. But it in fact says the description was he tried to tip someone and it was an insult.

0:49:30.8 Bill Scherkenbach: And so instead of a thank you. He talked, he talked about the letter he sent to a surgeon of his, meant more than adding $500 to the bill. And the surgeon would carry the letter from Dr. Deming because he was, Deming was thankful for it. But it takes an astute manager to be able to understand all of the individual voices of the customers, their employees, and be able to construct a system that is going to be more congruent with each of them. And if you know that money doesn't influence or isn't congruent with someone, maybe it's retirement point, maybe it's a day off, maybe it's a variety of things managers would know that works for one person pisses off another. So that's where I stand on that, on the overjustification. And the obvious: fear invites wrong figures. Yeah. Although I think I had mentioned that in my work over in Asia, in China. So we don't have fear. It's called respect. So.

0:51:09.0 Andrew Stotz: I've just been reading a book about the Gaokao, the exam that students have to take in China to get into the elite university system. And it really makes you, it definitely gives you all kinds of both sides of the thinking on that. It really has got me thinking about this, one measure, everybody's ranked and they go through the pros and cons of it, which is challenging, it's good to go through that and think about that. So, fascinating. Well, that's been a great discussion for me, the idea of transformation, the concept of metamorphosis was interesting to me also the stuff related to having, you know, that how do we acquire knowledge? I think sometimes when in research, let's say in financial research that I've done all my life, I come up with a vague hypothesis and then I just start playing with numbers to see what I find. And so I'm kind of fiddling around. I wouldn't say that I have...

0:52:18.7 Bill Scherkenbach: What's the vague hypothesis? Give an example of...

0:52:22.7 Andrew Stotz: So, one observation that I've been able to make is that a particular ratio has fallen consistently across the world for the last 30 years, and that is the amount of revenue that assets generate out of companies. And I looked at 10,000 companies across the world. So the first thing I thought, okay, well, maybe it's a particular sector that's causing this. And I broke down that those 10,000 companies into 10 different sectors, and I saw they all had almost the same pattern. So that kind of showed me yeah, it's probably not that. And then I went through. I came up with kind of five different ideas of what it could be. And I could test that because I had a lot of data to be able to test it, but I couldn't find an answer to it. Now, I guess what you could say is that my fiddling around was based on some type of theory or guess or prediction. It wasn't until I came up to one final one, which was, could interest rates have a relationship with this? We have been through a period of time of very, very low interest rates.

0:53:39.7 Andrew Stotz: So could that decline have been caused by or related to interest rates? So I looked at the average interest rate that these 10,000 companies were paying over the past 30 years, and I saw it was going down, down, down, down, down, down very low. And I would say that that was the most plausible explanation I could find was that low interest rates incentivize companies to invest in projects that generated less revenue than previous projects.

0:54:13.2 Bill Scherkenbach: Okay. Yeah. I would think that the system. Well, you have to take into account the lag in response to lower and lower. Okay, am I going to wait for the next one? Whatever. And what's the lag in decision-making on the thing? But you need to codify, what's your theory? Okay, if X, then Y, then collect, ask the questions, make sure you understand how you got the data. And then try to take action there. But, yeah, everything starts with theory. Yeah. So it'll be good to be specific about it. What do you think it is?

0:55:09.8 Andrew Stotz: Yeah, that's, that's helpful. Well, let's wrap this up. How would you, if you were to, to bring this into a very condensed takeaway of what you want people to get from this discussion, what would you say is the core takeaway you want them to remember.

0:55:25.7 Bill Scherkenbach: Space and time. And I have done my best. Dr. Deming ended all of his lectures.

0:55:38.9 Andrew Stotz: I have done my best. Well, I love that. And let me wrap it up, Bill, by saying, on behalf of everybody at the Deming Institute, I want to thank you again for this discussion, another one that I've enjoyed immensely and for listeners remember to go to deming.org to continue your journey. And of course, you can find bill on LinkedIn in particular, where he's posting a lot of these cool discussions and thoughts and all of that. So this is your host, Andrew Stotz, and I'll leave you with one of my favorite quotes from Dr. Deming, and it relates to what we were just talking about. And that is "people are entitled to joy in work."

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Are you looking for smarter, more sustainable improvements? In this episode, John Dues joins Andrew Stotz to challenge the way schools - and businesses - set goals. Instead of chasing stretch targets that often frustrate teachers and students alike, John shows how to use data and systems thinking to create real improvement.

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 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. The topic for today is how to set educational goals. Take it away, John.

0:00:25.6 John Dues: Hey, Andrew. It's good to be back. Yeah. So the thing that I see just over and over again is that goal setting in schools is just really ineffective. And not only that, but it's often counterproductive. So I thought it'd be good to talk about a different approach to how to set educational goals. I think most typically what I see, and this is probably not just true in schools, but in other places too, you get some result, and then you set a goal to increase by 10 or 15 or 20%. But I think that what often is missed is that without certain conditions in place, these stretch goals end up disconnected from reality. And so what I wanted to do in this session is to teach three conditions that I believe will lead to much more effective goal setting.

0:01:20.8 Andrew Stotz: It's interesting because goal setting seems really simple, like, just set a goal and go get it.

0:01:29.1 John Dues: Yeah.

0:01:29.5 Andrew Stotz: And yet when you're... You say that it's simple as an individual that I'm going to go walking every morning. That's my goal. It seems simple as an individual, but when it gets to a company level, it can get really complex, or a school level. And also there's this... What did you call it? Like aspirational... Or what was the word? Stretch, stretch goal. It's so common, particularly when business is not going great. Like, I want this from this team, and it's just so common to say, to lay down demands. I want 20% revenue growth. I want students passing this by 70% or whatever. And yet it just doesn't work that way. And so I'm looking forward to hearing from you about your three conditions. So let's go.

0:02:23.1 John Dues: Yeah, sounds good. So let's start by looking at why I don't think stretch goals are helpful. And since I'm working in schools, I like using data that people are familiar with. So I'll use this third grade reading state test score data. It's very common. It's really important. There's often some guarantee around third grade reading scores or there's often high stakes attached to third grade reading. So I'll use that. And so let's say in year one, and this is actually real data, 54.9% of third graders scored proficient or higher on that test. And then in the next year, they score 63.8% of the third graders scored proficient or higher. So in most places, leaders and teachers would celebrate because that represents an 8.9% increase in proficiency rates. And so then they do something like set a stretch goal of, well, next year we're going to grow by 20%. So you think, well, we grew by nearly 9%, so we can surely hit 20%. But then what often happens in a situation like this is that the next year's data comes out and actually goes down.

0:03:41.4 John Dues: And that's exactly what happened in year three of this data. Now, in this third year, only 61.2% of the students scored proficient or higher. And so then you think to yourself, well, what stretch goal would I set next? Would you change that 20% goal because of the decreased rates in the most recent year? So it actually is an interesting exercise. If you're listening to this, actually get a number in your head. You're the school leader, you're the superintendent, you're the principal or whatever, think about what goal then would you set for this group. So they grew by almost 9% and they went down by a couple percent. Between year one and two, they set the goal of 20%. Now what are you going to do? What's the goal? What are you going to say?

0:04:36.2 Andrew Stotz: And I'm thinking about the tampering concept that Dr. Deming talks about, constantly adjusting based upon where you're at. And it's interesting because in that case, you may say, you know, a disappointing year, but we've got to stick to our 20%. We got to stick to our strong, we can't give up. Remember that celebration we had?

0:05:01.0 John Dues: Yeah, this is a one year blip. We had increased by nearly 10. I know we can do it if we just double down. Let's keep that 20% goal in place. Yeah, that's definitely what a lot of people would do. So let me show you the results for those three years and then what happened for the next several years after that. So I'll share my screen for those that are watching so they can see this actual data in chart form.

0:05:27.7 Andrew Stotz: Great. Yep, we can see that.

0:05:29.8 John Dues: You can see it. All right. So now we have nine years of test data, and we can see that setting that early stretch goal had no effect whatsoever on outcomes. And so in year one, we had that 54.9% of those third graders were proficient. Then we went up to 63.8 like we said. Then we dipped back down in year three to 61.2, and then in the subsequent years that we're looking at now, it jumped up to 60.7, and then it fell to 51.9, and then it jumped up to 59.8, and then it rose again to 62.3, and then it rose again to 64.5, and then it fell again to 61.3. So again, between year one and two is when we set that stretch goal of 20%, and we can see again that it had no effect on outcome. So really, in all likelihood, the goal was not only ineffective back there between year one and two, but it was likely counterproductive. Because if you're thinking about, if you're a teacher in this school, you're teaching third grade or you're the principal of the school, year after year, this team didn't come close to approaching that 20% stretch goal that had been set.

0:06:52.8 John Dues: Year one, year two, year three, all the way through year nine. Some years the scores go up, some years the scores go down. It's pretty demoralizing if you think about it. I think the good news is, and the reason we're having this conversation is I think there's a better method for understanding your data and then using that data to set school goals in a smarter way. So I'll introduce these three conditions. I think about them as three conditions of healthy goal setting. So the first thing that you want to do is gather baseline data in the area that you're interested in improving. So this could be historical results if you have data, or it might be new data that you need to collect if this is a new focus area. But either way, you need some type of baseline as a starting point, and then you can work to understand these three conditions.

0:07:55.9 John Dues: So the first condition, condition one is what I call the capability of the system under study. And by system under study, in this case, I just mean the third grade reading test data. So how capable is it? Condition two is the variation of that system under study. And then condition three is the stability of that system under study. So those are the three conditions that I'm interested in taking a look at. And this focus could be on any data that occurs across time. It could be like state test scores, like we're looking at here. Could be attendance rates, could be oral reading fluency rates for those elementary teachers. It could be the number of office referrals that are coming into the principal's office or assistant principal's office on a daily or weekly basis. For this example, I'll just keep using the third grade state testing data.

0:08:52.8 Andrew Stotz: And let's just go through that just to review. So you talked about gathering baseline data. So you got to figure out what's happening here. The second thing, the first thing then you talked about, step one is capability of the system under study. And what does the word capability mean?

0:09:10.5 John Dues: Yeah, we'll get into each of them and then define each one.

0:09:12.0 Andrew Stotz: And then the second one is the variation of that system. Okay. Now what I noticed in all of these as you're talking about system, third one is stability of the system. So I guess a big part of this is basically saying if you're not looking at it as a system, you're not going to have the success that you want to have. So that's certainly a reinforced point there. Okay, keep going.

0:09:38.1 John Dues: Yeah. And by system, I just mean there's all these inputs into the third grade reading test, and then there's things that we do in schools, and then there's an outcome, there's an output that happens. So that's why I'm calling this third grade reading state testing data system, basically. So the first thing that I've done is taken that data that we've been looking at in a table and I put it into what I call a process behavior chart. Other people call a control chart or Shewhart chart. We've talked about those charts here, and I've done that so that we can better analyze those three conditions. So this charting method allows us to do that. So can you see the chart now?

0:10:22.6 Andrew Stotz: Yep. And for the audience, we have a chart up on the screen, third grade English language arts test, state testing proficiency rates. And maybe you want to describe what you got in the chart.

0:10:36.1 John Dues: Yeah, so it's the same data that was in the table, but now I've just taken it and plotted it. And that's what the blue dots are. So for each year, which is running along the bottom of the chart of the x-axis, there's a year, year one through nine. Those all represent school years. And on the y-axis I just have proficiency rates running from 0 to 100%. And then I've plotted that data that we had just looked at for each of those years. So it's the same exact data. So the thing that should... Before you even get into the chart in detail, the thing that should jump off the page is how much more intuitive the analysis is just by looking at the chart as compared to looking at that same data in the table.

0:11:23.8 Andrew Stotz: Yeah, in some ways it just looks like a boring chart that looks pretty normal, a little ups and downs.

0:11:30.7 John Dues: It does, but it's super powerful. And it allows us also to start looking at those three conditions that we just talked about by putting it in this format, taking that data from the table and putting it in the process behavior chart format. So you had asked about capability. So what I would say is that the capability of this third grade ELA or reading system is actually defined by the chart. So some of the most important components of this are that green line running through the middle for those watching the video is the average of the nine data points that we have. So the average of those nine tests is 60.7%. That's the green central line. And then those red lines, there's the bottom line and the top line. Those are called process limits. And they're set by plugging nine years of data into a formula.

0:12:28.8 John Dues: So the most important thing is I don't get to choose where those limits are placed. They sort of appear on either side of the nine data points. So that lower limit is a little bit lower than the lowest point. So it's set at 44.9%. And the upper limit is a little bit higher than the highest data point, and it's set at 76.5%. This data, or this really tells us that the data is really just likely to bounce around this 60.7% average, but could plausibly range between those two limits.

0:13:09.8 Andrew Stotz: So is that when we say capability of the system is that this system, as is could just by randomness, could end up between 45, is highly likely to end up between 45 and 75 without it necessarily being attributed to anything but random variation.

0:13:31.9 John Dues: That's right, yeah.

0:13:33.0 Andrew Stotz: Yep.

0:13:33.6 John Dues: So another way to think about it is given what we're seeing in this nine years, if we call this our baseline, the data is likely to bounce around that average of 60.7%, but it could plausibly range between those limits.

0:13:51.9 Andrew Stotz: And one of the fun things I was just thinking about is if you made the average and the blue line of the data like invisible, then you'd have a really good picture of the system, right?

0:14:05.6 John Dues: Yeah, that's right.

0:14:06.3 Andrew Stotz: The capability is between these two fixed lines. There it is. There's your capability. Okay.

0:14:13.3 John Dues: That's the capability. And the thing that we can tell for sure, well, that's fairly certain, with a high degree of probability, we can tell that this third grade reading system as it's currently set up is incapable of hitting that 20% stretch goal. And the reason that I know this is if I add 20 to that average of 60.7%, the answer is beyond the upper limit of 76.5%. So is it possible that you could hit that stretch goal? I would say it's not impossible. It's highly, highly unlikely. And nowhere in that time period did we get anywhere close to hitting that 20% target. And so when you start to look at data this way, it becomes self-evident that the 20% stretch goal in this case is...

0:15:16.5 Andrew Stotz: So then a crafty manager would say, okay, John, that's great, so I'll set the stretch goal at 75%. We should be at the upper limit and therefore just below the upper limit. It's within the capability of the system. Let's go.

0:15:33.5 John Dues: Yeah. So that target setting is beyond the content of this podcast, but to me it would depend on what's the nature of that target. Is it an accountability target that a manager has set for subordinates and that people are going to be held accountable in some way? Demotions, lose their job, affects pay, that type of thing. That's completely the wrong way to go about target setting. But if the target setting is, hey, look, it's a fact of life that more kids need to be able to read proficiently. We need to, as a team, figure out how we're going to bump this up every year until we get to 80, 90, 95, 99, 100%, that type of thing. That's a completely different sort of mindset. That's an improvement mindset, and I would be all for it even if the target is outside of the capability. I'd be all for it if there's an improvement orientation and team orientation to that target setting. So that's the first condition, that's the capability of the system. So the second condition that we'll look at here is that we want to understand the variation in the system. And so the data now in this process behavior chart format can help us understand the variation in this system.

0:16:55.6 John Dues: So the first thing to notice when it comes to variation, you want to look at the blue data points and how they orient themselves around that green central line. And so you'll notice if you're able to see it, that those blue data points are really just regularly bouncing above and below the green line. There's nine of them. And if you look closely, three of the points are below the line, one point is just about right on the line, and five points are just above that average line. So if you're doing year to year, the results increase and then decrease, then increase, then decrease, then increase slightly for three points in a row before decreasing in that most recent year.

0:17:50.2 John Dues: So again, given the data we have so far, it's clear that this system is not going to increase from that average of 60% or so to 80% proficiency rates in any given year. It's just not going to happen based on what we're seeing in this baseline data. So again, the table, it's much harder to see. I mean, you can see it if you're really looking, but it's much less intuitive when you don't have the plots or the dots plotted and then connect them by line so you can see the ups and downs. And the other problem is, so often with something like state test data, but with lots of data, we only have two or three of those points in a table. And we're just looking at did we increase or decrease from last year.

0:18:41.3 John Dues: And so we completely miss all of these patterns that are happening in a relatively recent time period. So by charting, we get that analysis that jumps off the page when you look at data in this way.

0:18:55.7 Andrew Stotz: Yeah you feel like when you get a table of two data points, you get an understanding of data, but when you look at it like this, you get an understanding of the system.

0:19:09.0 John Dues: Right. And if someone's hearing this for the first time and you hear, okay, system capability, system variation, and the third condition, we're about to get into system stability, it sounds technical and engineering-like and things like that. You got to have some mathematical ability. You really need none of that to understand this. I mean, it actually makes data far more intuitive and far easier to understand, even for those that aren't mathematically or statistically inclined, which I would count myself as being among those people.

0:19:41.0 Andrew Stotz: Yeah, it's interesting that point, when I think about what's fantastic about Dr. Deming and his teachings, was that he understood statistics to an extremely deep level. But then he brought it back to us in such a simple way of understanding common cause, special cause, and understanding that just chasing around data points is what most people are doing. And I just think that that's impressive because I studied statistics for a long time before I really thought about that type of stuff deeply. And I didn't understand that most of what we're doing is rewarding and punishing random variation.

0:20:23.3 John Dues: Yeah, that turns out to be the case. That turns out to be the case. So that third condition is understanding stability. So the thing to understand there is that systems can be stable or they can be unstable. And then from there we want to understand that by a stable system we mean it's predictable. We can within reason predict about how that system is going to perform over time. In an unstable system, we don't have that power of prediction. Unstable systems are unpredictable. The other thing to know is that if the system is producing predictable results, it's performing as consistently as it's capable. And so this third grade ELA or reading state testing system, it's a stable, predictable system. So there's no patterns in this data to suggest otherwise.

0:21:20.0 Andrew Stotz: Yeah. And I feel like, congratulations, you have a stable system.

0:21:25.9 John Dues: I mean, there is something to take from that. And it is that if you do have a stable system, it does tell you that what you do need to do is improve the system as a whole. There's no special thing to go look at. It's just that random variation that you were just talking about.

0:21:44.7 Andrew Stotz: And in this case, if we could just imagine on this chart that we take all of these lines and we shift them up without changing any data or anything except that the underlying data just is moved up so that the upper limit is 95 and the lower limit is 65 or whatever that would be, you would still have a stable system.

0:22:11.4 John Dues: Still have a stable system. Yep.

0:22:13.1 Andrew Stotz: But it would be operating at a different level.

0:22:16.6 John Dues: Yeah, you might not be as worried about it if it was performing at a much higher level. You might not have the same concern as a system that's producing a 60% average proficiency. So that's a good segway.

0:22:32.5 Andrew Stotz: In some ways, this chart and what you've explained is very depressing for us aspirational goal setters. Come on, let's get 20%! And what you see here is like Ah.

0:22:42.9 John Dues: Yeah, I mean, I think what I always say there is not saying it doesn't make it not true. I mean it is what it is. You might as well know it. Right? And that's a good point though, because just because this system is stable like it is, it doesn't mean it's acceptable. And we've talked about this before, but in this particular system, on average only 60% of the kids are proficient. So that means that only three in five students are reading proficiently. In this system, that means two in five are not reading proficiently. So we have this stable, predictable system, but it's producing less than desirable outcomes currently. So it might be a little depressing, but at least we know actually what's happening in the system. I think you have to know that before you can have any hope of improving it.

0:23:35.8 Andrew Stotz: Yeah.

0:23:36.2 John Dues: And then once you know those three things, the capability, the variation and the stability, then you can ask that question. You can ask that by what method question that Dr. Deming would ask.

0:23:48.7 Andrew Stotz: Yeah. And when I look at what this, as I was saying about the aspirational goal, all of a sudden it becomes harder. Like all of a sudden you come to this realization that to get to a new level of output of this system is going to really require new thinking, new action, rethinking. It's going to show that, there's so many things that hit me when I look at that.

0:24:15.2 John Dues: Yeah, yeah. I mean, so to drive that point home. So we've talked about that 20% stretch goal. It's beyond the capability of this third grade reading system as it's currently designed. The target is currently nothing more than a hope and a dream. But that all important question is by what method? So by what method could this third grade ELA system be improved?

0:24:40.2 Andrew Stotz: That great old song, coming in on a wing and a prayer.

0:24:45.5 John Dues: Yeah, that's about right. That's about right. But I think we should shift the focus to that question more than this question of setting a goal or people hitting this target that's been set for them in education. And we should think about what fundamental redesign of that third grade reading system would have to happen for any chance of improved outcomes.

0:25:16.1 Andrew Stotz: Yeah, I mean, this, by far, this wakes you up to that reality and helps you then start to rethink. How are we going to tackle this?

0:25:25.9 John Dues: Yeah, and you can do things like look for bright spots, right? There are places that despite having a high percentage of kids that are economically disadvantaged, still get very high scores. What are they doing that could be studied and perhaps brought to other places? Now you have to be a little careful there because education is one of those complex systems that context really, really matters. So you can't just pick up an idea from one place and put it in another place and expect it's going to work. There's more that goes into it than that. But at least going and finding those bright spots is something that's a starting place you can start to learn from.

0:26:11.5 John Dues: But that... At least when you have the three conditions, again, you have this logical starting point for that target setting. So again, you can set a stretch goal in my mind, but you should first understand those three things. And again, it should take on this improvement orientation where you've set this challenge out on the horizon, you've rallied your team around it, you've clearly communicated this is an improvement thing and not an accountability thing. And then you get to work as a team, slowly trying to figure things out and working your way closer and closer to that ambitious goal out on the horizon over maybe a six month or 18 month or three year timeline, something like that, depending on what the nature...

0:27:03.4 Andrew Stotz: I had an interesting experience with this because you helped me look at my student enrollment for Valuation Masterclass Bootcamp in a process chart. And I looked at it and I could see it was just like, this is a stable system. And then I made some adjustments to the system and we had a huge number outside of the control limits.

0:27:24.6 John Dues: Oh, yeah.

0:27:25.9 Andrew Stotz: And then the next time it went right back down where it was. And I realized like, it was like extra human effort for that period, like double down everything, and it wasn't a sustainable change to the system. And now I'm working on that sustainable change because I realized that even an exceptional effort in one period couldn't be sustained.

0:27:52.1 John Dues: Yeah, I think next time we'll actually talk about that. I'm working on an article about how to define improvement and how to know when it's happened and when it hasn't. So that'll be a good pickup point for next time. But I think that's the basic message I wanted to get across this time. And I think as we move towards wrap up, I think school leaders, I mean people in schools, they want to do better, right. So they set those stretch goals for that reason. But I think the three big ideas from this article can really help people as they're navigating that process with their team. So three big ideas that people can take with them from this episode. I think big idea one is that we've talked about setting stretch goals is ineffective and counterproductive in most cases.

0:28:54.7 John Dues: Big idea two was we want to gather that baseline data and then we want to plot it on some type of time series chart, even if it's just a run chart. And then big idea three was we wanted to understand those three conditions prior to setting any type of goal. And I think if people apply those big ideas to their goal setting work, now the team in place at the school is set up to answer that most important question, which is, by what method are we going to improve our system?

0:29:29.9 Andrew Stotz: Fantastic. Well, that's a great summary of it and I think you've walked through it in a simple and clear way. So I just want to thank you on behalf of everyone at the Deming Institute for this discussion. And for learners, remember to go to deming.org to continue your journey. And you can also 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.

View Details

What if learning could feel like a team sport instead of a pressure test? Lyle "Lee" Jenkins, PhD., a longtime educator, shares how a chance encounter led him to a Deming conference specifically for educators in 1992, which transformed his thinking. Deming emphasized defining learning outcomes, rejecting numerical goals, and avoiding ranking. Lee explains how Deming methods prevent "cram and forget", celebrate small wins, and rekindle students' natural love of learning. (Lee shared a powerpoint during the episode, which you can find on our website.)

TRANSCRIPT

0:00:02.3 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 talking with Lee Jenkins, who is a career educator in public school, ending his career as a school district superintendent. It was as a superintendent that he was introduced to the teachings of Dr. Deming, and he has been applying it to his life and work since then. In his business, Crazy Simple Education, he publishes books and schedules speaking engagements. Lee, how you doing?

0:00:38.4 Lee Jenkins: I am doing just great, Andrew. Yeah, this has been fun to put together. And just to highlight, I haven't done this before, just to highlight just simply what Deming taught. We've obviously, over the years added other things, but today we're just talking about what did he teach, just the pure form of it and our implementation of that.

0:01:01.6 Andrew Stotz: Yeah. And I think you and I have already met once and gone through this. It's pretty interesting, you know, I think what I enjoyed about our discussion, truthfully, what I liked, was your energy and the energy about the teachings of Deming and how we can apply that. And so I'm looking forward to seeing you bring that to the audience. Now, for those that are listening, we're going to have... Lee's got a PowerPoint and a presentation he's going to share, but we'll walk you through it. It's not like it's full of very complicated things. So, Lee, why don't you take us through a little bit about what you've prepared here?

0:01:38.3 Lee Jenkins: Okay, I can do that, Andrew. I was like anybody else as a school superintendent. I went to a meeting of the Association of School Administrators. I can't even tell you what city or state it was in, but I was there. And while I was in the hallway between sessions, Lew Rhodes, who worked for AASA, he came up and he said, "Lee, I think you'll enjoy this next session." And that's why I've called this, One-Minute Invite That Changed My Life. So I went in and no idea, I just liked Lew. I trusted him. And it was David Langford's an administrator. And that's how I was introduced to Deming and spent a lot of time after that, reading everything I could get my hands on and absorbed it. And I knew that he was correct in how organizations are operating. And so that intrigued me a great deal. But it was the same information that he shared with all organizations. I just took them and applied them to education. But then two years later, in 1992, American Association of School Administrators, under... With Lew Rhodes' leadership, sponsored a Deming conference. So I went to Washington, DC in January that year to hear him speak.

0:03:20.2 Lee Jenkins: We were there four days. He was assisted and was a part of it for two days. And for two days it was him on stage, the red beads, you know, all the things that listeners know about with Dr. Deming. And I would say that the first part of it was the things you would normally expect to hear. Now, understand, the audience here was educators. And I know there were educators sprinkled in his audiences in his whole speaking career. I know that. I wasn't one of them, but I know that. This was one that was specifically for educators. And nobody's told me any other time when he spoke to educators as the audience. So, but just things he'd say that we've all heard.

0:04:13.7 Lee Jenkins: Best efforts are not enough, you have to have knowledge, you have to have theory. He said too, you can't delegate quality. And I had school superintendents doing that all the time. You ask them about, anything about teaching or learning, they say, oh, no, I'm not involved in teaching and learning. I have an assistant superintendent for instruction. In other words, they've delegated quality. Deming talked about wasting time and wasting money in all organizations, and certainly schools are good at that. I'm going to talk at the end of this, how I took it onto one other point which is similar to what he's talked about also. The losses of the current system. He said in one place that, for 50 years... Now, he said this in the '90s, but for 50 years, America has been asking for better education without a definition of what better education is. And...

0:05:10.5 Andrew Stotz: That reminds me of talking to Bill Scherkenbach, who showed a picture of him, Dr. Deming, in the old days at an event of national teachers, and he said they really couldn't come up with a conclusion about what was the aim. [laughter]

0:05:25.9 Lee Jenkins: Yes, right. It's... Yeah, okay. And then he described fear, brings about wrong figures. So what did our government do? No Child Left Behind, which says, you increase your reading scores or your math scores or we're going to fire you. Well, then you get wrong numbers. That's what he predicted, that numerical goals are a failure. I had a discussion with a pastor several years ago and he said, "Our goal is to have 2,000 people in attendance on Easter Sunday." I said, "Okay, what's the best we've had so far?" "It was around 1800." "Okay, what happens if we have 1900 on Easter Sunday, the best ever? What do we do?" Well, it kind of caused him to think, which is my purpose. It wasn't to be critical, it was to get him to think. You could do your best ever but call yourself a failure because you didn't meet this artificial number. And I can hear Deming talking about just pulling the number out of the air. And that ranking is a failure. We rank and rank and rank in schools. I've got a granddaughter in first grade. School has just started. She's student of the month in her class, which means there's 19 failures of the month. I mean, Deming, it's just sad to see that it's still going on. But then Dr. Deming, I don't think it was in... It wasn't in his PowerPoint. Not even a PowerPoint. We had transparencies.

0:07:12.0 Andrew Stotz: Acetates.

0:07:12.6 Lee Jenkins: It wasn't in his transparencies. It wasn't in the handouts. But it's like he went on this little tangent and that's what has captivated my career, his tangent. And it was Dr. Deming, the statistician, talking about the classroom. So I'm going to go through what he said, just as he said, point by point. He said, number one, tell the students what they will learn this year. Now, when I share this with people, they say, oh, yeah, our college professors had syllabuses. I said, no, no, a syllabus is what the professor is going to teach. Dr. Deming talked about, what are they going to learn? They're two different things. What are you going to learn? And you give it to them. And we've done this pre-K, kindergarten all the way to grade 12 and a little bit of work at universities.

0:08:14.6 Andrew Stotz: And how detailed do you go on that? I see you're showing concept one to concept 19. Is it, you know, this is everything you're going to learn, or this is generally what you're going to learn?

0:08:26.5 Lee Jenkins: Well, this is a partial list. So it's the essential.

0:08:31.6 Andrew Stotz: Yep.

0:08:32.6 Lee Jenkins: I tell people, put down what's essential. Do not put trivia on the list. Now, of course you teach trivia. It's interesting, it's fun, but they're not accountable for it. And so it's what students have been asking for for years. What am I supposed to learn this year? I don't know how to study for the exam. I don't know what's important. I was at a... Doing a seminar for teachers in Missouri. And I said, "I wasn't a good test taker in college. Were some of you?" And a lady raised her hand and said, "Oh yeah, I was really good at it." I said, "How did it work?" She said, "Well, I was in a study committee and by design, half of our time was sharing our insights as we psyched out the professor. And then once we agreed on what was important and the personality of that professor, then we studied that." That's nonsense. Here's Dr. Deming saying, just tell them what you want them to learn, it's so simple.

0:09:47.0 Andrew Stotz: In the world of teaching, we often talk about learning outcome statements at the beginning of a lecture.

0:09:55.6 Lee Jenkins: Yeah.

0:09:56.5 Andrew Stotz: And I know, for instance, with CFA for Chartered Financial Analysts, they have very clear learning outcome statements and then they have a whole section that they teach and it's self study. And then you take an exam. Is that... Is learning outcome statement the same thing or is this something different?

0:10:13.0 Lee Jenkins: I would say it's the same. It's very, very close. It's same in general terms. Exactly. We're not talking about how it's going to be taught, only that it's going to be learned. Okay, the next thing Dr. Deming said to do... And by the way, before we leave, make sure this is a partial list. If I put the whole year's list on there, it's so small nobody could read it on the screen. Okay, next he said, give the students an exam every week on a random sample from the whole course. Said if, for example, you had a 100 concepts on your list, they would take a quiz on 10 of them each week, randomly selected.

0:11:02.6 Andrew Stotz: This is so mind blowing. Go ahead, keep going.

0:11:07.7 Lee Jenkins: Yes, because... So what do we do now in schools? We do cram, get a grade, forget. That's the most common thing in American education. Cram, get a grade, forget. Have a friend in college. He said, "Lee, I've looked at your website. I have a little bit of an idea of what you do. You don't know this about me, but I never studied the night before an exam in college, ever." "Oh, really? What'd you do, Larry?" He said, "Well, I set the alarm for 4 o'clock in the morning. I studied the morning before the exam." I said, "Why is that?" "I couldn't remember it overnight. So I did well in college. I got the grades on the exam and by noon it was gone. But I got through. That was my system." I was at my annual dermatology exam and the medical doctor said, "What do you do?"

0:12:20.7 Lee Jenkins: I said, "Well, actually I get on airplanes and I give speeches." "Ah, who do you give them to?" "Well, teachers and administrators." "But what do you tell them?" "I tell them how to set up a system where it's impossible to cram and forget, you just have to learn." She said, "Oh, that's interesting. That's what I did all the way through medical school." And I'm thinking, here I am with somebody who crammed and forgot all the way through. So I checked with an MD on my next plane flight who I happened to be sitting next to one. I told him the story. He said, "Yeah, that's how it works." I said, "Well, when do you learn?" "Residency." So Dr. Deming didn't talk about cram, forget. But the side effect was, when the students don't know what's coming on the Friday exam, they'll say to me, I just have to learn. There's no other choice. You just have to learn.

0:13:25.8 Andrew Stotz: Right. And then you talk about the... You're talking about the random sample size is roughly the square root of total concept list. I'm thinking about a 15 hour course that I teach and there's 25 concepts that I'm teaching. So a random sample would be 5 of those 25, give them that test. And then the idea here is that we're testing their understanding of that material. And in the beginning, let's just say that random, in the beginning, I haven't taught anything. So they have five questions and on average, let's say they get one right in the beginning because...

0:14:05.2 Lee Jenkins: You'd be lucky if you got an average of one. Yes.

0:14:07.8 Andrew Stotz: So we have evidence that they don't know the topic.

0:14:10.9 Lee Jenkins: Right.

0:14:11.6 Andrew Stotz: And then as we... Let's say we have five weeks and each week we go through, then in theory, if we've taught right and they've learned right, that they would be able to answer all five of those randomly selected questions on the fifth week?

0:14:29.3 Lee Jenkins: That's what you're after. You want them to not have to study, but whatever five is pulled out, they would get it. And if you're teaching a five week course, you might give 10 quizzes during the time, one at the beginning and one at the end of each class. So that because the random, you want them to have questions come up more than once, you want them to have the same question come up. Because that's part of the joy. Oh, we've had that, it's been taught or I've seen that before and it's not 25 questions, it's 25 concepts. Because you can ask it a multitude of different ways to see if they have the concept.

0:15:09.3 Andrew Stotz: And for teachers nowadays, or administrators, they're going to say, what's the point of giving quizzes for topics you haven't taught?

0:15:22.7 Lee Jenkins: That is the most common thing I've been told. Okay. And teachers who have done this for a number of years, sometimes 10, they will say that is the most powerful part of the whole process. Think of it as the synonym for what Dr. Deming taught as review preview. People are used to previews of movies and TV shows and all kinds of previews. And that's what it is. It's a preview. It's not graded. You know, the quizzes aren't graded. That is not fair.

0:16:00.9 Andrew Stotz: You mean they just don't count... They don't count as a grade for the students?

0:16:05.4 Lee Jenkins: Don't count as a... They're scored.

0:16:07.0 Andrew Stotz: Yeah.

0:16:07.3 Lee Jenkins: They're scored...

0:16:08.6 Andrew Stotz: They're scored.

0:16:08.7 Lee Jenkins: But they're not ABCDF on it. Yeah.

0:16:10.3 Andrew Stotz: Yep.

0:16:11.1 Lee Jenkins: It's just a number, correct. Yes. And so like a geography teacher, excuse me, science teacher, said, "You can't believe what happened to me last Friday. I said to the students, on Monday, we're going to start a unit on rocks. And these are middle school students. And they all applauded." He said, "I've never had students applaud about rocks before." Why? Because it keeps coming up on the quizzes and they want to know. It does that. And then when the students get things right that the teacher hasn't taught yet, then they get, oh, they're really happy. I outfoxed the teacher. I know that.

0:16:57.8 Andrew Stotz: Yeah. You can also imagine it would be interesting if you gave a test and the score was, you know, a four on average out of five, let's say, right at the beginning of the class, you think, wait a minute, they already know this stuff. How did they learn that? Where did they learn that? What am I doing in this class?

0:17:15.1 Lee Jenkins: And see, and one of the things we have to get our heads around is, it doesn't matter how they learn it. The question is, did they learn it? I mean, with AI out, okay, they can... They could do AI... They could find out on their own. They can ask their parents. I mean, there's books, there's the Internet. It doesn't matter. Did they learn it?

0:17:40.4 Andrew Stotz: Yep. Okay, this is great.

[overlapping conversation]

0:17:42.5 Lee Jenkins: So then Dr. Deming said, if you've got 100 concepts, then you'd have 10... It's what he said. You'd be 10 questions a week. So that was in January and in November, I wrote him a letter and we had teachers in the school district already doing this. "Thank you for your kind letter and for the 100 sided die." I had just seen that and they're on Amazon. You can buy a die that's 100 sides. It's like the size of a golf ball. He said "it's exciting. Thank you also for the charts, which I've looked at with interest. I wish for you all good things and remain with blessed greetings. Sincerely yours, W. Edwards Deming."

0:18:29.3 Andrew Stotz: That's cool. And that 100 sided die, that was just saying, if you had 100 concepts, just roll the die and pick whatever ones that land... The 10 that lands on it.

0:18:43.1 Lee Jenkins: Right. Now, I've discouraged over times people landing on 100 because you want essential. So to get to 100, you either have to add trivia to get to 100 or you have to take away essential to get down to 100. So I want people to put down what is it that's essential for their kids to know and when they see them 10 years from now, they still know it.

0:19:10.0 Andrew Stotz: Yep. Okay. So, let's not... We're not going to fixate on 100 is what you're saying.

0:19:14.6 Lee Jenkins: Don't fixate on the 100. But I'm telling what Dr. Deming said as an example. Yeah. And what we did. Okay. Then he said create a scatter diagram. This is not a scatter plot, it's a scatter diagram. So if you look at the bottom left, you can see that... And let me find here, if I can just pointer options. Let's get this. Okay, if you look right here, this is Quiz 1, Quiz 2, Quiz 3. Over time...

0:19:49.4 Andrew Stotz: Okay. So the... Just for the listeners, we're seeing a document that's up here with a 14 quizzes across the bottom. Yep. And then on the Y-axis...

0:20:03.1 Lee Jenkins: And the Y-axis is from 0 to 10.

0:20:06.5 Andrew Stotz: And that's the quiz questions.

0:20:09.8 Lee Jenkins: No, it's... They were asked 10 questions. Yes.

0:20:12.0 Andrew Stotz: Okay. So in this case we can see...

[overlapping conversation]

0:20:12.7 Lee Jenkins: The question number...

0:20:12.7 Andrew Stotz: And then those questions were randomly selected. And then they were put into a quiz format of 10 quizzes, quiz questions. And here we can see, for instance, question number two, four people, I'm assuming, got it right.

0:20:29.8 Lee Jenkins: On quest... This is... On quiz two...

0:20:31.0 Andrew Stotz: Quiz number one, let's say quiz number one, question number two.

0:20:35.7 Lee Jenkins: Quiz one, nobody... One person got zero right. One person got one right. Four people got two right.

0:20:41.7 Andrew Stotz: Okay. Okay. I see.

0:20:42.8 Lee Jenkins: One person got three. Okay?

0:20:44.8 Andrew Stotz: Yep.

0:20:45.8 Lee Jenkins: These are people for quiz one.

0:20:49.1 Andrew Stotz: Okay.

0:20:50.3 Lee Jenkins: Then this is quiz two. And then this is quiz three. Generally one each week. We've landed on seven times a quarter, because think snow days come up, things happen.

0:21:09.0 Andrew Stotz: Yep.

0:21:09.5 Lee Jenkins: But so seven out of the nine weeks works. So this is the quiz for a semester.

0:21:16.8 Andrew Stotz: Okay.

0:21:17.6 Lee Jenkins: And the end, at the 14th week, a 14th quiz, I mean, you've got one, two, three, four, five, six. We've got all 10 right. You got four of them with nine, et cetera. That's your Scatter diagram.

0:21:32.2 Andrew Stotz: Okay.

0:21:33.4 Lee Jenkins: Okay. Then he said, do that. Then he said, which I've heard nobody else ever say, add up the total for the whole class. That is unbelievable. Think about it. When an athletic team wins, the players and the coaches celebrate together. In schools, when the final's over, the students celebrate and they do not invite the teacher. Here, every time they are tracking their work, this is quiz one, quiz two, quiz three, four, five, six, seven. It's an interesting one. Somebody put this chart up on a bulletin board, put push pins up and connected with rubber bands.

0:22:24.5 Andrew Stotz: Right.

0:22:25.8 Lee Jenkins: Okay. Here's another one where they're learning that the United States states, they have a blank map of the United States. An arrow points to one of the states. They have to write down what state that is. And there they are. And this shows the progress over 18 quizzes. And you can see it going up and up and up. And here's one, two, three, four, five, six, seven, eight times, where... And maybe there's another one. But you're... I'm covered... Oh, there is another one. There's nine times that the class did better than ever before as a team of learners. And they celebrate together, the teachers and the students together.

0:23:16.1 Andrew Stotz: Right.

0:23:16.7 Lee Jenkins: Look what we did. Then here's another one. This one on the left is from Australia. And I don't know what subject it was. There's no information. But I know that they went out and took a picture of it with one of the students holding it because they were so excited they'd hit the 200 mark after having started out at 65.

0:23:41.3 Andrew Stotz: Yeah. And for the listeners, we're... Basically Lee's showing different run charts of the number correct, starting from quiz number one all the way through to the final quizzes. And the number is going up and to the right showing that the process of learning is working.

0:24:03.4 Lee Jenkins: Yes. And this one here is spelling. We know that spelling doesn't... Spelling tests don't work. It starts in first grade. It's the classic cram on Thursday night if your mom makes you, take the test on Friday, forget on Saturday. So here is a classroom with 400 spelling words for the year. They're all put in a bucket and 20 are pulled out each... 20 are pulled out each quiz at random. And you can see they're learning the words. Now, sometimes people think that we teach at random. You don't teach at random. You teach logically.

0:24:40.1 Andrew Stotz: Right.

0:24:41.2 Lee Jenkins: But the random is giving you accurate information. Are the students actually learning it and not just playing the game. And here's a... You want students to do the work as much as possible. They're your student. That is when you see the coloring and the art, the creativity. Yeah, that's... You want to hand that over to kids to do as soon as you can. And here's one. A French class out of Canada. This is a Spanish class, a third year Spanish class. And the teacher has written that ABC, ABC, ABC, because the teacher had three different quizzes all for the same concepts. So they got quiz A, one week. Quiz B the next time. Quiz C the next time. Whatever, random numbers, but then she had three different complete sets of questions for each of the concepts.

0:25:37.0 Andrew Stotz: Right.

0:25:39.6 Lee Jenkins: Oh, I love this one here. The class had 69 correct, then 108, then 128 right as a class. Then they slumped. One, two, three, four, five, six weeks they slumped and they ended up 129 correct as a class. One more than ever before. The kids are thrilled. If you don't count it up, you'll never know that as a teacher. You'll never know it.

0:26:07.3 Andrew Stotz: And you wouldn't know your progress relative to your past class.

0:26:11.2 Lee Jenkins: You would not.

0:26:12.0 Andrew Stotz: Yep.

0:26:12.8 Lee Jenkins: And so I can't tell you how many teachers have told me, when they have a... The class has an all time best by one or two, a student in the class who's been struggling will stand up and do a chest pump and say, it was me.

0:26:27.6 Andrew Stotz: Yeah.

0:26:28.8 Lee Jenkins: If it hadn't been for my correct questions, which were few in number, but hadn't been for mine, the class wouldn't be celebrating. Yeah, we all understand that, if you're a poor athlete, you're on the basketball team and you're on the bench and the coach decides to put you in for a little bit. The other team fouls you because they know you're not a good athlete. But you make the free throw and the team wins by one.

0:26:57.3 Andrew Stotz: Right.

0:26:57.6 Lee Jenkins: You don't hang your head and say, we only won by one. No, you and everybody knows you're the one that made the point that counted, yeah, it's the same thing. And I've wrote this, it's so important. But sports teams celebrate together, coach and athletes, with class run charts, teachers and students celebrate together. So since 1992, we have subtracted nothing from Dr. Deming, what he taught. We've added some clever additions. The little dots on there that say all time best, that's an addition. We changed it from every week to almost every week. And if we have a chance to do another podcast, I will focus on all the things we've added that are so creative, that have come mainly from students. But what Dr. Deming said, and I'm estimating it was three to five minutes, that he shared and they went back to his normal program and it just impacted me. I couldn't believe it.

0:28:15.7 Andrew Stotz: Right.

0:28:17.9 Lee Jenkins: On the website, Crazy Simple Education, there are free blank graphs. So if anybody's interested in what I'm talking about, there's... If you're... And you'd have to look at, if I'm adding... If I'm asking five questions a week, then there's question... There's graphs for that. If I'm asking 20, there's... They're all there. And other things.

0:28:36.6 Andrew Stotz: Yep.

0:28:39.6 Lee Jenkins: So there's kind of just my little bit of the bio, but it's already been shared. And then on the website, if anybody's interested after over 25 years, what would be the most detailed information of Dr. Deming it's in this book. But you're going to get that information in the future anyway. But I'm just saying, it is there.

0:29:10.9 Andrew Stotz: And just for the viewers, that book, go back to the book for a second. For the listeners, it's called the Essential Navigation Tool for Creating Math Experts, Numbers, Logic, Measurement, Geometry.

0:29:24.0 Lee Jenkins: It has the actual quizzes for grade five, the 28 quizzes for the year. They're there.

0:29:31.2 Andrew Stotz: Right. Right. Amazing.

0:29:33.0 Lee Jenkins: It is superbly put together. Each of the concepts in grade five is assessed seven times. Each of the grade four concepts are assessed twice during the school year. And each of the grade three concepts are assessed once during the year.

0:29:53.5 Andrew Stotz: Yep.

0:29:54.0 Lee Jenkins: So you don't have to waste the first month or so going over last year. You just start the new content and the review is built in.

0:30:02.4 Andrew Stotz: Yep. Okay. And for the listeners and the viewers, we're not trying to sell this stuff. What we're trying to do is show it as an example of the things that you're doing, which is great.

0:30:12.6 Lee Jenkins: Yes. Yeah. It just shows what can be done with the simple concepts.

0:30:18.5 Andrew Stotz: Yeah.

0:30:18.8 Lee Jenkins: And this is one example. Yes. And so then Dr. Deming talked about waste. And he also said that graphs have to be long and narrow. So here's my long and narrow graph on waste. I asked 3,000 teachers, five different states, just what grade level do you teach and what percentage of your kids love school? Okay, well, kindergarten teachers said 95% of their kids love school. First grade said 90%, second grade said 82% love school. And it goes down every year. It gets fewer and fewer kids love being in school until we get a low of 37% love school in grade nine. It ticks up slightly in grades 10, 11, and 12. But I show this to people, the most common answer I get is, well, of course it went up in grade 10, 11, and 12. I dropped out of high school. They didn't count me.

0:31:25.9 Andrew Stotz: Yeah, yeah.

0:31:28.6 Lee Jenkins: So, but, so the biggest waste in education is the love of learning kids bring to kindergarten. Much more damage caused by that than wasting time and money. That the kids have all the motivation they need for life in that five-year-old body. It's not our job to motivate...

0:31:52.4 Andrew Stotz: And then we flush it out of them.

0:31:52.4 Lee Jenkins: Yeah. It's not our job to motivate them. It's the job to maintain it. So I'll tell you a story of a good friend that I worked with from the very beginning. I mentioned that when I had the note that went off to Dr. Deming. And after we'd just gotten started, he's still teaching grade eight science. He has five periods of science. He says every year, the first day of school, three, four, five eighth graders come to him each period. And they say, "Just so you know, Mr. Burgard, I hate science." So he says to them, "Oh, that's interesting. How long have you hated science?" The kids say the same thing every time, "I always hated science." He says, "You know, actually, that's not true. You loved everything in kindergarten. Tell me your story." And they tell the story. Well, I was in grade three or I was in grade five, whatever, they tell their story. He says, "Okay, here's the deal this year, I'm not going to motivate you to learn science. What I am going to do is to try to put you back the way you used to be. We're going to put you back with the mind of a kindergartner loving learning. That's what we're going to do." Because they... Everybody has stories on what happened to them.

0:33:23.4 Andrew Stotz: Yep.

0:33:24.3 Lee Jenkins: So I would conclude this part by saying, I am forever grateful to Dr. Deming. My younger son went to the Deming Scholars Program with Joyce Orsini and he graduated. I got to meet both Diana and Judy Cahill, and they were helpful. Kevin just been helpful to me. Kevin Cahill, the grandson, David Langford, I met with him in-person probably 20 times. All encouraging. Jake Rodgers now is the reason why we're here. And of course you, Andrew. So there's so many people to be grateful to that have encouraged me along this journey, in addition to several thousand teachers who send me their stories and their pictures of their graphs, thanks.

0:34:14.1 Andrew Stotz: Fantastic. That's quite a story. And I just love those lessons that you've gone through. I'm going to stop. Is it okay if I stop sharing the screen? I'm going to do that myself here. Is that okay?

0:34:27.9 Lee Jenkins: Yes.

0:34:28.4 Andrew Stotz: Okay, hold on. Don't do anything there. Okay, now I see you, you and me. I want to wrap up because I think that was a great presentation. A lot of things that I'm thinking about myself. But I did have one question for you that I... I'm not sure what to do. One of the things that I've found with teaching is that sometimes my students, they have a hard time focusing. And so when I tell them, okay, you need to read chapters one, two and three before we meet the next time, let's say short chapters. And then they find it's hard for them to stay, they're like, ah, I'll do it later. So they really haven't covered the material. Now, if I give them, if I say, you need to read chapters one, two and three, and I'm going to have a short quiz on chapters one, two and three, and I'm going to give you quizzes every time that we meet, not as an objective to score your work, but as an objective to help you keep focused. And then I do that, let's say five times, and then I take the two best scores and I drop the rest, so, it shows that they did it. And I find that my students, they definitely do... They stay up on their work with it. So my question is, how do I incorporate this, which is really an assessment of the learning in the class with that, or do I need to drop what I'm doing with my quizzes?

0:36:00.6 Lee Jenkins: Okay, we're really talking about the difference between them intrinsically wanting to learn it and being pressured to learn it.

0:36:13.8 Andrew Stotz: Yep.

0:36:14.0 Lee Jenkins: In a sense. Okay? Now, one of the parts I did not share that could be for future. But the students do graph their own work. Dr. Deming didn't talk about that, but that was... I just focused on what he taught. They graph their own work. And then there's the graph for the whole class. They want to know if they have a personal best. They care about that at all grade levels.

0:36:41.8 Andrew Stotz: Yep.

0:36:42.4 Lee Jenkins: When I... My work is with teachers and if it's a two-day seminar, there's three quizzes, day one and three, and three more quiz, two, day two. There's... You see them, high five. They're teachers. They got... They did better than ever before. Other people are congratulating them. They're so happy. And then at the table where they... Because they usually sit about six or eight at a table, they can see their table did better. There's a chart up on the wall, that's everybody in the room. It might be 200. And altogether we did better than ever before. They care about that. And so kids...

0:37:29.6 Andrew Stotz: Okay so from that, do I take from that drop the quiz that I'm doing and replace it with what you're talking about and get them excited about that and then they'll do their work naturally.

0:37:41.3 Lee Jenkins: Because they don't want to let the team down.

0:37:45.7 Andrew Stotz: Right.

0:37:46.1 Lee Jenkins: Okay?

0:37:46.5 Andrew Stotz: Okay.

0:37:47.7 Lee Jenkins: One of Dr. Deming's story for business was, a businessman came, listened to him and he had salespeople on commission. He went back after hearing Dr. Deming and he said, I'm not going to pay everybody their individual commissions anymore. We're going to put all the commissions in a bucket and everybody gets the same amount. So what happened? The best salesperson quit and the company sales went up because everybody wanted to help the team. They couldn't... They didn't want to be the freeloader. They wanted to contribute. But when you think, oh, that person always gets the free trip to Hawaii. I'll never get that. It's not motivating. It's demotivating.

0:38:37.7 Andrew Stotz: Right.

0:38:38.4 Lee Jenkins: And so they want to help. My only time that I know about a good experience in college, was a professor teaching masters students. And he taught the same class on Monday night and Tuesday night. They were doing research methods from all departments on campus. He gave the quiz on Monday night and then the same goes on Tuesday night. And students, they're taking night classes. They don't come every time, things happen in their lives. So it used to be if a student said, I can't come next Tuesday night, they just wouldn't come. Now they say I can't come next Tuesday night, is it okay if I come on Monday, if I do that and take the quiz, will you put my score on the Tuesday night group? Because they don't want to let their team down. Here they are in their 30s and 40s and 50s, getting their master's degree and they care about... So it's... And then something else we haven't talked about, that we have graphs for the school. It's the whole... It's the school-wide graph. And every teacher has to turn in the total for their classroom for whatever subject they're doing it with by a certain time. And then there's a graph in the hallway for the whole school. Teachers you're not going around the clipboard and inspecting the teachers to make sure they turn it in. No, they do turn it in because they want to help... They don't want to let the team down.

0:40:06.4 Andrew Stotz: Right, right. Okay, I got it. All right. Is there anything you want to share in the... In wrapping up?

0:40:16.0 Lee Jenkins: I would say that you will get the question, how can you assess them on things that you haven't taught yet? And the answer is you don't grade... You don't give them a letter grade for it.

0:40:28.6 Andrew Stotz: Yep. So you're assessing their knowledge. You're not scoring that assessment.

0:40:34.3 Lee Jenkins: Yes. Yes. And you will have more fun than you can believe from Dr. Deming's simple concept, no matter what age you're teaching, no matter what subject, you will love it.

0:40:48.8 Andrew Stotz: It's brilliant. It's brilliant because it shows that the teacher cares, that first the teacher says, I know what I want to get you guys to learn in this semester as an example. And it's very clear. And I want to know that you're learning it.

0:41:08.5 Lee Jenkins: Yes. And actually, the hardest part for teachers is to write down on a sheet of paper what they want them to know at the end of the year.

0:41:15.7 Andrew Stotz: Yeah. It forces a lot of structure onto you to have to think ahead of time, what do I... What exactly do I want here? You can't... What you're talking about is really clarifying the learning outcomes.

0:41:28.7 Lee Jenkins: Yes. You can't just say one... Stay one chapter ahead of the kids.

0:41:32.7 Andrew Stotz: Yeah.

0:41:33.2 Lee Jenkins: No, you got to know upfront what it is, and that's hard. That takes time. And you revise it. At the end of the year, you'll say, why did I put that dumb one on there, everybody knows that. Oh, I left off something else that was really important. Why didn't I put that on there? Well, every year you will tweak it, but you're not starting over again, ever.

0:41:54.0 Andrew Stotz: One of the interesting things that I can do is, I have my valuation masterclass, which is an online course, and it's a 12-week course. And I do it, let's say roughly three times a year. So I've got a great data set there that I rep... You know, my repetition is not annual. It's three times a year. I even may do it four. But the point is that, you know, I can just repeat, repeat, repeat, improve, improve, improve, and then show them as...

[overlapping conversation]

0:42:20.1 Lee Jenkins: You can... You got a perfect model.

0:42:21.1 Andrew Stotz: Yeah.

0:42:21.4 Lee Jenkins: Yes, you can.

0:42:22.4 Andrew Stotz: Yeah. No, that's exciting. Okay, well, on behalf of everyone at the Deming Institute, I want to thank you, Lee, for joining us and sharing your Deming journey and just a very tiny interaction with Dr. Deming and what he's teaching, that you've expanded into something to bring that joy in learning. So I really appreciate that. And ladies and gentlemen, this is your host, Andrew Stotz. And I'm going to leave you with one of my favorite quotes from Dr. Deming and I'm going to tweak it a little bit for education because he said, people are entitled to joy in work. And I think today what we're talking about with Lee is that, people are entitled to joy in education.

0:43:04.9 Lee Jenkins: Absolutely. They are entitled to that. Absolutely. Yes. Thank you.

View Details

Great leaders know there’s no one-size-fits-all formula. In this episode, Bill Scherkenbach and Andrew Stotz discuss practical lessons on how to connect with people on physical, logical, and emotional levels to truly get things done. Discover why balancing “me” and “we” is the secret to lasting results—and why empathy might be your most powerful leadership tool. Tune in now and start rewriting your own leadership playbook. (You can view the slides from the podcast here.)

TRANSCRIPT

0:00:02.1 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 Scherkenbach, a dedicated protégé of Dr. Deming since 1972. Bill met with Dr. Deming more than a thousand times and later led statistical methods and process improvements at Ford and GM at Deming's recommendation. He authored The Deming Route to Quality and Productivity at Deming's behest, and at 79, still champions his mentor's message, "learn, have fun, and make a difference." And the episode today is Getting Things Done. Bill, take it away.

0:00:41.5 Bill Scherkenbach: Okay, Andrew. We will get 'er done today. The reason I put that on there is that in many of his seminars, Deming said that, "I am not a businessman and not trying to be one." But you need to think about these things. And his approach really was to improving organizations was to put people who he thought were masters of his teachings into organizations, and they would be there full time to facilitate the transformation when he wasn't there, such as Ford and GM and a few other companies. There were a few of us who he trusted to be able to be there to get things done. And I'm reminded of the philosopher, the Asian, Chinese philosopher, Mencius, and I'll read it there. It says, "Don't suspect that the king lacks wisdom. Even in the cases of things that grow most easily in the world, they would never grow up if they were exposed to sunshine for one day and then to cold for 10 days. And it's seldom that I have an audience with the king. And when I leave others who exposed him to cold arrive, even if what I say to him is taking root, what good does it do?"

0:02:35.7 Bill Scherkenbach: And quite honestly, that's the lament of every consultant trying to get stuff done in today's world, in Western style management. And so one of the things in this slide, the framework for getting things done, for having fun learning and making a difference, is one of the two, I think, major contributions I do say that I've made to the profession of quality. And that is using this Venn diagram to be able to show that even though other people have used other terms for physical, logical, and emotional, that there usually have been holy wars being fought by people who say, "Well, emotional is better. That's how you get stuff done." And other people saying logic and other people saying physical. And in fact, I think in the last time we spoke, the three major gurus of quality were those ships sailing in the night. Dr. Deming was the epitome of logical thinking, whereas Phil Crosby was looking for the wine and cheese parties and the emotional sell part of it. And Joe Duran was looking at physical, how are you going to organize to get stuff done? Now, they all had their followers who were pretty much on those frequencies, and they reached people in other frequencies. I came up with this idea for the Venn diagram to show no hierarchy, I guess back in 1987, something like that.

0:04:49.3 Andrew Stotz: And for the listeners out there, we're looking at a diagram that shows one circle that says physical, that's interlocked with another one that says logical, and then there's a third, a Venn diagram, that third is emotional. And so those are the three pillars that Bill's talking about. All right, keep going, because you got stuff in the middle too, which is interesting.

0:05:16.1 Bill Scherkenbach: And the thing is that I based it primarily at the time in the mid-60s, there was a theory of brain structure called the triune brain. Now, and it was the limbic system, the neocortex, and the R-complex. And pretty much followed the logical, emotional, physical words that I'm using. Now, our understanding of the brain in the decades up through now, it's a little bit more complicated than that. But physical, logical, and emotional is in all of us. In our body, I mean, the latest looks at neural connections extend to your gut. And nerves are just about everywhere and connected, and that the way the brain works is still not even fully, not begun to be fully understood. Having said that, in order to get stuff done, this Venn diagram shows very, very simply that the intersection of physical and logical, I put as science. It's the logical explanation of physical phenomenon. And the intersection of logical and emotional is psychology, logic of the soul. And the intersection of emotional and physical is art. All art is is the emotional interpretation of sensory input, whether it's a great meal, whether it's a Mona Lisa picture.

0:07:27.9 Bill Scherkenbach: But what will make one person absolutely swoon will make another person barf. So it's all personal, but it's physical, logical, and emotional is in all of us. And in the center, we're looking at what Eastern philosophies call harmony, where all of these are working together. And Western philosophies would call them peak experiences. And it's where the whole can be a lot greater than the sum of its parts, but with some slight changes can be a whole lot less than the sum of its parts.

0:08:14.3 Andrew Stotz: Great. I like the harmony in the middle. That's the challenge, really. Now, just out of curiosity, is harmony the goal? Is that what you're thinking with that being at the center? Or what is the meaning of harmony being in the middle?

0:08:28.0 Bill Scherkenbach: Yeah. When I apply this to the individual, harmony would be the goal. When I'm applying it to an organization, the larger an organization grows, the more you really need to use this overarching approach. And the reason I say that is, and it doesn't happen all the time, but most of the time when we're starting up a company, you want to surround yourself with fine people just like yourself. And so if you have a particular way of getting stuff done, you're going to hire people or surround yourself with people that are just like that, and everything is fine. But the more you grow the company, the more you're going to get people that are absolutely vital to your organization that aren't on those frequencies. And certainly, if you're in international business, you're trying to sell things to the world that in the larger the group of people, the more you have to be broadcasting on the physical, logical, and emotional frequencies. I mean, one of the first things that I did at GM when I joined was looked at the policy letters that Alfred Sloan wrote. And Sloan, it was very interesting because in any policy, Sloan had a paragraph that said, "make no mistake about it, this is what we're going to do."

0:10:31.8 Bill Scherkenbach: That's a physical frequency. In the Navy, it's shut up and fly wing. And so make no mistake about it, this is our policy. The second paragraph had, well, this is a little bit why we're doing it. And to be able to get the, and I don't know whether he was thinking that, but to my mind, it was brilliant. He was explained things. And the third paragraph or so in the policy letter was something that would instill the GM spirit, that there's something to do with the values. Hugely, hugely prescient in my viewpoint, but he's Sloan, I'm me, so he knew what he was doing.

0:11:29.9 Andrew Stotz: For people that don't know Alfred Sloan, he took over and was running General Motors at the time when Ford had, I don't know, 50% of the market share by producing one vehicle. And part of the brilliance of Sloan was the idea of building a lineup of different brands that went from the low all the way up to the high of Cadillac. And within a short period of time, he managed to flip things and grab the majority of the market share from Ford at the time, as I recall. Now, I don't recall it from being there, but I recall from reading about it.

0:12:12.3 Bill Scherkenbach: There you go. There you go. Yeah, having saying that, he offered those by buying the various little auto companies, littler auto companies to put that conglomerate together. But as people who have read my works, specifically my second book, The Deming's Road to Continual Improvement, this change philosophy is in there. And as I said, that's one of, I think, my major contributions to the field of quality. The other one being in a process model back in '86, we also were learning about Taguchi, Genichi Taguchi's approach to customers and the loss function, and he used the title or the terminology voice of the customer. And it occurred to me in our process definition, there was something called the voice of the process to go along. And so the voice, I introduced the voice of the process, and the job of anyone is to reduce the gap between the voice of the customer and the voice of the process. And I mentioned that because this matrix that we're showing now has physical, logical, and emotional, and the various process states that you could be in, there's a dependent state where you're completely dependent upon your customers or suppliers.

0:14:00.9 Bill Scherkenbach: There's an independent state where it's just you and an interdependent state. And I have that cross-reference with physical, logical, and emotional. In dependent state, it's essentially feed me, teach me, love me, do it for me, teach me, and love me. Now, in the independent, it's, I do it, I understand what I do, and I take great joy in doing what I do. And in the interdependent is, we do it. I understand how what I do helps optimize our process, and I take great joy in belonging to this team. And joy is the ultimate goal of what Dr. Deming had said for years, the ability to take joy in one's work. Now, I mean, every one of us starts out in life as dependent. It's feed me, teach me, love me, newborns, parents have to do everything. When you're a new employee, you might have some skills and understanding and emotion or pride, but this is how we do it in this company. And so you're dependent upon how you are introduced to that organization. But everyone tries to get out of that. Now, having said that, a pathology is there are givers and takers in this world, and some of the takers would just be very happy for other people to feed me, teach me, love me.

0:16:18.8 Bill Scherkenbach: My point or my philosophy is you've got to get out of the dependency and you have to balance that sense of independence and interdependence that is in each of us. Whether you're doing it or whether you're doing it in your family, as part of a family or a company or a motorcycle gang, whatever your group is, you're looking to blend being a part of that. Every human being looks to balance that sense of me and we. And in the thing we're finding in Western cultures, obviously, especially in North America or the US, we celebrate the me. It's the individual. And the team, we talk a good game about team, but mostly we're celebrating the me. In Eastern philosophies, they're celebrating the we. It's the team. It's not necessarily the, well, not the individual. The point is that in the Western philosophies, if you can't feel a part of a family or express that part, what we see in the US, there's a whole wave of people volunteering to belonging to organizations, whether it's sports teams, whether it's volunteer teams, whether the family balance. If you can't be a part of a family at work, you're going to go offline and do it.

0:18:24.9 Bill Scherkenbach: And the problem is your life suffers because you can't fulfill yourself as a person. In the Asian cultures, if you can't feel important as an individual, you go offline. Golf is huge in Japan and elsewhere, and it ain't a team sport. Calligraphy isn't a team sport. Karaoke isn't a choir event. There are ways to be able to express yourself offline if you can't feel important as an individual in your group. And so my philosophy is every human being needs to find that balance for each individual to be able to lead a fulfilled life.

0:19:28.7 Andrew Stotz: I'm reminded of a book by Dr. William Glasser called Reality Therapy, brought out in late '60s, I believe. And his philosophy was that part of the root cause of mental illness was that people didn't have one person they could trust. And that all of a sudden sets up all kinds of defense mechanisms that if prolonged end up leading to mental illness. That was a very interesting book, but the thing I took from it is that people want to connect. They want to belong. They want to be a part of it. They may act like they don't sometimes and all that, but we want to be in this interdependent position. And I'm looking at the bottom right corner of the matrix where it says, "I take joy in belonging to a team or this team." And that to me is, you know, that book helped me understand that it's not just the idea of, "Hey, we should all get along and work together." There is true value for a human being to be able to feel good about being part of a family or part of a business or part of a team. Something that just reminded me of.

0:20:53.7 Bill Scherkenbach: Yeah. Where I'm coming from is that everyone needs to balance that pride that you take as an individual and as you take as a member of a team or a family. That the independence is not, the interdependence is not the preferred state. Everyone, even people who are celebrating team need some time out to be alone, to do whatever they need to do to hone their skills, improve their knowledge, get excited about things that they also do as individuals. So it's a balance that I'm pushing for.

0:21:51.4 Andrew Stotz: Okay, got it.

0:21:53.3 Bill Scherkenbach: Okay. So with that as a framework, I think there are a couple of mistakes, well, there are many mistakes that leaders make, but the two big ones are, is don't think that what works for you must work for everyone. Okay. And don't even think that the sequence that works for you has got to work for everyone. Change is not a predictable hierarchy. And I'll explain that further. Let's see here. Yeah, I can do it on this next one here. I've got the matrix again, and of physical, logical, emotional, and physical, logical and emotional. And if a physical person is talking to another physical person, they're communicating on a similar frequency. And so a physical person is going to say, "Okay, this is the policy." The mother will say, "Because I said so." However, that physical person is communicating, the physical person receiving that communication is going to say, "Aye, aye, roger that, consider it done."

0:23:43.6 Andrew Stotz: Loud and clear.

0:23:45.3 Bill Scherkenbach: Okay. If a physical person is telling a logical person, using those same things, these are the policy, you could be a dean at a college and you're telling your professors, "This is what we're going to do," a logical person would say, "They're ignorant suit."

0:24:11.3 Andrew Stotz: Suit, what do you mean when you say suit? You mean an ignorant executive? What does it mean suit?

0:24:16.4 Bill Scherkenbach: Yeah, executive. Over here, they're called suits.

0:24:19.5 Andrew Stotz: Okay.

0:24:22.3 Bill Scherkenbach: So, no, but I'd be interested, you're logical, what would a logical person respond to a physical person who said, "Do this"?

0:24:34.5 Andrew Stotz: Yeah, I think without any logical backing, it's rejection maybe is what I would say is that ignorant, this guy doesn't know what he's talking about, he thinks just do it.

0:24:51.0 Bill Scherkenbach: Yeah. Yep, yep, yep. Okay. So, and again, if that same physical leader is saying, "Well, get this done," to an emotional person, that person might say, "You Neanderthal, you don't, you don't feel what the value system is." Okay. So, I'm trying to come up with sayings or whatever that these particular people would be saying. So if the logical person tells the physical person, "We've got to do this," it could be, well, the physical person is going to say, "That's too academic, spray some paint on it so I can see it." So, and that's the diss. Logical person talking to another logical person, "Yep, I got it, I understand it, it'll be done." A logical person talking to the emotional person, "You're heartless," or, "Quit mansplaining," as they say over here. So, and again, an emotional person trying to talk to a physical person to get stuff done, the physical person's going to say, "There's no crying in baseball." And so, and the logical person will say, "That's too touchy feely," and the emotional person reacting to the emotional signal, "Oh, they really like me." So, I'm trying to use movie quotes there to express the feelings and the understanding and the, what to really get done.

0:27:04.4 Andrew Stotz: So, people really come from different places, and if we don't take that into consideration, we may, it's one of the things I teach, Bill, when I teach a course on presenting, and I say, "Are you more of a logical person or are you more of an emotional?" And half the audience will say logical, half the audience will say emotional, let's say. And I said, "If I look at your presentations that you create, they're going to be based around what you are, logical or emotional. The problem with that is that you're only going to connect with half the audience. So, you need to build the logical and emotional aspect into your presentation to capture the whole audience."

0:27:50.8 Bill Scherkenbach: Well, I would argue that you're missing a third of it because you didn't check for the physical folks. I mean, in the story I tell about what we were doing at Ford, our vice president of supply purchasing was listening to Dr. Deming and said, "Well, we need longer term contracts." And so he had his people talk to the buyers down through the ranks and we need longer term contracts. And at Ford, a longer term contract was a contract that was more than one year. And so, yep, there were classes. It's important to get it done. Everyone's enthused. We look at it six months later, no change. A year later, no change. And so we looked at, because some people react to physical stimuli. And so we looked at the policy. And in order to get a long term contract, then you had to go through three levels of supervisory approval. No person in their right mind is going to go through that hassle. So we changed one word in the policy and it changed overnight. So now if you need a contract that's less than a year, you need to go through three levels of supervisory approval.

0:29:48.5 Bill Scherkenbach: And the long term contracts were magically appearing. So there are physical people. That is not a pejorative. I know that the educators are saying, "Well, the logical and emotional, but physical is a very viable way of getting stuff done." That should not be a pejorative.

0:30:14.1 Andrew Stotz: So I think now when I'm looking at my teaching in presentation, when I think about physical and presentation, there's people that really like props. They like having physical things to bring up on the stage. They like people, "Hey, stand up and raise your hands," or "Turn and talk to the person next to you," or something like that. So maybe that's what I need to do is bring that physical into my thinking and teaching.

0:30:44.0 Bill Scherkenbach: Yeah, I would recommend that. Find a way. There are many dimensions of physical. But you've got my second book. There are a bunch of ideas.

0:30:58.9 Andrew Stotz: Right here.

0:30:59.8 Bill Scherkenbach: Okay. Yep, yep, yep. Let's see here. Now we're going to go that transformation is not hierarchical. And this is hugely, hugely important. Again, if it works for you, don't make the mistake that it's going to work for everyone. And one of the sequences is everyone knows form follows function, form follows function. Physical form follows logical function. And in the automobile industry, if an automobile is to be fuel efficient, that's the function. It's got to have a jelly bean form. It's got to be aerodynamic. If the function of the vehicle is to carry passengers in comfort, the form has got to be a shoebox. Okay. And so that certainly form follows function. A screwdriver, whether it's the tool or the drink, the form follows function. If the function is to, no matter what the screw head is, you need to be able to screw it in or unscrew it, the form of it, you're going to give that head some leverage to be able to turn it.

0:32:36.9 Bill Scherkenbach: And if the function is to relax, you need to have a good vodka in the screwdriver, in the drink anyway. So if we look at how animals have evolved, a bird's beak is a prime example of over the years of whatever you want and whatever you want to say happened, the beaks went from blunt to very peaked so that they could get into a particular flower and be able to feed themselves. Dr. Deming used the example of what business are you in and the carburetor people went out of business because they only thought in terms of form. But if the function of the carburetor was, as Dr. Deming said, provide a stoichiometric mixture of air and fuel to the combustion chamber, then you might expand the number of forms that could be useful. So a number of examples of form following function, but function also follows form. The logical follows physical. And we're looking at it in the US government today. If your headcount is cut in half, you can't keep doing the same functions you were doing.

0:34:43.4 Bill Scherkenbach: You've got to figure out what your function is. So your function is going to follow form. Logical is going to follow the physical because you don't have the resources. In other times, when I was in Taiwan, I used the example of, if the price of petrol gets to 50 new Taiwanese dollars, the function of the automobile is to sit in the parking space because gas is too expensive to go anywhere. And again, the function of, I mean, if the function is security on the internet, one of the forms is the CAPTCHA. You have to identify, click the picture of all of the cars in this picture to prove you're a human. Next week, I'm going back up to Michigan to be with some of the grandchildren, but my daughter has toddlers, twins, that are 19 months old now. And whenever she is lying on the ground or on the floor, the twins sit on her. And I keep thinking of these large language models who are, that are in the AI approach to, she could be classified as a chair because her function is something for babies to sit on.

0:36:43.3 Bill Scherkenbach: And so it even applies in the AI generation. Okay, so now we come to seeing is believing. Physical leads the emotional. In Christianity, the doubting Thomas must see for himself. Some people don't really appreciate, it's not necessarily believing, but the emotional impact of going to our Grand Canyon or seeing something that is so indescribably beautiful and vast is, you have to see it to believe it or appreciate it, actually. The use of before and after pictures, if unless I see the before picture, I don't believe you did lose 150 pounds or whatever the before and after is, seeing is believing. Other, who is it? Thomas Kuhn in The Essential Tension wrote of Foucault. There's something called Foucault's Pendulum. It's a weight on maybe a 20 meter wire that back in the 1850s, he really was able to unequivocally get people behind the Copernican view that the earth really is rotating because that was the only explanation that this big, huge pendulum and the figure it was tracing in the sand, he had a spike at the end of it. Absolutely, okay, I believe the earth is spinning before the space shuttle.

0:39:07.4 Bill Scherkenbach: So, and yet, okay, seeing is believing, believing is seeing. Emotional leads the physical. Many times our beliefs cause us to use or see or miss seeing something I've said or quoted a number of things. The greatest barrier to the advancement of knowledge has not been ignorance, but we think we already know it. And so we're not going to even consider another perspective. Our friendships, our like of someone or dislike of someone can blind us to other qualities. The placebo effect, conspiracy theories, they're all believing is seeing. You believe in UFOs or unidentified aerial phenomena now, you're going to see a whole bunch of them based on your belief. And then there's feeling should drive reason. Emotional drives logical. You use your gut or intuition to make decisions. I mean, impulse sales, what's on the cap in any grocery store. You're going to buy the sizzle, not the steak. At least that's what they're selling, the sizzle. Political battles often play on the heart. So rescuing someone, emotional drives logical. If you see on YouTube, but even before that in the newspapers. I don't know if anyone remembers newspapers, but yeah, they would show pictures of someone running into a burning building and try and rescue someone or a crashed car getting them out before it explodes.

0:41:30.3 Bill Scherkenbach: If you had to think about it, you wouldn't do it perhaps, but the spur of the moment, the feelings driving over reason. Choosing a career for fulfillment and not the money. A lot of people do that and that perfectly fine. None of these as I go through them are a pejorative. They're perfectly, everyone uses, well, all of these at various points in time in your life. And last but not least, reason should prevail over passion. That logical rules the emotional, make a decision on the facts. Don't cloud your decision with emotions. Some of the ending a toxic relationship or diet and exercise. You're using reason. I've got to stick to this even though I'm hungry and sore. I've got to do this. And hopefully investing. You're not going to go for the latest fad. And there hopefully is some reason to investment strategies.

0:43:04.7 Andrew Stotz: And when...

0:43:06.8 Bill Scherkenbach: Go ahead.

0:43:09.1 Andrew Stotz: Let's just take one just to make sure that we understand what you want us to take from this. So seeing is believing and believing is seeing. And I think in all of our lives, we have some cases where we don't believe something and then we see it and then we think, "Okay, I believe now." And there's other times where we have a vision of something and we believe that it can occur and we can make it happen. And eventually we get it, we get there. So seeing is believing happens sometimes and believing is seeing happens sometimes in our life. And then some people may be more prone to one or the other. So what is the message you want us to get is to recognize that in ourselves, we're going to see it. It's going to be one way sometimes and another way and other times. Or is it to say that we want to make sure that you're aware that other people may be coming from a different perspective, the exact opposite perspective?

0:44:04.5 Bill Scherkenbach: Yeah, it's the latter. This whole thing is really what management, how is management going about communicating. And if they think if what works for them is form follows function or feelings should drive reason, then they have to be aware that other people need to, might look at it the other way around and approach their communication. Again, and this goes to the voice of the customer and the voice of the process. Every one of us has an individual voice of the customer. And people, psychologists would say, "Well, that's internal motivation or motivation's internal." Many of them do. Having said that, it's management's job who manages the process to be able to, if someone is motivated by money, that's important to them, then management needs to talk on that frequency. If they want retirement points or time with their family or recognition in other ways, what will, and Deming mentioned it, what will, he gave a tip to someone who just wanted to help him with his luggage getting to the hotel room and gave him a tip and completely demoralized him. And so management's job is to know their people, they're the most important customers that management has if you're going to satisfy whatever customer base your organization is trying to meet. And so how to get stuff done, getting things done, this applies to all of it.

0:46:15.5 Andrew Stotz: Fantastic. All right, I'm going to stop sharing the screen if that's okay?

0:46:19.9 Bill Scherkenbach: Yeah.

0:46:20.6 Andrew Stotz: Okay, hold on. So an excellent run through of your thinking, and I know for listeners and readers out there, you've got both of your books, but one of them I've got in my hand, Deming's Road to Continual Improvement, and also the other one, which we have right here, which is The Deming Route to Quality and Productivity, both of these books you can find on Amazon, and you go into more detail in it, in particular in The Deming's Road to Continual Improvement. Is there anything you want to say either about where people can go to find more and learn more about it, and anything you want to say to wrap up this episode?

0:47:04.1 Bill Scherkenbach: Yeah, the first book, my second edition, is in e-book form on Kindle. You can get it through Amazon or Apple Books. And in Apple Books, that second edition has videos of Dr. Deming as well as audio. And a whole bunch of stuff that I put in my second book. And that's in e-book format, immediately available from Apple or Kindle.

0:47:37.0 Andrew Stotz: So let's wrap up this episode on getting things done. Maybe you can just now pull it all together. What do you want us to take away from this excellent discussion?

0:47:49.6 Bill Scherkenbach: As we began, if what works for you doesn't necessarily work for everyone else. And the larger your span of control, the larger your organization, you have to understand to be broadcasting on physical, logical, and emotional levels, as well as trying to help people balance their sense of individual and their sense of team and family.

0:48:22.5 Andrew Stotz: Great, great wrap up. And the one word I think about is empathy, and really taking the time to understand that different people think differently, they understand differently. And so if you really want to make a big change and get things done, you've got to make sure that you're appealing to those different aspects. So fantastic. 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. And also, you can find Bill's books on Amazon. And as he mentioned, on Apple, where there are videos in that latest book. You can get them on Kindle, on printed books. I have the printed books because I love taking notes. And so this is your host, Andrew...

0:49:12.0 Bill Scherkenbach: Yeah. But old people like that.

0:49:15.4 Andrew Stotz: Yes. We like that. So this is your host, Andrew Stotz, and I'm gonna leave you with one of my favorite quotes from Dr. Deming. And that is, that "people are entitled to joy in work."

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What is your data trying to tell you? In this episode, John Dues talks to Andrew Stotz about why most leaders misread data, overreact to single results, and miss the real story. Discover how Deming thinking exposes when change is truly happening and how to use a process behavior chart to listen to the real story. Plus, find out why nine years of ‘stable’ results may still demand transformation. Tune in and rethink data-driven leadership!

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 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. The topic for today is understanding variation is the key to data analysis. John, take it away.

0:00:27.8 John Dues: Andrew, it's good to be back. Yeah. So, we've just started the school year in Ohio, so I thought doing a session on goal setting would be a good place to kick off the year. And I was thinking a lot of leaders, school leaders and leaders in general, are setting goals around this time period. And I was really thinking about having this Deming lens. I was thinking, how did I set goals before I sort of started understanding this approach? And it's, you know, this is one of those things where if you really stop and think about it, goal setting is a lot harder than it seems at first glance. Things like, how do you set a reasonable goal? And then once you've gotten to that place, how do you know if things are improving? How do you know if things are getting worse? And I was thinking how powerful this understanding variation method is for folks that may be struggling with those questions.

0:01:32.9 Andrew Stotz: Yeah. In fact, that's a great question for the listener and the viewer. Like, how do you set goals? How did you set goals in the past? How have you improved that? And I was thinking when you were speaking, I didn't set goals. I gave proclamations. You know, 20% of I want to see this and that. And they were just stretch targets without any means or methods. So yeah, interesting.

0:01:55.2 John Dues: Yeah. How do you set the target? Was it arbitrary? Is it based on some standard that you heard somewhere? A lot of times you have no idea sort of what's behind that target or you've sort of associated it to something that's familiar. Like in my case, we often sort of set goals that sort of mimic the grade scale. So, you know, 80% is a common goal for something like test scores, you know.

0:02:23.7 Andrew Stotz: But they don't even call them goals anymore. They call them, let me remember, I think it's called KPIs.

0:02:30.0 John Dues: KPIs, targets, you know, lots of different things for sure. And I think what I've seen is that a lot of the reason that goal setting is so hard is because you, well, one, you misinterpret your data in the first place. And a lot of that misinterpretation, at least in the education sector, is because leaders don't have the knowledge. They don't know about natural variation. They're typically making comparisons between some current performance level, some previous value. But those two things, those two data points don't show you, don't convey the behavior of that data across time. So, what we do and what I did before I sort of discovered this method is you overreact to a single data point. Probably less frequently, you underreact to the data because you don't have this understanding of, you know, how much is the data moving up and down sort of naturally almost no matter what you're doing. Now, that's not always the case, but that's the case that I've found in a lot of situations. And so until you start to take that into account, those natural ups and downs, then you just misinterpret the data over and over again, usually by overreacting is what I've seen.

0:03:54.9 Andrew Stotz: Yeah.

0:03:56.0 John Dues: So there's, you know, I think as a starting point, people in the Deming community will be familiar with, a lot of people. But others listening to this probably have never heard of this idea of dividing variation into, I've heard it described as like two flavors. There's the routine variation, what I call natural variation, things vary naturally no matter what you're doing. And then there's exceptional variation where things are so different that there is reason to pay attention to this. And what I found through studying this is, the key is knowing how to tell the difference between those two types of variation. And don't do that, lots of confusion, lots of wasted effort. And so that's really where the power of this methodology comes into play. And for anybody that's studied this, you sort of realize that you have to have a tool to make that differentiation. It's not arbitrary. And so that's where what I call the process behavior chart, some people call the control chart, where that comes into play because that tool allows us to tell what type of variation is present. And it also allows us to tell if the system is predictable or unpredictable. And once we have that understanding, then we can chart an improvement sort of roadmap that makes sense.

0:05:21.8 Andrew Stotz: Yeah. In fact, I've applied two of the things, you know, one of the things to my pass rates and admission rates, I applied the process chart, the control chart, based upon your recommendation a long time ago. And it did help me to kind of think if, you know, in my case, I wanted to break out of that standard outcome that I was getting. And so I realized, something has to change substantially in the system in order to get a different result than this variation that I was getting. That was the first thing. And then the second one, a couple of nights ago, I was giving a lecture and I was using your work that you and I have talked about, as well as Mike Rother's stuff on goal setting and having the target. And then there's that obstacle. And what I realized when I gave a little talk on it and I used the diagram and I showed the obstacle, it became kind of apparent to everybody like, oh, yeah, there's an obstacle there that we don't know how to solve.

0:06:27.6 John Dues: Yeah.

0:06:28.3 Andrew Stotz: And that's where PDSA came in. And we started talking about that, as you have taught previously. So, yeah, I'm excited to hear what you have to say today.

0:06:38.2 John Dues: Yeah. And the Mike Rother model, I mean, he does have this target that's this long term target that's pretty hard to hit. And you don't really know what you're going to do. But the difference there then in the situation I'm describing is that that in Mike's model, that target is knowingly outside of the current sort of capability of the system. And they're coming together as a team and saying, how do we get to that target six months from now or a year from now? And we're working towards that rather than someone has just arbitrarily set some target, without a realization that the system isn't capable of hitting that currently. Those are two completely different scenarios. Yeah. So, I think I'll share my screen. Well, actually, before I do that, I would just say, too, because I know sometimes when I introduce these things, a lot of times people get scared away because they think the math is hard. And what I would say there is that there's the creation of a process behavior chart probably takes about fourth grade level math skills. You really only need to do addition, subtraction, multiplication, and division.

0:07:49.3 John Dues: That's it. But the thinking, I think, actually can be taught all the way down to the kindergarten level. And I've actually seen kindergartners explain the data on a process behavior chart. So, if anybody gets scared away at this part, the math is simple and the thinking is also pretty simple and powerful once you sort of have the basics. So, I'll go ahead and share my screen so the folks that are watching have a visual to follow along on. And for those that don't, I'll do my best to describe it. When we're talking about a process behavior chart, and this one's sort of an annotated version so that things are clear. But basically a process behavior chart is just a time sequence chart. It has upper and lower natural process limits, and we plot data for some measure that we're interested in. And the chart typically has a central line so that we can detect a trend of those plotted values toward perhaps either limit. So, this particular chart, the data is the percent of students who scored proficient or higher on the Ohio third grade reading state tests from spring 2004 through 2015.

0:09:06.8 John Dues: So, I've labeled sort of some of those key parts of the chart. So, just kind of call those out. Again, the red lines are the lower and upper natural process limits, sort of bound where you'd expect the data to be in a stable system.

0:09:21.1 Andrew Stotz: And those are 1, 2, 3 standard deviations or what?

0:09:28.1 John Dues: Well, this particular chart, it's what I call a process behavior chart. So it's actually, it's not standard deviation. It's based on a measure of dispersion called the moving range. And then there's a formula that smarter people than me figured out sort of how to use that moving range to set the red lines. But the important thing to know about the limits is that they're set empirically. And that just means that they're based on the data. And so they are where they are, not where I want them to be necessarily. I don't get to choose where they are, how wide they are, where they're placed numerically is based on the data itself. And then that green center line for this particular chart is the average of all the blue dots. And then the blue dots is each year of, again, testing data.

0:10:19.4 Andrew Stotz: 2004 to 2015 as the x-axis, yep.

0:10:27.0 John Dues: Yeah. So, you have a decade and a half or so, or sorry, a decade plus of data here. So, a good amount of data. So, you can kind of see how things are performing over time on this third grade reading test. And so the purpose of the chart, like we talked about, is to separate those two flavors of variation, the routine and the exceptional. And this chart is a really great example of just natural or routine variation. So, I'm looking for patterns in the data, like a single data point that would be outside the end of those red process limits. And you don't see that. The results for these years instead are just bouncing around an average of about 78.5%. Now there's some years where it's a little higher than that and some years where it's a little lower. But the point is none of those increases and decreases are meaningful. There's only that natural variation present. But the problem is, in the typical data analysis method, what I call the old way, the simple sort of limited comparison, is that a leader will rely on comparisons between the current figure and some previous value.

0:11:48.9 John Dues: And probably the most common and why I chose this data, at least in my world, is a leader will compare last year's test scores and this year's test scores. That's very, very common. But the problem is, again, that what I'm calling a limited comparison, the comparison between two years of data, it doesn't take natural variation into account. So, what happens is we try to ascribe meaning to those increases or decreases between data points when in reality there's often no difference to be found. And I have a really great example of this. Let me switch my screen here. So, there's a lot of information here, but it's pretty simple to understand. So, this is a snapshot from 2017/2018 state test results. And so this is a document that was published by our Department of Education here in Ohio back during those school years. And the thing is, it may be eight or so years old, but it's as relevant today as when it was published eight years ago. We're still making the same sort of mistakes. So, we're basically, when we look at the data in this chart, we're basically being led to believe that there's been this meaningful decline in performance in third grade ELA.

0:13:16.4 John Dues: That's what's signified by that red arrow in the first row of the table. So, you have the ELA data says that in '16/'17, 63.8% of our third graders were proficient. And in the following year, 61.2% were proficient. And there's this red down arrow to say, oh, things got worse this school year, at least when it was published. But then if you look at the blue box, the text for those that have video, in the text it says we're not supposed to worry because, "third grade saw decreases this year, but has maintained higher proficiency than two years ago." So. Then you start to think, well, which is it? Should I be worried about my third grade ELA state test scores because of the most recent decrease, you know, as of when this was published? Or should I not worry because the scores are better than they were two years prior to that?

0:14:21.7 Andrew Stotz: And that depends what side of the argument you're on.

0:14:24.4 John Dues: Depends what side of the argument you're on. What story do you want to tell with this data, right?

0:14:30.3 Andrew Stotz: So, it's bad enough to be potentially misled by this probably common variation, but then to have both sides of an argument be misled at the same time.

0:14:41.0 John Dues: Right, yeah. Ultimately it seems like what they're trying to do is show improvement because you have this big headline up here that says, Ohio students continue to show improved achievement in academic content area.

0:14:55.2 Andrew Stotz: Yay!

0:14:58.5 John Dues: But there's a way to actually answer these questions definitively using this method, right? And so what I did was I took the data from the three years of the state testing for third grade ELA from this state education department publication, and I just plotted it on a process behavior chart. And then I continued plotting it for the more recent data that's happened since this, because three data points isn't a lot, so I kept plotting it. And so now we have, going all the way back to the first year of data in this state testing document, we have 2015/2016 data, and of course now we have data all the way up through the end of the last school year, 2024/2025. So, we have nine data points. So I plotted it, right? It looks like this. So, here's those same data as the first three data points, spring 2016, spring 2017, spring 2018.

0:15:58.3 John Dues: That's from the table from the previous slide. And then I've continued plotting things for, you know, spring of 2018, '19, '21, '22, '23, '24, and '25. So, now we have nine years of data. And what we can see is, just like what I would have predicted, even if I had only had those three years to work with that were from the state testing document and not the more recent data, but there's no evidence of improvement. It's definitive. And so you see these nine data points. They're just simply bouncing around this average of 61%. That's what the green line shows. It's almost perfectly balanced, in fact. So, three of the points are actually below the average. One point is almost right on the line, the average line. And then there's five points above. And if you follow it from point to point, it increases, then decreases, then increases, then decreases, then increases very slightly for a couple or three or four years in a row. Right? But there's no signals or patterns in this data to indicate any changes of significance. Right? So claims like, you know, yeah, we've declined in this most recent year from that testing document or, oh, we shouldn't worry too much because it's better than two years ago. All of that is nonsense.

0:17:24.6 Andrew Stotz: So, the title should have been nine years of no improvement.

0:17:29.7 John Dues: Nine years of no improvement. Nine years of stable data. And the thing is, a lot of data looks just like the state testing data over time. Not only in education, but in other things. And how I've heard this described by people that use this methodology is that, claims of improvement are often nothing more than writing fiction. And I think that's a very good description for what we see here. And the thing is, is like, I'm not trying to throw the person that wrote that document under the bus. All I'm saying is that there's a better way to be looking at data like this, a way that makes more sense.

0:18:24.9 Andrew Stotz: It made me think of the Mark Twain quote, rumors of my demise are greatly exaggerated.

0:18:39.9 John Dues: Give me one second here. My screen switched on me. There we go. Okay. So, when I think about this data, there's no real decline in performance, there's no real increase in performance. It's just stable performance. I think the key for leaders, systems leaders especially, is that this system, the way we would describe it is it's producing predictable results, and it's performing as consistently as it is capable. And so it's a waste of time to explain the natural variation in a stable system. Because what people would say is that there's no simple single root cause for this noise.

0:19:24.5 Andrew Stotz: And I think it's even better way of saying it. It's not a waste of time, it's a waste of your career.

0:19:32.6 John Dues: That'd be a very apt way of describing this.

0:19:36.0 Andrew Stotz: It kind of goes back to the point that Dr. Deming said, which was that, a manager could spend his life putting out fires and never improve the system. And every little thing above and below was a little, little mini emergency or a response was made every year because of the under or over, you'd just spend, you know, it would just be whack-a-mole.

0:20:01.9 John Dues: Yeah. But I think the thing for people to understand is I'm saying this system is performing as capable as it is, or as the performances is what this particular system is capable of. But that doesn't mean just because it's stable and predictable, like this one is, you know, it's up above 61% one year, and then it's down below it a little bit or right on the line. That doesn't mean that stable means acceptable. It doesn't mean stable is satisfactory.

0:20:37.1 Andrew Stotz: I'm thinking that this is neutral, you know, it's an observation rather than a judgment.

0:20:42.5 John Dues: Yeah. It's just what is. It's the process is producing what you would expect it to produce because it's stable and predictable.

0:20:49.8 Andrew Stotz: I want to just mention that my mind's wandering because I know that you help people with these types of charts. And when I was working with a hospital here in Thailand, they had a great room that they set up that was all blacked out and it was full of these great computer screens and guys in their technicians, like 10 of them in this room. But the room was dead silent, blacked out 100%. And they were radiologists and all the x-rays, MRIs, and everything that were being done on the machines outside were coming into them and then they were making their judgments on it. And then they would submit that and then the doctors would very quickly get a read on that. And I was just thinking, imagine being a person that just all day long looking at these types of charts. Like just any system can be described by the... And then what's your judgment on this? Yep, common cause. That's it.

0:21:50.9 John Dues: Yeah. And I think it obviously doesn't mean that there isn't work to be done. Like in this case, even though it's stable and predictable, so if I was putting a bet down on what the results are for spring 2026, at the end of this school year, I'd put my money somewhere between, let's call it 55% and 65%. And I'd be right almost every single time, I think, as long as nothing changes. But that doesn't mean, like I said, it doesn't mean there's not work to be done because when you look at this, this means that about 60% of third graders are proficient in any given school year on this Ohio third grade state test, which means that two in five students are not reading proficiently. So, the improvement roadmap, there has to be some fundamental changes to how we do third grade reading instruction, curriculum, assessment. Something fundamental has to change if we want to get a different set of results.

0:22:54.8 Andrew Stotz: And one of the things that I've kind of come to believe in my life, right or wrong, I'm not exactly sure, but it's like having traveled to so many countries and seen so many places, I kind of feel like people get what they demand. Like the population of a country, if they don't demand certain behavior from politicians, they don't get it. And so on the one hand, this is a neutral thing, but I think you can also make a judgment that the population of Ohio is not in a continuous uproar to see this change.

0:23:39.0 John Dues: Yeah. Well, I would say very few people even have this picture in their head, whether it's educators or the general public, because every time we get one of these state testing reports, it usually has only two or three years of data. So no one even remembers what happened.

0:24:01.9 Andrew Stotz: I agree that they don't have clarity, real good clarity like you're bringing us here. They have an understanding of what's happening generally. And this is what, so the reason why I'm mentioning that is because part of the benefit of trying to understand the state of a system is to understand that the level of change or work or new thinking that has to go into saying, modifying, let's just say that the population was in an uproar and they decided that they wanted to get to 90% proficiency from 60%. The level of rethinking is such a huge thing. And I think what this chart tells me is like, that's kind of what's set in stone. And in order to move beyond what's set in stone, there is a whole lot of work and a whole lot of new thinking that has to go into that. And it must be continuous. And that's part of the constancy of purpose. And you do it for three years and then a new guy comes in and he changes it. And then next thing you know, it's not sustained.

0:25:17.4 John Dues: Yeah. I mean, yes, you'd have to do something significant and then you'd have to stick with it. That constancy of purpose phrase is right on because you'd have to, first you'd have to develop the right plan and then you'd want to test it. But then once you started seeing some evidence of improvement, you'd have to stick with that plan for a decade or more to see those types of results. And that's really hard when the political will shifts, the focus shifts, you have a pandemic, whatever the thing is, you have less money for school, whatever that thing is or any combination of that, it makes it very challenging to sustain.

0:25:57.8 Andrew Stotz: And the reason why I'm raising this point is because it just kind of really hits me that take away Ohio, take away education, take away all of those things and just produce a control chart on any process in any business, in any school, and you're gonna see the current state.

0:26:17.3 John Dues: Yep, absolutely. Yeah. You can use this in any setting, any data that occurs over time, you could use this methodology.

0:26:24.8 Andrew Stotz: And one of the questions I have in my mind as I was thinking is like, why change it? The level of effort required to sustainably change that is just incredible. And you could argue that, okay, there's companies that build a competitive advantage by saying, that's not the status quo that we want to exist in and therefore we're gonna create a whole new business built around something different that produces a result that's considerably better than that. But it happens for sure, but we're much more likely in our lives if we were to see that to just let it be.

0:27:03.6 John Dues: Yeah. Yeah. And when you get it down, when you sort of zero in and get down to the sort of local level, there are schools that sort of performed in this sort of general fashion that made changes at the building level and then got significantly different results. So, it becomes a little easier. It's not easy, but it becomes easier when you're talking about a single school building and coordinating the efforts there versus trying to do that across all the school buildings.

0:27:32.9 Andrew Stotz: And I think this is what, when Dr. Deming talks about leadership, this is what he's talking about.

0:27:39.1 John Dues: Yep. Yep. And I think, you know, the good thing is here, if this is resonating with you, whether you're a school leader or the leader of some other type of organization, you know, you've probably struggled to interpret your most important data. So, before I discovered this method, I didn't really have a method per se. I'd put numbers in a table and then try to look at them and try to sort of ascertain what was happening on. And so I think it's, you know, if you've never heard of this, it's totally fine. Most of us were never taught how to understand variation in our data. But I think there's two sort of big ideas I would take from this as we've talked about this. The first is just taking natural variation into account. Just meaning plot your data over time, plot your dots, and look at how it's moving up and down over time. So, that's the first big idea, this idea of natural variation. Things are going to move up and down just naturally, no matter what's happening, even if nothing of significance has occurred.

0:28:47.6 John Dues: And then big idea two is that you can use this chart, this process behavior chart methodology to differentiate between those two types of variation that I talked about, the routine or natural variation, and then the exceptional variation. And then once you do that, you're gonna get some very powerful insights into what your data looks like, because people are gonna say, oh, I know why that happened. I know why that looks like that. Now that I see it like this, I have an understanding for why the patterns look like they do. And then you can start to turn that sort of type of analysis into better outcomes. And that's really the point of doing this is that you, you know when to react, when not to react, you are making sound decisions based on a logic, a logical model, a logical data model. And the best part is it's very simple. Like I said, a fourth grader can do the math required to create the chart. And I've seen kids as young as five or six interpreting the data in a chart. So, that means that we can all do it for sure. It's not actually that difficult.

0:30:00.6 Andrew Stotz: Yeah. And I was just thinking of Newton's law of inertia, meaning an object stays at rest until acted on by an outside force.

0:30:12.7 John Dues: Yeah.

0:30:13.8 Andrew Stotz: And I think what you're showing is the state of inertia.

0:30:18.5 John Dues: Yeah. Yeah. Yeah. The state of inertia. And I think it's just, you know, you don't know what you don't know. But once you see this and, I did some of the figuring this out on my own reading about it, listening to other people talk about it, but I talk to a lot of people and got a lot of guidance. So if this has piqued your interest, my suggestion is reach out to somebody that has done this before, at least at the start. Because there are a lot of, you know, while I am saying you can create a chart with fourth grade math and I've seen kindergartners analyze the charts, there is some learning, there is some technicality to it. And so I think if you have a coach, even better because you're gonna learn it so much faster and be able to sort of turn that learning into results so much faster.

0:31:07.0 Andrew Stotz: And maybe the starting point is trying to figure out of all the different measures that I've got in my business, in my school, in my life, what's one that I get regularly? And I like data that comes out more than annual because then it's just such a long process. So if I have daily data, weekly, monthly, you know, those types of data points, then from that, you know, and what's one thing in your life that would be a data point that you'd like to look at? And I would even argue the first step is just to start collecting it into, let's say, an Excel file and just collect that raw data. And you can make a chart of that raw data. And the benefit of the process, you know, control chart and the process chart is that what you're seeing is, you know, tools within that chart to help you interpret. But even if you just start by figuring out what data point you wanna look at, start collecting it, do a month or two of getting that data, and then you can start saying, okay, now I'm gonna apply these tools, nothing wrong with that.

0:32:21.2 John Dues: Yeah. And you wanna show it to people, like whether that's teachers or students, you wanna show them the data that you're collecting because they're gonna be a part of that improvement process, no matter what type of data that you're looking at, at least in schools, you're always gonna want the front line people to be a part of that process.

0:32:39.4 Andrew Stotz: And the way I did that in my area of research when I was an analyst and I had a research, was I wanted to see the data of the output of our research operation. How much did we produce? I didn't have a strong opinion as to whether we should produce more or less or whatever. I just wanted to understand them. And so I started plotting that data on a weekly basis, and I labeled it pretty well. And then I just put it up on the wall, and I didn't talk about it. And I put it up, and people looked at it, and I didn't go and explain it, and I didn't put control limits or anything like that. I just put the data up. And I remember a Thai lady that worked for me came to me, and she said, I figured you out. And I was like, what are you talking about? And she said, I was out to lunch with a friend of mine, and she asked me, how many reports do you publish a month? And she said, my employee said, I publish six reports in a month. And my friend said, what?

0:33:45.4 Andrew Stotz: And she said, how many do you do? She said, I only do two in a month. And she said, what are Andrew's targets for you? My God, to get six reports. And then my employee said to her, he doesn't have any target for me. And then that employee of mine came back to see me after that lunch, and she said, I get it. You just put it up on the wall, and it raised the awareness for all of us, and we all looked at it, and then it influenced the way we thought about our job without you telling me, get four or six or two. And so sometimes, and I did that exact same thing when I worked at Pepsi when I was in 1989 when I joined Pepsi in the factory in Buena Park in particular, where I would put up on the wall, here's everybody's error rates from last night. And I would post that, and then the employees would just look at it and go, that's wrong. Okay. Fine, great, tell me. Let's look at the data.

0:34:44.8 Andrew Stotz: And I kept all the underlying data that was manual in my hands in stacks, and then they would go, oh, okay, so I did get that wrong. Let me fix that. And then I fixed it and put it back up, but it didn't look much prettier after I fixed it. And then all of a sudden, people started looking at it, and then they started having new information they never had. And I hadn't studied with Dr. Deming by that time, so I didn't even understand anything to do with the chart, but just putting up the chart without any major commentary is fascinating.

0:35:12.9 John Dues: Yeah. It starts those conversations, starts getting people sort of more involved, more engaged with the work. Yeah, I think those are all really smart moves that we often don't do.

0:35:25.2 Andrew Stotz: And I think that was why my boss suggested I go to a Deming seminar, because he saw me starting to do that, and then he had heard about Deming and knew a little bit, and then he was like, yeah, this guy could be suited for that.

0:35:36.6 John Dues: Yeah. It sounds like it was fate or something like that.

0:35:41.6 Andrew Stotz: Yeah. Definitely. So, I'm going to wrap up just by saying that, for the listeners and the viewers out there, I think a big takeaway is figure out that one data point, just one. You don't need five, just one that comes out consistently, daily, weekly, monthly, you know, something that's relatively regular, and then start collecting that data. Write it down on a, you know, I do have times that I just write it down on a manual chart, in my notebook. Write it down there. You don't even need Excel. Just start collecting that data and thinking about the collection of the data, what time of the day you get it or what time of the week or what time of the month, and then start collecting it. Then the second stage is start to, you know, obviously, if you can go to an expert, someone like John or others, reach out to them, LinkedIn or other place, you know, and say, hey, I've got this data. Can you help me? And then they can easily do the calculations and then send you back the Excel file and say, here it is with all the calculations, which you did to me on one of mine, and that was great. And then get that help, and then start to move yourself slowly into the process because I think one of the things that I take away from it is that this really is the present, and it is an accurate representation of what the system is capable of.

0:37:10.2 John Dues: That's right. Yeah.

0:37:10.8 Andrew Stotz: And if you don't understand that, then you're just going to be beating your head against the wall. So, anything you would add?

0:37:18.9 John Dues: No, just beat your head against the wall and you make stuff up about what is happening. That's often what happens. Yeah.

0:37:27.0 Andrew Stotz: Then you become AI. You're hallucinating.

0:37:30.1 John Dues: Yes.

0:37:31.0 Andrew Stotz: Well, John, 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 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, and that is that people are entitled to joy in work.

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Discover how Andy Novins turns business challenges into big wins! Andy shares with host Andrew Stotz how he uses Deming strategies to outsmart competitors, watch for market shifts, and win loyal clients in one of the toughest industries around.

TRANSCRIPT

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 here with featured guest Andy Novins. Andy, are you ready to join and share your Deming journey?

Andy Novins: I sure am. Yep.

Andrew Stotz: We've done a lot of prep for this, had some good conversations, and I'm looking forward to it. Let me introduce you to the audience. Andy first got introduced to the teachings of Dr. Deming more than 30 years ago and has been hooked ever since. He attended Dr. Deming's four-day seminar in August of 1993, only four months before the passing of Dr. Deming on December 20th of 1993 at the age of 93. Andy was a co-owner of a women's athletic apparel company, which was eventually purchased by Warren Buffett's Berkshire Hathaway. For the past 23 years, he's been applying Dr. Deming's philosophy to his work in real estate, which traditionally has operated in what could be described as in opposition to the teachings of Dr. Deming. Andy, why don't you tell us a little bit about what you're doing right now and maybe a little bit about how you got into what you're doing now, and then later we're going to talk a little bit about your experience with Dr. Deming and all that. But just let us know, where are you at? What are you doing?

Andy Novins: Okay. Well, I am in Northern Virginia, just outside Washington, D.C., and after my partners and I sold the company that Andrew just referred to, I had to decide what I was going to do. And I had about six months to do that because part of the contract required me to help the purchaser, which originally was Russell Corporation, a big athletic, they made all the Major League Baseball uniforms and everything. We had to transfer my company's systems to their systems, and that was one of the worst six months of my career, watching everything we had done, which was really all Deming-based, being sort of dismantled and worked into another Fortune 500 company at the time. It was, somewhat, actually it was a few years later that Berkshire Hathaway bought it, and it was because Russell was not doing very well. It was a rescue-type purchase by Berkshire Hathaway, which sort of had some satisfaction in mind that their systems weren't all that good. So that's where I got into Deming, and I've taken a lot of what I learned from the apparel company into real estate, which, as Andrew just mentioned, is very volume-centric, volume-focused, and focusing on processes as opposed to systems.

Andrew Stotz: And in the real estate world, for those people that don't know, let's say real estate, what position are you in? For instance, my sister is a mortgage broker in Maine, and that's a different place within the whole sphere of it, but maybe you can explain exactly where you are in the value chain.

Andy Novins: Okay. We focus on residential real estate. What we call in real estate farm, okay? I send out 5,000 newsletters a month that show to eight different areas, really, but they're all within, believe it or not, two miles of my house. And those news, I've been doing that for over 20 years. I've never made a cold call. I will never call anybody and say, are you thinking of selling or anything like that. Yet, using this process, which is all really Deming-based, I've done about 10 times the volume of any other realtor in the 5,000 homes that I service. It's the process... I don't want to use process. The system we used is based on Michael Porter, his concept of competitive advantage. And it's a system that's focused on a value chain, things that we do that other people can't do. For example, there are close to 300 sales a year in my 5,000 home market. I see every one of them. And when you see a house that's on the market, you know a lot more than anybody else does by looking at pictures. If you've ever been to an open house and after seeing it on the internet, it's a lot different than what you saw in the pictures. No other agent can do that because most agents in my area focus on Northern Virginia, which would be about 20,000 transactions a year, not 300. So they can't even try to compete with me in my area. So that's the whole concept of it is doing things. As Michael Porter would say, you have a value proposition. That's my expertise in my local area.

Andrew Stotz: Porter talks about different strategies. One, he says, is the low-cost leader. Another is the differentiation. And the third one he talks about is focus and where you're focused on a niche in the market. And then I guess I always kind of think that really he's talking about two, because with focus, you're picking a niche, but then you're going to either be a low-cost leader or probably a differentiator in that focused area. But when you talk about Porter and what he's teaching, can you explain a little bit more for those people that don't know what he talked about?

Andy Novins: Sure. Yes. Basically, yes. I mean, I'll never forget. My partner and I were at a breakfast, realtor breakfast at one point, and there was an agent sitting across the table from us and he said, I just got this listing. And he said, but I had to go down to 1%. And he's, you know, for commission. And at that time, commissions were pretty much 3%. And he kind of looked at us and said, that's better than nothing, right? And that's the low-cost. Low-cost producers will never win. It'll always be somebody else. And Porter says, you can't be the best either. Okay. There's no such thing as the best realtor. There's always going to be somebody else. So the concept for real estate is picking a niche, that for me, it was farming. I'm a pretty good writer. So I write a newsletter, and people call me when they're ready to sell their house. And it's worked beautifully for... I started that in 2003. Okay. But there's people that focus on luxury, the luxury market or people that focus on first time buyers, or people that focus on... There's all kinds of different niches downsizing or upsizing. And so you can become an expert in anything. And that's how you differentiate yourself in real estate.

Andrew Stotz: And that concept of not competing to be best that Porter talks about is great because it also forces you to think. You're focused on the wrong thing if you're focusing on how to beat the competitor. And I always enjoyed the fact that Deming was so focused on the customer.

Andy Novins: Yes.

Andrew Stotz: And that, I think with Porter, I like that. But with Deming, I just really love the idea that he saw quality in the eyes of the customer. He saw innovation and continuous improvement in relation to the customer as primary over trying to benchmark off of some competitor.

Andy Novins: Exactly. And if I go back to my apparel business, the name of our company was Moving Comfort, and we just made women's apparel. Nobody else ever stuck to just that. We were the only company. Just, everybody broadened out to try to get more. So again, it's the same concept of a niche. Okay. But one of the policies, I guess, we've developed, it was a Deming related policy, which was fun, okay, was when we made a mistake, which we often did, whether we shipped somebody the wrong thing or we did other things, our objective was to make the, delight the customer, as he would say, make them happy we made the mistake. And that didn't matter what that cost to do that, sending them free stuff, doing whatever. And I think that's a Deming concept that we used in the apparel business aside from many, many others. Back to real estate, that's, I don't know anybody else in the Washington area that does what we do, because nobody's willing, that's the so-called trade-offs. Nobody's willing to say, I'm just going to focus on 5,000 houses.

Andrew Stotz: Yeah. It's scary.

Andy Novins: They can pick whatever they get.

Andrew Stotz: Yep. Yep. And maybe why don't we now go back to August of 1993. How did you find yourself in a four-day seminar? And I'm kind of jealous because what... My seminars I went to in '90 and '92 were two-day seminars.

Andy Novins: Really? Okay.

Andrew Stotz: And I had thought that he... I had thought by that time, maybe he was only doing two days, but then I learned that he was still doing four days. But what got you to that seminar? Where was it, and what got you there?

Andy Novins: Okay, I was going on vacation. Okay, this was in 1990. We were going to go to Cancun. And there's this, I guess they're still around, but there was a bookstore in DC on K Street called Reiter's. And it was all business and science. And I used to go there because pre-Amazon or anything like that. I think it was even pre-Borders. But I used to go there and spend an afternoon looking at books. And I found Out of the Crisis. And I brought it home and I said to my wife, by perusing through it, I didn't know anything about Deming at that point. But perusing through it, it just struck me as something I really wanted to read. And I went home and I said, I'm taking this book to Cancun, and I'm going to sit on the beach and read it. Well, I actually didn't read it till got home. But I got completely enthralled with it.

Andy Novins: And being in suburban DC, we're like eight miles from the White House. The Deming Study Group was very active in DC. Dr. Deming lived in DC. And there were just a lot of very well-known, famous speakers that would be part of our group, including Deming at one point, but I wasn't. But I think it was before I joined the group. So I read the book, joined the group, and after about three years, I had heard enough about the seminar that I wanted to go. And I went to that in Chicago. It was the first or second week of August of '93. And one of the things that I never really understood that Dr. Deming would say a lot was talking about being transformed, or the transformation that you get when you're studying his philosophies. And I always kind of said, well, that's not going to happen to me. It just was foreign to me. That third day of the seminar, I was transformed. I don't know how to describe it, but ever since then, I look at the world through his eyes and see things and think in systems and variability. And you get all that when you first get exposed to them, but you're not transformed. Somehow it all comes together. I couldn't describe it, I never thought it was, but that happened during that seminar.

Andrew Stotz: And what Dr. Deming talked about was the idea is that the person who's leading the organization has got to go through a transformation in order to truly implement this.

Andy Novins: Exactly.

Andrew Stotz: What was it like there? How many people were in the room? And what was your... You walked in knowing a bit. I walked in knowing nothing, basically. And it was just like, whoa. But I'm just curious, what were your first impressions? For those people that have never and never will have a chance to go in, give us a feeling about how it went.

Andy Novins: I don't know if I mentioned it was in Chicago.

Andrew Stotz: Yep.

Andy Novins: Okay. Which is a great city, and it was in the summer, which is often hot. But I was amazed because at that point, and I may be wrong, but I think it cost $1,000 to go. Okay. And he had 500, and I'm pretty sure that's about what it cost. And do you remember what yours was?

Andrew Stotz: Mine was about 500 people, for sure. I didn't pay for it, so Pepsi paid for it but I would think it was even more than that. But who knows? But maybe mine was a two-day, so it was less, I don't know.

Andy Novins: But it was 500 people. That's what I remember, because being a numbers person, I translate that to 500,000 for the four days. And so that kind of stuck in my mind. And he did a lot of them. And one of the things, too, that he did a lot of them, and I think, geez, he's making a lot of money doing this. He lived in a little tiny house on a street in Washington, and he worked in the basement. One of the things that happened to me after that, again, with the Deming Study Group, was his son-in-law, Bill Ratcliff, okay? Somewhere shortly after the four-day seminar, he called me and he said, I'm getting a lot of feedback, you guys at Moving Comfort are doing a lot of using Deming's theories and everything. Could I come and visit the company and you show me what you're doing? And I said, sure. I mean, any more exposure to any of the people interested in Deming at that point was fascinating to me. And so he came and he spent a good part of the day at the company. And then I'm not even sure if at the time I knew that he was Deming's son-in-law, but then we went out, his wife was Linda Deming Ratcliff, okay? And so he and Linda and my wife went out to dinner a couple of times after that. And it was fascinating to hear both of their stories about Dr. Deming. What I remember is Bill would say, we used to go over there on Sunday mornings and read the newspaper, and Dr. Deming would be down in the basement working. And he'd come up periodically and say, how are you doing, Bill? In his voice, and then go back down and work. And he constantly was focused on his work. And so those relationships just tied me into Deming forever, especially after the four-day seminar.

Andrew Stotz: Yeah. I think it was a discussion with Bill Scherkenbach when I asked him about what it was like in the basement. And Bill was telling me, I don't think we got this recorded, but Bill was telling me that somebody asked him why you have all of this stuff around you and in your office. And he said, I'm desperate. I'm absolutely desperate. And with the idea that he was on such a mission. And I just feel like when I went to the seminar, the first one was in Washington, and then the second one was in Los Angeles. I didn't know how significant he would be in my life at the time, and I didn't understand the transformation I was going through. But what I did later really come to understand is that he inspired me to have a mission. And like, why am I doing what I'm doing? It's one thing for all of us to be busy, working really hard, doing all kinds of stuff and bringing value to our clients. But for what? What's the mission? And was a huge, that's a much bigger takeaway for me now than it was then. But what I witnessed was this man who is very old, just conveying an incredible message. So, yeah.

Andy Novins: Yeah, it was, and he was... Well, DemingNEXT, if anybody is involved in that and can see a lot of the videos with Dr. Deming, especially during the years that I was interested in watching and everything else, he just had a unique way of presentation, but he did have a sense of humor. And it was a dry sense of humor, I guess, maybe going with his dry martinis.

Andrew Stotz: Yeah, tell us that story about Deming Martini.

Andy Novins: Yes. As one of the sessions at the four-day seminar ended, apparently this Deming Martini is famous or was pretty well-known at that point. So he described how he loved martinis and he acted out the process of making one. And again, he's 93 and just you could tell this is just part of his life he loved. And he, so he kept his vermouth in the freezer, okay? And it was, and so he demonstrated how he poured the gin, and then he acted out like he went into the refrigerator freezer and took out the vermouth. And then he would not open the bottle, but he would wave the bottle around the glass and then he'd put it back in the freezer, and he'd say, this is the best martini you can make. And he had a lot of stories that added a lot of spice to it.

Andrew Stotz: So when you left that seminar, what changed in the way that you were operating? And obviously you had already had awareness of the teachings, but did that inspire you to go to a different level or what did it cause?

Andy Novins: Yes, and I'm not sure at what point the so-called transformation took place in the four-day seminar. You knew that that's how you were going to think for the rest of your life. That wasn't, you were going to think in systems and variation and predicting from the system and all those things. But so I can't really remember what years we did it, but as an apparel, our company basically, we designed, manufactured through separate factories and sold women's athletic apparel to specially sporting goods stores around the country. Nordstrom's was a client, one of the bigger ones, L.L. Bean and those kinds of things. And so one of the things we implemented that was really a Deming concept was improving our shipping, the picking process, which is filling an order. And we automated that with a carousel, which brought the product right to the picker, the warehouse person, and barcodes and scanned the order, and it brought the thing right to them. It incredibly reduced our error rate in shipping. And at the time, this would have been like 19, this was '91 or somewhere early on that. And at the time, we were way ahead of other companies.

Andy Novins: Even Nike, they would get an order, they'd walk around and pick their orders. And so that was a Deming-inspired process or way of improving our system. With apparel and you're designing 100 different styles or sizes and styles and everything else, the design development group, the functional silos that, I don't know if Dr. Deming used that term, but the system that every department has to hand off is working for the next department. In apparel, it's really complicated. And that was the biggest Deming issue we would focus on. It never went away. You really had to always, because our designers would put bells and whistles into a garment. We were very high-end and it either wasn't practical price-wise or it wasn't practical in the factory or we didn't have a good source for where we were going to put it, where, what factory we were going to put it in, that type of thing. So that's where really the Caribbean Basin Trade Initiative at that point came out. That's where we had factory, up until about 1990, all our production was in the United States.

Andy Novins: After that, it got too expensive, labor, sewing labor in the United States. That's when most companies started going offshore. We did a lot in the Caribbean. And when you're manufacturing apparel, back at the beginning, you would ship, we would buy the fabric and we would ship it to the Caribbean factory that we were using and they would sew it, and put it together. And then trade agreements came out where the factories could buy the material. And essentially, instead of they being just a sewer, they would be making a finished product for us. That had huge implications on simplifying the system and transferring responsibility to the people that really needed it. But now maybe I'm getting too much into apparel, but...they haven't been doing it for 23 years.

Andrew Stotz: So let's talk about what you're doing about your application of Dr. Deming's teaching in real estate. And I know you've also brought something along to share and go through, but maybe you can just talk a little bit about how you're applying that in the real estate business.

Andy Novins: Yeah, and that's the control chart concept. And all real estate statistics are lagging indicators, whether we're talking median prices or active listings, or I guess active listings are the only one that's not a lagging indicator, but almost virtually every month's supply of inventory, all those things are lagging indicators. So they tell us as realtors what happened. And in my market here, it bottomed out after the 2008 recession in March of 2009. And until this year, it's gone straight up for 16 years. So most realtors, virtually no realtors... Well, most realtors haven't experienced a shift in the market, which is what we're going through now, where the market goes from being a buyer's or seller's market for all those years. And I'm talking about a strong seller's market. A seller's market is defined by the National Association of Realtors as any market where the months' supply is less than six months. And our supply was hovering around two to three weeks. And it's now almost two months, but the market has shifted and it's incredible how many people don't realize that.

Andy Novins: Everybody knows there's something going on, but the media takes care of that. But all the statistics we get are, again, median prices are still very high, okay? But using control charts, you can plot, for example, a couple of months of live inventory. That started going down in April, okay? I mean, that went out of the control limits in April, okay? That's telling us that something's happened. It tells us directly that the market shifted, okay? The other thing that I watch is price drops, okay? How many price drops? That went out of the control limits in, I think, June, they started out, okay? And we're looking at that weekly, and that's showing us every week, the number of price, it's so far out of the control limit right now, it's amazing. There's no... You can't... You can look at price drops, and you can look at months' supply on a graph, okay? But it doesn't tell you that the system's now out of control. But control charts do tell you that, so...

Andrew Stotz: Should we look at your control chart? Maybe that's a good time to do that.

Andy Novins: Sure, yeah. And before we do that, one of the things in real estate is seasonality, okay? And that hides a lot of problems because prices go up in the spring, down in the summer, down in the fall, up a little bit, then down. But let me bring those up and talk about them. Okay, you can see this?

Andrew Stotz: Yep, and for the listeners out there, I'll just describe. You've got a line chart up here, and a line that's going up and down, and then recently is going up a lot. And it starts in July of 2023, and it goes to June of 2025. And so why don't you take that away and help us understand what you've got here?

Andy Novins: Okay. So the control limits, the upper and lower control limit are the red lines on this. And going back to July of '23, everything was stable. And if we went back long before that, it would also have been stable.

Andrew Stotz: Yeah, and by the way, just to make it clear, it's monthly supply, or month supply, sorry, of housing.

Andy Novins: I'm sorry.

Andrew Stotz: Can you explain what it means, month supply?

Andy Novins: Yeah, month supply is the number of active listings at the end of a month divided by the average monthly sales for 12 months, the 12-month average. So it's basically saying if you've got 10 active listings and the average is two a month, that you've got a five-month supply of listings. Okay?

Andrew Stotz: And the average on this is one month supply.

Andy Novins: The average, right. And you can see where during the pandemic, we've had times where it went down to just a number of weeks, which is pretty incredible, but that's our market. So again, this chart is telling us that... Well, there's another thing, other ways that Dr. Deming would look at this. We've got several months where it's going, the month supply is just going up. So starting in December '24, you can see that the supply keeps going up. And then it went out and broke the upper control limit. So what he would say in this, looking at this chart is that up until really of March 2025, the system was in control, it was predictable, okay? And then starting in March or April 2025, it was out of control, it was not a stable market, and the market is a system.

Andrew Stotz: And it went up above the upper control limit of 1.6 roughly or 1.55. And now the highest it went up in May was about one point, almost, yeah, 1.8.

Andy Novins: 1.8, okay. And so Dr. Deming would say that number one, it's a shift in the market, number two, the market is no longer predictable. Okay? Clients don't like to hear that, but using these charts and explaining it to them, they do understand it. And in real estate, one of the most important things when markets are changing, or always actually for that matter, is managing client expectations, okay? And using Deming's theories and control charts, it makes it... And I'll get into that a little bit more in a minute, but managing their expectations becomes more of a science than scripts, which is what...

Andrew Stotz: One of the things I learned from Dr. Deming was be skeptical of data, and I know I've spent my career as a financial analyst manipulating tons of data. And every time I see something out of control like we see here, the first question I ask is, is there an error in the data? And then the next question is, okay, so what's going on out there that the chart is one thing, but can you just talk briefly about what's going on? What do you think is behind this? What's causing it? What is that shift that you're seeing?

Andy Novins: Well, if you were asking me this in 2008, I could have told you. The irresponsible lending and all kinds of other things. Today, the market is in our market more than others is impacted by uncertainty. Okay. Uncertainty surrounding the impact of tariffs. Okay. But especially in our area, the impact on federal workers job security. Okay. In our area, which is an expensive area, almost any couple that is buying a house is buying it on two incomes. And if one of those, one of the members of the couple is, works for the federal government or is a government or works for a government contractor or is affected by any, in any company that may be impacted by government cutbacks, they're not buying a house right now. They're waiting. So they don't want to buy on one income. And so they pulled out of the market. And that's, that's the biggest reason for the increase in the supply. The other is, people do want to move. People want to downsize and upsize. Well, most people have a 3% interest rate or better or slightly around there. So with the impact of low, you know, of rising interest rates and everything else, there's people that want to downsize. And if they move, they'd be paying more for their smaller house than they were for their house they're staying in. So they stay.

Andrew Stotz: What are, what are mortgage rates right now? Roughly.

Andy Novins: That's 675, 6.75. 30 year. But what's interesting on that, and I haven't done it, but it would be an interesting exercise is when I began my career as a CPA in New York, I moved down here in 1982 to be part of the company that I talked about before, the apparel company. I, when I said to her, when I had that opportunity, I said to my wife, what do you think about moving down to Washington? We lived in Westchester County, New York, and she said, well, sure, but, and at that point, I was treasurer of a bank in the New York metropolitan area, and she was willing to take the risk. It was a risky move, but she said not, but not, we can't sell our house. We have an eight and a half percent mortgage. We'll rent it, and if it doesn't work in Washington, we can always come back to it. So that eight and a half percent mortgage back in '82 was not something you got rid of, and people don't realize that the average mortgage rate in the past 50 years is eight percent. So at 6.75, it's not that bad, but it's relative to the three percent interest rates we had. It's making it tough for people to move.

Andrew Stotz: So just talking now, I just want to wrap up on the chart by saying, so once you use, you're demonstrating using a control chart in the industry of real estate, and you're discussing the fact that right now, you've got three points that have breaking out of the upper control limit, which now tells us, as you said, it's unpredictable at this point. What else, what do you take from that, and how does that drive your actions when you see this chart? How does that impact you, and in other words, how are you applying Deming's teachings once you've now done this?

Andy Novins: Great question. When you price a house to sell it, you use what we call comparable sales. When a market is going up or stable, comparable sales are a good indication of what you're probably going to price it at if it's going to go on the market soon. What realtors do is what we call a comparative market analysis, and that's comparing at least three homes to their home. There's all different ways of doing that, which is part of a Deming system too. But when you go to somebody and say, well, we got these three homes and they sold it at 800, but if you're going to put your house on the market next month, we're probably looking more like at 750. And most people would say, well, I'm not going to use that guy. This other realtor says 800 is the way to go. And using the control chart showing that the market has shifted and that those comps are no longer valid is one of the most valuable uses of control charts in real estate because, again, it's evidence that the comps aren't valid anymore.

Andy Novins: The other thing is comps represent, even if it closed yesterday, it went under contract a month ago. So the comps are just not necessarily good if the market is shifting, and this is pretty powerful evidence to a potential client that pricing is really important and you can't just use past comps. I'll go to the next chart, which is price drops. And this is something, again, our market really just shifted recently, so this is something I'm actually doing actively right now looking at. But you can see that this is weekly price drops. Okay, it started off monthly because I can't go back and get that data. But if I go back to a stable year, last year is the base. You can see that price drops were pretty stable process in the pricing system. They were...

Andrew Stotz: So what does that mean? Just so we understand, let's say the average is 25% projected monthly price drop. What does that actually mean?

Andy Novins: That's saying that every month that of the active listings on the market, 25% of them are reducing their price. That month.

Andrew Stotz: So in other words, 75% are either keeping it the same or raising it.

Andy Novins: Say that. Yes, right.

Andrew Stotz: The opposite of that. Okay.

Andy Novins: Right. And that's each month. That doesn't mean somebody didn't lower their price on that same house the month before. But it's registering the number of drops that homes on the market are doing.

Andrew Stotz: And that would mean it's like a pretty good seller's market again when only a quarter of listings need to drop their price in order to get the sale.

Andy Novins: Yes, exactly. Yep. Exactly. And you can see this...

Andrew Stotz: And let's just talk about the January 2024 to December of 2024. So for the year of 2024, what's your observation of the data?

Andy Novins: It was stable. It's not a change in the market.

Andrew Stotz: Yep. Okay. Normal variation.

Andy Novins: Yeah, normal variation. Okay. But when it starts to go up like it has, and it's even worse because what I'm using is an average for these weeks. The next week starting tomorrow will have the four-week average. They're actually quite a bit higher, the last two, than what they show here because they were averaged down. But when you see rampant price dropping, that's out of control, so to speak.

Andrew Stotz: Right. So it's gone from a mean of 25 up to 60-plus percent of monthly price drop. I'm just curious. It says on your y-axis, it says projected monthly price drop. Does that mean somebody's making some estimate on that, or what does that mean?

Andy Novins: That's because right now I'm doing it by the week.

Andrew Stotz: Okay. Ah, okay.

Andy Novins: Okay. And I'm averaging the week. And then when I get the month, it'll be like the earlier ones.

Andrew Stotz: So the most recent ones are the projected, and the other ones are the actual month.

Andy Novins: Yeah.

Andrew Stotz: Okay.

Andy Novins: And right, I'm using, I'm multiplying them times four the week. So it's right now I'm projecting what July will be, basically, the total, but it'll be up around 60%.

Andrew Stotz: And this chart corroborates the conclusions that you made in the prior chart, or are there any other additional...

Andy Novins: Yeah. And the month supply chart is more of a leading indicator of a market shift, because this is the reaction of sellers and realtors to a market they didn't anticipate properly. And so this is a much more now type of thing. And again, if I go back to a client and say, you know, all the comps are 800, but we're going to recommend 750, this is pretty convincing evidence that basically almost everybody in the market is reducing their prices.

Andrew Stotz: Yeah.

Andy Novins: And in a falling market, the worst thing you can do is chase the prices, chase it down.

Andrew Stotz: Yeah. And what this doesn't show, it shows that 60% are dropping their price. It doesn't show what the remaining 40% are. And that composition of that could just be, there could be no price increases. We don't know from this data whether that's holding the price the same or increasing it.

Andy Novins: Right. But it doesn't mean that there aren't homes in those active listings that didn't reduce their price, that reduced their price. They may have reduced their price last month. Okay. So it's really just showing the panic that's out there.

Andrew Stotz: Okay. Got it.

Andy Novins: But it's a great leading indicator from that standpoint.

Andrew Stotz: Okay. So two charts that show us the application of control charts and Deming's teachings there in real estate and making a note of the fact that these are now out of control. Interesting.

Andy Novins: Yes. And again, the most important thing you can do, I think, in real estate is accurately manage your client's expectations. Yeah. Because, and I'm going to back up for a second, that's another real benefit of having a niche practice. And again, like the competitive advantage Michael Porter concept. And for me, writing a newsletter, which gives them what we hope to be useful information for the 5,000 homes that get it. When they're ready to sell, again, I don't call them, they call me. And they call me because they trust me. They believe I know what I'm doing. And so part of a system that would be outside of what Dr. Deming talked about, but part of the system is your clients, the quality of your system is going to depend on the quality of your clients. And so having a niche, again, what I'm doing in terms of that so-called farming and the newsletter is I'm attracting clients that will trust me. Okay. That's so much a Deming concept in terms of the overall system and how it affects it. We see all the time when buyers that are buying one of our listings and they have all these problems and the other real estate agents, their buyer's agent says, I know they're crazy. I can't wait till this is over because their buyer clients aren't listening to them and they're asking for unreasonable things or whatever. So a critical part of the system in real estate is getting clients that will listen to you because theoretically we know what we're doing.

Andrew Stotz: And if we look at this chart, one of the things that some people may ask is what about forecasts? And I know I spent my career as a financial analyst in the stock market forecasting earnings. And then when I worked on my PhD for my dissertation, I decided to calculate the accuracy of analysts in earnings forecasts. And as I said, the title of my dissertation was analysts were only 25% wrong. And in other words, here is the highest qualified people to forecast the earnings of these companies and they get it wrong by 25% on average. And so for those people that say, well, what about your forecast and all that? I always say, I live on the cutting edge of history. Don't try to go too far out in the future. Just make sure you understand. And that's where this chart shows July 19th to July 25th that you could say that's pretty much, and if you get the data out the next day, that's the cutting edge of history.

Andy Novins: Yeah, yeah, exactly. And in the past, people say, well, should I wait? At this time of the year, they might say, should I wait and put the house on the market next spring? Or should we do it after Labor Day? And in the past, I would have said, wait till next spring because things were going to be better. You could... Everything was stable and rising. What these charts show, and they do require some explanation, is that the market is out of control right now. You can't predict it. And then if so, then it becomes a decision that a client makes based on what they really need. Do they want to move yet? Do they want to wait? Do they... But these control charts are showing that you can't predict. Whereas in the past, you could be pretty safe.

Andrew Stotz: Yeah. And the point of that, too, is that a control chart can't solve every problem. It tells you where things are, so you understand things a lot better. But then, how you're going to actually use that information, well, somebody may use it to say, I need to sell my house now. Somebody else may say, I'm going to wait because I think this is bad and it's going to get better later. And somebody's going to say, I'm going to sell now desperately because I think this is going to get much worse, right? That's the hard part.

Andy Novins: Yeah.

Andrew Stotz: But if you don't know what's actually happening, which the control chart gives you that information, then there's none of that. It's just, there's no basis in fact of what you're doing.

Andy Novins: Exactly. Right. They provide a window into the market that I have never seen anybody use this or talk about it.

Andrew Stotz: And do you have any more charts? Was that it?

Andy Novins: No. Yeah, I got more.

Andy Novins: Okay. Whoops. Oh, but before we get to that, okay, so this is a concept, and if I'm going too long, cut me off.

Andrew Stotz: No, no. Go ahead.

Andy Novins: So in a falling or stable market like we're in, okay, in a rising market, you pick a price, and if you're good, you're going to do well. If you do it right, they're going to bid it up. That's the way it's been for five years since COVID. Okay. Now the market is not rising. It's falling or even in a stable market. So the PDSA cycle that Deming talked about is absolutely so on target for what we're going through right now. So I'll just briefly go through this. The plan part is you price using comps or adjusted comps based on what the control charts are showing where the market is going rather than where it was. Okay. And then you put the listing on the market in the MLS. And then what we do, okay, is we study what's happening, okay? And again, the market is not in control. It's not a stable system. So we monitor and we subscribe to special services that most agents don't get. They cost money, but they give us a lot of information. We can see the number of views all over the internet that a house is getting that's on the market. And we can subscribe to another service that shows all the showings that are comparable houses in our zip code or any way we want to do it are getting. And then we use the control charts and we look at feedback and everything else.

Andrew Stotz: So do you have more charts, Andy?

Andy : I sure do. This isn't actually a chart. It's one of the core tools that Dr. Deming used. And it's what he called the PDSA cycle. And that is the most important tool that we use with the data we get from the control charts. So I'm going through an example here of pricing. And so the PDSA is plan, do, study, act. And the planning section of this process is we price using comps, like I've described. But we also use the control charts to let us adjust the comps for what's happening in the market right up to today, basically. And the do is just in real estate is just simply putting the listing in the real estate market, MLS, and listing it so people can see it. The study, though, is what's really important. And that's where a lot more data comes in. We subscribe to services where we can monitor all the views all over the Internet of our listings. And we can monitor showings that our listings are getting, which we know, but other listings. We can monitor what they're getting in terms of competitive listings, similar prices, and that type of thing.

Andy : And we also monitor what houses, if any, are going under contract since our property went on the market. And that provides what we talk. So we have to act on that data. And that's the A of the PDSA cycle. And so we use feedback loops. So just as an example, I won't necessarily go through all these. If we have a lot of views, high views, and high showings, we know the price is right. We're going to get offers. On the other hand, if we have high views and low showings, we know buyers are interested in it, they like it, but they're not ready to come and look at it. They're waiting for that price to go down, which in this market, it probably will. So we advise our clients based on the data we're getting, and then we either reprice or we don't. There's also some other things we use to monitor, but I won't go into those at this point.

Andrew Stotz: What's interesting about that is it's like every single listing is a test.

Andy : Exactly.

Andrew Stotz: That's cool.

Andy : Yeah. And that data is so important. And when you tell a client, you're getting all kinds of... You're getting... And we compare it to the other listings. We give them charts, which shows the other houses. And we say, look, you're getting twice the views of these other houses, but nobody's coming to your house, or very few are coming. And the other listings are getting less views and more showings. People think you're overpriced. And it's very convincing to a client.

Andrew Stotz: Is there one of these that you're aiming for? And if you are close to that in your listings, you're hitting the right spot? Or what are you aiming for?

Andy : High views and high showings. That's the best. Everybody's looking at it. People are coming. Okay. There's other tests down the road because traditionally if you get 16 to 18 showings and nobody makes an offer, you're still probably overpriced, but that's very unlikely. Okay.

Andrew Stotz: And is price the only factor that you can adjust here, let's say high views, high showings could be just the type of house, the location, but you don't necessarily control those things?

Andy : No, the one down near the bottom. Low views, high showings. It's ikely a niche piece of property. Not many people are looking at it, but the people that want that niche, whatever may be different, it's a unique piece of property, they'll get a lot of showings relative to their views, because most people aren't interested. But there isn't much else we can do because we spend... We pay for staging. We don't pay for it. We do it. We have our own inventory and staging. We have contractors that we've used for years to help get a house ready. So the product itself, the house, and the presentation, there's never much more we can do to make that better.

Andrew Stotz: And quality in the eyes of the customer is the best price sold quickly, I guess.

Andy : Yes. Yeah. That's right. There's a saying which not everybody agrees with in the real estate industry, but you want to make the most amount of money in the least amount of time with the least amount of hassle.

Andrew Stotz: I think that's everywhere.

Andy : That's true.

Andrew Stotz: Yes. I want that. Great.

Andy : That's what everybody wants, but some people say, well, if it's too fast, you didn't... But that's usually not true. Fast is usually good as long as it's priced right. The next chart I have is a whole other way we use control charts, and that's to evaluate our own performance, which is what this is doing. And it's using sales-to-list price ratios. In other words, what percentage of the list price was the sales? And here we're using a long base period, and I'm just going to back up for a second. In some of the two recent, the ones I did on price drops and supply of inventory, we only had a year worth of, for the base line. And normally it's better to use more than that, but those two years I used were stable, and we didn't go back further because the Fed had been raising interest rates, and that created a... That was not a stable market when they did that, so we didn't want to use that as a history.

Andy : So this is showing our performance, and you can see starting with the pandemic, we went way above the control limits a lot of times. But what you do when you're looking at or using a chart like this for your own improvement is you want to narrow the upper and lower control limits, the two red lines. The closer they get together, the less variation you have, the smaller your standard deviation. And for us, it's 0.2. And our range between what... That's normal is between 95% and 107% of the sales price. And just to how we use it and how we get better at it is we focus on pricing. We focus on improving negotiation, which is a big deal, especially in the last few years. We are always looking to improve our client base. We're always looking to improve our preparation and presentation. We think we got that pretty well down pat. And the other thing is to stay within your area of expertise, because when you go out of that, okay, if I was to work on a house out of my market, okay, I wouldn't get this kind of performance. So that's going to lead me to the next and really the final chart. And that's another group, okay? And I'm using this group because... Just to...

Andrew Stotz: Sorry, when you say another group, what do you mean?

Andy : It's not my team, no offense industry...

Andrew Stotz: So it's a competitor or it's...

Andy : This is a well-known group. It's led by two Ivy League graduates. And it's a much bigger team than ours. Their standard... And it's the same base period, 2017 to '19. Their standard deviation is three times what ours is. Their range of what they do within the control limits is 78% to 114%. And that... Why do we do this? Why do we care? It's always nice to benchmark yourself. But most of all, with groups or agents that we compete with, if these guys put a house on the market, okay, and we thought it was overpriced, or let's say we thought it was underpriced, okay, and it was competing with one of ours, we wouldn't tell our client to reduce their price to match their price, okay, because we know they probably are underpricing. In this case, we'd say let it go. Likewise, if we're working with a buyer who's buying one of their houses and we think it's overpriced, what their listing is overpriced, then we will probably make a lower offer knowing that they also know that their pricing can be way off. So understanding your clients and where they fit on these control charts is useful information.

Andrew Stotz: And I can imagine that some people, let's say, at another firm, as an example, may say, oh, I don't care about this variability because one side of the mean is more favorable than the other, so I'm just trying to get to that other side. Whereas what you're saying is I'm trying to reduce variation around the mean.

Andy : Yes, and that'll take me to this last section I have here. If we compare the two groups, what are the major differences? Number one, if it was a million-dollar listing, okay, we would probably get $43,000 more than they would based on these control charts. Most of all, the biggest difference...

Andrew Stotz: The selling price of your customer would be $43,500 more?

Andy : Well, our average selling price is a little over 100%. Their average selling price is 96%. So on average, they're getting $43,000 less on $1 million house than we are. But the most important thing in this is the consistency and the predictability of when you lower those control chart limits, you're making your performance much more predictable, and it's an important part to all of our clients. I mean, Deming had a... One of the things he used to say is quality is in the customer's eyes, not your eyes. So I can say we do all this great stuff and all that. It all boils down to what does the customer think. And when a group's working on volume, which is pretty typical in our industry, that's what we're taught, how to get more volume, how to get more volume, that's... The customer doesn't care. The client doesn't care about what kind of volume they do. What the customer cares about is service. And you can see some of the other things, consistency over time, process control and all that. I'll get out of here now and say that that's really what control charts and Deming's philosophy and the PDSA, it all focuses on quality in the customer's eyes, consistent performance, better service, and not a lot of guesswork. We're using data that other agents don't even know exists. And that's unfortunately not an exaggeration, really. I've never talked to anybody that knew about this.

Andrew Stotz: When Deming talked about quality, he often referenced the idea that you could have a quality system in place and still go out of business if you weren't looking at quality in the eyes of the customer and being completely connected to the customer. And I have a little story on this from my coffee business. Many years ago, we had a restaurant chain in Thailand that's a global chain come to us and we won the bid. And they said, we chose you over all these other suppliers for coffee and we're going to come to your factory and when we do, we're going to do an audit, we're going to ask 600 questions and if you get below 75% or whatever, you're fired. But, hey, I knew Deming and I knew all of this stuff and we cared about quality and we never had quality problems, so we thought we're in good shape. And they came out and they said, your score was 68, you're fired. You have six weeks to fix it or you won't be our supplier. Well, we learned something very quickly there, which was to them, paperwork was quality.

Andrew Stotz: And that was a quality system to them that meant that we had quality. And so we had a passion for quality, but we didn't have the paperwork system that they wanted. So luckily, when you have passion for quality, it's pretty easy to overlay a paperwork system on it, if that's what the customer required. I would hate to be in the opposite situation where you go and do like many people when they go and get certified or ISO or whatever and they build a paperwork system without that commitment to quality. Now, that's a disaster. But the point is that we had to realize that in order for us to satisfy that customer's needs, we had to appeal to quality as they saw it. And so we've got to always keep the customer in mind as we're working on our quality.

Andy : I got another story. My wife reminded me today that sometimes in probably early '80s, maybe mid '80s at the latest, I looked up in the... I wanted to find a statistician and I looked him up in the yellow pages, which a lot of the listeners may not know what that is. And I wanted to... What I wanted to do was find a way to improve, optimize our inventory and try to approach just-in-time inventory because we had factories all over the place and we were getting stuff in. And we never did it. And I imagine with Dr. Deming, we could have done it, but we never did it because exactly the quality's in the customer's eyes. We were shipping to specialty restock stores primarily, and if we couldn't stock their shelves, okay, they went somewhere else. Didn't matter how much they liked us, they had to have those shelves full. So we decided it wasn't worth the risk of just-in-time and optimizing our inventory at the expense of having maybe too much inventory, but satisfying our customers. And it's just so true.

Andrew Stotz: Yeah. Yeah. In the story that I told, that particular chain never ran out of product and certainly never ran out of coffee. And I know myself, being a customer of that chain, never in my life did I walk in there and they ran out of a particular product. And they made that very clear. That's quality to us is that our supply chains are never broken. And for 16 years, we never broke their supply chains. It was never the case. So in the eyes of the customer, well, on behalf of everyone at the Deming Institute, I want to thank you again for this discussions and for listeners, remember to go to Deming.org to continue your journey. But I thought I would leave the closing comments to you to maybe wrap up and give the audience what you think should be their main takeaway from this discussion.

Andy : I think probably the main takeaway would be that Dr. Deming's philosophy, the Profound Knowledge, everything he taught is as relevant to real estate, okay, pricing, probably most markets as it is to a factory or production or anything like that. I think that it took me a while, after I became a realtor, it took me a while to realize, wow, all these things we can use. And we have more data to play with than anybody. So that's a good takeaway for anybody, especially realtors.

Andrew Stotz: Yeah, I think, and I'll just add on, I enjoyed the conversation because I love Michael Porter's stuff and talking about figuring out where's your niche and trying to bring a differentiated offering to the market. And that differentiated offering could be based on what I like to say from my study and teaching of corporate strategy is there's kind of two main corporate strategies. One I would say is the type that engineers build, which is an operational corporate strategy. And another one is a differentiating strategy that a sales type of person would build, which is about the interaction with sales, with the product and all of that. And so with Dr. Deming, one of the benefits we get is the process part of our business can just be improved forever. And then we can overlay that with whatever we want from what we bring to the market. And I think you've given us an example of how you can apply Deming's principles to the process of your business and do that in a niche area or an area that you've defined and dominate. And so I love that.

Andy : Yeah, and one of the things, just a last thought, is something you and I had talked about, is you don't have to have a PhD in physics or you don't have to get a doctorate in something to understand Deming. And he even says it in his book. You don't have to be an expert in any of it. You just have to understand it. And that's the beauty of it. Anybody can do what I'm doing with just nowhere near the effort you'd have to do if you were going to be a physicist or something else like that. And that's something people can take away.

Andrew Stotz: And on that hopeful note, this is your host, Andrew Stotz, and I'm going to leave you with one of my favorite quotes from Dr. Deming. I always repeat it because it's such a great quote, and that is, "people are entitled to joy in work."

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Step into a treasure trove of rare stories, photos, and audio clips as Bill Scherkenbach shares his decades with Dr. Deming. From boardrooms to sleigh rides, discover the moments, minds, and memories that shaped modern quality thinking, told by someone who lived it. A powerful blend of insight, humor, and history you won’t want to miss. (You can see the slides from the podcast here.)

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 Scherkenbach, a dedicated protégé of Dr. Deming since 1972. Bill met with Dr. Deming more than a thousand times and later led statistical methods and process improvement at Ford and GM at Deming's recommendation. He authored 'The Deming Route to Quality and Productivity' at Deming's behest and at 79 is still championing his mentor's message. Learn, have fun, and make a difference. Bill, take it away.

0:00:41.2 Bill Scherkenbach: Well, thank you. Thank you, Andrew. It's an honor to be asked back. Many places don't.

0:00:48.7 Andrew Stotz: I really enjoyed our first discussion, and particularly towards the end of it, it got a little personal and emotional, and I appreciate that you shared your journey. That was amazing.

0:01:00.9 Bill Scherkenbach: Thank you. Thank you. It is personal.

0:01:05.2 Andrew Stotz: Yeah.

0:01:05.4 Bill Scherkenbach: But today, along that wavelength, I brought some pictures or photos and letters and audios of my association with Dr. Deming. So, if you might bring them up, we can start the commenting.

0:01:27.9 Andrew Stotz: Wonderful. Well, hopefully you see a screen now up.

0:01:34.8 Bill Scherkenbach: Yes. Yep.

0:01:35.8 Andrew Stotz: Okay. And for the audience, just to let you know, for the listeners, we're going to show these and I'll try to explain a little bit about what we're talking about because you're not going to be able to see the pictures. But the first thing is the title is An Insider's View of Deming. Learn, have fun, make a difference. And we see a great picture on the left-hand side, and then I threw in a picture of a Lincoln Continental, which we're going to talk about later, which is kind of fun. But maybe you can take it from there, Bill.

0:02:07.2 Bill Scherkenbach: Yeah. Well, we can talk a little bit later on on that, but this is a picture of me and my wife, Mary Ellen, with Dr. Deming having fun. We were at a restaurant in Northville called Elizabeth's, and it's something that he enjoyed to do just about every evening.

0:02:31.3 Andrew Stotz: Great. Well, what a kickoff. So let's go to the next one. And you guys all look great in that photo.

0:02:38.2 Bill Scherkenbach: Thank you. Thank you. Thank you. Yeah. This is a letter that I received from Dr. Deming back in May of '85, auspicious because the letter dated 13 May, that's my birthday. But for those who cannot read it, should I read the letter for you?

0:03:05.2 Andrew Stotz: Either you or I can read it for you. You tell me.

0:03:08.3 Bill Scherkenbach: Okay. Well, yeah. Why don't you read it?

0:03:10.9 Andrew Stotz: Okay. So, the letter is addressed to a particular person. It says, this is written by Dr. Deming, this acknowledges your kind letter of the 29th April. He that depends solely on statistical process control will be out of a job in three years. The record is clear, the record is clean, no exceptions. A whole program of improvement of quality and productivity is necessary, and it requires that top management learn what their job is. No part of the program will by itself suffice. Your letter does not describe your program, hence comment is difficult. I am happy to learn that Bill Scherkenbach will work with you. His achievements are renowned. He is excelled by nobody. I am sure that you will follow his guidance, not only while he is there with you, but from that then on out. I send best wishes and remain yours sincerely, W. Edwards Deming.

0:04:19.2 Bill Scherkenbach: Yes. I did spend a week with this organization, and as Deming said, and in many, many cases, the local management or local part of the organization get very enthusiastic, but the top management did not buy in. And so very little happened there, unfortunately.

0:04:53.9 Andrew Stotz: Yeah. And I missed that the top right-hand corner in handwritten, it says Portland, 20 May 1985. Dear Bill, I neglected to hand this to you in San Francisco, W. E. D.

0:05:08.1 Bill Scherkenbach: Yeah. We went to, we. Dr. Deming and I were in San Francisco to meet with Shoichiro Toyoda and his wife. It was a social call. Shoichiro was in town. I don't know where his brother Tatsuro was. Tatsuro headed up NUMI, but Shoichiro was head of it all and was in the US. And wanted to just have a dinner with Dr. Deming. I'm embarrassingly cloudy. We met in a hotel and I can't tell you which one, but it was a nice, relaxing dinner. The English was a bit stilted, but Soichiro wanted to have a dinner with Dr. Deming and to express his appreciation.

0:06:31.3 Andrew Stotz: And he was a titan of industry at the time and in 1985 was really making a beachhead and a real expansion into the US market. Why did he want to meet with Dr. Deming? What was the connection there? Maybe for those that don't know.

0:06:55.2 Bill Scherkenbach: He was in town and Deming was nearby in town and just wanted to express his appreciation. I guess, Tatsuro, his brother wasn't there, and Tatsuro headed up NUMI, the partnership between GM and Toyota. But Shoichiro was there and just wanted to express appreciation.

0:07:35.1 Andrew Stotz: Great. Okay. So shall we continue on?

0:07:40.0 Bill Scherkenbach: Yeah. We have a Where is Quality Made? Famous talking from Dr. Deming, and hopefully the audio translates well.

0:07:55.3 Andrew Stotz: Yes, we'll see. Let's go.

0:07:59.5 Dr. Deming: Where's quality made? Answer is in the top management. The quality of the output of a company cannot be better than the quality directed at the top. The people in the plants and in service organizations can only produce, at best the design of product and service prescribed and designed by the management. Job security and jobs are dependent on management's foresight to design product and service [that] will entice customers and build the market.

0:08:31.6 Andrew Stotz: So where did that come from? And tell us more about that.

0:08:36.2 Bill Scherkenbach: Well, I'm not exactly sure which particular seminar or meeting that was, but over the years I have, have, we've made a number of audio recordings and videos of Dr. Deming in his meetings. And so we're looking to get them to the Deming Institute so they can process them and distribute.

0:09:11.8 Andrew Stotz: And why is this so important? He's talking about quality is made at the top where we can see many people think that quality is made by the worker. Do your best. Quality is your responsibility. Tell us more about why you wanted to talk about this.

0:09:32.9 Bill Scherkenbach: Well, it's a common, it's a common, very common mistake. He learned back in 1950, and I think I mentioned it in our first talk, that he gave a number of courses at Stanford during the war and people learned SPC. But when the war was over, over here, because management didn't buy in, nothing really happened. And he learned in his visit in 1950 when he was able, as we said, Mr. Koyanagi was able to get a meeting, a number of seminars done with top management in Japan after the war. And he thought that that, he saw that that actually did make a difference, that management was absolutely key. And in every one of his seminars, he would make, he would make this point, that quality is made at the top.

0:10:54.0 Andrew Stotz: And what was interesting is that, of course, the Japanese senior management, were very receptive. It's many times the case that Deming may have interacted with some senior management at the top of a company, but they weren't receptive or willing to implement what he's talking about.

0:11:12.6 Bill Scherkenbach: Yeah. I think I mentioned last time that you need maybe a significant physical or logical or emotional event. And Ford lost a few billion dollars and was then looking, is there a better way? Japan lost a war, and the tradition over there is to perhaps listen to the conqueror. But MacArthur was very astute, my understanding, that you're not going to go in and replace the emperor and really mix the place up from what their culture is, which is very, very, very astute, in my opinion.

0:12:11.4 Andrew Stotz: Okay. So let's continue. And we see a document now up on the screen and a diagram. And maybe you can explain this one.

0:12:24.8 Bill Scherkenbach: Yeah. This is one of the foils, as he called them, that he wrote on his lantern, which is the overhead projector for all the young people. And making another very, very important point. And that is, he's quoting John Tukey, "the more you know what's wrong with a figure, the more useful it becomes." And he also, at various times, would, would, would talk about George Gallup. And Gallup was his friend. And George Gallup would say that unless you've gone through the slogging of collecting data, you shouldn't be too quickly using data or analyzing data. Because if you go to collect it, you know that some people just aren't there. And this is primarily survey stuff that Gallup was talking about. But Tukey was talking about anything. And Deming, along the way, with his learnings from Shewhart, what I've developed is based on Deming's questions come from theory, created a theory, question, data, action cycle, similar to a PDSA. And so that you need to know what the question was before you can use the data. And Dr. Deming's example was you can't use manganese dioxide for just anything. If it's really, really critical work, then you need to know what's in it that could contaminate it or interact with the other chemicals that you're trying to mix it with. Hugely important in chemistry, hugely important anywhere. And he talked, yes, we do have some audio from Dr. Deming talking about another analogy, on I can't even wash the table unless you tell me what you're going to use it for.

0:15:24.0 Andrew Stotz: I remember watching a video of this with him, with Robert Reich, I think it was, being interviewed. And it was such an impactful thing because I always thought you just tell people what to do and they go do it. And so let's listen to the audio. I'm going to play it now. One second.

0:15:42.6 Dr. Deming: You could teach me how to wash a table. Teach you how to rub, scrub, use brushes, rags. I'd be pretty good at it. But you know, I could not wash this table, suppose you told me my job is to wash this table. I have no idea what you mean. There's no meaning to that. You must tell me what you're going to use the table for. I want to see a flow diagram, work moving. Here I am. My job is to wash this table. I do not understand what you mean. Wash this table. There's no meaning to that. I must know what you're going to use the table for, the next stage. What will happen to the table, next stage, in the flow diagram? You want to put books on it? Well, it's clean enough for that now. To wash the table, I just go through it from just here, make a look at it. If I work a little, good enough. If I clean enough to eat off of it, well, it's good enough now. Or use it for an operating table? Oh, totally different now. Totally different. Now I scrub it with scalding water, top, bottom, legs, several times. I scrub the floor underneath and for some radius. If I don't know the next stage, I cannot wash the table.

0:17:28.8 Andrew Stotz: Tell us your thoughts on that.

0:17:31.5 Bill Scherkenbach: Yep. Yep. Well, again, my theory, question, data, action cycle, if you're asking a question, you, you, if you can, and there are some confidential considerations, but if you can, you need to tell the people who are trying to answer the question what you're going to do with it. And so if you want the table washed, tell them you're going to just eat off of it or assemble microchips on it. If you, so that's the responsibility of the manager or anyone who is asking the question. So if you want to improve your questions, you got to go back up and think of, well, what's my underlying theory for the question? If this, then that, that prompts a question and the circle continues. And if you, the only reason to collect data is to take action. Both Eastern and Western philosophers absolutely have said that for centuries.

0:18:55.2 Andrew Stotz: Yeah. What's interesting, I didn't hear him say it in any other cases when he was talking about the next stage. I did hear him say before, like, what's it going to be used for? But you could hear when he's talking about the next stage, it's saying to me, that's saying the responsibility of management is looking at the overall system and communicating that and managing that, not trying to, you know, just give some blind instruction to one group, one team, one person without thinking about how it all interacts.

0:19:29.9 Bill Scherkenbach: Absolutely. Absolutely. But in the local aspect of, well, some question answers are not so local, but it's what the question asker's responsibility to let the people know what they're going to use the data for.

0:19:51.9 Andrew Stotz: Yep. Great lesson. All right. So now I've got a interesting picture up on the screen here. We have Dr. Deming and there's John Turkey, Tukey how do you say his last name?

0:20:05.6 Bill Scherkenbach: John Tukey, T-U-K-E-Y, yep. George Box and Sir David Cox. Anyone in the statistics arena knows them. We also had Stu Hunter and I believe John Hunter was there. They're not in the picture. I took the picture. But we were at Meadowbrook, which is, which is, on the old Dodge estate where Oakland University is near Detroit. And had a, we called the meeting to discuss the importance and the various perspectives of enumerative and analytic. Now, each of these men, Box, Tukey, and Cox, and all of them, all of us in the university, quite honestly, were brought up with enumerative methods. And so your standard distributional stuff and T-tests and whatever. And Deming and Tukey realized the importance of being able to not just take action on the sample, but the cause system, the system that caused the sample, or the process term, in process terms. So yeah, John Tukey was strangely enough, well, not strangely enough, but came up with a graphical method to look at data called the box and whiskers plot, with George Box standing next to him, but it's not that George didn't shave. But Tukey, very, very well known for graphical methods.

0:22:24.2 Bill Scherkenbach: George, well known for experimental methods. One of the Box, Hunter and Hunter book on statistical design of experiments is legendary. And Sir David Cox, logistic regression, which is hugely, strangely, well, not strangely enough, but huge nowadays, very important in AI, in how you would be looking to teach or have your model learn what it is that you would like them to learn to look for. So each of these gentlemen, very, very much a pinnacle of the statistical career. We were very, in a large company like Ford, we were very lucky to be able to make big meetings like this, or meetings with very influential people happen.

0:23:38.9 Andrew Stotz: Yeah. That's got to be amazing because I think when most of us listen to Dr. Deming and all that, we get a lot of what he says. But I would say that the statistical aspect and his depth of statistical knowledge is what many people, you know, it's hard for many Deming followers to deeply connect with that. And I think even myself, having, you know, read everything, listened to him, learned as much as I can, the best that I probably come up with is the idea that once I started understanding variation, one of the things I started realizing is that it's everywhere and it's in everything. And I didn't understand...

0:24:27.3 Bill Scherkenbach: Well, I still have the cartoon of a popcorn maker that was very surprised when he said, "They all popped at once." And his popcorn stand has blown up. So yeah, variation is everywhere, a lot or a little. And the thing is that you need to be able to take appropriate action. Sometime, I can remember, I can remember Bob Stemple asking me, "What did I think of the Shainin methods, Dorian Shainin, and technical approach?" And I wrote back to him and I said, "It's no better or worse than any of the other methods we don't use here at GM." The point is, all of these methods are better than Bop-A-Mole. And one of the things, well, one of the things that concerns me is that in these tool areas, and Deming's counsel to me long ago was he remembers the fights that the technical people, the statisticians in the quality profession, would have over which one is a tenth of a percent better or more effective doing this and that. And they would publicly argue, and Deming said, "Stop. It confuses management because they don't have a clue and they're staying away from all forms of quality." So, you, and I don't know the solution in this day and age where everyone is connected. But all of these methods have their strengths and weaknesses, but you have to have the savvy to figure out which one to use to help you improve. All of, each of these four were great teachers, and I have a comment from Dr. Deming on that.

0:27:11.7 Andrew Stotz: And just in wrapping this up, it's like, I think one of the things that you realize when you see this one and what you're talking about, what I realize is what a powerhouse Dr. Deming was in the area of statistics. And in some ways, it's kind of like seeing a rock star that you love to listen to and that rock star is great. And then one day on a Sunday, you go to the church and you see he's a reverend and a very solemn man who is a very, very devout devotee of Christianity and something. In some ways, that's the way I feel when I look at this, like, wow, just the roots of the depth of that is so fascinating.

0:28:03.2 Bill Scherkenbach: As you mentioned that, I'm thinking back, we were in Iowa and one of the professors there, and I forget his name, but you're right. Deming was held in awe and he was riding in the backseat. I'm driving and this professor is beside me and Dr. Deming said something and I said, how do you know? And the guy thought the world was going to come to an end that I dared ask the master, how did he know? Well, it, it, it ended up fine.

0:28:52.9 Andrew Stotz: That was the question he was trying to teach you to ask.

0:28:55.3 Bill Scherkenbach: Absolutely. You don't accept it at face value.

0:29:02.2 Andrew Stotz: So we got this other slide now. It says, what do you mean by a good teacher? Maybe you want to set this up and then I'll play the audio.

0:29:10.7 Bill Scherkenbach: Yeah. This was one of his favorite stories when he studied under Ronald Fisher, who is the big godfather of statistics, well, relatively modern stuff. So, Fisher was there at University College, as Deming will describe, and Deming wanted to know, and this is where a number of you will have recognized, he wanted to know what great minds were thinking about.

0:29:56.7 Andrew Stotz: All right. I'm going to play the clip right now.

0:30:00.2 Dr. Deming: What do you mean by a good teacher? I taught with a man, head of the department. The whole 150 students spellbound, teaching him what is wrong. And they loved it. What do you mean by a good teacher? Holding students spellbound around him. What do you mean teaching them something? I've had a number of great teachers. One was Professor Ronald Picker, University of London, University College I should say, part of the University of London. In London, 1936, no teaching could be worse. A lovable man, if you tried to work with him, could not read his writing, could stand in the way of it, room was dark and cold, he couldn't help the cold, maybe he could have put some light in the room, make mistakes, Professor Paul Ryder in the front row always helped him out. He'd come in with a piece of paper in his hand the ink not yet dry, talk about it. Wonder why the room was full of people from all over the world. I was one of them. Made a long trip, at my own expense, to learn, and we learned. We learned what that great mind was thinking about, what to him were great or important problems today.

0:31:45.9 Dr. Deming: And we saw the methods that he used for solutions. We saw what this great mind was thinking about. His influence will be known the world over for a long, long time. He would rated zero by most people that rate teachers. Another teacher that I had was Ernest Crown at Yale, very poor teacher. We'd get together afterwards, some of us, and try to figure out what he was teaching us. He was not even charismatic the way Ronald Fisher was, but we learned. We learned what that great mind was thinking about, what he thought was the problem. We learned about perturbation. His work on lunar theory will be a classic for generations. We learned. Worst teacher there could be, but we learned.

0:32:49.0 Andrew Stotz: Wow. Tell us more about that.

0:32:53.6 Bill Scherkenbach: Well, he also had a similar story because, from great teachers at NYU, and that's where I first met him and learned from him. He was my teacher, but NYU had a, they had nominations for great teachers. And Deming was able to convince, and I forget who was the, Ernest Kurnow was the dean, and he convinced the dean to wait 10 years before you survey any of the students. And the question was, did any teacher you have really make a difference in your life? And he was able to get that done or get that process agreed to, and it was for the better because in, and I don't want to... I mean, every generation has said this new generation is going to hell in a handbasket, I mean, that for forever. That's nothing new. But what's popular, it's great to be entertained, and as he said, teaching what is wrong. And so did someone make a difference in your life? And not surprisingly, Deming was one of the people selected as a great teacher from NYU Graduate Business School.

0:35:15.4 Andrew Stotz: So that's your review after 50 years after the course, huh?

0:35:21.6 Bill Scherkenbach: Yeah.

0:35:24.5 Andrew Stotz: Yeah. And so the point is that, let's separate popularity from original thinking. And also he highlighted the idea that some teachers may not come across very organized, very polished. They may need assistance to help them clarify what they're trying to get across. But just because they're kind of a mess in that way, doesn't mean they're not thinking very deeply. In fact, it may be a sign that they're thinking very deeply about it.

0:36:01.9 Bill Scherkenbach: Yeah. Now, again, remember, and I know it's a broad brush, but Deming was eminently logical. Crosby would have loved it. Wine and cheese parties showed Juran more physical. And so I think Deming's preferences there, the key to his statement is teaching what was wrong. Some people get excited in class for a variety of reasons, but the key is what are you teaching? The method depends on the ability of the teacher to connect to the students and actually teach. So it gets you back to physical, logical, and emotional. But for Deming, Fisher struck a chord with him.

0:37:09.9 Andrew Stotz: Yeah. And I think for the listener, the viewer, think about some teacher that really made an impact on you. And it could be that there was a teacher that was able to connect with you emotionally.

0:37:25.2 Bill Scherkenbach: Absolutely.

0:37:26.7 Andrew Stotz: So there's different ways. But I think of Dr. Deming wasn't a teacher of mine in university, but at the age of 24 to learn from him was definitely a teacher that left me with the most to think about. And I would say there was one other teacher, a guy named Greg Florence that was at Long Beach City College who taught me argumentation and debate. And he also really encouraged me to join the debate team, which I really couldn't because I didn't have time because I didn't have money and I had to work. But he really saw something in me, and now I love to teach debate and helping young people construct arguments. And so for all of us, I think this idea of what do you mean by a good teacher is a great discussion. So, love it. Love it. Well, we got another picture now. Speaking of teaching, the City University of New York is in the backdrop. Maybe you can set this one up.

0:38:27.0 Bill Scherkenbach: Yeah. This was a one-day, maybe one and a half with some pre-work, but essentially a one-day meeting in New York that was able to gather some of the top educators in the US, the head of the schools in California. There were some folks from Chicago. We had, as I mentioned, Albert Shanker, who was head of the American Federation of Teachers, was sitting right beside me. Other teacher organizations and education organizations. And we got together for a very meaningful thing. We got together to try and determine what is the aim of education in America. And it turned out that everyone was looking for their mic time, and we couldn't even agree on an aim for education in America. And if you can't agree on an aim, your system is everyone doing their best, and it's all, there's not too much progress, except locally or suboptimally.

0:40:02.3 Andrew Stotz: Yeah. That's a good illustration of the concept of best efforts. Dr. Deming often talked about best efforts. And here you're saying, without an aim, everybody's going to just go in their own direction. And it reminds me of a story I tell people in relation to management, which was that I had a really great boss many years ago in the field of finance research in the stock market. He was very brilliant, and he hired really good analysts. I was surrounded by the best. But he never once really brought us together to say, this is our aim. And so what ended up happening was that each person did their best, which was very good as an individual, but as a group, we never were able to really make an impact. And I explain that to my students nowadays, that I believe it's because he didn't set an aim and bring us together for that.

0:41:09.1 Bill Scherkenbach: Now, one of the, I mean, one of the things Deming very predictably talked about, as I recall, is the grades and gold stars, which were part of his forces of destruction. And the education is the way we approach education here was part of that, even before people get to get beat further down by corporate and other organizational stuff. And the grading and gold stars, I don't know how much that was, that criticism was appreciated. But everyone had a chance to talk. And in my opinion, not too many people listened.

0:42:09.3 Andrew Stotz: Now, the next one is titled Mongolian Rat. What the heck, Bill?

0:42:17.1 Bill Scherkenbach: Well, this is part of teaching what good teaching would be. You've got to listen. It's one of my favorite stories of his.

0:42:30.3 Andrew Stotz: Well, let's roll the tape.

0:42:33.3 Speaker 3: I met a professor in New York. I had a dinner one time in New York with a surgeon, professor of surgery, he gave out some marbles. Had 21 students in the class. He told them describe the surgical procedure on the jaw, in which a certain breed of Mongolian rat was very helpful. The rat would eat the flesh right down the bone, cleaner than a surgeon could do it. Very important rat. Described it in detail. Students listened intently. On examination, one of the questions was to describe the surgical procedure by use of the Mongolian rat. Twenty of the students gave him back the same marbles that he doled out. Described it as exactly the same word that he had described it. He flunked them all. All the 20. One of them said, my dear professor, I've searched the literature, I've inquired around in hospitals and other teachers. I could find no trace of any such procedure. I think that you were loading us. He passed. The others had to take a new examination. They gave him back the same marbles he doled out to them. He wanted to think.

0:43:55.0 Andrew Stotz: Marbles. I haven't heard that expression. Tell us a little bit more about what you want us to take from this.

0:44:02.6 Bill Scherkenbach: Well, I think it's pretty self-explanatory. His comment on education that teachers are handing out marbles and pieces of information, not necessarily knowledge, and the testing, you're expected to give them back what the teacher said instead of how can you process it and put it in the context of other things, as well as, I mean, maybe not in the early grades, but in the later ones, you need to be able to look at various perspectives to see who has this opinion and that opinion. And unfortunately, today, that discourse is nicely shut down.

0:45:07.3 Andrew Stotz: At first, when I heard him saying marbles, I thought he was kind of using marbles as a way of kind of saying pulling their legs, but now I understand that he was trying to say that he's giving something and then the students give it back.

0:45:24.1 Bill Scherkenbach: Yeah. Yeah. Yeah.

0:45:26.0 Andrew Stotz: Okay. Mongolian rats.

0:45:31.0 Bill Scherkenbach: Yep. Yep. So we go from learning to having fun, and here's a picture of our statistical methods office at Ford.

0:45:48.1 Andrew Stotz: And you're sitting in a sleigh? Is that what's happening there?

0:45:50.0 Bill Scherkenbach: We're sitting in a sleigh, yes, at Greenfield Village, which is where the Henry Ford Museum is, and it happened to snow, so we've got the, we've got the horse-drawn sleigh, and I was listening to your first interview of me, and I want to deeply apologize. It's Harry Artinian, and so from the left, you've got Ed Baker and Bill Craft and Pete Jessup, Harry Artinian, Narendra Sheth, Dr. Deming, Debbie Rawlings, Ann Evans, my secretary, uh ooooh, and the gentleman who worked with Jim Bakken, and then me. So, we were working and decided to have a good lunch.

0:46:58.5 Andrew Stotz: And it's a horse-drawn sleigh. And I wasn't sure if you were pulling our leg here because you said, I'm second from the far right. First from the far right, to me, looks like the horse.

0:47:09.0 Bill Scherkenbach: Yes. That's the horse's ass. Yep.

0:47:14.6 Andrew Stotz: That's a big one.

0:47:16.1 Bill Scherkenbach: It is what it is.

0:47:18.7 Andrew Stotz: Yep. Okay. Next one. Who's Sylvester?

0:47:22.3 Bill Scherkenbach: Sylvester is my son's cat. And this is one of the times Dr. Deming was in my home. And he sat down in my office at my home. And Sylvester saw a good lap and he jumped up on it and took it. And as I said, I couldn't tell who was purring louder. They both were content.

0:47:52.7 Andrew Stotz: Yeah. That looks beautiful.

0:47:55.4 Bill Scherkenbach: Yeah. It was very, very peaceful. Another fun thing, after a long day of work at Ford, we would go to Luigi's restaurant in Dearborn. I think there was a Dearborn Marriott, a big hotel. I don't know if it's there now. But that's Larry Moore, director of quality, next to Dr. Deming and me. I had a mustache back then.

0:48:30.4 Andrew Stotz: Yes. And we all loved soft serve ice cream.

0:48:34.0 Bill Scherkenbach: Soft serve ice cream. Yep.

0:48:38.0 Andrew Stotz: Yep. All right. Star-Spangled Banner.

0:48:40.9 Bill Scherkenbach: Yep. Now we're at one of my earlier houses in Northville. And Dr. Deming had written a new tune for the Star-Spangled Banner because it was an old English drinking song, Anna, the what? The Anacrocronistic Society. And he thought it was just too bawdy. I mean, you're an unsingable, except if you're drinking. So he rewrote the music for the Star-Spangled Banner. I have a copy of it here. But he, my son Matthew, my oldest son Matthew, we had just gotten one of those first Macs from Apple, Macintosh. And it had a very elementary music thing. So he put the notes that Deming had handwritten. And we put it in there and it played the tune. And so Deming was playing on our piano the Star-Spangled Banner.

0:50:04.7 Andrew Stotz: So he had a musical talent.

0:50:10.8 Bill Scherkenbach: Oh, yeah. He was a very serious study of, a student of music. Very much so. He wrote a complete Mass. He was a high church Episcopalian. And he wrote a complete Mass of the Holy Spirit with all parts. So, very much a student of music.

0:50:41.8 Andrew Stotz: And how did his religious beliefs, like Episcopalian, as you mentioned, how did that come across? Was he a person who talked about that? Was he a person that didn't talk about that? Like, how did that come across?

0:50:59.2 Bill Scherkenbach: It was more of a private thing. But then again, on every one of his books, he would begin a chapter with some quotation from different books. And many of them were from the Bible. I can remember one time in London, I'm Catholic, and so we were celebrating the St. Peter and Paul that Sunday. But he was in London and he was at St. Paul's and they weren't giving Peter any traction. But he looked up and he said, yep, you're right. It was both of those saint days.

0:51:58.3 Andrew Stotz: All right. Next one, Drive Out Fear.

0:52:01.8 Bill Scherkenbach: Oh, yeah. This was Professor Arnold. And we were having lunch in the Ford dining room, one of the Ford dining rooms. And Dr. Deming wasn't too happy of what Professor Arnold was talking about. And Professor Arnold didn't look too happy either. So, I framed the picture and put Drive Out Fear underneath it and hung it in my office. And Deming came and looked at it and smiled.

0:52:46.5 Andrew Stotz: And what was the background on Professor Arnold? And in this case, did they have opposing views or was it a particular thing or what was it that was...

0:52:58.4 Bill Scherkenbach: I don't remember the particular conversation, but Professor Arnold was head of the statistics department at Oakland University. And Ford had an agreement with Oakland University that we established a master's degree in statistics, according to Dr. Deming's viewpoint on enumerative and analytic. And no, he was very, very capable gentleman. I mean, one of the things Dr. Deming mentioned to me is if the two of us agreed all the time, one of us is redundant. So there were always discussions. This is just a snapshot in time.

0:53:52.3 Andrew Stotz: I love that quote, that one of us is redundant. That's powerful, powerful.

0:53:59.4 Bill Scherkenbach: Absolutely. Yep. This is another having fun after learning in... There were a number of restaurants we went to. He particularly liked Elizabeth's,

0:54:16.1 Andrew Stotz: And how was their relationship? How did he treat your lovely wife?

0:54:22.5 Bill Scherkenbach: Oh, I mean, very lovingly. I mean, I don't know how to describe it, but one of the family.

0:54:36.2 Andrew Stotz: Yeah. He seemed from my observation, like a true gentleman.

0:54:42.5 Bill Scherkenbach: Absolutely. Absolutely.

0:54:46.0 Andrew Stotz: Well, here we come to the Lincoln that we started off with. This is a great picture too.

0:54:51.4 Bill Scherkenbach: Yeah. That's a picture I had. It wasn't a Hasselblad, but it was a two and a quarter frame. And I had black and white film in it, but this is one of a number of pictures I took of him at the Cosmos Club. I think it was a very good picture. And in any event, it was blending learning and having fun.

0:55:19.7 Andrew Stotz: Yeah. And the Cosmos Club was near his house?

0:55:22.5 Bill Scherkenbach: Yeah. Well, it was depending on who drove. I mean, it was just, it was down a few blocks and then a number of blocks on Massachusetts Avenue. I enjoyed the drive from his house because you'd pass the Naval Observatory, which for years was the home of the chief of naval operations here. But a few decades, a few, I don't know how long ago, the vice president pulled rank on him. And so the Naval Observatory, beautiful, beautiful old house. So, the vice president lives there now. And a lot of people think Massachusetts Avenue in that area is Embassy Row. So you're passing a number of embassies on the way. And the Cosmos Club, anyone can look up. I mean, it's by invitation, members only, and Nobel laureates and Pulitzer Prize winners and a very distinguished membership, let's say.

0:56:39.3 Andrew Stotz: Here was another one, Making a Difference with Don Peterson.

0:56:43.0 Bill Scherkenbach: Yep. Yep. We're, we're, this is one of the meetings we had with Don. And it wasn't this meeting, but we were in one of them. Okay. You have it on the right there. That we periodically would have, Dr. Deming and I would have breakfast with Jim Bakken in what was known as the Penthouse at Ford. There are 12 floors, and then there was the 13th and 14th, which were private quarters, essentially. And so we were having breakfast one morning and finishing breakfast, and I'm walking a little bit ahead, and I run ahead and press the elevator button to go down one floor, and the door opens, and there's Henry Ford II in cowboy belt buckle and boots, no hat. He's going to a board meeting, he says, and Jim shied away, said, "Oh, I'm sorry, Mr. Ford." He said, "Shut up, Jim, get in here." And so we got in the elevator, and it was the small elevator. And so we're back to back, belly to belly, and Jim introduces Dr. Deming to Mr. Ford, and Ford said, "I've heard of you, Dr. Deming. God, we really need your help." And Deming had the presence of saying, "I heard of you too, Mr. Ford." It was the longest one-floor elevator ride I've ever had in my life.

0:58:49.1 Andrew Stotz: That's fascinating. All right. Next one, talking with workers.

0:58:54.1 Bill Scherkenbach: Yep. Yep. He made it a point. And this is a fine line, because you want to be able to have workers say, how, how, are they able to take pride in their work? And are there any problems and all of that? But you don't want to be in a position of then going to management and telling them because of fear in the organization. So, Dr. Deming was very good at listening and getting people to talk about their jobs and their ability to take joy and, well, pride in their work. So we had many, many meetings, different places. And this next one is with the Ford Batavia plant, I think.

1:00:01.2 Andrew Stotz: Yep.

1:00:02.4 Bill Scherkenbach: Yeah. We're riding on the tractors and having a good time.

1:00:11.3 Andrew Stotz: Who's driving?

1:00:14.2 Bill Scherkenbach: The plant manager, Ron Kaseya, was driving.

1:00:16.9 Andrew Stotz: Okay.

1:00:17.9 Bill Scherkenbach: And so I absolutely do not recall what we were laughing at, but we were having a good time. And the Batavia transaxle plant, a number of people will recognize as where Ford, it really made the point that doing better than spec is really what the job is. And it's a very powerful video that's been out there and people would recognize it as well, because we were producing the exact same transaxle in Mazda. And Mazda was influenced a lot of by Genichi Taguchi and looked to reduce variation around the nominal and not just be happy that we made spec. And John Betty, who was head up of powertrain operations and then went to the Department of Defense as assistant secretary of defense for procurement, I think, because of the quality expertise. Betty is in the front of the video saying he's absolutely convinced that this is a superior way to look at manufacturing, to look at the management of any process. You want to get your customers to brag, not just not complain.

1:02:10.3 Andrew Stotz: Yeah. Courage.

1:02:11.8 Bill Scherkenbach: And all of this takes courage. And especially in his seminars in London say, the Brits had the advantage. You guys can take courage every day. We can't get that in the US anymore. Or it's very rare to be able to buy it here.

1:02:36.3 Andrew Stotz: For the listeners, there's a logo of the John Courage beer, premium beer.

1:02:45.7 Bill Scherkenbach: Yes. Yes. It's an amber pills.

1:02:49.8 Andrew Stotz: Okay.

1:02:52.4 Bill Scherkenbach: And last but not least, well, not last, but we're looking for, and I ran across this quote from Yogi Berra, and it's very applicable right now. And Yogi Berra said, I never said... Well, what did he say?

1:03:19.2 Andrew Stotz: Never said most of the things I said.

1:03:21.4 Bill Scherkenbach: Most of the things I could have said. I never said most of the things I said. Yeah. And every day online, I see people saying Dr. Deming said this, and he said that. And if he did, I've never heard him say it. And not that I've heard him say everything. But if he did say something like, if it's not measurable, you can't manage it. He would have followed it with, that's not right. The unknown and unknowable. And so you've got a lot of people misunderstanding what Dr. Deming said. And you've got to go with, I never said most of the things that I said.

1:04:24.0 Andrew Stotz: Well, that's the great thing about this discussion is that we're getting it from the horse's mouth, someone that was there listening and being a part of it.

1:04:32.1 Bill Scherkenbach: Well, I'm glad you saw the other end of the horse.

1:04:37.5 Andrew Stotz: Yeah. So, I'm going to close out this by just sharing a little personal connection. And that is, I'm showing a picture of me in my 1963 suicide door Lincoln Continental, which I owned for 10 years in beautiful Bangkok, Thailand. And much like being kind of wild taking a ride to the Cosmos Club with Dr. Deming driving his Lincoln Continental, you could imagine how odd it looked seeing this American guy driving this 1963 Lincoln Continental on the streets of Bangkok. But I just thought I would share that just to have some fun. So, yeah.

1:05:14.3 Bill Scherkenbach: That's beautiful. Absolutely. Yeah. I didn't think the streets were that wide.

1:05:22.1 Andrew Stotz: It gets stuck in traffic, that's for sure. But wow, there's so many things that we covered. I mean, I just really, really enjoyed that trip down memory lane. Is there anything you want to share to wrap it up?

1:05:36.1 Bill Scherkenbach: No. As I said, our last conversation, we've just scratched the surface. There's so much, so much more to talk about and preserve, I think.

1:05:48.9 Andrew Stotz: Yeah. Well, I really enjoyed it.

1:05:52.1 Bill Scherkenbach: I have done my best.

1:05:53.6 Andrew Stotz: Yes, you have. You have. I've enjoyed it, and I'm sure the listeners and the viewers will enjoy it too. So, on behalf of everyone at the Deming Institute, I just want to thank you for taking the time to pull that together and to walk us through it. And for listeners out there, remember to go to Deming.org to continue your journey. And of course, go to LinkedIn to find Bill and reach out and share your interpretations of what we went through. And maybe you have a story that you'd like to share also. So, this is your host, Andrew Stotz, and I'm going to leave you with one of my favorite quotes from Dr. Deming. And that is, “people are entitled to joy in work."

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What was it like to learn from Dr. Deming himself -- a decade before his name became legend in U.S. business circles? In this deeply personal episode, William Scherkenbach shares with host Andrew Stotz what it was like to sit in Deming’s classroom in 1972, join him for late-night chats at the Cosmos Club, and help ignite transformational change at Ford and GM. Learn how Deming’s teachings shaped a lifetime of purpose, and why Scherkenbach, now in his 80th year, is stepping back into the arena with lessons still burning bright. TRANSCRIPT

0:00:02.3 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 here with featured guest William Scherkenbach, and he is known as one of the men who has spent a huge amount of time with Dr. Deming, as he mentioned to me previously, starting from 1972, over a thousand meetings and many other activities that he's been involved in. So, Bill, welcome to the show. Why don't you give us a little background about you?

0:00:39.5 William Scherkenbach: Oh, okay. Good to be here, Andrew. Well, I'm going to start with, since it's about Deming, in '72, I was newly married in April, but had been accepted to NYU Graduate School of Business, and I don't know, I never found out who wrote the course syllabus, but whoever did wrote something that it sounded like a darn interesting course, sampling, manufacturing. I was a protocol officer at the United Nations at the time and was going to night school at the New York University Graduate School of Business. So, I said, this sounds like a good course, interesting course. Had no idea who Dr. Deming was, and I walked into the first class, and there was an old, I'm 26, so he was 72 in 1972, and he was one of the first, one of the only old person who didn't say, I used to be, and I don't want to stereotype all of my peers now that I'm 79, but hopefully I don't fall into the, well, I used to be and what happened. But he did tell, I mean, statistics can be a very technical subject, and the way he taught it, I had courses in some theory of sampling, which was one of his books.

0:02:52.2 William Scherkenbach: He had three, I said three courses. The other course that I took was based on his lectures in Japan in 1950, and in fact, two of them. The third course was an extension of that. So, he was, he would teach the statistics, but he was able to tell the history of the people behind all of the thoughts and the formulas and approaches, and I found that extremely, extremely interesting. And he handed out tons of papers and material, and it was just a very, very good experience. I know he had, and he had, in my opinion, a great sense of humor, but then statisticians, what's our status? Yeah, we're like accountants, in any event. .

0:04:12.2 Andrew Stotz: Why was he teaching? I mean, at 72, most men, you know, maybe women also, but most of us are like, it's the twilight of our years, and we now know he had 30 more years to go, but why was he teaching? And also, what's interesting is when I think about Deming, I think about his overall system of what he's teaching, whereas it's interesting to think about how he taught one relatively narrow subject.

0:04:43.7 William Scherkenbach: I'll get to that as to why I think he was teaching. But yeah, back then there were no 14 Points, no glimmer of Profound Knowledge. It was, not theoretical statistics, but applied statistics with a theory behind it. And he still was really expanding on Shewhart 's work with the difference between enumerative and analytic. He used his own. Now, why he was teaching, years later, probably 1987, so yeah, a bunch of years later, when I was at Ford and I had attended at the time, I attended a senior executive week-long get-together in order to get constancy of purpose or more continuity in the senior executive group. One of the people we brought in was Dr. Peter Kastenbaum. And I found as I attended his lecture in that week-long meeting, he was a student of CI Lewis. And CI Lewis, Deming learned about from Walter Shewhart and his work in the epistemology theory of knowledge. And in any event, Deming, when he was asked, and at the time it was still in the '30s, I think, when he was at the School of Agriculture, or the agriculture department, and bringing in Shewhart, he had tried to get CI Lewis to come talk. And CI said, I would love to, but I have a commitment to my students. And so I can't adjust my schedule.

0:07:33.9 William Scherkenbach: And the students, the people who wanted to learn were sacred. And I think that had a huge impact on Dr. Deming. I mean, he spoke about it a lot. And the way, you know, in a lot of the videos that Clare Crawford-Mason did, lovingly called the old curmudgeon. But for students, he had the greatest empathy and charity for, he just didn't suffer fools gladly. If you showed him that you weren't willing to learn, he took great joy in letting them know where they, where they stood.

0:08:43.1 Andrew Stotz: And one of the things when I went into my first Deming seminar in 1990, so now we're fast forwarding 30 years from when you first met him. It was almost like there was a safe harbor for workers, for young people, for people with open minds. I mean, I didn't, I watched as he didn't suffer fools, but I'm just curious, when you go back to 1972 in those classes, I'm assuming that he was pretty gentle with the students, encouraging them and all that was...

0:09:19.0 William Scherkenbach: Oh, absolutely. In my experience, I mean, if you were by, you know, in a student in graduate school, even though the graduate school of business in New York, down on 90 Church Street, Wall Street area, there were very few people going directly from your bachelor's to the master's program. And so these were people that had probably 10 years experience in business doing stuff. And yet by going to the class, absolutely were willing to learn, listen to different points of view, which is absolutely crucial. As you progress with theory of knowledge to be able to get different perspectives on whatever it is you're trying to look at.

0:10:23.2 Andrew Stotz: I would like to continue on this period of time just because it's a snapshot we don't get that often or that easily. You mentioned CI Lewis, a man who lived from about 1880 to about the year I was born, around 1964-65, and he was known for his understanding and discussion about logic and things like that. But why was CI Lewis someone that was interesting to Dr. Deming? What was the connection from your perspective?

0:10:59.6 William Scherkenbach: Well, my understanding is Shewhart referred to him, and Lewis was a professor at Harvard, and he was in the Peirce, I believe it's called. It looks like Peirce, but it's Peirce School of, or Chair of Philosophy, and Charles Sanders Peirce was a huge, huge influence in epistemology. And so that whole chain of thought or train of thought interested Deming, but it really was, he was introduced to it by Walter Shewhart.

0:11:48.3 Andrew Stotz: There's a famous quote, I believe, by Deming about CI Lewis and his book Mind and the World Order.

0:11:56.0 William Scherkenbach: Mind and the World Order, yeah.

0:11:59.9 Andrew Stotz: Deming said he had to read it six times before he fully understood and could apply its insights. And sometimes I think maybe Dr. Deming was truly inspired by that because when I think about his work, I'm still reading it and rereading it. And just listening to the video that you did many years ago with Tim talking about reduced variation, reduced variation, what he was talking about. Sometimes when we see the big picture, there's many different components of Deming's teachings. But if you had to bring it down to kind of its core, you know, he mentioned on that video that I just watched this morning, he mentioned reduced variation, and that will get you lower costs, happier customers, more jobs. How would you say, after you've looked at it from so many different angles over so many different years, how would you say you would sum up Dr. Deming's message to the world?

0:13:01.5 William Scherkenbach: Well, that's a difficult thing to sum up. Back then, when we did the video, which was in the early '80s, maybe '84, again, he had his 14 Points by then, but he hadn't, it hadn't really, the Profound Knowledge part of that wasn't there. Now, he had used what Shewhart said, and he had read, tried to read CI Lewis, and when he spoke about the connection between theory and questions, that's what he got from Shewhart and, well, and from Lewis, and a bunch of other pragmatist philosophers. So, he, you know, he was influenced by it, and, well, that's all I can say.

0:14:27.5 Andrew Stotz: So, let's go back in time. So, you're sitting in this classroom, you're intrigued, inspired. How did the relationship go at, towards the end of the class, and then as you finished that class, how did you guys keep in touch, and how did the relationship develop?

0:14:51.0 William Scherkenbach: Well, that is an interesting story. I usually am, well, I am introverted. So I had, after I moved from New York, I got a job at Booz Allen and Hamilton in Washington, DC. So in '74, when I got the degree from NYU, we moved to Silver Spring. And obviously, he's lived on Butterworth Place since there was a Butterworth Place. So we were able to, one of the things, and this is, well, I will say it, one of his advice to me, although he gave everyone an A, I later kidded him, he didn't remember that he gave me a B. No, he gave me an A. In any event, but one of his piece of advice was, you really don't need to join ASQC. You know more about quality than any of those inspectors. And so he had learned from the '50s in the past 20 years from the 50s that inspection wasn't going to do it. Well, I didn't take his advice, and I joined ASQC, and I was reading...

0:16:36.1 Andrew Stotz:Which for those who don't know is the American Society for...

0:16:41.6 William Scherkenbach: Quality Control, back then, now it's just the American Society for Quality. I had recommended when we did a big recommendations and forecasts for the year 2000 that quality, it should be the Society for Quality worldwide, but it's ASQ now. Let's see.

0:17:07.7 Andrew Stotz: So he recommended you don't join and you didn't follow his recommendation.

0:17:12.1 William Scherkenbach: I don't join, and I read an article, and it was by a professor in Virginia Tech, and he was showing a c-chart and the data were in control, and his recommendations were to penalize the people that were high and reward the people that were low, which is even back then, Dr. Deming was absolutely on track with that. If your process is in control, it doesn't make any sense to rank order or think that any of them are sufficiently different to reward or penalize. And I had never done this, but it was, I wrote a letter to quality progress. I sent a copy to Dr. Deming, and he said, "By golly, you're right on, that's great." And so I think it probably was '75, yeah, 1975. So I had been a year or so out, and he started inviting me over to his place at Butterworth, and we would go to the Cosmos Club. And that was a logistical challenge because at the time he had, well, his garage was a separate, not attached, it was in the backyard and emptied onto an alley. And he had a huge Lincoln Continental, the ones with the doors that opened from the center.

0:19:29.0 William Scherkenbach: And he would get in and drive and then park it in back of the club and someone would watch over it. But those were some good memories. So that was my introduction to keep contact with him. As I said, I had never done that. I don't think I've written a letter to an editor ever again.

0:20:04.8 Andrew Stotz: And you're mentioning about Butterworth, which is in DC.

0:20:12.6 William Scherkenbach: Butterworth Place, yeah.

0:20:14.7 Andrew Stotz: And Butterworth Place where he had his consulting business, which he ran, I believe, out of his basement.

0:20:18.3 William Scherkenbach: Out of the basement, yep, yep, yep.

0:20:21.2 Andrew Stotz: And just out of curiosity, what was it like when you first went to his home? Here, you had met him as your teacher, you respected him, you'd been away for a little bit, he invited you over. What was that like on your first walk into his home?

0:20:38.5 William Scherkenbach: Well, went down the side, the entrance to the basement was on the side of the house, and Seal had her desk set up right by the door. And then, I don't know if you can see, this is neat compared to his desk. It was filled with books and papers, but he knew where everything was. But it was a very cordial atmosphere.

0:21:25.2 Andrew Stotz: So when you mentioned Cecelia Kilian, is that her name, who was his assistant at the time?

0:21:36.3 William Scherkenbach: Yes, yes.

0:21:38.0 Andrew Stotz: Okay, so you...

0:21:38.8 William Scherkenbach: Yeah. For Jeepers. I don't know how long, but it had to be 50 years or so. So I don't, I mean, back in the '70s, I don't know of any other. He might have had, well, okay. He, yeah.

0:22:01.1 Andrew Stotz: I think it's about 40 or 50 years. So that's an incredible relationship he had with her. And I believe she wrote something. I think I have one of her, a book that she wrote that described his life. I can't remember that one right now but...

0:22:14.2 William Scherkenbach: Yeah. A lot of, yeah, it contained a lot of...

0:22:16.6 Andrew Stotz: The World of Dr. W. Edwards Deming, I think was the name of it, yeah.

0:22:20.6 William Scherkenbach: Okay. It contained a lot of his diaries on a number of his visits to Japan and elsewhere.

0:22:32.1 Andrew Stotz: So for some of us, when we go into our professor's offices, we see it stacked full of papers, but they've been sitting there for years. And we know that the professor just doesn't really do much with it. It's just all sitting there. Why did he have so much stuff on it? Was it incoming stuff that was coming to him? Was it something he was writing? Something he was reading? What was it that was coming in and out of his desk?

0:22:55.7 William Scherkenbach: A combination of stuff. I don't know. I mean, he was constantly writing, dictating to seal, but writing and reading. He got a, I mean, as the decades proceeded out of into the '80s, after '82, the NBC white or the '80, the NBC white paper calls were coming in from all over, all over the world. So yeah, a lot of people sending him stuff.

0:23:35.8 Andrew Stotz: I remember seeing him pulling out little scraps of paper at the seminar where he was taking notes and things like that at '90. So I could imagine he was just prolific at jotting things down. And when you read what he wrote, he really is assembling a lot of the notes and things that he's heard from different people. You can really capture that.

0:23:59.0 William Scherkenbach: Yeah. He didn't have an identic memory, but he took notes and quite, you know, and what he would do at the end of the day before retiring, he'd review the notes and commit them to memory as best he could. So he, yeah, very definitely. I mean, we would, you know, and well, okay. We're still in the early days before Ford and GM, but.

0:24:37.6 Andrew Stotz: Yeah. And I want to, if I shoot forward to '90, '92, when I studied with him, I was impressed with his energy at his age and he was just on a mission. And when I hear about your discussion about the class and at that time, it's like he was forming his, you know, System of Profound Knowledge, his 14 Points. When do you think it really became a mission for him to help, let's say American industry?

0:25:09.0 William Scherkenbach: Oh, well, I think it was a mission when Ford began its relationship with him. The ability of a large corporation, as well, and Ford at the same time Pontiac, the Pontiac division, not the whole GM, but Pontiac, was learning as well. But the attachment to Ford was that you had Don Peterson at the time was president of Ford, and he was intellectually curious, and he and Deming were on the same frequency. Now, I don't want to jump ahead, but if anyone has, well, you've read my second book there, you'll know that I have mentioned that the way to change is physical, logical, and emotional. And when you look at the gurus back then, there was Deming, who was the logical guru. You had Phil Crosby, who was the emotional guru. You go to the flag and the wine and cheese party, and Deming would say, "No," and Joe Juran, who was interested in focusing on the physical organization, you report to me kind of a thing. And so each of these behemoths were passing each other in the night with the greatest respect. But, but, and so they had their constituents. The challenge is to be able to broaden the appeal.

0:27:33.8 Andrew Stotz: So we've gone through '72, and then now '75, you've written your piece, and he's brought you into the fold. You're starting to spend some time with him. I believe it was about 1981 or so when he started working with Ford. And at that time, the quality director, I think, was Larry Moore at the time. And of course, you mentioned Donald Peterson. Maybe you can help us now understand from your own perspective of what you were doing between that time and how you saw that happening.

0:28:13.4 William Scherkenbach: Well, I had, my career was, after Booz Allen, mostly in the quality reliability area. I went from Booz Allen and Hamilton to, I moved to Columbia, Maryland, because I can fondly remember my grandfather in Ironwood, Michigan, worked at the Oliver Mine. There's a lot of iron ore mines up in the UP. ANd he would, and his work, once he got out of the mines later on, was he would cut across the backyard, and his office was right there. And so he would walk home for lunch and take a nap and walk back. And I thought that really was a good style of life. So Columbia, Maryland, was designed by Rouse to be a live-in, work-in community. And so we were gonna, we moved to Columbia, and there was a consulting firm called Hitman Associates, and their specialty was energy and environmental consulting. So did a bunch of that, worked my way up to a vice president. And so, but in '81, Deming said, you know, Ford really is interested. He was convinced, and again, it's déjà vu, he spoke about, when he spoke fondly about his lectures in Japan in 1950 and onward, that he was, he was very concerned that top management needed to be there, because he had seen all the excitement at Stanford during the war, and it died out afterwards, because management wasn't involved.

0:30:42.8 Andrew Stotz: What do you mean by that? What do you mean by the excitement at Stanford? You mean people working together for the efforts of the war, or was there a particular thing that was happening at Stanford?

0:30:51.7 William Scherkenbach: Well, they were, he attributed it to the lack of management support. I mean, they learned SPC. We were able to improve quality of war material or whatever, whoever attended the Stanford courses. But he saw the same thing in Japan and was lucky to, and I'm not sure if it was Ishikawa. I'm just not sure, but he was able to get someone to make the call after a few of the seminars for the engineers to make the call to the top management to attend the next batch. And he was able, he was able to do that. And that he thought was very helpful. I, I, gave them a leg up on whatever steps were next. I'm reminded of a quote from, I think it was Lao Tzu. And he said that someone asked him, "Well, you talk to the king, why or the emperor, why are things so screwed up?" And he said, "Well, I get to talk to him an hour a week and the rest of the time his ears are filled with a bunch of crap." Or whatever the Chinese equivalent of that is. And he said, "Of course the king isn't going to be able to act correctly." Yeah, there are a lot of things that impacted any company that he helped.

0:33:07.6 Andrew Stotz: It's interesting because I believe that, I think it was Kenichi Koyanagi.

0:33:15.8 William Scherkenbach: Koyanagi, yes, it was.

0:33:17.8 Andrew Stotz: And it was in 1950 and he had a series of lectures that he did a series of times. But it's interesting that, you know, that seemed like it should have catapulted him, but then to go to where you met him in 1972 and all that, he still hadn't really made his impact in America. And that's, to me, that's a little bit interesting.

0:33:44.4 William Scherkenbach: Yeah, and quite, my take, I mean, you could tell even in '72 and '3 in classes, he was very frustrated that he wasn't being listened to. I mean, he had, his business was expert testimony in statistical design of surveys. He did road truck, truck transport studies to be able to help the interstate commerce commission. And made periodic trips back to Japan, well known in Japan, but frustrated that no one really knew about him or wasn't listening to him in the US. And that was, I mean, for years, that was my, my aim. And that is to help him be known for turning America around, not just Japan. But it's usually difficult. I mean, we did a great job at Ford and GM and a bunch of companies, but it's all dissipated.

0:35:25.9 Andrew Stotz: It's interesting because it's not like he just went as a guest and gave a couple of guest lectures. He did about 35 lectures in 1950. About 28 or almost 30 of them were to engineers and technical staff. And then about seven of them were to top level executives. And, you know, one of the quotes he said at the time from those lectures was, "the problem is at the top, quality is made in the boardroom." So just going back, that's 1950, then you meet him in 1970, then in '72, then you start to build this relationship. You've talked about Booz Allen Hamilton. Tell us more about how it progressed into working more with him, in particular Ford and that thing that started in, let's say, 1981 with Ford.

0:36:22.0 William Scherkenbach: Well, again, he was very enthusiastic about Ford because Peterson was very receptive to this, his approach. And again, it's, I think the British philosopher Johnson said, "there's nothing like the prospect of being hung in the morning to heighten a man's senses." So he, Ford had lost a couple billion bucks. They hadn't cashed in like Chrysler. GM lost a bunch too, but that, and Japan had lost a war. So does it take a significant emotional, logical, or physical event? For some folks it does. So he was very encouraged about what he was seeing at Ford. And he had recommended that Ford hire someone to be there full time to coordinate, manage, if you will. And I was one of the people he recommended and I was the one that Ford hired. So I came in as Director of Statistical Methods and Process Improvement. And they set it up outside, as Deming said, they set it up outside the quality. Larry Moore was the Director of Quality and I was Director of Statistical Methods. And that's the way it was set up.

0:38:08.0 Andrew Stotz: Were you surprised when you received that call? How did you feel when you got that call to say, "Why don't you go over there and do this job at Ford?"

0:38:18.6 William Scherkenbach: Oh, extremely, extremely happy. Yeah. Yeah.

0:38:23.1 Andrew Stotz: And so did you, did you move to Michigan or what did you do?

0:38:27.7 Andrew Stotz: I'm sorry?

0:38:29.4 Andrew Stotz: Did you move or what happened next as you took that job?

0:38:32.0 William Scherkenbach: Oh yeah, we were living in Columbia. We moved the family to the Detroit area and ended up getting a house in Northville, which is a Northwest suburb of Detroit.

0:38:49.9 Andrew Stotz: And how long were you at Ford?

0:38:53.8 William Scherkenbach: About five and a half years. And I left Ford because Deming thought that GM needed my help. Things were going well. I mean, had a great, great bunch of associates, Pete Chessa, Ed Baker, Narendra Sheth, and a bunch of, a bunch of other folks. Ed Baker took the directorship when I left. That was my, well, I recommended a number of them, but yeah, he followed on. Deming thought that there was a good organization set up. And me being a glutton for punishment went to, well, not really. A bunch of great, great people in GM, but it's, they were, each of the general managers managed a billion dollar business and a lot of, difficult to get the silos to communicate. And it really, there was not much cooperation, a lot of backstabbing.

0:40:25.0 Andrew Stotz: And how did Dr. Deming take this project on? And what was the relationship between him and, you know, let's say Donald Peterson, who was the running the company and all the people that he had involved, like yourself, and you mentioned about Ed Baker and other people, I guess, Sandy Munro and others that were there. And just curious, and Larry Moore, how did he approach that? That's a huge organization and he's coming in right at the top. What was his approach to handling that?

0:41:02.1 S2 Well, my approach was based on his recommendation that the Director of Statistical Methods should report directly to the president or the chairman, the president typically. And so based on that, I figured that what I would, how we would organize the office, my associates would each be assigned to a key vice president to be their alter ego. So we did it in a, on a divisional level. And that worked, I think, very well. The difficulty was trying to match personalities and expertise to the particular vice president. Ed Baker had very good relations with the Latin American organization, and, and he and Harry Hannett, Harold Hannett helped a lot in developing administrative applications as well. And so we sort of came up with a matrix of organization and discipline. We needed someone for finance and engineering and manufacturing, supply chain, and was able to matrix the office associates in to be able to be on site with those people to get stuff, to get stuff done.

0:43:09.5 Andrew Stotz: And what was your message at that time, and what was Dr. Deming's message? Because as we know, his message has come together very strongly after that. But at that point, it's not like he had the 14 Points that he could give them Out of the Crisis or you could give them your books that you had done. So what was like the guiding philosophy or the main things that you guys were trying to get across?

0:43:35.9 William Scherkenbach: Well, I mean, he had given in, I think, Quality, Productivity, Competitive Position back in the late '70s, and he was doing it through George Washington University, even though Myron Tribus at MIT published it. But it was a series of lectures, and he didn't really, even in the later 70s, didn't have the, the, the 14 Points. And so those came a couple years later, his thinking through, and Profound Knowledge didn't come until much later over a number of discussions of folks. But the, I mean, the key, I mean, my opinion of why it all dropped out is we dropped the ball in not working with the board. And at Ford, we didn't, weren't able to influence the Ford family. And so Peterson retires and Red Poling, a finance guy, steps in and, and everything slowly disintegrates. At least not disintegrates, well, yes. I mean, what was important under Peterson was different. But that happens in any company. A new CEO comes on board or is elected, and they've got their priorities based, as Deming would say, on their evaluation system. What's their, how are they compensated?

0:45:46.8 William Scherkenbach: And so we just didn't spend the time there nor at GM with how do you elect or select your next CEO? And so smaller companies have a better, I would think, well, I don't know. I would imagine smaller companies have a better time of that, especially closely held and family held companies. You could, if you can reach the family, you should be able to get some continuity there.

0:46:23.5 Andrew Stotz: So Donald Peterson stepped down early 1995. And when did you guys make or when did you make your transition from Ford to GM?

0:46:38.5 William Scherkenbach: '88.

0:46:39.6 Andrew Stotz: Okay, so you continued at Ford.

0:46:42.1 William Scherkenbach: The end of '88, yeah, and I left GM in '93, the year Dr. Deming died later. But I had left in, in, well, in order to help him better.

0:47:07.8 Andrew Stotz: And let's now talk about the transition over to General Motors that you made. And where did that come from? Was it Dr. Deming that was recommending it or someone from General Motors? Or what...

0:47:21.4 William Scherkenbach: Yeah, Deming spoke with them and spoke with me. And I was a willing worker to be able to go where he thought I could be most helpful.

0:47:41.9 Andrew Stotz: And was he exasperated or frustrated that for the changes that happened in '95 when Peterson stepped down, he started to see the writing on the wall? Or was he still hopeful?

0:47:55.4 William Scherkenbach: No, Deming died in '93, so he didn't see any of that.

0:47:58.9 Andrew Stotz: No, no, what I mean is when Peterson stepped down, it was about '85. And then you remain at Ford until '88.

0:48:08.0 William Scherkenbach: No, Peterson didn't step down in '85. I mean, he was still there when I left.

0:48:14.0 Andrew Stotz: So he was still chairman at the time.

0:48:17.3 William Scherkenbach: Yeah.

0:48:17.6 Andrew Stotz: Maybe I'm meaning he stepped down from president. So my mistake on that.

0:48:20.3 William Scherkenbach: Oh, but he was there.

0:48:24.3 Andrew Stotz: So when did it start...

0:48:25.9 William Scherkenbach: True. I mean, true, he was still there when Deming had died.

0:48:31.3 Andrew Stotz: Yeah, okay. So did the whole team leave Ford and go to GM or was it just you that went?

0:48:39.1 William Scherkenbach: Oh, just me. Just me.

0:48:42.8 Andrew Stotz: Okay. And then.

0:48:44.0 William Scherkenbach: Yeah, because we had set up something that Deming was very pleased with. And so they were, everyone was working together and helping one another.

0:48:59.5 Andrew Stotz: Okay. So then you went to General Motors. What did you do different? What was different in your role? What did you learn from Ford that you now brought to GM? What went right? What went wrong? What was your experience with GM at that time?

0:49:16.5 William Scherkenbach: Well, I've got a, let's see. Remember Bill Hoagland was the person, Hoagland managed Pontiac when Deming helped Pontiac and Ron Moen was involved in the Pontiac. But Bill Hoagland was in one of the reorganizations at GM was head of, he was group, group vice president for Buick, Oldsmobile, Cadillac. And so I went over and directly reported to him and each of the, I mean, Wendy Coles was in, Gypsy Rainey, although Gypsy was temporary, worked for powertrain and Pontiac and still, but powertrain was where a lot of the expertise was and emphasis was, and then Buick and Cadillac and so, and Oldsmobile. So we, and in addition to that, General Motors had a corporate-wide effort in cooperation with the UAW called the Quality Network. And I was appointed a member of that, of that and, and helped them a lot and as well as the corporate quality office, but focused on Buick, Oldsmobile, Cadillac.

0:51:18.6 Andrew Stotz: And then tell us about what was your next step in your own personal journey? And then let's now get into how you got more involved with Deming and his teachings and the like.

0:51:32.8 William Scherkenbach: Well, I mean, he would be at GM two and three days a month, and then every quarter he'd be here for, just like Ford, for a four-day seminar. And while at Ford and at GM, I took uh vacation to help him as he gave seminars and met people throughout the world. Even when he was probably 84, 85, I can remember, well, one of the, he always, not always, but he would schedule seminars in England over the Fourth of July because the English don't celebrate that, although he said perhaps they should, but right after the Ascot races. And so he would do four-day seminars. And on one case, we had one series of weeks, the week before Fourth of July, we did a four-day seminar in the US and then went to London to do another four-day seminar. And he went to South Africa for the next four-day seminar with Heero Hacquebord. I didn't go, but I went down to Brazil and I was dragging with that, with that schedule. So he was able to relish and enjoy the helping others. I mean, enjoy triggers a memory. We were at helping powertrain and Gypsy was there, Dr. Gypsy Rainey.

0:53:59.2 William Scherkenbach: And she, we were talking and goofing around and he started being cross at us. And Gypsy said, "Well, aren't we supposed to be having fun?" And Deming said, "I'm having fun." "You guys straighten out." Enjoy, enjoy, enjoy, yeah.

0:54:40.6 Andrew Stotz: And for the typical person to imagine a man at the age of 80, 85, traveling around the world. And it's not like you're traveling on vacation in London, you're walking into a room full of people, your energy is up, you're going and it's not like he's giving a keynote speech for an hour, give us a picture of his energy.

0:55:09.5 William Scherkenbach: And over in London, it was brutal because the hotel, I forget what hotel we're in. When he started there, I think it was Dr. Bernard that he wanted to help. And Bernard wasn't available. So he recommended Henry Neave. And so Henry was a good student, a quick learner. So he helped on a few of them. And I can still remember, I mean, the air, it was 4th of July in London and the humidity was there. There's no air conditioning in the hotel. I could remember Henry, please forgive me, but Henry is sitting in his doorway, sitting on a trash can, doing some notes in his skivvies. And it was hot and humid and awful. But so it reminded Deming a lot of the lectures in Japan in 1950, where he was sweating by 8 AM in the morning. So, yeah.

0:56:30.6 Andrew Stotz: What was it that kept him going? Why was he doing this?

0:56:39.5 William Scherkenbach: I think he, again, I don't know. I never asked him that. He was very, to me, he was on a mission. He wanted to be able to help people live better, okay, and take joy in what they do. And so he was, and I think that was the driving thing. And as long as he had the stamina, he was, he was in, in, in heaven.

0:57:21.1 Andrew Stotz: So let's keep progressing now, and let's move forward towards the latter part of Dr. Deming's life, where we're talking about 1990, 1988, 1990, 1992. What changed in your relationship and your involvement with what he was doing, and what changes did you see in the way he was talking about? You had observed him back in 1972, so here he is in 1990, a very, very different man in some ways, but very similar. How did you observe that?

0:57:56.6 William Scherkenbach: Well, toward the end, it was, I mean, it was, it was not, not pleasant to see him up there with oxygen up his nose, and it just, there had to have been a better way. But Nancy Mann was running those seminars, and they did their best to make life comfortable, but there had to have been a better way to, but I don't know what it was. He obviously wanted to continue to do it, and he had help doing it, but I don't know how effective the last year of seminars were.

0:59:01.1 Andrew Stotz: Well, I mean, I would say in some ways they were very effective, because I attended in 1990 and 1992, and I even took a picture, and I had a picture, and in the background of the picture of him is a nurse, and for me, I just was blown away and knocked out. And I think that one of the things for the listeners and the viewers is to ask yourself, we're all busy doing our work, and we're doing a lot of activities, and we're accomplishing things, but for what purpose, for what mission? And I think that that's what I gained from him is that because he had a mission to help, as you said, make the world a better place, make people have a better life in their job, and help people wake up, that mission really drove him.

0:59:57.8 William Scherkenbach: Yeah, and it, it really did. But for me personally, it was just not pleasant to see him suffering.

1:00:09.6 Andrew Stotz: And was he in pain? Was he just exhausted? What was it like behind the scenes when he'd come off stage and take a break?

1:00:18.7 William Scherkenbach: Yeah, yeah.

1:00:20.8 Andrew Stotz: And would he take naps or?

1:00:23.2 William Scherkenbach: In the early days, we'd go to, well, at Ford and GM, we would go out to dinner just about every night and talk and enjoy the conversation. We'd, my wife Mary Ellen, went many, many times. He enjoyed Northville, some of the restaurants there, and enjoyed the Deming martinis after the meetings at the Cosmos Club. So very, very much he enjoyed that, that time off the podium. So, but he couldn't do that in the, in the later years.

1:01:28.7 Andrew Stotz: And let's now try to understand the progression as you progress away from General Motors and did other things. How did your career progress in those years until when you retired or to where you are now? Maybe give us a picture of that.

1:01:51.4 William Scherkenbach: I tried to help. I've developed my view on how to operationalize change, worked for, was vice president of a company in Taiwan, spent a couple of, and before that had helped Dell, and would spend probably ending up a couple of years in PRC and Taiwan, and growing and learning to learn, in my opinion, there's too much generalization of, well, Asians or Chinese or whatever. There are many, many subgroups, and so change has to be bespoke. What will work for one person won't work for another. For instance, trying to talk to a number of Chinese executives saying, drive out fear, and they will, oh, there's no fear here. It's respect. And so, yeah. But that was their sincere belief that what they were doing wasn't instilling fear. But it broadened my perspective on what to do. And then probably 10 years ago, my wife started to come down with Alzheimer's, and while we lived in Austin, Texas, and that I've spent, she died three years ago, but that was pretty much all-consuming. That's where I focused. And now it's been three years. I'm looking, and I'm a year younger than Deming when he started, although he was 79 when he was interviewed for the 1980 White Paper.

1:04:36.3 William Scherkenbach: So I'm in my 80th year. So, and I'm feeling good, and I also would like to help people.

1:04:46.6 Andrew Stotz: And I've noticed on your LinkedIn, you've started bringing out interesting papers and transcripts and so many different things that you've been coming out. What is your goal? What is your mission?

1:05:02.3 William Scherkenbach: Well, I also would like to take the next step and contribute to help the improvement, not just the US, but any organization that shows they're serious for wanting to, wanting to improve. On the hope, and again, it's hope, as Deming said, that to be able to light a few bonfires that would turn into prairie fires that might consume more and more companies. And so you've got to light the match somewhere. And I just don't know. Again, I've been out of it for a number of years, but I just don't know. I know there is no big company besides, well, but even Toyota. I can remember Deming and I were in California and had dinner. Toyoda-san and his wife invited Deming and me to a dinner. And just, I was blown away with what he understood responsibilities were. I don't know, although I do have a Toyota Prius plug-in, which is perfect because I'm getting 99 miles a gallon because during my, doing shopping and whatever here in Pensacola, I never use gas. It goes 50 miles without needing to plug in.

1:07:00.6 William Scherkenbach: And so I do my stuff. But when I drive to Texas or Michigan, Michigan mostly to see the family, it's there. But all over, it's a wonderful vehicle. So maybe they're the only company in the world that, but I don't know. I haven't sat down with their executive.

1:07:26.4 Andrew Stotz: And behind me, I have two of your books, and I just want to talk briefly about them and give some advice for people. The first one is The Deming Route to Quality and Productivity: Roadmaps and Roadblocks, and the second one is Deming's Road to Continual Improvement. Maybe you could just give some context of someone who's not read these books and they're new to the philosophy and all that. How do these books, how can they help them?

1:07:58.8 William Scherkenbach: Well, the first book, Deming asked me to write in, I think it was '84. And I don't remember the first edition, but it might be '85, we got it out. But he asked me to write it, and because he thought I would, I could reach a different audience, and he liked it so much, they handed it out in a number of his seminars for a number of years. So.

1:08:40.7 Andrew Stotz: And there's my original version of it. I'm holding up my...

1:08:47.0 William Scherkenbach: Yeah, that's a later version.

1:08:49.7 Andrew Stotz: And it says the first printing was '86, I think it said, and then I got a 1991 version, which maybe I got it at one of the, I'm sure I got it at one of the seminars, and I've had it, and I've got marks on it and all that. And Deming on the back of it said, "this book will supplement and enhance my own works in teaching. Mr. Scherkenbach's masterful understanding of a system, of a process, of a stable system, and of an unstable system are obvious and effective in his work as well as in his teaching." And I know that on Deming's Road to Continual Improvement, you do a good amount of discussion at the beginning about the difference between a process and a system to try to help people understand those types of things. How should a reader, where should they start?

1:09:42.8 William Scherkenbach: Well, not with chapter six, as in CI Lewis, but well, I don't know what... I don't remember what chapter six is. As I said, the first book, and a lot of people after that did it, is essentially not regurgitating, but saying in a little bit different words about Deming's 14 Points. What I did on the first book is arrange them in the order that I think, and groupings that I think the 14 Points could be understood better. The second book was, the first half was reviewing the Deming philosophy, and the second half is how you would go about and get it done. And that's where the physiological, emotional, and all of my studies on operationalizing anything.

1:10:55.4 Andrew Stotz: And in chapter three on page 98, you talk about physical barriers, and you talk about physical, logical, emotional. You mentioned a little bit of that when you talked about the different gurus out there in quality, but this was a good quote. It says, Dr. Deming writes about the golfer who cannot improve his game because he's already in the state of statistical control. He points out that you have only one chance to train a person. Someone whose skill level is in statistical control will find great difficulty improving his skills.

1:11:32.1 William Scherkenbach: Yeah. Well, yeah, I mean, well, you're old enough to know the Fosbury Flop. I mean, for all high jumpers did the straddle in jumping and made some great records, but many of them had difficulty converting their straddle to the Fosbury Flop to go over backwards head first. And that's what got you better performance. So anything, whether it's golf or any skill, if you've got to change somehow, you've got to be able to change the system, which is whether you're in production or whether it's a skill. If you're in control, that's your opportunity to impact the system to get better.

1:12:40.3 Andrew Stotz: Yeah, and this was Dick Fosbury in 1968, Mexico City Olympics, where he basically went in and blew everybody away by going in and flipping over backwards when everybody else was straddling or scissors or something like that. And this is a great story.

1:12:57.0 William Scherkenbach: You can't do that.

[laughter]

1:12:58.8 Andrew Stotz: Yeah, and it's a great story of something on the outside. An outsider came in and changed the system rather than an existing person within it. And that made me think about when you talked about Ford and having an outsider helping in the different departments. You know, what extent does that reflect the way that we learn? You know, can we learn internally, or do we need outside advice and influence to make the big changes?

1:13:29.7 William Scherkenbach: Yeah. I mean, we had a swim coach, Higgins, at the Naval Academy, and he was known for, again, following in Olympic swimming. And I'm probably going to get the strokes wrong, but there was no such thing as a butterfly stroke. And he used it in swimming the breaststroke, and supposedly the only criteria was recovery had to be underwater with two hands. But I'm screwing up the story, I'm sure, but Higgins rewrote, rewrote the book by doing something a little bit different or drastically different.

1:14:25.4 Andrew Stotz: I'd like to wrap up this fascinating discovery, or journey of discovery of you and your relationship also with Dr. Deming. Let's wrap it up by talking about kind of your final memories of the last days of Dr. Deming and how you kind of put that all in context for your own life. And having this man come in your life and bring you into your life, I'm curious, towards the end of his life, how did you process his passing as well as his contribution to your life?

1:15:08.1 William Scherkenbach: That's, that's difficult and personal. I, he was a great mentor, a great friend, a great teacher, a great person, and with, on a mission with a name and impacted me. I was very, very lucky to be able to, when I look back on it, to recognize, to sign up for his courses, and then the next thing was writing that letter to the editor and fostering that relationship. Very, very, very difficult. But, I mean, he outlived a bunch of folks that he was greatly influenced by, and the mission continues.

1:16:34.1 Andrew Stotz: And if Dr. Deming was looking down from heaven and he saw that you're kind of reentering the fray after, you know, your struggles as you've described with your wife and the loss of your wife, what would he say to you now? What would he say as your teacher over all those years?

1:16:56.3 William Scherkenbach: Do your best.

1:16:59.0 Andrew Stotz: Yeah, wonderful.

1:17:01.4 William Scherkenbach: He knows, but he knows I know what to do. So, you need to know what to do and then to do the best. But I was, I mean, he was very, he received, and I forget the year, but he was at Ford and he got a call from Cel that his wife was not doing well. And so we, I immediately canceled everything and got him to the airport and he got to spend that last night with his wife. And he was very, very appreciative. So I'm sure he was helping, helping me deal with my wife.

1:17:56.4 Andrew Stotz: Yeah. Well, Bill, on behalf of everyone at the Deming Institute and myself personally, I want to thank you for this discussion and opening up you know, your journey with Dr. Deming. I feel like I understand Dr. Deming more, but I also understand you more. And I really appreciate that. And for the listeners out there, remember to go to Deming.org to continue your journey. And also let me give you, the listeners and viewers, the resources. First, we have Bill's book, which you can get online, The Deming Route to Quality and Productivity. We have Deming's Road to Continual Improvement, which Bill wrote. But I think even more importantly is go to his LinkedIn. He's on LinkedIn as William Scherkenbach and his tagline is helping individuals and organizations learn, have fun, and make a difference. So if you want to learn, have fun, and make a difference, send him a message. And I think you'll find that it's incredibly engaging. Are there any final words that you want to share with the listeners and the viewers?

1:19:08.9 William Scherkenbach: I appreciate your questions. In thinking about this interview, we barely scratched the surface. There are a ton of other stories, but we can save that for another time.

1:19:26.1 Andrew Stotz: Something tells me we're going to have some fun and continue to have fun in these discussions. So I really appreciate it and it's great to get to know you. Ladies and gentlemen.

1:19:36.7 William Scherkenbach: Thank you, Andrew.

1:19:37.7 Andrew Stotz: You're welcome. This is your host, Andrew Stotz, and I'm going to leave you with one of my favorite quotes from Dr. Deming, and that is that "people are entitled to joy in work."

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What if you could tackle a persistent problem without guesswork? In Part 10 of the Path to Improvement series, John Dues and Andrew Stotz discuss how John's team uses Plan-Do-Study-Act (PDSA) cycles to calm a chaotic process with precision. Discover how to shift from blame to solutions by leveraging data and Deming thinking. You'll also find out where the team stands on their path to reducing chronic absenteeism in their schools. Listen now! #EducationLeadership #ContinuousImprovement #SystemsThinking #DemingInEducation 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 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. The topic for today is mapping the process, part two. John, take it away.

0:00:23.5 John Dues: Hey, Andrew. It's good to be back. Yeah, we've now been talking about our efforts to improve chronic absenteeism for several episodes. And we've talked about two Plan-Do-Study-Act or PDSA cycles focused on where we were working with specific students and their families regarding obstacles to getting to school. And then we shifted gears, and we started running this PDSA cycle three that we talked about last time. And just as a refresher for listeners, the objective of PDSA three is to create a process map, basically. And the goal for the process map is to standardize our attendance intervention system. And I think one of the things that comes to mind when you sort of work on process maps or on important processes is this quote from Dr. Deming. He said, If you can't describe what you're doing as a process, you don't know what you're doing, which is pretty convicting when you really think about it. I think a lot of people initially will say, No, no, no, I know exactly what our process is. And then you say, Well, write it down, map it. And then it becomes much more apparent that most people most of the time have a very rough version in their head that they can't translate into an actual written process.

0:01:44.8 Andrew Stotz: And I'm curious why that is, because on the one hand, when I've done mapping a process, you end up with, Okay, but then there's this exception, and then there's this. And oh, yeah, but don't forget that. So there's like all these intricacies. That's one reason. And then there's another reason is why is that someone's tunnel vision on I know the process because I know the three parts of the process that I'm working with. Why do you think it's hard for people to understand the whole process?

0:02:11.9 John Dues: Well, I think that first reason is probably the biggest reason where there's when they actually start mapping it, there's all these things that they initially left out. And I think as soon as an organization gets to a certain number of employees and has a certain amount of complexity, or you have to add a person that's now going to do part of what you previously did because your role changed or something shifted, needs change, or whatever in the environment. And you have to bring them in. You realize pretty quickly that you can't rely on that stuff that lived in your head anymore. So I think it's a combination of all those things for why this becomes so important. And the other reason I mean, the reason you want to do this is so that there's a starting place, a standard place where people are working from so that whatever it is that the focus is that it can be improved. It's hard to do that when there's no set process to start with.

0:03:08.5 John Dues: Let me. I'll share my screen and just kind of as a refresher, take a look at some of that data that we've talked about so far on this chronic absenteeism front. So, you'll remember that we have this long range goal to improve chronic absenteeism. We've kind of talked about where we are now, where we want to be. So where we are now is in that sort of 40 to 50 % range in terms of chronic absenteeism. We want to be down in under 5%. We have eight years of data going back to the 16-17 school year. And the other thing we've talked about on the data front is that really we have this pre-pandemic world and this post-pandemic world when it comes to chronic absenteeism. For anybody that's watching, you can clearly see this on the process behavior chart or control chart that's on the screen where prior to COVID, we're sort of humming along around 25% chronic absenteeism, which is still high. But now, since COVID, we've since the pandemic, we've skyrocketed. So there's this clear, sort of, new reality, new system for schools like ours that...

0:04:23.7 Andrew Stotz: And can you, just for someone that may be just popping in and hearing this, can you just describe what is chronic absenteeism rate?

0:04:31.9 John Dues: Yes, chronic absenteeism is a standard federally defined level of absenteeism where kids are called chronically absent once they've missed 10% or more of the school year. So the percent of kids that are chronically absent is what's being displayed.

0:04:50.5 Andrew Stotz: So if a school has 100 kids, this chart is saying that 50% of them are chronically absent?

0:04:58.9 John Dues: Yes. Yep.

0:05:00.5 Andrew Stotz: Okay. Yep.

0:05:01.1 John Dues: And that's not since the pandemic happened. That's not atypical, especially for schools that serve a high population of students that are economically disadvantaged, basically, unfortunately. So that's the goal, sort of cut it by a significant amount, 40 to 50% down to less than 5%. So that's the goal. And we've looked at the... Last time we looked at sort of the processes that are currently in place. So just as a quick refresher, United Schools, where I work, is a small urban public charter school system. We have four campuses, and there's people from each of the campuses on this attendance improvement team. And what we've been doing lately is sort of mapping out the process that each campus is using. Each campus has their own little process for intervening with kids that are chronically absent. They have different people that are doing different parts of that process. And so we started with just saying, what is it that your process looks like?

0:06:09.3 John Dues: And we looked at a couple of those maps. So this first map is from one of the campuses. It's pretty simple. There's just one or two people involved. The way they represented it initially is just maybe 10 or 15 steps that they're going through to sort of identify who's having attendance issues, sending letters to families, contacting families, that type of thing. But you can see, initially, at least as they mapped it, it's a pretty simple process. And then when we looked at one of our other campuses and they mapped theirs out, it was a slightly more in-depth process. There's sort of more detail. There are more people involved in the process. I'd say there's probably a little more sophistication to sort of when and how they were intervening with parents. And a lot of the intervening is just sort of the compliance requirements. When a kid reaches a certain number of missed hours, we're required to send them a letter to their parents, for example. So a lot of the process currently focuses on sort of the legal requirements when it comes to absenteeism in Ohio's law. But these are two campuses that are about three miles apart, and you can see, even though they're following the same legal sort of requirements from the state, they have very different processes for how that work is being done.

0:07:38.9 Andrew Stotz: Or could you also say that this particular campus, the people involved may have a much deeper understanding of it or a desire to map it out with more detail? Or do you think it's significantly different?

0:07:52.3 John Dues: I think that this second one that looks like it has more steps, I think they have a person that's more of their sort of 1.0 FTEs, like more of their 1.0 FTE is focused on just attendance, whereas it's sort of like a divided responsibility.

0:08:09.7 Andrew Stotz: Wait, what's a 1.0 FTE?

0:08:12.1 John Dues: Like one full-time equivalent person. So a big part of the person's job is this attendance process. So they know this process pretty deeply. So they were able to map it in more detail, basically. So that was interesting. So part of this PDSA cycle three was, so the plan was really had sort of two steps. One, create a standardized process map for the system as a whole that everybody's going to work from. And then, once that's drafted, gather some feedback, both quantitative and qualitative feedback from our network leadership team. So that was the Plan. The Do was just make the map and then gather the input. So that's what's been happening of late with this team. But we can see pretty quickly what they did. And it certainly does help to have an improvement advisor, someone with a deep knowledge of the Deming philosophy and mapping processes, because he's the one at the meetings. He's the one sort of taking everything that the team is telling him, the process maps that the campus teams have done. And then he's putting it all together based at their input. And their input is certainly super important, but he's also very talented at building processes that are coherent and can be understood by many across our system.

0:09:40.3 John Dues: And so what he ended up doing using their input is he's now got a process map that includes not just the nuts and bolts like, okay, the kid has an attendance problem, and we have to send letters and do things like that. He's going back and created a process map that includes four different stages. So this first stage that if you're viewing this part of the process map is just for onboarding, which was completely missing from all of the campus maps. It wasn't on the... So the idea here is the very first thing, the beginning of this process is a new student enrolls. And as soon as they enroll, a family enrolls, there's going to be a number of things that happen, mostly on the educational side, like what is good attendance? So right from the get-go, one of the things they're going to do is they have this welcome folder that a family gets when they come for their tour or their orientation. And right in that welcome folder is going to be our attendance framework that defines what good attendance is and when, where it really starts to become an issue and impacts a kid's education. So this whole first process map, this whole first stage is about onboarding and educating the family and the student about what good attendance is, which was, again, completely missing from the process before.

0:11:10.2 John Dues: The second stage is attendance monitoring. So, the kid's been onboarded, school has started, and now there's a process to monitor every student's attendance, whether they have a problem or not. And this monitoring system is going to be standardized so that different notifications are being sent home to families, different sort of letters, letting them know when things are becoming a problem. So again, this whole process is about monitoring attendance after providing some of that education. And then, if through that monitoring, it becomes apparent that the student needs additional intervention, the next stage is sort of that attendance intervention plan. So this is where the full map before for each campus just focused on this part. And this is obviously, if you look at this compared to the campus maps, this is much more in detail about what's happening. I'd say, the other thing that's happening here is there's problem-solving with the family. So instead of just saying, warning, your kid has gotten to this number of missed hours, and you send that home in a letter, once that happens, you can see that there's actually Plan-Do-Study-Act cycles being run with the family and the student that are off track from attendance perspective and some individual problem solving is happening.

0:12:52.3 John Dues: See, we run three PDSA cycles to try to get them back on track. So that's a brand new component to this attendance system. And then from there, for some kids, if we get them back on track, then we don't have to take any further action. But for other students, there are some, again, some legal requirements. And so the last stage of that process is if we do have to file official truancy charges, sort of like what, or let the state know that the student is now truant, there's some steps that we take to make that filing. But that's far after many, many steps have been taken to educate, to run PDSA cycles with individual kids that are off track, to try to get the family and sort of the knowledge they need to understand, like how to keep their student on track when they're in school. So, there's a good chance that this will change pretty quickly, this process map, it's a good one, I think, having gone through it, it's a solid process, but it'll, as soon as it like gets battle tested, there's going to be updates. Now, that's not say you're going to change things willy nilly, but what you are going to do is you're going to learn what's working, what's not, you sort of have this hypothesis, but at least now, since everybody's working from the standard process, we can make improvements that then can go out to the entire system.

0:14:32.9 Andrew Stotz: Great. I'm curious, what is the definition of truancy these days? When I was in school, there was trouble in River City and it was trouble with a capital T and that rhyme with P and that stands for pool. So you had the trouble of all the kids hanging out at the pool place, but I'm just curious what's going on. What is the definition of truancy these days?

0:15:01.3 John Dues: Yeah, it's when they, I mean, students have to have missed a certain number of hours of instruction. And now instead of attendance being measured in days, there's basically a threshold that you hit in terms of numbers of hours missed that then you legally have to file truancy.

0:15:24.4 Andrew Stotz: But what does truancy mean?

0:15:27.3 John Dues: Truancy just means that you've missed a lot of school, basically.

0:15:31.1 Andrew Stotz: Okay.

0:15:31.4 John Dues: Yeah. Yeah. And in terms of reasons, when we did those first PDSAs, not all those kids were necessarily truant, but they all had serious absenteeism issues. I think what we talked about was that we found that there were many different issues that were sort of at the root of that, which is part of the challenge here is we have high numbers of chronic absenteeism and then lots of different reasons for that. And so how do you problem solve with all those different folks to help get them back on track? That's part of the challenge. For sure, part of the challenge. But so where the team is at now, so they've completed this third PDSA cycle. So the Do was to make the process map and then get the input from the leadership team. And now they're doing the Study and the Act. So the Study, one of the things I talked about was that the initial feedback from folks that aren't a part of the team was more education needed to happen during that onboarding process.

0:16:39.9 John Dues: So that was sort of like a blind spot before. Not that people didn't talk about it, but now it's systematized. Here's the piece of paper, the attendance framework you're going to give them. There's an orientation session on attendance. There's a session with students during their orientation about what's good attendance and how many days does that equate to in terms of missing school throughout the year, that types of things. Another big thing in the study was more personal touches throughout the process and not just sort of those notifications that I talked about, like the attendance warning letters. The group sort of talked about, while some of these letters are required, whether they're that effective or not is definitely in question.

0:17:25.1 John Dues: Another thing is we have a role at each campus that's called Dean of Family and Community Engagement. And so something like attendance is the responsibility of everybody in the school. But if there's a point person at each campus, it's that Dean of Family and Community Engagement. And so there's some worry about, like when I go back to this process, it's the Dean of Family and Community Engagement or DFCE, they're sort of the point person running these PDSAs and the PDSAs can be time intensive. So one of the concerns is, will they be able to sort of handle the workload that sort of comes with this new process? And I think that's definitely an open question, but at least it's on the radar. It's not like no one is saying, here's the process, go figure out how to make this work. That would be a bad way to do it. There's a recognition that we think we need to do some of this problem solving with individual cases, but there's also this recognition that there's going to be a time constraint for the DFCEs. And then another big X factor that was a part of this study write-up was transportation. Because we've talked about how bad transportation, yellow school buses have been in Columbus this year. We've had a lot of problems. And so what's that look like next year, and how does this factor in? When we did those interviews with students and families, it wasn't the primary reason for all families, but I think in about 50% of the families, transportation had some role in the attendance issues. So these are things that are on folks' minds as they're working through this.

0:19:06.5 Andrew Stotz: That's a lot of progress on this.

0:19:09.3 John Dues: Yeah, a lot of progress, I think. And you get questions like, is it worth all the time to do this? And it's like, is this improving anything? And if you're looking at the outcome, probably not yet. But now that there's this standardized process, I think we can actually make some inroads on this chronic absenteeism process. It would be very hard to do in the absence of this standardization that we're going through and this input from the group to put more sort of resources towards this to get some expertise in terms of putting together a process instead of leaving it up to individual people that maybe don't have this skill set.

0:19:53.9 Andrew Stotz: You also recently posted on your LinkedIn about the idea of a system and results. If you don't even understand the system, how are you going to get the results that you want from the system?

0:20:05.8 John Dues: Exactly. If you don't understand what's causing the problem, if you don't have a whole systems view, you could put a process in place that actually makes things worse, may make things better in one area, but make them worse in another area. So yeah, this is complicated stuff when you're trying to make change in a complex system like a school system.

0:20:25.7 Andrew Stotz: Interesting.

0:20:26.2 John Dues: Yeah, the last step is just the Act. So they're deciding what to do. Are they going to adopt this? Are they going to adapt it or abandon the idea? So I think we're not going to abandon it because obviously we're moving forward with this new process map. And it's, I would call this adapt though. So we're going to adapt this process map into the system, but very high likelihood that there are going to be many adjustments to it as it gets put into action. As I was just saying, it's not adopt because if it was adopt, this thing, this process map would be sort of run through a number of cycles where it had been tested, the kinks had been worked out, and it's sort of going to be, this is the way. So what we're doing now is adapt. So we're going to make some improvements based on this initial feedback we got from the leadership team. Now we'll make some additional adjustments, especially next school year because the school year is over during the initial implementation.

0:21:29.8 John Dues: And the other sort of part of the Act was if you read the steps in this process map from start to finish. There are a lot of artifacts that go along with this that don't exist. So for example, this attendance slide deck for new student orientation. That's a part of the process. We probably don't want to leave that up to each individual group to create on their own because what is the content of that? And so that has to be created. So there are a number of things like that, that the improvement advisor for the project is going to take on either creating himself or he's going to strongly support the creation. So those are also standardized across the network. So you see, it's a lot of work.

0:22:20.4 Andrew Stotz: Yeah.

0:22:22.2 John Dues: So that would be where we pick up with, once students come back in August, and that's kind of leaving things off at the end of this school year.

0:22:31.6 Andrew Stotz: That's great. I was mentioning about this little jingle that I was talking about, and it comes from a 1957 movie called The Music Man. And he says, his line is, there's trouble in River City, and it starts with T, and that rhymes with P, and that stands for pool. And it's this guy, he's a con man, a hustler, who's gone to the citizens of a town in River City, Iowa, telling them that the corrupting influence is the pool table in the town that's going to keep the kids from going to school. And he wants to start like a marching band. But for those old-timers that seen that movie, they'll love that reference. And if you haven't seen it, go see The Music Man on... I don't know. It's hard to find things on Netflix these days like that, but maybe it's on YouTube.

0:23:27.9 John Dues: Very classic, just like that.

0:23:30.2 Andrew Stotz: But I remember listening to that when I was young, because my parents always had musicals. My sisters actually played musicals on the record player. So you always was hearing the songs of musicals.

0:23:43.8 John Dues: Well, it seems like the truancy thing is, that's not a new problem necessarily.

0:23:48.1 Andrew Stotz: Oh, yeah, that's for sure. That's for sure. Well, why don't we wrap it up there? And 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 you can find John's book, "Win-Win: W. Edwards Deming, the System of Profound Knowledge, and the Science of Improving Schools" on Amazon. 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."

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How can we improve attendance when every school has a different process?

In this episode, John Dues continues his exploration of Deming’s philosophy in action, focusing on chronic absenteeism. As part of their third PDSA cycle, John’s team shifts from individual interventions to process standardization—mapping how each of their four campuses handles attendance interventions. The surprising discovery? Each school follows a different process, revealing hidden variation and inefficiencies.

By visualizing these systems, the team is not only grasping the current condition but also setting the stage for a reliable, scalable, and effective process. This methodical approach highlights how understanding systems and reducing variation are key to meaningful improvement.

TRANSCRIPT

0:00:02.1 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 John Dues, who is part of the new generation of educators striving to apply Dr. Deming's principles to unleash student joy in learning. The topic for today is Mapping the Process. John, take it away.

0:00:26.7 John Dues: Hey Andrew. It's good to be back. Yeah. For the folks that have been following along for the past several episodes we've been working towards defining this problem more narrowly in terms of this chronic absenteeism issue we've been talking about. And for the last few episodes we've been talking about how the team didn't have enough information to write that precise problem statement. And we took a look at gathering additional information by running a couple PDSA cycles in those first two cycles that we've discussed so far. We know we had zeroed in on a handful of students and ran PDSAs with them and their families about their obstacles getting to school. And then we left off talking about how we were going to shift gears in PDSA cycle three. And instead we were going to focus on standardizing our process. So creating a process map for how we intervene with kids with our attendance teams across the network. So that's what the team is currently working on. But just as a sort of quick reminder to folks, and especially if you're watching, we have this model that we've been working through, this four step improvement model where you set the challenge or direction, grasp the current condition, establish your next target condition, and experiment to overcome obstacles.

0:01:48.1 John Dues: And then like we've talked about several times, we're doing this with the team and that includes people working in the system, people with the authority to change or work on the system, and then at least one person with significant knowledge of the System of Profound Knowledge, like an SOPK coach. And we've been using this model that's on the screen to sort of symbolize or I guess visualize what those four steps look like. You're sort of marching up this mountain towards this challenge or direction. And we've also talked about this long range goal that we've had and we've taken a look at some data where we have our chronic absenteeism rate mapped out over the last eight years or so. We have this long range goal. So this is the direction of the challenge where we're trying to take our chronic absenteeism from above 50% down to 5%. We have the data going back to the 2016/17 school year. Then we also talked about how there's this, not surprisingly, there's this sort of pre-pandemic level of chronic absenteeism, which was again too high. It's not where we wanted it, but we have this major shift up where we've seen this significant jump in chronic absenteeism since the pandemic hit.

0:03:15.0 John Dues: So in those four years, 2020/21, 21/22, 22/23 and 23/24 we were up in the 51, 52, even up into the close to the 60% range in chronic absenteeism at the height of the pandemic. So for PDSA cycle three, really doing two things. So, and we're going to talk about this in the episode today. If you remember back way at the start of this series, we looked at something I called a system flowchart. So we'll kind of revisit that and then we're going to take a look at two process maps that were created by two of our school teams to sort of map their current process. And then we'll walk through, sort of we'll take that, we'll walk through what the plan is for this PDSA cycle three. So let's start by looking back at this system flowchart. I'll sort of reorient you to this. So we have up on the, and this is the current state. So up on the top we have the target system which is attendance. And then we have this aim that is sort of a three part aim.

0:04:42.7 John Dues: We want to define strong attendance for students and staff, make sure everybody's on the same page. We want to ensure that students, families and staff have a shared understanding of what it means to have strong attendance. And then we are working on improving and creating systems that identify and remove barriers to strong attendance for students and staff. And then over on the left hand side we have sort of inputs. So these are things that contribute or their conditions that impact our system. And then in the middle we have our core activities. So the things that are happening that impact attendance and then there's outputs, both negative and positive outputs that come out of this system. And then we get feedback from our customers, we do research on this feedback and then we make design if it's a new system or redesign if it's a current system. And some of these things, some of those contributing conditions are, Ohio has a set of transportation laws. You know, there's our school model and our the way we operate our school hours, our expectations regarding student attendance, our various intervention systems, neighborhood dynamics, how far our families live from school.

0:06:03.4 John Dues: These are all things that contribute to our sort of inputs into our system. And then we have these core activities. And remember, we could just zero in on attendance systems. But there are many other parts of our system that impact whether or not kids come to school. So for one, many of our families are always going to be new to our system. So for example, in our middle schools, where they start with sixth grade some number of those kids are going to be from our elementary schools. Some number of those kids are going to come from other neighborhood schools, but they're all going to be new to that middle school. So whether they're coming from our elementary school or not, you have to think about how is the student and family being onboarded to our system. Another thing we're looking at is school culture and trust. You know, how much trust is in there, in the school. Do they have a strong culture between teachers and families or teachers and students, or the principal and teachers? Then there's academic systems how engaging are classes, those types of things.

0:07:05.7 John Dues: Then we have the attendance intervention systems, which is obviously a core focus. We have health and wellness and changes around mindset since we went through the pandemic. And then finally the third sort of, or sorry, the third, not the third, but the sixth core activity that we talked about was transportation. So we've talked about lots of problems with our busing system this year. So that's another thing that has a big impact on attendance. And so what this group, again is working on the core activity is the attendance intervention systems. What's the process for that? But I had mentioned in an earlier episode that we have another group that's working on transportation and busing and how we can improve that. So the whole point of the system flowchart is there's many, many things that go into something like an attendance rate. And many of these things are very challenging. Some are largely out of our control, but much of it is largely in our control. And we're trying to pull the levers that we think are most important when it comes to student attendance.

0:08:09.2 Andrew Stotz: And just one thing on that, one of the things I just find so frustrating and it's part of this class I'm teaching tonight is how do we scale a business. And one of the ways that's critical to scaling is simplifying. And sometimes, like, when I look at all of this complexity, on the one hand, you're like, okay, well, that's our job, right? Our job is to manage complexity. And that's the reason why we don't have a thousand competitors coming in, because it's complex and it's difficult. And on the other hand, it's like the simplifier in me is like, how do we simplify this? You know, like, I'm just curious about how you see complexity versus simplification. And in particular, it may just be in this stage, you're just putting everything up there, and it's just overwhelming. Like, oh, my God, there's so much involved in just fixing one thing, you know? What are your thoughts on that?

0:09:11.5 John Dues: Yeah, that's, I mean, that's a really good question. It's, I mean, I think it is a complex system because there's so many moving parts. And I think part of the nature of a complex system versus something like a complicated system is that when you try to impact some part of the system that has these ripple effects into other parts of the system, many of which are unattended or unintended consequences. So, yeah, I mean, I think one thing we have working in our favor is very stable senior leadership. So we're pretty good at understanding how we all work. We have a pretty good historical knowledge of how our school system has worked over time. And we have a pretty good holistic view of all of this complexity. Not that we're all able to improve it all at once, but I think we have a pretty good grasp of what's going on. And even a team like this there we could move faster perhaps, but I think we're trying to be pretty deliberate about the changes that we're making.

0:10:24.7 John Dues: And we're also deliberate about the levers that we're trying to pull for improvement. And these things change over time. So even something like transportation, I mean, the reason that we're working on that now and that we've chosen to work on that now is because the transportation that we're getting from the district is so untenable. Whereas 15 years ago, when I was a principal in our system, while the busing wasn't perfect, it was pretty consistent. You know, most days it dropped off at about the same time. It picked the kids up at about the same time every day. And while it was nowhere near where you would want it to be overall, it wasn't my biggest pain point as a principal. Now kids are literally missing hours or buses aren't showing up at all. And so we have to figure out a way to make this work. And to your point this was a system when charter schools were set up in Ohio, is just basically like the district, the nearby district, which is usually a big urban district, is going to do the busing for charter schools.

0:11:35.5 John Dues: And there really wasn't any more thought to it than that and so from the district's perspective, they they have to manage a lot of complexity. They have their own schools, they're busing for charters, which there's about 15,000 kids in charter schools in Columbus. And then they're also busing for private schools. And the district itself still has a very large geographic footprint, even though the number of students that attend there are about half what it was 50 years ago. So they have very spread out buildings, some of which are far below capacity, but they still have students attending them. So they haven't shrunk that geographic footprint. So that's a challenge as well. And at a time when it's become very difficult to find bus drivers. So I don't take lightly, like the challenges that the district is facing in this, but we got to get kids to school as a... Just as a basic starting point to be being able to do school well.

0:12:31.8 Andrew Stotz: Okay, keep going.

0:12:33.8 John Dues: I mean, it's also a really good segue. We'll take a look at a couple of the process maps. So we have our four campuses. We have something different going on. So even though our four campuses are geographically pretty proximate to each other, they have four different processes going on with their attendance intervention system. So take a look at this first process map, which is pretty simple from start to finish. What is that? 1, 2, 3, 4, 5, 6, 7, 8, 9. It's really nine steps and it really...

0:13:08.6 Andrew Stotz: And for the listeners out there that can't see it, he's got a process map, State Street. And what it shows is some circles and some squares and some tilted squares. I don't know what those are called.

0:13:23.5 John Dues: Yeah, I mean, it's just the circles are the start and end points.

0:13:26.9 Andrew Stotz: Okay.

0:13:27.8 John Dues: The squares are the steps in the process. And then the diamonds are, when there's a... Some decision has to be made in the process.

0:13:37.0 Andrew Stotz: Okay, great.

0:13:38.0 John Dues: So we're not going to go through all of these steps. But if you are watching this is a pretty simple process at one of our campuses, while there are multiple people sort of involved, it's also true that one person is driving a lot of this work. But the point is, especially for people that are watching, when you sort of walk through these 10 steps, you're going to see that this map is going to look very different and less complicated than the map at one of our other campuses. But the point is, especially if you can see things visually that you can tell just by looking at the two maps, there are two very different processes going on. And these two schools, this first one is actually an elementary school that feeds into the middle school. That is the map that we'll look at second, so this is the first process map. And then when we look at the second map, we can see very quickly, just visually speaking, there are far more steps, it's far more complicated. There's far more decision points. There's a lot more detail here, and there's a lot of interfacing between multiple people that all play a role in this particular process.

0:14:55.4 John Dues: And it's not that one is right and one is wrong. It's just that when you have these two campuses doing it differently, there very likely is inefficiencies.

0:15:06.8 Andrew Stotz: And are they mapping the same thing? And they...

0:15:10.6 John Dues: Yes, it's the same process. It's how they intervene as the state requires for kids that have some type of attendance issue. And there's different thresholds that mean different parts of the process kick in as a result. But they're operating within the same state process that you have to follow. But even so, you can see that they have a very different sort of illustration of what that process looks like. And if I had the other two campuses, we'd have four separate versions. And remember all these steps and you know, all these decision points. There's documents that exist. There's meetings that happen. There's agendas for those meetings. There's agendas for meeting with parents. There's letters that have to be mailed. And so you can imagine if everybody is creating separate forms, separate meeting agendas, keeping this information in different ways. There's probably a way to design this that's far more effective and efficient by pulling from the four different processes to create one process. And oh, by the way, if you do that, it makes training easier for anybody new that's going to take on some of the clerical roles or some of the interfacing with parents.

0:16:26.9 John Dues: And then if you have one process that you're working from, then you can also share best practices as they emerge as you're working. But if you have four variants, it's much harder to share that information.

0:16:43.4 Andrew Stotz: And you know, it's questionable whether this is a core function. It is an important process. Is it the core?

0:16:54.8 John Dues: Yeah, I mean, I would say it's a, I guess depending on how you define core. I mean, it's a required process. It's a process that the state requires and a lot of the sub steps are required components. Now, interestingly, this, the setup for this attendance intervention system came out of some legislation called Health...House Bill 410. And it's been in place for maybe five years or so, four or five years. And they're changing it right now. So there's new language.

0:17:30.2 Andrew Stotz: Just when we got it set.

0:17:32.2 John Dues: Just when we got it set. But we at least know the likely changes that are coming. So Ohio operates on a two year budget cycle. So in this new budget that will likely pass on. Well, it has to pass by June 30th. Right now there's language in there that changes this process for schools and actually gives schools way more leeway. So we'll sort of be ahead of the game because we're going to have our own process mapped and you know, we can remove some of those things that are a little more cumbersome on the school teams. And to your point, those things that were compliance related but didn't have really impact on improving attendance, we could just remove those now. We'll have some more freedom there.

0:18:13.8 Andrew Stotz: I mentioned about the core thing because there's a great book I read called Clockwork by Michael Michalowicz and he talks about identifying what is the core function in your business and then really focusing in on that. And it's interesting because one of the benefits of that is that if you don't do that, you can get caught up in every process like, and then all of a sudden it's just everything is seen as equal.

0:18:43.6 John Dues: Right. Yeah.

0:18:44.6 Andrew Stotz: Anyways, keep going.

0:18:45.9 John Dues: Yeah, it's one of those weird things and I'll stop sharing. Yeah, that was the last visual. But that's one of those things where like I said for the last five years or so these things have been required. And I think you'd be hard pressed to find a school system that would say these, the way things are outlined as requirements for schools to do on this front are not effective but people do them because they're required. And you know, I think with this updated language, we'll have some more flexibility to do this how we want to do it.

0:19:20.4 Andrew Stotz: And how does this, just to clarify how it fits into that mountain diagram, this is trying to assess or deal with the obstacle or is this the current state? I noticed that it said current state for the process map. But is the purpose of what you're... The original one you show. But is the purpose of what you're doing trying to overcome the, identify and overcome the obstacle?

0:19:46.8 John Dues: Well, I would say this is a part of grasping that current condition. You know, we did that early on in terms of that system flowchart, in terms of what the whole system looks like. And now what we're doing is learning about the processes at each individual school. Well, I'd say when you map out a process like this, and I think people would probably, my guess is, is that senior leaders would often say, well, no, we have a process and you know, everybody follows the same thing. And then if you actually mapped it like that, step by step, what you would see is tons of variation, tons of variation.

0:20:23.9 Andrew Stotz: So one of the benefits of that is it's not only, it's about facing the reality or understanding the true current state. Like everybody can say, no, no, no, we all know what the current situation is. No, we don't.

0:20:41.2 John Dues: No, you don't. And every time I sit with a team and make these process maps, we'll say, okay, what's the next step? And you know, maybe a couple people will pipe up and then someone inevitably goes, well, no, wait a second, that's not what we do. What we do next is X, Y or Z. I mean, it's... And that happens over and over and over again with this with this process just seems to be a part of it. It's not a bug. It's actually a feature of this mapping exercise.

0:21:08.5 Andrew Stotz: And many people try to solve these problems by just jumping in rather than taking the time to really, truly understand the current state. You know, what's the risk of the action taker?

0:21:22.7 John Dues: Well, yeah, I mean, I think what happens a lot of times is like when people don't really understand a process like this is they start blaming people for things that aren't going right. That's what typically happens.

0:21:35.8 Andrew Stotz: I want people to take responsibility around here.

0:21:38.3 John Dues: We have to hold people accountable, but you can't hold them accountable to a process that's unknown. Right. It's not well specified, but that's what typically happens. So, so yeah, so the objective for this PDSA cycle, so we're on this third cycle. So those first two were focused on talking to individual kids, interviewing with individual kids. And we said well let's actually look at our process for how we're intervening from a school perspective as a team at each of the schools and let's standardize that process.

0:22:13.1 John Dues: So that's what we're doing. We're sort of mapping it from start to finish, gathering feedback from key stakeholders as we sort of map a standardized process that works across all four schools. And really one of the things that we're doing right now is we're saying can we develop a process? And we have these four dimensions that we're looking for to sort of meet. One is functional, one is, is it reliable? Third, to your point about the business talk you're giving tonight is is it scalable? You know, does it work across the entire school and across the entire school system? And then is it effective? And we're basically, the attendance improvement team basically is going to put together the process and then they're going to put it in front of our senior leaders and we're going to rate sort of the process across those four dimensions and they've sort of predicted what they think is going to, how it's going to hold up when it's sort of tested by those senior leaders.

0:23:12.8 John Dues: So that's kind of what we're doing right now. So step one is mapping the four campuses and then we're going to map one standardized process, at least a rough draft. And again, so once that initial network wide or system wide map is created, we're going to put it in front of that senior leadership group. We're going to give them a brief survey, sort of a Likert scale across those four dimensions and see, see what they think basically. So that's our next step right now.

0:23:40.6 Andrew Stotz: Exciting, exciting. I want to tell a little story to wrap up my contribution here and that is after many years of living in Asia, I started to realize that everything's connected in Asia, people are connected. If you want to be mean to somebody, it's going to come back around to you. And if you want to push on somebody, it's going to come back around because everybody knows everybody. And I like to picture it like a circle. Let's just say a bunch of people in a circle facing the same direction. And then let's say they all put their right arm on the right shoulder of the man or woman in front of them. So now we have a circle that's connected in such a way. And if you think you're going to get something done by squeezing on the shoulder of the person in front of you, the problem you're going to face is that that's going to transmit all the way around the circle until all of a sudden you're going to be squeezed. And that is my visualization of the way influence works in Asia. Yeah, but I feel like it's the same type of thing when you just say, I want to hold people accountable and we need responsibility around here.

0:24:57.8 Andrew Stotz: What ends up happening is that the only choice that someone has is just to squeeze on the person in front of them. And when they do that, it just transmits a squeeze all the way around. It builds fear, it builds distrust and all of that. And so that. That was a visualization I was having when you were talking.

0:25:16.4 John Dues: Yeah, I mean, I think... And it can be convicting a little bit there. There's a Dr. Deming quote that I'll share to sort of wrap this. Before I do that, I think again, I go back to we... There are these unknown things about how to improve attendance. And so this PDSA, this plan, do study, act cycle, we're using one, again, was intervening with kids and trying to work with a handful of kids that had attendance issues and just see what works and what doesn't. We've shifted gears in this third cycle to something very different. But this is all part of one comprehensive effort by this team to put this new system in place. And all of these pieces of information are important, but this and this mapping, the process thing I think is a great... And I think maybe a lot of people wouldn't think about that as a PDSA to plan a new process, but you can absolutely use it in that way. But the Dr. Deming quote that I think of when I do process mapping is "if you can't describe what you're doing as a process, you don't know what you're doing."

0:26:21.7 John Dues: And I think that's true. Again, it's not to convict people, but I think often when we say, well, that's this thing is going wrong, we need to hold people accountable. And then you ask that person that's making that claim, well, what is the process for this thing? And they often can't tell you. Or they do, it's so vague that nobody could.

0:26:45.3 Andrew Stotz: Or they say, that's not my responsibility. My responsibility is to hold you accountable for getting the result.

0:26:51.4 John Dues: Right. Yeah. And, and, and many people, many organizations don't write these things down. You know, they don't write them down and share them with folks. So that's just some of these simple things are as part of the power making things exciting.

0:27:05.1 Andrew Stotz: Exciting. Well, yeah, how about we wrap it up there and so what are we going to get next time?

0:27:10.7 John Dues: Yeah, I think so. What we went through quickly here at the end was the plan for this PDSA cycle. So by the time we get back together, will have the process map for the system and we'll have had the feedback back and we'll be able to compare that to what the group predicted.

0:27:28.8 Andrew Stotz: So ladies and gentlemen, we're watching it in real time unfold the applications of Dr. Deming's principles. And isn't that what we want? You know, obviously we love theory and we love ideas, but we really need to be all thinking about how we apply these things. And so from my perspective, I'm really enjoying this series and I'm learning a lot. And as I mentioned before, I've been improving some of my thinking and some of my teaching in particular, based upon the discussions that we've had. So 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 also 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. I know you've heard it before, but I'm going to say it again. Until we have joy. "People are entitled to joy in work."

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Why would any leader choose to take on a transformation that requires rethinking how they lead, how their organization functions, and how they learn?

In this episode, we dive deeper with Cliff Norman and David Williams, co-authors of Quality as an Organizational Strategy, exploring Chapter 11: “Getting Started.” They share powerful stories, practical steps, and the deep-rooted challenges leaders face when shifting from conventional methods to building true learning organizations grounded in Dr. Deming’s philosophy.

This conversation highlights why improvement cannot be delegated, why leadership transformation is essential, and how to begin the journey—with clarity, commitment, and courage.

TRANSCRIPT

0:00:02.1 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 we are going to continue our conversation with Dave Williams and Cliff Norman about their book Quality as an Organizational Strategy. I found this book fascinating because I think it's addressing something where there's been a bit of a hole and that is how do we think about the strategy of our business? And so we already had our conversation in a prior episode about the overview of the book, but today we're going to be talking about specifically, now this is kind of funny because we're going to be talking about the back of the book and that is chapter 11, getting started. Dave, why don't you take it away?

0:00:53.3 Dave Williams: Well, thanks, Andrew. Thanks for having us back on the Deming podcast. So, as you mentioned, part of the way that the book is laid out is that it describes kind of the foundations that are behind quality as an organizational strategy and begins sort of with an introduction that explains a good bit about how Dr. Deming had this provocation of a need for leaders to transform the way that they approach leading organizations. And part of that was to move not just from process based improvement projects, but to start to think about major systems in the organization and to pursue quality as the overall strategy and create a continuous improvement organization or learning organization. And so the book lays some of the foundation behind the science of improvement or behind profound knowledge that underpin the thinking, walks through quality as an organizational strategy, as a method of five interdependent activities. Then at the end it comes back full circle to say, well, this is great, now you've learned about these theories and methods. But a natural question for any leader would be, how do I get started? And one of the first things that we talk about in that section actually is about why leaders would want to do this transformation.

0:02:30.9 Dave Williams: And this actually came from a conversation that Lloyd and Cliff and I had in 2020 where we were talking about getting on this journey of building the book. And we all kind of recognized that this was really, really hard work. And we were curious or we, we didn't have a good answer of what was our theory about why somebody would deviate from the way in which they work today and embark on a transformational change of the way that they approach leadership, the way that they approach organizations. And actually I ended up going on a journey of interviewing a whole host of leaders who had been influenced by Deming, who had been involved in improvement in healthcare, folks like Dr. Berwick and Paul Batalden and Brent James. I interviewed some folks in the UK and other places, like John Seddon, and asked them, oh and I should Blaine Godfrey, who had been the lead of the Durand Institute, and I posed the question, what causes somebody to want to embark on this change? And many people actually had a hard time articulating it. But the answer that emerged, or actually Blaine Godfrey was the one that kind of framed it the best, I think, for us, was a number of things.

0:03:57.7 Dave Williams: Sometimes it's something like a book like this comes out and people read it and it's interesting and new. Sometimes it's an event happens, a patient safety event or a major accident or something of which causes people to have to change or do something different. Sometimes it's a discouragement with a desire that you know you could do better, but you don't have methods or know how to. So there were a host of things that we listed, and those are some of a sample of them that might invite somebody to say, the way that we're working today is not getting us to the level that we want to. And now we want to embark on something different. And we might look to something like quality as an organizational strategy as a method for us to transform the way that we're working and build on the shoulders of Deming's philosophy and the science of improvement and do it differently.

0:04:56.0 Andrew Stotz: And when I look at the book, you guys are bringing together a lot of different stuff. It's not just a Deming book. It's Deming is a part of this, and that's fascinating. One of the questions I have is when we look at, let's say, a business owner, a business leader is looking for answers, as you said, maybe it's an event, maybe it's a discouragement, maybe it's a feeling like we can do better. Maybe it's just being beaten by competitors. They come to a point where they start looking for answers and they find some fantastic books, authors, ideas, consultants, all this and I think about whether that's Peter Drucker or whether that's the Lean movement or whether that's, let's say Taguchi or something like that is the teachings that you guys are talking about - and I'm going to specifically ask about the teachings of Dr. Deming. Is it more or is it more difficult or less difficult to implement than other books or styles or methods that someone's going to come across?

0:06:08.7 Cliff Norman: I have to quote one of my colleagues here who probably knew about more about Deming than anybody in API or all of us combined, that's Ron Moen, who did, I think it was 88 seminars, four-day seminars with Dr. Deming. Dr. Deming once told him, he said, Ron, I believe you've been to more of these and I've been to. And it's kind of a joke. He had a great sense of humor. But you know, Ron told me the problem with Deming is he's asking us to change. And there's all sorts of things out there that require the management and the leadership, they really don't have to do anything different. And there are several things out there. In fact, Philip Crosby, one of the three gurus during when they launched, he was more the evangelical and had a way of talking to management so that they understood it, which that was his contribution to all that. But when Six Sigma came up and black belts and all that, and Crosby looked at him and says, that's not going to change the system. He said, all you're doing is killing a bear for management, killing a bear for management, and then you'll get a black belt.

0:07:19.9 Cliff Norman: You know, And I thought, wow that's pretty profound. Because the management at that point doesn't have to do anything, just have the black belt ceremony. There's absolutely no change on their part. Where Deming, as Ron says, he's kind of a pain. You've got to learn about variation, you got to learn about Shewhart charts. You've got to be able to put together a family of measures for your organization. You've got to understand your organization's system. You need to understand psychology, you need to understand theory of knowledge and how people learn how they change. And nothing else out there puts that on leaders. And so that was a question that Dave was lending back to. Why would somebody do this to themselves? You know, why would they take on this whole extra thing to learn and all the rest of it. And for the people that I know that have made that, that bridge, the pure joy that they get and the rewards they get from people who are learning and that they're leading and that they're changing and they're able to go to other organizations and repeat this and call them up and say, thank you so much for helping me learn how to be a real leader.

0:08:35.8 Cliff Norman: I mean, that's the reward in it. But it requires a real change on the part of the leader. And I don't know of anything else, Andrew, that actually requires that kind of in depth change. And there was one of our leaders, Joe Balthazar, he had Jane and I do four years in a row with his leadership team, teach them the science of improvement. The same curriculum, same leaders, four years in a row. And the second year I was doing it, I said, don't we need... No, no, Cliff, I want you to do exactly what you did last year. He said, it takes years for people to understand this. And I thought, wow, this is unbelievable. But on the fourth year, the VP of sales walked up to me and he says, I think I figured it out. And I thought, wow. And it does it literally... Because you've got to depart from where you've been and start thinking about how you're going to change and let go of what's made you successful up to this point. And that's hard, that's hard for anybody to do.

0:09:47.2 Cliff Norman: And anybody's been through that four day seminar knows when they crossed that path that all of a sudden they had to say, you know what I've been doing, I can see where I've been, the problem and not the solution. And that's tough for us. That really is tough. And Deming says you have to give up that guilt trip. And once you understand the theory of variation, once you understand systems, once you understand psychology and theory of knowledge, it's time then for you to move on and let go of the guilt. I hope that makes sense. But that's the difficulty in this.

0:10:17.6 Andrew Stotz: It reminds me of two, it made me think about two things. I mean, I was just a 24 year old guy when I attended the seminars that I did, and they weren't even four day. I think they were two-day ones at Quality Enhancement Seminars in, what was it, George Washington, I think. But the point that I remember, as just a young guy who I was, I pretty much admired all these business leaders. And then to see Dr. Deming really nail em to the wall and say it's about you changing. And whether he was saying that directly or whether that he was implying that through the Red Bead experiment or other things, it's about you shaping the system. That really blew me away because I had already read some books and I was pretty excited. And then it also made me think about, let's say there's a really good book, I would say Good to Great by Jim Collins that highlights some things that you can do to succeed and make your business better. And you can just buy that book and hand it to your management team and go, hey, implement what you learned from this book.

0:11:20.8 Andrew Stotz: Whereas with the Deming book, it's like there's just so much more to it. So I guess the answer to this is it is more takes time. There's more thinking going on. And I think that's part of the whole point of what your book does, is to help us map it out. So why don't we go through and think about this and kind of maybe step by step through what is the starting point and how do we go?

0:11:45.4 Cliff Norman: Andrew, I just got to add to what you just said there and go back to Joe Balthazar at Hallmark Building Supplies. He shared with me that, and he's the one that said I want you to do these four year seminars dedicated Deming's idea of Profound knowledge. And he said, Cliff, the day I made it, I knew I'd made it. Is my son Joey spilled his milk. He's about three years old. And he said, I started to do my normal leap across the table and he said I was about mid air. And I thought, oh my, this is what they do. This is part of their system. This is common. And I'm treating this like it's special. And that was so profound for him. And when, when you move beyond the Shewhart chart and you see events in your life around you relative to the theory of variation, common and special cause variation at a deep way like that, that's the kind of transformation you want to see in a leader. And Joe will tell you he's forever grateful for Deming and everything he's learned, and I think that's the reward. But people need to be willing to go on that journey, as Dave was saying.

0:12:53.0 Andrew Stotz: So Dave, why don't you walk us through a little bit of what you guys are teaching in that chapter.

0:13:00.3 Dave Williams: Sure. Well, one of the next steps obviously is if somebody, if a leadership team thinks that they want to go on this journey, there's some considerations they got to think about. As we've already sort of alluded to or touched on, this is a leadership responsibility and a leadership change. And so there's got to be will amongst the leadership team in order to say we want to work together and work hard to do this work. That this is not something that, similar to Cliff's example of say, having black belts, that we can just hand it off, somebody else will do it, and we can just keep going about our business and hope. It's important that leaders spend time recognizing and thinking about the fact that this is going to involve them doing work, doing effort, changing the way that they think, changing the way that they practice. And I like to say it's good hard work. I mean it's going to be something that's deeply rewarding. But it does require them to have that will. And with will then it's going to come time and energy, right? They've got to make the space, they've got to create regular routines and opportunities for them to learn just in terms of content, learn in terms of practice or application and learn in the process of doing the improvement work and doing the change to the way that they work in the organization.

0:14:38.0 Dave Williams: So there's going to be a need to build in that ability. And then a third thing is to ask whether you think this is something that you can do on your own or whether it might be useful to have help. And help may be an internal, a consultant, but likely not to promote consulting it but, but there's a good chance that you're going to need somebody that has both experience in improvement and helping people do results-driven improvement as well as somebody who has experience doing system wide change through a lens like QOS. And, and the advantage of that often is it it gives you as a leadership team to focus in on your job of thinking and looking and learning and allow somebody else to be an external intervener, somebody who comes in and creates some of the support, some of the context, some of the ways that can make it easier for you to step back and look at your organization in a different way. And so many times those are some of the things that should be considered as teams working through it. Cliff, what would you add or improve upon.

0:16:07.3 Cliff Norman: The idea of external help. Deming was pretty black and white about that. I was kind of surprised. I went back and read one of his quotes. He said, "I should mention also the costly fallacy held by many people in management that a consultant must know all about a process in order to work on it. All evidence is exactly the contrary. Competent men in every position, from top management to the humblest worker know all there is to know about their work except how to improve it. Help towards improvement can come only from outside knowledge." And I was reflecting on that today with Jane who's been involved in this for 40 plus years also. I said Jane, when he said that, I think it was accurate because at that time she and I were going to Duran seminars. There's only two books out there with methods. One was Ishikawa's book on Guide to Quality Control. And the other was Feigenbaum's book. And then of course you had Duran's book on The Quality Handbook, which was a nice doorstop. But there wasn't that much knowledge about improvement. And the worst part where Deming was really getting to was there's very few people you'd run into that actually under the Shewhart methods and charts and understand the difference between special and common cause variation.

0:17:27.0 Cliff Norman: And so you had to bring that kind of knowledge in from the outside. And frankly, we've had people go off the rails here. You know, Dr. Deming in the teaching of statistics has identified analytic studies which is focused on looking at data over time and trying to understand that and simple methods and approaches and then what he calls enumerative statistics, which is use of T tests, F tests and all the rest of it, which assumes that under the IDD principle that data is independent and identically distributed. Well, if you have any special causes in the data set, it blows up both of those assumptions and the use of those methods doesn't offer any help in prediction. And as Dr. Deming often said, prediction is the problem. And then go back to Shewhart. And Shewhart said, things in nature are inherently stable, but man-made processes are inherently unstable. So when Dave and I first do a Shewhart chart for a client, we don't expect for it to be stable. We expect for to have special causes. And as Dr. Deming said and also Dr. Juran, that when you get a stable system, that in and of itself is an achievement, that means nobody's messing around with the system anymore.

0:18:43.0 Cliff Norman: And you see this in the simplest things, like in an office, somebody will walk in and they think that their body is the standard for what the internal temperature should be for that room. So then they walk up and they start tampering with the thermostat. And by the end of the day everybody's irritated because we've had so many bodies up there with their standard. Moving the funnel on us here, and just leaving it alone would probably all be better off. But you have to learn that. And I think that's what Dr. Deming was saying, is that that kind of knowledge is going to come from the outside. Now the good news is is that since he wrote that in 1986, we've got a lot of people out there and some of them are in organizations that do understand the Shewhart methods and can understand the difference between common and special cause variation. They do understand the difference between a new and analytic studies and statistics and they can be of help. So the Deming Institute has a room full of these people show up, but they're at their gatherings annually. So we're a lot further along than we were in 1986.

0:19:45.2 Andrew Stotz: Yeah. So let's go through that for just a second. Some considerations you've talked about. You know that it's a leadership change. Right. And you gotta ask yourself, are we ready to work on this? And you know, this is not a hands-off thing. The second thing you talked about is time and energy. Are we ready to make the space for this? We have to have regular meetings. You know, we've gotta really... There's some work involved here. And then the third part you've talked about is outside help. And you mentioned about this story of Joe Balthazar and how he asked you to do the same topic over and over for four years. And imagine if he was telling his team, let's meet and try to implement some of this stuff on our own. Everybody dig into a book and then let's try. It would be very difficult to make that kind of progress compared to bringing an outside person. Which also brings me to the last thing that you said, Cliff, which was the idea that Dr. Deming had mentioned, that you need an outside person to truly change something. Everybody's got the expertise on the inside.

0:20:44.5 Cliff Norman: I appreciate you summarizing that because my job and working with Joe and leadership team, I was meeting with him every month. But what the four years that Jane and I spent were the next levels of his leadership. You know, it wasn't the leadership team. And I'm glad you brought that up because it was the very next level that he wanted exposed to this and the VP of sales that came in, he was new, so he had to be part of this group because he wasn't there originally. And so there was that ongoing... He wanted that next generation that was going to take over for him and the others to really understand this. So I'm glad you summarized that for me to help.

0:21:30.5 Andrew Stotz: Yeah. And I think one of the starting points too, I mean, the body of work, not just this book, but the other books that you guys have been involved in and produced provide a lot of the starting points for this. So there's a lot there. Dave, where do we go after these considerations? And the people say, okay, yeah, leadership says, we want to make this change. We're ready to make some time for it. We're willing to get outside support and help. Where do we go next.

0:21:57.7 Dave Williams: Right. Well, one thing that we typically invite a leadership team to do is to take kind of a self assessment of where they sort of see their baseline in relation to the methods and activities of QOS. So in chapter one of the book, there's actually a table that is 10 different categories. And then each leader takes it independently and they rate their level of agreement with different definitions from 0 to 10. 0 being this really isn't present, and 10 is, I'm very, very far along on this journey that in the book that's out now, there's a summarized table, it's on a page. But actually in the QOS field guide that we're working on publishing this year, there's a much more detailed version that we use in practice that has deeper definitions, but basically it works its way through purpose and leadership and systems thinking and measurement and all the things that are tied into QOS and what... And as I mentioned, we have each individual member of the leadership team take it independently and then we bring those scores together to learn together.

0:23:32.5 Dave Williams: And there's different ways in which you can display it. In the book, we show an example of a leadership team's scatter plot where it shows the rating and then it also shows the standard deviation amongst that exists between the leadership team. It's very, very common for leaders to not be in agreement in terms of their score in each of the different areas. You know what I said, It's a 0 to 10 scale. Typically, in my experience using the tool, people tend to be between a 2 and a 6 and hovering around a 2 or a 4. But it sort of looks like a buckshot or shotgun blast where there's a very... If you were to put dots where everybody scores, where there's variation that exists. And that's good because it's useful for the team to pause and think about why they assess the organization the way that they did. Looking at it through this new lens, where are the places that there's agreement and also where are the places that there's variation? And that helps them to be able to think about the fact that through this process, they're likely to both improve their assessment of the organization, but also increase their agreement about where they are and what they need to do to move forward and what they need to do to improve.

0:25:05.2 Dave Williams: And so that's a useful starting point, gets everybody kind of on the same page, and it's something that we can use at intervals as one of the ways to continually come back and evaluate progress towards the destination of pursuing quality as an organizational strategy.

0:25:23.7 Andrew Stotz: Yeah, I mean, I imagine that self assessment, it helps you too when you work with companies to be able to really understand, okay, here are starting point with this company is really, they just really don't know much about all of this stuff, whereas you'll have some other clients that basically, wow, okay, there's a lot of knowledge here about it, but how's the implementation and all that? So are we ready to change? Are we prepared to devote the time and energy? Are we going to get outside help? And where are we now? What's our starting point that's great to help us understand exactly how you step through it. What comes next?

0:26:03.5 Cliff Norman: Well, in that very first milestone, in that table, is it table three, Dave? Anyway, the very first milestone is to establish formal improvement efforts. And the reason for that is that unless people experience what it takes to develop, test and implement changes in the organizations, they really can't appreciate the structure that comes with quality as an organizational strategy. Because it's very difficult for many organizations to launch three or four improvement efforts and then bring them to fruition. And there's all sorts of stuff that happens. And then you find out very quickly whether you have managers or leaders, and organizations they've brought me in, they say, let's do some leadership training. I said, no, let's just do some improvement and then we'll find out if we have leaders or not. And one group, I won't mention who it was, but they had five people on their leadership team and they had to replace two of them because they found out they couldn't actually manage an improvement effort. And then the CEO was wondering how they actually manage their organization, which they weren't either. And so it's a rather, it's an important test in the front.

0:27:22.2 Cliff Norman: But as Dr. Juran says, it's real important to develop the habit of improvement. And if you don't know what that is, if you've never experienced it, then it's hard to say to people, gee, I need a purpose that aligns my improvement efforts. I need to understand my system so I know where those improvements are going on. I need to build an information system, get information from customers outside, people inside. I need to put together a strategic plan that actually makes improvements on purpose. That's a lot of work. And once you understand how complicated it can get in terms of just doing three or four improvement efforts and then all of a sudden you got a portfolio of 30 to do your strategic plan. Now that needs some structure, that needs some guidance and all the rest of it. But I'll just go back one step further. My own journey. I was sent by Halliburton at Otis Engineering to go see Dr. Deming 1982 in February. And coming back, I had an audience with the president of our organization, Purvis Thrash. And I went on and on about Dr. Deming. He said, Cliff, you know what I'd like to have? I said, what's up, Mr. Thrash?

0:28:27.5 Cliff Norman: He says, if you'll take this 50 million dollar raw material problem and solve this for me, I'll be a happy man and I'll give you all the quality you want. But go take care of that problem for me first and then come back to me and talk about Deming and Juran and anything else you want to talk about. So I put together four or five people and over about three months we solved his 50 million dollar raw material problem. And then he had a meeting of all executives and I was sitting with the managers in the back row and he called me to the front and he says, Cliff, will you sign this card right here? And I says, well Mr. Thrash, what is this? He says, well, I'm giving you authority to sign $50,000 anytime you need it to get all the quality we can stand here at Otis Engineering. One of the vice presidents said, well, I don't have that authority. He said, you didn't save me $50 million. You know, but once that happens, Andrew, once you do that, then you've got people that are willing to help you. And then once that takes place, I can't tell you how important, it allowed me then to bring in Lloyd Provost to help me.

0:29:36.2 Cliff Norman: And they weren't about to pay out money. They didn't like consultants, in fact, they were anti-consultant. But you saved us $50 million. I gave you $50,000. And Lloyd doesn't make that much. So get him in here, do whatever you need to go do. And I just think it's so critical that we have that demonstration project that people understand at the leadership level what we're talking about when we talk about design and redesign of the system.

0:30:00.0 Andrew Stotz: Yeah. I mean, I appreciate in the book you're talking about this concept. I'm not going to call it quick wins, but the idea is we need to get results. You know, this isn't just about talking about stuff so that's one thing that as you just illustrated, that's one point. The second thing you mentioned, is this person a leader or a manager? You know, and I think for the listeners or viewers out there, they're probably... When they heard you say that, they're probably thinking. Okay, wait a minute. Are my team managers or leaders? How do I know? What would you say? What differentiates the two?

0:30:37.2 Cliff Norman: I was fortunate to hang around Dr. Maccabee, as Deming did, and I asked Dr. Maccabee that question. He said, Cliff it's actually pretty easy. He said leaders have followers, and if you have followers, you can be anywhere in the organization, be a leader, but if you don't have followers, you're not a leader. You might be a manager with authority. You're not a leader.

0:31:02.7 Andrew Stotz: Can I ask a little bit more on that? So I'm thinking about my own business, which is a coffee factory, and I have people that are running the business, but I also have people that are running departments like the roasting department. And that area when they're overseeing this and they're doing a very good job and they're keeping things up and all that. How do I understand in a sense you could say, are they followers? Well, not really. They're people working for them and they have a good time and so do I view that person as not necessarily a leader, but more of a manager, or how do I look at it in my own company?

0:31:35.5 Cliff Norman: It could be a manager, which is essential to the organization. And that's another big difference. You see, the leader can't delegate their relationship with the people who are followers. You can't do that any more than a teacher can dedicate her class to a substitute teacher. Anybody that's ever watched that knows that chaos is getting ready to break out here because that teacher has a relationship with those students. She knows them all in a big way. And when the substitute comes in is game time in most classrooms and so forth, the managers have skills and things that they're applying and they can actually delegate those. Like when I was a foreman, I could have somebody come in and take over my department and I say assign all my people tomorrow. And they could do that. Now, in terms of the people that I was leading that saw me as a leader in that department, they didn't have that relationship.

0:32:30.2 Cliff Norman: But management or skills and necessary things to make the organization run like you're talking about, the coffee is not going to get out the door unless I have people with subject matter knowledge and competent managers to make sure that the T's are getting crossed, the I's dotted and the rest of it. But the leadership of the organization that has followers, that's a whole different person. And I think it's important. That could be anywhere in the organization. Like I had at Halliburton, I had a VP of engineering. Everybody went to him, everybody. He had 110 patents. You know, he built that system. He built the whole organization. So the CEO did not have the followers that the VP of engineering had. And it was well earned. It's always earned, too.

0:33:16.7 Andrew Stotz: Yeah. Okay, that's great. Leaders have followers. Leaders cannot delegate their authority. They have a different relationship.

0:33:24.0 Cliff Norman: They can't delegate the relationship.

0:33:25.8 Andrew Stotz: The relationship. Okay.

0:33:27.4 Cliff Norman: Yeah. Very important.

0:33:34.3 Andrew Stotz: So now let's go back to what, where we were. So we were saying some of the considerations. Are we ready to change? Are we prepared to devote the time and energy? Are we ready to get outside help and where are we now? And that self assessment that you talked about helps us to understand what's our starting point. I always tell a joke with my students about this when I talk about. I'd say, imagine you go to London and you're going to go visit your friend and you call your friend up, you say, I've arrived and I'm calling from a phone booth and just tell me how to get there. And the friend says, well, where are you? And you say, I'm not really sure. Well, do you see anything around you? Yeah, well, there's lots of buildings, but I don't really, you know. Well, do you see any names of any streets? No, I don't really see anything. But just tell me how to get there. There's something missing. If we don't know where we are, it's very difficult to get to where we're going. So now we understand where we are. We got that scatter plot that you guys have that you've talked about. Dave, where do we go next?

0:34:26.6 Dave Williams: Well, so Cliff already mentioned one of the fundamentals. And sometimes I think this is something that people struggle with because they want to jump into something new. But one of the best starting points is to focus in on improvement. And there's a number of different reasons for that. So one is that I don't know about you all, but in my experience, if I ask people, like, hey, I want to create some improvement projects and get started on improvement, I always tell people, like, if you remember the old Stephen Covey exercise where he put the rocks and the stones and the sand into a jar and poured water. And like you would do it in different orders. And I'm fascinated that people will stare at the big rocks or the things that are right in front of them, or the things that are on their agenda, or the things that are part of their strategy. And then they'll look to the side and grab some rare event or some extra thing that isn't related to that, but they've always wanted to work on. And where we try to focus people's attention is one, what are you already working on? Can you look through your and ask around, what are the things that are currently in play, projects that exist? And sometimes we won't ask, what improvement projects do you have? Because if you do that, you get a short list.

0:35:51.4 Dave Williams: Those are the things that people defined as an improvement effort, or maybe use some kind of framing to decide it was an improvement project. It may be better to in the beginning of the book, in the first chapter, we talk about different ways that you improve. And there's designing and redesigning a process. There's designing and redesigning a service or a product. There's changing a whole system. And so it can be useful to say, well, what are we doing in these areas? And that may actually create a bigger list of the various things where people are working on something that's about change to the system that may lend itself to be better activated through firing it up as an improvement project. And then, of course, there's a good chance that any organization, especially if they've done some kind of strategic planning, have some strategic objectives or some strategic priorities which they've committed to or already said, these are the things we're going to work on. So kind of crowdsourcing or bringing those together helps us to potentially find the early portfolio of projects without having to look much further, without having to say, what else do you want to work on.

0:37:07.0 Dave Williams: And then if we've got that, if we've got that list, a second thing that we can do is invite people to use the three questions of the model for improvement and reflect on can you answer these three questions? Do you know what you're trying to accomplish? Do you know how a change will result in improvement? Do you know what changes you'll make? What's your theory about how you'll get to improvement? And so having a list of the things that are already present or existing may be one first step. Another second step in the firing up a portfolio of improvement projects is asking the three questions for the model for improvement. And then a third one, if it's an active project is we have a project progress scale that you might use that can help you gauge. So I've got a project where is it on its journey towards achieving its aim or getting results? Those three can help us to sort of get a sense of the work that is at hand and that has already been sort of started in some fashion that is already in progress and maybe to get a sense of the level of definition and the progress that exists.

0:38:22.3 Dave Williams: They may not be the right projects, but that's a good place to start before trying to create new ones. And I'll hand it to you, Andrew.

0:38:30.4 Andrew Stotz: I find that interesting. Both the story that you told Cliff about fix my raw material problem and then, Dave, what you're talking about is as you talk in the book, focus first on improvement. What are we already working on? What's an improvement project we've got? What's a problem we've got? Because a lot of times, let's say in the teachings of Dr. Deming, it's like, no, get your mind right, read this stuff, read this, figure this out, think about this, go to a seminar, talk to other people before you do anything. I feel like that is oftentimes where people get caught is they get caught up in, I need a year to think about this. And can you explain a little bit more about why once we've done our self assessment and we're ready to go, that you focus on improvement rather than the thinking process?

0:39:21.7 Dave Williams: Well, because we want to... Well, one, we know that in order to get results or to get a different result than what we want, we got to change the system that we got. Right. So in order to do that, we've got to do improvement. The other thing is that there's already energy that's being expended here.

0:39:41.4 Andrew Stotz: That's a good point.

0:39:42.7 Dave Williams: The risk that often I find people run into is that they then add other projects that are not strategic into that bucket and take up more energy. I'll tell you an example. I was working with the health system here in the States and we crowdsource just the things that they were calling improvement projects. The health system had 25 active teams that were just the ones that were called out as improvement projects. When we looked at those 25 teams, the vast majority of them were not actually... They had been meeting for months and doing things for quite some time, but they actually weren't doing any changes and, or they've been testing changes for quite some time. So, now just this exercise alone by only asking, what improvement projects do you have? You realize you've got 25 teams that have been resourced or are spending energy or going to meetings or focused on something. They may not be the strategic thing that matters, but that's irrelevant right now. We just know that we already have invested some interest here. The second thing is these folks have been on this journey for quite some time and are not making progress.

0:41:01.7 Dave Williams: So that tells me something about maybe the way that they framed it. Did they charter it well? Did they have the right people in the room or the right team? Did they have the right tools and methods to be able to break down the problem and then figure out what to test and learn? So there may be some difficulty...

0:41:19.4 Andrew Stotz: Or did they even just dissipate their efforts across 25 projects too? Right in their resources, yeah.

0:41:26.1 Dave Williams: Yeah. Or there are overlaps? So there's a number of different factors. There's actually a paper that was published by a health system in the United Kingdom, and it was really interesting. They spent a lot of attention on generating will through training and getting people in the classroom and teaching them about improvement methods. And they fired up all this energy. They had a massive explosion of the number of projects that were started or where somebody went into their software. They had a software platform. Anybody could go and start a project. Well, something like 50% of those projects never actually got to PDSA testing where they changed anything. And then there were a slew of them that were stuck in PDSA testing but never saw any movement in their process measures or their outcome measures. And only a small number actually progressed in achieving their aim. And I asked the Chief Quality Officer about this, and and he admittedly said that it was very exciting that we we're generating will and getting things going, but that alone was only getting them to maybe some early design and some thinking, but they weren't getting them to results.

0:42:34.8 Dave Williams: And I said, well, what about the ones that were getting results? And he said, well, those are actually ones where we've got an improvement advisor who's got some skills and ability and improvement. There are things that are resourced, there are things that were prioritized. And man, when we did all those things, they moved from planning and organizing and thinking to testing changes and moving in a direction of goodness and getting at least results in their process measures, if not their outcome measures. And so in my mind, I was like, I appreciate you're trying to build this sort of culture, but it felt like a lot of burnt energy at the front end with all these teams getting into training and firing up their software and more energy might have been strategic in copying what was getting to results. And I think that's part of what we're trying to get to, is helping people learn. You've got if you don't have a method to figure out strategic projects, let's look at the ones you got. How are they going? Where are people at? And how effective is the capability that you have within your system right now? And the leaders want to be part of that, and they can learn within that to go, oh, wow, this is our current state.

0:43:47.2 Dave Williams: And so maybe we're going to agree to continue on with these projects. Maybe we're going to sunset some of them, but we're going to learn together about how do we get better at getting better, and how do we learn how to move projects forward and not to have them take two years. Let's try to get them down to four or six months, whether that's through scope or execution. But let's get better at getting better. And then as we're building... Developing the early activities of QOS, we'll eventually get to a point where we'll also be able to identify more strategic projects that are going to move us towards our aim or towards our purpose better. And this will help us as we're trying to build the capability to get there.

0:44:32.7 Cliff Norman: You know, Andrew, early on, when Dave went down this path, he said that we got to make sure that somebody's working on improvement. They're actually making changes. And Jane and I were working with a group, and the CEO said they've been meeting a long time. Could you down there and see what they're doing? Because nothing's happening. And we started looking through their agendas and they had everything well documented, and it was all about getting ready to get ready. And then they'd assign the dessert. Who's going to bring the dessert to the next meeting. And Jane looked at him and says this reminds me of something, Cliff. I said, what's that? Can I share my screen?

0:45:10.9 Andrew Stotz: Yeah. Yep, go ahead.

0:45:13.7 Cliff Norman: I may send this to. You may know about it, but this is Dr. Deming's Diary of a Cat. And everyday...

0:45:20.6 Andrew Stotz: It hasn't come up yet. Hold on one second. Hopefully you've got permission now.

0:45:28.6 Cliff Norman: Let me go back and check here.

0:45:33.9 Andrew Stotz: Okay. It looks like it's coming up. One second.

0:45:38.4 Cliff Norman: It said every day is today. There's no theory days of the week. But today I got up some food in a bowl, it was great. Slept some too. Play with yarn, got some food in a bowl, had a good nap, slept, food, yarn, fun. Play with a shoelace. There's a big change right there. Went from yarn to a shoelace. Some people call that a job shop. And ate, slept, had a good day, slept, ate some food, yarn, so forth. So, and the team meeting looked just like that. But there's really no changes going on relative to improvement. So Dr. Deming would often share this into four days seminar to make sure that we weren't involved in the Diary of the Cat, but we were actually doing something useful in terms of making changes in the organization.

0:46:24.4 Andrew Stotz: That's a great one. And it helps us to understand that we could be busy all day long and not improve anything.

0:46:31.8 Cliff Norman: You know, or actually confuse that with improvement. In fact, we have an operational API that my team, we were embarrassed in our first, wait a second, our first improvement guide we wrote. And Dr. Adamir Pente, who's a professor at the university in Brazil, he sent us a note and he said, I know you guys and he said you're real big on operational definitions, but you've written this book on improvement and nowhere have you, you've defined what you mean by improvement. And then he put together a three part definition that there's a design and redesign system, there's system measures and the change is sustainable and lasting and so we put that definition in the second edition. But I was confronted at a university, I won't mention which one it was, but they had 30 Keystone projects for a advanced degree program for nursing and they were convinced they were doing improvement. And when I had them apply that definition, they came up out of the thirty. They only could find two projects out of the 30 where they were actually designing and redesigning the system, which, that's the first thing Dave said are we designing and redesigning and making real changes? And people think just showing up and going through motions and all the rest of it is improvement. No, it means...

0:48:07.8 Dave Williams: Looks like we've lost...

0:48:11.9 Andrew Stotz: We lost you at the last, the last statement you just made. People are going through all this stuff and thinking that they're improving, but they're...

0:48:22.8 Cliff Norman: Yeah, it's showing up and going through motions and you know, having the meetings and making sure we assign who's bringing dessert. But we're not really designing and changing the system. We're not getting measurable changes of improvement. In other words, we haven't tracked the data over time and we can't say that the changes that we've made are going to in fact be sustainable because we haven't known what we've done to the system to deserve a sustainable change.

0:48:51.4 Andrew Stotz: By the way, what a buzzword these days, sustainability, sustainable and all that. And you just think do people really think about how we're building something that's really lasting and sustainable?

0:49:04.8 Cliff Norman: Well, we have a checklist and actually Jane designed it for the first edition and it literally lays out what changes did you make, which processes did you change, what's going to change in the documentation, whose role statements have been changed in the organization because of this change. And once all that's answered on that checklist, which is in the book, then we can... But we're pretty certain that we've created the structure to make it easy for people to do the right thing and hard to do the wrong thing. But unless that structure's changed, probably not much going to happen.

0:49:40.8 Andrew Stotz: Just for the sake of time, because I think we want to wrap up in just a bit. But there's so many stuff, so much stuff that we've been through. But I know there's even more in this chapter, but how would you start to bring this together for the person who is a leader, himself or herself, and they're listening to this and they're thinking, okay, I'm ready to make a change and I'm prepared to devote the time and energy because I see the outcome and I'm open to help, whether that's through the book and other books, whether that's through a consultant, whatever that is. And I can even do a self assessment to some extent and know where our level is, which is very low. We don't know much about this type of stuff and that type of thing. We talked about the first focus on improvement. How do they pull this all together and start moving on it?

0:50:35.0 Dave Williams: There's three things that follow the self assessment. The first one is this focus on doing improvement work and setting up a portfolio of projects. And we just kind of talked about many of the different methods that go into that. And like I said, sometimes that when you say that out loud, leaders don't initially get excited by it because they think they have it. But actually it's a powerful opportunity for you to learn about what's currently going on in the organization and about where this opportunity is to reduce a lot of the noise and a lot of the friction that's getting in the way from you getting to results. The second thing that often happens in parallel is that the leaders need to build a learning system where they're going to be able to learn together both about these projects and what these projects are telling them about their organization, about their culture, about their people, and about their capacity to get results, but also that they can start to be learning about the science of improvement and profound knowledge and the activities of QOS that are going to be part of what they're going to work on developing over the course of the first year or two.

0:51:50.6 Dave Williams: And so that typically is, that's making that space and energy. It's a blend of book learning and application and practical. Trying and looking at things within the organization. It's a very applied approach, but it's an ongoing piece of their discovery. And I often argue that this is a real opportunity for leadership because they're going to be able to see their organization in a way that they haven't seen it before. And when we talk about profound knowledge, they're going to gain this profound understanding and expertise about what they're charged with and what they own and what they want to change in a way that they haven't been able to have it before. And so it's a hard work, but rewarding work. And then third is that typically where the, where we invite people to start is to focus in on the first activity, which is to develop or establish or develop their purpose. When this work was initially framed, not everybody was as... Not everybody had a mission, vision and value statement or a purpose statement that wasn't as common, but today people do. But the difference here, and you'll see this in the chapter on purpose, is that organizations that are pursuing quality as an organizational strategy are organizations that are systems that are built to constantly be trying to match a need that exists out in the world.

0:53:34.7 Dave Williams: And so often a learning for people is to step back and have to reflect on, well, what is the need in which we are creating these products and services to match? And if we're creating these things to match the need, how do we understand what's important, what are the quality characteristics that matter? And then how do we define what our mission is in that context? And being able to say, here's why we exist and the need that we're trying to serve, and in what way? And how do we set a vision for where we want to get into the future and what are the tenants or the practical values that exist in our organization, that we want to define how we work together in terms of building in that way. And so purpose is a big focus. It's that clarity of the need, the clarity of the quality characteristics that it takes to match that need. Understanding what are the products and services that we have. I know that sounds a little trivial, but you'd be stunned how hard it is, especially in service organizations, for people to actually describe what it is that they do, what are the actual services.

0:54:54.3 Dave Williams: They might have the name of the service or the class or the whatever, but to actually say this is what we deliver, and then really think about how do I use this as our organization's sort of North Star, our aim, so that everything else that follows is going to be about building a system that produces the results that we want and produces the services that match that need. So going forward, that's going to be very, very important in instructing the direction and instructing the way in which we're going to work as a community of professional people together.

0:55:30.8 Andrew Stotz: So after self assessment, we're talking about focusing on improvement. We're talking about building a learning system, and we're talking about revisiting or establishing or developing our purpose?

0:55:43.3 Cliff Norman: Yeah, I'll just add to what you just said there, Andrew. There's three basic things that have to happen when we start working. Number one is create the habit of improvement. Start improvement right away. Second thing, Dave just went through some detail on building a system of improvement. And Dave called that a learning system, which I thought was interesting because that's what Dr. Maccabee called it when he saw the five activities. Said, these are really methods for building a learning organization. And he said, I've never really seen them before, but this is what will come out of this, which is the essence of what you want. You want people continually learning, as Dr. Deming said, so they can continually improve. But the third thing that has to happen is we have to develop internal capability for them to carry this on, because we're not going to be around with them. We've never advertised. We don't advertise for clients, and we only get word of mouth. And we're only in there to do those three things, get them started on the habit of improvement, start building the system improvement so they can take it over.

0:56:43.4 Cliff Norman: And the third thing, start developing internal capability so they can continue it on into the future. So those three things basically take off on day one. And depending on the organization, I think this is critical. Dave, you asked this question the other day, if the context is such they've got things in front of them are so bad and so challenging that they just need to work on improvement. That's where we're going to be focused. But now if they can chew gum and walk at the same time, we're going to start building the system of improvement. And the first people I want on those initial teams, I want people on there who are going to be future improvement advisors. And more importantly, they perceive them as future leaders in the organization. I don't want a cadre of a whole bunch of improvement advisors. I want leaders in the future who actually understand the science of improvement, understand these methods, so when they go to the next department, the next organization, they can carry this on. So those three things start improving, start building a system of improvement. And the third thing, start developing internal capability. Those have got to take off almost simultaneously, depending on the situation, of course.

0:57:49.8 Andrew Stotz: Well, on that note, that's quite a discussion. I'm so happy that we can have this to go in a little bit deeper into the work that you guys have done. Again, the book is Quality As an Organizational Strategy. I got mine on Amazon and it sent it to me. But I wonder if you have any last words that you'd like to share about what we've talked about today in relation to getting started.

0:58:18.3 Cliff Norman: So, Dave, why don't you talk a little bit about. Because I think this is critical. We've just finished Andrew, the book that's going to be for the people who actually have to build this system. So Dave, just say a few things about that if you would, because you.

0:58:32.0 Dave Williams: About the field guide?

0:58:33.8 Cliff Norman: Yeah.

0:58:35.5 Dave Williams: Yeah. Well, so when this body of work was first created, there was the content of which you see in this book. And then there were also a lot of exercises and methods and applications and examples that existed as well. And it was a pretty thick binder. We have created two volumes. One, the book that you have, which is the description of the theory and the method and gives you some of the tools. And we're now in the process of pulling together what we call the QOS Field Guide, which is a guide that is supporting people that are going down this journey. It follows the same structure as the book, with the exception of the, the Getting started chapter that we had at the end is now at the beginning. And it walks through in great detail various ways in which you leaders and practitioners can approach getting started and building the capacity and then working through each of the activities. And it's equal in size, I mean, it's about the same thickness. But what we tried to do is to give people really pragmatic things to do.

1:00:01.1 Dave Williams: So there are exercises where people are simulating an idea or a concept or a particular piece. There are what we call QOS applications, which are where you're actually taking the theory or the method and applying it to your own organization. There are case studies and things that have been built that might allow you to practice. There's wonderful examples of just about everything from all, from people that we have worked with over the years across multiple different fields, from my background in emergency services and healthcare to education to manufacturing to elevator companies, all kinds of great stuff. And so that will be helpful as people are trying to think about pursuing this journey and working through that first phase of developing QOS and moving into using it. And we're in the stages of having it done to be available later this year.

1:01:08.6 Andrew Stotz: Exciting.

1:01:09.2 Cliff Norman: We've tried to make it useful, Andrew, that the people have to stay overnight with the management and actually get something done and build it without being run off. That everything is there for them to make sure that they make it successfully. That's the thing we kept in mind as we kept writing this second volume.

1:01:25.2 Andrew Stotz: Yeah, I mean, I would say my experience with your guys's writing is that it's applicable.

1:01:34.1 Dave Williams: Well, Andrew, one thing I was going to add on you mentioned a lot of different examples. There are a lot of books in which people tell you a theory, but they don't tell you how to do it. Or they tell you about their own experience, but they don't actually convey the theory. The Quality as an Organizational Strategy book is laying out the theory and the methods of this approach built on the foundations of the science of improvement and profound knowledge and the Deming philosophy. The QOS Field Guide adds to that by giving you the methods and the tools and the things. It doesn't mean that that by itself you can't just go through like it's some kind of self guided tour and all of a sudden magic happens. There's a lot of work and learning and things that have to go into going through that process. But between these two volumes, a leadership team has the tools and methods that put them in position to be able to make this journey.

1:02:41.4 Andrew Stotz: Right. Well, let's wrap it up there. On behalf of everyone, I appreciate Dave and Cliff. All that you're doing and you're sharing with us and taking the time to do that. So from everyone at the Deming Institute, I want to thank you again for joining this and bringing your discussion on these topics. And for listeners, remember to go to deming.org to continue your journey. And you can find this book, Quality as an Organizational Strategy at Amazon and other booksellers. Are there even booksellers these days? I don't even know. They're mainly online these days. So this is your host, Andrew Stotz, and I'm going to leave you with one of my favorite quotes from Dr. Deming, which is "people are entitled to joy in work."

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It's time for PDSA (Plan-Do-Study-Act) Cycle 2 in John Dues' journey to reduce chronic absenteeism in his schools. His team is using PDSA to quickly test ideas and learn on a small scale. Find out what happened and how PDSA can be a powerful tool for learning.

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 discussion with John Dues, who is part of a new generation of educators striving to apply Dr. Deming's principles to unleash student joy in learning. The topic for today is Powerful Learning with the PDSA Cycle, Part 2. John, take it away.

0:00:26.7 John Dues: It's good to be back, Andrew. Yeah, like you said, we, I think for the past three episodes or so, we've been working towards getting a better definition of our problem specific to this chronic absenteeism issue that we're working on this year. I don't know if you remember from last episode, but we have this team working and they've basically said we don't have enough information quite yet to write this precise problem statement. So we decided to gather information running the Plan-Do-Study-Act cycle. And last time we focused on the first cycle. This episode, we're gonna focus on a subsequent PDSA cycle, sort of along those same lines. For folks that are watching and perhaps just joining for the first time, I'll kind of share my screen and do a little bit of a review so that everybody can see or know what we're talking about, even if they're just listening for the first time. So we've talked about this improvement model. We're working through this four step improvement model. So set the direction or challenge is the first step. Grasp the current condition is the second step. Third step is establish your next target condition and then fourth, experiment to overcome obstacles.

0:01:44.3 John Dues: And we're doing all this with a team, people working in the system. People have the authority to work on the system and someone with the System of Profound Knowledge knowledge. right. And so, you know, we've talked about setting that challenge or direction. And as we're grasping the current condition, we've actually decided to skip to step four and experiment a little bit so we can get a deeper understanding of this problem that we've been working on. And you'll remember probably as well, did the screen change for you so you can see the chart now?

0:02:21.8 Andrew Stotz: Yeah.

0:02:22.9 John Dues: Yeah. Great. So I thought it'd be helpful to show this again too. So this is our process behavior chart of the chronic absenteeism rates dating back to the 2016/'17 school year. So we have eight years of data in regards to this problem. And you'll remember when we talked about set the direction or the challenge, we wanna basically cut this chronic absenteeism rate we're seeing coming out of the pandemic by a lot. So we're hovering around this 50% chronic absenteeism rate. We wanna cut it to 5%. So that means, you know, 50% or more of our kids, or right around 50% of our kids are missing 10% or more of the school year.

0:03:06.2 John Dues: And this is a trend that we're seeing all over the United States right now. And the other thing that we talked about is when we looked at this process behavior chart, that it's basically like there's a pre-pandemic system of chronic absenteeism, and then there's a post-pandemic system of chronic absenteeism. So, you know, before the pandemic, the rates were too high, but nowhere near to where they are now. So, you know, prior to the pandemic, we were sort of hovering around the, you know, 20 to 30% of kids chronically absent. And then, you know, coming out of the pandemic, it's been more like that, that 50% number that we've, that we've talked about.

0:03:49.4 Andrew Stotz: And so to reiterate for the listeners or the viewers, this is the chronic absentee rate at your school, as opposed to nationwide, which I remember last time you talked about, it's about 30% nationwide, and pre-pandemic, it was about 16%.

0:04:06.5 John Dues: Yeah. Right around there. So, yeah, so I'm talking about the four schools that make up our school system in Columbus, Ohio.

0:04:15.8 Andrew Stotz: Yep.

0:04:16.6 John Dues: And, you know, we have a pretty high percent of our kids are economically disadvantaged. And so the rates in schools that have that demographic tend to be more like ours, in that 40, 50% range. And then, but all schools coming out of the pandemic had much higher rates than what they had pre pandemic. No matter your affluence levels. It's just, just like a lot of things the schools with the most kids living in poverty get hit the hardest when you have these problems, basically. So, yeah, yeah. So what we were, we were studying this problem, and, you know, we have some idea of what's causing our challenges, but we've started running these PDSA cycles to dig into that a little bit more, and I'll, I'll, I'll stop sharing. So that's not distracting. And so we ran this first PDSA cycle we talked about last time, and now we're running, or we've just gotten finished running a second PDSA cycle. So for folks that are new to that, what that means is that we are basically running an experiment to test an idea, an idea about how to improve chronic absenteeism.

0:05:26.6 John Dues: And to do that we plan the intervention, then we do or run the experiment, we study it and then we act on that information. 'Cause that's where the PDSA comes from. So basically the objective specific to PDSA 2 is were or we designed a individualized intervention based on responses we get from interviews with kids using this five whys sort of empathy interview template. Right? And then after we do that, what's happening is that students are actually. So after the five whys is completed with the student, we move right into creating the plan of the PDSA still with that student. So they're part of the process. So that's also sort of a key, I think innovation of this particular round of PDSAs is the student is sitting there as we design the intervention. A student that has some issues with chronic absenteeism. And then basically in this particular plan, we decided we're gonna collect detailed attendance data for two weeks to evaluate the effectiveness of that.

0:06:39.7 Andrew Stotz: When you said this one, are you talking about the PDSA one or two?

0:06:43.5 John Dues: Two. The one. The one you just got done running. The one we're talking about. So the PDSA 2 ran for two weeks. So when I say experiment, I'm not talking about, you know, like a randomized controlled trial that can last a year or two years or five years before you get the results. I'm talking about something you can do in a day, a week, two weeks. My general rule is not to go over a month with these PDSA cycles. It starts to feel like it's too long. I wanna get data back quicker than that on an intervention. And so that's what we did with this PDSA cycle 2. And it was really, the plan was built around this key question. The key question was, will involving students in the design of an individualized intervention to address their chronic absenteeism lead to an increase in their average daily attendance rate during that period of intervention. So we're not taking that for granted just because we're sitting with the kids creating a plan with them. We don't know, we don't know what's gonna happen exactly. And basically step one of that plan was this five wise interviews that I talked about.

0:07:50.2 John Dues: So basically we had four staff members. So each one was assigned a student at their campus that they chose to work with on this initial intervention. And they took a piece of sticky paper and up top they basically wrote, here's our problem, the student's name. So let's say James is not coming to school consistently. And when students miss a lot of school, they're at risk of falling behind academically. And right below that problem statement, then they wrote, why are you not coming to school consistently? 'Cause that's the first why question. So that's sort of the first part of this five whys interview. So it's very simple. You need chart, paper and marker in about 20 minutes to do this. Step two is, then they used the information that they gathered from that five whys interview to design the intervention with the student. And basically what they did was they designed the intervention around the root cause that they got to at the bottom of that five whys sequence. So basically, you know, when they said that, when they asked that first question, you know, why are you not coming to school consistently? The student is then going to say something, right? I miss the bus almost every day.

0:09:10.7 John Dues: And so the next question, the next why question is built on the previous answer from the student. So why do you miss the bus every day? And you kind of keep going. And it doesn't always happen perfectly. Sometimes it takes three questions, sometimes it takes a little more than five. But generally speaking, once you drill down with those five whys, you'll get to sort of a root cause from the interviewee, right? And so then they're basically saying like, you know, based on that root cause we identified, what do you think we can do to improve your daily attendance? And then now they're sort of transitioning from the five whys into the planning of the intervention. And sort of that was step two of the plan. And step three is then actually starting to track the student's daily attendance as they do whatever that plan is across the 10 school days that are in that particular cycle. So that's the plan phase. You know, we had a key question that we designed around, and then the team also makes predictions about what they think is gonna happen during that cycle. That's the plan.

0:10:23.5 John Dues: And then, so then they move into, once the plan's in place, you run the experiment. That's the do, right? And so in this particular do, PDSA cycle two here, that team collected both the quantitative data, so that's the five whys interview, and then the quantitative data, that's the daily attendance data. And so, you know, I mentioned that they had chosen four students to do this work with. And so what you're doing in the do is saying, did you do the plan? Basically. And that shouldn't be assumed because things may happen that interrupt the plan or derail the plan or make you change the plan. The guy that's designing these PDSAs is pretty good project manager. He knows improvement science, he knows the Deming stuff pretty well. So largely this experiment ran as planned. It's also for a pretty short time frame, so there's less time for it to go sort of off the rails and go wrong. But one of the student's attendance, it was so poor during this two week period that they never actually held the empathy interview. So you're noting stuff like that. You plan to interview four kids, you actually only interviewed three kids.

0:11:34.9 John Dues: And here's the reason why, we couldn't even get to the part of interviewing the student, this particular student, because he was not there during that two week period when they were gonna do the interviews. And so then the data comes in, right? The data comes in and now we're ready to study what actually happened during that two week period. So with the first student, interestingly, during the course of the PDSA, that daily attendance rate did go up. Right? And he was actually, he did miss a couple days, so it wasn't perfect, but he brought a note and there was actually a medical diagnosis. There was like a excuse reason for those particular days. Right. The second student was that student I was just referring to. So it was, his attendance was so poor that weren't even able to do the interview. That happens that you know, in real life. Third student's, this was a real success story. She was a part of her, the plan that she designed. She was meeting with one of the staff members at the school she attends that she chose one-on-one at the start of the day and she had significantly increased attendance during this two week period.

0:13:04.0 John Dues: And then the last student had this initial bump early in the PDSA and then had four straight sort of missed days at the end of that two week period also due to an illness, due to the flu. So you know, four kids, one uh two kids, pretty good success. Two kids still had some absences throughout the period. And then one kid sort of really didn't break the cycle. Nothing changed. And in fact the interview didn't even occur. Which means there was also no intervention that occurred with that particular student. Even so, with the student where we couldn't do the interview during that period, part of the plan was to get him a more reliable bus stop and we actually were able to change his bus stop, communicate that to the family and then that still didn't lead to increased attendance. And that's, you know, when you, I think when you work like this too, when you are sort of a policymaker or politician and you make these proclamations, we're gonna decrease chronic absenteeism or to cut it in half. And then you say, okay, well here's four students. Do that in two weeks. Do that over the course, just two weeks, just 10 days. How hard could it be? Right. [laughter] You see, you see just how hard these things are in reality. Right. So can't just make these proclamations.

0:14:32.9 Andrew Stotz: And is that part of what you're trying to do also in this process is get people to, you know, I mean, obviously what you'd love is to be able to come up with solutions from these four students. But really what you also are identifying is the other side of that. Wow, this is even harder than I thought.

0:14:50.2 John Dues: Yeah. And I, you know, with the people that work in schools, like the folks that are on this improvement team, none of this is gonna be a surprise to them.

0:14:57.3 Andrew Stotz: Yeah, they already know that, I guess.

0:14:58.6 John Dues: They already know.

0:15:00.3 Andrew Stotz: Yeah.

0:15:00.4 John Dues: Because they're on the front lines. I mean, they already know knew this is, you know, multi layered, challenging problem to address. But on the flip side, there were some pretty encouraging signs that getting, we call it getting proximate to students, individualizing some of those interventions and then including the student in that attendance monitoring and the intervention that it, you know, like I said, there were some success stories. So that first student I talked about, he went from 52% attendance to during the intervention period, it jumped up to 70%. So, you know, it's a short time frame, but a positive sign. That second student that I said that, you know, we never even got to do the interview with, he actually got quite a bit worse. So he had something like 37% attendance and that dropped 10% during that two week period. And then that third student that I said was a real success story, she went from 75% attendance to 96% attendance. And 96% attendance is good. And then the last student, she was the one that I said, you know, there was an initial bump and then kind of fell off, due to the flu at the end, she basically stayed the same. Like she was at right around 56% attendance and stayed right in that mid-50s range during the intervention.

0:16:19.8 Andrew Stotz: And just for, if a listener or a viewer has come in just on this episode and they're trying to understand where we're at, it's maybe you could talk a little bit about what you're doing in the sense that someone may look at it and say, wait a minute, this is just some anecdotes and how does that help you? And then on the other hand, one of the lessons in the business world that people sometimes say these days is do things that don't scale, which is counterintuitive. But what they're trying to get you to do is focus in, on getting it right with a small number of people before you then, you know, decide to go to the next level. So just maybe just give a brief of where it's at in this whole process.

0:17:04.8 John Dues: Yeah, I mean, I think. I mean, that's the whole point of the PDSA. The counterintuitive thing is that while you want to improve things for all students, you may start by working with a single student or a single classroom, or in our case, you know, four students. So, you know, the good thing is, is that what you could possibly do out of a cycle like this is, and this is only two weeks. But there's significant learning. And so what you would then do with cycle three, perhaps if the team decided this was what they're gonna do, is make some adaptation to this process, and if you were feeling confident that the adaptation was gonna work, then you could possibly. It's pretty early cycle two to start spreading this real wide. But I mean, you could spread this, you know, if you wanted to, to instead of four students, maybe you wanna try 10 students, something like that. Right. And in that way, and that's the basic idea, is to go from one student to one classroom of students to maybe one grade level of students to a whole school, perhaps if some type of idea is working really well. But the thing is, is that the whole mantra is, I lost my train of thought. Start small, learn fast. That's the mantra. Right.

0:18:23.7 Andrew Stotz: And then the other question I would have is, to what extent is this, you know, just subject to the Hawthorne effect in the sense that we knew in the many years ago that when they increased the intensity of the light, the workers did better, and then when they reduced the intensity of the light, the workers did better. So it was just that somebody was paying attention to the workers and the result was they appreciated that and so they did better.

0:18:53.9 John Dues: Yeah, I mean, that's possible. I mean, I would say...

0:18:57.0 Andrew Stotz: Which of course. Which of course may be the solution anyways. Right? You know, like, geez, if a teacher was... If each student was greeted by a teacher who cared about them and said, I'm so happy to see you, and it's great that you made it on time. Let's get started. I mean that could change the life of some people for sure. Including me.

0:19:13.7 John Dues: Yeah, I mean, I think, you know, like the girl that went from 75% to 96% attendance during the intervention. I wouldn't say, oh my gosh, we're gonna do this school wide now, but what I would say is, wow, that worked for that two week period.

0:19:25.7 Andrew Stotz: We're learning.

0:19:27.5 John Dues: It was relatively easy to do on a daily basis, so let's do more of that. Right. And also another thing you can think about is when you run PDSA cycles and you, let's say you do have really great success on whatever that thing is and you've spread it throughout your system. But now the priorities have changed. There's some other thing that really needs intensive intervention. One thing you can do is sort of as the 10th step in our improvement process is hold the gains. And so you often can then check back in on that thing in a month or two months and just see what the data says. Did it deteriorate because we're not paying as much attention to it or because we put that thing in place and left it in place? Although we're not as hyper focused on it, is it still sort of continuing on in a way that's at least acceptable to us?

0:20:22.3 Andrew Stotz: I just had an idea. Why don't we put a finish line and a countdown clock and a checkered flag and cheer every student as they get over the line?

[laughter]

0:20:35.0 John Dues: Yeah, that would be great. That would be great. The problem is, is the cheering isn't the thing that's preventing them from coming to school.

0:20:45.1 Andrew Stotz: Yeah.

0:20:46.1 John Dues: Maybe like the cherry on top, but you know.

0:20:49.4 Andrew Stotz: Exactly.

0:20:51.6 John Dues: So, so it's tough. Yeah.

0:20:52.2 Andrew Stotz: Great, great example of where superficial things that outsiders see may not really connect with the real trouble that they're struggling with. Yep.

0:21:01.5 John Dues: And remember, the student's not the only part of the process. The people, the staff that were doing these interventions, they reported that this was like a really powerful experience for them. Most of them haven't been through a PDSA cycle before.

0:21:18.6 Andrew Stotz: Right.

0:21:18.6 John Dues: So this.

0:21:20.3 Andrew Stotz: Maybe I was, slogans and exhortations is what I was just talking about.

0:21:24.8 John Dues: Right, right, right. Yeah. But they felt pretty confident that doing more of that thing was a good idea coming out of cycle one and then this second cycle. Now, with that being said, one of the things that we've also discovered is that there's some required intervening that has to happen as kids meet certain thresholds that are required by the state of Ohio. And so I think I mentioned this before, that one of the things that we're doing as a part of the project was mapping out the intervention process in place at each campus. So while the benchmarks are the same for when you need to do that, the how and the who and the when, that there's variation in that. So right now we're taking like each of the campuses mapped out their intervention process for attendance, and we're taking a look at that. And so what we're actually gonna do in the next cycle is work to put together a more standardized approach to these intervention teams. So, and that... And you get that from the team, you know, you're sort of talking about, you know, as we get to the Act.

0:22:38.4 John Dues: I think I've talked about this before. There's sort of the three A's. You can adopt this into your system, write it down in a manual or whatever, you can adapt it, change it a little bit, or if it's really not going well, then you abandon it. So in this case, there's an adaptation where we're gonna sort of shift gears and work on this process mapping and get that put in place 'cause the team feels like that's the highest lever, next thing to do, basically.

0:23:06.5 Andrew Stotz: And is that. Have you already mapped out PDSA 3 now? And you're in that process? Is that. And that's what we're gonna talk about next one, or where are you at with that?

0:23:15.5 John Dues: Yeah, so I think looking at the process maps would be interesting because you can sort of assume that things happen relatively similarly, you know, especially in a small school system like ours. But you're gonna see that there's... And it's not right or wrong necessarily, but there may be a sort of like, again, a better way to do things because there are many... There's sometimes many people involved, many processes, many forms. And so, yeah, we're gonna look and see, basically, is one more efficient than the other, is one more effective than the other, that type of thing.

0:23:51.4 Andrew Stotz: Okay.

0:23:52.3 John Dues: Yeah. So a lot of learning, you know, I mean, I think, and you know, again, this takes time. But, and we're still sort of in that "define the problem" step. But again, the fact that we're studying the problem, the fact that we're talking to kids as a part of it, we're actually learning from data coming from what's happening on the ground. The ultimate solution or set of solutions we come up with are gonna be much more robust, you know, and they're gonna be much more sort of durable into the future, anti-fragile you know, into the future because of this work versus, you know, the typical fly by night. Let's have a pizza party on Friday to encourage kids to come to school, that just... There may be an initial bump, but it's just, this has no durability into the future. Yeah.

0:24:44.8 Andrew Stotz: Great, great. Well, I like that. And I got excited 'cause I thought, oh, maybe we can come up with some incentive or something. But what I see is that the challenge is how do you make it durable? So I like that word. And this was a good discussion on that.

0:25:01.8 John Dues: Yeah. Well, I was just gonna say the other point I would make is, you know, sometimes you can plan, plan, plan, but that, you know, at any point of an improvement process, you can use a PDSA cycle, start running an experiment and start gathering information right away. Just do something, you know, thoughtful, but do something. Don't plan in a room when you can go out and get actual, run actual experiments and get back real data.

0:25:27.5 Andrew Stotz: All right, and one other question I had that just came to my mind is what is the value of doing this in such a structured way as the PDSA versus Oh, come on, John, we're testing things all the time, you know, and let's say that to some extent they are, right? We all are testing every day. Why is it important that it's done in a structured way, in a documented way?

0:25:50.8 John Dues: Well, I mean, one, you have a historical record. Two, you know, we had four. So there's one PDSA cycle, but actually there's four different mini experiments happening, one at each campus. And if you didn't write it down like the guy does that's designing these, every one of the experiments would have been different. And he really thinks through step by step. Okay, put this number here. How are we gonna define that? There's a validated list of definitions of that type of attendance issue that day. Because if you don't have all that stuff, then there's no way to analyze it after the fact, or at least it's a lot less, a lot less efficient.

0:26:28.3 Andrew Stotz: And the learning could be lost too.

0:26:30.1 John Dues: Learning could be lost. And you know, I would venture to guess that, you know, if you run a sort of an experiment haphazardly, especially if there's multiple locations, the people sort of, their definition of the thing that's being measured is gonna vary too.

0:26:45.0 Andrew Stotz: Yeah.

0:26:45.5 John Dues: Almost every time. Almost every time, even subtly.

0:26:50.9 Andrew Stotz: All right, well, that was a great discussion. And 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. You can find John's book, Win-Win, W. Edwards Deming, The System of Profound Knowledge and The Science of Improving Schools on Amazon. 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.

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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.

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Are your specification limits holding you back from improving your products and services? Should you throw out specifications? What does Stephen Hawking have to do with it? In this episode, Bill Bellows and host Andrew Stotz discuss specifications and variation.

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 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 12, and the title is Do Specification Limits Limit Improvement. Bill, take it away.

0:00:31.4 Bill Bellows: Hey, Andrew. How's it going? All right.

0:00:33.8 Andrew Stotz: Great. Great to have you back and great to see you. For those that are just listening, you can watch the video on DemingNEXT. But for those listening, Bill looks handsome, full of energy, ready to go, and it's my 8:30 in the morning in Bangkok, Thailand. So let's rock Bill.

0:00:56.3 Bill Bellows: So. I spoke recently to one of the folks I'd met on LinkedIn that have listened to our podcast and took the offer to reach out and we now talk regularly. And I just wanna say I've gotta, before we get to some, the story behind the title, I wanted to share, a heads up. And if anyone would like a copy of this article that I wanna, take some excerpts from, then just reach out to me on LinkedIn and ask for a copy of the article. The article's entitled 'A Brief History of Quality,' and there's three parts. So it's about 10 pages overall, and it was published in 2015 in the Lean Management Journal, which I don't believe still exists. I was writing articles at the end once a month for this journal, I think based out of the UK.

0:02:04.3 Bill Bellows: I think there was a manufacturing magazine that still exists and had this as a special topic and my interest was bringing Dr. Deming's ideas, to the Lean community, which is why it was a Lean Management Journal, so the article was entitled 'Brief History Equality.' And so I wanna get to those topics, but when I was reading the article, reminding myself of it, I thought, oh, I'll just share this story online with Andrew and our audience. And so here I'm just gonna read the opening paragraph. It says, "several years ago, I had the opportunity to attend an hour-long lecture by Stephen Hawking," right? So the article was written in 2015. So the presentation by Hawking would've been maybe 2012, 2013. And back to the article, it says, "he, Hawking, returns to Pasadena every summer for a one-month retreat, a ritual he started in the 1970s, several thousand attendees sitting in both a lecture hall and outdoors on a lawn area complete with a giant screen were treated to an evening of reflection of the legendary Cambridge physicist."

0:03:14.3 Bill Bellows: And I'll just pause. I have friends who work at JPL and they got me seats, and they got me an inside seat in the balcony, front row of the balcony, but they had big screens outside. I mean, it was like a rock concert for Stephen Hawking, right?

0:03:34.3 Andrew Stotz: That's amazing.

0:03:34.9 Bill Bellows: Oh, it was so cool. Oh, it was so cool. So anyway, "his focus was my brief history offering us a glimpse of his life through a twist on his treatise, A Brief History of Time. His introspective presentation revealed his genius, his humility, his search for black holes, his passion for life, not to mention his dry sense of humor. It ended with questions from three Caltech students, the last of which came from a postdoc student, an inquiry Hawking had likely tackled many times before."

0:04:06.6 Bill Bellows: So realize he's answering the questions through a voice activated thing. And it appeared that the questions were, his answers were prerecorded, but they're still coming through a device that is a synthesized voice. But I get the impression that he knew the questions were coming, so we in the audience were hearing the questions for the first time. But he had already answered the questions. So anyway, it ended with questions. There was an undergraduate student, a graduate student, then a postdoc, and I said, "the last of which came from a postdoc student, an inquiry Hawking had likely tackled many times before. And the student relayed the story of an unnamed physicist who once compared himself to both Isaac Newton and Albert Einstein." So this unnamed physicist compared himself to Einstein and Newton each placed on a scale of 1 lowest to 10 highest. "With this context, Hawking was asked where he would rank himself."

0:05:22.0 Bill Bellows: So this physicist said, oh, you know, Andrew, I see myself as this. And so the guy relays the story, and he says to Hawking, so given this other physicist said this, where would you rank yourself? "Well, I do not recall the relative rankings posed in the query. I'll never forget Hawking's abrupt reply. He says, “anyone who compares themselves to others is a loser." And I found online that he was, that commentary, this was not the first time he said that.

0:06:04.9 Andrew Stotz: Right.

0:06:06.5 Bill Bellows: And I just thought, oh, anyone who compares himself to others is a loser. And then the end of the paragraph is "in reference to Dr. Deming," Andrew, "variation, there will always be. So can't we just get used to variation?" So the title, are you in favor? No, no, no, no. That was last time. Are you in favor of improving the quality was number 10. Number 11 was to improve quality, don't measure quality. For 12, the specification limits limit improvement.

0:06:46.9 Andrew Stotz: Now, if that was true, first of all, that would be a little scary, 'cause we spend a lot of time working on specification limits. There's a lot of people working on that.

0:06:55.4 Bill Bellows: But here's what's behind the title. In 1995, I was invited to speak, not for the first time, but for the first time I ever spoke to an audience of the American Society of Quality. It was a San Fernando Valley chapter. I forget the number. I've spoken there many, many times over the years, but this is the first time I ever spoke to quality professionals as opposed to project managers or Society of Manufacturing Engineers. I was there with my wife. There's dinner, then after dinner in the next room, and the chairs were set up, theater style, that'd be 70, 80 people. And I was talking about what I would, I mean, things I still talk about, I talk about new things, to have new things done. But the big thing I was trying to get across the audience is, the difference between meeting requirements, which in this series, we call it acceptability versus desirability, which is, I want this value, I want this professor, I want to date this person. And so I was relaying that concept to that audience. And the question I asked that night was do specification limits limit improvement?

0:08:31.0 Bill Bellows: And there was a guy about seven rows back, and I built up to that. That wasn't the opening thing, but what I was really pushing on was a focus on Phil Crosby's goal of striving for zero defects. And, then what? Once you achieve that, then what? And we've talked about the doorway and that's like the door is closed, we get up to the doorway and we've achieved zero defects. And, what we've talked about is going through the doorway and the attitude is, well, why open the door? I mean, don't open the door, Andrew. There's a wall on the other side of that door, Andrew. So it might be a door, but everybody knows there's a wall behind it, and I was poking at that with this audience, and prepared to show them the value proposition of going through that.

0:09:34.0 Bill Bellows: So anyway, I remember I got to the point of asking, do specification limits limit thinking about improvement or something like that. And a more senior gentleman, about seven or eight rows back, and fortunately, he was seven or eight rows back, fortunately, because he stood up and he says, "Are you saying we don't need specification limits?" There's a lot more anger in his voice. And I said, "No," I said, "I'm saying I think they limit our thinking about improvement." And, but he was really upset with me, and I was deliberately provoking because again, you and I have talked about, how can we inspire through this podcast and other podcasts that you do with the others, to get people to think about the possibilities that Dr. Deming shared with us. And it's not believing that there's a door that you can't walk through. You open the door and there's an opening and you can go through. There's a lot more going on there. So anyway, so I had prepared them. The whole reason for being there was to share what we were doing at Rocketdyne, and not just talk about the possibilities, but show them the possibilities. But he got very upset with me. But if he was in the front row, he might've hit me.

0:11:08.9 Andrew Stotz: May have thrown a book at you.

0:11:11.5 Bill Bellows: Oh, he...

0:11:12.2 Andrew Stotz: May have thrown a Specification Limit at you.

0:11:17.0 Bill Bellows: Twice I've had people get, well, I've gotten a number of people upset with me over the years, but that night was, I'll never forget, and I'll never forget, because my wife was sitting in the front row and she asked me never to be that provocative again. It might be dangerous to my health. But I was doing another class, also for the American Society of Quality, I was a member of the local chapter, and there was a big movement within Rocketdyne that all Quality Engineers within Rocketdyne be Certified Quality Engineers. And so two or three of us from Rocketdyne got involved in helping the local chapter train people to prepare to take this one day exam. Very, very, very rigorous. And it's a valuable credential for quality professionals.

0:12:20.1 Bill Bellows: And so the company was pushing that every single quality engineer was certified. So we did the classes on site. So instead of going to the nearby Cal State Northridge and doing it over there, we wanted to do it onsite, make it easy for our employees to attend. And so I would do one and a half sessions. So a given session was three hours long, and then there'd be a half session. And my topics were Design of Experiments and Dr. Taguchi's work. And so as I got this group this one night for the very first time, I was the second half of that three-hour session, and there's 30 some people in the room at Rocketdyne. And the question I wanted to raise is, why run experiments? What would provoke you to run an experiments either, planned experimentation, Design of Experiments or Dr. Taguchi's approach to it.

0:13:15.1 Bill Bellows: So I was throwing that out and I said, in my experience, we're either applying it to make something better - that's improvement, Andrew, - or we're applying it to find out why something doesn't work, which is rearward looking. And I was saying that in my experience, I spend like a whole lot of time running experiments to solve a problem, to fix something that was broken, to get it back to where it was before the fire alarm, not as much time focusing on good to make it better. And so I was just playing in that space of, you know, I guess I was asking the audience are we running experiments to go from bad to good and stop, or from good to better? And I was playing with that 30 people in the room, and all of a sudden, four or five feet in front of me, this guy stands up, says this is BS, but he didn't use the initials, he actually said the word and walked out of the room. And all of us are looking at him like, and there was no provocation. Now, I admit for the ASQ meeting, I was poking to make sure they were paying attention. Here, I was just plain just, why do we run experiments? So, he stands up, he lets out that word, pretty high volume, storms out of the room.

0:14:42.1 Bill Bellows: Well, at Rocketdyne, you can't... You need a... You have to walk around with someone who works there. You just can't go walk around the place, so I had to quickly get one of my coworkers who was in the room to go escort him to the lobby or else, we're all gonna get fired for having somebody unescorted. So the specification limits limit thinking about improvement, I think they do. I am constantly working with university courses or in my consulting work and acceptability in terms of the quality goal, that this is acceptable, it meets requirements is alive and well and thriving, thriving. And, I think what goes on in organizations, I think there's such a focus on getting things done, that to be done is to be good and is to stop that I could pass my work on to you.

0:15:45.2 Bill Bellows: And, the challenge becomes, even if you're aware that you can walk through the doorway and move from acceptability to desirability, how do you sell that to an organization, which you, what I see in organizations, there's a lot of kicking the can down the road. There's a lot of, and even worse than that, there's a lot of toast scraping going on because there's not a lot of understanding that the person toasting it is over toasting it because all they do is put the toast into the oven. Somebody else takes it out, somebody else scrapes it, somebody else sends it back to a different toaster. And I see a lack of understanding of this because the heads are down. That's part of what I see. What I also see in organizations is, with students is this is their first drop.

0:16:51.0 Bill Bellows: Wherever they are, engineering, manufacturing, quality, they're new, they're excited, they're excited to be on their own, to have an income. And they're taking what they learned in universities, and now, they get to apply it. And I remember what that was like. I worked the summer after getting my bachelor's degree, my last semester, I took a class at heat transfer, the prior semester, took a class in jet engines, and I just fell in love with heat transfer and I fell in love with jet engines. And that summer, I was coming back in the fall to go to graduate school for my master's degree. That summer, I worked for a jet engine company as a heat transfer engineer, I was in heaven.

0:17:37.6 Andrew Stotz: Yeah. That's gotta be the coolest thing.

0:17:40.1 Bill Bellows: Just incredible. So I can imagine people coming out of college, going to work, and you get to apply what you learned. You get to use computers, you get to work with some really cool people, and you're doing what you're doing, and it's a blast. And I think it takes a few years before you start to listen to what the veterans are talking about. And you might hear that they're challenging how decisions are made, they're challenging how the company is run. I think prior to that, your heads are down and you're just the subject matter expert. It could be, you know, engineering and manufacturing, finance, and you're doing what you're doing. Their head is down, you're receiving, you're delivering. I still remember when I went to work with my Ph.D. at the same jet engine company, they hired me back. And, I remember walking down the hallway with a colleague and somebody says, that's the VP of Engineering.

0:18:42.7 Bill Bellows: And I thought, we have a VP of Engineering? I mean, I know we have a Vice President of the United States, but I didn't know anything about titles like that. And I think... And I don't think I'm the only one. I've shared those with some younger folks recently, and they agree, you come in, it's heads down, we don't know management, all I get to work on this great stuff. I go and I, and so what we're, but I think what happens is, I think at some point of time you start to look up and you're hearing what the more senior people that are there are saying you've had some experience. And, I know when people join Rocketdyne, and they would come to my class and I would share these stories that had some things that were, if your experience would be questionable, some other things that are pretty cool.

0:19:34.6 Bill Bellows: And, I just had the feeling and I found out people would walk outta there thinking what you mean that, I mean the things, the use of incentives, like why do we need incentives? But, and what I found was it took a couple of years and I would bump into these same people and they'd say, now I'm beginning to understand what you were talking about and what Dr. Deming was talking about. So I throw that out. For those listeners that are trying to, that are at that phase where you're starting to wonder how are decisions being made? You're wondering what you wanna do in your profession. You're wondering what this Deming stuff is about. A whole lot of this entire series has been targeted at people that are new to Deming's ideas. Or maybe they have some experience, they're getting some exposure through these podcasts either with me and the ones you're doing with John and the others. And so, but the other thing I wanna get into today is this quality thing. I go back to this article. And then I was thinking about this article, things I didn't know when I started researching this article is, this term quality, where does that come from? And the term quality comes from, I got to pull it, I have to scroll through the article. Let me get it, let me get it.

0:21:06.4 Bill Bellows: All right. Here we go. "The word quality," Andrew "has Latin roots, beginning with qualitas coined by Roman philosopher and statesman, Marcus Tullius Cicero, who later became an adversary of Mark Antony." You know, what happened to Cicero? Wasn't pretty.

0:21:32.8 Andrew Stotz: Yeah.

0:21:33.9 Bill Bellows: "Feared by Antony," I wrote, "his power of speech led to his eventual beheading. But long after he introduces fellow Romans to the vocabulary of qualitas, that's quality; quantitas, that's quantity; humanitas, that's humanity; and essentia, which is essential. He's also credited with an extensive list of expressions that translate into English, including difference, infinity, science, and morale. When Plato invented the phrase poiotes for use by his peers." So Plato would've been Greek, "Cicero spoke of qualitas with his peers when focusing on the property of an object, not its quantity." And, what I had in mind there is counting how many things we have, so you come in and you want five apples, five suits, whatever it is, there's the quantity thing. And then what Cicero was trying to do is say, quality is not the number, but quality is a differentiation of not just any suit, not just any...

0:22:53.1 Bill Bellows: And I think that becomes the challenge is, is that still important? So when Dr. Deming came on board in 1980, at the age of 79, when the NBC white paper was written, and people got excited by quality because quality was something that people identified with Japanese products, not with American products.

0:23:19.9 Andrew Stotz: Well, not in 1980.

0:23:21.1 Bill Bellows: Not in 1980...

[laughter]

0:23:22.2 Bill Bellows: I mean, at that time, the auto companies were making a lot of money in repair businesses. And Toyota comes along and says, and the words on the street, our products don't require all that repair. And I thought, yeah. And what was neat about that is when I thought, when you think about differentiation and like how do you sell quality? Because, again, I find it, for the longest time, beginning in 1980, quality was hot. Quality improvement. I mean, the American Society of Quality membership skyrocketed. Their membership has dropped like a rock since then because they don't have this Deming guy around that got them going.

0:24:12.1 Bill Bellows: Now, they're still big in the Six Sigma, but I don't believe their membership is anything like it was, but what I was thinking and getting ready for tonight is the economics of quality is from a consumer, what, at least, when my wife and I buy Toyota, it's a value proposition. It's the idea that if we buy Toyota, in our experience, we're getting a car that doesn't break down as often, is far more reliable. That becomes the differentiation. Also in the first... In the second series, second podcast of this series, we talked about the eight dimensions of quality and David Garvin's work.

0:25:03.2 Bill Bellows: And one of them was features, that a car with cup holders is quality 'cause... And there was a time, and the more cup holders, the better. And that was... And Garvin was saying lots of features is quality. He said, reliability could perceived it as a dimension of quality. Conformance was one of the dimensions, and he attributed that to the traditional thinking of Crosby. Reliability is a thing. And so when it comes to, how do you sell quality today? How do you get people within your organizations to go beyond, 'cause what I see right now is it's almost as if quality has gone back to quantity, that it's gone, that it's lost its appeal. Now, quantity doesn't lose its appeal 'cause we're selling, five of them, 20 of them, 30 of them.

0:26:09.2 Bill Bellows: But I don't get the impression from students and others that I interact with, that quality has big appeal. But, if we convert quality to the ability to do more with less, I mean the, when I'm delivering a higher quality item to you within the organization, that it's easier for you to integrate, to do something with, that's money, that's savings of time. And the question is, well, I guess how can we help make people more aware that when you go through the door of good and go beyond looking good and start to think about opportunities for desirable? And again, what we've said in the past is there's nothing wrong with tools, nothing wrong with the techniques to use them, there's nothing wrong with acceptability, but desirability is a differentiator.

0:27:15.2 Bill Bellows: And then the challenge becomes, if everyone's focused on acceptability, where it makes sense, then within your organization going beyond that, as we've explained, and this is where Dr. Taguchi's work is very critical. Dr. Deming learned about desirability from Dr. Taguchi in 1960. And that's what I think is, for all this interest in Toyota, I guess my question is, why is everybody excited by Toyota? Is it because they do single-minute exchange of dies? I don't think so. Is it because they do mixed model production? They can have, in one production line have a red car followed by a blue car, followed by a green car as opposed to mass production? Or is it because of the incredible reliability of the product? That's my answer, and I'm sticking to it. So...

0:28:14.3 Andrew Stotz: Yeah.

0:28:14.7 Bill Bellows: So what do you think Andrew?

0:28:17.2 Andrew Stotz: Yeah. There's two things that I was thinking about. One of the things I was thinking about is the idea if we're doing good with quality, and maybe we're satisfied with good, I was thinking about the book 'Good to Great,' and like how do you make this breakthrough? And then I was maybe it's good to groundbreaking or good to amazing or whatever. But like, when you really go beyond specification limits and take it to the next level, it's like you're moving from good to great. And one of the things that I see a lot is that, and I talk a lot in my corporate strategy courses with my clients and with my students is this idea that Deming really hit home about, about focusing on your customer, not your competitor.

0:29:06.6 Andrew Stotz: And I just feel like humans have a need to classify everything, to name everything, to label everything. And once they've got that label, that's the specification. That's what we want, they will fixate on that. And whether, I think, you think about all the kids that come out of the out of some meeting with a doctor and say, oh, I'm ADHD. Okay, we got a label now that's good and bad. And so that's where I think it, when I thought about the specification limits limit improvement, I think that, specification to me, when I think about quality, I think about setting a standard, moving to a, a new standard, and then maintaining that standard. And I can see the purpose of limits and controls and trying to understand how do we maintain that. But if we only stay on maintaining that and never move beyond that, then are we really, are we really in pursuit of quality?

0:30:12.0 Andrew Stotz: Now, on the other hand, when I think about the customers of my coffee factory, CoffeeWORKS and they want the exact same experience every single morning. Now, if we can make tests and do PDSAs to improve how we're doing that, less resources, better inputs and all that, great, but they do not want a difference. And I was just thinking about it also in relation to my evaluation masterclass bootcamp, where I still have a lot of variation coming out at the end of the bootcamp. Now, in the beginning, this is bootcamp number 19. So I've done this a lot. In the beginning, man, I would have, someone really terrible and someone really great, and I wasn't satisfied. So I kept trying to improve the content, the process, the feedback to make sure that by the time they get to the end, but I was just frustrated yesterday thinking there's still a lot of variation that, and I'm not talking about, the variation of a personality or something.

0:31:15.2 Andrew Stotz: I'm just talking about the variation of understanding and implementing what they're learning. And then I was thinking as I was at the park running this morning, I was thinking like, what makes Toyota so great is that there is very little variation of the 10 million cars that they've produced last year. And how impressive that is when all I'm trying to do is do it in a small little course. So I don't know, those are some things that were coming into my head when I thought about what you're talking about.

0:31:44.6 Bill Bellows: But no, you're right, in terms of the coffee, and I think you brought up a couple of good points. One is when the customer wants that flavor, whatever that level is, now, but that, I don't know how, anything about measuring taste, but there could be, within the range, within that, when they say they want that flavor, I mean, that could still have, could be a pretty broad spectrum. So maybe there's the ability to make it more consistent within that, if that's possible.

0:32:27.8 Andrew Stotz: Yeah, I think that, I think, like we have a blend we call Hunter's Brew, and I drink that every single morning and I can say, yeah, there's a variation, but it's a small enough variation that it doesn't bother me at all. And I think it doesn't bother our customer. Could we get more conformity to that? Yes, I think we could reduce that. Is it worth it? That's another question. We're looking at some automated equipment, some automated roasting equipment that would bring automation that would allow us to reduce that variation a bit. Will the customer notice that or not? Maybe. But the customer will definitely notice if we're outside of specification limits or if it's burnt...

0:33:12.7 Bill Bellows: Yes.

0:33:13.5 Andrew Stotz: As an example, and we're still shipping it, you know, they'll definitely notice that. And we have our mechanisms to try to measure that so that we are within those limits. So I do see, I see that the function of that to me is like, okay, in fact, in any business, you're constantly chasing and putting out fires. I mean, there's always things going on in every business owner's situation.

0:33:38.6 Bill Bellows: Right.

0:33:39.9 Andrew Stotz: And so there's at points where it's like, okay, can you just keep that in specification limit for right now while I get over to here and fix how we're gonna make sure that this is at another level where that is, I would consider it kind of an improvement versus maintaining. But I don't know, I'm just, I'm riffing here, but those are some things in my head.

0:34:00.0 Bill Bellows: No, what I hear you talking about is if we shift from quality management to, I mean, what desirability is about is looking at things as a system. Acceptability is about looking at things in isolation and saying, this is good, this is good, this is good, this is good. Not necessarily with a lot of focus of how is that used. So if we move away from quality and really what we're talking about is a better way to run an organization with a sense of connectedness that we're, we can talk about working together. Well, it's hard to work together if the fundamental mindset is: here, Andrew, my part is good and I wash my hands of it. When you come back and say, well, Bill, I'm having trouble integrating it, that's more like working separately.

0:35:07.2 Bill Bellows: So if we shift the focus from quality, which could be really narrow, it could be an entry point, but I think if we step back, I mean the title of Dr. Deming's last book was 'The New Economics,' the idea which has to be, which to me, which is about a resource. The better we manage the organization as a system, the more we can do with less. And relative to the quality of the taste and yeah, the customers want this and maybe we can make that even more consistent simultaneously. Can we use control charts to see special causes before they get too far downstream that allows us to maintain that consistency? That'd be nice. Then can we figure out ways to expand our capacity as we gain more? So there's a whole lot to do. So the organization is not static. And simultaneously the challenge becomes how do we stay ahead of others who might be trying to do the same thing? Dr. Deming would say, be thankful for a good competitor. Are we just gonna sit there and say, oh, we're the only coffee... We're the only ones in house that know how to do this. What is our differentiator? And I think having a workforce that thinks in terms of how the activities are connected, that are constantly involved in improvement activities.

0:36:45.1 Bill Bellows: Short of that, what you're hoping is that no one comes along in... Remember the book, it was required reading within Boeing, sadly, 'Who Moved My Cheese?'

0:36:58.2 Andrew Stotz: It was required reading at Pepsi when I was there, and I hated that book. We had another one called 'The Game of Work,' which I just was so annoyed with, but that 'Who Moved My Cheese?' I never, never really enjoyed that at all.

0:37:07.0 Bill Bellows: We used to laugh about, within Rocketdyne 'cause, and for those who aren't aware of the book, the storyline is that there's a bunch of mice and they're living in their little cubby holes and every day they go through the mouse hole, try to avoid the cat, find the cheese, bring the cheese back into their cubby hole, and that life is good. And then one day, somebody steals the cheese, moves the cheese and one's kind of frantic and the other's like, oh, not to worry, Andrew, I'm sure it was taken by a nice person and I'm sure they'll return it. So I wouldn't lose sleep over that. That's okay. That's okay. And then kind of the moral was another company is stealing your cheese and you're sitting there thinking everything's okay, and next thing you know, you're outta business because you weren't paying attention. And so the, and it was, this is written for adults with cartoons of cheese. That's how you appeal... That's how...

0:38:15.9 Andrew Stotz: Yeah. So that's what got me annoyed about it because it felt like, just tell me what you're trying to tell me, okay. Instead of telling me this story. But yeah, it was a used to create the burning platform concept that was used... I know at Pepsi when I was there, they talked about the burning platform, the level of urgency, we're gonna get, and, and there's, I kind of understand where they were coming from with it, but yeah.

0:38:44.7 Bill Bellows: But what is interesting is nowhere in the book was a strategy to be the ones moving the cheese. What it was more like is don't be in an environment where somebody else moves the cheese. Don't be that company. And I thought, no, you wanna be the company that's moving the cheese. But that was, maybe that's an advanced book that hasn't come out yet.

[laughter]

0:39:08.6 Bill Bellows: But really...

0:39:10.5 Andrew Stotz: There's some work for you, Bill.

0:39:12.6 Bill Bellows: But, but that's what... I mean what Dr. Deming is talking about is having an environment where you have that capacity on an ongoing basis. First of all, you're not sitting back stopping at good, thinking that what you're doing is always acceptable. It's trying to do more with that. Anyway, that's what I wanted to explore today. Again, there's nothing wrong with specification limits. I told the gentleman that night, specification limits are provided to allow for variation, to allow for commerce, to allow for suppliers to provide things that meet requirements. Then the question becomes, is there value in doing something with a variation within the specification limits? Is there value in moving that variation around? And that's the desirability focus. That is what Ford realized Toyota was doing a lot, is that then improves the functionality of the resulting product, it improves its reliability. All of that is the possibility of going beyond meeting requirements. So it's not that we shouldn't have, we need specifications. Why? Because there's variation. And if we didn't allow for variation, we couldn't have commerce because we can't deliver exactly anything. So I just want, just for some...

0:40:34.9 Andrew Stotz: Okay, all right. That's a good one.

0:40:37.4 Bill Bellows: All right.

0:40:38.2 Andrew Stotz: And I'll wrap it up with a little humor.

0:40:40.4 Bill Bellows: Go ahead.

0:40:40.5 Andrew Stotz: There were some parody books that came out, in relation to 'Who Moved My Cheese.' In 2002, the book 'Who Cut the Cheese' by Stilton Jarlsberg, which was good. And in 2011 was, 'I Moved Your Cheese' by Deepak Malhotra. So there you go. A little humor for the day. Bill, on behalf of everybody 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. He responds. This is your host, Andrew Stotz, and I'll leave you with one of my favorite quotes from Dr. Deming. I just love this quote. I think about it all the time. "People are entitled to joy in work."

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Can you use Plan-Do-Study-Act (PDSA) during the information-gathering phase of an improvement project? Yes! Join John Dues and host Andrew Stotz as they discuss how John's team used PDSA to learn more about chronic absenteeism, their surprising findings, and what they'll do next.

TRANSCRIPT

0:00:02.8 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 John Dues, who is part of the new generation of educators striving to apply Dr. Deming's principles to unleash student joy in learning. The topic for today is powerful learning with the PDSA cycle. John, take it away.

0:00:25.5 John Dues: Yeah, Andrew. It's good to be back. For the past two episodes or so, we've been working towards defining the problem of our chronic absenteeism issue, of course, we have a problem with chronic absenteeism, but we're trying to narrow that down and get a more specific problem statement. Last time we talked about how our improvement team, basically, had come to the conclusion after a few weeks of study that we didn't have enough information to write that specific, precise problem statement. So what we decided to do, and we started looking at this last time, was we started to gather additional information through a Plan-Do-Study-Act cycle. So that's what we'll focus on today, is this first PDSA cycle, and I think it's good to know that you can use PDSAs to run an experiment to test a new idea, but you can also run a PDSA to gather more information. Those are both very worthwhile uses of the PDSA cycle. So I go to share my screen just so I have that model up so that people who can see it, for those that are viewing. Can you see that now?

0:01:33.8 Andrew Stotz: Coming up. Okay, we can see it.

0:01:36.6 John Dues: All right, great. So you remember, we've been working through this four-step process for those who are hopping in for the first time or as a review for those that have been following along. So we have these four steps: set the challenge or direction, grasp the current condition, establish your next target condition, and then an experiment to overcome obstacles. And remember, we've been working through this team, that's a combination of people working in the system, people who have the authority to actually change the system, and then the System of Profound Knowledge coach. So I think that's a pretty powerful combination of people, and that's our team here working on this chronic absenteeism problem. You also remember that we have this long-range goal that this challenge that is to improve our chronic absenteeism from right around 50% to down closer to 5%, and I don't know if you remember this, but a number of episodes ago, I showed you the data we had over time, and we just had three years of data. Since that time I showed you that first run chart, I've actually gone back and added chronic absenteeism rates for our schools going all the way back to the 2016 - '17 year, and I think it's worth it to just take another quick look at those rates over time in a process behavior chart.

0:03:00.2 Andrew Stotz: Exciting.

0:03:01.5 John Dues: So, yeah. This is our chart. So we add more days so why not display it in this way. So what this chart is, is again a process behavior chart, we have school years going back to the 2016-'17 school year, and then through last school year. And we have the blue dots displaying the chronic absenteeism rate for each of those school years across our school system, and then the green is... The green line is that central line, it's the average of all years, the red lines are those natural process limits that sort of tell us where we can expect our data to fall given that this is a predictable system. So you can see right off the bat, something that's pretty obvious is that the first four years of data are below that central line, and then the last four years of data are above that central line. And of course, it's not too hard to sort of recognize that the pandemic happened towards the end of the 2019-'20 school year, and then sort of... We were all remote heading into that 2021 school year, and then for a number of years after we were in remote or hybrid, and so you can see very clearly that while there was chronic absenteeism in our system prior to the pandemic, after the pandemic, it exploded and it has not subsided.

0:04:28.7 John Dues: So in a typical year prior to the pandemic, we were somewhere around that 25, about a quarter of the kids give or take, depending on the year, of the kids were chronically absent, and then after the pandemic, we can see it sort of... Or at the begining of the pandemic, explodes up and then has settled around this, right about 50% average.

0:04:51.1 Andrew Stotz: And the fact that it's remained at this much higher level of, let's say 50-55% tells you that there's like... It has had somewhat of a permanent impact, whereas some people may think that the COVID situation caused a spike in chronic absenteeism up to 70% or whatever that number was, and then it came back to normal. But it's far away from normal.

0:05:26.4 John Dues: Yeah, and I haven't done a deep analysis. But in addition to the chronic absenteeism, the National Assessment of Educational Progress, which is like the gold standard, the report card for the nation, a nationally known test given every couple of years, that data shows that the 4th and 8th graders that take that test across the country in ELA and math, the scores are down coming out of the pandemic as well and have not rebounded. So I think that data is important. I'm not necessarily saying one way or the other, what we should have done, but what I am saying is like when we make decisions like shutting down schools, it's not just a decision that has an impact in the moment, there are ramifications on an ongoing basis. And we should sort of take that calculus into consideration when we're deciding what to do in a situation like that.

0:06:20.0 Andrew Stotz: And this also shows that you're taking on a pretty serious challenge because...

0:06:23.8 John Dues: Very serious. Yeah.

0:06:25.0 Andrew Stotz: Yeah, it's serious for the students, but it's also serious in the sense that it's been lingering at this very high level of chronic absenteeism, so, okay.

0:06:37.0 John Dues: Yeah.

0:06:37.5 Andrew Stotz: Shocking.

0:06:38.1 John Dues: Yeah, it is pretty shocking.

0:06:38.7 Andrew Stotz: That's not happening in Asia.

0:06:40.6 John Dues: No, and it's... I think a number of places in the United States, the learning chronic absenteeism has bounced back, but in the places where you expect where there's, especially high concentrations of poverty and things like that. It's sort of remained a serious issue even depending how you mark the end of the pandemic, two or three years after the primary part of the pandemic anyway. The height of the pandemic, if you will. So, ongoing challenges for sure. So what I said was that the team was going to run this initial PDSA cycle to gather more information, of course, there were some initial thoughts on why kids were missing so much school. We've talked about these transportation, different expectations that have been set for when to stay home, family and instability, those types of things. But again, we want to further test those assumptions early on in the project. So the key question that we were looking at is, for this first PDSA cycle, at least was will the combination of a what we call an empathy interview, which is just like where we sit down with a student or the family and try to better understand what's going on, and then daily attendance tracking was the other part of this, will that lead to a modest increase in the students average daily attendance rate during the period of the intervention.

0:08:11.9 John Dues: So even though we weren't necessarily testing a change idea, there was this sort of like... We framed it as a modest intervention in terms of sitting down with the kids and then doing this daily tracking and showing them the data. And a key part of this plan phase is we had all of our team members predict what they thought would happen with the four students that we chose to have those interviews with and track the daily attendance of during Cycle 1. So we had everybody really think through, "Okay, what do we think will happen when we put this plan in place?" And that's going to be really important because when we actually run the test, we want to compare the predictions to what actually happens, and that's where a lot of the learning happens from a PDSA cycle.

0:09:02.9 Andrew Stotz: And just for the listeners or viewers out there, why is it important to do that? Some people would say just do it and find out what the result is.

0:09:12.3 John Dues: Well, if you don't take a stance basically before the intervention happens or before the plan is put in place, then there's no learning that can really happen because whatever happens happens. But you didn't sort of say, "Here's what I think's going happen." And a lot of times, we quantify that prediction, and then what you can see is the difference between those two things is not only the learning, but it's also an indication of how well you understand your system. So what I mean is, if we put an intervention in place and I say, "Okay, I think this is going to have a 15% increased impact on whatever it is, a test score or attendance in this case," and then it has no impact, then I don't have an understanding really of what's going to work to fix whatever I'm trying to fix. But if the prediction bears out and it's pretty close to what actually happens, then that means, oh, I have a pretty good grasp on what's going on in my system. Yeah, kind of makes you put a stake in the ground, and it makes you mentally when you're doing it, it makes you think.

0:10:19.0 John Dues: Look further ahead and say, "Okay, if I do this, do I actually think this is going to be effective?" And you can also see the team's thinking. Some people might think this is going to be very effective, and some people may think it's not. Some people might think it'll work with some students, but not other students, and it gives you that picture black and white before you actually run the test.

0:10:37.8 Andrew Stotz: And in academic studies, it's really important to identify your end point that you're testing for. Otherwise, you run the risk of switching your end point as you get through your research because you're grounded initially.

0:10:53.2 John Dues: Right, exactly. Right, yep, absolutely. So in this plan, what we did was, this... We had parent conferences coming up, so we just said, that's a natural time to sit down with these four students that we chose at parent conferences. So at the end of November, we did that, we reviewed the data, we sat with the family to discuss some of the causes of the attendance challenges. We explained the plan to track attendance for 15 days coming back from Thanksgiving break. And then part of the plan was collecting that quantitative data, like the actual attendance rates each day for each kid, but then it was qualitative too, because we were asking the family on the front end, what was the sort of overall cause of the problem. And then we were asking the actual student every day like, "Oh, on this particular day, why were you absent, or why were you late, why did you miss school?" And we were tracking that across 15 days, so it's a relatively short time period, 'cause we don't want to go off on some grand experiment and then find out three months from now that our intervention wasn't effective.

0:12:02.5 John Dues: So that was the plan. And then the next step in the PDSA cycle is the do and that's just like it sounds. So we ran the experiment for 15 days and then started gathering that data. So what we found was that in two of the cases, transportation challenges were in fact the primary issue, in the third case, it was sort of transportation, but that was exacerbated by a family that was homeless during this period, and then in the fourth cause, or in the fourth case, there was actually some sort of anxiety issues with coming to school. So you can see three very different causes just across four students. So again, if you don't have that picture, then it's very hard to sort of design the right type of interventions 'cause you don't really know what's going on. You have assumptions, right? So I don't think it's rocket science, but the team learn that there are so many layers to this attendance challenge, and even for a single student, there's often multiple factors rather than some single explanatory variable. And so you have to sort of uncover that, and I think the key thing was that holding these empathy interviews, just these four interviews allowed us to challenge some of our initial assumptions. Like maybe a family doesn't value attendance, that didn't seem to be the case, at least with any of these four students who are facing some serious challenges on the home front.

0:13:48.6 John Dues: But it wasn't like families didn't value school or having their kids attending school, there're just major obstacles. And so digging deeper allowed us to explore these various causes with the families. Another thing that was interesting is that as we talked with the team about... As the data came in and what they were doing, we also learned that we need a better, more systematic process for intervening with chronically absent students, that's everything from reviewing the data, identifying those chronically absent students early on in the school year, for those that we're required to do something like file truancy for those processes and then monitoring attendance, there's various requirements public schools have on that front. Every school is... They have a system in place, and they have a team in place, and they have a process in place for these different things, but they're all doing it differently, and so there's not a standardized process across our system. And another thing is, some parents didn't even realize that they may have a general idea that the attendance isn't great, but don't... Most parents don't actually realize what is the actual attendance rate of their child, how far off is it from what's considered exceptional or at least okay attendance.

0:15:17.6 John Dues: Almost nobody has that. Those numbers at the ready. Another thing that has happened as we studied the data was that there was a really wide variation in terms of the difference in student daily attendance between the period of the intervention and end of the school year up to that point. So there's basically a lot of learning going on with just a very simple four student experiment. So even though the predictions weren't perfect, and one thing with the predictions is, this is Cycle 1, so what should happen over time as we gain knowledge about our system, is that the predictions get closer and closer to what actually happens because we're learning with every PDSA cycle that we're running basically. So the last part is, then you act, so we've done the plan, we've done the do, the study, and the act, and the way I frame this is that you have three As that you can choose from in the Act segment. You can adopt that change that you've tested, you're going to adapt that into the next cycle, or you can say this is not working at all and you can abandon it and just do something else.

0:16:34.2 John Dues: Yeah, those are the three options. So what we've actually decided to do, what happens in a lot of early tests, is we're going to adapt Cycle 1 into Cycle 2, and in fact, Cycle 2 has actually already started. But the aim of Cycle 2 now is we're going to increase the extent to which we're involving students and families in the data collection process, and we're going to hold what we call like a... We call this a 5 Whys Empathy interview with each student that we've identified, and then use that to create a plan for a PDSA that's specific to that one student, basically. So it's going to be very hyper-focused and so we're going to collect this data for two weeks, we recognize that doing this intensive of a process with the entire school or the entire group of students that are chronic absent probably isn't possible, but what we're doing is learning so much from this, that seemed like we're going to take another step to learn more and work with the individual student to set up the next round of interventions.

0:17:49.4 Andrew Stotz: And what are you guys expecting for an outcome? You know, talking about prediction? I don't know. Should we think about where are you going to be in one year or two years, three years?

0:18:00.7 John Dues: Oh no. It's very closely tied with the PDSA. So if it's a two-week PDSA, then we're actually saying, what is that the average daily attendance going to be for that two-week period?

0:18:11.7 Andrew Stotz: Yep. Yep.

0:18:14.3 John Dues: I mean. It's very tightly closed. Yeah.

0:18:14.8 Andrew Stotz: What I'm saying though, let's just take the attendance levels that we've seen in the chart, let's just talk about annual and let's say, "Okay, one year from now, two years from now."

0:18:23.7 John Dues: Oh yeah. That's right. Oh I see.

0:18:26.7 Andrew Stotz: Are you... Is it right to make a prediction about where you think you would be or is that not the right way to do it?

0:18:32.0 John Dues: I think it's too early in the process to make... I see what you're saying now you're talking about the actual... That overall system measurement. Yeah, I think it's too early to make a prediction on that, if you were holding a gun to my head and making me put money down, my prediction would be right in line with what it is this year, basically. I would think it... Because it's a stable system. Those last four years, all bounce around 50-55%, like you said. So my bet would be on 50-55%. Because...

0:19:11.2 Andrew Stotz: And what would... How would things change for you or the school? Let's just imagine hypothetically... I'm going to push back a little bit here and just get some thinking, but from a hypothetical perspective, let's say a new school opened up and their number one focus was chronic absenteeism, and they decided that the most important thing for them is to solve that problem. And they had been doing it for a while in other locations, and now they've come in, now you're competing with them. They're an option for some people, and they're just the place for others, and let's just say that they have optimized for chronic absenteeism and it's down to 10% at their school. Does that change how you think about what you're doing? Again, it's hypothetical, but I'm just curious. How does that...

0:20:01.3 John Dues: No. Not me, because this is what our system produces right now, so... Yeah, I think I would say I don't have enough information to make a prediction about what the ultimate outcome measure will be.

0:20:19.4 Andrew Stotz: And I guess you could say this is what our system produces in this area based upon what we see as important, right? Like this is...

0:20:32.4 John Dues: Yeah. That's fair.

0:20:33.2 Andrew Stotz: And there may be another area that you think is very important in that those numbers in that area may be very, very different from that, but another... Go ahead.

0:20:43.7 John Dues: Yeah, well, I was going to say, so in this attendance team, there's... The empathy interview is going on with these four students, and then in the Act phase, we also said we're launching an effort to make the intervention process more consistent across all of our schools. And we're starting by understanding the process that's in place right now, but this team is not the only team pulling levers that ultimately could impact attendance. I think they're pulling important levers, but there are other improvement teams across the school system, for example, I think I mentioned this maybe a few episodes ago, transportation. Transportation did come up like we thought it would in three of the four interviews. So, and we have mentioned how poor the bussing has been in Columbus for the last several school years, but especially last year and this year. And so we're working to see can we do something significantly different next year on the transportation front.

0:22:00.1 John Dues: And I think if we can pull that lever, that also... But that would be a change to the system, like a very significant change. Now, if that went through, I would be much more confident about making a prediction about improvement on the attendance front next year, so.

0:22:17.9 Andrew Stotz: If I look...

0:22:19.2 John Dues: It's not going to solve our problems though. Yep.

0:22:21.2 Andrew Stotz: Yeah. If I look at my roasting business for coffee, if I replace my pretty much manual roasting machine with a fully automated high-tech one, it's going to have a massive improvement in variability. Invariability is going to reduce way beyond what our current system can produce and it will happen in a day, right? When that happens, it'll happen in a day.

0:22:47.4 John Dues: Yeah.

0:22:52.9 Andrew Stotz: And being late for class is a big bag-a-boo of teachers here in Thailand, particularly at universities where I go to, and it's a problem and nobody likes it and students come in late and all that. But I solved that problem with just the twist of my finger, one twist of my fingers, and I solved it. What was that twist? I locked the door. And then as the students were outside waiting to come inside, I would eventually go out and I'd say, "Look, it's important to me that you're on time. I'm going to lock this door. If you can't make it... You got to figure out how to make it." I know you got two hours of traffic and you're coming in from abroad, or you're coming in from outside of the city, I know that your parents don't have the money to pay for a car for you and you got to take the subway or you've got... I know. Everybody's got their circumstances, but you're making an effort to get here, I want you to get here on time.

0:23:52.4 Andrew Stotz: The next class that I have, everybody's on time. So one of the questions I have, and this is, again, push back is, some people may look at this and go, "Oh. Come on. All this work. Why don't we just massively prioritize and focus." Let's just say that... Let's just say, I don't know what the answer is, but let's just say that the principle of the school, all the teachers and all the students gather out in the front area at the time that you're supposed to be at school, and there's a band playing. Everybody's cheering. We're getting ready. Whatever that thing is. I remember a boss I had that used to have a stand-up meeting every single morning, and you didn't miss it. And so for some people who are listening, they may think, "Oh, come on, John, you're going through all this stuff and it's not going to improve. Why aren't you just taking more aggressive action right now."

0:24:48.9 John Dues: Well, I didn't say I was going to improve it, I just said I wasn't going to make a prediction.

0:24:51.9 Andrew Stotz: Yes. Yes. Sorry. I didn't mean...

0:24:53.8 John Dues: So yeah. What would I say? I think when you have... So the person that is in charge of this project, for example, I don't know that anybody's ever gotten better results while a principal of a school in Ohio with the challenges that he faced. So this is not people that aren't driven to get extraordinary results. This is a multi-faceted problem that is incredibly tough to improve, and when I have the view point of sitting down with the students and hearing what is... Keep the obstacles are... It is just a very hard thing, and I'd say one of the reasons we're pulling that transportation lever early, or at least attempting to is because that's such a big part. Again, that's not going to solve everything. But like I said, if we were able to pull that lever and it's a big if because we get no funding for transportation. All the funding flows through the school district, so that's a massive obstacle. Millions of dollars that we aren't allocated to do this service, someone else is. So right now we don't have control over it, and so those are the types of obstacles, we can't just buy buses, for example. Because...

0:26:36.1 Andrew Stotz: Yeah. And it's like you got 50 problems that you're trying to...

0:26:41.7 John Dues: 50 problems.

0:26:41.7 Andrew Stotz: And 50 more constraints that you're operating within.

0:26:45.9 John Dues: Yeah. And so we were attacking it from multiple angles, so we were attacking it on the attendance front with kids, at the State House with funding, with trying to see if we can set up our own transportation system even without that funding. So there's many, many levers being attempted, but they are not quick and easy, simple, so.

0:27:12.8 Andrew Stotz: And for a listener who's listening to this, who may not be the CEO of a company, let's say who's got resources he can allocate or she can allocate, they also may be in a situation like, "This is all I can impact. I can impact this area, but I have to be realistic about what resources I have."

0:27:33.6 John Dues: Yeah, and I think one of the things we're doing too, we don't have rose colored glasses on, we're saying, even if we did fix this transportation system, and that's a big if again. That doesn't mean that the chronic absenteeism problem is going to be solved. Maybe it's significantly better, maybe it goes down to 30%, 35%, if we had a good transportation system, but that still means... And even before transportation was such an issue, even before the pandemic, these rates were still... The quarter of the kids who are so chronically absent, that's way too high, that's way too high. So we recognize that, but these are very, very thorny problems to try to improve.

0:28:15.0 Andrew Stotz: Yeah. Well, and also you're trying to make lasting change too, so.

0:28:18.6 John Dues: Lasting change. Yeah.

0:28:19.6 Andrew Stotz: Yep.

0:28:19.7 John Dues: Yep. Yeah.

0:28:22.1 Andrew Stotz: Okay. Great. So I'm going to wrap it up there. And thanks...

0:28:23.3 John Dues: Yeah. Absolutely.

0:28:24.6 Andrew Stotz: And thank you for, on behalf of the Deming Institute, and I want to encourage all the listeners out there to follow what John's doing and what he's talking about, and of course, go to Deming.org to continue your journey. You can get his book, Win-Win, W. Edwards Deming, The System of Profound Knowledge and the Science of Improving Schools on amazon.com. And 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.

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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.

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Join John Dues and Andrew Stotz as they go one step deeper into finding the precise problem you want to improve. Sometimes taking big actions means starting small.

TRANSCRIPT

Diving Deeper into Defining the Problem: Path for Improvement (Part 6)

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 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. And the topic for today is more on defining the problem. John, take it away.

0:00:23.5 John Dues: It's good to be back, Andrew. Yeah, so it's been a minute, but two episodes ago we just kind of refreshed. We discussed how helpful it is to make sure we see the system in which we work whenever we're starting an improvement project. And then in this last episode, we took the sort of next step and we started working towards defining a specific problem. And like you said, we're going to dive deeper into that topic today. For those that have been following along, you'll remember that we've been walking through this four step improvement model. Step one, set the challenge or direction. Two is grasp the current condition. Three is establish your target condition, and four, experiment to overcome obstacles. And then again, we've said repeatedly, we're doing all of these steps with this team that has three parts.

0:01:18.1 John Dues: The people working in the system, again, for us, that's teachers and students a lot of the time, and then those that have the authority to work on the system, that might be a principal, that might be a teacher depending on the project, maybe it's the superintendent, if it's the whole system. And then this System of Profound Knowledge coach is that third part that's often missing, at least in school improvement. So we have this nice model and this nice graphic. And then what we've also been sort of layering on top of that is this improvement process.

0:01:48.9 John Dues: So in each of these steps in the model, we have a number of steps that we're taking to be able to sort of achieve that. One of the things though, that sort of like a key organizing question in step one in the model is we asked where do we want to be in the long run, right? And so we're thinking through this longer range goal, typically in the timeframe of something like six months to three years. And if we achieve this, it's really going to differentiate us from other schools in our case or maybe businesses or hospitals or whatever it may be. And we've also sort of said that this is a stretch goal and it's at the outset we don't know how to achieve it. It almost seems impossible.

0:02:31.8 John Dues: And so for us, the key thing we're working on at United Schools here in Columbus is that we've have this really high chronic absenteeism rate coming out of the pandemic, and we have a goal to get that down much lower. So right now, about 50% of our kids are chronically absent. And I think I've said this before, we're trying to get that down to closer to something like 5%. So it's a pretty, pretty weighty problem and a pretty, very ambitious goal, I would say.

0:03:04.3 Andrew Stotz: Yep.

0:03:06.7 John Dues: So last time, what we said was, at this stage in the process, we've stepped back, we looked at some tools that help us see the system, and now we're doing that same thing for defining the problem. And we talked about there's some really useful questions to ask at this stage. The first one that we talked about as a group is how is the project being funneled from a general to more specific problem? We start with this sort of broad problem about chronic absenteeism, and we're trying to narrow the specific problem that we're going to work on. And then once we have that narrower view, we'll get all the way down and answer the question, what is the precise problem statement? And that's kind of our focus for today.

0:03:57.8 John Dues: Now, we won't get to the precise problem statement today, but we're trying to figure out the things that we need to do to get there. So last episode, I reviewed a tool we use at this step in the process called a Problem Statement Readiness Check. So we wrote this problem focus area, and this is really important. I've repeated this like, we use these tools because it helps us organize the group's thoughts and put it into writing. And that's really, really powerful. So we wrote this problem focus area, this sort of broader sort of characterization of the problem as we see it.

0:04:34.4 John Dues: And then we just listed out, what have we learned so far? What insights have we gained? And then we also listed a number of questions that still needed to be answered. And then we basically, as a group, we have this improvement team that meets weekly on Friday mornings. Then we filtered all that learning through six questions. First question is, has our team investigated multiple perspectives on the problem focus area? And actually, in the document, we write our evidence, and then we say, do we feel like the evidence is weighty enough that we've met the standard of that question, yes or no? So that particular question, we check no.

0:05:20.6 John Dues: The second question was, have you challenged assumptions our team held about why the problem occurs? And again, we've done some of that, but we were like, overall I don't think we've challenged enough of those assumptions. So we checked no for that question as well. And then we said, have you gained useful insight into why previous efforts haven't been successful? And we said no to that one.

0:05:45.7 John Dues: And the last two questions were, has your team gained sufficient insight into student needs to give you confidence that you know which kinds of improvements will lead to improved student experiences outcomes? Said no to that one. And then the last question was, have you identified existing school based practices or processes connected to the problem that might be improved? And for that one we said yes. And so again, there's no right or wrong answers here. But by having these six questions, a key sort of step at this point is down at the bottom it says, if the team checks three or more boxes, we'll move on to draft the problem statement, that precise problem statement. And if the team hasn't checked at least three yeses, then we're not going to do that. We sort of feel like if we haven't answered at least half of those questions to our satisfaction, then there's probably some more learning that needs to happen. So in this case, this is... Oh, sorry, go ahead.

0:06:42.5 Andrew Stotz: I wanted to ask because I know sometimes people probably would sit in something like this and they're like, come on, why do we have to go through all this? We know what the problem is, let's go, let's solve it now. What is the risk if you skip this type of stuff?

0:07:00.4 John Dues: Well, and that's... Interestingly, this group is mainly made up of a couple principals, a couple deans on the dean of student side or we have these dean of family and community engagements that are really involved with families especially that have attendance issues. There's a couple people that are sort of like attendance officers and then there's a couple sort of systems leaders, myself and another guy. And in this group, you don't actually have a lot of that. Where you get a lot of that type of thing is when you have the CEO or the superintendent in the room and there's a lot of urgency and pressure on those folks coming from different constituencies. But the problem is if you don't sort of slow down and study it and do that thoroughly, then what happens is you move forward. The solutions are miss, sort of, aligned to the problem and you end up wasting resources, time, money, whatever.

0:07:57.9 Andrew Stotz: And I guess you lose credibility too, that you go back and say, okay, now we're going to do our next thing. Well, we didn't really really succeed with our last one.

0:08:07.6 John Dues: Yeah. And in education, especially urban education, but in education generally, the average urban superintendent is at the helm for about three years. And so what happens is that they then turn over and there's a whole nother set of initiatives that the new person brings. And we call this initiative fatigue, where you constantly have these initiatives. Most of the people on the front line know these things aren't going to work from the outset because it's not the real problems that they're seeing in their classrooms and they sort of have to go along to get along type of deal. But over time, you just sort of wear people out and then they stop really trying that improvement. But with this team, what we're doing, we have the people that are on the ground sort of dealing with these attendance issues day to day, and they're a part of building the solution. So they have a lot of investment, I think, in developing the solution on the front end.

0:09:02.6 Andrew Stotz: A little corollary to that is the idea of family businesses versus public companies. In family businesses in Asia and particularly, which I'm familiar with, they have an amazing ability to have continuity in senior leadership in the values and that type of thing that you see is very hard to have in public company unless they're run by the founder and the founders... And it's... And the founder's been running it for 20 years or whatever.

0:09:29.5 John Dues: Yeah.

0:09:29.9 Andrew Stotz: In fact, I see in my own coffee business that just the fact that my business partner, the founder, has been running it for 30 years brings something that our competitors don't have.

0:09:40.3 John Dues: Yep, absolutely. And stability that... Sorry. Sorry, go ahead.

0:09:44.8 Andrew Stotz: No, I mean, and that can become a competitive advantage. And so I was just curious too about public versus private schools. I'm assuming that private schools in America have more ability to have the continuity of leadership or is that not the case?

0:10:03.9 John Dues: Well, I don't know. I mean, I wouldn't have the data to say, one way or the other. I would suspect that in a private setting there may be more leadership stability. I mean, the other thing that you're having to deal with in a public school system, most public school systems, traditional public school systems especially, is there's a publicly elected board that those five or seven people are who the superintendent reports to and those people they turn over as elections occur on a staggered basis. And so, yeah, I mean, getting that continuity is really, really tough. And so I think finding especially of larger districts, especially of urban districts, finding that continuity of leadership, especially at the superintendent level, is very difficult for those reasons.

0:10:58.4 Andrew Stotz: So I'm going to stop and talk for just a second about that because one of the lessons I've learned in business and in life is that when you identify that everybody's doing this thing and they're all kind of bound by this and they're stuck in this situation, that is your opportunity to differentiate.

0:11:12.8 John Dues: Yeah.

0:11:13.3 Andrew Stotz: Once you identify that point, everything you can do, knowing they're tangled up in this problem, in this mess that they cannot break free from unless they have a huge amount of political will or force of will, then you know that if you could do something differently, you would be able to differentiate your school, your business, your social enterprise or whatever it is. So it's a great little trigger to something I'm always looking for in business.

0:11:40.4 John Dues: Yeah, no, absolutely, absolutely. That continuity of leadership is a key differentiator if you can have stable leadership. No doubt. It's hard to get anything done if you don't, especially in a complex system. But in this particular case, as you would imagine, if five of the six answers to those questions were no, we didn't do enough study yet or we don't have enough understanding yet then the team obviously concluded that we didn't have enough information to write a precise problem statement. And this is where I talk to people because we do have this improvement model. And then it's under that is this improvement process. And there are steps, but it's not a recipe.

0:12:19.1 John Dues: So you can't just go from step one to two to three to four and four to five. And some people sort of get that and some people don't like that messier process. And this is sort of where the art comes in. But one of the key tools in this case that we're using, and we've talked about it before, is we don't have enough information. Typically, we start running experiments later in the process, PDSA cycles, Plan, Do Study, Act cycles. When we have a set of solutions, we want to start testing them. But there's other times you can use PDSA. I actually recommend doing this pretty early in the process when you need to gather more information or run a mini experiment. That's the perfect time, no matter what step it is, to run a PDSA cycle and start to gather that information, because otherwise, with this process, it can become a little disconnected. You can talk about things forever.

0:13:15.4 John Dues: And so you do wanna think, you do wanna slow down, you wanna be deliberate, but you also wanna run some tests right away and start small and start to learn some things that will later on inform the full set of interventions you're going to try or the full set of solutions you're going to try. So that's what we did in this particular case where we didn't feel like we had enough information to write the problem statement, we said, let's stop and let's run a PDSA cycle. So I'll just kind of walk through the objective of this first cycle. So we ran this right before break.

0:13:51.9 John Dues: So we ran it for 20 days right before our winter break, so sort of like the second half of December. And so the objective of this particular PDSA and this is sort of will take us to the end of this episode is, we already know that there's this high percentage of students that have significant attendance challenges. We know that average daily attendance across our four campuses is somewhere between 85 and 88%, and chronic absenteeism is somewhere in the low 40% range. So that's information we've started to gather. We know all that. We know there's this problem. But while the attendance team, they have some definite thoughts on what's causing so many students to miss so much school, things we've talked about, transportation, health, family instability. But we really wanted to test those assumptions early on through this structured format, this structured PDSA cycle.

0:14:56.4 John Dues: And so what we did... And again, especially at the start, if it's the first cycle in a project, you want to have a pretty narrow focus. So with this PDSA cycle, what we're going to do is... Or what we did was we picked one student. Sounds kind of crazy. You got all these students you need to help. But we picked one student at each campus. And so we have this improvement team that has people from each campus. And we said, what's a student that you'd want to dig into and learn some more about that's having attendance issues? And there's no shortage of students to pick. But what we settled on was the kind of the frame was, here are four students that are having attendance issues. And we've had trouble really figuring out what the cause is.

0:15:43.5 John Dues: So if we're going to focus on just one student on our campus, let's pick one where we've had some struggles to find additional information. So what we did was, pick those four students, and then we started tracking their attendance very closely over those three weeks of the PDSA cycle. And we came up with a system to categorize every single absence event. And it was a sort of predetermined list, like a validated list, so that it was kind of a balance between having simply qualitative perceptions of why kids are absent and we didn't want to just have like five reasons either that they need some more detail. You actually don't know enough if you just put transportation.

0:16:30.7 John Dues: So we ended up with about a list of about 20 or so, and that kind of got adjusted at the start of the cycle. And then what we did was, we sat down and talked with those students and their families, every one of those four. So the team, the school based team, there was a point person or two that sat down and kind of dug into the attendance challenges with the students and their parents and started categorizing and adding context to the various absences that had happened up to that point in the year. And then also across those three weeks, right?

0:17:07.1 John Dues: And then a key part of this is, so we kind of outline that as an objective. And then we said, okay, while this isn't like a really intense attendance intervention, it is an intervention to sit down and talk with people and try to categorize and problem solve a little bit about what the problems are and how might the parent get the kid to school over those next three weeks.

0:17:31.0 John Dues: So at this point, one of the things that we did, and this is where we'll pick back up next week or the next time we talk with the plan is, we had our team members predict, what do you think is gonna happen when we sit down and have these conversations? And do you think the conversations in and of themselves are gonna impact the students attendance rates? And I think that's a good place to pick up in our next conversation. It was pretty fascinating, the first experiment, actually. So I think listeners will get a lot out of hearing those results in our next session.

0:18:10.8 Andrew Stotz: Yeah, it's exciting as we've gone through this, thinking about how we can apply all this into, I've been taking tons of notes from our discussions on this, and I know the other listeners and viewers are to try to think about how do we adjust our own way of even thinking about improvement. And I know from my perspective, I think I would argue that my discussions with you have helped me to slow down in my improvement process.

0:18:40.7 John Dues: Yeah, I think that's often... I mean, because there's so much urgency to... And whatever our business area is, urgency to get it right, urgency to change, urgency to improve. But like what I see in schools, schools have an attendance problem. And I'm sure there's some schools that do a really good job on this front. But a lot of schools, what they're going to do is they're going to have some type of attendance incentive. We're going to have pizza party Fridays if you came all week. Might that have some short term impact? Maybe. But you're not solving the actual problems that are leading to the attendance challenges in the first place. So...

0:19:20.7 Andrew Stotz: In my online Valuation Masterclass Bootcamp, one of the big improvements that I've worked on is I've realized that I don't think we've defined the assignments as well as we could. And so I'm looking at the outcome and I'm thinking, the outcome isn't what I want. I want it better. And then I realize I've got to go back. And all of a sudden, two bootcamps ago, it made me realize I need to actually physically separate the lecture on the assignment.

0:19:54.5 Andrew Stotz: And so I've now, for every week of the six weeks on Mondays, I release a video and I say, this is your assignment and here's all the questions you're going to have. But more importantly, what I always do is I say, this is what it should look like. This is from the prior best example from last class. And all I ask of you is to try to beat this.

0:20:21.3 John Dues: That's great. Yeah.

0:20:22.5 Andrew Stotz: And then students are inspired and they're seeing, you could say, well, you just giving them the... You're giving them the result, okay, so my students are doing studies on industry in particular, what I'm talking about like the automotive industry. So they may see a prior students that just got an A plus, they were great. I don't give grades in the bootcamp, but let's say it's A plus work. Great. I'm happy to show them that and let them see that and say, now I want to challenge you to do better.

0:20:49.3 Andrew Stotz: And I think that is another addition. And I'm finding we're getting a lot less questions. The only questions we're getting from the people that haven't watched that video, if they haven't watched the assignment video, then they have all these questions. But also what's fascinating is that what we're seeing is a much improved outcome. And all of a sudden, as a teacher, on our feedback Fridays, when the students are presenting their work of the week, I'm spending a lot less time going, wait a minute, you got a grammar mistake in there or you got this or that or all that stuff's gone and now I'm focusing on the quality of their logic and their argument and that type of thing, which is exactly what I want to be doing. So just the idea of constantly improving is just so exciting.

0:21:35.2 John Dues: Yeah, I think... And I think a lot of people on our team have this natural inclination to sit down... Want to sit down with families, spend time with them and problem solve some of these issues. But when you zoom out and look at the problem and how big it is, you don't know where to start. So this gave people a place. One student, like, have one longer... I know we can't do this probably with all our kids across the entire school, but let's do this with one student and see what we learn and then use that learning to build the next cycle. And that's really what this is about, is that the power of the PDSA at any point in the improvement process, whether it's testing intervention or in a scenario like this where you need to get more information before you go on to the next step. I think PDSA can be used at any time of an improvement project.

0:22:27.9 Andrew Stotz: Wonderful. Well, John, 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. 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 and 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.

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What if you could transform quality from a compliance exercise into a strategic advantage? In our latest podcast, Andrew Stotz sits down with Cliff Norman and David M. Williams, two of the authors of Quality as an Organizational Strategy. They share untold stories of Dr. Deming, hard-earned insights from decades of real-world application, and a framework for making quality the driving force behind lasting business success. - How can organizations move beyond quality improvement projects to make quality their core strategy? - How do the five key activities outlined in their book create a system for sustainable success? - Why has this work, developed over 30+ years, remained largely behind the scenes—until now?

Don’t miss this conversation that challenges conventional thinking and reveals how organizations can thrive, not just survive.

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, we have a fantastic opportunity to learn more about a recent book that's been published called "Quality as an Organizational Strategy". And I'd like to welcome Cliff Norman and Dave Williams on the show, two of the three authors. Welcome, guys.

0:00:27.1 Cliff Norman: Thank you. Glad to be here.

0:00:29.4 Dave Williams: Yeah, thanks for having us.

0:00:31.9 Andrew Stotz: Yeah, I've been looking forward to this for a while. I was on LinkedIn originally, and somebody posted it. I don't remember who, the book came out. And I immediately ordered it because I thought to myself, wait, wait, wait a minute. This plugs a gap. And I just wanna start off by going back to Dr. Deming's first Point, which was create constancy of purpose towards improvement of product and service with the aim to become competitive and stay in business and to provide jobs. And all along, as anybody that learned the 14 Points, they knew that this was the concept of the strategy is to continue to improve the product and service in the eyes of the client and in your business. But there was a lot missing. And I felt like your book has started really to fill that gap. So maybe I'll ask Cliff, if you could just explain kind of where does this book come from and why are you bringing it out now?

0:01:34.5 Cliff Norman: That's a really good question, Andrew. The book was originally for the use of both our clients only. So it came into being, the ideas came out of the Deming four day seminar where Dr. Tom Nolan, Ron Moen and Lloyd Provost, Jerry Langley would be working with Dr. Deming. And then at the end of four days, the people who some of who are our clients would come up to us and said, he gave us the theory, but we don't have any methods. And so they took it very seriously and took Dr. Deming's idea of production viewed as a system. And from that, they developed the methods that we're going to discuss called the five activities. And all of our work with this was completely behind the wall of our clients. We didn't advertise. So the only people who became clients were people who would seek us out. So this has been behind the stage since about 1990. And the reason to bring it out now is to make it available beyond our client base. And Dave, I want you to go ahead and add to that because you're the ones that insisted that this get done. So add to that if you would.

[laughter]

0:02:53.0 Dave Williams: Well, thanks, Cliff. Actually, I often joke at Cliff. So one thing to know, Cliff and Lloyd and I all had a home base of Austin, Texas. And I met them about 15 years ago when I was in my own journey of, I had been a chief quality officer of an ambulance system and was interested in much of the work that API, Associates of Process Improvement, had been doing with folks in the healthcare sector. And I reached out to Cliff and Lloyd because they were in Austin and they were kind enough, as they have been over many years, to welcome me to have coffee and talk about what I was trying to learn and where my interests were and to learn from their work. And over the last 15 years, I've had a great benefit of learning from the experience and methods that API has been using with organizations around the world, built on the shoulders of the theories from Dr. Deming. And one of those that was in the Improvement Guide, one of the foundational texts that we use a lot in improvement project work that API wrote was, if you go into the back, there is a chapter, and Cliff, correct me if I'm wrong, I think it's chapter 13 in this current edition on creating value.

0:04:34.3 Dave Williams: In there, there was some description of kind of a structure or a system of activities that would be used to pursue qualities and organizational strategy. I later learned that this was built on a guide that was used that had been sort of semi self-published to be able to use with clients. And the more that I dove into it, the more that I really valued the way in which it had been framed, but also how, as you mentioned at the start, it provided methods in a place where I felt like there was a gap in what I saw in organizations that I was working with or that I had been involved in. And so back in 2020, when things were shut down initially during the beginning of the pandemic, I approached Lloyd and Cliff and I said, I'd love to help in any way that I can to try to bring this work forward and modernize it. And I say modernize it, not necessarily in terms of changing it, but updating the material from its last update into today's context and examples and make it available for folks through traditional bookstores and other venues.

0:05:58.9 Andrew Stotz: And I have that The Improvement Guide, which is also a very impressive book that helps us to think about how are we improving. And as you said, the, that chapter that you were talking about, 13, I believe it was, yeah, making the improvement of value a business strategy and talking about that. So, Cliff, could you just go back in time for those people that don't know you in the Deming world, I'm sure most people do, but for those people that don't know, maybe you could just talk about your first interactions with Dr. Deming and the teachings of that and what sparked your interest and also what made you think, okay, I wanna keep expanding on this.

0:06:40.0 Cliff Norman: Yeah. So I was raised in Southern California and of course, like many others, I'm rather horrified by what's going on out there right now with fires. That's an area I was raised in. And so I moved to Texas in '79, went to work for Halliburton. And they had an NBC White Paper called, "If Japan Can, Why Can't We?", and our CEO, Mr. Purvis Thrash, he saw that. And I was working in the quality area at that time. And he asked me to go to one of Deming's seminars that was held in Crystal City, actually February of 1982. And I got down there early and got a place up front. And they sent along with me an RD manager to keep an eye on me, 'cause I was newly from California into Texas. And so anyway, we're both sitting there. And so I forgot something. So I ran up stairs in the Sheraton Crystal City Hotel there. And I was coming down and lo and behold, next floor down, Dr. Deming gets on and two ladies are holding him up. And they get in the elevator there and he sees this George Washington University badge and he kind of comes over, even while the elevator was going down and picks it up and looks it up real close to his face. And then he just backs up and leans, holds onto the railing and he says, Mr. Norman, what I'm getting ready to tell you today will haunt you for the rest of your life.

0:08:11.8 Cliff Norman: And that came true. And of course, I was 29 at the time and was a certified quality engineer and knew all things about the science of quality. And I couldn't imagine what he would tell me that would haunt me for the rest of my life, but it did. And then the next thing he told me, he said, as young as you are, if you're not learning from somebody that you're working for, you ought to think about getting a new boss. And that's some of the best advice I've ever gotten. I mean, the hanging around smart people is a great thing to do. And I've been gifted with that with API. And so that's how I met him. And then, of course, when I joined API, I ended up going to several seminars to support Lloyd Provost and Tom Nolan and Ron Moen and Jerry as the various seminars were given. And Ron Moen, who unfortunately passed away about three years ago, he did 88 of those four day seminars, and he was just like a walking encyclopedia for me. So anytime I had questions on Deming, I could just, he's a phone call away, and I truly miss that right now.

0:09:20.5 Cliff Norman: So when Dave has questions or where this reference come from or whatever, and I got to go do a lot of work, where Ron, he could just recall that for me. So I miss that desperately, but we were busy at that time, by the time I joined API was in '88. And right away, I was introduced to what they had drafted out in terms of the five activities, which is the foundation of the book, along with understanding the science of improvement and the chain reaction that Dr. Deming introduced us to. So the science of improvement is what Dr. Deming called the System of Profound Knowledge. So I was already introduced to all that and was applying that within Halliburton. But QBS, as we called it then, Qualities of Business Strategy was brand new. I mean, it was hot off the press. And right away, I took it and started working with my clients with it. And we were literally walking on the bridge as we were building it. And the lady I'm married to right now, Jane Norman, she was working at Conagra, which is like a $15 billion poultry company that's part of Conagra overall, which is most of the food in your grocery store, about 75% of it. And she did one of the first system linkages that we ever did.

0:10:44.5 Cliff Norman: And since then, she's worked at like four other companies as a VP or COO, and has always applied these ideas. And so a lot of this in the book examples and so forth, comes from her actual application work. And when we'd worked together, she had often introduced me, this is my husband, Cliff, he and his partners, they write books, but some of us actually have to go to work. And then eventually she wrote a book with me with Dr. Maccabee, who is also very closely associated with Dr. Deming. So now she's a co-author. So I was hoping that would stop that, but again, we depend on her for a lot of the examples and contributions and the rest of it that show up in the book. So I hope that answers your question.

0:11:28.2 Andrew Stotz: Yeah, and for people like myself and some of our listeners who have heard Dr. Deming speak and really gotten into his teachings, it makes sense, this is going to haunt you because I always say that, what I read originally... I was 24 when I went to my first Deming seminar. And I went to two two-day seminars and it... My brain was open, I was ready, I didn't have anything really in it about, any fixed methods or anything. So, for me, it just blew my mind, some of the things that he was talking about, like thinking about things in a system I didn't think about that I thought that the way we got to do is narrow things down and get this really tight focus and many other things that I heard. And also as a young, young guy, I was in this room with, I don't know, 500 older gentlemen and ladies, and I sat in the front row and so I would see him kind of call them on the carpet and I would be looking back like, oh, wow, I never saw anybody talk to senior management like that and I was kind of surprised. But for those people that really haven't had any of that experience they're new to Deming, what is it that haunts you? What is... Can you describe what he meant when he was saying that?

0:12:42.9 Cliff Norman: I gotta just add to what you just said because it's such a profound experience. And when you're 29, if most of us, we think we're pretty good shape by that time, the brain's fully developed by age 25, judgment being the last function that develops. And so you're pretty well on your way and then to walk in and have somebody who's 81 years old, start introducing you to things you've never even thought about. The idea of the Chain Reaction that what I was taught as a certified quality engineer through ASQ is I need to do enough inspection, but I didn't need to do too much 'cause I didn't want to raise costs too much. And Dr. Deming brought me up on stage and he said, well, show me that card again. So I had a 105D card, it's up to G now or something. And he said, "well, how does this work?" And I said, "well, it tells me how many samples I got to get." And he says, "you know who invented that." And I said, "no, sir, I thought God did." He said, "no, I know the people that did it. They did it to put people like you out of business. Sit down, young man, you've got a lot to learn." And I thought, wow, and here you are in front of 500 people and this is a public flogging by any stretch.

0:13:56.1 Cliff Norman: And it just went on from there. And so a few years later, I'm up in Valley Forge and I'm working at a class with Lloyd and Tom Nolan and a guy named, I never met before named Jim Imboden. And he's just knock-down brilliant, but they're all working at General Motors at that time. And a lot of the book "Planned Experimentation" came out of their work at Ford and GM and Pontiac and the rest of it. And I mean, it's just an amazing contribution, but I go to dinner with Jim that night. And Jim looks at me across the table and he says, Cliff, how did you feel the day you found out you didn't know anything about business economics or anything else? I said, "you mean the first day of the Deming seminar?" He said, "that's what I'm talking about." And that just... That's how profound that experience is. Because all of a sudden you find out you can improve quality and lower costs at the same time. I'm sorry, most people weren't taught that. They certainly weren't taught that in business school. And so it was a whole transformation in thinking and just the idea of a system. Most of what's going on in the system is related to the system and the way it's constructed. And unfortunately, for most organizations, it's hidden.

0:15:04.2 Cliff Norman: They don't even see it. So when things happen, the first thing that happens is the blame flame. I had a VP I worked for and he'd pulled out his org chart when something went bad and he'd circle. He said, this is old Earl's bailiwick right here. So Cliff, go over and see Earl and I want you to straighten him out. Well, that's how most of it runs. And so the blame flame just takes off. And if you pull the systems map out there and if he had to circle where it showed up, he'd see there were a lot of friends around that that were contributing. And we start to understand the complexity of the issue. But without that view, and Deming insisted on, then you're back to the blame flame.

0:15:45.1 Andrew Stotz: Yeah. And Dave, I see a lot of books on the back on your shelf there about quality and productivity and team and many different things. But maybe you could give us a little background on kind of how how you, besides how you got onto this project and all that. But just where did you come from originally and how did you stumble into the Deming world?

0:16:08.9 Dave Williams: Sure. Well, sadly, I didn't have the pleasure of getting to sit in on a four-day workshop. Deming died in 1993. And at that time, I was working on an ambulance as a street paramedic and going to college to study ambulance system design and how to manage ambulance systems, which was a part of public safety that had sort of grown, especially in the United States in the '60s. And by the time I was joining, it was about 30 years into becoming more of a formalized profession. And I found my way to Austin, Texas, trying to find one of the more professionalized systems to work in and was, worked here as a paramedic for a few years. And then decided I wanted to learn more and started a graduate program. And one of the courses that was taught in the graduate program, this is a graduate program on ambulance management, was on quality. And it was taught by a gentleman who had written a, a guide for ambulance leaders in the United States that was based on the principles and methods of quality that was happening at this time. And it pieced together a number of different common tools and methods like Pareto charts and cause-and-effect diagrams and things like that.

0:17:33.1 Dave Williams: And it mentioned the different leaders like Deming and Juran and Crosby and others. And so that was my first exposure to many of these ideas. And because I was studying a particular type of healthcare delivery system and I was a person who was practicing within it and I was learning about these ideas that the way that you improve a system or make improvement is by changing the system. I was really intrigued and it just worked out at the time. One of the first roles, leadership roles that emerged in my organization was to be the Chief Quality Officer for the organization. And at the time, there were 20 applicants within my organization, but I was the only one that knew anything about any of the foundations of quality improvements. Everybody else applied and showed their understanding of quality from a lived experience perspective or what their own personal definitions of quality were, which was mostly around inspection and quality assurance. I had, and this won't surprise Cliff, but I had a nerdy response that was loaded with references and came from all these different things that I had been exposed to. And they took a chance on me because I was the only one that seemed to have some sense of the background. And I started working and doing...

0:19:10.1 Dave Williams: Improvement within this ambulance system as the kind of the dedicated leader who was supposed to make these changes. And I think one of the things that I learned really quickly is that frequently how improvement efforts were brought to my attention was because there was a problem that I, had been identified, a failure or an error usually attributed to an individual as Cliff pointed out, somebody did something and they were the unfortunate person who happened to kind of raise this issue to others. And if I investigated it all, I often found that there were 20 other people that made the same error, but he was, he or she was the only one that got caught. And so therefore they were called to my office to confess. And when I started to study and look at these different issues, every time I looked at something even though I might be able to attribute the, first instance to a person, I found 20 or more instances where the system would've allowed or did allow somebody else to make a similar error.

0:20:12.6 Dave Williams: We just didn't find it. And it got... And it became somewhat fascinating to me because my colleagues were very much from a, if you work hard and just do your job and just follow the policy then good quality will occur. And nobody seemed to spend any time trying to figure out how to create systems that produce good results or figure out how to look at a system and change it and get better results. And so most of my experience was coming from these, when something bubbled up, I would then get it, and then I'd use some systems thinking and some methods and all of a sudden unpack that there was a lot of variation going on and a lot of errors that could happen, and that the system was built to get results worse than we even knew.

0:21:00.7 Dave Williams: And it was through that journey that I ended up actually becoming involved with the Institute for Healthcare Improvement and learning about what was being done in the healthcare sector, which API at the time were the key advisors to Dr. Don Berwick and the leadership at IHI. And so much of the methodology was there. And actually, that's how I found my way to Cliff. I happened to be at a conference for the Institute for Healthcare Improvement, and there was an advertisement for a program called the Improvement Advisor Professional Development Program, which was an improvement like practitioner project level program that had been developed by API that had been adapted to IHI, and I noticed that Cliff and Lloyd were the faculty, and that they were in my hometown. And that's how I reached out to them and said, hey can we have coffee? And Cliff said, yes. And so...

0:21:53.1 Andrew Stotz: And what was that, what year was that roughly?

0:22:00.3 Dave Williams: That would've been back in 2002 or 2003, somewhere in that vicinity.

0:22:02.0 Andrew Stotz: Hmm. Okay.

0:22:06.8 Dave Williams: Maybe a little bit later.

0:22:06.9 Andrew Stotz: I just for those people that are new to the topic and listening in I always give an example. When I worked at Pepsi... I graduated in 1989 from university with a degree in finance. And I went to work at Pepsi in manufacturing and warehouse in Los Angeles at the Torrance Factory originally, and then in Buena Park. But I remember that my boss told me, he saw that I could work computers at that time, and so I was making charts and graphs just for fun to look at stuff. And he said, yeah, you should go to a one of these Deming seminars. And so he sent me to the one in... At George Washington University back in 1990, I think it was. And but what was happening is we had about a hundred trucks we wanted to get out through a particular gate that we had every single morning. And the longer it took to get those trucks out the longer they're gonna be on LA traffic and on LA roads, so if we can get 'em out at 5:00 AM, fantastic. If we get 'em out at 7:00, we're in trouble. And so they asked me to look at this and I did a lot of studying of it and I was coming for like 4:00 in the morning I'd go up to the roof of the building and I'd look down and watch what was happening. And then finally I'd interview everybody. And then finally the truck drivers just said, look, the loaders mess it up so I gotta open my truck every morning and count everything on it. And I thought, oh, okay.

0:23:23.7 Andrew Stotz: So I'll go to the loaders. And I go, why are you guys messing this up? And then the loaders was like, I didn't mess it up. We didn't have the production run because the production people changed the schedule, and so we didn't have what the guy needed. And so, and oh, yeah, there was a mistake because the production people put the product in the wrong spot, and therefore, I got confused and I put the wrong stuff on by accident. And then I went to the production people and they said, well, no, it's not us. It's the salespeople. They keep putting all this pressure on us to put this through right now, and it's messing up our whole system. And that was the first time in my life where I realized, okay, it's a system. There's interconnected parts here that are interacting, and I had to go back into the system to fix, but the end result was I was able to get a hundred trucks through this gate in about 45 minutes instead of two hours, what we had done before.

0:24:18.8 Andrew Stotz: But it required a huge amount of work of going back and looking at the whole system. So the idea of looking at the science of improvement, as you mentioned, and the System of Profound Knowledge, it's... There's a whole process. Now, I wanna ask the question for the person who gets this book and they dig into it, it's not a small book. I've written some books, but all of 'em are small because I'm just, maybe I just can't get to this point. But this book is a big book, and it's got about 300... More than 300 pages. What's the promise? What are they gonna get from digging into this book? What are they gonna take away? What are they gonna be able to bring to their life and their business that they couldn't have done without really going deeper into this material?

0:24:57.7 Cliff Norman: Dave, go ahead.

0:25:01.4 Dave Williams: Well, I was gonna joke by saying they're gonna get hard work and only half because this is just the theory in the book and many of the... And sort of examples of the method. But we're in the process of preparing a field guide which is a much deeper companion guide loaded with exercises and examples of and more of the methods. So the original guide that that API had developed was actually about an eight... Well, I don't know how many pages it was, but it was a thick three inch binder. This, what you have there is us refining the content part that explains the theory and kind of gets you going. And then we moved all of the exercises and things to the field guide for people that really wanna get serious about it.

0:26:00.3 Dave Williams: And the reason I say hard work is that the one thing that you won't get, and you should probably pass it if this book if you're on Amazon, is you're not gonna get an easy answer. This is, as a matter of fact, one of the things that emerged in our early conversations about was this project worth it? Is to say that this is hard work. It's work that a very few number of leaders who or leadership teams that really want to learn and work hard and get results are gonna embark on. But for those, and many of our clients, I think are representative of that, of those people that say, gosh, I've been working really hard, and I feel like we could do better. I feel like I could make a bigger impact, or I could serve more customers or clients.

0:26:44.0 Dave Williams: And but I am... And I'm in intrigued or inspired or gotten to a certain point with improvement science on my own, but I want to figure out how to be more systematic and more global and holistic at that approach. Then that's what QOS is about. It builds on the shoulders of the other books that you mentioned, like The Improvement Guide which we talked about as being a great book about improvement, and improvement specifically in the context of a project. And other books like The Healthcare Data Guide and the Planned Experimentation, which are also about methods, healthcare Data Guide being about Shewhart charts, and Planned Experimentation being about factorial design. This book is about taking what Cliff described earlier as that... I always say it's that that diagram that people put on a slide and never talk about from Deming of production views as a system and saying, well, how would we do this if this is the model for adopting quality as strategy, what are the methods that help us to do this?

0:28:01.3 Dave Williams: And this book breaks that down into five activities that are built on the shoulders of profound knowledge, built on the shoulders of the science of improvement and provide a structure to be able to initially develop a system, a systems view of your organization, and then build on that by using that system to continually operate and improve that organization over time. So the book describes the activities. The book describes some of the things that go into getting started, including being becoming good at doing results-driven improvement, building a learning system, focusing in on the things that matter to your organization. And then working towards building the structure that you can improve upon. The book creates that foundation. It provides examples from clients and from people that we've worked with so that you can see what the theory looks like in practice get, kind of get a flavor for that. And we hope it builds on the shoulders of other work that I mentioned in the other books that compliment it and provides a starting point for teams that are interested in taking that journey.

0:29:26.5 Andrew Stotz: And Cliff, from your perspective, if somebody had no, I mean, I think, I think the Deming community's gonna really dive in and they're gonna know a lot of this stuff, but is gonna help them take it to the next level. But for someone who never had any real experience with Deming or anything like that, and they stumble upon this interview, this discussion, they hear about this book, can they get started right away with what's in this book? Or do they have to go back to foundations?

0:29:49.6 Cliff Norman: No, I think that can definitely get started. There's a lot of learning as you know, Andrew, from going through the four-day to understand things. And I think we've done a pretty good job of integrating what Dr. Deming taught us, as well as going with the methods. And one of the things people would tell him in his four-day seminars is, Dr. Deming, you've given us the theory, but we have no method here. And he said, well, if I have to give you the method, then you'll have to send me your check too. So he expected us to be smart enough to develop the methods. And the API folks did a really good job of translating that into what we call the five activities. So those five activities are to understand the purpose of the organization.

0:30:35.6 Cliff Norman: And a lot of people when they write a purpose, they'll put something up there but it's usually we love all our people. We love our customers even more. If only they didn't spend so much, and we'll come out with something like that and there'll be some pablum that they'll throw up on the wall. Well, this actually has some structure to it to get to Deming's ideas. And the first thing is let's try to understand what business we're in and what need we're serving in society that drives customers to us. So that word is used not need coming from customers, but what is it that drives them to us so we can understand that? And then the second part of that purpose needs to define the mainstay, the core processes, the delivery systems that relate directly to customers. And just those two ideas alone, just in the first activity of purpose, most people haven't thought about those ideas.

0:31:27.8 Cliff Norman: And can somebody pick up this book and do that? Yes. And that will answer a big challenge from Dr. Deming. Most people don't even know what business they're in, haven't even thought about it. And so that we... That question gets answered here, I think, very thoroughly. In this second activity, which is viewing the organization as a system contains two components that's viewing the organization as a system. And that's difficult to do, and a lot of people really don't see the need for it. Jane Norman reminded Dave and I on a call we did last week, that when you talk about a systems map with people, just ask 'em how do they know what's going on inside other organizations, other departments within their organization? How do they know that? And most of us are so siloed.

0:32:11.2 Cliff Norman: Somebody over here is doing the best job they can in department X, and meanwhile, department Y doesn't know anything about it. And then three months later the improvement shows up and all of a sudden there's problems now in department Y. Well, somebody who's focused on the organization as a system and sees how those processes are related when somebody comes to a management meeting said, well, we've just made a change here, and this is gonna show up over here in about three months, and you need to be prepared for that. Andrew, that conversation never takes place. So the idea of having the systems map and this book can help you get started on that. The second book that Dave was just talking about, there are more replete examples in there. I mean, we've got six case studies from clients in there than the practitioners and people who actually are gonna be doing this work.

0:33:01.7 Cliff Norman: That's gonna be absolutely... They're gonna need that field guide. And I think that's where Dave was coming from. The third activity is the information activity, how are we learning from outside the organization and how do we get feedback and research into the development of new products and services and the rest of it? And so we provided a system there. In fact, Dave took a lead on that chapter, and we've got several inputs there that have to be defined. And people just thinking through that and understanding that is huge. When Dr. Deming went to Japan in 1950, he was there to do the census to see how many Japanese were left after World War II. And then he got an invitation to come and talk to the top 50 industrialists. And he started asking questions and people from the Bank of Tokyo over there and all the rest of it.

0:33:52.4 Cliff Norman: And Dr. Deming says, well, do you have any problems? And they said, what do you mean? He says, well, do customers call up and complain? And he said, yes. And he says, well, do you have any data? And he said, no. He says, but if they complain, we give them a Geisha calendar. And then Dr. Deming says, well, how many Geisha calendars have you given out? So it's like, in 1991, I'm sitting here talking to a food company and I asked him, I said, well, you get customer complaints? Oh yeah. Do you have any data on it? No, but we give 'em a cookbook. I said, well, how many cookbooks are you giving out? So I was right back to where Deming was in 1950, so having the information activity, that third activity critical so that we're being proactive with it and not just reactive.

0:34:43.7 Cliff Norman: And so I think people can read through that and say, well, what are we doing right now? Well, I guess we're not doing this and move on. Then the fourth activity is absolutely critical. This is where you know that you've arrived, because now you're going to integrate not only the plan to operate, but a plan to improve. That becomes the business plan. For most people in business plan they do a strategy, and then they have a bunch of sub strategies, and they vote on what's important, and they do some other things, and then a year later they come back and revisit it. Well, what happens here is there's some strategic objectives that are laid out, and then immediately it comes down to, okay, what's gonna be designed and redesigned in this system? Which processes, products and services are gonna be designed? 'Cause we can all see it now, Andrew.

0:35:31.6 Andrew Stotz: Mm.

0:35:31.6 Cliff Norman: We can, it's right in front of us. So it's really easy to see at this point, and now we can start to prioritize and make that happen on purpose. As an example when Jane was a vice president at Conagra, they came up with five strategic objectives. Then they made a bunch of promises to corporate about what they were gonna do and when they were going to achieve it. When she laid out the systems map for them, they were horrified that over 30% of the processes that they needed to be having precooked meat didn't even exist. They were gonna have to be designed. And so Jane and I sat there and looking at 'em and said, well, if you'd had this map before you made the promises, would you have made those promises? No, no, we're in trouble right now. I gotta go back to the CEO of the holding company and tell 'em we're not gonna make it.

0:36:22.4 Cliff Norman: But there's a whole bunch of people that sit around in goal settings. We're gonna do this by when and have no idea about what they're talking about. So that's a little bit dangerous here. And then the fifth activity, it's probably the most important. And where I want people to start, I actually want 'em to start on the fifth activity, which is managing individual improvement activities, team activities. And what I mean by that is, nothing can hold you up from starting today on making an improvement and use the model for improvement. The three basic questions, you can write that on an envelope and apply it to a project and start right away. Because learning the habit of improvement, and when you identify, and this is typical in the planning process, again, a chapter that Dave took a lead on in the planning chapter.

0:37:03.8 Cliff Norman: When you lay that out, you're gonna come up with three to five strategic objectives, but that's gonna produce anywhere between 15 and 20 improvement efforts. And when people start three improvement efforts, and they see how difficult that is to traffic through an organization, particularly if you have a systems map, makes it a lot easier. If you don't have that, then there's all sorts of things that happen to you.

0:37:21.3 Andrew Stotz: Hmm.

0:37:22.8 Cliff Norman: But the, the idea of that all coming together is critical. And where you... Where that really shows up for the reader here is in chapter one. So Lloyd Provost took a lead on chapter one. If you read chapter one, you got a pretty good idea of what's gonna happen in the rest of the book. But more importantly, in that book, in chapter one, there's a survey at the end. And every time we give this out to people, they feel real bad.

0:37:48.1 Cliff Norman: And well, Cliff, any, on a scale of one to 10, we only came up with a four. Well, what I would tell 'em is, if you can come up with a four, you're pretty good. And those fundamentals have to be in place. In other words, the management needs to trust each other. There are certain things that have to be in place before you can even think about skating backwards here. And quality as an organizational strategy is all about skating backwards. The people who don't have the fundamentals can't even start to think about that.

0:38:15.0 Cliff Norman: So that survey and the gap between where they are at a four and where they're going to be at a 10, we've integrated throughout the whole book. So as you're reading through the whole book, you're seeing that gap, and then you have a good plan forward as to what do I need to do to get to be a six, an eight, and what do I need to do to finally arrive at a 10? Dave, why don't you add to what I just said there, and I gotta turn on a light here, I think.

0:38:39.2 Dave Williams: Well, I think one of the things that, and Cliff has probably been the one that has helped me appreciate this to the biggest degree is the role in which improvement plays in quality as an organizational strategy. So, I mean, I think in general, in our world, improvement is seen as kind of like a given, but in our case, what we've found is that many times people are not working on the things right in front of them or the problems in which they have, that they are on the hook... I like to say, are on the hook to get accomplished right now. And like Cliff mentioned, many of my clients when I engage with them, I say, well, what have you promised this year? And they'll give me a list and I'll say, well, okay, what are you working on to improve? And they'll be working on projects that are not related to that list of things that they've got to affect. And so usually that's a first pivot is to say, well, let's think about what are the things that you're working on or should be working on that are either designing or redesigning your system to achieve these strategic objectives.

0:39:48.8 Dave Williams: And the reason to put the attention on that fifth activity and get people working on improvement, there's a good chance that the improvement capability within the organization currently isn't to the level that you need it, where you can get results-driven projects happening at a clip that will enable you to chip away at 20 projects versus four in a year. And that it's not well integrated into the leadership, into the support structures that you have. In addition, if you're trying to use improvement on things that you're on the hook for, and Cliff noted, especially if you've got a system map while you're on that journey, you're gonna start to pick up on where the disconnects are. Similar to your example, Andrew, where you were describing your experience working backwards in the process, you're going to start to recognize, oh, I'm working on this, but it's linked to these other things. Or in order for me to do this, I need that. Or... And so that amplifies the project to be kind of just a vehicle to appreciate other things that are interconnected, that are important in improving our work together.

0:41:05.1 Dave Williams: And so I think that that's a critical piece. I mean, I sometimes describe it as the disappointment that people have when they open QOS because they want to have a new method or a new thing to work on. I said, well, there's a lot new in here. And at the same time, we want to build on the shoulders of the fundamentals. We want to build it because it's the fundamentals that are going to be able for you to activate the things that are necessary in order for you to skate backwards, like Cliff was describing earlier.

0:41:36.2 Cliff Norman: I got to add to what Dave was saying because this actually happened to me with a... I'm not going to mention the name of the company, but it's a high-tech companies worldwide. And we got up, a good friend of mine, Bruce Bowles, and we were introducing the idea of quality as an organizational strategy. And one of the guys in the front row, he says, Cliff, this just sounds like common sense, why aren't we all doing this? I said, that's a real good question. Let me put that in the parking lot here. So I put it up on a flip chart. And so we went through the idea of... We were working on Shewhart control charts. And so we showed him one of those. And at the end of all that, he raised his hand and I said, yeah, he says, Cliff, this is hard. I said, well, let me put that up here. This is hard. Then we went through the systems map and he says, look, this is hard. By the end of the two days, it was, this is hard, this is hard, this is hard, this is hard. This goes back to what Dave was saying earlier about once you open this page, there's some work that takes off, but more importantly, there's something new to learn here.

0:42:40.3 Cliff Norman: And that's frustrating to people, especially when they've got to quit doing what they've done in the past. It's what Deming says, you got to give up on the guilt and you got to move forward and transform your own thinking. So there's something here for the management to do. And if they're not willing to do that work, then this is probably not a good thing for them. Just go back to the blame flame and circling org charts and that kind of stuff and then wonder why we're losing money.

0:43:11.8 Andrew Stotz: Yeah, and I think that that's one of the things that we see in the Deming community is that, why are people doing it the way they are, dividing things up and doing KPIs and saying, you take care of that. And we're gonna optimize by focusing on each... We see how that all kind of falls apart.

0:43:27.9 Cliff Norman: It all falls through reductionism.

0:43:29.8 Andrew Stotz: [laughter] Yeah.

0:43:32.5 Cliff Norman: It doesn't understand the system, yeah.

0:43:32.5 Andrew Stotz: Yeah, so what I want to do now is I was just thinking about a book on my shelf called "Competitive Strategy" by Michael Porter. And there's a whole field of study in the area of strategy for businesses. Now you guys use, and you explain a little bit about the way you come up with... Why you come up with organization rather than let's say company as an example. But let's just talk about strategy for a moment. Generally we're taught in business school that there's two main strategies. One is a differentiation strategy. I like to teach my students like Starbucks. It's very differentiated from the old model. And you can have a low cost strategy, which is like McDonald's, where it's all about operational efficiency.

0:44:18.4 Andrew Stotz: And those are two different strategies that can get to the same goal, which is to build a strong and sustainable business that's making a good profit for the employees to get paid well and for shareholders. And so for somebody that understands some of the foundations of typical strategy, it's hard for them to think, wait, wait, wait, what? You're just talking about just better quality is the strategy? How should they frame this concept of quality as a strategy in relation to what we've been taught about low cost and differentiation and other types of strategy? How do we think about this book in relation to that?

0:45:03.2 Cliff Norman: When Deming wrote his book, his very first one of the four "Out of the Crisis", which was the whole idea about quality and competitive position. But he was kind of answering that. And at that time, what we had is we had three companies in the United States that were going at each other, Ford, GM, and Chrysler. And they'd call each other up, well, what are you doing this year? Oh, we're making cars that don't work. Sometimes they break down. That's why we have Mr. Goodwrench to repair them. That's an extra revenue source for us. As one of the executives that are challenged, a colleague of mine, he said, you don't realize how much money we're gonna lose here taking the repair business out because we make a lot of money out of repair. So making cars that don't work has been a good revenue stream for us. Well, all that works out great, until somebody shows up like Toyota that has a car that works and doesn't need to be repaired by Mr. Goodwrench all the time.

0:45:58.8 Cliff Norman: So the mind shift there, and what Dr. Deming was saying is that he was focused on the competition's already licked. And I don't think Porter's thought about that very much, not to be overly critical, because I'm an admirer of his, but the idea of focusing on the need and why is that customer coming to us so that we make a journey, and the Japanese call that being in the Gemba, being in the presence with the customers as they use the product or service and doing the research and the rest of it. And then coming back and then redesign that product or service so that it not only grabs the current customer, but we start thinking about customers that are not even our customers and innovate and actually come up with a design that actually brings new customers to us through products and services that we haven't thought about yet. So if I show you three products just to make a picture of it, we often show like an abacus, which was a hand calculating machine about BC. Then there's a slide rule that came out about the same year that Columbus discovered America. And that was good till about 1968.

0:47:06.0 Cliff Norman: And then the calculator, the handheld calculator came out. Well the need for all three of those products is to do handheld calculations. So we've had that need since BC. Now in 1967, K&E Calculator was making that slide rule, which I used in junior high school. If you'd have come up to me and said, Cliff, what do you need in the way of a better slide rule? I said, well can you get me a holster for it? 'Cause I don't like having to stick me in the face. I put it in my pocket and it sticks me in the face. And if you can give me a holster for that, that would be my view of that. I wasn't about to come up with the TI calculator. That wasn't gonna happen. Not from Cliff. It's gonna come from an engineer at TI. Now, K&E Calculator, if they'd been doing research in the marketplace and saying, is there something that can totally disrupt us going on here? Rather than just looking at figuring out a way to make the K&E slide rule better, they might've discovered that.

0:48:07.0 Cliff Norman: Most people don't do that. They just go back. They just lose their business. And it was interesting in '67, their annual report put out, what's the world gonna look like 100 years from now? So they had dome cities, they had cars flying, they had all sorts of things going on that were great innovations, but they didn't have the TI calculator in there, along with the HP calculator. And that wiped out their business. And so if people understand the need, and that's what Dr. Deming is getting at, he says, they really haven't thought about what business they're in. So why are the customers coming to us? He says, no customer ever asked for pneumatic tire. No customer ever asked for a microwave oven. That came from people with knowledge that were looking at how the customers are using the current products and services and say, now, is there technology innovation going on that we can actually do a better job of providing a better match in the future?

0:48:56.9 Andrew Stotz: And can you explain why you use the word need as opposed to want?

0:49:06.5 Cliff Norman: That's a good question. The idea is that there's a need that's constant in society. So that need of having to do handheld calculations or needing healthcare or to pay bills, that need is constant throughout civilization. And so if I want something that's interesting, that might be the match. That might be something to do with some features what I'm offering and so forth. I'd like to have this, I'd like to have that. But the need and the way we're using that is it doesn't come from customers. It's what drives customers to us. And it's always been there. It's always been there. Need for transportation, for example. Whether you're walking or driving a bicycle or a car or a plane.

0:49:53.6 Andrew Stotz: And Dave, how would you answer the same question when you think about a person running a business and they've had many strategy meetings in their business, they've set their corporate strategy of what we're doing, where we're going and that type of thing. And maybe they've picked, we're gonna be a low cost producer. Thailand's an interesting one because Thailand had a ability to be low cost producers in the past. And then China came along and became the ultimate low cost producer. And all of a sudden, Thai companies had a harder time getting the economies of scale and the like. And now the Chinese manufacturers are just really coming into Thailand, into the Thai market. And now it's like, for a Thai company to become a low cost leader is almost impossible given the scale that China and the skills that they have in that. And so therefore, they're looking at things like I've got to figure out how to get a better brand. I've got to figure out how to differentiate and that type of thing. How does this... How could this help a place like that and a management team that is struggling and stuck and is looking for answers?

0:51:07.0 Dave Williams: Well, I go back to what Cliff said about that many organizations don't pause to ask, why do they exist? What is the need of which they are trying to fulfill? Much of my background involved working in the service industry, initially with public safety and ambulance systems and fire systems, and then later in healthcare and in education. And in many of those environments, especially in places where in public systems where they've been built and they may have existed for a long time, when you ask them about what are they trying to accomplish as an organization or what is it that they... The need that they're trying to fulfill? Typically, they're gonna come back to you with requests or desires or wants or sort of characteristics or outcomes that people say they expect, but they don't pause to ask, like, well, what is the actual thing of which I'm trying to tackle? And Cliff mentioned like, and we actually, I should mention in the book, we have a list of different strategies, different types of strategies, all the different ones that you mentioned, like price and raw material or distribution style or platform or technology.

0:52:30.9 Dave Williams: There's different types of strategies, and the one that we are focusing in on is quality. But I think it's important for people to ask the question. Cliff mentioned transportation. There's a number of different great examples, actually, I think in transportation, where you could look at that as being an ongoing need as Cliff mentioned from the days when there was no technology and we were all on foot to our current day. Transportation has been a need that existed and many different things over time have been created from bicycles, probably one of the most efficient technologies to transport somebody, wheels and carts. And now, and you were referencing, we've made reference to the car industry. It's a fascinating experience going on of the car world and gas versus electric, high technology versus not, autonomous vehicles. There's, and all of them are trying to ask the question of, are there different ways in which I might be able to leverage technology to achieve this need of getting from point A to point B and be more useful and potentially disrupt in the marketplace? And so I think the critical thing initially is to go back and ask and learn and appreciate what is that need?

0:53:58.6 Dave Williams: And then think about your own products and services in relation to that. And I think we include four questions in the book to be able to kind of think about the need. And one of those questions is also, what are other ways in which you could fulfill that need? What are other ways that somebody could get transportation or do learning or to help sort of break you away from just thinking about your own product as well? And that's useful because it's super tied to the system question, right? Of, well, this is the need that we're trying to fulfill and these are the products and services that are matching that need. Then the system that we have is about, we need to build that and design that in order to produce, not only produce the products and services that match that need, but also continually improve that system to either improve those products and services or add or subtract products and services to keep matching the need and keep being competitive or keep being relevant. And maybe if it's not in a competitive environment where you're gonna go out of business, at least be relevant in terms of the city service or community service, government service that continues to be there to match the need of the constituents. So I think it's a really important piece.

0:55:17.0 Dave Williams: It's that North star of saying, providing a direction for everything else. And going back to your original comment or question about strategy, and many times people jump to a strategy or strategies or, and those might be more around particular objectives or outcomes that they're trying to get to. It may not actually be about the method or the approach like cost or technology that they may not even think that way. They may be more thinking about a plan. And I really encourage people to be clear about what they're trying to accomplish and then start to ask, well, how's the system built for that? And later we can bring a process that'll help us learn about our system and learn about closing that gap.

0:56:05.1 Cliff Norman: Yeah. Just what I'd add to that, Andrew, because you mentioned China, a few other countries, but I think the days are coming to an end fairly quickly where somebody can say, oh, we can go to this country. They have low wages, we'll put our plant there and all that. There's a lot of pushback on that, particularly in the United States. And if that's your strategy, that hadn't required a lot of thinking to say the least. But in 1966, over 50% of the countries in the world were, let me rephrase that, over 50% of the population of the world lived in extreme poverty. So there were a lot of targets to pick out where you want to put your manufacturing. And in 2017, and you and Dave were probably like me. I didn't see this hit the news, but that figure had been reduced from over 50% down to 9%. And all you have to do is just, and I worked in China a lot, they're becoming very affluent. And as they become very affluent, that means wages are going up and all the things that we want to see throughout the world. And the whole essence of this book is to focus on the quality of the organization and the design and redesign of a system to a better job of matching the need and cause that chain reaction to go off. When Jane and I went over to work in Sweden, Sven Oloff who ran three hospitals and 62 dental clinics there and also managed the cultural activities and young shipping. He said, Cliff, I report to 81 politicians. I don't wanna have to go to them to put a bond on an election to get more money for my healthcare system, I wanna use Dr. Deming's chain reaction here to improve care to the patients in my county and also reduce our costs. A whole bunch of people that don't even believe that's possible in healthcare.

0:58:39.9 Cliff Norman: But that's what Sven Oloff said that's what you're here for. And that's what we proceeded to do, they launched about 350 projects to do just that, and one of their doctors, Dr. Motz [?], he's amazing. We taught him a systems map, I came back two months later, and he had them in his hospital on display. And I said, Motz, how did you do this? He said well Cliff, I'm an endocrinologist by education as a doctor, of course, that's a person who understands internal systems in the body. So he said the systems approach was a natural for me. But I'd like to say it was that easy for everybody else, that systems map idea and as you know, being in the Deming seminar, that's quite a challenge to move from viewing the organization as an org chart, which has been around since Moses father-in-law told him, you need to break up the work here a little bit, and the tens of tens reporting to each other, and then of course, the Romans took that to a grander scale, and so a centurion soldier had 100 other soldiers reporting to him. So we've had org charts long and our federal government took that to a whole new level.

0:59:46.1 Cliff Norman: But the idea is switching off the org chart from biblical times to actually getting it up to Burt [?] about 1935 and understanding a system that's kind of a nose bleed in terms of how much we're traveling there to get us into the 21st century here.

1:00:04.0 Andrew Stotz: And I left Ohio, I grew up outside of Cleveland, and I left Ohio in about 1985, roughly. And it was still a working class, Cleveland had a huge number of jobs and there was factories and all that, and then I went to California, and then I moved to Thailand in 1992. So when I go back to Ohio now, many years later, decades later, it's like a hollowed out place, and I think about what you're saying is... And what's going on in the world right now is that I think there's a desire in America to bring back manufacturing to bring back production and all of that, and that's a very, very hard challenge, particularly if it's gone for a while and the skill sets aren't there, maybe the education system isn't there, I talk a lot with John Dues here on the show about the what's happening in education and it's terrifying.

1:01:05.9 Andrew Stotz: So how could this be... Book be a guide for helping people that are saying, we've got to revitalize American production and manufacturing and some of these foundational businesses and not just services, which are great. How can this book be a guide?

1:01:25.8 Dave Williams: One thing I would say that I think is interesting about our times, many times when I reflect on some of the examples that you just provided, I think about how changes were made in systems without thinking about the whole system together. And there may have been changes at various times that we're pursuing particular strategies or particular approaches, so it may have been the low-cost strategy, it may have been to disrupt a marketplace. And oftentimes, they don't think about... When somebody's pursuing one particular view, they may miss other views that are important to have an holistic perspective. One of the things that I appreciate about QoS in the methods and overall as a holistic view of looking at organizations that it's asking us to really think initially about that North Star, what we're trying to do, our purpose, and what are the tenants. What are the things that are important us, the values...

1:02:38.7 Dave Williams: That are important to us in pursuing that particular purpose? And in doing that, really thinking about how does the system work as it is today, and if we make changes, how does it move in alignment with the values that we have and in the direction that we wanna go? And appreciating, I would say, part of the value of the scientific thinking that is in the Science of Improvement is that it encourages you to try to see what happens and appreciate not only what happens in relation to the direction you're trying to go, but also the... Have a balanced view of looking at the collateral effects of things that you do, and I think that systems do is really important there. So I think from that perspective, the quality as an organizational strategy brings a holistic picture into these organizations, or at least...

1:03:45.1 Dave Williams: To be paying attention to the system that you have, maybe the direction you wanna go, and what happens as you... What are your predictions and what do you see when you study the results of making changes in the direction of the vision that you have. And I think that's at a high level that is one of the ways that I think about it. Cliff, how would you add on there?

1:04:09.1 Cliff Norman: Your question made me think of something that happened about two years ago, Jane and I got a call from a lady that worked for her in one of the chicken plants, and she said, Jane, I had to call you because I need to order some of those Shewhart charts. But what happened today, you should have been here and Jane said, what... She said, Remember that 10 year thing we buried in the ground that we're gonna open up in 10 years, and she said, yeah, said, well, we opened it up today, and the new plant manager was here, and those Shewhart charts came out, and he looked at the costs on them. He said, you were operating at this level? She said, yeah, routinely. And he said what happened? He said, well, they had new management come in and they got rid of the charts, that's the first thing they did, and then gradually they try to manage things like they normally did, and then they forgot everything that we had learned. And that's kind of where we are right now.

1:05:11.0 Cliff Norman: So just think of that a decade goes by, and it just as Dr. Deming said, there's nothing worse than the mobility of management, it's like getting AIDS in the system. And they basically destroyed their ability to run a low-cost operation in an industry that runs on 1 or 2%. And when you watch that happen and understand that we still have food companies in this country, and we have to start there and start looking at the system anew and start thinking about how it can actually cause that chain reaction to take off, and that comes from focusing on quality of the system. And then as Dr. Deming says, anybody that's ever worked for a living knows why costs go down with two words less rework, but instead of people will put in extra departments to handle the rework. Next thing they start building departments to handle...

1:06:01.8 Cliff Norman: The stuff that's not working because the system they don't understand. So that was a... What do they call those things, Dave, where they put them in the ground and pull him out?

1:06:11.0 Dave Williams: Time capsule.

1:06:13.4 Andrew Stotz: Time capsule yeah.

1:06:13.5 Cliff Norman: Yeah. Time capsule. The a 10-year time capsule.

1:06:19.2 Andrew Stotz: It's a great, great story. And a great idea. We had a company in Thailand a very large company that the CEO of it came upon the idea of the teachings of Dr. Deming and over time, as he implemented it in his company, the Japanese Union of Scientists have their prize and his company won that prize and then he had about 10 subsidiary companies that also were doing it and they also won over time. And so Thailand is actually is the second largest recipient of the Japanese Deming Award outside of India. But he left and he retired and another guy took over, a very bright guy and all that, but he threw most of that out and focused on newer methods like KPIs and things like that. And just at the end of last year, maybe six months ago, they reported a pretty significant loss, and I was kind of made me think how we can spend all this time getting the Deming teachings into our business, and then one little change in management and it's done.

1:07:26.9 Andrew Stotz: And that made me think, oh, well, that's the value of the book, in the sense that it's about building the concept of quality as a core part of strategy as opposed to just a tool or a way of thinking that could go out of the company as soon as someone else comes in. Go ahead, Dave.

1:07:41.9 Dave Williams: I was gonna say, Andrew, you raise a point, I think it's really, really important and Cliff mentioned this in terms of the problem of mobility of management. One thing that I don't know that we outline probably in dark enough ink in the book is the critically important piece of leadership, building the structures and the capability. I know we talk a little bit about it, but doing it in a way that both builds up the people that you have... So Cliff emphasizes this a lot in terms of like those early improvement projects, we wanna try to pick the up and coming leaders and build their capability and get them working on important projects and help them learn how to build management a project or an effort to results that those are gonna be the ideal people that we want in the future, and this system is gonna build a learning system that's really powerful. But it requires some deliberateness to keep that going, and there are example after example of organizations who have gone down the quality journey because of a particular leader, and then that leader moved on and maybe in... Sometimes quickly, sometimes over time, those organizations...

1:09:20.1 Dave Williams: Revert back to traditional approaches. And I think that is an important consideration when you're thinking about going down this journey, is not only how do you create the quality as an organizational strategy, how do you build that structure and build the team and the people around it. But also how do you be really really thoughtful about continuing to recruit the right people, continuing to build their capabilities, and when it comes time, and it really, very natural there are gonna be leaders who either maybe they're in a role and they now wanna go off and lead another organization, that's exciting.

1:09:58.1 Dave Williams: I wanna celebrate our creating talent that might be able to blossom out in the world, or there are people that wanna retire, or are there people that... Any number of things that may happen that require transition. How do we make sure that when those transitions in leadership happen, that we then fill their shoes with people that keep that learning and approach and strategy going forward? And I think that's a really, really important consideration in any of these, and I think each of us could probably rattle off five or 10 companies that were... Organizations that were recognized for their quality or their results 10, 15 years ago, that today are not, and one of the reasons might be, or is likely that there was a transition in the chief executive or the leadership team, and that wasn't sustained. And I think that's a really critical aspect of building an organization around quality as a strategy, but making it be the way that it continues to go forward. How would you build on that...

1:11:04.9 Andrew Stotz: Yeah. Cliff I'm curious, how would you say you contribute to the continuity of quality in the organization from this book?

1:11:15.9 Cliff Norman: Let me... I'm gonna build on what Dave just said, right there. Because the people component to this is critically important, and we have a chapter dedicated, chapter 10, and one of the things that often comes out every year is a annual Gallup Survey that shows the low number of people that are actually engaged in work. And that made Jane and I particularly think about that as we work with our clients, that they actually enjoy making improvements and making contributions. We had a group of nurses and doctors that were brought into a team up in Wisconsin, and they just stared at each other across the land, there was no trust in the room or anything else. And we started working with them just use the model for improvement, have them focus on a project, we did some things with what we call the strength deployment inventory, so they can understand each other. And we got over some of the barriers and the rest of it, but this one lady in there was just adamant on the first day, this wasn't gonna happen. We don't trust them. We got all these issues going on and Cliff, we don't have time for this.

1:12:14.4 Cliff Norman: Well, at the end of three months, Jane drug them over the finish line with a real improvement, and I'm on the call, they have me come back on the call and she said, Jane, we have three more improvements we need to do now. And I said, wait a minute, Betty, I thought you didn't have time for this. Says, "Cliff, will you shut up? We're having fun." I love that take off, and it's not that apparent in many organizations, but people wanna contribute, and this provides a system to make sure that that happens, they get a role statement, it connects them to the purpose of the organization, it tells them which processes that they can work in and change, what people externally and internally, that they're going to be able to relate to. They don't have to run around asking for permission. When you unleash that in the organization, you have a whole bunch of opportunities to find gold mines laying all over the place that need to be looked at, and most organizations aren't doing that. As Dr. Deming would say the answers I'm giving you here, you haven't even thought of the questions. And I think that's where this book takes it, is it forces you to answer those questions and come up with those answers. But the engagements here, Dave, you just reminded me of that is so critically important because that comes riding in with this is an unintended consequence, I don't know how my times I've seen it in people, thousands of times. So...

1:13:36.7 Dave Williams: I always tell leaders, when an employee applies to your organization and shows up on their first day, they're hoping this is their dream job, this is the one. And if six months later, they don't show that same enthusiasm and engagement and intrigue, that's what your organization did to them over time. They showed you their true selves when they show up to interview. And it's so true, and it's so unfortunate, and I agree with Cliff, I always feel sad for folks that don't look at work as being something to enjoy. I think, especially the more that I've been involved in thinking about quality as an organizational strategy. I think any type of business or any type of organization can be a joyful place to work for the right people, it just needs to be a place that's focused on enabling people to do their best work in the right way, in the direction of serving their clients and customers. And I think that's...

1:14:37.5 Andrew Stotz: So Cliff...

1:14:40.2 Dave Williams: The value anywhere.

1:14:40.3 Andrew Stotz: Cliff why don't you wrap this up?

1:14:43.5 Cliff Norman: Andrew, I don't even remember this diagram, but Deming actually had a picture of it, and I think it was in "Out of the Crisis" called the Forces of Destruction, that starts when you're in kindergarten, then just goes up from there once you go to work. It just constantly growing... To where you lose that intrinsic motivation and this, I think really... It just absolutely unleashes it in the organization. So I think that's a big answer to your, probably your first question to us.

1:15:14.5 Andrew Stotz: Right. I think that's a great wrap-up, and it's really been wonderful to talk to both you guys and congratulations on getting this out to the world. And for the listeners and the viewers out there that you can go to Amazon has a starting point, number one, that's where I got mine, and it was at my door step, not very... Not many days afterwards, so I really encourage everybody to go out there and start to really think... See how this is plugging some of the gap of what Dr. Deming was saying, I'm gonna go back to Dr. Deming's first point of his 14 Points, and that is create constancy of purpose towards improvement of product and service with the aim to become competitive and stay in business and to provide jobs. Any last words from you guys?

1:16:00.2 Cliff Norman: No, we appreciate the invitation, Andrew. Appreciate the good questions, appreciate your time.

1:16:05.2 Dave Williams: Yeah, same here Andrew. Thank you very much for inviting us to be part of the Deming podcast, and it's a pleasure to be able to share this work with this great community. And we're grateful for your time.

1:16:18.1 Andrew Stotz: Well, I appreciate it myself, and I know for both of you guys, on behalf of the Deming Institute, I wanna thank you again for this incredible discussion and all of your hard work that you've done to get to this point with this particular book of the many things that you guys have done. And for listeners, remember to go to deming.org to continue your journey. This is your host, Andrew Stotz, and I'm gonna leave you with one of my favorite quotes from Dr. Deming, and we just heard it earlier out of the speaking of these two gentlemen, Dave and Cliff, and that is people are entitled to joy in work.

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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."

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In the final episode of the series, Jacob Stoller and Andrew Stotz discuss the difference between typical companies using traditional management and more successful Deming-style companies. If productivity and performance are so much better, why do companies stick with traditional management?

TRANSCRIPT

0:00:02.3 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 continue my discussion and conversation with Jacob Stoller, Shingo Prize winning author of The Lean CEO. And ladies and gentlemen, I just received my copy finally. Productivity Reimagined, it just arrived from Amazon. You can get it there. And that's the latest book that he's come out with. And this is exploring applying Lean and Deming Management Principles at the enterprise level. The topic for today is moving forward with productivity. Jacob, take it away.

0:00:41.7 Jacob Stoller: Oh, thank you, Andrew. Great to be here once again. Yeah. Moving forward. That's really Chapter 13. Whether you consider that, hopefully you consider 13 lucky as I think they do in Italy.

0:00:57.4 AS: We do in Thailand.

0:01:00.4 JS: Oh, really? Wonderful. Okay. Perfect. Anyway, so I wrote in the book, I sort of defined where we're trying to go by describing two companies; a typical company, and then the company that we would aspire to for maximum productivity. So I'm gonna read those, just to illustrate. "Company A follows traditional top-down management practices. Leaders determine how the work is to be done, and give orders to their staff accordingly. Individuals, functional groups and departments are treated as independent entities under centralized control. Pay and promotion are determined by individual performance according to a set of predetermined criteria. Employees are ranked and encouraged to compete with each other." So that's company A, your typical company, which probably comprises what percentage would you say? 90%? 95%?

0:02:03.8 AS: 97.9%

0:02:04.4 JS: Okay. Okay. Let's look at where we'd like to go from there. "Company B is managed as an interactive system where people and functional teams depend on each other. Supervisors aren't expected to have all the answers, and they rely on frontline workers to share their workplace knowledge and take an active role in improving their work processes. All employees know they are part of a team culture pursuing common goals and solving problems together to move the company forward." Okay, so that's really, that's where we wanna be. And the reason you would want to go there is because if you take those two companies and they have similar resources, similar markets, perhaps operating in similar region, company B will outproduce company A 10 times out of 10. It's a more productive model, and it's proven to work. So why don't people do it?

0:03:16.3 JS: Well, there's some thinking that gets in the way, some sort of systemic kinds of barriers that are out there. So even people who aspire to making a company better, and I think there are a lot of people out there that think that, but they run into these barriers, and I'm just gonna review them again because we've gone through them in some detail. But the myth of segmented success, that's the really kind of the exact opposite of a company as a system. It's this idea that all the parts are interchangeable. You can take a department, you can give each department separate goals, and they'll all make their goals and it'll all add up. That's the myth, of course. So the myth of segmented success. We have really stemming out of that the myth of the bottom line.

0:04:11.9 JS: And because of that segmented structure, we believe that we can use finance as a proxy for all the quantitative, all the accomplishments of all these different segments. It all adds up. It's arithmetic. We figure, so why not? We just take, everyone makes their numbers, and then they all make their numbers and they all celebrate together. That's the myth, of course. The bottom line doesn't tell you what's really going on in the company. The top-down knowledge myth they run into, and that's this whole idea that managers are supposed to know all the answers, and their job is to tell people what to do. And it's not just people with MBAs. It's people with degrees in psychology and maybe working in HR. It's engineers, it's any person with professional training, figures that they have not only the privilege, but a duty to actually tell people what to do. And if I'm not telling people what to do, I'm probably not doing my job and somebody's going to be looking over my shoulder. So a big fear around that.

0:05:31.6 JS: Myth number four is the myth of sticks and carrots. And this is this idea of Homo Economicus, the idea that people act in their own financial interest and it's perfectly predictable. Performance is down? Well, let's just pay them more or maybe we need some threats here. Maybe we need to threaten them, or maybe we need to get some competition. So somebody is gonna be a little bit worried looking over their shoulder that they might get fired. Fear is a big factor here, obviously. Finally, there's the myth of tech omnipotence. And this stems right from the myth of segmented success. This idea we can take a process and we can swap out technology, we can put in technology and swap out people. We can reduce head count by 5, 10, 15 people and put in a machine in its place. That's been the business case for technology for decades. And we still have a very strong belief in that. So that's kind of what we're stuck with, those myths. And we really have to crush those myths as we go along.

0:06:42.5 AS: You know, Jacob, I was just at a meeting yesterday with a very senior executive at a very large company in Thailand. And I was just talking to him, it's off the record, so we were just chatting, but he was talking about the challenges that they're facing, and I said, so how are your KPIs? And he said, KPIs are just killing us. They're causing us to be siloed. It's setting up competition in the company. People can't work together. And I asked him this question, like, what can you do about it? He says, not much. What am I gonna do? Remove the KPI system? No. We know...

0:07:31.1 JS: Isn't that interesting?

0:07:34.8 AS: That ultimately that's probably one of the best things that they could do and get people to work together. But it just, you know, he said something to me that just made me think about, for the listeners and the viewers out there who are running small and medium-sized businesses who feel disadvantaged so many times when they're fighting against the big giants...

0:07:53.6 JS: Yeah.

0:07:53.6 AS: Take comfort that you can change your business. But many of these big companies, they just can't. And they won't.

0:08:01.2 JS: Yeah.

0:08:03.5 AS: And they never will. So that's what's so great about these types of principles, both Lean, what you're talking about, Deming, is that if you're a business owner, it's a family business, it's your private business or a group of people that you have real control over the business, you can implement these things. And you can build your business to be great.

0:08:23.7 JS: That's interesting, Andrew. I've talked in my book, I've talked with some smaller manufacturers, and at least a couple of them have said they're getting refugees from large corporations. And he'll interview these people and say, well, I can't give you, you know, you won't have 500 people reporting to you or anything. And they say, I don't care. I said, I really, you know, I've had it with this corporate stuff, and they want to be part of a culture that makes a difference. And so that's maybe catching on. I mean, interesting that the gentleman you're talking with also recognized that.

0:09:00.3 AS: Yeah. And he's just as, his hands are tied in some ways. And, so, but that to me is hopeful for the rest of the businesses that can change. And the other thing I was, you know, I always end with my favorite quote from Dr. Deming, which is that people are entitled to joy in work. Yesterday I was speaking to about 75 students in my Ethics in Finance class, and it's the kickoff day. And so it's a real fun, and I talk about a bunch of things, but the one thing I said is that ever since I graduated from university, all I really wanted was a job that I enjoyed, at a place that I enjoyed doing it, with the people I enjoyed doing it with. That's all I wanted. I wanted joy in work and I got it because I walked away from the places and the people where it wasn't happening, and I walked towards the places where I had the opportunity to enjoy it. Of course it helps that I found my love, which is being a financial analyst. It's just, I understand that so well, but this is where I think I want us to think about hope and potential for happiness in work and all of that. And so I know you've got some more steps that you've got to help people. So maybe we move into that.

0:10:27.7 JS: Sure. Sure. Well, and it would be interesting, this gentleman you talked with, I wonder if he's visited any companies that we would admire that are using Deming principles, or maybe...

0:10:39.1 AS: Well, it may give it away, but this company in the past has fully implemented the teachings of Dr. Deming.

0:10:49.2 JS: Oh, really?

0:10:51.5 AS: But they had a changeover in management, and they completely walked away from this and implemented the KPI system.

0:11:00.9 JS: Yeah. Oh my. Isn't that something? Yeah, that happens. That happens for sure. And we've had, you know, in my last book, The Lean CEO, I found some people, number of companies had fallen off the ladder. And gosh, the Shingo Institute had a real problem with that. People were winning Shingo prizes and then they were falling off the ladder, and they changed their emphasis on criteria now, and now they really emphasize culture. You can't just follow the principles, but you really have to get the culture, and they really grill them on that. So, interesting. Interesting.

0:11:38.2 AS: Yeah.

0:11:41.0 JS: But the first step, the reason I asked you if they've visited anybody is really, I think if you're starting from scratch at company A, I think the first thing is to go visit companies.

0:11:48.6 AS: Yep.

0:11:49.5 JS: I mean, you've got to see what's going on in companies that are different to even appreciate what's possible. And it's...

0:12:00.6 AS: 'Cause it's inspiring.

0:12:00.7 JS: It's not only inspiring, but you see things that you wouldn't expect to see. And I think what they said, what these folks have told me over and over again is that what you see is you actually feel it. There's a culture in there, there's a kind of an atmosphere when you walk in the door. And that's what really wows people. I hear that over and over again. So you have to feel that, you can't write that down, or you can't explain that in a talk. So I think that's really the first step. And fortunately, companies that have gone through these transformations are happy to welcome people to come visit, because it helps them reinforce their culture as well. So it's a reinforcing kind of thing. I think after you've done that, gone the rounds a bit, that's when you really need to assess where you are and what you wanna be. And I think there has to be some honest criticism about the kind of company you are. I don't know if you wanna call it soul-searching, but there's not a realization that we don't wanna go on as we were, you're really not gonna do much. So that's, I think, critically important. You're smiling. Do you have a story there?

0:13:20.8 AS: No, but I'm just, you know, it makes sense. It makes sense. I did actually, you know, in Thailand there was a company that I saw in the newspaper many years ago that it came out in the newspaper that they won the Deming Prize from Japan, from the Union of Scientists in Japan. And so I just called the company and I said, congratulations. And they said, great, thank you. And then I said, and I talked to the CEO of the company, and then I said, could I bring my staff from my coffee, you know, management team from the coffee business to come and see you guys? And he said, yeah. And that started a lifelong friendship with a guy named Srini, who was the guy who won that. He passed away about a year or two ago. And I featured him in my book on Transform Your Business with Dr. Deming's 14 Points. But the idea is...

0:14:11.0 JS: Oh yeah...

0:14:12.7 AS: Go out and...

0:14:14.0 JS: I love that book.

0:14:16.2 AS: Explore and see it, see what's out there.

0:14:16.3 JS: Yeah. For sure.

0:14:17.5 AS: Because you also, when you go out and explore, you also find out, hey, we're pretty good at some of these things and there's things that we're doing well, you know?

0:14:23.5 JS: Of course, of course. So once you've assessed your state, I think it's very, very important, even before you start talking to your people, 'cause it's gonna be a transformation, you're gonna demand an awful lot from your people, you've really got to know where you're going, and you have to establish a vision. And companies have different ways of doing that. But the one thing I would emphasize is that it's gotta be a vision with substance. And I think Dr. Deming would say, by what method? [laughter] You say where you're going. Right? So, for example, a hospital. I saw a hospital that did a very good job of that, establishing a vision, and they wanted to be the safest and most compassionate hospital in their region. They said, well, what would that look like?

0:15:13.3 JS: And they looked at, well, okay, safety would obviously be big. There would be fiscal responsibility. Wait time is a big issue in healthcare, be no waiting. I think there may have been one more as well. But anyway, they established these kinds of what I would call aspirational goals. It's where we, really where we want to be, and it's gotta be something that inspires employees, right? You wanna be a compassionate, safe place for patients to come. I mean, that's what people want. So then what they do is they took it a level down, and they said, okay, well, if we're going to have an exemplary safety record, what would that look like? How would we measure it? And they have safe... The health organizations have safety statistics. So, they have an institution, that third party organization that would report on the numbers, so they could set some targets according to that. And then they go down even further. They say, okay, safety. What are the things that we need to do? What are some of our weaknesses? So they say, well, patient falls was one of them. They have things like medication error, hospital acquired illnesses. So all this goes under the idea of no harm to patients, right?

0:16:44.0 AS: Yeah.

0:16:45.3 JS: All goes together. So, they then started to work on the most pressing one. You know, work on targets, do projects together, PDSA kinds of projects. And they chipped away at it and eventually with a number of projects, they were very successful. But I think the key, of course, is that problems in workplaces and hospitals, maybe especially, are very granular in lots and lots of things, so you need all hands on deck. But they were very, very successful at getting a very high rating just through these efforts. So, that's...

[overlapping conversation]

0:17:28.8 AS: Yeah, the vision with substance is a great one because I think lots of visions are flaky, and we've been working on the vision for Coffee Works, for my company, and that is we supply coffee to every leading brand in Thailand. And that's something that we can visualize, the employees can visualize, they can also see who we don't serve. And also when we lose a customer that's a leading brand, we can say we messed up, but when your contract's up with our competitor, we're gonna be back because we supply every leading brand in Thailand.

0:18:08.0 JS: Right, right.

0:18:10.3 AS: So, substance, vision. Yep.

0:18:13.3 JS: Yeah, definitely. Yeah. And I guess you share that, been sharing that kind of vision with your people for a long time, right?

0:18:18.3 AS: Yep.

0:18:21.6 JS: But I mean, would you say, how important would you say vision is? I mean...

0:18:23.2 AS: I think it's critical. And I think that part of what happens is that many companies start with a vision, and then they get, it's just so easy to get distracted. And there's so many, you know, business just grows complex, and then all of a sudden you feel like, we can do all of this, we can do this, we can do that, we can do this, we can do that. The best book on this is Good Strategy Bad Strategy by Richard Rumelt. And he talks a lot about what are bad strategies, and he talks about these fluffy visions that really don't help anybody. And so getting a vision with substance, I think is critical.

0:18:58.0 JS: Okay. So we got our vision, it's got real teeth. It's something that we can stand in front of our people and say, here's what we're going to do. And they won't say, oh, this is just another flavor of the month. They'll realize that we're serious and we're gonna do this. The next step, number four, is building trust. And that's extremely important. And one of the manufacturer actually told me a wonderful story about this. He was working in a very... Had a plant in a very rough neighborhood in Baltimore. And when he took over that plant as a general manager, there was terrible culture. People were... He said there was racism and there were just people quitting all the time. And just walking out the door, not showing up to work. You know, the workers hated management.

0:19:56.7 JS: So this guy went in onto the shop floors. I'm your new general manager. And he said he spent the first three or four months just talking to them about their lives. You know, he was committed to the Lean methodology, but he didn't talk about methods, how we're gonna do things different. He just found out what's important to these people. And a lot of 'em were financially strapped. They were in poor neighborhoods. So the direction was really how to make this company more profitable so we can pay you more. And that was kind of a guiding vision and remarkably successful how it did. How he won the people over. And I think there's so many people out there asking people to do things. And, you know, you really have to... Takes a lot of trust. I mean, you're gonna say, I'm gonna admit when I've made a mistake, I'm not gonna cover it up and you're not gonna fire me. You know, that's never happened. So...

0:21:02.9 AS: And I can tell you, for the listeners and the viewers out there, here's a good inspiring movie to get you an idea of thinking about how to get out on the shop floor and understand from the inside what's happening in the business. And the movie came out in 1980, and it's called Brubaker by Robert Redford. And it's the story of a new prisoner warden.

0:21:25.2 JS: Oh, I never saw it.

0:21:27.0 AS: Yeah. Prison warden who goes in as a prisoner, and the governor of the state has sent him in as a prisoner. And so he lives a prisoner's life for, I don't know how long it was, a week, a couple weeks, a month, until eventually he, you know, reveals himself and then takes over. And then he knew all the corruption and all the problems and all the issues, and he went about solving 'em. It's an inspiring movie.

0:21:54.2 JS: Yeah. And more recently, there was a program, I've seen a couple of episodes of Undercover CEO, you know, where CEO actually goes into the workplace in disguise and flips burgers or whatever. And then discovers what's really going on in the company.

0:22:09.2 AS: Yeah, that's a great. That's probably even more applicable.

0:22:11.2 JS: Yeah. Right. So building trust is just... It's very personal. And from that point, you start to make changes. But those changes... My favorite examples, I don't know if this is a general rule, but some of the best examples I've seen are working on safety. You work on safety because improving processes to make them safer is actually kind of like a gateway drug to doing continuous improvement, right? You start to understand what processes are, but first of all, people are improving the process in their own interest.

0:22:50.8 AS: Yep.

0:22:52.2 JS: So you get them very good at making these changes, proposing changes, speaking out, pointing out when other people are not following safety guidelines. Understanding that something has to stop when safety is not there. No, you build on the trust you created and you start to change the culture around that. So that's number five. So you notice I've gone five steps and we haven't introduced any methods or anything. You know, it's...

0:23:23.8 AS: What I noticed from those first five is that they're really all things that senior management need to do before they go out with all their exciting new ideas and start training people and start really bringing that out in a much more aggressive way.

0:23:41.5 JS: Exactly. So really step six is train and transform. And that's when we do all the... That's when we draw the diagrams, and that's when we start the PDSA training or the Kaizen events or whichever type of transformation you're doing. That's when we start to train the workforce and we start to undergo the transformation. So that's all the work, but the transforming work. But we've done enormous preparation before we get there. And I think that's what I've seen is the best way to do it. So we train and transform, and then of course we have to remove barriers as they come. So it might be removing some aspects of the accounting system because they might be holding us back. So you run into the barriers and you take on those barriers as you run into them and you build momentum.

0:24:36.3 AS: Yep.

0:24:38.6 JS: So step seven really is you're building this momentum and you raise the bar. You've done something and now you raise your standards and continue to raise them. And that leads you to a continually improving organization where you're always expecting to get better. People have a joy in work because they know that they're part of making something better. And you continue raising the bar 'cause people like a challenge.

0:25:07.9 AS: Yep.

0:25:08.5 JS: As long as it's a safe environment and as long as it's a team kind of self-supporting workplace. So finally we get to share and learn. So we've gone full circle. You know, you've got... You've gone through a transformation, you're proud of your work, and you start to open the door to visitors because that's where you really reinforce the culture. And, I don't know, you have... You say you have visitors at the coffee place?

0:25:45.9 AS: Yeah. I mean, for me, I just love going to companies that do like to share and learn. And I like to do that too. We get students, a lot of times it'll be like executive MBA students coming to Thailand and others that I'll bring out to the factory, so to get them to see how we do things. But I just personally love to... Well, it's great when you go out to a place, and there's a lot of factories in Thailand for sure where you can just see that they have a vision of what they're doing and they clearly communicate it. I had a company that I saw in the financial data many years ago when I was an analyst that really did something very odd, which was their cash conversion cycle was negative. Normally it's a positive thing for a manufacturing company 'cause they have a lot of inventory and accounts receivable and the like.

0:26:34.9 AS: And so I went out and I met with the CEO and then I said, how did you do this? He said, it took us five years, but we brought our inventory down to seven days of inventory. And how did you do it? And he took me out on the factory floor to meet all the different people doing it. And he said, I put people in teams and they work together and they try to figure out how do we reduce the inventory here? I help them see the overhead cost that's coming from the executives so they could calculate a P&L and understand like, how can they make their section, you know, better? And then he had some of the guys come and speak and explain what they were doing, some of the supervisors and managers on the shop floor. And I was like, wow, this was impressive. So love that sharing and learning.

0:27:22.7 JS: Yeah. No, it's great. And I've had wonderful visits where people are so excited about their work that you think, wow. And of course that means they're really, really productive. I mean, they just... They're doing it because they love it and it's... You can't compare with that kind of creativity that you get from that. So I guess that I'd like to talk a little about the competitive advantages here of taking this journey and, you know, that's the whole point. Productivity becomes your competitive advantage. You outproduce other companies with similar resources. And I believe that the way the world is changing right now, that competitive advantage for company B type companies is going to grow as things... And I have four reasons I cite for that.

0:28:21.0 JS: Reason one is flexibility, adaptability, agility, whatever you wanna call it. You know, we're going with manufacturing and services too much more into high mix, low volume type scenarios. So the mass production machinery approach has just become less and less relevant to manufacturing and also with services as well because it's not... It's less a ones size fits all kinda world. That's one very strong reason. The ability to hire talent. You know, we're just starting to see that. You know, people don't wanna work for these corporations that they feel don't have purpose. And couple of manufacturers actually told me, and this is in the US, I don't know how that compares with Thailand, but in the US he said there's a real crisis not just 'cause people maybe don't have jobs, but because people don't have purpose in their work, so people go home depressed, they take drugs and they've done medical studies on this.

0:29:30.3 JS: You know, if you don't have purpose in your work and you're doing something even though you know it's dumb and you're doing it anyway, just, you know, because to please the boss or whatever, that places huge stress on people. And there are actually medical... They've done medical studies on that, people who work in those kinds of jobs, on the negative effects. So anyway, I think getting the best talent, I hear that more and more anyone I talk to, and I think that's gonna be more and more of a factor. There's a whole deglobalization process going on right now. A lot of reshoring here in North America. People, you know, companies really realizing that sort of the fallacy of having these very, very long supply chains. So it's all about now shortening that supply chain, having immediate suppliers that are close.

0:30:23.9 JS: I mean, that's the only way you're gonna get your inventory turns down to 50 or whatever your friend was talking about. Right? And finally on climate change, that's getting tougher and tougher to deal with. And it's not just about governments not acting, but it's going to be scarcity of resources. It's going to be having to run businesses in difficult climate circumstances. It's gonna be government regulation. It's going to be whether people will come and work for companies that aren't making... Doing their bit to combat this. So those four reasons, I think that's a competitive advantage that's going to grow. And I think it's urgent that corporations act, and Dr. Deming warned that there'd be a crisis coming if companies kept running the way they were, and the crisis is here. We've arrived and, you know, the statistics are terrible. Don't have to bore you with those, but, you know, it's a very rough world and we need, obviously governments will have to act, but we need better companies. Now... Sorry, go ahead.

0:31:48.2 AS: I was... Yeah, that's why he entitled this book Out of the Crisis 'cause there was a crisis then, and the fact is there's still, and it's so many things are harder too particularly in the US with reshoring and that type of thing because education has been decimated also in the US so it's very hard to bring back, you know, engineering prowess and things like that, so. Yep.

0:32:14.1 JS: Yeah, for sure. So I... My sort of wrap up comment would be, answer to your question, not really a question, but your title, you talked about boosting Lean with Deming. So, you know, when we chat about this, but you know what, I was thinking about this, what as a person who wrote about Lean initially and then took a much deeper dive into Deming, what does Deming add, from my perspective? And what excites me the most about Dr. Deming is that I think he was less interested in maybe methods and more interested in fundamental truths. I mean, he really, I think put forward what are really fundamental truths about people, about the physical world and about how people in the physical world interact. And these are, like I say, this is not slogans or anything like this, this is science. I mean, these are proven scientific principles and I think those principles underline any method you use. You know, if you're really following that. And I'm not a Deming scholar enough to be able to say that that's what he meant by profound knowledge. But when you use the term profound knowledge, that's what that means to me. It means just a very fundamental knowledge of the way things work.

0:33:49.8 AS: Yeah. Well, it's exciting to think about how we can learn from what you've written about and what you've talked about. So ladies and gentlemen, the book is Productivity Reimagined: Shattering Performance Myths to Achieve Sustainable Growth. And I've really enjoyed our time, Jacob, to go through all the different myths and to hear the way you look at things which is coming from your direction originally, the Lean direction, and then bringing that thinking together with the teachings of Dr. Deming. So I just wanna thank you and give you the last word. If you'd like to wrap up for the listeners and the viewers to say, what's the main message you wanna get, want them to get out of all the... Out of the book and out of all of our discussion? How would you wrap it up?

0:34:45.4 JS: I would wrap it up by saying, let's look for those fundamental truths. You know, let's not look for slogans, let's not look for techniques. Let's look at what's really true about humans, about the physical world, and let's build our future based on that.

0:35:04.2 AS: Well, Jacob, on behalf of everyone at the Deming Institute, I wanna thank you again for this discussion right now and the prior discussions about each part of your book and the myths and the like. And for listeners, remember to go to deming.org to continue your journey, and you can find Jacob's book, Productivity Reimagined, at jacobstoller.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."

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Join Bill Bellows and Andrew Stotz as they discuss what actions (or inactions) make us worse than thieves and how that relates to expiration dates, and acceptability vs desirability. Plus, stories about job swapping, Achieving Competitive Excellence, and birthdays.

TRANSCRIPT

0:00:02.3 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 9, and it's entitled "Worse Than a Thief." Bill, take it away.

0:00:27.2 Bill Bellows: Welcome, Andrew. I haven't seen you in a while, and great to be back.

0:00:29.1 AS: It's been a while.

0:00:32.0 BB: Here we are. Episode 9 already. Gosh, [chuckle] time flies when we're having fun. First, let me say a shout out to people who are reaching out to me on LinkedIn. I spoke with another one of them this afternoon. It's always exciting to connect with them. And then I ideally connect in a regular basis and help them as best I can, and learn from them as best I can.

0:01:03.0 AS: Yep.

0:01:03.2 BB: So, for those who are thinking about it, they keep hearing you say, "Hey, you know how to reach Bill? Find him on LinkedIn." So, a reminder for those who are waiting for a nudge, here's a nudge. So, "Worse than a thief" is an expression that Dr. Taguchi used when he say, Andrew, "Don't be worse than a thief." And we'll get to that, but let me just give our audience some context on that.

0:01:37.8 AS: Yep.

0:01:39.0 BB: Dr. Taguchi would say... And actually, I don't know if Dr. Taguchi explained it. Someone explained it to me this way. He said a thief could be someone who steals your wallet, finds $20; which means they're up 20, you're down 20; which people refer to as "zero sum gain." Right? So, the thief's gain is my loss, zero sum. What could be worse than that? Well, "worse than a thief" would be a situation where what someone gains is nothing compared to what I lose. A simple example is, [chuckle] I'm not the only one who does this, but if I'm going to the supermarket and I get out of the car and I see a nail in the parking lot or a piece of glass in the parking lot on my way in. So, I'm not talking about walking all around the parking lot. I'm talking about if on my way into the store I see a nail, something that could puncture a foot, a tire, and I spend a few seconds to pick it up, throw it in the trash can right by the door, then my theory is the reason I do that, the reason others do that, is the belief that that little bit of time that I am spending doing that could potentially save someone far more than the few seconds it took me.

0:03:20.9 BB: Well, "worse than a thief" would be, I see that broken bottle, let's say a bunch of shards of glass. And having worked at my father's gas station, I've seen... A nail on a tire is one thing. Nail creates a puncture. A piece of glass in a tire creates a fracture. A piece of glass can destroy a tire 'cause you get a crack and it spreads, and that's hard to repair. A puncture with a nail, yeah, it's inconvenient, but that doesn't destroy the tire. So, I'm overly sensitive when I see pieces of glass in a parking lot, that that could ruin a tire.

0:04:04.8 AS: And ruin a day.

0:04:06.2 BB: Ruin a day, oh yeah. And so the idea is that for someone to not take the time, and the time they save cost you more than they saved, that's worse than a thief.

0:04:19.8 AS: Right.

0:04:20.0 BB: So, if I meet a set of requirements, leave the bowling ball in the doorway, deliver minimally, but in the world of acceptability, what do we call that, Andrew? It's good.

0:04:35.3 AS: It's good.

0:04:36.0 BB: Right? It's good. It's just within requirements, but good.

0:04:41.8 AS: It's not beyond looking good.

0:04:43.9 BB: And forget about beyond looking good; this is looking good. So, I leave the bowling ball in the doorway. I deliver to you the absolute minimum, which is still good. So, your response to that, Andrew, is, "Thank you, Bill." [chuckle]

0:05:00.0 AS: Yeah.

0:05:00.1 BB: And I'm not saying you know what I did, but let's say the situation where I am unaware of the loss function. I'm unaware that what I'm doing is make making your life worse.

0:05:12.2 AS: Right.

0:05:13.3 BB: But the idea is that my shortcut to deliver the D minus; D minus, minus, minus, minus, minus. 'Cause that's still not an F. What Taguchi is talking about is that the amount of resources I save, may be a fraction of what it cost you in terms of extra effort to use it. So, my savings of an hour, a minute, a second causing you far more than I saved, is worse than a thief. But in the world of acceptability, there is no such thing. In the world of acceptability, a little bit within requirements on the low side, a little bit within requirements on the high side, it's all the same. Again, there may be a situation where if you're putting a shelf on a piece of wood on a wall as a shelf and it's a little bit longer, a little bit long on either side, that may not have an impact; may not be touching anything on either side. It doesn't have to fit in.

0:06:25.9 BB: Now, this past weekend, our son and I were installing a new floor at our daughter's condo, and we wanted the pieces to fit in-between other pieces and this laminate floor which is a [chuckle] lot of work. Our son is turning into quite the artist when it comes to woodworking and things. But it's very precise getting things just right, just right, just right. And that attention to detail, that attention to making sure the gaps are just right, minding the gap and not the part. And there were pieces of this floor that he was trying to install. And it was driving him nuts, and finally... He's trying to figure it out and he finally figured it out what was going on. 'Cause he wanted that floor and the spacing between not just to meet requirements [chuckle] not that our daughter gave him and set the requirement, but he wanted the floor in those gaps to be invisible. He wanted things to... Right? He had a higher level, a higher standard.

0:07:25.3 BB: Now, this is the same kid who when he was 13 left the bowling ball in the doorway. But I would've done that. You would've done that. So, anyway, that's the difference between... Another reminder of, one, the difference between acceptability and desirability. But to add to this idea of "worse than a thief," embedded in the concept of desirability is not to be worse than a thief, is to understand the consequences of your action on others, and the amount of time and your decision on how you deliver it and how you meet the requirements. The idea is that, the less time you take in order to save at your end might be causing the person downstream in your organization more than you're saving.

0:08:22.8 AS: In other words, something small, you could adjust something small that would have a huge impact down the line, and you just didn't... You don't know about it.

0:08:32.2 BB: Again, that's why I go back to the nail in the parking lot. To not pick up the nail could cause someone so much more than the few seconds you didn't spend. But again, that could be...

[overlapping conversation]

0:08:44.0 AS: And one of the things that makes it easier or better for a working environment is you know your downstream.

0:08:51.8 BB: Yes.

0:08:51.8 AS: When you're walking in the parking lot, you don't know your downstream; it's just anybody generally, and hopefully I've stopped something from happening here, but you're never gonna know and all that. But with a business, you know your downstream, you know your upstream, and that communication can produce a really, really exciting result because you can see it and feel it.

0:09:11.8 BB: Well, and thank you for bringing that up, because I've got notes from... Since the last time we met, I keep a file for the next sessions we're gonna do. And so as things, ideas come up from people that I'm meeting on LinkedIn or elsewhere, then I, "Oh, let me throw that in." And so I throw it into a Word file for the next time. And so somewhere, I can't remember who, but since the last time we spoke, someone shared with me... Hold on, let me find it here. Okay. In their organization, they do staff rotation. They move people around in their organization. And the question had to do with, "Isn't that what Dr. Deming would promote? Is having people move around the organization?" And I said... Hold on, I gotta sneeze. I said, "Well, if I am the person that makes the parts that you have to assemble, and I make them just within requirements unaware of the downstream impact... " I don't know where they are within the requirements, let's say.

0:10:30.0 BB: All I know is that they're acceptable. I machine it, I measure it, the inspection says it's good, I don't know where within it's good. I don't know. So, I'm unaware. All I know is that it met the requirements. And I hand off to you on a regular basis, and then the boss comes along and says, "Bill, I wanna have you go do Andrew's job." So, now, I'm on the receiving end. And maybe you are upstream doing what I used to do. And you are likewise unaware that... You don't know that you're delivering acceptability. All you know is all the parts you deliver are good. You're trained the same way I'm trained, I'm doing your job. Does that change anything? [chuckle] If I take on your job and let's say, banging it together, whereas the week before you were banging it together, does that rotation create the conversation?

0:11:27.2 AS: So, you're saying rotation for the sake of rotation is not necessarily valuable if in fact, what could be more value is just the two of us sitting down and saying, "So what is it that you're doing with yours and what do you need?" and maybe visiting the other side or something like that.

0:11:44.9 BB: My point is, until the thought occurs to either one of us on the distinction between acceptable and desirable, neither one of us is the wiser as to why we do what we do. So, having people move around the organization and take on different roles, absent an understanding of this contrast, absent an understanding of what Dr. Deming is talking about, which includes these distinctions, that's not gonna do anything.

0:12:16.0 AS: Right.

0:12:16.8 BB: I would say it's a nice idea, and you hear about that all the time about oh the CEO's gonna go work at the front desk. But if the CEO goes to the front desk, again, unless he or she has a sense of what could be, that things could be smoother than what they are because of where they've worked before and it's so much smoother over there, that could lead to why at the Atlanta office does it take so much longer than the LA office. Now I'm beginning to wonder what might be causing that difference. But if I just take on your job for the first time, or if you and I every other week change jobs. So, I'm doing your job, we are both doing assembly, we're both making the parts. Absent an understanding of the contrast between a Deming environment or a non-Deming environment, which would include an appreciation of what Dr. Deming would call the System of Profound Knowledge and the elements of psychology and systems and variation, the theory of knowledge, just not enough. Insufficient. Nice idea. But it's when at Rocketdyne we would call "reforming."

0:13:39.0 BB: And we started 'cause Russ... Dr. Deming talks about transformation, and Russ talks about reforming. And so I started thinking, "How would I explain what... " I just thought it was too... My interpretation of what Dr. Deming is saying of the individual transform will begin to see things differently, okay. My interpretation is, I begin to hear things differently, I begin to hear the contrast between somebody referring to their son as "their son" versus "our son," my idea versus our idea; I start paying attention to pronouns, so I start hearing things differently; I start to think about, see things as a system a little... I become more aware, visually more aware.

0:14:43.9 BB: And to me, another aspect I think about relative to transformation is that, if I'm the professor and you're the student in a class, or in any situation, I don't see... I think about how I've contributed to whatever it is you're doing. I have somehow created the headache that you're experiencing. If I'm upstream of you in the organization, whether that's me delivering a report or a tool, or I'm the professor delivering the lecture, I began to realize that your issues I've created, and I begin to see things as a... I begin to see that I am part of the issue, Part of the solution, part of the problem. When I explained to students this, I began to realize as a professor that I am not an observer of your learning, asking "How did you do on the exam?" I am a participant in your learning, saying "How did we do in the lecture?" And to me, that's all part of this transformation.

0:15:53.0 BB: Now, the other word, "reform," which is associated with things I've heard from Russ. He talks about... Yeah, I'll just pause there. But I started thinking, well, Deming's talking about how I see the world, how I begin to see relationships differently, think about variation differently. That's a personal transformation. Reforming, and others began to explain to people at Rocketdyne and I do with clients and students is, reforming is when you and I swap jobs. Reforming is when I look at the process and get rid of a few steps. Reforming is changing titles. Reforming is painting something, [chuckle] changing the color. I think I shared, maybe in the first podcast series, I was doing a multi-day, one-on-one seminar with a pediatrician in Kazakhstan, who came to London to meet me and a bunch of other friends to learn more about Dr. Deming's work. And the entire thing was done through a translator.

0:17:07.1 BB: And so I would ask a question in English, it would be translated to Russian then back to me in English. And so at some point, I said to Ivan Klimenko, a wonderful, wonderful guy. I said, "Ivan," I said [chuckle] to Yuri, the translator, I said, "Ask Ivan, what's the fastest way for a Red Pen Company, a non-Deming company, a "Me" organization, to become a Blue Pen Company, otherwise known as a Deming company or "We" organization." And these are terms that we talked about in the first series; I don't think in this series. But, anyway, I said, "So what's the fastest way for a non-Deming company to become a Deming company? A Red Pen Company to become a Blue Pen Company?"

0:17:44.9 BB: And so he asked, and I'm listening to the translation. And he says, "Okay, I give up." I said, "Spray paint." [chuckle] And that's what reforming is: Getting out the red spray paint, having things become neat, clean, and organized, and you're just going through the motions. There's no change of state. And so, "I do your job, you do my job," that's not sufficient. But get us to think about the contrast of a Deming and a non-Deming organization, then you and I changing roles could be enormously beneficial as I begin to understand what it's like to be on the receiving end. Now, we're talking. And I think I mentioned in a previous podcast, I had a woman attend one of the classes I did at Rocketdyne, and she said, "Bill, in our organization, we have compassion for one another." It's the same thing. It's not sufficient. And that's me saying, "Andrew, I feel really bad. I lost a lot of sleep last night thinking about how much time you spend banging together all those parts that I give you. And if there was anything I could do to make things better, I would love to help you. But at the end of the day, Andrew, all the parts I gave you are good, right? I don't give you bad stuff, right? Have I ever given you a defective part, Andrew?"

0:19:12.0 AS: Nope.

0:19:13.1 BB: "So, everything's good, right? Everything's good that I give you? Well, then, if I could help you, but I don't know what else to do. Everything I give you is good. So, it must be on your end." [laughter]

[overlapping conversation]

0:19:24.1 AS: And I'm busy. Yeah.

0:19:26.6 BB: Must be on you. And that's what I'm talking about. Now, if I understand that I'm contributing to your headache, I'm contributing to the trouble you're having with an example, now I'm inspired; now I understand there's something on me. [chuckle] But, short of that, nice idea, it's not helping.

0:19:50.0 BB: [laughter] So, the story I wanted to share before we're talking about this role-changing. Again, role-changing by itself, nah, not sufficient. So, see if this sounds familiar. It has to do with acceptability. I'm pretty certain it's part of the first series. I wanna make sure it's part of the second series. So, I was in a seminar at Rocketdyne on something to do with quality. And I think United Technologies had purchased Rocketdyne. They were bringing to us their new quality management system. Not just any quality management system, Andrew. This was called ACE, A-C-E. And, when we first learned about this, I remember being in a room when their United Technologies, ACE experts started to explain it. And some of my colleagues said, "Well, what is ACE?" They said, "Well, it's Achieving Competitive Excellence." "Well, what is it? What is it, 'competitive... '"

0:20:52.2 AS: It sounds like you wanna put that up on the wall as a slogan.

0:20:56.0 BB: It was a slogan, "Achieving Competitive Excellence." And people says, "Well, what is it?" I said, "Well, it's Lean Six Sigma." Well, so why do you call it ACE? Well, our arch rivals, General Electric. they call it Lean Six Sigma. We ain't gonna call it Lean Six Sigma. So, we're calling it ACE, A-C-E, Achieving Competitive Excellence. But it's the same thing as Lean Six Sigma. [chuckle] And so we had all this mandatory ACE training that we would all sit through and pray that the rosters were never lost, were never lost so we wouldn't have to take the training again. So, in the training, there was a discussion of, how does the environment impact quality? And I don't know how it came up, but similar, there's a conversation about the environment could affect quality. And, so when that was raised, I think it was a question that came up.

0:21:56.9 BB: How does the environment affect quality? The physical environment: How hot it is, how cold it is. So, one of the attendees says, "I've got an example." He says, "I worked for a Boeing supplier," and it might have been, "I worked for Boeing in Australia." I know he said he worked in Australia. They made parts, big parts, very tall parts like a 15, 20... Very long section. And I think he said it had to do with the tails, part of the tail for Boeing airplane. [chuckle] He says, "When we would measure it," he said, "we knew that if we took the measurement first thing in the morning before the sun came up and it started to get hot, then there's a good chance that the length would meet requirements. And, we knew that once that part saw the heat of the sun and expanded, then it wouldn't meet requirements. So, we measured it first thing in the morning, [laughter] and that's an example of how the environment affects quality." And, my first thought when I heard that was, "You can't make that story up, that I will keep measuring it until it meets requirements." That, Andrew, is me shipping acceptability. Do I care at all about how that part is used, Andrew? [chuckle]

0:23:18.7 AS: Nope.

0:23:19.9 BB: Do I know how that part is installed? Am I watching you install it and go through all, you know, hammer it? Nope. No. Again, even if I did, would I think twice that I measured it before the sun came up and that might be causing the issue? No, that still would not occur to me. But the other thing I wanted to bring up on this, on the topic of ACE, remember what ACE stands for?

0:23:46.0 AS: Achieving Competitive...

0:23:50.0 BB: Excellence.

0:23:50.3 AS: Excellence.

0:23:51.8 BB: So, Rocketdyne was owned by United Technologies of Pratt and Whitney, division of West Palm Beach, for 10 years or so? 10 long years. ACE, ACE, ACE, ACE, ACE. So, I kept thinking, [chuckle] I said to some of my Deming colleagues, "There's gotta be another acronym which is A-C-E." Achieving Competitive... What? What might be another E word? 'Cause it's not... Instead of ACE, Achieving Competitive Excellence, I kept thinking of this, what might be another way of what this is really all about? And it dawned me. The embarrassment is how long it took me to come up with what ACE translated to. And it was "Achieving Compliance Excellence." [chuckle]

0:24:42.9 AS: Excellent.

0:24:45.0 BB: Does it meet requirements? Yes. And so what is compliance excellence? It gets us back to acceptability. So, traditional quality compliance. But then while I was on the thought of Achieving Compliance Excellence, and then, well, there's a place for meeting requirements. There's a place for compliance excellence. I'm not throwing it out the window. I would say, if I ask you, Andrew, how far it is to the closest airport and you say 42 miles, 42 kilometers, or you say it takes an hour, then embedded in that model is "A minute is a minute, an hour is an hour, a mile is a mile, and all the miles are the same." Well, maybe they aren't. Maybe they aren't. Maybe I'm walking that distance, and I'm going uphill and downhill. Maybe I'm driving that distance. And those changes in elevation don't matter as much. So, then, what I thought was, there's Achieving Compliance Excellence that's acceptability, and then there's Achieving Contextual Excellence, which is my understanding of the context.

0:25:56.7 BB: And given my understanding of the context, if you say to me, "How far is it to the nearest airport?" I say, "Well, tell me more about the context of your question. Are you driving there? Are you riding your bike there? Are you walking there?" 'Cause then I'm realizing that every mile with Compliance Excellence, I just treat it as "a mile is a mile is a mile." They're all interchangeable, they're all the same. With Contextual Excellence, the context matters. And I say to you, "That's a... I mean, 42 miles, but boy, every mile is... They're brutal." And so then just the idea that context matters, that the understanding of a system matters. All right. So, next thing I wanna get to, and we've talked about this before but we never got it in, but I wanna provide, I really... Well, what I think is a neat example. [laughter] Okay. Calm down, Bill. [laughter]

0:26:54.8 AS: Yeah. You're excited about it.

0:26:57.0 BB: All right.

0:26:57.1 AS: So, about your idea... [chuckle]

0:27:00.2 BB: All right. So, again, in this spirit, my aim in conversation with you is to provide insights to people trying to bring these ideas to their organization. They're either trying to improve their own understanding, looking for better ways to explain it to others. And towards that end, here is a keeper. And for those who try this, if you have trouble, get back to me. Let me know how it goes. Here's the scenario I give people, and I've done this many, many times. What I used to do is give everyone in the room a clear transparency. That's when you had overhead projectors. [chuckle] 'Cause people say, "What is a transparency? What is an overhead projector?"

[overlapping conversation]

0:27:45.0 AS: Yeah exactly.

0:27:46.8 BB: It's a clear piece of plastic, like the size of a sheet of paper. And on that sheet, on that piece of plastic was a vertical line and a horizontal line. I could call it set a set of axes, X-Y axis. And the vertical axis I called "flavor." And the horizontal axis, I called "time." And, so everyone, when they would walk into a seminar, would get a clear transparency. I give them a pen to write on this transparency. And I'd say to them, "Here's what I want you to imagine. The horizontal axis is time. The vertical axis is flavor." And I would hold up a can of soda and I'd say, "Imagine. Imagine, inside this can, imagine before the lid is put on, soda is added to this can," any kind of soda. Right? "Imagine soda's in the can. Imagine in the can is a probe, a flavor meter. And the flavor meter is connected to the pen in your hand." And what that... Wirelessly, Andrew. So, there's this probe that goes into the soda, into the can. It is, let's say, with Bluetooth technology connected to the pen in your hand, such that you have the ability with this magic pen to trace out what the flavor of the soda in the can is at any point in time.

0:29:31.0 BB: And so I would put on the vertical axis, right, the Y axis, I would put a little tick mark, maybe three quarters of the way up the vertical axis. And so everyone started at that tick mark. And I would say, "Okay, get your pen ready, get it on the tick mark. This flavor meter is inside the can. It's transmitting to your hand and the pen the flavor of Pepsi. If I was to seal this can, put the lid on it, and I say, 'Now the device is activated.' As soon as I put the lid on the can, the pen is activated and your hand starts to trace out what is the flavor of the soda doing over time." And I would say, "If you think the flavor gets better, then you have a curve going up. If you think the flavor of the soda's getting worse, then it goes down. If you think it stays the same, it just goes across."

0:30:37.1 BB: And I would just say, "What I want each of you to do, as soon as that can is sealed, I want you to imagine what the flavor of Pepsi, Coke, whatever it is, I want you to... " The question is, "What do you think the flavor of soda is doing in a sealed can over time?" And I would say, "Don't ask any questions. Just do that." Now, most of the people just take that and they just draw something. They might draw something flat going across. [chuckle] Now and then somebody would say, [chuckle] "Is the can in a refrigerator?" [chuckle] And my response is, "Don't complicate this."

[laughter]

0:31:26.1 BB: So, I just throw that out. Most people just take that and just trace something out. And for the one who says, "Is it refrigerated? What's the timescale? Is the horizontal axis years or minutes?" I'd say, "Don't complicate it." [chuckle]

0:31:46.8 AS: "And don't ask questions."

0:31:48.9 BB: "And don't ask... " But you can bring me over and I'll ask you a question. You can ask your questions, I would just say, "Don't complicate it." So, what do we do? Everyone gets a few minutes, they draw it. I take all those transparencies that you can see through, and I put them on top of one another. And I can now hold them up to the room and people can see what I'm holding up. They can see all the different curves.

0:32:17.0 AS: Right.

0:32:18.0 BB: 'Cause they all start at the same point. And then I would say to the audience, "What do they all have in common?" Well, they all start at the same point. "What else do they have in common? What do they all have in common?" And people are like, "I don't know." Some of them are flat. They go across, the flavor doesn't change. Most of them think it goes down at some rate.

0:32:43.4 AS: Yep.

0:32:45.0 BB: Either concave down or convex down. Now and then, somebody will say it goes up and up and up; might go up and then down. But most people think it goes down over time. That's the leading answer. The second leading answer is it's constant. Up and down, rarely. So, I've done that. I've had people do that. I used to have a stack of 500 of transparencies. I used to save them and just go through them. I've done it, let's say in round numbers, 1,500 to 2,000 people. So, all the curves start at that tick mark in the 99.9999% of them either go down or go across. What's cool is, all those curves are smooth. Meaning, very smoothly up, very smoothly across, very smoothly down. Mathematically, that's called a "continuous function." And what I explained to them is, if I draw a vertical line halfway across the horizontal axis, and I look at every one of those curves, because the curves are smooth, if I draw a vertical line and how each curve, your profile and all the others go across that line, immediately to the left and immediately to the right, it's the same value because the curve is smooth.

0:34:28.3 BB: But I don't ask them to draw a smooth curve. I just say, "What do you think the flavor does over time?" They always, with three exceptions, draw a smooth curve. And so when I ask them what do they have in common, you get, "They start at the same point." Nope, that's not it. I don't know if anyone's ever articulated, "They're all continuous functions." Very rarely. So, then I explained, "They're all continuous functions. But I didn't ask you to draw a continuous function." Well, when I point out to them that three times, three times, Andrew, out of nearly 2,000, somebody drew a curve that goes starting at the tick mark, zero time, and it goes straight across halfway across the page at the same level, and then drops down to zero instantly, it's what's known mathematically as a "step function."

0:35:26.9 BB: So, it goes across, goes across, and then in zero time drops down to zero and then continues. So, three out of nearly 2,000 people drew a curve that wasn't smooth. Again, mathematically known as a step function. And each time I went up to that person and I said, and I comment on it, and each of them said, there's a point at which it goes bad. And each of them had a job in a quality organization. [chuckle] And so why is this important? Because in industry, there's this thing known as an "expiration date." What is an expiration date? It's the date past which you cannot use the chemical, the thing. And what's the assumption? The assumption is, a second before midnight on that date, Andrew, you could use that chemical, that acid, that glue, whatever it is in our product; a second before midnight, before the expiration date, you can use that. But a second after midnight, we put this tape and we call it "defective." And so I've worked with companies that are in the chemical business, and they literally have this tape. At the expiration date, we don't use it. A second before midnight, we do. And so what you have is a sense that it goes from good to bad, you know how fast, Andrew?

0:37:15.0 AS: Tick of a clock.

0:37:17.0 BB: Faster than that, Andrew. Zero time.

0:37:21.0 AS: Yeah.

0:37:22.0 BB: Zero time. And so what I ask people is, "Can you think of any phenomenon that happens in zero time?" And people call that's... "Well, the driver was killed instantly." No, it wasn't zero time. "Well, someone is shot." It's not zero time. And so what's cool is, when I ask people to describe a phenomenon, describe any physical phenomenon that happens in zero time, that we go from one location to another, from one state to another in zero time, I've not been stumped on that. Although actually, [chuckle] there are some situations where that happens. Well, the reason that's important for our audience is, that's a demonstration that expiration-date thinking is an organizational construct. It's not a physical construct. Milk goes bad fast. [chuckle] I'll admit, the expiration date on the half gallon of milk, it goes bad fast.

0:38:27.2 BB: But a second before midnight and a second after midnight, it's still the same. So, expiration-date thinking is what acceptability is about; that everything is good, equally good, but once we go across that expiration date, Andrew, then the flavor changes suddenly. And so what I used to kid people is, imagine if that really happened, right? Then we'd have this contest. I'd say, "Andrew, I had a can of Pepsi recently. And have you ever done this, Andrew? You get the can of Pepsi that has the expiration date on it. And if you listen to it at midnight, on the expiration date, you listen closely, you can hear it go from good to bad, Andrew." [chuckle] Would that be awesome? [chuckle] So, I was sharing some of this recently with our good friend, Christina, at The Deming Institute office.

0:39:31.0 AS: Yep.

0:39:32.7 BB: And it happened to be her birthday. And, so I sent her a note and I said, "Happy birthday." And I said, "So, did you change age immediately on the second you were born?" 'Cause she said, 'cause I think she said something like, "My mom reached out to me and she reminded me exactly what time I was born." And I said, "Oh," I said, "so did you feel the change in age as you crossed that?" And she said, she said, "Hi, Bill. Of course, I felt instantly different on my birthday. My mom even told me what time, so I'd know exactly when to feel different." [chuckle] Now, so here's a question for you, Andrew. Can you think of a situation where something changes from one value to another in zero time? In zero time. Again, we don't go from living to dying in zero time. The change of Pepsi doesn't go from one value to another in zero time. The quality of any product is not changing, you go from one side to the other. But can you think of anything that actually happens in zero time: Across that line, it goes from one value to another?

0:41:05.0 AS: Nope, I can't.

0:41:08.8 BB: Oh, come on, Andrew. You ready?

0:41:16.2 AS: Go for it.

0:41:20.0 BB: Did you ever hear of the German novelist, Thomas Mann, M-A-N-N?

0:41:24.0 AS: No.

0:41:25.7 BB: All right. I wrote this down as a closing thought; it may not be the closing thought. We'll just throw it in right now. So, this in an article [chuckle] I wrote for the Lean Management Journal.

0:41:38.0 AS: By the way, it's gotta be the closing thought because we're running out of time. So, perfect.

0:41:43.7 BB: Fantastic! Well, then here's my closing thought, Andrew. You want my closing thought?

0:41:47.1 AS: Do it.

0:41:48.1 BB: All right. So, from an article I wrote for the Lean Management Journal, so here's the quote. "I have witnessed industrial chemicals in full use right up to the expiration date, and then banned from use and tagged for immediate disposal with a passing of the expiration date only seconds before the chemicals were freely used. While they may rapidly sour, it is unlikely that they expire with a big bang, all in keeping with a sentiment of German novelist Thomas Mann's observation about New Year's Eve," Andrew. What he said was, "Time has no divisions to market's passage. There's never a thunderstorm or a blare of trumpets to announce the beginning of a new month or year. Even when the century begins, it is only we mere mortals who ring bells and fire off pistols." So, at midnight on December 31st, a fraction of a second before midnight, we're in 2024 and we go to 2025 in zero time, Andrew. So, legally things change as you go across a line. You go from the United States to Mexico across a line of zero thickness. So, legally things across a line change instantly.

0:43:17.0 AS: Well.

0:43:18.0 BB: A coupon, Andrew, expires at midnight. [laughter]

0:43:22.7 AS: Yep. All right. Well, 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 wanna keep in touch with Bill, as he mentioned at the beginning, just reach out to 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."

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Before you start solving a problem, you need to know what, precisely, you're trying to solve. In this episode, John Dues and Andrew Stotz talk about how to figure out the problem on which you will focus your team's efforts.

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 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. The topic for today is, Define The Problem. John, take it away.

0:00:22.9 John Dues: Hey, Andrew. It's good to be back. Yeah. So, we've been going through this improvement model just as a refresher. Two episodes ago we looked at the three phases of performance measurement, research, accountability, and improvement. That was an important frame at the start of this process. And then in the last episode we discussed how we made sure in that first step of the model, we step back and see our system, see the full system in which we work. And I showed you some improvement tools that we use to visualize the improvement team or the group's thinking for each of a set of guiding questions. So, we looked at a system flow chart and that sort of said to us, within our system, kind of saw how things flow into the system, the things that we do, and then the outputs, and the questions there were, what's the largest system to improve on and what's the aim of that system? And then we took a look at an affinity diagram, and we used that just to answer the question, what are the opportunities for improvement within the target system? And then we used this tool called an interrelationship digraph, where we prioritize basically the various opportunities for improvement. And then it's been through this model that everybody can see these four steps that we're talking...

0:01:57.7 AS: Well, for the listeners, they may not be able to see, but for the viewers, yeah.

0:02:01.7 JD: For the listeners, they can't see it. But the model that we've been talking through, for sure, we've been working through this four-step improvement model, and we've spent most of our time on step one, which is set the challenge and direction. And we'll remain here at this point in the process today as well. And then later on in the series, we'll go on to the subsequent steps. So step two, grasp the current condition. Step three, establish your next target condition. Step four, experiment to overcome obstacles. And some of the first episodes in the series, we talked through just a high level overview of each of those things. And then we've also said that we wanna do all of these steps with a team that's made up of somebody that has Profound Knowledge, some number of people that have the authority to work or change or redesign the system, and in some number of people that are working in the system.

0:02:57.3 JD: So that's just kind of a refresher for those that have been following along. And again, in step one of this model, this is where we're at right now, we ask, where do we wanna be in the long run? And so we're really thinking about a longer range goal that will differentiate us from other organizations. So in our case, schools. And it seems nearly impossible at the outset. We've said that. And we've also talked about what's the right time period for this challenge or direction to be set for, in terms of out in the horizon? Then what I said was, somewhere in the neighborhood of six months to three years, sort of anything less than six months, it's just too fast to put the team together and really dive in and do the work that you need to do. Anything beyond three years, it just seems so far that, you now, things can kind of get away from you if you set the vision out that far.

0:03:48.8 JD: Not that it's impossible, but six months to three years seems to be a sweet spot in my perspective. And then I gave this example, we're working on this chronic absenteeism problem. Chronic absenteeism is when a student in a K-12 school is absent for more than 10% of the school year, and coming out of the pandemic, we've talked about a very high number of kids across the country in the United States are chronically absent. And in our particular system, like a lot of high poverty systems, those numbers are particularly stark. So over the last few years since the pandemic, the chronic absenteeism rate in our school system has been hovering right around 50%.

0:04:34.3 AS: It's just so incredible, every time I hear you say that, I just can't believe that.

0:04:38.3 JD: It is incredible, incredible. And we're trying to get that down, that number down to 5%. So it'd be a huge...

0:04:44.0 AS: Which is also an incredible stretch goal.

0:04:47.3 JD: Incredible stretch goal. Seems almost impossible. That's sort of how we've framed things in our school system.

0:04:54.4 AS: So let's stop there just for a second, because I think for the listeners and the viewers, what's your long range? Let's take three years. What is your three-year goal that is nearly impossible? Where do you wanna be? Yeah, I liked it the way, you know, the diagram that you're showing is kind of a mountain, and so why not think, what mountain do you wanna plant your flag on three years from now? And that really is what you're describing, what you guys are focused on is a very challenging goal, but for the listener and the viewer, what's yours?

0:05:31.4 JD: Yeah. Yeah, that's a great point. Yeah, I mean, I think encouraging people to think through how they would step through this process, how they would frame goals within the system that they're working in, I think that's a really important sort of thought process to be going through as you're listening to, at least to our approach.

0:05:49.8 AS: Yep.

0:05:51.1 JD: So at this stage in the process, like I said, we've stepped back. We have this sort of long term goal. We've mapped out our system, we've talked about some opportunities for improvement and prioritize those. So at this stage in the process, the next thing we're gonna do is we're gonna define the problem. We know we have an issue with chronic absenteeism, but we don't necessarily know what the specific problem is that we're going to work on. So they're, like, with See the System, and we had a set of guiding questions, similarly, we have a set of guiding questions that we're asking at this step in the process to find the problem.

0:06:32.1 JD: So the one that we're gonna focus on today is how is the project being funneled from a general to a more specific problem? So again, we've got this general problem area, chronic absenteeism. Some other guiding questions that we'll tackle later, what's the precise problem statement? What are key operational definitions, concepts that we're gonna measure? Who will benefit the most from the improvement effort? What are their needs? And then what's the vision for excellence? So those are all the things that we're tackling in this stage that we're calling Define the Problem. But we're gonna focus just on this one question today, how is the project being funneled from a general to a more specific problem?

0:07:19.1 JD: So, in our case, and we talked about this last time, by this point we've formed an improvement team. So we have an actual group of about 10 people cross-disciplinary, meaning different roles that are, and they're coming from different parts of our system, different departments, all four of our campuses are represented. So this is the improvement team that we've formed to work on this particular problem. And really what we're trying to do in this step is show the importance of this particular attempted improvement. And we're trying to paint a picture for everybody else that's not on the team why energy should be spent here instead of elsewhere. Because there's gonna have to be resources both obviously in people, money, whatever, deployed as a part of this effort. And we have any number of problems like most school systems...

[laughter]

0:08:19.7 JD: That we could focus on. And so we have to really paint the case for why we're gonna focus on chronic absenteeism.

0:08:27.3 AS: I have to tell you a story, John. When I was, I don't know, 10 years ago I went to visit my first boss who was so successful that he bought a piece of land in New Zealand, and it was a farm. And it was 250 square kilometers. So I went to visit him and he had a little house on this big farm, and it had all these mountains. And he looked at me and said, what mountain do you want to climb today? And I said, "That one." And so we climbed up that one, and I was there for five days and we had to take a break in between, 'cause it's pretty exhausting climbing up one of these mountains, but there was endless mountains, and you can't climb 'em all.

0:09:03.2 JD: Yeah.

0:09:03.7 AS: And you only have limited time, and you only have limited energy. So what mountain are you gonna climb? And I think part of what you're talking about, showing the importance of spending the energy here is that, you know, hey, this is a very hard challenge that we want to get to, and we have to explain that we cannot climb two of these mountains at the same time, and we cannot climb all of these mountains over a period of time. We have to really be able to focus and make the argument of why we're planting our flag on that particular mountain.

0:09:35.5 JD: Yeah, absolutely. Absolutely. And in terms of the team, one of the things we talked about last week was that, or last episode is that, one of the ways that we use this set of guiding questions for each step in the process is, we're tagging that guiding question to a tool that we use to visualize the group's thinking. So again, we're funneling from this sort of general problem, this mountain to climb to a more specific mountain to climb, so to speak. So we'll keep doing that today. And again, what we're trying to get to is what's the precise problem statement? But we have sort of a general area of focus now, and we're thinking about, are we ready to write that more precise problem statement? Or perhaps is there more study that's needed? And one of the things that we do is we use this tool called a Problem Statement Readiness Check.

0:10:41.0 JD: And, so basically, so the group's been working for about a month and a half, and so we have quite a bit of information that we've gathered about this process thus far. And part of the power of this Problem Statement Readiness Check is it puts all of that information in one place, or at least the most important information. So you can kind of see at the top for folks that are viewing, there's this general problem focus area. And basically this captures the problem as we understand it early in the process. And basically what it says is that our average daily attendance across our four campuses is between 85% and 88%. And currently chronic absenteeism rates are between 43% and 53% depending on the campus. High number of students are excessively absent or habitually truant.

0:11:39.1 JD: So those are sort of officially defined attendance terms in Ohio's attendance laws, basically. And that we... We know that, you know, fairly obvious that missing a high amount of school, missing a lot of school is detrimental to students and their ability to grow and achieve academically. So it's, also when you have, you know, so students that are experiencing these problems require a lot of intervention. And so when you have high numbers, obviously it becomes harder to intervene because it's an intensive process. And when you're interviewing with chronically absent students, school leaders are being pulled away from other things. So that's sort of part of the case that we're making for this being a worthy problem. Although it's not very hard actually to paint this picture.

0:12:35.4 AS: Right.

0:12:35.5 JD: And so we have this focus area. Then what we say is, what insights into the problem focus area are helpful? What learning has the potential to lead to effective solutions? So this is stuff we've done so far. Again, we're kind of summarizing where we are to date. So the leader of this group is saying, well, we created this affinity diagram. We have these six categories of problems that we could focus our attention on: Data, academic systems, communication, transportation, culture and engagement, our intervention systems. And then we use that in a relationship digraph to try to come up with what's the dominant cause of the attendance problem? And if you remember from last time, what we settled on when we looked at that digraph was transportation. But then we said, well, we're not gonna focus on transportation because we already have an improvement team in our system that's working on the transportation issues that we're seeing here in Columbus.

0:13:40.8 JD: The other thing is we're looking at a bucket of questions that remain to be answered. So after we looked at of all the data that we've gathered so far, the conversations that we've had, what questions remain to be answered, what do we still need to know as a team? Maybe what new questions has the problem analysis revealed? So some of those questions are things like, why aren't students coming to school consistently? What does the intervention process look like at each campus? There's variation, we've already found out there's variation in the campus... How the campuses intervene. What does the typical attendance intervention plan look like at the individual student level? Is that intervention process at each campus effective? How do we know? Are we tracking data? So you can start to see how there are a lot of questions to sort of consider even after you've done some study digging into your data.

0:14:37.7 JD: So that's sort of the first part of the problem focus... Sorry, the Problem Statement Readiness Check. So this is a worksheet that we use. And the second part is we have a series of six questions that we ask after the group has talked through that first part of the worksheet. And basically they're just yes/no questions. They're six questions. So the first question is, has our team investigated multiple perspectives on the problem focus area? And basically what we said there is the team basically understands a higher percentage of students are not coming to school consistently, but the team doesn't have a strong understanding of what those causes are. So in that case we checked no, we haven't investigated multiple perspectives. The second question is, have you challenged assumptions our team held about why the problem occurs?

0:15:37.3 JD: So you can imagine anytime you're working in team with or without data, people are gonna have these preconceived notions, "Oh, I know why kids don't come to school." It's this reason or that reason, right? These are assumptions that we have. So in terms of challenging those assumptions with data, with study, we said, no, we haven't done that. The third question is, have you gained useful insight into why previous efforts haven't been as successful as desired? Basically there we said not systematically. We haven't studied this issue for a while, so we checked no there. The fifth question is, has your team gained sufficient insight into students' needs to give you confidence that you know which kinds of improvement will lead to improve student experiences and outcomes? To that we said no. We haven't done a lot of talking to students and families about specific challenges individual students are facing.

0:16:31.5 JD: And then the last question is, have you identified existing school-based practices or processes connected to the problem that might be improved? So that was the one question that we checked yes to. So basically there's this little guidance done at the bottom, then of the worksheet. It says, if the team checks three or more boxes, we'll move on to draft the problem statement. Well, we only draft... Sorry, we only checked one of the six boxes as a yes. The other five were no. So we're basically saying there, we don't have enough information to write the specific problem statement that we're gonna work on. So we have to do something else that's going to give us additional information about our process. So you can see how this thing has, you know, it's starting to be funneled from sort of a general understanding that we have a problem with chronic absenteeism, a problem with students attending school consistently.

0:17:29.8 JD: We think we know generally some of the reasons that's happening, but we haven't done enough study to really understand the specific obstacles that individual students are facing. So, then we, you know, since we're not ready to write the problem statement, we have to think about, well, what do we do to dig in and get sort of additional information? And so in our case, what we decided to do next was a Plan-Do-Study-Act cycle. So this is a way, if properly designed, where we can get some of that additional information from students and families. So that's what we're in the process of doing right now. And it's been really interesting. So what we did was, so we started the PDSA a couple weeks ago. This sort of coincided with the end of our first grading period.

0:18:22.9 JD: We're on trimester, so this was at the end of November. And we knew that parent conferences were coming up during that time. So that would give us a unique chance to talk to some of the students and families that are having attendance issues. So basically what we did was we said, well, we're gonna talk to one student and one family member from each campus that's been chronically absent. And we created a structure for the PDSA. So the plan was, so we have a Dean of Family and Community Engagement at each campus, and they're the point person for this attendance work. And so the guy that's leading this project, he's like the System of Profound Knowledge coach, the improvement coach on this, he created a little interview protocol, and basically then the DFCEs, the family engagement person at each campus took the protocol and sat down with the family member to interview them.

0:19:24.0 JD: And they're basically asking, you know, if the person is missing days of school, they're asking why, what's going on, what are the obstacles? Sometimes, because Ohio counts attendance by hours, so sometimes families are consistently bringing their student late, and those one and two hour misses in the morning add up to days pretty quickly, or you get the vice versa where someone is coming to pick the student up early repeatedly for some reason. And then of course some folks have a combination of these things. But what we said was, let's get some information from specific families. And we made a prediction, we said, you know, if we talk to people about the attendance issue, start to gather some information from them and let them know that, hey, your child, your student has this attendance issue, we all then made predictions for, is this gonna have an impact?

0:20:23.5 JD: Just this little intervention, is this gonna have an impact on the attendance rates? So we're in the middle of this, now we're gathering this data. It's been really fascinating to see the information that was gathered, to see, like, on a day by day level, the specific reasons, not the attendance codes that get put into the system, like drilled down specific data, specific anecdotes about what's happening on any given day that leads to a kid missing all or part of a school day. So this is sort of the first part in our process, PDSA cycle one is just to gather this information to see, you know, get a better sense, a detailed sense of some of the obstacles that our families are facing when it comes to attendance.

0:21:08.9 AS: Like, I got up and I went out and started the car and it didn't start.

0:21:15.4 JD: That's exactly right. That's exactly right. That's a...

0:21:19.6 AS: So I gave up...

0:21:21.8 JD: Oh, sorry, go ahead.

0:21:22.1 AS: So I gave up and I thought, I can't be bothered with this. I've gotta take care of other stuff and whatever.

0:21:28.7 JD: Yeah, it's stuff like that. And we've talked about this bus issue that we're having in Columbus. So it's not uncommon for a bus to come late, an hour late in the morning to a student bus stop.

[overlapping conversation]

0:21:39.4 AS: Do you sit there for an hour, wait for it, or, you know?

0:21:42.9 JD: Tomorrow it's gonna be something like 19 degrees in Ohio. Are you gonna sit out there for an hour when it's 19 degrees and wait for your bus? Right? And maybe you go home and you're right, and the car doesn't start. Or we had a family tell us that the bus stop that the kid is assigned to is dangerous, you know? And so you start to dig into these things and they're very reasonable explanations for attendance issues.

0:22:12.6 AS: Yeah.

0:22:13.2 JD: And so this is a way for us to sort of dig into some of those questions to help us better define the problem. And we're spending a lot of time on these early stages. And what I typically tell people is these early stages, before we ever develop a solution, account for at least 50% of any of these projects, because we wanna be very sure that when we start solutions that the problem is well understood, otherwise if there's misalignment between that problem identification and then the solution, then we're just wasting time and spinning our wheels.

0:22:50.7 AS: What do you say to people, like, "Come on, this is so much work. I mean, let's just solve the problem. Come on, John. You know, it's a problem. We know it's out there. Let's go, let's solve it"?

0:23:00.8 JD: Yeah. I mean, that's actually something that, I mean, there's that. And then when you're in an improvement team, there's, I have many other responsibilities that I need to attend to. And for a team like this that's cross campus, we have to have the meeting somewhere. So we pick a campus, and that means the people at the other three campuses have to travel to the meeting. So there are sort of hardships or at least extra work that's associated with this. But we just sort of keep reminding people like, this deep study is worth it. And the good thing with us, I think, is that we're a very mission-driven organization. That mission orientation is assessed during the interview process. So the vast majority of people that work at United are very bought in and very driven by that mission. And something like this is a very mission-aligned effort. So it's not like we're trying to improve some web traffic or something like that that may be harder to find, maybe important, but maybe harder to find meaning in. This is kids' futures, like improving this...

0:24:16.6 AS: People are generally aligned.

0:24:17.7 JD: Have a significant... What's that?

0:24:19.7 AS: People are generally aligned.

0:24:22.6 JD: People are generally aligned. That's right. Yeah. Yeah. So I'm really interested, like I said, we're in the middle of this PDSA, so I'm really interested in what the outcome is gonna be. We're gonna run this for about 20 days, basically until our winter break here in about a week and a half, gather the data, we're gonna use that to go back and then see if we're ready to write this problem statement, basically.

0:24:44.8 AS: So how would you summarize today's discussion?

0:24:49.0 JD: Yeah. If I was gonna kind of recap where we are, just sort of overall, I'd say the first thing is we, as an organization, senior leadership team, we set this chronic absenteeism as a key priority, right? So that was set at the organizational level, our senior organizational level, this overall challenge. And then in talking with the team, because we're telling them for the first time, hey, this goal is to go from 50-ish percent down to 5%, so it's really important, again, with that team that we frame this as an improvement orientation. This is not an accountability orientation. This isn't an individual person's fault if we don't achieve this metric. This is a team effort. And people have to understand that because people, especially in education, really have this accountability sort of mindset ground in. So we have to sort of...

[overlapping conversation]

0:25:46.8 AS: Which can also bring in defensiveness or...

0:25:50.1 JD: Defensiveness or what's gonna happen if we don't meet these goals, those types of things. So we kind of constantly have to talk about that frame. I think it's important for that challenge to be quantitative. So it's very clear if we have met it, if we're on track, if we didn't meet it, if we're not on track, if we're not moving in the right direction. I think that's really important. I also talked about how long we're spending defining the problem, understanding the problem, understanding the system before we ever got to solutions, before we ever attempted any solutions. This PDSA is not about testing an intervention, it's about gathering information, gathering additional data, which is a fine use of the PDSA. And then the final thing I would say is, the model is then paired with this improvement process. These guiding questions that are tagged to these tools are very helpful, because we have this now written record and people can respond to it.

0:26:53.0 JD: They see it in black and white, and then we can refine it based on the input of the group. And I know that sounds simple, but most of the time we just talk and we don't write stuff down, and we don't have a record, and just makes it harder to see sort of what we said we were gonna do, did we do those things? One thing I didn't mention, in our sort of project and meeting tracker, there's a tab called Journey. And every milestone, every meeting, there's a one-sentence description of what happened, and there's a link to any tool that was created at that meeting. So on one single tab of a spreadsheet, anybody could see the entire process that a particular improvement team went through on their particular project.

0:27:40.3 AS: Excellent. Well, on behalf of everyone at the Deming Institute, I want to thank you again for your discussion. And for 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."

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In this episode, Bill Bellows and Andrew Stotz dive further into acceptability versus desirability in the quality world. Is it enough that something is "good" - meets requirements - or do you need to focus on degrees of "good"? How can you tell the difference?

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 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. Episode, today is episode eight, Beyond Looking Good. Bill, take it away.

0:00:25.4 Bill Bellows: Hi, Andrew. How are you doing?

0:00:29.1 AS: Beyond looking good. So beyond my good looks, that's what you're saying. Okay.

0:00:33.6 BB: No, but it's funny, this beyond looking good and so I could say, Andrew, how you feeling? Oh, I'm feeling good. Right? I'm feeling good. So we have this, and that's part of why I think is funny is how are things? Things are good, things are good.

0:00:49.3 AS: Looking good.

0:00:51.0 BB: And that's what I find is, I mean, and it's not that people are necessarily honest, but when somebody says how was your day? Good. Or it could be the extreme other, and we won't use any foul language, but it's like, but I find it's just a very common, how are you feeling? Oh, I'm feeling good. Or I could say, great, which is better than good. So anyway, so I'm gonna pick up on, well first say that a heavy focus of this series, Misunderstanding Quality, is for you, quality professionals out there around the world that are excited by Deming's work, learning about Deming's work, trying to bring Dr. Deming's ideas to your organization in your quality function.

0:01:41.6 BB: Or it could be, you're elsewhere in the organization and you believe that...you're inspired to realize that there's something about how quality is managed in your organization, whether you're in design or manufacturing, which is inhibiting what you might want otherwise to do. And what I'm hoping is that the examples and concepts presented here can help you, one, absorb the ideas yourself, begin to absorb them, eventually explain them to people at work. At least once a month I'm contacted by someone listening to the podcast who says, hey, they wanna connect with me on LinkedIn, and then quite often I reach out to them and ideally end up in a conversation with them to find out more about what they're trying to do.

0:02:38.7 BB: But what I'm hoping is that this fundamental information, knowledge, wisdom is useful to you and personally learning, but then depending on what you wanna do with it, you have to engage others. And that's why I've been encouraging, and this is what I do with people I mentor, is you have to develop the ability to explain it to others. 'Cause you can't be the only one talking about these differences. You're gonna drive your coworkers nuts. You might get in a jam where somebody's confused by what you're trying to do, and you need help, or you need help in implementation, help in explaining.

0:03:17.6 BB: So I'm gonna go back to acceptability and desirability. And I was in the Finland, the Netherlands and the Sweden about a month ago with friends in each of those countries. And what came up was, again, this acceptability/desirability and that contrast. So acceptability again, as a reminder is, there's no need to know where we are within the requirements. It is absolutely good. All we know is that it meets requirements for whatever the requirements are. It is you're comfortable with good versus bad. I was talking with somebody, some clients today and we were talking about, pass versus fail. And I said, 'cause it's really a pass. Acceptability is a pass-fail system. And what does passing mean?

0:04:17.5 BB: Passing means not failing. It's like, years ago when I was a summer student working for this jet engine company in Connecticut and got together for beers one Friday night with a couple of the executives, and there were a couple of us summer interns there with these directors. Yeah. Senior directors. And one of the senior directors says to us, says, so what's the difference between business and crime? And we're like, this and this and this and this. And I don't know what our answers were, but we. And finally one of them said, no, no, no, no, no, no. He said, the basic difference is crime's illegal.

0:05:03.0 BB: So you end up with what is bad, what is bad is what's not good. And what is good, good is what's not bad. And so what is passing? Passing is not failing. And so when I was explaining to somebody today I was asking him, what's the letter grade? What letter grade? In fact, I asked a very senior NASA executive this question once. What letter grade do they expect for everything they buy that put into their missions? And he said, A plus. And I said, A plus is not the requirement. He said, what's the requirement? I said, D minus. And he is like, nah, it's not D minus. I said, your procurement system is based on things being good or things being bad. He said, yep.

0:05:45.7 BB: I said, well, what is good but passing? Right. Good is not... Good is... To be good is to not be bad, to pass is to not fail. What is crime? What is crime is what's illegal versus legal. It's one or the other. We talked once on the previous podcast about Kepner-Tregoe problem solving, decision making. And part of decision making I mentioned is you come up with a bunch of characteristics of a decision. You're buying a house and you want it to be one story, three bedrooms, two bathrooms, whatever it is. And you put down all the requirements and then you ask for each of those requirements. Is it a must or a want? And a must is yes or no. It has it or it doesn't. So it must have three bedrooms, must be one story. The must could be must be under a million dollars or whatever the number is.

0:06:53.5 BB: And then you get into, well, is that really a must or is that a high weighted want? For our daughter, Allison, I remember taking her out to buy a bike for her birthday one year and she said, well, how much can we spend? And I said, $200. So, what did she say, Andrew? "What if it's 201?" Well, then you get into, well, is that a must or a high weighted want? You know what I say? Depends on how much money's in your wallet. If you don't have $201, it is a must if you're...

0:07:34.7 AS: I thought she was gonna say, if I can get it for 150, can I keep the 50 bucks?

0:07:41.3 BB: But that's it. So acceptability is like treating it as a must. It is absolute. It has to be three bedrooms. And then what is desirability? Desirability is the lower the cost, the better, the higher the performance, the better. And so acceptability is absolute, it is good versus bad. Desirability there's relativeness. And the next thing I wanna say is why should we be interested in desirability? Which also based on what we've talked about before, is to be appreciative of desirability in regard to the Dr. Deming's Red Bead Experiment. Deming Red Bead Experiment, we had red beads and white beads the customer wanted white beads. And then one of the things we looked at was, if all the red beads are gone, can we still improve?

0:08:46.1 BB: And then people would say, well, we can make the white beads faster, we can make them cheaper, but can we make the white beads better? And the huge blind spot and asking that question to audiences on a regular basis is, they get stuck. Well, then we got into, well, what if there's variation in the white beads? So part of desirability is that there's variation in good. And that allows us to go beyond just being good to better. But what is better than? Well, better than is, I mean, what would be better for the organization would be a better appreciation of the white bead variation. One, could prevent red beads from happening in the first place. And so why do we have a gas gauge that goes anywhere from E to full? It allows us to watch the gauge go down and go down and go down.

0:09:39.7 BB: What does that? It's watching variation in good and then getting gas before it runs out. So if we use a run chart and monitor vacuum level in a braze oven if we're monitoring something on a variable way, not just saying it's good or it's bad, that allows us to see trouble coming before it happens. We could use that information to create a control chart and go one step further. And so relative to a given characteristic, what we're doing is trying to prevent non-conformances, trying to prevent bad from happening by monitoring what is good. What we can also do and what I shared is with appreciation of Dr. Taguchi's insights, the idea that the closer we are to that ideal value so when we're at home cutting the piece of wood really close to that line, why do we do that?

0:10:33.7 BB: Because at home we have to get those pieces of wood together and they're not quite square or straight, then that's extra work over there. So those are two aspects of the value proposition for desirability. And then I wanted to mention is, our son is a handyman and a pet sitter. And he is self-employed in both. And the handyman stuff involves and sometimes it involves woodworking. And recently he's doing some work in our house and some really cool stuff. So he experiments in our house, which is great for us. He also experiments in our daughter's condo. So there's great opportunities for him to practice doing something. So he was cutting some long pieces of wood and they weren't, he was very frustrated. They weren't coming out straight. So we called a friend who's a master craftsman over, and he gave us both a lesson on how to, how desirability, how to get a really straight cut, not just anywhere within spec, but you need a really straight cut so they fit together well.

0:11:38.6 BB: Well, this carpenter friend, Alex, shared with me a while ago, years ago, what it's like in the construction industry. 'Cause I explained to him acceptability, desirability, focusing on the target. And in the world of construction, he gets involved, he'll be involved on a team building a multimillion dollar home for six months to a year. And it's not uncommon he's called in to have to deal with everybody else barely meeting requirements. And his job is to go in there and straighten things up because they're not quite right. And that's all this compensation stuff. And that's what with his insights trying to help our son get around that. All right, so, I do wanna share a couple anecdotes from Rocketdyne the world of acceptability and so it was a fun story.

0:12:41.2 BB: I was meeting with a small team and one of them was a senior quality manager and in the quality organization. And he says, you know what the problem is Bill? He says, what's, you know what the problem is? He said, "the problem is the executives VP of quality and as directors are not getting the quality data fast enough." So I said, "well, what data?" And he says, "scrap and rework data. He said, "they're just not getting it fast enough." So I said, "I don't care how fast they get it it's already happened."

[laughter]

0:13:18.9 BB: And I kept saying to him, the speed doesn't matter. And so how many red beads did we have today? Well, we gotta instantly report the number of red beads on a cell phone. No. If you monitor the white bead variation, then that's a means to do that. Also say, when I joined Rocketdyne in 1990, there was a big movement on the space shuttle main engine program. And I don't know what instigated this, but Rocketdyne developed, designed and developed and then produced for many years the space shuttle main engine. I mean the world's first reusable rocket engine. And there was a movement before I got there to change the drawings. And so a set of manufacturing drawings will have a nominal value, let's say 10. And then it might be something must be 10 plus or minus one.

0:14:19.4 BB: And what does that mean in terms of acceptability? It means anything between nine and 11. And then what I learned was they'll say that the number 10, that's the nominal value. And then we have 10 plus or minus one. Well, what matters to the person downstream is not the 10 plus or minus one. What matters to the person downstream is it's gotta be between nine and 11. So no matter what that nominal is, the nominal goes out the window. So there was a movement to get rid of the nominal value. 'Cause now the machinist has to do the math, 10 plus or minus one. Okay? Anything between nine and 11. So we're gonna save you all that trouble and just give you two numbers. The min and the max. And so what is that system? That is a system based on acceptability.

0:15:07.0 BB: And so that was the starting point when I joined. And so what I wanted to add for our listeners, if you're in an organization, this came up recently with one of my clients, and they're talking about the nominal value of that 10. The 10 plus or minus one, or it could be the nominal value is 11 and they'll say 11 plus nothing minus two. And so what does that mean? 11 plus nothing means eleven's the max minus two means nine and 11. So when I saw it doesn't really matter what the nominal value is, 'cause all that's gonna happen is gonna get translated to a minimum and max. And so in this client, they're talking about nominal values, nominal values. And I said, my recommendation is when it comes to desirability, don't say nominal.

0:16:00.3 BB: 'Cause I'm not convinced we use that term the same way. What I would suggest, again, this is for those listening to the podcast on a regular basis, is don't use the word nominal. It's confusing. Use the word target. Say that is the ideal. And the idea, by using the word target, which may not be part of the vocabulary, you can differentiate from nominal, which I find to be confusing and just say that's what we want. I'm gonna give you another fun story relative to acceptability. I was at a supplier conference, so in the room are a couple hundred Rocketdyne suppliers. And the person speaking before me says, and there was some very heavy duty brow beating.

0:16:48.0 BB: And the person ahead of me says, when we give a Rocketdyne employee a job and they sign that it's good, that's their personal warranty, Andrew. That's their personal warranty. So for you suppliers, when you tell us something is good, that's your personal warranty to us. And so that has to be transmitted to your organization. That's personal warranties. We take it seriously. This is the space business, Andrew. So that was going on and there was some heavy duty browbeating. And on the one hand I'm thinking, I wonder what happened recently where somebody said, Andrew, get up there on stage and go browbeat 'em, go browbeat 'em. And so this guy's up there, browbeating, browbeating.

0:17:42.7 AS: We need people to take this serious.

0:17:44.0 BB: Well, this is personal warranty, Andrew. When you say it's good, that's your warranty. So I got up and I told the story of the bowling ball being left in the doorway of the bedroom. And I said, the fact of the matter is, Wilson gave us his personal warranty that the bowling ball was in the bedroom. And just trying to say, 'cause the personal warranty is not a personal warranty of an A plus Andrew. It's not a personal warranty. It's a personal warranty that it's good and what is good, Andrew? Not bad. And so when I hear this talk of personal warranty, it's like it's not all that it's cracked up to be. When you start to look at what is good is what's not bad.

0:18:36.4 AS: By the way, I have a funny one to share in this one. And that is, every time I start my ethics in finance class with a new batch of fourth year finance students here in Thailand, class starts at 9:00 AM and the students think that the time to arrive is somewhere a little bit before or a little bit after nine. And when they arrive at the class at 9:01 or actually just after 9:00, they find the door is locked.

0:19:12.3 BB: Yeah.

0:19:13.3 AS: And then I leave them outside. And then after about five minutes, I go out after they've built up a group of people out there and I come out and I talk to them. I said just so you know I want you to be on time for my class. Don't tell me about traffic. Don't tell me you're busy. I got a full-time job and I'm working like crazy and I'm here for you. I'm not making much money out of this. So show me the respect and be here on time. They come in, they walk in shame, past all their classmates, and then they sit down and then I lock the door again, and of course another batch comes at about 9:05 or 9:10.

0:19:46.0 AS: And then I do the same. And then I bring them in, and then next week they come and they're all there at 8:58, let's say 8:59, but nobody arrives past 9:00. And then in the following weeks, I never locked a door anymore. Curious how things change. And of course, things start to shift back to that range around it, but it just made me think about what I do in trying to communicate that, whether it's right or wrong or whatever. But I like doing it because I want the students, I wanna set the parameters from the beginning. Like, take it seriously.

0:20:26.4 BB: Oh yeah. I go to a daily meeting and it starts exactly on the hour and it's done exactly. And everybody knows that. And the degree to which things are accomplished and 'cause the whole strategy was to develop a cadence that, yeah, no, that's...

0:20:56.8 AS: And I have a hard time. I want to, with my valuation masterclass bootcamp, which I do have classes at 6:00 PM. I'm generally pretty lenient letting students come in, but there's a part of me that has... I've started locking the room after 6:03 or so, and then I'll unlock it five minutes, 10 minutes later and let a few people that are... But I've had some questions in my mind as to whether I should just be hard line and say, it starts at 6:00, if you don't make it, see you next time. Now we also record it so they can watch it. But I don't know, I haven't really figured out whether I should be that tough or not.

0:21:35.0 BB: Yeah. And that's what it comes down to. I think depending on the environment, there could be, I mean, it's about synchronizing watches, right?

0:21:48.9 AS: Well, yeah. And the other thing that you could say is that, well, Andrew, come on if you understand variation, then you understand that there's gonna be some people that are gonna be late, and there's gonna be some people that are gonna be early. You set the target at 6:00 PM what else would you expect? But I guess what I'm thinking is, if for a student they should be thinking, I need to shift my target to be 8:00, sorry, 5:55 if the meeting's at 6:00, that way I could be a little bit late, you know?

0:22:16.2 BB: Exactly.

0:22:16.7 AS: And it's same concept, it's just that shifting that target. So maybe I need to start working on that one.

0:22:25.3 BB: No and it's respect for the other 15 people in the meeting that... you know, and this idea that we are... This meeting is designed for this reason, but it has to fit the work. And, yeah, I mean, so is that necessary for a college class? Again, I mean, if it depends on how much you wanna squeeze in. And five minutes if you're trying to get a whole bunch in and develop a cadence, then, yeah.

0:23:07.6 AS: Well, it also depends. What are you teaching.

0:23:11.4 BB: Exactly.

0:23:12.5 AS: In my Valuation Masterclass about valuing companies, I've decided I'm not teaching Excel. You can go somewhere else and get that, and people ask me for it, and I let them use my Excel model that I've created, but I've just decided that's not what I'm gonna teach. And so in this case, with being an ethics class, I think it is probably important to teach about the importance of time and understanding that. And so for that, but for the bootcamp, Valuation Masterclass Bootcamp, I am trying to teach discipline and helping young people realize you gotta deliver. And so that's it. By the way you're looking good, Bill. So let us summarize beyond looking good. How would you like people to... What would you like them to take away from our discussion on this topic?

0:24:07.3 BB: It goes, this is...I mean, we started off this whole series talking about quality and the eight dimensions of quality and the book and the article by David Garvin of the Harvard Business School. So to first introduce in this series called Misunderstanding Quality, that there are dimensions of quality. And amongst those dimensions were capacity and reliability and repairability. And one was aesthetics, and one was a sense of a reputation that through everything else, you're developing a reputation. Well, one of them was acceptability, and that then was the inspiration to get into the contrast between acceptability and desirability.

0:25:05.6 BB: And there's a lot to that. And so what I found in the beginning I had a little bit in mind based on some things I've seen. And then the more I researched it, the more I saw and what I wanna get into next time is, and these are questions I was asking people in the trip to Europe is, first is, can acceptability - a focus on acceptability explain the incredible reliability of Toyota products? At least that I have experienced. Can you explain that with acceptability? And I don't think so. Next, okay, I'll go back to my notes here.

0:25:57.7 BB: Next is, does your organization, again, for those calling in, the better you understand this distinction between acceptability and desirability. Does your organization distinguish those? Does your quality system... Is your quality system based on acceptability? Does it have acceptability and desirability? That is a question for our audience. What I want to get into next time is, and I think I've mentioned this before, I've read much a great deal about Lean. I've gone to Lean conferences. I've written plenty of articles for the Lean Management Journal involving reading articles and commenting on them. Everything I see within Lean is acceptability. I don't see any mention of desirability. Six Sigma quality is that we wanna have 3.4 defects per million. There's no mention in acceptability, either explicitly or implicitly to this difference between acceptability and desirability nor in Lean.

0:27:04.9 AS: Sorry, can you clarify that for just a second? Okay. So you said Lean was one and Six Sigma was the other, which was focused on which?

0:27:13.4 BB: Well, what I'm saying is that I don't see explicitly... I don't see a call out in the Lean literature a conversation about acceptability and desirability. What I see is plenty of evidence of an acceptability-based quality mindset in Lean, in Six Sigma quality, in Lean Six Sigma, in Operational Excellence, in the Toyota Production System is what I see is a heavy emphasis directly about things being good versus bad. I don't see any inference to desirability that there's something beyond good in that system.

0:28:06.4 BB: And that's what I've been wanting to point out, is I think Dr. Deming's work is unique in its appreciation of that distinction in explaining the difference and the value of understanding when acceptability makes sense, when desirability makes sense. And that's what this whole Misunderstanding Quality series, a big part that I'm trying to introduce through my experiences is, if you're interested in moving your organization or just your personal awareness beyond a good mindset into continual improvement, that's what I'm trying to bring about in this series.

0:28:50.5 AS: Fantastic.

0:28:50.9 BB: That's my story, Andrew, and I'm sticking to it.

0:28:53.7 AS: Yeah. Exciting. Exciting. Well, Bill on behalf...

0:28:58.9 BB: It'll be on my tombstone, acceptability is not desirability.

0:29:01.7 AS: Yeah, exactly. We have accepted the death. It is acceptable. It's not desirable, but... On behalf of everyone at The Deming Institute, I want to thank you, Bill, for this discussion. Again, it's a fun one to hear what you're thinking about. And for listeners, remember to go to Deming.org to continue your journey. Any final thoughts Bill?

0:29:31.4 BB: Keep looking good Andrew, keep looking good.

0:29:34.0 AS: I wanna go beyond looking good. If you wanna keep in touch with Bill, just find him on LinkedIn. 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.

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Before you jump into tools and solutions, you need to take a step back. In this episode, John Dues and Andrew Stotz discuss the four questions you need to ask in order to make the system you want to work on visible, and decide on a direction.

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 am 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. And the topic for today is, what is the topic for today, John?

0:00:25.4 John Dues: See the System.

0:00:27.3 AS: All right. Well, why don't you take it away?

0:00:30.3 JD: All right. Great. Yeah, it's good to be back. Yeah, just as a quick refresher for people following along in the series, so two episodes ago we briefly talked about the importance of framing the challenge as an improvement goal. And then last episode, if you remember, we went deeper into those three sort of faces of performance measurement. There was research, there was accountability, and then there was improvement. And if you remember, you took the avocado quiz and you got 100% on that quiz. But the whole purpose of sort of taking that time to dive into those three different types of measurement or three different types of goals was this idea that problems arise when measures aren't used for their intended purpose. And what we talked about was, if you're gonna do a research goal, then, you know, the basic goal for research is to contribute to the knowledge base.

0:01:32.4 JD: And for accountability, the purpose of the goal is to determine the application of rewards and sanctions. And then for improvement, the goal is to learn our way to a system that produces a higher level of performance. And basically, at the end of that sort of episode, we established that the challenge or direction should be framed as an improvement goal, in my opinion, and not as an accountability goal, not as a research goal. And then we have this model that we've been working through which is up on the screen for those that are also watching the podcast, and it's this four-step improvement model. So we've outlined these steps. So step one is to set the direction or challenge. That's what's gonna be your improvement goal, not your accountability goal.

0:02:28.7 JD: Step two is to grasp the current condition or conditions on the ground where you are in your organization. Step three is to establish the next target condition. Step four is to experiment, overcome obstacles in the way of meeting that next target condition on the way to that ultimate goal or that direction or challenge that you've set for your organization. And then we've said multiple times that all of the steps are done with this team that's including those working in the system, those with the authority to work on the system, and then someone that has this System of Profound Knowledge lens. That's sort of a quick recap. And so what I thought we could do today is to sort of go back to, actually to step one.

0:03:16.8 JD: So we've gotten an overview of it, and talk about some other things to think about when you're on this particular step. And if you remember in step one of the model, what we're asking is, where do we want to be in the long run? Or what do we as a team or as an organization, what do we wanna accomplish? And we've talked about that this is this longer range goal, and it's a big goal. It may seem even impossible or nearly impossible at the outset, but if we achieve it, what we're saying is this thing, whatever it is, is really gonna differentiate us from other organizations, from other schools in our case, or you know, it could be differentiating you from other businesses or other hospitals or whatever the thing is that you're working in.

0:04:07.9 JD: We said this challenge or direction typically has this sort of long-term timeframe, six months to three years as sort of a rough guide. And then I talked about this example, one of our goals or challenges that we sort of set in our organization is we wanna significantly reduce student chronic absenteeism. If you remember, when we looked at this a couple episodes ago, that number rose significantly coming out of the pandemic. And so it's right around in the 50% range. So 50% of our students are chronically absent, which is a very high number. And we wanna take that all the way down to 5%. So right now as things currently stand, that seems like a very tough, nearly impossible challenge that we've set for the organization.

0:05:07.4 AS: I'm curious about how stretch of a challenge should someone be thinking about in this case? I mean, it's one of the hardest things when you start setting goals, is like, are we thinking about 10 years from now? Are we thinking about one year from now? Are we thinking about, come on guys, let's dream big, let's envision what we could be, or are we talking about realistically we think we can get to this point? How do you think about that?

0:05:32.7 JD: Yeah. I like this six month to three-year timeframe for step one, for the challenge or direction, that sort of ultimate goal that you're reaching for. It's not so long that it seems like it's, you know, there's no urgency. It's not five years, it's not 10 years. But it's not so short that it's gonna be impossible to achieve this tough thing. Six months to three years, when you're talking about a significant organizational effort, you gotta be realistic. There's, you gotta have a team working on this. You have to train people, you have to educate people on why this goal is an important goal. And so I think that all of those things take time. Some infrastructure within your organization has to be set up, resources have to be deployed.

0:06:21.5 JD: And so to be realistic but not so far off into the future, I think that six month to the three-year timeframe is a pretty good one. And then step three is to establish your next target condition. So along the way you're setting these intermediate sort of goals that you're working towards along the way ultimately to reach that challenge or direction. So I like the six month to three-year timeframe. And previously when we talked about set the challenge, almost all of our focus was on that quantitative goal. Like, how are we gonna quantify that challenge? And I talked about this chronic absenteeism example. But during this first step, I think it's also really helpful to take a couple sort of sub-steps. And one of them that we talk about in our organization is See the System.

0:07:16.8 JD: Like literally see the system in which we work. And I've found that it's really helpful to have some questions to ask the team that's working on this, questions like on the outset of, so we've set this challenge, we wanna reduce chronic absenteeism from 52% to 5%. Well, what is the largest system to improve when we're working towards that goal? What's the aim of that particular system? What are the opportunities for improvement within that target system? How will the opportunities for improvement be prioritized? Those are sort of four of the questions we ask at the outset of one of these improvement projects, when we're working towards one of these long-term goals. And when we've started asking those questions, at this point in the process, we formed an improvement team.

0:08:15.9 JD: For something like attendance, it's cross-disciplinary, meaning we have a number of people in a number of different roles. We have four school buildings in our school system, so there's representation from all four school buildings. So it's really a cross-functional team that's working through those particular questions. So I think that's really, really important. And then throughout the process, even if folks aren't a member of the team that's meeting on a regular basis, in this case it's a weekly team meeting, there are other people that are going to be important to gather information from; students and families, for example. That's an obvious one. Other staff members that aren't necessarily members of the team that are meeting every week, but that there are ways to gather their input as well.

0:09:04.5 AS: And in this...

0:09:05.5 JD: Oh, sorry, go ahead.

0:09:06.7 AS: In this graphic you show on the left, some people work on the system, some people work in the system, and then you've got your System of Profound Knowledge coach. Is that what you mean by improvement team or are you just highlighting some roles?

0:09:19.3 JD: Yeah. Well, so the improvement team members should be composed of each of those three groups. So in our particular team there's actually two people that have sort of like enough of the knowledge of the System of Profound Knowledge that they could, I'm one of them and then there's another person that also has that knowledge that's working on this project. And then there's a number of people that are working on the system, working in the system in different ways when it comes to this chronic absenteeism, this attendance problem.

0:10:00.3 AS: Okay.

0:10:01.3 JD: And really what we're thinking about during this See the System step in the process is it's really a funneling process. So, even within just the chronic absenteeism, student attendance realm, there's almost unlimited opportunities for improvement and many different areas where we could focus our efforts. And so we're trying to funnel down, focus down to the most vital areas that will have the biggest impact on this chronic absenteeism problem.

0:10:38.5 JD: And we're also really working hard to make sure that people on the team and will be impacted and responsible for implementing whatever this new theory is, this new improvement theory or this new improvement system, they're a part of the team from the get go. One reason is because they're close to the work and they're gonna inform a lot of the ideas that we try. And ultimately for things that are put in place, they're also the people that are gonna have to implement. So if they were a part of developing those solutions, they're much more likely to sort of be bought in from the get go versus just being told you're gonna do this new thing.

0:11:17.3 AS: Yeah.

0:11:17.9 JD: And I think something that I've found to be very, very critical, when you work with teams like this and you're answering those questions like I talked about, what system are we gonna focus on? What's the aim of that system? Is we have a series of tools that are gonna be known to a lot of people that listen to this podcast, maybe some of them are new to people, but we have this series of tools that we use that help us visualize the group's thinking. I'm a big believer when you're working in groups that you write stuff down and you have people react to it, right?

0:11:53.5 JD: You actually do that. You write it down, can be as simple as chart paper with post-its, and you paste that, you post that to a whiteboard or whatever, the wall, and everybody can see it as it's being made. And you can ask clarifying questions, you can ask for what people are thinking when they put up that idea or that brainstorm, and I just think it's really, really important. And so I think a key part of our improvement process here is that we've matched the tools to these guiding questions.

0:12:29.3 JD: So for this question, we use this tool or this tool because we know we use that particular tool, it's a good way to represent that particular question. So we've provided some of the structure because a lot of times people see the System of Profound Knowledge, and even when they start to grasp that as a management theory or a management philosophy, they need some type of structure beyond that to then work with the team in their organization to answer those questions to, like I said, aggregate the group's thinking and put in into something that's coherently understood by the whole organization.

0:13:12.6 AS: Right.

0:13:14.3 JD: So I thought we could just start with the first two questions. What is the largest system to improve and what is the aim of this system? So when we started working with this team on this chronic absenteeism problem this year, those were the first two questions that we asked. And we use a tool called a System Map to represent our system as we understand it. And then we also worked with the group to write an aim for this attendance work. So this may be a little small on the screen, but the target system is up here as attendance. And then we've written an aim as a group to figure out, oh, I can put this in Slide Mode. That'll make it a little bigger. We've written an aim as a group so that we all know like, what is it that we are aiming for as the attendance team? That's the first thing that we did.

0:14:19.7 JD: So for this particular system, this target system that says the aim of the United Attendance System is to first, or one, define strong attendance for students and staff. Two, ensure that students, families, and staff have a shared understanding of what it means to have strong attendance. And three, create and improve systems that identify and remove barriers to strong attendance for students and staff. So it's not necessarily, this is sort of a qualitative statement, there's not necessarily right and wrong answers, but as we were sitting with the group, it's about a 10-person improvement team. And we just took a Google form and said, what do you think the aim of this work should be? There was like one or two people that included staff, like, we should actually think about staff attendance in addition to student attendance, and the whole group was like, oh yeah, that's a really good idea.

0:15:15.9 JD: And so right from the get go, that became a part of the aim. And you can see how the inclusion of staff in that would maybe change the nature of the improvement effort. Again, it's not right or wrong, but it just, when you explicitly set that aim for the group, there's a much clearer guide for what you're gonna be working on. There's also things in here that may not have been obvious to people. So that first part of the aim is define strong attendance. So, many people may think, well, everybody knows what good attendance is in the school, but that's not true. That's really not true.

0:15:54.3 JD: And the problem is, the main problem is, is because when you think of what's good attendance in your brain, your mental model, what I've found with both students and adults is that there's an association with grade scales. And so when you think about a grade scale, if you get a 90% on a test, for most students would say that's a pretty good grade. In most systems, that's an A minus, right? And so when you say, well, what if a student has 90% attendance, is that good attendance? People say, oh yeah, 90% is good, but 90% means you're missing 10% of the year. So in a traditional 180 school day year, 180 times 10% is 18 days. So when you ask people, is it okay for students to miss 18 days? Almost 100% of them say, no.

0:16:45.0 AS: Yeah. One day every two weeks.

0:16:47.9 JD: Yeah. Basically one day every two weeks. But there's a disconnect between 90% and 18 days for people. And so one of the things that we're building as a framework that defines how many days is sort of reasonable and if you miss so many days per quarter or semester, what's that gonna add up to at the end of the year? And then how's that translate into a percentage? So just little stuff like that becomes more apparent when you start to write this stuff down, when you get input from the group. And then, so we have the aim. And then we also sort of represented the attendance system in the System Map. So on the left hand side of our System Map, we have the contributions and conditions of the attendance system. So there's things like Ohio Attendance Laws that we have to attend to.

0:17:37.9 JD: There are things like family dynamics and stability and beliefs, that's gonna contribute to attendance at our schools. There's sort of health perceptions, especially coming out of COVID. We trained people to sort of be more cautious and keep kids at home during the pandemic. Well, some of those habits took and there's sort of a different, for a lot of people there's a different interpretation of when you should keep a kid home versus when they should be in school. And so all of these things sort of contribute to what we're seeing in our system. And then there's all these core activities that we do that impact attendance. Now, one thing that's really interesting with the core activities is that when the group originally sat down, a lot of the core activities had to do very explicitly with our attendance systems.

0:18:28.8 JD: Like at what point is a student considered truant, truancy systems, the attendance tracking systems. And this is one of the areas where I pushed the group to think, well, what are all of the core activities that we do as a school that contribute to a kid coming to attendance, I think... Or sorry, coming to school, and effect their attendance. Now, could some of those attendance systems have an impact? Yeah. And you can see that attendance intervention systems makes up one of these sort of core activity boxes here in the middle. But there's many other things like for example, student and family onboarding. Like, how was a student brought and their family brought into the school community? Do they feel welcome? Do they make a connection to a staff member? Their school culture and trust, is it safe? Do I have friends in my classroom?

0:19:20.2 JD: There's academic systems. Are the classes engaging? Do I want to go to science class because we do experiments or whatever? And so you can see there's many other core activities just besides the core attendance systems that influence attendance. Some of the other ones we have on here are health and wellness and transportation, 'cause I've spoke before that that's a big problem in Columbus right now. And then, so we have these sort of inputs, the contributions and conditions, and then things happen while the kids are at school. And then there's these positive and negative outputs, right, that our system is producing. A positive output would be student academic growth, a negative on the flip side would be student academic stagnation.

0:20:04.8 JD: And then as you sort of go up from the outputs, you have to think about sort of how are we collecting feedback from our constituents, our families, our students. And then how do we use that information to design and redesign our system? And then it sort of loops back, sort of forms a feedback loop to the contributions and conditions. So this may seem like, is it worth the time or not? But it really is very helpful at the outset to sort of represent your system visually. So you have, this gives you an idea of all the different things going on in your system, in this case, our attendance system. And it also starts to give us ideas where we might focus our efforts because we have a, like a comprehensive picture of what these core activities are in our organization.

0:20:57.3 AS: When I look at this, I just think, no wonder it's so hard to improve. When you look at the system and all the different aspects and when you bring someone into this group and they say, wait a minute, we didn't think about staff or as an example, or wait a minute, we didn't think about transportation, oh, yeah. And then you realize like how big the system is, how interdependent it is and how difficult it is to really make lasting change. Whereas it's kind of just natural state that all these things fall into place and bring, I wouldn't say stagnation, but they bring the current state.

0:21:36.2 JD: Yeah. I mean, it certainly helps you understand the complexity level, right? Yeah.

0:21:43.7 AS: It also makes you think that once you've gone through this, you've got everything there, then you have to really think as a team, where can we have the most influence or what is the area that we think has the biggest, or is the leading item that if we could fix this, it can impact other parts, 'cause when you look at what you're putting up on the screen, it's just overwhelming. Like, we can't do all this.

0:22:11.4 JD: Nope. And we're not gonna focus on all of these things. So as a part of this improvement model and this improvement process that's sort of nested within the model, that's the whole purpose, is to sort of represent the whole system and then start to narrow the focus of the team. And that's a perfect segue because the next two questions that we're asking when we're trying to see the system is, what are the opportunities for improvement within the target system and how will the opportunities for improvement be prioritized? So probably many people on here will be familiar with something that looks like this. And again, there are certainly places for technological resources, but I will say the vast majority of the work I do with improvement teams is done with chart paper like this, post-it notes and a marker.

0:23:16.7 JD: You can be pretty powerful when you're armed with those tools when you have the System of Profound Knowledge philosophy. But basically what we did was just post that question right on top of the chart paper. What are the opportunities for improvement within the United Schools system of attendance? And then all of these blue and pink post-its, which you probably can't read, but those are just the people on the team answering those questions. Basically one idea per post-it note. And then we basically took those ideas and kind of grouped them categorically. And then once it sort of emerged what the categories were, they were given these labels, these category headings.

0:24:04.6 JD: So we have data, we have about four post-it notes about data, academic systems, communication. That's a big one, you can see has a lot of post-it notes, not surprising. Transportation, it's a pretty big category and that's on the top of everybody's mind in Columbus right now. We have sort of improvement and intervention ideas and then we have culture and engagement. So once we brainstorm, we categorize, put them in these affinity groups, basically. And then from there, and see, it's a tool. You can see this, this isn't just people sit around and talk. They have to write their ideas and then there's actually a tool that we use to organize those ideas. And then we store this in our project and meeting tracker so people can refer back to this. And then we use this information to help us complete subsequent steps.

0:24:56.2 AS: So was this a source of the chart that you showed us prior?

0:25:03.0 JD: When you say source of the chart...

0:25:06.3 AS: The layout of the system that you showed previously that had all these different things in it, did that originate from this discussion with post-it notes and putting stuff up on the wall and then later you put that into that, or is that different?

0:25:18.4 JD: System Map happened first. So I'm actually going in like sequential order. So the System Map happened first and then the affinity diagram.

0:25:26.3 AS: Now it's opportunities. Okay. Yep.

0:25:28.5 JD: Yep. Now it's opportunities. Once we understand what our system looks like, what are those opportunities for improvement? Then what we did is we said, how will the opportunities for improvement be prioritized? And we created this tool, it's called an Interrelationship Dye Graph. So we basically took the categories from the affinity diagram and those are these boxes here. So you have transportation, improvement and intervention, culture and engagement, academic systems, communication and data. And basically we systematically go around the circle and the first question we say is, is there a relationship between transportation and improvement and intervention? And if the group sort of consensus is, yep, those two things, there's a relationship, then we say, which one is impacting the other thing the most? And we draw an arrow away from that sort of dominant cause.

0:26:35.8 JD: So you can see transportation, that group thought transportation was having an impact on improvement and intervention. And then you just basically keep doing that for each of the categories. Then we compare transportation and culture and engagement. We ask those same two questions about what, is there a relationship and if so, what's the directionality of the relationship? We go around the circle until we've done that with every one of these categories. And then we basically tally up the number of "in" arrows versus the number of "out" arrows. And the thing with the most out arrows is sort of starred. And that's thought of as the dominant cause. Now, you have to know context, what this team is talking about and thinking about, 'cause there's not a lot of information just right on this page.

0:27:29.2 JD: But you might ask like, why is transportation having such an impact on improvement and intervention? Well, or why is transportation having an impact on culture and engagement? It's because the transportation system right now is so flawed in Columbus, buses aren't showing up at all sometimes, kids don't get picked up, so their parents have to bring them in. They're often an hour, two hours late to school. And so what people are saying is there's so many of those problems being caused by transportation right now that it's impacting the ability to do interventions with the kids, for example, or it's impacting the ability to build culture and engagement 'cause kids are constantly having to be making up school and making up work and those types of things. So...

0:28:16.8 AS: And in Thailand, when we have problems like that, the free market solves it because we can get, people can apply to transport through vans and other activities. But, well, is it a socialist state of Ohio these days or what's going on?

0:28:33.4 JD: Well, I would say there are various transportation possibilities. I would say there are no great systems for, you've been assigned and you've opted to ride the school bus and it doesn't come on a particular day, there's no sort of like on-demand on that particular day type of solution for the kid to take besides the parent taking them or that type of thing, so, unfortunately.

0:29:01.4 AS: Just a funny, a fun story. When I was a kid, we grew up, the piece of land that our development was built on was a piece of farmer Barlow's land that he sold off in parcels. And we worked in his farm on the summertime. And then he drove the bus to school during the wintertime. So see Farmer Barlow right there and you get on the bus and he showed up every single day. I don't think Farmer Barlow...

0:29:22.5 JD: I was gonna say...

0:29:22.8 AS: Ever missed a day.

0:29:24.3 JD: I know a lot of farmers and I'm assuming that bus driver was pretty reliable.

0:29:27.4 AS: Yeah.

0:29:28.3 JD: So yeah, unfortunately that's just not the case right now. So, but context's also important. So we actually have a few different improvement teams going on in our school system right now. And one of them is transportation. So as a group, we sort of decided like, while transportation is having a large impact this year, it's not the thing for this group to work on because there is a transportation improvement project also going on, but there's also an acknowledgement that there's gonna be overlap between those two things. And as the group talked about knowing the kids and knowing the students, it's certainly not the only reason kids are absent. And I think that someone in the group actually said even if transportation was perfect, we would still have this chronic absenteeism problem. So there are other things that we need to focus on and work on, so.

0:30:21.1 AS: Great.

0:30:21.3 JD: Those are just some examples of tools and you know, visualizing the thinking of the group and you have to know your system. You can't just sort of go straight off the tools, there's other sort of analysis that has to happen along the way. And so that's kind of where I wanted to go today. And I think sort of wrapping up See the System is where we're at now. So I can kind of wrap that up and we can go from there.

0:30:48.4 AS: Fantastic. If you had it in one simple statement that could wrap up what we talked about today, what do you think is the most valuable thing for people to take away from this discussion?

0:31:03.1 JD: From this discussion? I think there is a desire, an impulse almost to jump in and create solutions. But I think it's... What I've seen, it's very important to step back and make sure you really see the system and do a number of things around seeing the system. Next time we'll talk about defining the problem, to really make sure you do those things before you start jumping to solutions. And in fact, about 50% of the work or more in our improvement process occurs before we ever even talk about possible solutions. And I think it goes to that old Einstein quote where it's like, if I had an hour to save the world, I'd spend 55 minutes, make sure I understand and define the problem and five minutes. You know, putting that solution into action.

0:32:00.3 JD: I'm sure I'm messing up the quote, but you get the gist of it. So I think what we've seen is we set this challenge at the organizational level, that we have to understand the difference of those three faces of performance improvement or performance measurement. We wanna focus the challenge or direction, we wanna frame it as an improvement goal. And it's important to do that and it's important to make that ambitious, to quantify that. But then there's these other sort of qualitative things that we need to step back and do that allow us to see our system. And there's, you know, we went through some guiding questions and some related tools that can help put this into action with an actual team that you're working with in your system. And these tools are not education specific. You can use these in any type of organization.

0:32:45.0 AS: I'm gonna sum it up in five words. Slow down to speed up.

0:32:48.7 JD: I like that. Slow is smooth and smooth is fast.

0:32:52.7 AS: Smooth is fast.

0:32:54.3 JD: I like it. Yep.

0:32:55.4 AS: So John, 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 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'm gonna leave you with one of my favorite quotes from Dr. Deming, people are entitled to joy in work.

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John Dues and Andrew Stotz are diving deeper into the improvement model that John is building with his team. In this episode, learn the three ways to think about an improvement frame for your big challenge.

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 John Dues, who is part of the new generation of educators striving to apply Dr. Deming's principles to unleash student joy in learning. And the topic for today is Frame the Challenge. John, take it away.

0:00:23.6 John Dues: Hey Andrew, it's good to be back. Yeah, we're gonna talk about Framing the Challenge today. We kicked off a new series a couple of episodes ago. I introduced this improvement model that we can use to set ambitious goals backed with this sound methodology. Make this disclaimer again, we're sort of building the plane while we are flying it. So this improvement model is new at United Schools where I work. And so again, we're actually letting listeners sort of see it as it's being built and first put to use. And so I think just starting out with a quick recap of the model is a good place to start. So what is this improvement model that we've been looking at? I'll pull up my screen so we can share a visual of the model for those that are watching. Right. Can you see that all right?

0:01:21.2 AS: Yep.

0:01:21.3 JD: Great. Give me one second. All right. So we have this improvement model. Basically the core idea of the model is it gives us the scientific way of thinking. And remember, we talked about we're working to close this gap between current conditions in our organizations and future aspirations. In order to close this gap, we're walking through the four steps on the model. So first, we set the challenge of direction. That's really where we focused our time last episode. The second step is to grasp the current condition. The third step is to establish the next target condition. And then the fourth step is to experiment to overcome obstacles. And that's where we spend most of our time in this four-step process. And then the other thing we've talked about is we do it with this team. The people working in the system, that's one part of the system, one part of the team.

0:02:19.8 JD: And we've talked about this in our case. This can be students, it can be teachers, whoever the frontline people are in your organization. Then there's those with the authority to work on the system, to make changes to the design or the architecture of the system. That could be a teacher in a classroom, or we've said the principal of a school, or maybe the superintendent of a system of schools. And then one of the innovations that we've made to this improvement model is that that third group or that third person on the team is someone that has Profound Knowledge, someone that's using Deming's principles to guide the work. So that's the basic model that we looked at in the first episode and...

0:03:11.8 AS: And I would just highlight... By the way, can you put it on slideshow?

0:03:15.3 JD: Sure.

0:03:15.4 AS: And I've been reading Mike Rother's book, rereading his book on Toyota Kata and stuff. And so this has really got me back to it. But what you're doing is applying this and helping us understand it as you're putting it into action at your school, right?

0:03:35.0 JD: Yeah, we've had an improvement model. And I think... Yeah, so like it says down in the right hand corner, that this model, it's based on Mike Rother's work, the Toyota Kata work. I think one thing that was missing from our model previously was like, how do you set this challenge or direction? How do you do that in an ambitious but reasonable way? And I think Mike Rother's sort of model speaks to this. So that's why I like his four-step model. I also like the four steps because it's pretty simple. It's not 15 steps. It's not 20 steps. It's four steps. Now there are some steps that you have to learn and stuff like that. There are different pieces to each of the steps, but I like that it's four steps. It's sort of easy to remember. It's memorable. And I think the innovation that we've done so far is who is the team that's working through this? And I think to frame it as the people working in the system, the people working on the system, and then someone with Profound Knowledge, I think that's an innovation, from what I've read about Mike Rother's work.

0:04:39.6 AS: Yep.

0:04:40.4 JD: Yeah. And so to continue the recap from last time, I think in the last episode, so we introduced the model two episodes ago. And then last episode, what we said we were gonna do is start walking through each of the steps, episode by episode, and do a deeper dive into each of the steps. And we did that with step one last time. So we did Set the Challenge last time. And just as a refresher, this is that longer range goal that would differentiate us from other schools in our case, if we achieve it. But remember, we also said it seems nearly impossible at the outset. This is something that's off in the horizon. It's probably gonna take at least six months, probably more like two or three years. And then I gave this example at United where I am. So we're a school system. One of the challenges that we've set is to reduce our chronic absenteeism from 52%. So that's sort of the current condition. And we wanna bring that down to 5%. And there's this huge gap between those things. Obviously, we talked about an order of magnitude, and we don't quite know how to get there right now.

0:05:48.7 AS: Yeah, I think that's the point is we don't know how to get there right now.

0:05:57.6 JD: Yeah. Yeah. And I think... And so what I originally had planned to do is to go on to step two. And I think we're gonna do that next. But I wanted to pause because last time we briefly touched on this idea of Framing the Challenge as an improvement goal. And so with this episode, what I wanna do first before we go on to step two is talk about how to sort of think about that framing. And I sort of have studied a little bit of performance management from healthcare specifically. And there's really these three phases of performance management. When you're setting a goal, there's sort of performance measurement that has a research orientation. There's performance measurement that has an accountability orientation. And there's performance management that has an improvement orientation. And I think it's really important to understand the difference between those three types of measurement because I think conflation of those three things can derail and often derail improvement efforts. And in fact, as I was doing some research for this episode, I read this quote in one of the journal articles that I was sort of reviewing. It said, "the problem with measurement is that it can be a loaded gun, dangerous if misused, and at least threatening if pointed in the wrong direction."

[laughter]

0:07:19.6 JD: Right. So, when I read that I was like, this is important enough to take a pause and do a little bit deeper dive into that, you know, the differences between the three that we sort of got into on a surface level last time.

0:07:33.5 AS: One of the things that I like to say these days when I talk to people about measurement is measurement... If the subject being measured, let's say a table, I'm gonna measure the length of a table versus measuring the performance of an individual as an example. If the subject being measured knows, is aware that they're being measured, you're gonna have a problem.

0:08:02.0 JD: Yeah, I think that's very well put. And...

0:08:07.5 AS: The table doesn't care.

0:08:09.3 JD: The table doesn't care, but people always do. No doubt. No doubt. So I thought it'd be... I put together a table for those that are watching 'cause there is a lot of nuance to this and we'll kind of walk through this step by step, sort of the differences between goals or measurement for research, measurement for accountability, and then measurement for improvement. So I think just... I came up with these dimensions in some of the research I was doing. So, what's the purpose of each of those? What questions are you trying to answer? What are some example questions that are answered with that type of measurement? What's actually getting measured? How often is it getting measured? And then why does quality improvement or quality measurement matter in that particular area? So let's start with the purpose first. So when we're thinking about measurement for research, what we're really trying to do is contribute to some knowledge base, right?

0:09:01.8 JD: You know, I think the classic example is, what a university professor is often doing in their research. The second type of measurement is measurement for accountability. And really there, what we talked about last time is the purpose is to determine the application of rewards and sanctions or rewards and punishments. And that's really juxtaposed against measurement for improvement, which is... The purpose there is to learn our way to a system that produces a higher level of performance, right? And so let's look at measurement for research. We talked about the purpose being contributing to the knowledge base. If the questions that we're asking are about constructs or relationships between constructs or theories, then research is probably the direction we wanna go. An example question would be what's the relationship between two conceptual variables and what gets measured is... Could be numerous latent variables, but how often is this measurement happening? Typically once or twice during a study. And what we're trying to do is detect a relationship where they exist, right?

0:10:16.8 AS: So it could be... Like in a school, it could be a relationship between being late, the late rate and the absenteeism rate.

0:10:29.9 JD: Yeah. I mean, you could do research into why is it that student... Why are students chronically absent? You could do research into what's the best way scientifically to teach reading, right? And so you're gonna sort of come up with some answers there, at least answers that are sort of coming out of a lab, right? And a lot of times measurement for research or research goal or research study, that can be helpful to sort of initially point you in the right direction. You might do a literature review when you're trying to come up with solutions in your particular context.

0:11:10.3 AS: And it's important to remember that surveys properly done are a great form of research. So not only going back and seeing what's already been... What is the knowledge base on attendance, but also trying to do some research into what do students or teachers or parents think are root causes as an example.

0:11:33.3 JD: Sure.

0:11:34.8 AS: Okay. Great.

0:11:35.5 JD: Gives you a starting point, right? And so you certainly need measurement for research for sure. In that second bucket, we have measurement for accountability. And this is probably the thing that teachers and educators are most used to because there's accountability systems in all 50 states, right? And remember, we said the purpose is to determine who should be rewarded and who should be sanctioned. That's the purpose of an accountability measure. It's gonna answer questions about merit or status or accomplishment. It could be of someone like an individual teacher in a classroom, or perhaps about a school, for example. It's gonna answer questions like who's performing well and who isn't, who should be considered knowledgeable enough to do whatever, something X, right? But when we're talking about measurements, they're typically end-of-the-line outcomes, usually once per year after the fact. I've given state tests as an example multiple times. That's a very typical accountability measure end-of-the-line outcome. And why it's important to have quality measurement for accountability is that we can assign consequences based on measurement that lacks sufficient technical rigor so.

0:12:56.0 AS: Consequences as in rewards and sanctions?

0:13:00.4 JD: Could be... Yeah, consequences as in rewards and sanctions. And so there's technical guides that go with accountability systems. So how is the state, for example, calculating all of these different measures that show up on a school report card, test scores, value-added progress scores, chronic absenteeism rates? All those things have to be well-defined. Data has to be collected systematically. And it has to be done the same across the entire system so that rewards and sanctions are meted out equally amongst all the districts and schools and classrooms. But those two things are very different than measurement for improvement. And that's where I focus most of my time and where these talks really, really focus. And again, we said the purpose is to learn our way to a system that produces a higher level of performance.

0:13:48.4 JD: So we're talking about questions about specific changes as potential improvements to our systems. So some questions might be, are the changes I'm making leading to improvement? How are my changes affecting other parts of my system? And really, we're talking about outcomes and processes relevant to the object of change in terms of what gets measured. And that's happening... Those measurements for outcomes or processes are happening frequently as the practice or as the process occurs, right? Because we want feedback on a much more frequent basis than once or twice per study or at the end of the school year. That's one of the advantages here of measurement for improvement. And why does quality measurement matter in this particular area? Well, we wanna learn which changes are an improvement without wasting resources or will. Those are both very finite things in organizations, schools are... That's the same in schools.

0:14:55.2 AS: Will as in energy towards this objective, is that what you mean by will?

0:15:01.7 JD: Yeah. So two finite things, resources, which could be time or money. But will, I literally mean the will of the people, the will of the frontline people that you have to get on board with whatever this change is gonna be. And if you're moving between this thing and that, you sort of use up that will for good...

0:15:23.4 AS: It seems you have depleted the will of the people.

0:15:27.4 JD: And that happens all the time, especially where you're in a service business like education, the frontline people are being burned out all the time, teachers, in hospitals it's nurses and other folks in other industries. So that's the basic overview. And then I think one of the key things here is that there are some real measurement limitations when it comes to accountability measures and research measures or goals, when we're thinking about organizational improvement.

0:16:08.5 JD: I think the key limitation for accountability goals is that... The key limitation for improvement is that it does not illuminate why the outcomes occur or what should be done to change them when we're thinking about accountability system. For research, the key limitation for improvement is that it is impractical to administer it and not designed to inform changes in practice. So those are some real limitations. But what often happens, I think... And I should say again, like we said at the outset, that the three types of measurement are complementary. Like we need each of these three different types of performance measurement. But I think what happens is that problems arise when they're not used for their intended purpose. Remember, we said research, we wanna contribute to the knowledge base, that's the purpose. For accountability, application of award and sanctions. And for improvement, there we're actually learning our way to a better system, right? So, I thought it would be useful here. I may put you through like a little quiz here to apply the purposes of measurement to the right scenario. So, I have three situations here. They're unrelated to education. So, there's no pressure there. So, I'll read the three situations and then you're gonna tell me how would you... Which of the measurement purposes would you use?

0:17:47.7 AS: So, research, accountability, or improvement.

0:17:49.2 JD: Research, accountability, or improvement so.

0:17:53.6 AS: And I'm doing this on behalf of our listeners and readers so... And listeners and viewers.

0:17:55.7 JD: Everyone yeah.

0:17:56.7 AS: So, pay attention ladies and gentlemen, 'cause my answers may be wrong, but yours may be right. Okay.

0:18:01.7 JD: This is the check for understanding. This is a true education exercise here. And we're gonna be talking about avocados, right? So, there's no prior knowledge needed. So, I'll read through the first three situations, give you a chance to think, and I can repeat them if necessary, and you kind of think between those three. So, the first situation is rank the grocery stores in Columbus, Ohio, according to the quality of their avocados. So, would you use measurement for accountability, measurement for research, measurement for improvement? That's the first situation. The second situation is understand the relationship between weather, soil, acidity, and the eventual quality of an avocado grown in California. And the third situation is improve the quality of avocados on sale across all stores in Columbus. So, let's go back to that first situation. So, if you're gonna rank the grocery stores in Columbus according to the quality of their avocados, what type of measurement orientation makes the most sense?

0:19:15.5 AS: So I'm thinking accountability.

0:19:20.0 JD: Yeah, that's exactly right. Accountability, it's basically a grading system for avocados. You think how meat gets graded, it's grade A meat. That's really an accountability system.

0:19:33.6 AS: Okay, so listeners, viewers, did you get that one right? These are tough. John's a tough teacher. All right. Next one.

0:19:39.0 JD: You're one for one, and you have A grade schools, right? So you have A grade avocados, and that's an accountability measure. The second one was you're understanding the relationship between weather, soil, acidity, and the eventual quality of an avocado grown in California.

0:20:00.2 AS: Ladies and gentlemen, is this research, accountability, and improvement? Well, we've already eliminated accountability, so it's got to be either research or improvement. And if I get this one right, then I'm gonna get the third one right naturally. And I would say that sounds to me more like research.

0:20:15.8 JD: Yeah, that's exactly right. Research, right? So 'cause you're experimenting to see how the manipulation of variables, in this case weather, like the pH level of soil, acidity, impact the quality of an avocado. So you're basically a researcher trying to figure out what's the best combination of those things that gives you the best avocado. But this experimenting is gonna take probably years as you adjust those variables, right? And the last...

0:20:46.5 AS: Yeah, avocados don't grow so fast.

0:20:50.2 JD: They don't grow so fast, yeah. And then the third situation was you wanna improve the quality of avocados on sale across all stores in Columbus. There's only one left, so it's got to be...

0:21:03.5 AS: Well you used the word improve in it, so I think it's improvement orientation, huh?

0:21:06.8 JD: There you go. That's a giveaway. So aim is the quality of the avocado. So the basic theory of change is something like maybe improving the transport time from the field to the store. So there you can see that it's not like one is bad in terms of a measurement orientation and one is good. It's just... Is it being applied to the appropriate situation?

0:21:35.6 JD: There are certainly appropriate situations for accountability, appropriate situations for research and appropriate situations for improvement. So basically to sort of wrap this up, I mean, I thought it was really important because last time we talked, when you set the challenge and then it's gonna be something like a vision far out into the future, maybe two or three years, it's gonna be really important that that challenge is framed correctly because you're gonna be working on this thing for a long time. So with the model, we now have a way to bridge the gap between conditions and future aspirations. There's always gonna be a gap. We now have this model that gives us the scientific way of thinking and working to close the gap. And then we've said it's the responsibility of upper management to set this overall challenge as a key priority.

0:22:37.5 JD: And then we've said it's really important to understand the difference between these three types of performance measurement because conflation of the three can derail our improvement efforts. So the key takeaway here is you wanna frame this challenge or this far out direction that we're heading in as an organization as an improvement goal. And that's gonna orient the work. It's gonna orient the types of questions that you're asking. It's gonna orient the people, and the outcomes and processes that they're tracking. It's gonna orient your measurement system. You're gonna have to come up with frequent process and outcome measures that let you know how you're doing along the way. And the purpose of all of this is to learn our way to a better system. That's the purpose of measurement for improvement.

0:23:34.1 AS: That's great. A great summary. I wanna ask a question. Recently I've been teaching my corporate strategy course and I've been talking about the teachings of Richard Rumelt, who wrote the book called Good Strategy Bad Strategy, which is such a great book on strategy. But one of the things he complains about when he says his bad strategy is just setting an aspirational goal. Because as we learned from Dr. Deming, by what method? Like now, so there's... You've got to have a vision. You've got to have an aspiration of where you're going. But what he really focuses on... I think we're gonna talk about this in next sections. He really focuses on, have we really identified what the problem is?

0:24:21.7 AS: Like, what is the constraint? What is the thing that is holding us back from getting there? And what ends up happening is, when you clearly articulate the problem, what happens is it focuses... It becomes hard. Because to solve that problem, you need new resources. You need to get rid of old stuff. You've got to make substantial changes. And so it's much more comfortable for people to set strategies that are based upon wonderful visions. But never really deal with the problem. And then the workers in the companies, an employee in a company just looks up and goes, what did management just do for that long weekend? They did a weekend getaway to do their corporate strategy. And then they just came up with a fluffy vision of whatever with no help for us of how do we deal with the hardest problem is that we can't beat our competitor with the technology that we have. And we're never gonna get to that goal if we can't solve that problem.

0:25:28.7 JD: Yeah. And that's really the essence of the steps two, three, and four. I mean, the very next thing that we're gonna talk about is one, what's the current situation on the ground? Now we have this aspiration, but what's actually happening? For whatever data we have, whatever time period, 10 years, five years, whatever it is, we're gonna look at that data in a way that gives us a very firm understanding. And then remember, there's that crack in the model. That's the threshold of knowledge. So right up front, we're acknowledging.

0:25:58.0 AS: We don't know how to get over this. We don't know what's blocking us. We don't know...

0:26:03.3 JD: Yeah. We may have some ideas, but... Some initial ideas, but we do not know how to solve this chronic absenteeism problem. And that's where the experimentation comes in.

0:26:11.4 AS: So let me ask you one last question before we go. This is completely selfish, but also for the listeners and viewers out there, that is, I always ask my students this question in corporate strategy, should corporate strategy be kind of secretive in the sense that you're trying to build a competitive advantage and therefore some of the best battle attacks in war were kept secret. Stonewall Jackson was famous in his Shenandoah Valley campaign for not letting anybody know what he was gonna do the next morning. And then... Or should it be public? Like your number of 50 to five is pretty scary. And I'm just curious, what are your thoughts on that?

0:27:00.4 JD: Well, if you're in war, I think you should keep it secret. But pretty much anywhere else, I think public. Now that'd be my opinion. Now I'm in a school setting. I acknowledge that. But I've also seen...

0:27:11.4 AS: This is my quiz for you, by the way.

0:27:14.7 JD: What's that?

0:27:15.6 AS: This is my quiz for you.

0:27:15.7 JD: Your quiz for me. Yeah. Well, I have seen... And I've had the same thought. I think it was one of the founders of Toyota, or maybe someone that was an early CEO basically said, well, you give away your playbook basically. And he's like, well, just because someone has my playbook does not mean they can do it. And so education is a different orientation. There's not corporate secrets. And we're very open, we often share our practices. But I've often been on the...

0:27:45.2 AS: If you could get from 50 to five, you would want the world to know.

0:27:48.8 JD: I would want the world to know. I want everybody to do it. But I've been on the other side of this where I've gone to school and I've reached out to people get a manual or an artifact or something that they have that they do really well at their school system. And I look at it and I'm like, I don't know what to do with this. Right? So it's something altogether different to have the thing and then be able to do it. In our case, it's gonna benefit kids. We're gonna share it as far and wide as possible. So yeah, I think the setting matters. If I'm... The Union Army fighting Stonewall Jackson, then I'm gonna keep my secrets secret, my battle plan secret. But for most of the things I'm gonna share.

0:28:32.9 AS: Nathaniel Banks taking on Jackson. It was a rough series of battles for him. So I'll close out with my thoughts on this, which is that, yeah, I think ultimately once you've decided on what's your goal, where you wanna be, then I think you've got to make it public. And the reason why is because you need your employees to deliver that. It can't be... Everybody needs to be bought in. But even more importantly from a marketing and a relationship with customers, suppliers and others, they need to feel that vision. And they need to feel that mission. I think another great book is Start With Why. And that is why are we doing this? And I just read a great book on corporate strategy that is called Corporate Strategy Demystified.

0:29:25.5 AS: But it's just great because it was written in 2006. So he's talking about the battle between Apple and Compaq and Dell and all of these and IBM. And he doesn't know the outcome that Apple ends up being this multi-trillion dollar business. And basically his last sentence that I read in the last chapter is, it's over for Apple. They just can't compete in this space. And what he missed... This is what I'm teaching tonight, what he missed was the trusting connection that the customers had to Apple, to Apple's mission. Somehow Steve Jobs was able to create that mission and get it out to the world. And in the valley of death, when they were going through the worst time and it didn't seem like they were ever going to be able to do anything, it was customers that stuck with them because they believed in the mission of what they communicated. And it is that total, let's say intangible, that is very hard to measure and very hard to understand. But this is what I got when I was reading that book from 3:00 AM 'till 4:00 AM This morning, John.

0:30:44.4 JD: Whoever that author is was a small miss, a small miss.

0:30:48.8 AS: Yeah. And he's a brilliant guy. And so it's also a great point that just stick with your vision 'cause people's commitment to Apple and all that is so so strong. So being public about what you're doing and sharing it is critical because the last thing, as you said, even if somebody else has your playbook, I like to tell people that if somebody was working at General Motors and they had all the list of all the parts for Cadillac or whatever it is that they're building, and then they went to Toyota and said, build this, just because you have a list of parts and you have that operating system doesn't mean that they can build it because the product was actually designed for the operating system. And it's that entanglement in the actual process of production that makes that corporate strategy almost impossible to duplicate, even if you have the playbook.

0:31:41.8 JD: Yep. Yeah, that's it right there, I think. That's it.

0:31:46.5 AS: So fantastic. Well, 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. 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" and in school.

View Details

In this episode, Bill Bellows and Andrew Stotz explore the intersection of variation and quality through awareness of the "Paradigms of Variation.” In a progression from acceptability to desirability, Bill created this 4-part model to offer economic insights for differentiating “Zero Defect” quality from “Loss Function" quality," with the aim of avoiding confusion between precision and accuracy when desirability is the choice. Learn how to decide which paradigm your quality management system fits into!

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 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 episode 7, The Paradigms of Variation. Bill, take it away.

0:00:30.3 Bill Bellows: Thank you, Andrew, and welcome to our listeners, as well as viewers, if you have access to the viewing version. Yeah, so I went back and listened to Episode 6. I'm going out bike riding 2-3 hours a day, so I listened to the podcast, listened to other things, stop and write down. Let me go write that down. And, so, we're going to pick up today on some major themes. And, what I keep coming back to is, is I think the difference between acceptability and desirability is the difference between how most companies operate and how a company inspired by Dr. Deming would operate.

0:01:29.3 BB: And, I just think of, if there was no difference between the two, then... Well, lemme even back up. I mentioned last time we were talking about why my wife and I buy Toyotas. And, yes, we've had one terrible buy, which I continue to talk about. [laughter] And, it's fun because it's just a reminder that even a company like Toyota can deliver a really lousy product, which we were unfortunate to have purchased. And, we're not the only ones that, and they've rebounded and they've apologized, they've had issues. There's no doubt about that. They have issues, but they have notably been inspired by Dr. Deming.

0:02:30.6 BB: The one thing I brought up last time was relative on this thinking of acceptability, desirability, where acceptability is looking at things and saying it's a quality system of good and bad. It's acceptable, which is good and unacceptable is not good. And, that's how most organizations view quality. Again, the focus of this series is Misunderstanding Quality. Our previous series was broadly looking at implications for Dr. Deming's ideas. And, here our focus is quality. And, so what I'm trying to get across here is quality management, traditional quality management.

0:03:17.4 BB: In most organizations, in all organizations I've ever interacted with is acceptability basis, good parts and bad parts. It's a measurement system of it meets requirements, we ship it, if it meets requirements, we buy it. And, I'm not saying there's anything wrong with that, but I don't think a system focused on acceptability can explain... To me, it does not explain the incredible reliability I have personally experienced in Toyota products.

0:03:46.9 BB: Now, I'm working with a graduate student and I wanna pursue that as a research topic in the spring, 'cause for all I know, the reliability of components in all cars has improved. I don't know if it's, I only by Toyota, 'cause so this woman I've met recently and I'm mentoring her and we're working on a research project. And, I thought recently, I'd like... And, I'm not sure how to do this, but I just know, I think I've mentioned I worked at my father's gas station back in the '70s and I remember replacing water pumps and alternators and all this stuff. This was before Japanese cars were everywhere. There were Japanese cars, but not like you see today.

0:04:33.3 BB: And, so I'm just used to all those components being routinely replaced. And, all I know is I don't routinely replace anything but the battery and the tires and change the oil. I think that's about it. Everything else is pretty good. But, I do think the differentiation between Toyota and most other companies is their appreciation of desirability and how to manage desirability. And, that's why I keep coming back to this as a theme for these sessions. And, what I think is a differentiation between a Deming view of quality and all other views of quality. What I tried to say last time is I just give you indications of a focus on acceptability. It's a quality system which looks at things that are good or things that are bad. It's, last time we talked about category thinking. It's black and white thinking. If the parts are good, then the mindset, if they're good, then they fit.

0:05:38.4 BB: Well, with a focus on continuum thinking, then you have the understanding that there's variation in good. And, that leads to variation in fit and variation in performance. And, that's a sense of things are relatively good, not absolutely good, whereas black and white category thinking is acceptability. They're all good. And, if they're all good, then they should all fit. I was, when I was at Rocketdyne, met, and the one thing I wanted to point out is... Again, as I said in the past, so much of what I'm sharing with the audience and people I've met through these podcasts or people I'm mentoring, helping them bring these ideas to their respective organizations or their consultants, whatever it is.

0:06:29.0 BB: And, so I like to provide examples in here for things for them to go off and try. You at the end of each podcast encourage them to reach out to me, a number of them have, and from that I've learned a great deal. And, so one guy was... A guy I was working with at Rocketdyne, he was at a site that did final assembly of rocket engine components. And, so one thing I'd say is the people who... And for those listening, if you wanna find people in your organization that would really value the difference between an acceptability focus and a desirability focus, find the people that do assembly, find the people that put things together. 'Cause the ones that machine the holes, they think all the holes are good. People that make the tubes, all the tubes are good. But, find the people that are trying to put the tubes into the holes. Those are the people I loved working with because they were the ones that felt the difference every day.

0:07:31.1 BB: And, so I was in a workshop for a week or so. And there's two people ahead of me. They came from this final assembly operation of Rocketdyne. And, during a break, I was trying to clarify some of the things I had said and I used, I shared with them an example of how when we focused on not the tubes by themselves or the holes by themselves, that we focused on how well the tubes go into the holes, which has a lot to do with the clearance between them and the idea that nobody owns the clearance. One person owns one part, one owns another. And, what we realized is if we focused on the relationship, what a big difference it made. So I'm explaining it to him and he turns to me and he says, he's like, "Oh, my God," he says, "I've got hundreds of turbine blades and a bunch of turbine wheels and the blades slide into the wheel." And he says, "I can't get the blades onto the wheel."

0:08:31.0 BB: And I said, "But they're all good." He says, "They're all good." But he said, "Well, what you're now explaining to me is why they don't go together. Why I have this headache." So I said, "Well, do you know where the blades come from?" He says, "yeah". And I said, "Do you know where the wheels come from?" He says, "yeah". I said, "Well, why don't you call them up and talk to them?" He says, "There's no reason for a phone call 'cause all they're going to say is, "Why are you calling me? They're all good." So, he just walked away with his head exploding 'cause he's got all these things.

0:09:05.8 BB: And, so I use that for our listeners is if you want to find people that would really resonate with the difference between acceptable and desirable, talk to the people that have to put things together. There you will find... And, so my strategy was, get them smart. Now they have to be patient with the people upstream 'cause the people upstream are not deliberately doing what they're doing to them. So, what you don't want to do is have them get... You want their consciousness to go up but you now wanna use them to talk to the component people. Now you've got a conversation. Otherwise, the component people say, "Why are you talking to me? Everything I do is good."

0:09:51.6 BB: So, I just want to talk at this point, just to reinforce that I think there's something going on with Toyota that is very intentional about managing desirability when it makes sense using acceptability. So, it's a choice. And, so indications of a focus on desirability is when you look at options that are acceptable and you say, "Of all these apples, I want this one. It's the ripest. Of all these donuts, I want this one. It's got the most sprinkles. Of all these parking spots, I want this one. It's a little bit wider than the other. I want this surgeon. I want this professor for this course."

0:10:33.8 BB: All right. So, what we're saying "is of all the choices, I want this one". So, some new ideas I want to get into tonight are the Paradigms of Variation A, B, C, D, and E. Paradigm A we looked at in the past. That's just acceptability. Does it meet requirements or not? The quality focus is achieving zero defects. And tonight I want to get into B and C. The next time we'll look at D and E. In explaining these ideas recently to someone who listened to one of our previous podcasts and were focusing on, he started asking about decision making. And that got me thinking about, of course, I took years ago decision making with Kepner and Tregoe. And there they talk about decisions. We're gonna look, we're gonna go buy a car, go buy a house. We're gonna make a decision.

0:11:29.4 BB: And, once you decide on the decision, you then list the criteria of the decision. And you come up with all the things you want in this decision. And then you look at each of them and you say, "is it a must or a want"? And let's say you're looking at houses. It could be a lot of houses to go look at. What makes this focus on acceptability, it's musts and wants. And must is very much acceptability. So you say: "We're looking for a house that must be one story, it must be in the middle of the block. The house must be in the middle of the block. It must have four bedrooms, must have two bathrooms". So now when you're looking at all these houses, acceptability says "I'm only gonna look at the ones that meet those requirements". And, so now the strategy is to go from hundreds of options down to an order of magnitude less.

0:12:25.1 BB: Now we're going to get it down to maybe 20. Now you look at the wants. So you've got an original list of all the things, the criteria, and you look at each one and say, "is it a must, is it a want"? And what I've just said is the first screening is all the ones that pass the must get into the next category. Well, with the Kepner-Tregoe folks, they talk about must, which is acceptability, and the wants are about desirability.

0:12:51.4 BB: And then here it ties into Dr. Taguchi's mindset, and we'll look at Taguchi in a future session. Taguchi looks at a characteristic of quality, such as the diameter of a hole, the performance of an automobile, miles per gallon. And he says, in terms of desirability, there's three different targets. There is desirability, I want the smallest possible value. So, if you're buying a house, it could be, I want the lowest possible electric bills where zero is the goal. It's not gonna be zero, but I'm looking, of all the ones that pass the must, now I'm looking at all the houses, and I'm saying "I want the lowest possible electric bill". That's a Smaller-is-Best.

0:13:35.9 BB: Larger-is-Best is I want something which is as big as possible. It could be I want the most roof facing the sun, in case I put solar in. That's a Larger-is-Best characteristic, where Taguchi would say the ideal is infinity, but the bigger, the better, as opposed to Smaller-is-Better. And, the other characteristic is what Taguchi calls Nominal-is-Best, is I have an ideal single value in mind. And in each case, the reason I point that out is that desirability is about going past acceptability and saying amongst all the things that are acceptable, I want the smallest, I want the largest, or I want this. It is a preference for one of those.

0:14:19.4 BB: So, I thought... I was using that to explain to this friend the other day, and I thought that would be nice to tie in here. That desirability is a focus on of all the things that meet requirements, now I want to go one step further. That's just not enough. All right, so now let's get into Paradigms B and C. And I want to use an exercise we used in the first series. And, the idea for our audience is imagine a quality characteristic having a lower requirement, a minimum, otherwise known as the lower spec, the lower tolerance. So, there's a minimum value, and then there's a maximum value. And, when I do this in my classes, I say "let's say the quality characteristic is the outer diameter of a tube." And, then so what I'd like the audience to appreciate is we've got a min and a max.

0:15:18.9 BB: And, then imagine your job as listener is to make the decision as to who to buy from. And. let's say we've got two suppliers that are ready to provide us with their product, these tubes that we're gonna buy. And, your job as a listener is to make the decision as to who to buy from. Who are we going to buy from? And, so we go off and we tell them, "Here's the min, here's the max," and they come back. And, they each give us a distribution. And, so what I'd like the audience to think about is a distribution. Just think very simply of two normal distributions, two Gaussian distributions. And, let's say the first distribution goes all the way from the min to the max. It takes up the entire range.

0:16:08.5 AS: So wide and flat.

0:16:12.1 BB: Wide and flat. That's supplier one. And supplier two, let's say is maybe three quarters of the way over. It's incredibly uniform. It uses a very small fraction of the tolerance. So that's tall and narrow. That's distribution two as opposed to wide and flat. So, imagine we've got those two to buy from. But imagine also, and this is a highly idealized scenario. And, I use this and this is why I want to share it with our audience. Because it becomes a great way of diving into what I think is a lot of confusion about meeting requirements. And, so what I want you to imagine is that no matter who you buy from, they both promise that they will deliver at the same price per tube.

0:17:00.8 BB: So, no matter who you buy from, price-wise, they are identical. To which I'd say that's highly idealized, but that's a given. Criteria number two, the delivery rates are the same. So, we cannot differentiate on delivery. We cannot differentiate on price. The third condition we find out is that everything they deliver meets requirements, 100%. So, if there is any scrap and rework, they don't ship that to us. So, everything they deliver meets requirements. And, again, that's highly idealized.

0:17:41.6 BB: Number four is the distributions are in control. And, that means that the processes are predictable and stable. And, that's guaranteed. So, imagine these distributions day by day every order is the same shape, the same average, the same amount of variation. Also, it will never change. It will never change. And, the other thing I want to point out in this fourth point here is that your job as the buyer is to buy these. They are used as is within our organization.

,

0:18:15.5 BB: And, the fifth point is that there's a min and a max. And, so I've been using this exercise for, gosh, going back to 1995, and I throw it out there and then I show them the distributions. I say "same price, same schedule, delivery rate, everything meets requirements, distributions never change shape or location. You're going to use as is. And there's the min, there's the max. Who do you buy from?" And, I give people not only do we buy from one or two, but I also say I'll give you a third option.

0:18:51.5 BB: The third option is it doesn't matter. It doesn't matter. So, what I find is that three quarters of the audience will take distribution two, the narrow one. And when I ask them, why do you like distribution two? They say, "because it has less variation". I then say, "From what?" Then they say, "From each other." And, that's what a standard deviation is, variation from each other. So roughly 75% plus and minus...

[overlapping conversation]

0:19:25.8 AS: When you say of each other, you're talking about each other curve or each other item in the...

0:19:31.3 BB: Each other tube. So, the amount of variation from all the tubes are close together, so the variation from each other.

0:19:38.6 AS: Okay. Each item. Yeah, okay.

0:19:41.8 BB: Standard deviation is the average variation from the average value. So, when I ask them, why do you like two? Okay, and then I asked the ones who take the wide one in the middle, I say, "why do you like that one," and they say because... And, actually, we'll come back to that. This is pretty funny. They will take that, but a very small percent say it doesn't matter, and here's what's interesting, if I didn't show the distributions, if all I did was say there's two suppliers out there, the same price, same schedule, that guarantee zero defects, the results will never change. Here's the min, here's the max, I'm willing to bet if I didn't show the distributions, people would say "it doesn't matter, I'll take either one". But, as soon as I show them the distributions, they want the narrow one. And, I use this for our attendees, this is a great way to show people that they really don't believe in tolerances, 'cause as soon as you go past meeting requirements, what you're really saying is, there's a higher bar.

0:21:05.6 AS: Okay, so requirements would be... Or, tolerances would be the extremes of that flat, wide curve. And, any one of those outcomes meets the tolerance.

0:21:17.5 BB: Yes, and so for companies that are striving to meet requirements, why is it when I give you two distributions that meet requirements... Why is it when I show you the distributions, and I'm willing to bet if I don't show you the distributions and all you know is they're 100% good, then you say "well, it doesn't matter," Well then what changes when I show you the distributions?

0:21:43.6 AS: I know why I'd choose the narrow one.

0:21:48.1 BB: Go ahead.

0:21:49.1 AS: I know how damn hard it is to reduce variation and I forget about any tolerance of anything, if I have two companies that show me a wide distribution, and another one shows me a narrow one, and let's say it's accurate. I'm much more impressed with how a company can do the same exact output as another company, the same product that they're trying to deliver, but they are producing a much more narrow range of outcome, which could be that they just have automation in their production line and the other one has manual.

0:22:27.4 BB: And, I have seen that within Rocketdyne, I've seen processes do that. I have seen the wide become the narrow through automation. Yeah. Okay, so hold that thought then. So, what I do in my graduate classes is I show that... Not only do I give them two options, I give them four options. So, I throw in two other distributions, but really what it comes down to is the wide one versus the narrow one, and then the other two, I throw in there that usually aren't taken, they're distractions. All right, so what I'll do in a graduate class in quality management is to show that and get the results I just showed. If I present the same exercise and then say, "imagine the average value of distribution one, the middle of distribution one, imagine that is the ideal value".

0:23:24.7 AS: That, you're talking about the wide and flat.

0:23:28.4 BB: Yes. So, all I do is I go back to the entire exercise and now I add in a line at the average of the wide distribution, and then go through and ask one more time, who would you take.

0:23:46.3 AS: So, now the dilemma that the listener has is that now we have a, within limits, within tolerances, we have a wide but flat distribution that's centered on the middle point between the upper and lower tolerance.

0:24:06.4 BB: Yeah, yes.

0:24:08.8 AS: And, then we have... Go ahead.

0:24:11.7 BB: Well, yeah, that is distribution one, same as the first part, we went through this, and all I'm doing now is saying, "imagine the average value of the middle is said to be the ideal value".

0:24:29.4 AS: And, now you're gonna tell us that the narrow one is not on that central or ideal value.

0:24:36.2 BB: No, that is still where it is at the three-quarter point, all I've done is now said, this is desirability. I'm now saying "that is the ideal value, that is the target, that is the value we prefer". And, people still take the narrowest distribution number two.

0:24:58.8 AS: I wouldn't take the narrow one because I would think that the company would have to prove to me that they can shift that narrow curve.

0:25:06.6 BB: Well, okay, and I'm glad you brought that up because according to the explanation I gave of equal price, equal schedule, meets requirements. I deliberately put in the criteria that you have to use them as is. So, now I'm forcing people to choose between the narrowest one over there at the three-quarter point, and the wide one on target. And, there's no doubt if I gave them the option of taking the narrow distribution and sliding it over, they would. Every single person would do that. But, when I give you a choice of, okay, now what? So, two things here, one is, is it calling out the ideal of value, 'cause desirability is not just beyond acceptability, it is saying, "I desire this value, I want this parking spot, I want this apple, I want this value". And, that's something we've been alluding to earlier, but that's what I wanna call out today is that...

0:26:13.7 BB: So, in other words, when I presented the exercise of the two distributions, without calling out what's desirable, all I'm doing is saying they're both acceptable, which do you prefer? But, instead of saying it doesn't matter, I'd like the narrowest one, and it may well be what people are doing is exactly what you're saying is the narrowest one seems better and easily could be for what you explained.

0:26:40.8 BB: But, what's interesting is, even when I call out what's desirable as the value, people will take the narrowest distribution, and so now what I wanna add to our prior conversation is Paradigm A, acceptability, the Paradigm A response would be, it doesn't matter. Choosing the narrowest one, otherwise known as precision, we're very precisely hitting that value, small standard deviation, that's what I refer to as Paradigm B, piece-to -piece consistency. Paradigm C is desirability being on the ideal value, that's piece-to-target consistency. And, in Dr. Taguchi's work, what he's talking about is the impact downstream of not just looking at the tubes, but when you look at how the tubes are inserted into a hole, perhaps, then what he's saying is that the reason you would call out the desirable value is what you're saying is how this tube integrates in a bigger system matters, which is why I want this value.

0:27:54.2 AS: Okay, so let's go back, A, meet requirements, that's acceptability. Anything within those tolerances we can accept. B is a narrow distribution, what you called precision or piece-to -piece consistency. And what was C?

0:28:12.8 BB: C is, I'll take the wide distribution where the average value is on target, that's piece- to-target consistency. Otherwise known as accuracy.

0:28:27.3 AS: Okay. Target consistency, otherwise known as accuracy. All right, and then precision around D is precision around the ideal value.

0:28:37.7 BB: Well, for those that want to take the narrowest one and slide it over, what you're now doing is saying, "I'm gonna start with precision, and I'm going to focus on the ideal". Now, what you're doing is saying, "step one is precision, step two is accuracy".

0:28:56.4 AS: Okay. And step three or D?

0:29:00.9 BB: Paradigm D?

0:29:02.7 AS: Yeah.

0:29:02.7 BB: Is that what you're... Yeah. Paradigm D would be the ability to produce, to move the distribution as needed to different locations.

0:29:17.4 AS: The narrow distribution?

0:29:18.9 BB: Yes, and so I'll give you an example in terms of, let's say tennis, Paradigm A in tennis is just to get the ball across the net. I just wanna get it somewhere on the other side of the court, right. Now that may be okay if you and I are neighbors, but that doesn't get us into professional level. Paradigm B, is I can hit it consistently to one place on your side of the court. Now, I can't control that location, but boy, I can get that location every single time. Next thing you know, you know exactly where the ball is going, and that's Paradigm B. Paradigm C is I can move it to where I want it to go, which you will eventually figure out, so I can control where it goes. Paradigm D is I can consistently hit any side of the court on the fly.

0:30:11.0 BB: So, Paradigm D is I can take that narrow distribution and move it around for different customers, different applications, and Dr. Taguchi refers to that as Technology Development, and what Taguchi is talking about is developing a technology which has incredible precision in providing your sales people the ability to move the next move it to accuracy and to sell that product by tuning it to different customers as you would in sports, move the ball around to the other side of the court. So now you're going to the point that you've got incredible precision, and now you've got “on demand accuracy,” that's Paradigm D. Paradigm C is I can do one-size-fits-all which is, which may be all you need for the application.

0:31:06.9 AS: I wanna separate the Paradigm B, the narrow distribution and that's precision around some value versus Paradigm D is precision around the ideal value.

0:31:20.7 BB: And, the idea is that desirability is about an ideal value. And, so if we're talking piece-to-piece consistency, that means it's uniform, but I'm not paying attention to... I have a value in mind that I want. And that's the difference between Dr. Taguchi's work, I mean, it's the ability to be precise. Again, accuracy, desirability is I have an ideal value in mind. And acceptability is it doesn't really matter. Precision is uniformity without accuracy. And so, if you are... What Dr. Taguchi is talking about is, is depending on how what you're delivering integrates, being consistent may cause the person downstream to consistently need a hammer to get the tube into the hole.

0:32:24.2 BB: So, it's consistent, but what you're now saying, what Taguchi is saying is, if you pay attention to where you are within requirement, which is desirability, then you can improve integration. And, that is my explanation for why Toyota's products have incredibly reliability, that they are focusing on integration, not just uniformity and precision by itself.

0:32:49.8 AS: I would love to put this in the context of a dart thrower. The Paradigm A meeting requirability or acceptability, they stand way behind and they throw and they hit the overall dart board.

0:33:04.3 BB: Dart board. It's on the board. Yes.

0:33:07.2 AS: And, the narrow distribution is, well, they hit the same spot over to the left, right towards the edge, they hit that spot consistently. And, then basically, I'm gonna jump to D just because I'm imagining that I'm just gonna ask the guy, Hey, can you just move over just a little bit, and I'mma move them over about a half a foot, and when I do, you're gonna start throwing that dart right at the same location, but over to the right, meaning at the target. The center of the dart...

0:33:43.9 BB: The bull's eye. Yeah. Yeah, well, that's... And you call that C or D?

0:33:47.6 AS: I call that D.

0:33:49.5 BB: No, I would say, let's call that C being on target, meaning that C is, for games of darts where the most points are being on the bull's eye, that's Paradigm C.

0:34:04.0 AS: So accuracy, yeah.

0:34:05.4 BB: Paradigm D would be a game in which the ideal value changes. So now, okay, now I watch the... When I play darts, I'm sure there's lots of darts games, but one game we used to play it in our cellar at home was baseball. So, the dart board is divided into has numbers one, two, three through, and you'd go to... There'd be a wedge number one, a wedge number two, a wedge number three, that's Paradigm D that I could hit the different wedges on demand. But that's what it is. So A is anywhere in. B is consistent, precision, but again, the idea is if you can move that, but now what we're talking about is, is there an impulse to move it or are we happy just being precise? What Taguchi's talking about is the value proposition of desirability is to take precision, take that uniformity and move it to the ideal value, and what you've just done and doing so, you're now focusing on not this characteristic in isolation, you're now focusing on how this characteristic meshes with another characteristic. And, it's not just one thing in isolation, one thing in isolation does not give you a highly reliable automobile.

0:35:38.9 AS: Is there anything you wanna add to that, or are you ready to sum it up?

0:35:45.0 BB: No, that's it. The big summation is, we've been building up to the contrast between acceptable and desirable. I just wanted to add some more fidelity. Desirable is I have a value in mind, which Dr. Taguchi referred to as a target. So, for people at home, in the kitchen, the target value could be exactly one cup of flour. We talked earlier about our daughter, when she worked in a coffee shop and then, and at home she'd give us these recipes for making coffee and it'd be dad, exactly this amount of coffee and exactly that. And, we had a scale, it wasn't just anywhere between. She'd say "dad, you have to get a scale." I mean she was... We started calling her the coffee snob, 'cause it was very, this amount, this amount. So, in the kitchen then it's about precisely one cup. Precisely one this. And that's desirability.

0:36:40.6 AS: And, I was just thinking, the best word for that is bull's eye!

0:36:48.3 BB: Yes.

0:36:48.8 AS: You hit it right on the spot.

0:36:50.6 BB: Yeah.

0:36:51.6 AS: Great. Well, Bill, on behalf of everyone at The Deming Institute, I wanna thank you again for this discussion. It was not only acceptable, it was desirable. 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. He'll reply. This is your host, Andrew Stotz, and I leave you with one of my favorite quotes from Dr. Deming, "people are entitled to joy in work."

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Many companies strive to automate by using more technology and fewer humans. But does their productivity really improve? Does it keep them agile? In this episode, Jacob Stoller and Andrew Stotz share stories of companies that improve productivity because they focus on processes instead of tech alone.

TRANSCRIPT

0:00:02.3 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 continue my conversation 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 five, the Myth of Tech Omnipotence. Jacob, take it away.

0:00:29.8 Jacob Stoller: Great, Andrew. Thanks. Great to be here again. Yeah. Tech omnipotence. Well, it's quite a myth. We sort of worship technology. We have for a long time, and we tend to think it can solve all our problems, and sometimes we get a little too optimistic about it. What I wanna talk about is in the context of companies adopting technology and go through some of the stories about that and how that relates to productivity. Really, the myth of tech omnipotence is kind of like a corollary to the the myth of segmented success. In other words, people have believed that you can take a chunk of a company. Now we'll take Dr. Deming's pyramid, and we take a chunk out of that and say, oh, well, that fits so and so in the org chart, let's automate that.

0:01:28.1 JS: And they don't consider what happens to the rest of the organization. It's just this idea that you can superimpose automation. So this has a long checkered history. And the way technology gets justified in organizations is generally what it's been, is reducing headcount. And I used to work in a tech firm, and we used to do this. We would do these studies, not really a study, but you do a questionnaire and you figure out if we adopt this, if we automate this workflow, let's just say, I don't know, it's accounts payable. So you automate accounts payable and you say, well, you got so many people involved, we think we could cut this by three people or something like that. So that becomes your business case. Now, they had categories in these little questionnaires where you would try to get other benefits from the technology, but they tended to be what they call soft benefits.

0:02:35.4 JS: And you know what that word means. Soft benefits means, well, okay, nice to have, but it's not going to get budget money or it's not gonna get approved. So anyway that's really been the kind of standard way of getting tech projects justified. And that goes through pretty much any industry. So what would happen is people adopt these technologies without looking at the whole system. And guess what? You put the software in, you start to implement it, and you run into problems. Doesn't quite work. Doesn't work the way it was supposed to. And so the tech people tended and still do tend to blame the company. They say, well, they had user problems. Users weren't really adjusting to it. These people are sort of way behind. We're a tech company. We've automated the same process for 50 different companies, we know what's good for them. We have to educate them, but they don't seem to want to be educated. So that was kind of the way it was. And I'll give you an extreme example. I did some freelance work for research firm, and one of the studies I worked on, I'm not making this up, it was called Aligning the Business with IT. So it was trying to get people to smarten up with their business and align it to what the smart people are doing with IT. So that's how extreme that kind of feeling was.

0:04:17.3 AS: As opposed to maybe aligning with the customer or something like that.

0:04:21.1 JS: Well, yeah, wouldn't that be crazy? Or how about aligning IT with the business? Finding out what the business wants. So anyway, that whole way of thinking has had, it's sort of filtered into manufacturing in the same way. And I found this out really researching Productivity Reimagined as I interviewed Ben Armstrong from MIT Industrial Performance Center. And what I learned from him is the whole history of automation and manufacturing in North America. And really, what he told me is that between 1990 and 2010, there were increases in productivity, but those were always from reducing headcount. They never found ways to actually grow the value of the business by using automation. So around 2010 or leading up to 2010, manufacturing started to change, and we started to transition into what they call a high-mix, low-volume type of markets.

0:05:33.3 JS: And I've talked to manufacturers that have said, 10 years ago, I only had to make two or three variations of this part, now I have to make 50 or 60. So you're getting shorter product cycles, larger mix. And the big buzzword now in manufacturing is agility. You've gotta be agile. So there was a study MIT, I think this Performance Center did a study. And they found that when you actually try to grow productivity, and this is really since 2010, you actually lose agility at the same time. You're kind of caught in that situation because you can't... That you lose agility when you let go of people. But that was the only way they could increase productivity. Does that make sense?

0:06:29.1 AS: Yeah. So I'm thinking about that's interesting because agility means being flexible, being able to accommodate. And when you think about the typical automation, it's about repetitive, repetitive, repetitive.

0:06:46.5 JS: Yeah.

0:06:47.3 AS: And so I can kind of get that picture about the agility versus, let's say automation or repetitive processes.

0:06:56.3 JS: Yeah. And I think that people are longing for this golden age. You go from the 1920s to 1960s, and manufacturers made incredible gains in productivity with automation. You put in these huge welding lines where they just weld. You look at the body welding, say in a plant, and it's at lightning speed. There's no question about that. But they basically ran into a plateau with that. And one of the robotics companies told me, he said, we learned decades ago how to automate these mass production processes, but now we're getting into a different kind of age where as somebody put it, we're moving from the industrial mass production age into what they call the process age, where processes are becoming more and more important. So to...

0:07:50.8 AS: And I'm thinking about the automation. I've seen videos on like online about let's say a fulfillment center with all these little robots going around and picking, putting things on them and packaging them, and all of that. So I'm thinking, well, automation has become definitely more maybe, I don't know if the words agile, but it's definitely, it's gone beyond like just automating one little part of the process.

0:08:21.4 JS: Yeah. It's gone away from the let's replace people type scenario. And so what the fastest growing segment right now in robotics is collaborative robots, which can work with people. So to put it very simply, instead of a human replacement, they're becoming tools. But these things are amazing. A worker online on the shop floor can programming these, and they have to be able to because things are changing so fast. So a worker, a welder can actually hold the robotic arm and guide it through a weld and thereby program it so it can learn how to do that weld. So then you can get the robot doing all the dangerous parts. If they're welding something large where they might have to get up on scaffolds or something, they might be able to get the robot to do some of the more dangerous types of positions. So that's when you get the real benefit.

0:09:27.7 AS: Yeah. I would think like in a paint booth, which we had in factories I worked at, now you can seal it off and have a robot in there, and all of a sudden lung problems and other things like that just go away.

0:09:40.8 JS: Interesting. Well, so anyway, we're still in a, I think in a rough spot generally with manufacturing because between 2010 and present day, at least in North America, productivity's gone down. And it's because people haven't been able to... They've depended on those people to keep their agility, but they haven't learned how to add value.

0:10:08.3 AS: Can you discuss that just for a second about productivity going down? That's a little bit of an odd thing because I think most people think that productivity's probably going up. What is the measure you're talking about, and how long and why is that happening?

0:10:23.5 JS: I think it's basically... At least I'd have to look at the study that they have, but it's basically output in proportion to the number of hours. I think that's pretty well accepted. So they're losing ground as the demands for agility are increasing. And their attempts to automate have been, caused problems. You automate and you lose your people, and then you're gonna have a heck of a time getting them back right now because that's really hard in manufacturing. But yeah, I would have to look at the study in detail to understand how they got that number, but I was taking it on faith that this is from Ben Armstrong, who's the director of the Industrial Performance Center.

0:11:11.8 AS: Yeah. You just mentioned something that I was just recently talking with another person about, and that was, one of the downsides of an aging workforce is that you're losing really senior people and you're replacing 'em with people that may not have the skills. Also, US kind of is notorious in America for a declining education. And with education coming down for the last 30 years or so, it's also hard to find, let's say, engineers and people that... There's not a deep market in some of these places where there's need. So that's a real challenge that businesses are facing.

0:11:55.2 JS: It is. Yeah.

0:11:56.3 JS: Yeah. And now what they're doing is they're looking at manufacturing from that standpoint. They're now acknowledging that the scarce resource is the human. And we have to actually build, if we're gonna automate, we have to build those processes around people. And that's... I'm gonna just read you a description here. There's, I think you heard of Technology 4.0, where they talked about putting sensors all over the place and having smart factories and that kind of thing.

0:12:27.7 AS: Yeah.

0:12:28.3 JS: Well, we now have something called Industry 5.0, and I'm just trying to get the wording here 'cause this has been around for a couple years, but it's on the EU website. It says it's "a vision that places the wellbeing of the worker at the center of the production process and uses new technologies to provide prosperity beyond jobs and growth while respecting the production limits of the planet." So they're really trying to center technology around that so you're not doing your sort of environmental and your DEI and all that independently of your production, it's all integrated part of it, which is I think something I'm sure Dr. Deming would have advocated.

0:13:17.8 AS: I'm still kind of fascinated by the productivity, and I just look at here in Asia, productivity is just rising. Education levels are rising. Engineering skills are rising. Competency in certain areas, specialties is just rising. And I oftentimes, I think that one of the things why this... One of the reasons why this is a good discussion that we're having is because in the West, in particular in the US, there's a new challenge. And that is how do you bring business... How do you bring jobs back to the economy when you're facing a very, very different workforce from when, let's say I left Ohio in 1985, roughly. It's a very different workforce nowadays.

0:14:07.1 JS: Well, yeah. And I think a lot of the offshoring arguments were about, well, we'll keep the smart jobs here 'cause we're all well educated and we'll export the low paying, less skilled jobs abroad, and we'll all win. But now, of course, we're finding that people overseas are getting darn well educated, so you can't have a more expensive labor force and have people that maybe aren't even as well educated.

0:14:40.0 AS: Yeah.

0:14:40.2 JS: So it's... Yeah, I think the West is in a very tight spot right now.

0:14:45.3 AS: Yeah. So speaking of automation and technology, I was just typing as you were speaking, and looking at productivity, it says... I was using ChatGPT and that says, US productivity growth average 2.7 annually from 2000 to 2007, but slowed to 1.4% from 2007 to 2019. There was a brief pickup in 2020, and then it's been slow since then. And they talked about this productivity paradox that I think is what you're referencing what Ben is saying.

0:15:21.3 JS: Solow's paradox? Yeah.

0:15:22.6 AS: Yeah. So that's interesting. Yep.

0:15:25.8 JS: Yeah. Solow's paradox, what does it say, that you can see the impact of technology everywhere except in the productivity numbers. I think that's what he said.

0:15:36.8 AS: Yeah, so he said that...

0:15:37.2 JS: He said that by the way in 1987. So anyway, yeah, maybe we're slow learners or something like that. But no, that's really fascinating. But I think that there's a difference between GDP growth and the growth of productivity in manufacturing. I think probably the ones that Ben Armstrong quoted were a little closer to actual manufacturing. But right now, GDP includes financial intermediation, it includes... If you own a home in North America, they include imputed rent, the rent you would have been paying as part of the GDP. So I think there's a bit of inflation, I guess, in the GDP over the years. So I think we have to take that sometimes with a little bit of a grain of salt and look a little more carefully at what the numbers are telling us.

0:16:32.8 AS: Yeah. The main ways that we typically look at it outside of GDP is like non-farm productivity, like non-farm worker, what's the output? And the other one is total factor of productivity. So yeah, GDP can be quite distorted for sure.

0:16:50.4 JS: Yeah, for sure. And anyway, and also just taking GDP per worker can be a very misleading number.

0:17:00.5 AS: Yeah.

0:17:01.3 JS: But anyway, yeah, it's fascinating. But again, the myth is... This myth that technology will solve everything is all over the place. I think with autonomous vehicles, the idea of being able to replace drivers is a just enormous economic cherry, I guess, that everybody wants to pick. You think about it what that would mean if you could... If you bought a car and then you could rent it out as a taxi at night, or what it would do to Uber if they didn't have to have people driving the cars. It's just enormous. But it's been very, very frustrating to get to that point. And when you look at a lot of the forecasts, it's still a long way away. So I think we have to be more conservative about that and talk about more the benefits really of technology and people working together. And I think the automatic driving features they have on cars now are fantastic. You can make a car a lot safer. You can slow down if you're tailgating somebody, it alerts you of just even the simple things that if there's a car to your left passing on the freeway, you get an alert, and that's... This is all really, really good stuff, but I still think that the self-driving part is maybe longer off than people think.

0:18:39.4 AS: Yeah. I think regulators too get panicked and then people want action when there's an accident or something like that. You also mentioned something about the computing power that's required for some of what this is doing, and that's a fascinating topic because it's funny, it's just amazing how much computing power is really going to be required over the next 10, 20 years.

0:19:05.0 JS: Yeah. I think there's a bell curve around some of this stuff, and I'm just gonna talk and I'm gonna jump to regenerative AI, which everybody is talking about. And they're saying, how long before I can have regenerative AI write a document that we could actually be held liable for? It can write documents, but you can't trust it. So they keep trying to improve it, but it's a kind of an exponential problem here where the wider you make your bell curve, the exponentially more power you need to do that. To the point where Microsoft is talking about buying Three Mile Island nuclear plant and rebuilding it to power all this AI stuff. So it's just phenomenal amount of power. I think that's somewhat... I don't know, relying purely on more computer power seems like it might not be a winning strategy.

0:20:13.3 AS: Yeah. It's the regenerative AI and all that's going on is also... I like to say when proponents talk about it and its strengths, which it definitely has strengths, I'm not arguing against that, I use ChatGPT almost every day. And I can say I used to have an editor sit next to me a lot of times and now I don't need that because I can go back and forth. But what I can say is that when a proponent of AI gets accused of murder and they're innocent and they're gonna go before a judge, is that proponent of AI gonna use purely AI to build their defense or would they prefer to have a lawyer who's using AI as a tool. I think I would argue we're far away from the trust level of being able to walk in there and say, I trust AI to get me out of this situation that I've been accused of murder and I'm innocent and it can get me out. There's no way any of the proponents of AI would take on that I would argue.

0:21:23.3 JS: Yeah. Well, it's interesting. I very recently had to write an affidavit and my lawyer was being a little slow on it, so I tried ChatGPT just for the heck of it and I created what I thought was pretty convincing. I gave it the facts and it gave a pretty convincing sounding affidavit, but then the lawyer did it and I saw what she did and it was so much... She had it... It was almost a human touch to it. It almost looked a little less like an affidavit. It was more of a sort of a document that had some meaning to it. That was an eyeopener for me.

0:22:10.8 AS: Yeah. Yeah. Interesting.

0:22:13.6 JS: But anyway, yeah, I'm wondering if we could jump back to automation and manufacturing because there's a story I wanted to share with you about some of the followers here of Toyota and, of course, company that's strongly dedicated to Deming's principles as well. And this is a company called Parker Hannifin. And what they do, and this is in the Lean tradition, is they're very conservative about adopting robots or any kind of automation. And they realize, when you bring in robots, you're bringing in software, you have to upgrade the software, you have to maintain it, you gotta train people, there's a risk of obsolescence or whatever, there's all that risk. So you really wanna be very, very careful. So what they do at Parker is you have to, but if you're gonna present a business case for a robot, you gotta be able to show that that's the only way that you can get the improvements you want.

0:23:22.3 JS: And by the way, you gotta have a target. You don't just say I wanna automate this, you say I wanna make this process better, here's how. So I got an example from Stephen Moore who's... He's retired now, but he was the VP I think of operations. So he was certainly the top person in terms of all the Lean initiatives that they did. But he told me and gave me an example. He said that somebody came to them, they had a cell with three people and they wanted to use the robot, one, so that they could reduce from three to two because they needed another person in another area. And secondly, there was a safety problem with that cell with loading and unloading the machines. So they came to Stephen and Stephen said, okay, let's divide our team into two groups. One group can sort out, plan the robotic implementation, how it's going to be done. The other group is gonna see if they can achieve the same objectives without a robot. So by the end of the week, the team that was without the robot team was able to achieve both objectives. They were able to reduce it down to two people and they solved the safety problem over the loading. So just by thinking it out by really going deeply into the process, they were able to do everything that people expected the automation to do.

0:24:58.3 JS: So that is a philosophy, I think is a lesson I think to anybody that's automating. 'Cause remember, we've got lots of companies that are just thinking about replacing people, whereas Parker Hannifin is talking about increasing the value of processes. They're concerned about safety here as well as headcount. And very often, they're looking at processes to improve the quality. So we've gotta look with a broader lens.

0:25:29.1 AS: That's fascinating. And for those people that don't know Parker Hannifin, I had mentioned before that was one of my father's big accounts when he was working in DuPont in the old days.

0:25:37.4 JS: Oh yeah.

0:25:38.4 AS: He was living in Cleveland. We were living... I grew up near Cleveland. But Parker Hannifin is about a $77 billion company. It's got a net profit margin of 14% versus the industry average of about 11%, which is already pretty high. And that's pretty impressive. But what's really impressive about Parker Hannifin is that it is the 11th most... If you look at all companies in America and you ask them which has been consecutively producing dividends since 1957, so about 66 years, Parker Hannifin has been producing an annual dividend. And in fact, they've been increasing that dividend ever so slightly every single year for 66 years. That is a very, very impressive feat. And very few companies are out there. In fact, only 10 companies are better than that, that are listed in the stock market. So there's some fun information from a finance guy.

0:26:35.4 JS: Well, of course, and the fact they've... We talked about some of the productivity challenges in the last while and the fact that they've sustained this. We're talking post 2010 when the productivity has been slowing down, and they've clearly kept things going, which is... We've seen that with Toyota and a lot of companies that follow these principles. It's a way of sustainable growth.

0:27:03.3 AS: Yeah. One of the things about Toyota is it's so fascinating is that they're not sold on automation, they're sold on improving processes. And if automation can help that, that's impressive. That do it, but otherwise, fix the process before you automate.

0:27:21.5 JS: Absolutely. And that's again I think this isolation of operations is a sort of a black box of the corporation where people sit in the boardroom and they just say to the operations person, well, that's your problem, solve it. We don't wanna know about it. So they see things outside the box in a sort of a financial lens. I think we talked about that in myth two.

0:27:45.2 AS: Yeah.

0:27:45.8 JS: Whereas the things that go on with process actually defy financial logic. We're improving quality and productivity and timeline very often too, delivery at the same time.

0:28:03.3 AS: Yeah.

0:28:04.2 JS: 'Cause it's a better process. It's simpler, it's better and it's a powerful concept. But I think a lot of people that are not inside process or not inside operations, aren't aware of that.

0:28:17.8 AS: Yeah. So how would you sum up what you want people to take away from this discussion?

0:28:25.3 JS: Okay. Well, I think there are a few, I guess, bullet points I would emphasise. First of all, there's no question that technology has potential to help companies get significant productivity gains. But you shouldn't see it as a technology-only solution, I think again like we were saying, you have to look at it as a way of improving processes and that's where the power of it really is. I think it shouldn't be about replacing people, but it should be combining the strengths of people and the strengths of technology. I think that's where a lot of the high potential is right now. But that means you've got to know how to optimize your process. And that's what Dr. Deming, what the Lean folks all work very hard on. And I kind of think this is a time when companies maybe need to think more seriously about that. And finally, last but not least, I think one of the wonderful things about technology is you can use it to remove the dull, dangerous aspects of work and you can make the jobs more, you know, safer and more human, I guess, more friendly for human workers by using technology. So I think that's a big hope there.

0:29:55.5 AS: Well, that's a great discussion of myth number five, The Myth of Tech Omnipotence. 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. You can find Jacob's book Productivity Reimagined at jacobstoller.com. This is your host, Andrew Stotz, and I'll leave you with one of my favorite quotes from Dr. Deming and I hope you're living it right now. "People are entitled to joy in work."

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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."

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In this episode, Jacob Stoller and Andrew Stotz discuss the myth that managers need to know everything in order to manage. What happens when you ask non-managers for feedback?

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 Jacob Stoller, a Shingo-Prize-winning author of The Lean CEO and also Productivity Reimagined, which explores how to apply the Lean and Deming management style at the enterprise level. The topic for today is Myth Three: The Top-down Knowledge Myth. Jacob, take it away.

0:00:31.2 Jacob Stoller: Okay. Great to be here again, Andrew. And, yeah, the myth we're gonna talk about is this notion that managers can make their workers and their people more productive by telling them exactly what to do. And that's surprisingly prevalent in the workplace. But I wanna start out by just saying how this relates to the other myths that we were talking about, 'cause we started with this, what Dr. Deming calls the "pyramid," the org-structure type or...

0:01:08.9 AS: Organizational chart.

0:01:09.9 JS: Paradigm idea, yeah, the organizational structure that says that everything is a independent component, right? You got your different departments, they all work independently, we optimize each, and we optimize the whole, right? So, from that, it naturally follows. And we did Myth Number Two that we can follow financial logic, 'cause financial logic fits nicely into that structure. And of course, we saw last time that all the shortcomings and problems you get when you follow that kind of thinking. So, the third myth is we get to top-down knowledge. And again, that follows from the pyramid structure. If it were true that interdependent components weren't interdependent, that everything could act independently, it would certainly follow that you could have knowledge about those components taught in school and that it would all make sense. I think it's the interdependence that really shoots that whole thing down of top-down knowledge. So... Sorry. Yeah.

0:02:16.3 AS: Go ahead.

0:02:18.8 JS: I wanted to start with a bit of a story just to illustrate how prevalent this is. I was doing a workshop with a small excavation company, and we were looking at ways to make them more effective and serve more customers, grow more effectively, and stuff like that. I did an exercise with them, and we looked at where maybe the waste was taking place the most. And they were driving trucks around a lot. This was a rural area, so there was a lot of mileage that was perhaps being wasted. So, we did an exercise with tracking value and non-value mileage. If you're going to a customer, that's adding value. But if you take a detour to have lunch or something, well, that doesn't add value to the customer, right?

0:03:08.8 JS: So, we were exploring those things, and that exercise worked out really well. They made some big changes, and it actually really helped the company grow. They started posting little notes in the trucks talking about, "Remember, value versus non-value." They were tracking it. And it was really interesting. But the success was largely due to one participant. And I'm sure you've seen this, Andrew, in workshops where somebody really seems to get it. And he had all these ideas, a very, very thoughtful guy, and we were just writing down his suggestions. He had a lot to do with that. But after the workshop, I sat down with him when we were chatting, and he told me that he'd been in the construction business for 15 years, and nobody had ever asked him for his opinion about how work was done. Never.

0:04:04.7 AS: Incredible.

0:04:07.1 JS: I was just stunned by that. This guy was so good. [laughter] When you think about that, it's pretty typical. And I think it's really, people are, managers are taught that it's their job to tell people what to do. And often that puts them in a tough spot. Often they have to be in a role where maybe that they're not that comfortable, because maybe they know deep down inside that there's a lot of knowledge out there that they're not aware of.

0:04:41.3 AS: Yeah, it's interesting. It reminds me when I was a first time supervisor at Pepsi, and I worked in the Torrance factory in Los Angeles, in Torrance, California, and then I worked in the Buena Park factory. And at Buena Park, I was given control of the warehouse. In both cases, I was a warehouse supervisor.

0:05:02.9 JS: Right.

0:05:03.1 AS: And I remember I worked with the union workers who were all moving the product all day long. And I just constantly focused on improvement and that type of thing, and talking to them, and trying to figure out how can we do this better, faster, cheaper and with less injury and all of that. And when I left, it was two years, it was maybe a year and a half that I was at that facility. And one of the guys that had been there, he said... He came up to me, he said, "25 years I've been here, and nobody really listened to us the way you did."

0:05:41.0 JS: Oh, wow. Well, that's a hint.

0:05:41.8 AS: And it just made me realize, "How can it be?" Now, I know Pepsi was taking first-time graduates out of school and putting them in this job, and... I don't know. But I just was... I was baffled by that. So, at first blush you would think you'd never hear that. People are always talking, but people aren't always talking. That's not that common.

0:06:03.1 JS: Yeah, for sure. And it's so really deeply entrenched in the system that it's very, very hard to break. One of them, I talked to a couple of companies that actually went through transformations, and this was with Lean, where they transformed their managers as a lot of Lean companies do. And I know Deming companies do this as well, where they changed their role from being someone that tells people what to do, to somebody who actually is a coach and an enabler, and draws people out and uses their knowledge and encourages them to solve their own problems, whether it's PDSA or whatever methods they support. And both of these companies lost half their management team through that transition. But both of the leaders admitted, they were honest enough to admit, that the reason why they lost the managed, they blamed themselves. They said, "It's 'cause we as the top leaders didn't prepare those people for the change." So, that was interesting as well.

0:07:17.6 AS: I want to go back and just revisit... Myth Number One was the myth of segmented success. The idea that, "Hey, we can get the most out of this if we segment everybody and have everybody do the best they can in each of those areas." Dr. Deming often said that we're destroyed by best efforts. And part of that's one of the things he was saying was that it doesn't work. Segmented success doesn't maximize or optimize the output for a system. The second one was the myth of the bottom line, and that was the idea that just measuring financial numbers doesn't tell you about productivity, and just measuring financial numbers doesn't give you success. And then the third one was, that we're talking about now, is the Myth Number Three, is top-down knowledge myth. And so, I'm curious. Tell us a little bit more about what you mean by "top-down knowledge myth."

0:08:17.7 JS: Essentially it's knowledge from outside the workplace being... How do I wanna say it?

0:08:26.0 AS: Pushed down. [laughter]

0:08:28.0 JS: Pushed down, imported, or imported into the workplace, imposed into the workplace. It's really that idea that something from outside can be valid. And it certainly can, to a degree. You can have instructions on how to operate a machine. You can have all kinds of instructions that are determined from outside, but there's a limit to that kind of knowledge. And when you really wanna improve quality, it really does take a lot more input. But I think there are many... This is one of the myths I think that there are very many different sides to. And one of the sides is that what I call the... It's related to variation, but it's really what I call the "granularity problem." And it's the fact that problems are not these nice, big omnibus types of items that a manager can solve. They tend to be hundreds of problems, or thousands.

0:09:37.0 JS: And so, when you've seen transformations, for example, in hospitals, I think that's an environment we can all understand, again, it's because of many, many different improvements that they become better. One example that I was given is, let's suppose you have a medication error problem. That's really, really common in hospitals now, right? But medication error is, it's not one thing. It could be because of the label, labeling on the bottles. It could be the lighting when people are reading the medications. It could be the way they're arranged on trays. It could be the way they're stored. It could be in the supply chains. The really successful healthcare transformations have been by getting thousands of improvements. And I mean literally thousands of improvements from employees who live with those processes every day. Managers can never [chuckle] know all these hundreds and thousands of things, especially, they can't be everywhere. So, really, the answer is that you do need an army of problem solvers to really get the kind of excellence that we want.

0:10:56.0 AS: Dr. Deming had a quote that he said which was, "A system cannot understand itself." And he's talking about, you got to understand... Sometimes it takes someone from outside looking at the system. And that's different from what you're talking about, which is the idea of someone at the top of the organization saying, "I know how to do this, here's what you guys got to do, and here's how you solve it," without really working with the workers and helping understand what's really going on. And I think what you're saying in this too is the idea that people who are empowered at the work level to try to figure out what's the best way to organize this with some support from above, that's management in that sense is a supporting function to give them ideas. If there's a person that understands quality or Lean, or they understand Deming's teachings, then that outside person can also give that team resources and ideas that they may not typically have. But the idea that a senior executive could be sitting up at the top of the company and then being able to look down and say, "Here's how to do each of these areas," is just impractical.

0:12:12.3 JS: Oh, yeah. And I think Dr. Deming was... He was giving managers, I think, a very challenging task to understand systems and to know, 'cause you're responsible for the system if you're management. So, you really have to know when you have to be constantly getting feedback from people who are working in the system and trying to improve their work within the system. So, yeah, it's got to be a definite give and take. And in Lean, they call that "catchball," where there's a constant back and forth between the managers and the workers in terms of the problems they're having and what needs to be done to help them. So, yeah, it's very tuned in to each other.

0:12:55.0 AS: Yeah, and I would say, from my experience in most companies, management's not really trying to help them. Each unit's fending for itself and trying to figure it out, and they're not really getting that much support from management. And so, the idea being that with the proper support and encouragement to learn and improve, the teams that we have in our businesses can achieve amazing things. And this goes back to also to the concept of intrinsic motivation versus extrinsic. And I think what Dr. Deming, what was appealing to me about Dr. Deming when I first started learning about it, was he was talking about "unleash the intrinsic motivation of people, and you will unleash something that is just amazing." And the desire to improve is going to be far better than... And that's why sometimes he would just say, "Throw out your appraisal system," or "Throw out these things, get rid of them," because what you'll find is you're gonna unleash the passions and desires and the intrinsic motivations. And so, that's another thing I'm thinking about when I'm hearing Myth Three: The Top-down Knowledge Myth. It just, it doesn't unleash that intrinsic motivation.

0:14:16.8 JS: Well, it's interesting, this thing was really studied by the Shingo Institute, where they, they, about, as I think you may know, they give out something called the "Shingo Prize for Excellence in Manufacturing." They also give prizes for books too, which I was fortunate to receive. But they had for years been giving the Shingo Prize to excellent manufacturers leading up to 2007 or so. But they found out that most of the people that had got the Shingo Prize had essentially fallen off the ladder. So, they did a very detailed study, interviewed all kinds of organizations: Ones that had fallen off the ladders, so to speak, and ones that had actually maintained the kind of excellence that they had won their prize for.

0:15:20.5 JS: And they found that the ones that had fallen off the ladder had a top-down engineered approach, whereas the ones that had been successful were much more respectful of their people and getting a lot more feedback from the people, the sort of the respect-for-people-type idea that Toyota has. So, really, what they were saying is that the top-down approach, you might be able to fix up your factory and get really good ratings for a while and you have great processes, but in the long run it's not sustainable. So, they changed their criteria so that now, to get a Shingo Prize in manufacturing, you really have to show culture; you have to show how you're listening to your people, the whole thing. So, it's very different now.

0:16:12.0 AS: Yeah. And it's interesting, we have a company in Thailand that the company and its subsidiaries won the Japanese Deming Prize. And there was 11 companies total in this group that won the prize at different years as they implemented throughout the whole organization. And then a couple years later, the CEO resigned. He retired; he reached the end of his time. And the new CEO came in. He wasn't so turned on by the teachings of Dr. Deming, and he saw a new way of doing things. And so, he basically dumped all that.

0:16:57.0 JS: Oh, really?

0:16:57.8 AS: And it's tragic. It's a tragic story. And the lesson that I learned from that is, one of the strengths of a family business is the ability to try to build that constitution or that commitment to "What do we stand for?" Whereas in a publicly listed business where you're getting turnover of CEOs every four, six years, or whatever, in just the case of Starbucks recently, we just saw turnover happen very, very quickly. And the new CEO could go a completely different direction. And so, when I talk to people about Deming's teachings, I say that family businesses have a competitive advantage in implementing it. And I think Toyota is the ultimate family business in Asia, right?

0:17:50.9 JS: Yeah. Yeah. Yeah, yeah, pride in the family name, and that's... Yeah, and a lot of the interviews I did were businesses like that, where there was a desire to do more than make money, to have a purpose, sustain the family name and that kind of thing. So, yeah, for sure.

0:18:10.0 AS: So, let's wrap this up with you giving us a final recap of what we need to be thinking about when it comes to the Myth Number Three: The Top-down Knowledge Myth.

0:18:24.0 JS: Okay. Well, I think essentially people need to understand that there are limits to what a manager can actually know. And I think the healthcare example, this illustrates that very well. I think they also need to understand that what you ultimately want if you wanna maximize productivity is team productivity. It's the productivity of the group. And people are motivated. You were talking about intrinsic motivation. Part of that comes from actually working together as a team. So, you need to create the kind of trust where information flows freely, and where somebody doesn't hoard their own knowledge but is willing to share it with others, because they don't feel they're in competition with each other. So, again, that's related to driving out fear. So, everything's really interrelated. But I think we have to accept knowledge as something part of a shared collaborative work environment, where everybody wins if knowledge flows freely. And people have to be willing to admit that what they've learned in the past, what they've learned in school has limits in how it can be applicable. And those limits have to be respected. And you have to be willing to listen to every employee, not just the ones that have degrees.

0:20:00.8 AS: All right. Well, that's a great recap. And, 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. And you can find Jacob's book, Productivity Reimagined at jacobstoller.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."

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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."

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Is your financial bottom line the true story of your organization? In this episode, Jacob Stoller and Andrew Stotz take on the myth of the bottom line - maybe it doesn't tell you what you think it does.

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 Jacob Stoller, a Shingo prize winning author of "The Lean CEO" and also "Productivity Reimagined" which explores how to apply the Lean and Deming management style at the enterprise level. The topic for today is myth number two, the Myth of the Bottom Line. Jacob, take it away.

0:00:32.7 Jacob Stoller: Thank you, Andrew. Great to be back here with you. Yeah, the myth of the bottom line, it is widely believed that if you look at the financials, that tells you everything you need to know about the productivity in your organization. And it's almost when you think what we talked about last time, so that the pyramid, the idea that the whole equals the sum of the parts, I think the myth of the bottom line is really kind of flows naturally out of that. If you believe in this pyramid that Dr. Deming was so critical of, the myth of the bottom line seems to make sense. Just that dollars flow through, you save a dollar here, it's all going to add up.

0:01:23.8 JS: So the problem with that is that productivity as we've learned from Dr. Deming, is actually determined by lots of non-financial factors. And what the bottom line gives you is a kind of an oversimplified, I guess, aggregated view. So you take the total sales of a company and you divide it by the number of employees. You can call that productivity, but it's not really productivity, 'cause productivity, strictly speaking, comes from making increasing output with a set of inputs. So you go from time A to time B, are we making more while keeping all our fixed costs constant? So there are things that get in the way of measuring that and one of the big ones is something called price recovery. So if you look at profitability, it's really a combination of price recovery and productivity. But price recovery would be any change in cost, any kind of financial cost during or between the two periods that you're measuring.

0:02:45.7 JS: So if you've got say the cost of labor, cost of materials, facility costs, energy costs, all these things can change between two time periods. And at the same time, maybe your selling price changes. So it turns out that factoring all those things out is much more difficult than you would think. It doesn't come easily using ERP systems in those things. And one of the pioneers of Lean accounting [0:03:16.8] ____ explained to me how he, when he first realized this, how much work it was to actually just separate all these price recovery factors from the total that contributed to productivity. So it's not that easy to even get to productivity and really get an accurate figure on it.

0:03:39.1 AS: It's interesting. I'm a financial guy, so I look at the P&L all the time of so many companies. So I think I've got some fun stuff that we can talk about, but was there something more you were gonna wrap that up with?

0:03:51.9 JS: Well, yeah, I think what happens with that is you get a sort of a cultural divide, because executives, I'm told, typically see operations as a black box. They'll say, well, okay, someone worries about process and manufacturing process, or it could be in any field. It could be medical, it could be something else, but that's something that operations worries about, so we'll let them do that. So they're left, these executives, with only one language, and that's financial language to understand things. And that's basically the iron law there is you get what you pay for. So we wanna get better quality, okay, we invest in it, that costs money. We wanna get faster delivery times, well, we'll pay money for that. And we wanna lower cost, well, then we better get rid of some people.

0:04:51.7 JS: So these things are all looked at sort of transactionally from the outside, not inside this black box of process. But inside that black box, that's where all the magic happens. That's where the Deming chain reaction happens. The fact that when we invest in quality, costs are gonna go down, but you tell that to an accountant, they'll tell you you're nuts. So it's really, I think there's a big challenge there of getting people to understand that the laws of that really determine productivity are not purely financial. And people need to... I think a lot of people need to broaden their thinking to understand that.

0:05:43.0 AS: Maybe out having looked at the financial statements of thousands of companies and have valued thousands of companies in my life, let's look from a top down, first of all. So people organize, people give money, give capital to companies, because they expect to get some return from that capital. Some people care about what that company does, others don't care, but that's the first step. And so the company gets capital that they deploy and they organize their business however they want, and ultimately they generate revenue. Now, revenue is price times quantity. And I think the first thing that supports what you're talking about is that, if a manager of a company says, our revenue went up 20% last year, and it was all driven by increasing prices only, well, that's... If you could sustain that, that would be fantastic, but it's quite likely when you increase prices, you're gonna have a knock on effect of your demand falling as your competitors have lower prices. But then, what you could say is that that company really didn't change anything about the way it's operating, it's output, it's productivity. Would that be correct in saying that in your mind?

0:06:56.9 JS: Yeah, it would be correct, and I think that a lot of the companies that are protected from... We got stories about this that are protected price wise and are able to kind of raise their prices at will, actually get very sloppy with their operations, and they don't increase their productivity. So I would say to your clients or whoever when you're analyzing that, that what productivity growth will give you is sustainable improvement over time. Productivity is the one thing that every company has control over, and you can control it year after year, but it's long term. It's a long term prospect. So that's... If you're managing quarter by quarter, that's maybe not gonna be so attractive.

0:07:52.0 AS: Yeah. So I think that's a great point about the long-term nature of trying to improve your productivity, because anybody can be a one hit wonder and increase price, let's say, and then tell everybody, "hey, we got more revenue, or we got more profit." Now let's look at the other side. So the P&L, the profit and loss statement, or the income statement is revenue minus costs, equal profit. There's a second aspect, is that a top level executive who come in and say, "I'm slashing the marketing budget, and I'm slashing the cost related to our operations and all that," and in the end, they would get an increased... Increase in profit. But they may get that at the sacrifice of future growth of let's say the image, the brand image of the company as an example, which doesn't necessarily have to do with the black box of actually making the product, but does have to do with creating a bottom line that looks great, but sacrificing the future bottom line. What are your thoughts about that?

0:08:55.1 JS: That's a great point. Yeah, of course, Dr. Deming would tell us to look at the system. They're all interdependent, marketing, sales, production and everything. But when I said black box, I mean, yeah, it does conjure sort of an image of manufacturing, but that same black box thinking, I think needs to spread through the entire company. And some of these really mature companies, Lean companies and Deming companies too, they're thinking everything as within that operational framework. Because it's operations within that, that you have your complex adaptive system. Financial, pure finance is not really in the same way... The laws of finance are not... Don't reflect that kind of complexity.

0:09:45.0 AS: I would like to just define this black box, because what you're... When we think of it of a black box, we think, okay, people just look at it, and they don't really know what's going on inside. But you're saying that that's the way a senior executive oftentimes comes in and they don't even know what's really going on. I remember when I worked for Pepsi in the factory, that the factory manager was even out of touch with what was happening on the floor. He wasn't out there all the time. So when you're talking about black box, you're talking about kind of people looking from the outside in, but inside that black box is where all this productivity work is being done of how do we get more efficient in what we do, use less resources, and get a better outcome? How do we hit the specifications or the desire product that the customer needs. Which is one of the great things about capitalism is that you're actually trying to reduce the resources that you're putting in to create an output.

0:10:43.4 JS: Yeah, exactly. Well, I would expand the black box again. It can be anything, it can be in your accounting department. So the black box really is process. It's the whole concept of process. So it's not a physical entity at all, or a plant floor, it can be everything in the company, but yeah, you can look at... You can take same kind of principles and say, "how come it takes you 10 days to close our books at the end of the month? Can we shrink that down to three?" So we can use the same principles anywhere in the organization. And similarly, we can use these principles in healthcare and services industries and just about anything. So yeah, so the black box is a very conceptual idea.

0:11:33.4 AS: The process, the systems.

0:11:33.4 JS: Yeah.

0:11:37.0 AS: The other thing I always tell my finance students on first day, the first thing I put up on wall, on the board is, "finance adds no value." Which is a very disappointing thing for undergrads in finance. But what I try to show them is that, finance is a feedback. It's a tool for feedback. And the feedback in this case is financial feedback. And with that financial feedback, it's information that the management team can use to create value, to make better decisions, ultimately about the business and what they're doing. And so for those people that think that finance is something that creates value in a business, I always say it's a support function. And when it's done really well, it's a fantastic support function to give feedback of, here is the big picture of what we're producing, whether that's looking at the cost accounting on a production line, or whether that's looking at the overall company. So finance adds no value is one of the things I always say to kind of wake my students up to see that really, finance can be great if it's supporting the CEO and the management team at making good decisions.

0:12:47.8 JS: That's a great point, Andrew. And of course that's said often in the Lean world. When they separate out, muda, which they call waste, they have... Well, they have necessary waste and unnecessary waste. Unnecessary waste is too many steps in a process or whatever, but the necessary waste is things like finance, and it's not just finance, but it's things like having an HR department. Because HR is not actually making any products for your company. So all these support functions, administration, even executive management would be considered to be not adding value in that framework. So I think what you're saying makes perfect sense.

0:13:38.4 AS: I came across a company when I was a young analyst here in Thailand, and it's a factory. And I was looking at the financials, and I was seeing that the profitability was rising quite fast, and the cash conversion cycle basically went negative, which I've never seen a factory have negative cash conversion cycle. So I called up the company and asked if I could come out as a analyst. I went out to visit the CEO and the management team and went around and I asked him, "how did you get your cash conversion cycle to be so low?" He said, "well, we focused on reducing an inventory in our business." And I said, "how long did it take you?" He said, "it took us about five years." And he said, "but I really gave the responsibility to each team leader and each team to think about how they could reduce the inventory in their area."

0:14:27.4 AS: And that was, first of all, a lesson in focus. If you focus on one thing and it's the right thing, let's say, let's assume that was the right thing at that time, you can get there. But the reason why I'm telling you this story is 'cause he told me another thing that was interesting. He said, "we have a... Each area we have a profit and loss statement for, and we try to get people to think about that." But I said, "how do you handle the overhead of management, the cost of management?" He said, "we list out the exact cost of management and we post it on the wall, and then we calculate it per area so that everybody knows how the management cost is hitting their P&L. And then we challenged them to help push us to drive down that overhead." And I was like, that's pretty transparent, I thought, in a Thai factory.

0:15:18.2 JS: Well, that is interesting and I'd be curious. A lot of companies use standard cost accounting and what often happens is inventory actually... When they reduce inventory, that's an asset right? On the balance sheet, and they take a hit from reducing inventory. So I'd like to know how your client dealt with that, or if they had to deal with it.

0:15:42.1 AS: I am not sure how he did the accounting, but I know that many, many companies in Thailand do not use standard cost accounting, just because it's a pretty advanced thing. And I think that they're pretty simple in some of their operations. Not all, but yeah.

0:16:00.8 JS: Yeah. Okay. Well, no, standard cost accounting is just not a good way if you're interested in maximizing your productivity, because it basically hides the... It hides the true cost of inventory. It postpones them to a later year. So when you sell the product, then you're paying the carrying costs of the inventory, which is crazy. So somebody overproduces, they don't take the hit for that.

0:16:25.3 AS: Right. One last thing from me, and then maybe we'll wrap it up by thinking about the takeaway of what we want the listeners to be able to do from this discussion. But I just, since it's myth number two, the myth of the bottom line, I wanna address another myth that I always talk to about my students, and that is that the goal... This is the myth, "the goal of the management is to maximize profit." And I teach my students that if we wanna look at the financial goal of the management of a company, it is not to maximize profit. And if anybody says that, I always stop them and say that "actually, the goal of the management is to maximize value. And value is a function of profit and risk in the calculations that we use in the world of finance." So you can... A manager, two managers of different companies, but let's say competing companies, they could be, one could be getting a huge amount of future cash flows coming in, but they could be doing it through bribery, let's say.

0:17:28.8 JS: Yeah.

0:17:29.6 AS: And that is raising the risk secretly behind the scenes. And so the ultimate, the value that's being created in that company is going to disappear. Another good example is Amazon. When Amazon listed in the stock market, it went seven years with losses. So was it doing the wrong thing? No, it was creating value even though it had loss. So ultimately, the importance is to create value, maximize value, not maximize bottom line. That's kind of me from the top down finance perspective, but what are your thoughts about that?

0:18:08.6 JS: Well, value is tricky. Because it's determined by the customer. So a bunch of things. I always give the example of ballpoint pens because I scribble a lot on my calls with a ballpoint pen, but supposing I'm making 10,000 of these an hour or something, and I up that by 10%, well, that's fine. And with all my machinery, maybe I'm running it faster and I'm using all the same plant, I figured out a way to do that. But what if the productivity, or sorry, the productivity will show as an increase, but what happens if some of those pens skip? I have a quality problem as a result of picking that up. Well, if the pens are not really acceptable to my buyers anymore, then I haven't gained anything. So it shows...

0:19:01.6 JS: So you can't just do a productivity calculation based on numbers that are turning out. You have to maintain that quality and that's not that easy to do. 'Cause it might be that my quality problem is that, I have to increase by 10%, but it's only skipping one out of 10,000 pens or maybe one out of 5,000, but the customer might not care about that, or they might not... They might rather pay a little bit less and have that slight defect. So it's a tricky business, I think, with value, you have to constantly be getting customer feedback, and knowing what the customer needs, what level of quality they need, and making sure that you consistently deliver that. So value, yeah, absolutely.

0:19:55.8 AS: It's a good time to come back to point number one of Dr. Deming's 14 points, which is, "create constancy of purpose towards improvement of product and service with the aim to become competitive, and to stay in business and to provide jobs." And the idea of focusing on improving product and service is the holy grail. If every day, you are working as an organization, as teams, as groups to improve product and service, it's just amazing, and I think that that's where Toyota has been a great example of just relentlessly pursuing that. But let me ask you, how would you sum up what you want people to take away from the myth of the bottom line number one, and what action do you think that they should take as they go back and look at their business or look at their department?

0:20:52.1 JS: I would say stop. First of all, stop pretending that you know everything based on the financials. Go look at, go study Deming principles or learn about what actually happens and how the value is created. Go onto the front lines where value is created. Whatever your company is, study that and start to learn what some of their problems are, and how that affects value. I think there's this... They've said that... It's often said that it's much harder to unlearn things than it is to learn new things. So I don't think it's an easy... I don't think it would be an easy thing to do. It's very convenient to believe that the finances tell you everything, especially if you're outside the company. If you're an investor or you're Wall Street or whatever, and you're providing guidance on companies, telling them that they don't really understand what's driving the value of that company is not a very welcome message. So I think it's it's not easy.

0:22:05.8 AS: I was just reading a book called, "The Six Month Fix" by Gary Sutton, which is a great book about turning around companies, but he has a chapter talking about Hewlett and Packard, the two gentlemen who started Hewlett Packard, but he talked about how they just... They were constantly walking around out in the production area. They were in the maintenance area, they were on the loading dock. They did it at evenings, they did it on weekends, they did it on day... They were just constantly out there. So part of what I'm hearing from you is step back from the financials and get into the operations, see what's happening in the processes, and helping support people to work towards improving the product and service, so that you get a consistent growth in your business that's driven not by like raising prices, but by getting more efficient in what you're doing. That would be kind of how I would summarize the takeaway.

0:23:02.3 JS: Yeah. I think you have to acknowledge that there are people out there on the front lines that are creating the value in your company. And there's a lot you can do to help them as a leader. You can remove roadblocks. And if the company's been running purely on financial metrics, you can bet there are tons of roadblocks and frustrations that these people are seeing. But you can also... Eventually you can create a kind of a culture where people work together. Because as I think we see with Deming, the productivity is a team sport. You really wanna have team productivity, and people working together, not knocking each other down, as we talked about in the sort of the pyramid structure is what people do. You want them working together and leaders can do a great deal to kind of create that culture and lead by example and all those things.

0:24:03.9 AS: Well, that's inspiring. And I know for all of us, the myth of the bottom line, we can get trapped into it at times, particularly when the bottom line's not that strong and times tend to get focused in on it and maybe at the cost of other things, but this is a good reminder for everyone. I'm gonna wrap it up there.

0:24:24.9 JS: Okay.

0:24:26.3 AS: 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. You can find Jacob's book "Productivity Reimagined" at jacobstoller.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."

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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".

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What can Dr. Deming's famous Red Bead Experiment teach us about quality? What happens when you only focus on the bad, and ignore the good? In this episode Bill Bellows and Andrew Stotz discuss acceptability vs desirability in the context of the Red Beads and a few of the 14 Points for Management.

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 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. This is episode 5 of the Misunderstanding Quality series and the title is "The Red Bead Experiment." Bill take it away.

0:00:30.4 Bill: Thank you, Andrew, and welcome back. Welcome back to our listeners. One thing I want to say is, one is I listen to every podcast two or three times, listening for, is there a need for clarification, reminding myself, thinking, oh, I should have said this. Or sometimes I say, oh, make sure you make this point, and I do or I don't. And. so one is, nothing comes up from the last one that I thought I missed or mispronounced, but what I do want to clarify is, I'm viewing the target audience as quality professionals in your respective organization or people that want to become a quality professional that are learning, that are trying to apply these ideas in their organization, are fascinated with it. Could be quality professionals who are consultants looking for new awareness of the Deming perspective. So, that's...

0:01:35.8 Bill: And so, some of what I have in mind is, and the examples is, things you can try at home. In fact one thing I encourage... What I encourage my students to do, undergraduate and graduate students, even the clients I consult with, companies I consult with, is develop the ability to explain these ideas, any of them, to people outside of work. So, that could be a spouse, a brother, a sister, a mother, father, son, daughter. And, why outside of work? 'Cause I view that as a safe audience. You say, hey, I just listened to this podcast. Somebody at work may not be as safe. And why are we having this conversation? So, I would say, it could be a college classmate, but one is, try explaining these things to people outside of work and then when whoever that is looks at you and says, I have no idea what you're talking about, or this makes sense, then as you develop that confidence then you're refining your explanations. And that puts you in a better position to apply, to explain it at work.

0:02:54.9 Bill: And why is that important? I'd say there's a lot you can do on your own. I mentioned that a month or so ago, my wife and I were in New England, and I met my doctoral dissertation advisor, who's 86 years old and lives in the middle of nowhere. And one of the things is the wisdom he gave us way back when it was so profound. One of the things he said, we were poor starving college students making seven bucks an hour, working 20 hours during the semester as Research Assistants or 40 hours during the summer. And what a life. Living in... This is poor starving college students. And he would say to us... We'd get together now and then, there'd be a keg on campus and we'd be... Which it wasn't all that often, but anyway, he'd say to us, "These are the best years of your life." [laughter] And we'd look at him like... Now again, I mean, we were... I wouldn't say we were poor starving college students, but I mean, we made ends meet. Now our classmates had gone, undergraduate, gone off to work and they were making real money, and we just stayed in the slum housing and doing... Just living cheap.

0:04:20.3 Bill: Then he says, "These are the best years of your life." We're looking at him like what are you saying? And what he said was, you're working on your research projects either undergrad, masters or PhDs. He said, "You will never have the time you have now to focus on one thing and not be distracted." Now a few of the classmates were married. Most were not married, but he just said this is... I mean, what a dream situation. You're in the laboratory every day. That's all of your focus. Your tuition is covered, blah, blah, blah. But it was just like, yeah, okay. So, when our daughter was in graduate school I shared that with her and she laughed at me. I said, "Allison, these are the best years of your life."

0:05:14.4 AS: If only we listened.

0:05:15.5 Bill: Right. So, that's... And well, I wanted to bring up... But the other thing I want to bring up aside from that story is, he'd say to us, when you go to work, he said trust me. He said "there will be more than enough time to get your job done. You'll have a lot of... You will have time to..." And he said, 'cause he used to brag about he'd be given a task and he can get it done in a fraction of the time that was allocated. And why I mention that is that every job has latitude. And so, to our listeners I would say, think about how to use the latitude you have to practice, to do a small scale Plan-Do-Study-Act thing. Now I really think that's what it's going to come down to is, either experiment at home or whatever, but just practice. And then as Andrew always reminds us at the end of each podcast, you can reach out to me on LinkedIn. And that's led to a number of people I'm meeting with once or twice a month.

0:06:31.8 Bill: And they are exactly who I hope to meet, is young quality professionals wanting to know more, to know more, to know more, and they're either in the States or they're living in Europe. All right. So, before we get into the Red Bead Experiment I wanna go back and talk more about acceptability, desirability which will be a focus of the Red Bead Experiment as well. But in the first series we did, there were 23 episodes before we got into the Misunderstanding Quality, and somewhere in there we discussed, you may recall the paradigms of variation. And the paradigms are labeled letters A, B, C, D and E. And we will look at them in this series. So, for those who don't know what I just said, don't worry we'll cover you. And for those who heard it before, okay, we're going to review it. And I mentioned that because paradigm A, the only one I want to talk about tonight, is paradigm A, is does it meet requirements? That's what acceptability is. Is it good? 'Cause we have this binary world in quality. Part of paradigm A is a binary world. It is good or it's bad. We talked about last time is, if it's bad can we salvage it? Which means we can rework it.

0:07:52.3 Bill: Now some of the rework means it could be we can rework it and use it. And in the aerospace industry what happens is, maybe we can't put it in a flight engine. When I was at Rocketdyne maybe it doesn't end up in a Space Shuttle Main Engine, but maybe it ends up in a test engine and a test stand, so it doesn't fly, but we're still going to use it, or it's scrapped. We have to throw it away. But paradigm A is acceptability. Another thing I want to mention is, I was commenting on LinkedIn the last couple of days over process capability metrics. And there's Cp which stands for capability of the process. And, then there's Cpk which is a little bit different. And I don't want to get into those equations tonight, maybe in a future episode. But what I want to say is, if you're looking at a metric such as yield, people say the yield is 100%. What does that mean? It means everything is good. What if the yield is 50%? That means we have to... 50% is good, 50% is bad.

0:09:06.2 Bill: So, yield is an acceptability metric. Why do I say that? Because the measure is percent good. What is a good versus bad? Also say that indices that involve the requirements. And we've talked in the past about a lower requirement and an upper requirement, the idea because we expect variation we give a min and a max. And so, if the equation for the metric you're using includes the tolerance limits, then that's a clue that that's an acceptability-based metric. Now, I don't care whatever else is in the equation, but if those two numbers are in the equation, then the inference is, what you're talking about is a measure, some type of measure of acceptability.

0:10:00.5 AS: Right.

0:10:02.6 Bill: But even if people talk about... If the metric includes the middle of the requirements, well, as soon as you say middle of the requirements, as soon as you say requirements we're back to acceptability. So, these are things to pay attention to is what we're talking about acceptability and desirability, 'cause what we talked about last time was I was trying to give everyday examples of both. And so, acceptability is when people talk about... In fact I listened to about an hour long podcast today on quality management. And one of the comments was, if you follow the steps correctly you get the right result. Well, that's acceptability. Right? If things are right as opposed to wrong. So, again, when you're in this world of good, bad, right versus wrong, that's acceptability.

0:10:58.7 Bill: Again, the reminder is this is not to say acceptability is bad, but it's not desirability. Which one is it? And then what we talked about in the last podcast number four was choose. Do we wanna to focus on acceptability or do we wanna focus on desirability? Where desirability is saying, of all the things that are acceptable, I want this one. I want that orange. I want that parking spot. I wanna date that person of all the ones that meet requirements in my search... You know, in the dating app. And so, that's acceptability. What got me excited by Deming's work in the early '90s was, I was spending a whole lot of time at Rocketdyne focusing on things that were broken. I'm trying to apply Dr. Taguchi's ideas to go, to take something that used to be good but then slipped into bad, and now we're focusing on the bad stuff to make it good. And now the good news is it kept me busy.

0:12:06.5 Bill: I was having a lot of fun. These are high visibility things and the solutions. We got the solutions working with some really wonderful people. But that led me to start asking questions. And I was once at an all-day meeting in Seattle at Boeing. Rocketdyne had been sold to Boeing Commercial Airplane Company. I got invited to a meeting up there. And it was a monthly all-day production meeting. I don't know 50, 60 people in the room. And they asked me to come up. So, I went up. And what time does the meeting start? You know 8 o'clock, 9 o'clock, whatever. And I said you know put me on a few hours into the meeting. Well, why then? Well, I want to listen to the first couple of hours of the meeting. Because in listening, now we're going back to what we talked about with Edgar Schein. And I've developed the ability... You know, I can hear are we focusing on acceptability, desirability, I can hear things you know with a Deming lens. People think of a lens as seeing, well, there's a Deming ear set as well.

0:13:10.7 Bill: And so, I listened for the first two hours and exactly what I expected. So, when I get up to speak at last I said before I got to the slides, I said, "How much time do you spend every day discussing parts that are good, that arrive on time?" And a couple of people in the front row made a circle with their fingers, zero. And I said, so why is that the case? And one of them says, if it's not broken don't fix it. And wherever I go that's what people say. I went to a big Boeing customer doing... Because they were a customer we sold them rocket engines of some size. And I was briefing that slide, had 110 people in the room for a lunchtime presentation. Before I could read the slide, the room erupted in laughter. And so, I share that because if we're spending all this time focusing on the bad but not the good, what is that? That's acceptability. That's what happens, is the economics of acceptability says, only focus on the bad to make it good. But we don't focus on the good because... And that's what we're gonna look at towards the end of tonight is, why don't we focus on the good? And so, next, I had a co-worker at Rocketdyne got a job in Chicago at a toy factory. They bottled soap bubbles. And as a kid's toy with a little wand inside and blowing bubbles and all that.

0:14:56.0 Bill: And she dramatically turned the place around, did some amazing, amazing work. She went from being the senior manufacturing engineer to the, I think plant manager. So, she called me up as she'd been promoted to plant manager. And the question was now that I'm plant manager what should I focus on? So, I said... I had known her for four or five years at that time. I had been mentoring her and the mentoring continued in that capacity. So, I said well, what do you think you should focus on? And the comment was, I think I should focus on all the things that are broken. Well, that's acceptability once again. And I said, so you're focusing on being 100% reactive. And she said, well, yeah. And I said, what you're doing then by focusing on acceptability, you're saying the things that are good I ship, the things that are bad I got to work on. But without understanding that there's actually variation in good... I mean, go back to the Boeing folks when the guy says to me if it's not broken don't fix it. My response to that was, if you use that thinking to drive your car when would you put gas in it? When it runs out. If you use that thinking relative to your plumbing system, your water system at home when would you call the plumber? When it breaks.

0:16:25.5 Bill: When would you go see the doctor? When... So, the downside of not working on things that are good and not paying attention to things that are good is that they may bite you. So, part of the value proposition of acknowledging from a desirability perspective that there's variation in good. If you pay attention to the variation in good there's two upsides. One is, you can prevent bad from happening if that's all you want to do. And two, the focus of a future episode is by focusing on things that are good and paying attention to desirability in the way that Yoshida, Professor Yoshida was talking about. That offers opportunities to do things that you can't do with an acceptability focus, which is improve how things work together as a system. And the idea being when you move from acceptability which is a part focus to desirability, which is a system focus, you can improve the system. Okay, more to follow on that. All right. So, I got some questions for you Andrew, are you ready?

0:17:37.4 AS: Uh-oh. Uh-oh.

0:17:39.8 Bill: So, Dr. Deming had how many points for management?

0:17:42.9 AS: Fourteen.

0:17:46.3 Bill: All right. Okay.

0:17:48.3 AS: I'm being set up here. I just feel it. You start with the easy ones.

0:17:52.8 Bill: All right. And...

0:17:54.3 AS: Listeners, viewers help me out.

0:17:56.9 Bill: All right. And which point, Andrew, was cease dependence on inspection to achieve quality? What number was that?

0:18:09.6 AS: I'm gonna say four or five, or six. I can't remember.

0:18:14.2 Bill: Three. Three.

0:18:14.6 AS: Really? Three. Okay. That was close.

0:18:16.1 Bill: I would not have known. That was number three.

0:18:19.1 AS: Yeah.

0:18:20.1 Bill: And it's followed by Dr. Deming saying, "Eliminate the need for inspection on a mass basis by building quality to the product." So, the first question is what point was it? And again, I had to look it up. I know it's one of the 14. Second question, Andrew, is, if Dr. Deming is saying cease dependence on inspection to achieve quality, would you think of that as an acceptability focus or a desirability focus?

0:18:55.1 AS: I don't know if I can answer that. I mean, I can only think about what he was saying, which was design quality in from the beginning and get everybody involved in quality, not just having an inspector at the end, but I'm not sure.

0:19:11.4 Bill: Yeah. No. And even as I asked the other question, I'm thinking... Well, this is great because if in the audience you think of quality from an acceptability perspective, right?

0:19:24.2 AS: Mm-hmm.

0:19:24.9 Bill: So, if you're working for Boeing, which is all about acceptability or most companies, and you hear step three, then you're thinking, cease dependence on the inspection to achieve..., you're thinking acceptability. If that's what you're used to, if you're used to quality being doesn't meet requirements...

0:19:42.9 AS: Okay.

0:19:43.2 Bill: Then what you're hearing is Deming talking about acceptability. But if you've been exposed to Yoshida's work and Dr. Taguchi's work and you're understanding that within requirements there's variation of things that are good, so it's kind of a trick question. The idea is it depends. Alright.

0:20:02.4 AS: Yep.

0:20:05.5 Bill: I got two other of 14 points to ask you about. Alright. Which of the 14 points is in the practice of awarding business on the basis of price tag alone? Instead, minimize total cost. So, first which point is that?

0:20:26.9 AS: I think it was also... I would say then four.

0:20:32.1 Bill: Yes.

[laughter]

0:20:33.6 AS: Yeah.

0:20:34.1 Bill: Yeah.

[laughter]

0:20:34.5 AS: You'd think I know. I wrote a book about it.

[laughter]

0:20:39.3 Bill: Alright. So, that's point four and...

0:20:42.1 AS: Okay. So, I got... I don't wanna be rated and ranked, but I got one right at least. Okay. Let's keep going.

0:20:49.1 Bill: Okay. And, so, is that acceptability or desirability? Let's say this. Is awarding business on price tag acceptability or desirability?

0:21:02.1 AS: Probably acceptability.

0:21:04.6 Bill: Yeah. 'Cause then you're saying...

0:21:06.5 AS: Can you hit this number? It's okay.

0:21:11.2 Bill: Yeah. Or you contact your insurance company and you say, I'm looking for a heart surgeon, and you say, and I found one, blah, blah, blah, blah, blah. And they call you up and say, yes, that person is a heart surgeon, but we prefer you use this one. [chuckle] What's the chance they're thinking about a cheaper option? Right? Alright? So, you're looking at from desirability perspective...

0:21:38.5 AS: This guy's really cheap on kidneys.

0:21:40.7 Bill: Right? And so you're thinking you've done a bunch of references. You've asked your friends. And why are you asking? Because all the doctors out there that meet requirements, you're blindly saying, I'll take any one. That's acceptability. And you're saying, I want this one. That's desirability. But the insurance company says, no. We consider them all to be the same in our policy. That's acceptability. Alright. Okay. And here's the last point we're gonna look at tonight. Which of the 14 points is "improve constantly and forever the system of production and service to improve quality and productivity and thus constantly decrease cost"?

0:22:23.5 AS: Isn't that number one? Constancy of... That's...

0:22:28.0 Bill: That's constancy of purpose. That's number one.

0:22:28.8 AS: Okay. Constancy of purpose. So, improve... Don't know. No. No.

0:22:39.4 Bill: That's number 5.

0:22:40.5 AS: Okay. Five.

0:22:44.5 Bill: And I was looking at, so I know those are three and one, and I thought, oh, that's three, four, and five. Alright. So, what I wanna do there is, we're gonna look at that a little bit later. So, I don't wanna ask you about acceptability, desirability, but I just wanna lay that on on the table. Alright. So, now we're gonna look at what Dr. Deming referred to as his chain reaction. The Deming Chain Reaction. Alright. So, what do you remember about the Deming chain reaction? It wasn't a motorcycle chain or a bicycle chain, right? What did Dr. Deming call his chain reaction?

0:23:31.3 AS: I can't... I mean, I'm thinking of the flowchart.

0:23:34.9 Bill: Yeah. We'll get to that. We'll get to that. The chain reaction...

0:23:36.5 AS: But that I can't remember.

0:23:39.6 Bill: And this is likely Out of the Crisis. The Deming chain reaction is, "if you improve quality, you will reduce scrap and rework, thereby reduce costs." And then he goes on to, by reducing costs, you can increase sales and expand the market. That's the chain reaction.

0:24:01.9 AS: Yeah.

0:24:02.2 Bill: So, when I ask students, again, in my either graduate, undergraduate classes is, talk about the Deming Chain Reaction, then I say, is the Deming Chain Reaction... Within the Deming Chain Reaction, Deming says, if you improve quality, reduce scrap and rework, lower cost, is that explanation of quality, acceptability, or desirability?

0:24:31.9 AS: I don't know. I'm fearful to answer nowadays because I'm not getting these right.

0:24:37.4 Bill: No. You are. You're on a roll. [chuckle] Again, the Deming Chain Reaction, if we improve quality, we reduce scrap and rework, thereby lower the cost thereby sell more and expand the market.

0:24:52.2 AS: I would say that's desirability.

0:24:56.1 Bill: Okay. One more time. If we improve quality, we reduce scrap and rework.

0:25:03.2 AS: Yep.

0:25:04.3 Bill: So, the clue is scrap. Is scrap something we talk about with acceptability or desirability?

0:25:12.1 AS: That's acceptability.

0:25:14.1 Bill: And rework.

0:25:18.2 AS: Well, we're trying to make it acceptable.

0:25:20.1 Bill: Exactly. And the reason I point that out is, I'm not sure... And I think we talked last time about things we agree with Deming or disagree with Deming. I'm not a big fan of the Deming Chain Reaction because I think... Again, if I'm in the audience and I'm working for a company that defines quality and in terms of acceptability, and he says to me, if you improve quality, reduce scrap and rework, that's what I'm used to. And my concern is, in other ways he's explaining quality in terms of constantly improving. Well, how can you constantly improve quality once you get to 100% yield? So. if all the product is good, which is acceptability, if there's no scrap and no rework, can you improve quality? Not if you're focusing on acceptability. And so, what I'm saying there is, that if Dr. Deming is in one hand defining the chain reaction and using the term quality in reference to scrap and rework, then he's projecting quality as acceptability. But if he's talking about improving constantly and forever, and then we get into, can you improve the quality forever? That's what he's saying.

0:26:49.1 Bill: What if you get to 100% yield, which is the maximum value of acceptability? Well, only if you shift to desirability can you improve forever quality, if you think it's worthwhile to do. So, that's why I wanted to go back and look at those things. One is revisit acceptability, desirability, and point out what I think are some opportunities for confusion in trying to explain Deming's work. Alright. Now we'll talk about the Red Bead experiment, which is, the very first time... I remember reading about it in the earliest books I read. I think, who is it that wrote the first books on Deming management, Deming management? She's a...

0:27:42.8 AS: Killian?

0:27:44.3 Bill: No, no, no. Cecilia Killian was Deming's admin.

0:27:48.9 AS: Mary?

0:27:50.5 Bill: Yeah. Mary Walton.

0:27:51.6 AS: Mary Walton.

0:27:52.5 Bill: Mary Walton. I remember reading a Mary Walton's book, that's when I first got exposed to this Red Bead experiment. So, The Deming Institute has a dedicated webpage, so, if you go to deming.org, or just do a Google search for deming.org Red Bead experiment, it's one of the most popular pages. I think that might be the second most popular, most visited page past the 14 Points. In there you can find short videos. There are longer videos, but there's enough on there to follow along with what I want to explain. So, Dr. Deming and the Red Bead experiment would take from the audience, and it could be four willing workers, six willing workers. He'd be the manager of the White Bead Company, and he would explain to them, he would share with them. He had a bowl, and in the bowl were 5,000 beads, maybe an eighth of an inch in diameter, small plastic beads, and there'd be 5,000 in the bowl, 4,000 white, 1,000 red.

0:29:00.6 Bill: And then there was a paddle, and the paddle could be roughly two inches by four inches, and the paddle had a little handle, and it had holes in it. So, the instructions he would provide to the willing workers, the production workers, is to take this paddle at a given angle, slide it in flat into the bowl, even the back of the beads. The beads are in one container, they get poured into another container.

0:29:27.7 AS: In a pan.

0:29:28.1 Bill: It's a mixing process, and then he pours them back in. So, just pour them from one to the other, and he would be very persnickety on pour at 45 degrees, tip from the corner. You pour back and forth, put the paddle in, and you'd end up with 50 of the beads would fill the paddle, and then you'd go to the inspector number one. And the inspector number one would count how many red beads, which is not what the customer wants. What the customer wants is white beads, but the raw material includes both. So, you go to inspector one, and they may count five beads. You go to inspector number two, and they quietly see five. The numbers get written down. Ideally, they're the same. And then you go to the, I think, the master inspector, and they say, five beads, and then "dismissed." And then write the five on a flip chart, and then the next person comes and does it, and the next person comes and does it. So, all six come up and draw beads, and then we count the number of red ones. The number of red ones go into this big table. Next thing you know we've done this over four different days. I've done this. This could take an hour. And even when you watch the videos, there's a fast forwarding.

0:31:00.1 Bill: I've done the Red Bead experiment, I think, just once, and I did it with a former student, which worked out really well, 'cause there was a lot of dead time, and the audience was watching, and so I was able to get conversation going with her. So, for those wanting to do this, boy, you've got to be pretty good on your feet to keep the audience entertained. To get to the point where you've got a table on the whiteboard, or on the flip chart, and on the table are the six willing workers on the left-hand side, and then day by day the red beads... Looking at the number of red beads. So, what are the red beads? Well, the red beads are not what the customer wants. What the customer wants are white beads, but in the production process, because the raw material includes red, well, then the red ends up in the output. So, I ask people, so, if the white beads are what the customer wants, what are the red beads? And typically, people say those are the defective, defects, scrap.

0:32:03.2 Bill: And, so now you get into this model is based on acceptability. The beads are either good, white, or bad, red. And so I would ask the students in class, in a work setting, what might the red beads be? I, in fact, asked our daughter. She said, is just moving from being a junior high school English teacher to a senior high school English teacher. Her undergraduate degree is from Cal State Long Beach.

0:32:34.3 AS: There you go.

0:32:34.3 Bill: So, her first day of school was today. She's also the varsity swim coach, which is way, way cool. Mom and dad are proud of her. So, I remember asking her a few years ago. So, I said, Allison, what are the red beads in the classroom? She said, well, the stapler doesn't work. The door doesn't close. The projector screen doesn't come down. The computer doesn't work. These are red beads in the classroom. So, I said, okay, Allison. What are the white beads?

0:33:01.1 Bill: Geez. So, we get so used to talking about the red beads are the defects or things that... Well, the white beads, by comparison, are the things that are good. So, I said, Allison, if the computer works, that's a white bead. If the door closes, that's a white bead. If you can close the window, that's a white bead. If you can pull down the screen, that's a white bead. So, the red beads are the things around us that are defects, broken, and the white beads are the others. And so, I wanna throw that out to do some stage setting. And ideally, this is a review for our listeners, and if not, you've gotta go watch as many videos as you can in The Deming Institute website. There's a lot of great content there. Watching Dr. Deming do this is pretty cool.

0:33:49.0 AS: He's a funny guy.

0:33:51.6 Bill: And I was very fortunate to be in Dr. Deming's very last four-day seminar. I did not participate in The Red Bead Experiment. I let somebody else do that, but it was classic. Well, the next thing I wanna get into is, and I would say to audiences many times, so we know... Well, a couple things. It's so easy to look at that data on a spreadsheet and say, Jill's the best performer. She has the minimum number of red beads. So, on the one hand, we can look day by day, and it could be Jill's number started off low. And we gave her an award, and then it went high, and then we started blaming her. So, there's variation in the number of beads, worker to worker and day to day. So, a given worker, their scores go up and down. So, that's called variation.

0:34:43.4 Bill: And so one of the aspects of the System of Profound Knowledge, which we haven't talked about too much, but ideally our listeners know Dr. Deming was really big about the value proposition of understanding variation. So, what Dr. Deming would talk about in his four-day seminars, and ideally anybody presenting this, is you take the data, you draw the usual conclusions. We're looking at data from an acceptability perspective. We look at the spreadsheet, and then voila, we turn it into a run chart and look at that data over time, calculate control limits, and then find that all the data is within the control limits and draw the conclusion that the process is in control. And then you move from in a non-Deming environment, looking at this data point versus this data point and drawing these conclusions that the white... The number of red beads is due to the workers.

0:35:33.7 Bill: So, the punch lines you'll find at Deming Institute webpage is that the workers are trying as best they can, that the red beads are caused not by the workers taken separately, but by the system, which includes the workers. A lot of great learning there. And a very significant piece is, in a Deming environment, where Deming's coming from is, again, this is before we go further in this in future sessions is, he's proposing that the majority of what goes on in the system relative to the performance of anything you measure is coming from the system. And if that is really, really understood, then you're hard pressed to blame people in sales for lousy sales or dips in sales or you look at grades of students in a classroom. So, for people looking at Dr. Deming's ideas, perhaps for the first time, realize that what he's talking about is coming from The Red Bead Experiment is a great eye opener for this is that, let's stop blaming the workers for the production issues and step back and look at our procurement system.

0:36:39.6 Bill: Do we have a procurement system where we're buying on price tag? If you buy on price tag, you end up with buying a lot of red beads. So, one aspect I wanna leave our listeners with today is, as you're studying this, realize there's a psychology aspect to The Red Bead Experiment. Not only the idea that there's variation up and down, but what are the implications of realizing that we can't be blaming the workers for the behavior of the system. The system includes the workers, but it also includes things that are well beyond their control. Well, where I wanna go next with this and then we'll next time get in and go further is, in appreciation of point five, "improve constantly forever the system," what I would ask audience is, so we know the red beads are caused by the system. We know the number of white beads goes up and down. But if we were to improve the system by not buying red beads or pre-sorting them out and get fewer and fewer red beads in there, then we get to the point that all the beads are white, perhaps. We have continuous improvement.

0:37:47.2 Bill: We end up with a 100% yield. Well, then we get into, again, and I've kind of set the stage in prior comments, what I would ask people is, what Dr. Deming's talking about trying to achieve zero red beads everywhere in the organization? Is that what we're striving for with the Deming philosophy, is to go around the organization, I want every single process to produce no red beads to make it to a 100% white beads? And if that's what Dr. Deming is talking about, then what does point five mean about continuously improving? Now we get into what I mentioned earlier is, you can improve the speed of operation to produce more white beads, so, we can do them faster, we can do them cheaper, but can we improve the quality of the white beads under that model? And the answer is no, because acceptability stops at a 100%. So, what we'll look at next time is, if you look at the beads and look closely, you'll see they have different diameters, different weights. They're not exactly the same color white. So, what is that Andrew? That's called variation.

0:39:00.9 Bill: And now it brings us back to desirability. So, what I encourage people to do, most of the times I see people presenting The Red Bead Experiment, they present it from an acceptability perspective. That's the starting point. But what I encourage our listeners to do is go through all that, and this becomes a great opportunity to move your audiences from acceptability focus to desirability by talking about the inherent variation in those beads. Again, we'll talk about the value proposition economically in future sessions, as well as the other paradigms of variation before we get there. So, that's what I wanna cover.

0:39:43.2 AS: Wow. 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, 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. It never gets old. "People are entitled to joy in work."

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In this episode, John Dues and Andrew Stotz discuss the first part of John's path for improvement model - setting the challenge. Using an example from United Schools Network, John explains their aspirations for cutting chronic absenteeism rates.

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 John Dues, who is part of the new generation of educators striving to apply Dr. Deming's principles to unleash student joy in learning. And the topic for today is "set the challenge." John, take it away.

0:00:24.6 John Dues: It's good to be back, Andrew. Yeah. Last episode, we kicked off this new series. I introduced this improvement model that we can use to help us set ambitious goals backed with a sound methodology. I think I made this disclaimer last time. I'll make it again that this is sort of like showing listeners a peek behind the curtain because we're sort of talking about this as this model is being built and used for the first time in my network of schools here in Columbus in United Schools. So I think that caveat's important, and I think maybe starting with just a quick review of the model we looked at last time would be a good refresher for this episode for those that are reviewing and I'll talk through it for those that are only listening. I'll go ahead and share my screen quick. You see that all right?

0:01:17.1 AS: Yep.

0:01:18.4 JD: All right. Yeah, so this is the model we kind of stepped through kind of an overview last time. I think it's important to remember a few things. One, basically the core idea of the improvement model is it gives us the scientific way of thinking so that we can work in a way that makes sense to close the gap between our sort of current conditions in our organization and sort of our aspirations. So we frame those two things as the voice of the process, as current conditions, what's happening right now. And then the future aspirations, that's the voice of the customer. That's sort of what we or someone else wants those conditions to be. And what we're doing throughout this process is stepping through the four steps that you can see displayed in the model. So kind of just stepping through those quick.

0:02:06.5 JD: The first thing is that we set the challenge or the direction, and that's gonna be... We're gonna dive deeper into that step today. Then the second step over on the left hand side of the model, for those that are viewing, you work to grasp the current condition, so what's going on currently in your organization. And then the third step is we establish the next target condition. So think of that as like the intermediate goal that we're working towards sort of on a more proximate timeline. And then fourth, what we're doing is once we understand those things, then we're experimenting to overcome obstacles or impediments. And so all of those things we talked about, doing that with a team that includes someone or people working in the system, in our case students, a lot of the time, those with the authority to work on the system like the teacher in a classroom or the principal of the school building. And then that System of Profound Knowledge coach that has that awareness of the System of Profound Knowledge and sort of brings that lens to the improvement efforts. So that's sort of a quick rehash of the model that we went over in episode one. And then I'll stop. Well, you want me to leave that up or I can stop sharing?

0:03:29.9 AS: Either way. I don't mind.

0:03:31.0 JD: Okay. Well I'll stop sharing for now and then we can always pull it back up if we want to. Yeah. So with that sort of in mind, what I thought would be helpful is then do this deep dive into step one. And so kind of what we'll do through the next several episodes is focus on each of the steps. So we'll take this deeper dive into step one. Set the challenge or direction. So last time I mentioned that in step one of the model we asked this primary question, where do we want to be in the long run? And this is... Think about this as a overall challenge or direction that's set by organizational leadership typically. So senior leaders, the CEO, typically the board, they're gonna be the ones framing this challenge, setting the direction for the organization.

0:04:27.2 JD: And we can also think about it as a sort of a longer range goal that if we accomplish it, it will differentiate us in our case from other schools or if you're in the business community, it would differentiate you from competitors in some way. But even though it's something that we're striving toward currently we're setting this in a way that it's gonna stretch us and right now it almost seems impossible to accomplish this thing far out into the future. And this direction or challenge, I think it's fairly typical. Sort of set this on a six month to three year timeframe. So that kind of gives you a sense of sort of how far out we're looking and the timeframe we're looking to sort of achieve this challenge is. And last time I shared an example from our most recent strategic planning where we're trying to reduce our chronic absenteeism from the current state, which is 52% chronic absenteeism. We're trying to take that down to something closer to 5% chronic absenteeism.

0:05:44.4 AS: Seems nearly impossible.

0:05:44.5 JD: It does if you're on the ground in schools right now, especially schools like ours, it really does seem nearly impossible to sort of cut it at that large of a rate. So.

0:05:55.6 AS: I have an ethics class that I teach here, an ethics and finance class here in Bangkok. And I tell the students it's not mandatory to attend class from my perspective. School may require you, but it doesn't matter to me. My job is to make it so exciting and interesting that you wanna be here. That's hard.

0:06:16.7 JD: Yeah. That's a good frame. That's a really good frame. We have, unfortunately we have so many obstacles that our kids are going through to get to school. Even something as simple as consistent transportation from yellow school buses is a major impediment to school attendance here in Columbus. So there's all kinds of obstacles that... Challenges in front of us that we're gonna have to improve and solve to get down to that 5% rate.

0:06:43.0 AS: When I was growing up in Ohio, in Hudson, outside of Cleveland, the farm that I worked on in the summer, Barlow's farm. Mr. Barlow was our bus driver because there wasn't much going on in the wintertime. And so, yeah, he never missed [laughter] I don't ever remember a bus not arriving in my whole youth.

0:07:07.6 JD: Yeah, yeah. It's something in many places you take for granted. And then in a number of other places, it is a major, major challenge for sure.

0:07:13.0 AS: Interesting.

0:07:14.8 JD: That's certainly the case in Columbus where we are, for sure. So when we think about this challenge it's this... I kind of think about it and this is why it needs to a lot of times be set at the leadership level or the senior leader level is it's this new future condition and it serves as a sort of compass for us to follow. And that's important 'cause we don't have an exact roadmap for how to get there. So it's sort of like a general direction, but the specifics are what we're gonna have to be filling in as we go through some of those other steps. Some of those intermediate goal setting, some of the experimentation that I talked about. But think about this direction or challenge is it's really the purpose behind our efforts. And then when you sort of put together the tough challenge and then the scientific thinking, that's really powerful. And those two things together can really sort of move you into this new territory. I think that you're looking to... I think this map territory compass metaphor is really sort of spot on for this particular model. Oh, go ahead.

0:08:29.8 AS: I had a question because I have a client of mine and one of their objectives is to list their company on the stock market here in Thailand. Like many companies, but in some ways that's kind of an owner's goal. Like we've talked about some of their other goals, like being the leading company in their field in asia, Southeast Asia or something like that, and/or maybe to have a happy workforce or whatever. And I'm just curious, like how do people think about goals? What is a good way to think about it? Is there such a thing as like an internal or a higher level goal versus a goal for the company versus an external goal? How do you guys think about those types of things and target conditions?

0:09:17.2 JD: Yeah, I mean, I think... I don't know the exact answer. I mean, I think when you set a goal at the leadership level, then you're gonna... Well, one, you're gonna have to explain it throughout the organization, whether it's a 100 people or a 1000 people or 10,000 people. And then depending on the size, there's probably gonna be different types of goals that are in different business units, I'm guessing by business type. We're a pretty small organization and so we're pretty close to the... In fact, our office... My office, it is on the ground floor of one of our middle schools, so we're very proximate compared to like a bigger company. So I think this can look different in different places. I think the consistent thing is it's gotta be clear, it's gotta be spelled out, it's gotta be clearly communicated. It has to be something that you're talking about frequently. Otherwise you're obviously not gonna move in this direction.

0:10:11.2 AS: Yeah, I mean, that kind of answers it too. 'cause I thought... When you said that, I also thought about how people care about with them, what's in it for me. And so, as you said, you gotta explain it and you're gonna have to do a lot of talking about it. So people need to see that that goal is something that's gonna bring them value, otherwise they're not gonna be excited to go do the hard work that it takes to get there.

0:10:37.0 JD: Yeah. Maybe in that respect, like sometimes in education is... Some of the goals that we have set are so self apparent that there's just sort of immediate buy-in 'cause like who's against kids coming to school? Almost nobody. So that's I think a fairly easy one to get buy in. And maybe in other settings more time needs to be spent on the buy-in part, the explanation part. Maybe... This can be kind of hard, but who's involved in setting the goals in the first place? Maybe there's ways to get more people involved in that process.

0:11:10.6 AS: Well, and maybe the kids aren't involved in the buy-in.

0:11:13.8 JD: Yeah, that's true. That's true. Although, yeah, like the yellow bus thing that's out of their control. And I'd say that's actually a major obstacle. But I think...

0:11:26.5 AS: That's true. Nowadays, I'm sure there's plenty of kids that wanna be there.

0:11:29.5 JD: Oh yes for sure.

0:11:30.9 AS: But there's obstacles all over the place for them.

0:11:34.3 JD: The vast majority wanna be there, actually, I think. But your point is good, and that goes back to that team they're the ones working in the system and so they're gonna be the best at identifying the obstacles. So to stay in our setting, they certainly need to be a part of the experimentation that happens to improve the chronic absenteeism rate. One other important caveat to point out at this step in the process, and we've talked about this a little bit but I got this little chart that I think will help sort of explain when we were setting this direction or challenge, it's what I would call like an improvement goal. And it's not an accountability goal. And I think it's really important to be explicit about the difference between those two things.

0:12:24.4 JD: 'cause they often get conflated. And so I had built this chart for another improvement project, but I think it does a really good job. So I'll share my screen again. I think it does a really good job of sort of outlining the difference. And it's not that one is necessarily better than the other, it is just really important to know what's the purpose of this particular type of goal and what's it used for. And so I was just gonna take a moment to kind of run through this. So on the left you have sort of some key questions that are answered either by... And here it says measurement for accountability, but you can sort of replace that with an accountability goal and improvement goal over there on the right. So you have measurement for accountability or accountability goal, and then improvement goals or measurements for improvement.

0:13:20.7 JD: And you have some questions that that particular type of goal or measure will answer. Then you have in the next row their specific uses. And then why quality measurement matters. So just starting with accountability goals or measurement for accountability what those types of goals are gonna do is answer questions about merit or status or accomplishment of someone or something. Who's performing well, who isn't, who should be considered knowledgeable enough to do X. We're talking about end of line outcomes, like end of year outcomes. They're often... Goals for accountability often happen once a year. So I've talked about this repeatedly, but state tests would be a very good example of an accountability goal. The point of doing that is to separate the good from the bad basically, when you look at state test. Down there in the use sell for those that are viewing, it says the purpose of, or the use for accountability goals is to determine the applications of rewards or sanctions. Right? And so it's none of this really has to do with improvement.

0:14:38.8 AS: Sanctions, what a word, [laughter]

0:14:40.4 JD: Sanctions, right? Yeah. I mean, this happens in schools all the time. Schools can be sanctioned depending on what the law is at the time as it relates to state testing and accountability system.

0:14:50.9 AS: I thought we only sanctioned Russia [laughter] Okay. So there's even sanctions in schools. Okay, got it.

0:14:58.0 JD: Definitely sanctions in schools. And then we can juxtapose the accountability measures with the improvement measures over there on the right or improvement goals. When we're talking about improvement goals or setting the challenge, we're really talking about questions about specific changes as potential improvements to systems like our systems. So we're thinking about questions like, are the changes I'm making leading to improvement? How are my changes affecting other parts of my system? And what's measured is outcomes and processes relevant to the object of change. You know and how often are we doing this? Frequently. Much more than once a year, like the state test. And the whole point is to learn our way to a better system, right. And so with chronic absenteeism this could be both a measure for accountability and a measure for improvement, depending on how it's framed.

0:15:57.8 JD: Chronic absenteeism is actually reported on state report cards, but in this case, I'm talking about an internally created goal that we have for ourself that we've created for ourself that our organization is gonna work towards. And there's gonna be various things that we do to see if things that we're trying as interventions, experiments work in improving those rates, basically. So I think it's really important to call this out that when we are talking about this particular improvement model and the four steps, we are not talking about accountability goals at all. We're talking about improvement goals, two very different things.

0:16:37.6 AS: Interesting. And the improvement goals is the type of thing that it seems like is not as common as the accountability. Like everybody's trying to, you do this, you've gotta achieve this, that type of thing. Whereas this is such a bigger picture.

0:16:51.3 JD: Yeah. I mean, I think the key difference is because you could actually have an internal accountability goal. You could set up a similar system internally as what the state does when they're looking at schools. And if our mindset was, we're gonna set this goal and you people over here go do this, figure out how to do it, that would be much more like an accountability goal. But our mindset is like hey, this is something we all gotta take a look at. This has to get better. This isn't working for kids, so what are we gonna do? How are we gonna figure this out? That's really the key difference, you know? You're not doing this for some other group of people. You're a part of that group that's trying to make this thing better.

0:17:36.5 AS: So I'm just curious too, as I think about the listener or the viewer out here is how do they get started in this concept of setting the challenge or direction and maybe there's people at the top of the company. I mean, the first thing that I thought when you started talking about it is Oh, there's so many target conditions, there's so many challenges. Like there should be this one and that one. And all of a sudden I started coming up with like three to five challenges. And then I thought, oh no. Now this is overwhelming.

0:18:11.8 JD: Yeah. So in our strategic plan, we have 13 of these key metrics. And each of one of those could be its own challenge or direction, but they are divided up sort of roughly in like different department areas. And so some of 'em have to do with our fiscal responsibility raising funds and stuff like that. And there's a specific team that does that. And that would be different from like an academic team or a school-based team that was working on something like chronic absenteeism. So there is sort of a divide and conquer. The CEO maybe our superintendent are focused on all 13, but there are different teams that are actually running the experiments and working towards improving these things. And then there's someone like me that's sort of serving as the System of Profound Knowledge coach across multiple teams that are working on each of these key metrics basically. But in terms of where to start, I think that's a good segue. I mean, I think we've answered the question or we've said that basically that this strategic challenge answers the question, where's our organization going next? And I think one good... One simple way to start is to think of completing this sentence: Wouldn't it be great if we could dot, dot, dot.

0:19:37.0 JD: What is that thing or what are those things in your organization? It's, again, going back to it seeming nearly impossible, it's something we can't achieve with our current systems and processes. It's not easy, but not impossible. We think it's achievable even if we're not quite sure how we're gonna get there. It's something that's gonna be measurable. So we know if and when we get there. And another thing is that, especially when you're talking about, you were talking about like communication of these challenges across the organization, these challenges or directions are often expressed as some type of catchy statement. So just a quick statement that brings to mind this entire sort of area of work. And so I was kind of brainstorming because we've been talking about this chronic absenteeism example and I think we can just kind of keep that going throughout these episodes. So I was thinking of something like, every student every day, and then everybody knows that we think it's important for every student to be at school every day. And we're sort of working to get back to that post pandemic.

0:20:52.3 AS: Yeah. I was thinking, wouldn't it be great if every parent was fired up.

0:21:00.1 JD: Yes, absolutely.

0:21:01.2 AS: About every student every day. Like, that's the way I was just thinking about it 'cause I think that, and I just like the kids. I'm sure there's plenty of parents that say, I want my kids to get a good education and I want them to get more than what I got, but I can't reach it or I can't do it. I got too much on my plate. But if somehow they were a party to this.

0:21:26.1 JD: Yep. I think, similar to the students, I mean, I think parents absolutely can be a part of an effort where you work. And in fact almost have to be, especially 'cause we're a K-8 system and certainly at the very least at the K-5 level, kids are almost entirely dependent in most cases on parents getting them to school. So, certainly parents...

0:21:49.2 AS: What is the catchment area of your schools? Like what's the farthest?

0:21:57.8 JD: Yeah, we have pretty, because we don't have a specific geographic assigned area assigned to our school buildings, like a traditional public school district would typically. So we have much wider areas. So let's say, a 15 mile radius around a building would catch the vast majority of the kids that attend. So, yeah. Yep. Well, I think, let's look at an example. Let's look at chronic absenteeism as our focus here. So, I've mentioned, we've just updated our strategic plan it includes these 13 metrics, and there's this one focused on chronic absenteeism. And when we sort of outline the key metrics in the strategic plan, each metric has four pieces of information that we're listing explicitly right in the strategic plan. The voice of the process, the voice of the customer, the operational definition, and then some type of visualization of the data, basically.

0:23:04.4 JD: So those four things go with each of the metrics. So just as a refresher, a lot of people know this, and we've talked about this, but I think it's good to refresh. The voice of the process is the metric that tells us how we're currently performing. The voice of the customer is the direction or challenge we have set, so that's the step one. The operational definition for the metric puts communicable meaning into the concept and includes a method of measurement or test, as well as a set of criteria for judgment. So basically we wanna make it clear to anybody that's looking at chronic absenteeism, that they know exactly what it is we're measuring, and they could come up with that same measurement independently. And then the fourth thing is this visualization that illustrates the performance of the metric over time, because that time factor is really, really important. So I'll share my screen one last time so that people that are viewing this can see what this actually looks like in our strategic plan.

0:24:07.4 JD: And I'll kind of walk people through this visualization for those that are just listening. So you sort of see this chart over on the left or on top of the chart it says key metric three student success, chronic absenteeism rate. So that's the metric. The voice of the process is 52%. So that means that 52% of our kids are chronically absent and the voice of the customer is 5%. So that's that far off thing. That's six months or probably more like three years off that we're working towards. And we're not quite sure how we're gonna get there right now. And then we have the operational definition of the concept of chronic absenteeism. So this says "a student is considered chronically absent if they miss at least 10% of instructional time for any reason. Our chronic absenteeism rate is the percentage of students at United Schools who are considered chronically absent."

0:25:08.9 JD: Now, this particular definition was fairly simple because there's already a sort of a federal and state definition of chronic absenteeism. And then down below the operational definition, you have the data that we have thus far charted over time. So in this case, we only have three years of this particular type of data 'cause that's when it sort of started getting measured at the state level. And so the y axis is the chronic absenteeism rate, the x axis is the school year. So this chart has 2021/2022, 2022/2023, and 2023/2024 school year data. And you can see the data is fairly similar across those three years. Not too unexpected, but it's right around, 53%, 54% in the '21/'22 school year, maybe 52% in the '22/'23 school year. And then slightly less than 50%, let's say 48% of kids were chronically absent.

0:26:11.5 AS: Just outta curiosity, where was that before covid? Let's say 2018/2019.

0:26:17.9 JD: Yeah. Lower. Definitely lower. I think going back historically, if we had that data, I would guess, and I'm sort of guessing based on overall attendance rates compared to what overall attendance rates are and like what chronic absenteeism probably was, it was down probably closer to like high 20s, low 30s, that type of thing. And obviously a chronic absenteeism rate of 52% is very high. But when you look at even the school district buildings that are sort of around these schools, generally speaking, their chronic absenteeism rates are even higher. They're in the 60, even into the 70% range. And so not that this is like a comparison, but you can kind of get some context there that these rates are even higher in the neighborhood schools that are closest to our campuses.

0:27:16.7 AS: It would be a bit shocking for someone in Asia, like myself in Korea, Japan, China, Thailand, who's, it's a much different view of education. But just for the purposes, for someone who doesn't know much about what's happening in the US, what are these kids doing? Are they out working or are they at home?

0:27:40.6 JD: It's hard to know exactly. I think one thing is, is that in some cases, older siblings, like in our middle schools, are often taking care of younger siblings for various reasons. I think that can be a common way, but I think it's hard to just pin on one or two things. I think this is a very complex problem with lots of causal things, causal variables that are going into this. So I think that's why it's so important to study it in our context and try to figure out besides the things that we already know, like busing being inconsistent, those types of things. What else is it that's contributing to this? And so that's sort of what the process that we're starting now is trying to figure this out.

0:28:32.3 AS: And would you equate the voice, is voice of the customer equate it to target condition? Or is there a difference between that?

0:28:42.1 JD: Well, in this case, the way I'm framing it is like the voice of the customer is that direction or challenge, that's step one. So we had to, because this is an internal improvement goal, we decided for ourselves, like what do we think that vision, that purpose, that challenge is out there on the horizon that we're not sure how to get to, but we want to get to in the next two or three years. So I would equate those two things in this case.

0:29:07.1 AS: And who is the customer in the case of a school, how would you view that?

0:29:15.0 JD: Well, so that can be a little tricky based on how you're asking the question. Just from the point of who's the customer and the voice of the customer. Well, it's the leadership that set this like a customer with a capital C, that's the voice of the customer in terms of who's the customer of the school system it depends on exactly what aspect of the school system that you're talking about. But in general, our families and our students, are customers of the school system. But then so are the high schools that we feed our eighth graders into. Those are also customers of the system. But in terms of who the customer was that set this challenger direction, that was our senior sort of leadership team.

0:30:00.7 AS: Okay. And the voice of the process where we're looking at the 52% absenteeism rate, would you call that the current condition?

0:30:11.5 JD: Yes. Yes.

0:30:14.0 AS: So voice of the process, current condition, then you have to have some operational definitions so that we know what we're really talking about. And then a visualization that helps people see kind of where things are at.

0:30:28.3 JD: Yeah. And ideally we would have more data than this, but this is the data that we have. And you can actually see there's this note here 'cause right now it's just a run chart. It's just the data points with a central line running through. But there's this note that says the natural process limits are not included until we have at least five data points. And so we won't include the control limits until we have more data, basically.

0:30:50.4 AS: And for the person looking at this from outside, they're like, so wait a minute. You gotta wait a full year before you get that. But I guess there's a lot of data underneath this that is input data that will eventually drive this output.

0:31:07.8 JD: Yeah, I mean, I think what we do with any data like this that comes once a year, you have to find some proxies. So some proxy outcome data that maybe you're measuring on a every other week or maybe on a monthly basis. And then you have some process data that you're measuring, here's the things that we think will move the outcome needle, and are we doing those things? So you set up different types of measures, sort of intermediate outcome measures, process measures that are sort of measuring the different things that you're trying. And then usually a sort of a third component to that measurement system is a balancing measure where you're making sure that other things in your system aren't, [laughter] going astray because you're putting all your focus on this chronic absenteeism concept. So it's complicated. It can be complicated.

0:31:54.2 AS: It is. And in the area of education, you're under so many different constraints set by government. I was having fun in my mind imagining like when we were young, the Keystone cops, and they were kind of funny, crazy cops. But I was imagining getting an old ambulance with a flashing light and arriving at student's homes and saying, we gotta get you to school urgently. [laughter] And all the fun things that you probably can't do.

0:32:27.4 JD: Yeah. Yeah. Well, that as a brainstorm is not too far off from some of the things that we're thinking about as possibilities in terms of different forms of transportation, taking more control over the transportation where we can 'cause this is a service that's provided by the school district.

0:32:51.0 AS: One thing I did with Google Maps many years ago is I uploaded the zip code or address of my students, and so that I could see clusters of where they were. And then from those clusters, I started recommending, Hey, why don't the five of you guys form a group here and you're in the same area? And then that would help them to make a connection that they may not have made themselves.

0:33:24.9 JD: Yeah, that's a great idea. We have the geo mapping already. Yeah. We.

0:33:29.1 AS: And there's pods basically. So pods are out there of 50 students in this area. So when one has a problem you've got 20 of them that got a problem. If a bus doesn't arrive, is there a way we can get those 20 students communicating with each other and say, we want to get to school, how do we do?

0:33:50.0 JD: Yeah. We said we have some beginning of the year challenges right now with busing and we were making some calls to some of the families, and one really awesome grandma actually said, I'm gonna look into how much it costs to rent a bus and I'm gonna go round. And so that type of problem solving is certainly happening on the ground. It's how to sort of make that systematic and consistent. That's the tougher thing.

0:34:12.5 AS: Yeah. Exciting. Great one, and I look forward to the next one. I'm learning a lot and I know the listeners and viewers are learning a lot. Is there anything you would just add to wrap this one up?

0:34:25.6 JD: Yeah, I mean, I just a couple points maybe to bring it home on set the challenge, I think, one thing is we have to have this model to bridge a gap between current conditions and future aspirations. So that's this improvement model as a whole. There's always gonna be this gap between current conditions and our aspirations. And I mentioned this improvement model has this combination of scientific way of thinking and working to close the gap. And what we did in step one was ask where do we want to be in the long run? And this overall challenge that we set is really set at the sort of senior leader level, becomes a key priority. And I'm really thinking about this. If we can figure this out and some of the other key metrics, it's gonna really differentiate us from other schools. And so I think that's sort of those four or five things are the key frames for "set the challenge."

0:35:19.9 AS: Exciting. Well, I'm looking forward to the next one. Well, on behalf of everyone at the Deming Institute, I want to thank you again for this fun and interesting discussion and really opening up what you guys are doing there and the challenges that you're facing makes it even more real for the listeners and the viewers, and for the listeners and viewers, 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'm gonna leave you with one of my favorite quotes from Dr. Deming. People are entitled to joy in wo

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Continuing their discussion from part 3 of this series, Bill Bellows and Andrew Stotz talk more about acceptability versus desirability. In this episode, the discussion focuses on how you might choose between the two.

TRANSCRIPT

0:00:00.0 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 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 4 of the Misunderstanding Quality Series, and the title is Quality, Mind the Choices. Bill, take it away.

0:00:31.3 Bill Bellows: All right, Andrew, welcome. So podcast three, I think the title was Acceptability and Desirability. And one correction there, when I went back and looked at the transcript the concept of... At least the first person I heard tie together acceptability, desirability, at least in the Deming community, was a professor, Yoshida, Y-O-S-H-I-D-A. He was a PhD student of Dr. Deming, I believe at NYU but I mispronounced or misspelled his first name. I thought I've heard people refer to him as Kauro, perhaps spelled K-A-U-R-O, maybe that's his nickname, and maybe I just didn't remember properly but his proper first name is Kosaku, K-O-S-A-K-U and he at one point in time was in Greater Los Angeles at Cal State Dominguez Hills. And then I think sometime in the mid '90s, early '90s, last I heard he moved to Japan.

0:01:51.1 BB: I've never met him. I've watched videos of him, there's a classic presentation. I don't know if it's got, it might be online someplace of he did a guest lecture. There was a... Dr. Deming was speaking in Southern California and needed an emergency surgery, had a pacemaker put in, so this would've been '92 timeframe. And Professor Yoshida was called in to give a guest lecture. And that ended up being something that I think was sold eventually. The video, the lecture was sold by Claire Crawford Mason and so he is... I don't know how much of that is online, but anyways.

0:02:38.4 AS: Is Kauro, Kauro wasn't that the name of Kauro Ishikawa?

0:02:43.7 BB: That may be where I... Yes that was a Kauro. There's two Ishikawas. There's a father and the son and I... So I'm not sure if Kauro was the father or the son, but anyway correction there. In the first series we did, going back to '23, 2023, I mentioned the name Edgar Schein, but I don't believe I've mentioned his name in this series. So I wanted to throw that, introduce that in this series today and give some background on him for those who have not heard his name or not aware, did not listen to the first series and Edgar Schein, who passed away January of this year. He was an organizational theorist, organizational psychologist, spent the greater part of his career at MIT. And one of the concepts I really like about what he talked about is looking at an organization in terms of its artifacts. So if you walk around an organization, what do you see? What are the artifacts? That could be the colors, it could be the artwork on the wall, but the physical aspect of the organization Schein referred to as the artifacts. And what he also talked about is if you dig beneath the artifacts, they come from a set of beliefs, and then the beliefs come from a set of values.

0:04:23.9 BB: And again, the first series we did, I talked about Red Pen and Blue Pen Companies, and Me and We Organizations, and Last Straw and All Straw organizations. And those titles should make it easy for our listeners who are not aware to go back and find those. And what I talked about is, this imaginary trip report, if you visited a Deming organization, if we could think in terms of two simple organizations, a Deming organization, and a non-Deming organization in this very simple black and white model. And I had people think about the physical aspects of both, if they were to go visit both. What I then followed up on in our conversation is what you see physically comes from a set of beliefs. Now, they may not be articulated beliefs, what Schein would call espoused beliefs. And then you have what they really believe and I forget the term, I use this for that, but it comes from a set... But anyway, the physical comes from the beliefs, the beliefs come from the values.

0:05:39.0 BB: And part of the reason I bring that up for our listeners, and I'm thinking in terms of the people that have a responsibility in their respective organizations. They could be consultants, internal consultants, working in quality likely, given the focus of this series. First of all, you have to start where you are. But even added on, included in start where you are, is you have to start where your management is. So, if your management is tasking you with an improving scrap and rework, then that's what you better be talking about. Now, you don't have to be guiding your actions based on acceptability because the other aspect is scrap and rework are typically associated... Well, not typically, they are associated with acceptability. The lack of acceptability, acceptability is the idea that this is good, it is acceptable, it meets the requirements, defines...the quality requirements that are defined.

0:06:52.0 BB: If it's good, it is acceptable, if it's bad. There's two categories of bad, bad could be I have to throw it away, that's scrap, which means I can't recover it or rework, which means I can do something with it and perhaps salvage it. And so if your management is tasking you with improving scrap and rework, then first of all, where they're coming from, quite naturally, is acceptability. And why do I say that? Because everywhere I've gone, that is the deepest foundation of quality in every organization I've ever met, worked with, I have met people that work from whether it could be... Whether it's clients that I've worked with, whether it's students, my university classes. Acceptability, scrap, and rework, all go together. And, so if that's where your management is, then they're asking you to focus on improving acceptability.

0:08:05.6 BB: But, you may find it invaluable to shift your focus to desirability to improve acceptability. And that will be a focus, well I get into some of that tonight and others or today, and then on a future podcast later. But, I remember once upon a time at Rocketdyne, the executives were, the VP of Quality was task master asking for improvements to scrap and rework and also things called process capability indices, Cp’s and Cpk’s. And if you've heard of a Cp or a Cpk, great, if you haven't all I could say is I find them dangerous. I find them, well I say they're all about acceptability. And what makes it, reason I would encourage people to stay away from them because they appear to be desirability, but they're really acceptability.

0:09:15.7 BB: We'll save that for later. But anyway you have to start where they are. So if people are asking for improvements in scrap and rework, then, instead of fighting them, you go with it. And then what we'll be talking about tonight is, is it worthwhile to shift? Well, what does it mean to improve acceptability and the difference between acceptability and desirability? And relative to the title tonight, Mind the Choices is being aware that there's a place for acceptability and there's a place for desirability. And going back to Yoshida in episode three, what I was referring to is, in presentations he was doing from the early '90s, maybe even going back to the '80s, he talked about Japanese companies are about desirability. So, he presented this model of acceptability and desirability. And then, his explanation of what makes Japanese companies, again, back in the '80s, Japanese companies were viewed as those setting the quality standards.

0:10:20.5 BB: And, he was trying to say that the way they're doing that is that they don't rely on acceptability as other companies in other countries do. They have a higher standard. And that's what I wanted to introduce in our last episode, Episode 3. And, what I wanted to do tonight in this Episode 4, is to put some, add some more to that. But, also reinforce I'm not saying that there's anything wrong with acceptability, it's a question of what does the organization need at that point of time? And, really it has to do with... Really, it has to do with how big a system you wanna look at. So if you're looking at something in isolation, which is, I mean, when you look at something and saying it's good or bad, that is the epitome of looking at something in isolation.

0:11:17.5 BB: You're looking at a pen and saying it's good. You're looking at the diameter of a hole and saying it's good. That is not looking at what goes in the hole, that is not looking at how the pen is being used. So by definition, that's what Ackoff would call analysis, which is looking inward. It's not what Ackoff would call synthesis, which is looking outward. And how far outward you look is all according... I mean you could look, it comes down to how big is the system. And I wanna introduce the name Shel Rovin, Sheldon was his full name. Shel was his nickname. I met Shel through Russ Ackoff in 2006. Shel was, he was in charge of the Chief Nursing Officer program, which was a two-week immersion program at the University of Pennsylvania.

0:12:14.5 BB: And he was doing that in the, 2003, 4, 5, timeframe when I met him. And Shel was a dentist by background. He was Dean of the School of Dentistry at University of Kentucky and University of Washington. And I met him through Russ and invited him to Rocketdyne on numerous occasions. And Shel spoke about relative to looking at a system, 'cause people talk about, well "Andrew, we've gotta look at the whole system," but how big is the system? And, so people say, well, systems thinkers look at the whole system. Well, how big is that? Is that 1,000 foot view? And people say, oh no, Bill, it's bigger than that. Is it a 10,000 foot view? Is it... How big is the system? Well, Shel's perspective, and the word I wanna introduce from Shel is relative to systems is boundarylessness.

0:13:12.7 BB: Say that a few times fast. 'Cause systems have no boundaries. So I'm sure our listeners... I'm sure you have heard, I don't if our listeners have all heard, Dr. Deming would say to executives, does your system include the future? He used to ask questions such as what business are you in? What business will you be in five years from now, 10 years from now? Well, why not 15 years from now? Why not 25 years from now? Native American Indians, associated with Native American Indians is the idea of looking at the seventh generation after you when you're making choices. And so what I would ask people is, well, why seven? Why not eight? Why not nine? Why not 10? I mean, within an organization, we could be working with our supplier to try to get across these quality ideas to our suppliers.

0:14:05.5 BB: Well, that's looking at the system. Well, wait a minute. Do our suppliers have suppliers? Yes. Do their suppliers have suppliers? And so relative to boundarylessness is this idea is when people start talking about the whole system, I don't know what "whole" means. What I'd rather look at is what size system are we looking at? That's a choice. That's a choice. So we could decide to look at our suppliers. We're gonna go one step, we're gonna look at procurement. Who do we buy from? Now, we may educate them and give them the responsibility of looking at their suppliers on... But that would be a way of managing quality. Likewise, we can look at the impact of our work on our customer and give them heads up as to how to look at the impact of their work on their customers. But that's looking at the system in an X, Y, Z, physical coordinate, add onto that, the time dimension. And so, again, all I wanna throw out there is that when it comes to making choices on acceptability, desirability, a lot of it has to do with how big is the system that we're looking at. Some everyday examples of acceptability.

0:15:23.5 BB: Again and what I wanna get across is, in part the difference to help people make choices. And so when we were on a vacation in Europe recently, I took a number of photos of people making choices. And,` when I travel, anywhere I travel, especially out of the country, I love walking into supermarkets just to see what they sell that perhaps is not sold in the States or in California. I know there are things you can't find in California that you can find on the East Coast. That's one thing. But I like going into supermarkets just to see what products are there. I mean, you can go to England and find in the refrigerator section, hard cider, apple cider, you know, alcoholic cider that I got exposed to going to a Deming conference in 2000. I've become a fan of it ever since. Well, in the States it's pretty hard to find hard cider, period. You go to England and you'll find, a dozen different brands and each brand may have a number of different types.

0:16:44.9 BB: And so that's, but anyway, relative to that when you walk into a supermarket, if you're looking at canned goods, or just look, well, looking at cider, we can look at this cider versus that cider. We treat a can as a can, whether it's buying tomato soup or cider, we treat all those cans as interchangeable, interchangeable parts. But when we go to into the bakery section, that's where I was taking photos in Amsterdam and I was watching people sort through the pastries. And yet what was laid out were a bunch of pastries of the same style. And yet people were, I want this one, I want that one.

0:17:26.0 BB: Well, part of acceptability is treating all those pastries as the same as we would treat all those cans of tomato soup as the same. Now relative to tomato soup I know you live with your mother, and I'm willing to bet your mom, early, early on when she took you to the supermarket, taught you how to buy canned goods, right? And she says "Andrew when you buy a can of something you pick it up, you're looking for dents," right?

0:17:55.1 AS: Mm.

0:17:56.0 BB: Because if it's dented, that's bad. And if it's not dented, that's good. I know my mother taught me that. So I know when it comes to buying canned good we look for dents. If dented, that's bad. If it's not dented, it's acceptable. But I don't see people sorting between cans of tomato soup made by the same manufacturer. They're just, we treat it as they're acceptable. Acceptable implies either one, the differences don't matter or I don't see differences.

0:18:33.0 BB: Desirability is, you wanna see a great example of desirability, go to the produce section and again, either watch people sort through pastries that are all acceptable, and yet they're looking for the biggest one, or... And when it comes to fruit, we're looking for the ripest banana, or maybe we're looking for bananas that are green because we're not gonna use them for a while. So acceptability, again, I'm trying to give everyday examples of acceptability is going in and saying, looking at all the fruit there, and just taking five peppers, whatever it is, and throwing them in the bag and saying, I need five 'cause my spouse said, go get five. And I throw them in the bag. And it could be time-wise, I don't have time to sort through them, or I quite frankly don't care that they're different. That's acceptability. So acceptability is either acknowledging they're different and saying, I don't care. Or...

0:19:29.6 AS: Seeing them as the same.

0:19:32.4 BB: Or pretending they're all the same. And I had a guy in class years ago, and I was asking about buying fruit and I was trying to use the example of we go into the supermarket. We sort through the oranges looking for the ripest one, and this guy says, well, I don't sort through the oranges. I said, well, how do you buy the oranges? I buy them by the bag. I said, do you sort between the bags? He says, no, I don't sort and his arms were crossed. I don't sort, I don't sort. So then I noticed that he had a ring on his left hand, a wedding ring on his left hand. So I said, I see you're wearing a wedding ring. And he said, yep. I said, did you sort?

0:20:15.2 AS: I don't sort.

0:20:15.3 BB: Meaning... I don't sort. And so when you're looking at things that meet all the requirements and saying there is no variation or the variation doesn't matter, that's acceptability, Andrew. When you look at all the things that meet requirements and you see them as being different and saying, I want this one, that's desirability. And so that could be, when it comes to selecting a spouse, when it comes to selecting an orange, when it comes to selecting a parking spot, in a university, you're looking for the, an ideal, the best professor for Thermodynamics II, and there's 10 professors the university says are acceptable. And you talk to classmates and you find out, oh, no, no, no, stay away from that one. What are you doing? You're sorting amongst things that meet requirements, that are acceptable and saying, that's not good enough for me in that situation.

0:21:17.2 BB: Well, what I wanna say then added to that is, this is not to say desirability is better than acceptability. It really comes down to is desirability worth the effort? Because when it comes to desirability, I am looking beyond, I'm looking at a bigger system. So I'm looking at the fruit in terms of how I'm using it. If I'm aware of that, I'm looking at the parking spots in terms of: I'm gonna be in the store for an hour and I want the most shade, or these parking spots have a little bit different distances between cars, and I want a spot with a little bit more width so somebody doesn't ding my car. So what I'm hoping is with these examples, people can appreciate that every day we make choices between acceptability and desirability.

0:22:11.3 BB: Every day we're making a decision based on saying, this is okay, code word for acceptable, or I'll take that one, that's desirability.

0:22:27.6 AS: That's quite a breakdown.

0:22:28.1 BB: Well, and the idea being... The other aspect of it is when you're choosing to say, I want... When you decide that acceptability is not worthwhile, my proposal it's because you're looking at a bigger system. You've got a bigger system in mind. You're not looking at that fruit in isolation. You are somehow saying, there's something about how I plan to use that, which is the reason for this decision. And then it gets into how big is the system that you're looking at? Are you looking at the person downstream of you at work, which that could be an internal customer. People used to use those terms. Are you looking at the person after them, two down from them, three down from them? And that gets into a choice. So what I would tell the folks I was mentoring at Rocketdyne is that they were designing things or going to see how they were used. And I'd say, first of all, nothing requires you to go see how that's used. Your job as a designer, whatever it is in engineering you design it, you give it to manufacturing. But you don't have to go downstairs and see how they're using it.

0:23:47.5 BB: I said, but if you do, you might learn a lot. And then they might say, "well, so I should go talk to the person who's first using it." Well that might be helpful. And then what about the person after that? Well, that might be helpful. And then what about the person after that? Well, that might be helpful. And I was trying to get across to them, we hire really bright people and if we just turn you down to don't look beyond, just deliver the thing, complete those drawings, do whatever it is, pass it to the next person. I said, the system may not require you to go look to see how it's used.

0:24:31.9 BB: But what Dr. Deming is proposing is, the better you understand how it's used, the better you can serve the system. But then you get into the question of how big is the system that you want to be thinking about? And there I would tell them that there's no right answer. I mean, you wanna be and this is what I would tell them is we hire really bright people and then we condition you to believe that it doesn't matter. What I'm proposing guided by Dr. Deming is that there's a possibility that it matters anywhere from a little to a lot, but you won't know unless you go look.

0:25:12.2 AS: Yeah. It's funny.

0:25:12.3 BB: And so what I wanna get... Go ahead Andrew.

0:25:14.4 AS: When I was a supervisor at Pepsi in Los Angeles at our Torrance factory, they asked me to help... Could I figure out how to quicken the pace with which we got 80 trucks or 100 trucks out the gate every morning because it mattered. If you got trucks out an hour late on the LA freeways, now you have overtime and all kinds of trouble. So, what I did is I climbed up... At 4:00 AM I climbed up on top of a building, one of our buildings.

0:25:54.1 BB: Wow.

0:25:54.9 AS: And I had a clipboard, which I always have. I have extra clipboards always with me, here's one right here. And I had paper and then I just observed, and I took a lot of notes. And what I was seeing was all these drivers were, they were checking their trucks and they were spending a lot of time with their trucks. So, after I observed it that morning, the next morning I went down and went around and I asked them, what are you doing? And they said, well I'm checking that the quantity that's on the paper is the quantity that's on the truck. And I said, how could that not be? And they said, the loaders at night don't fill it up right. So, the next night I went and talked to the loaders and I said, drivers are saying that you guys are making errors.

0:26:40.4 AS: No, we're not making any errors. Okay. So, now I gotta dig deeper into the loaders. And then I start to see, okay, the loaders are making errors. So, I went and talked to one loader and said, why are you making this error? He said, well, the production are supposed to put this particular Pepsi item in this spot. But they didn't, they put it in another and I got confused, but it's just 'cause it's normally always there. So, I go to talk to the manufacturer, hey guys come on, why did you put that stuff in the wrong spot? He said, well, sales told us to produce so much that we were overloaded. We didn't have any place to put all of this products. So, we had to basically put it anywhere we could as it's racing off the line and on and on.

0:27:27.9 AS: And then you start to realize like, okay, the system is bigger. Now I went and focused on the loaders and said, how do we make sure that when the loaders load that we can lock the truck and then tell the drivers, you must not open this truck. How do we build the trust between the loaders and the drivers that they're loaded correctly and that they can go, because the drivers don't want to get to San Bernardino or wherever they're going and find out, oh, I don't have what this particular customer wanted and it's supposed to be on here. So that's just a little bit of a picture of kind of a very narrow start that starts to bring in more of the system.

0:28:06.8 BB: Oh, yeah. Oh, that's a brilliant example. And also what you're talking about is a term we used the first series, which is the value of synchronicity. That those handoffs are smooth. And they disrupt...

0:28:26.7 AS: I love that word handoffs, by the way. I was just talking with a client of mine. We were talking about the core processes of the business. And I just now realize that what I was missing and what we were missing in our discussion was how do we make sure that the handoffs work.

0:28:43.6 BB: Well, then the other thing, again a concept you may recall from the first series is, I liken it... I think in terms of two types of handoffs. And, actually, I think in one of the first, maybe in the second episode we talked about this, is associated with acceptability. When I hand off to you something, my report, whatever it is I'm assigned to delivered to Andrew by 5 o'clock tomorrow, you look at it, you inspect it, and you're making sure before you accept it that it is acceptable, that it has all the content. And, if anything's missing a figure, a graph, a label, you send it back to me and then I go through and massage it and then send it off to you. And, part of acceptability is when you say, that's good, then the handoff we're talking about is physical.

0:29:51.6 BB: Right. I mean, there's nothing wrong with a physical handoff. I give it to you physically. And what you may recall me mentioning, I think, again likely episode 2, podcast 2 of this series is I would demonstrate this with people in the class. And I would say, if, if what I give you is not acceptable, what do you do? You give it back to me and you say it's incomplete. And then I go through, massage it. If I now give it to you and all the requirements have been met, it's acceptable. Now what happens? What do you say? And I would kid them and so now you say, thank you. But what I'd also point out is that part of acceptability in a non-Deming organization is the handoff is physical and mental. I mean, physical is: It is yours, not mine.

0:30:38.5 BB: Mental is that if you have trouble with how that fits into what you are doing with it, because that report does not exist in isolation, you're doing something with it. Right. So you're doing your things with it. Now we're looking at the system. And if in the system of you're using it, you have an issue and you come back to me, in non-Deming environment, acceptability is my way of saying "Andrew I'm not sure why we're having this conversation because what I gave you is acceptable." But in a Deming organization, the handoff is physical, but not mental. What does that mean? It means, I'm willing to learn from what you just said and the issues you're having. And now I'm beginning to wonder, there's two possibilities. Either one, what I gave you is not acceptable. There's something wrong with the inspection.

0:31:34.3 BB: Or two, what's missing is desirability, that there's some... What I give you is acceptable, but there's something about how it's, it's um, there's a degree of acceptability, and so instead of viewing it as it's good or it's bad, black and white. Now we're saying there's degrees of good. Desirability is degrees of good. And, so in a Deming environment, when I hand off to you and you have an issue with it, you come back the next day and say, "Bill, somehow this didn't get caught in the control chart." And I said, "well, let me take a look at it," and I may find there was something wrong with the inspection, or I may find that there's a degree of good I'm not giving you that I need to be giving you. So, that can either be an acceptability issue or a desirability issue. I'm willing to have that conversation with you in a Deming environment. So, in a Deming environment, the handoff is physical but not mental. And the learning, as you're demonstrating, the learning that comes from the ability to have those conversations, improves the system. That's a lot more work.

0:32:53.8 AS: So, if you were to sum it up, was that the sum up or would you add anything else to your summation of what you want people to take away from this discussion?

0:33:05.6 BB: Yeah, that's it. I'd like to say one is that there's, acceptability is fine. Choose acceptability, if that's all the situation demands then you've chosen that. But pay attention to how it's used, pay attention to the ramifications of that decision, which may show up an hour from now, may not show up until a year from now. And, the possibility that hiccup a year from now could be either it wasn't acceptable, in which case there's an inspection issue or it was acceptable, which means there's a degree of good, which means it's a desirability issue. And, that gets us into future conversations, talking about degrees of good and the whole idea of variation in things that are good. That's desirability, variation in things that are good.

0:33:57.6 AS: All right. Bill, on behalf of everyone at T he 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 wanna keep in touch with Bill, just find him on LinkedIn. 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."

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In this new series, Jacob Stoller and Andrew Stotz discuss five major management and productivity myths and how Lean and Deming thinking solve them. This first episode offers an overview and Jacob shares his journey from traditional management to a better way.

Jacob Stoller is the author of The Lean CEO: Leading the Way to World-Class Excellence and Productivity Reimagined: Shattering Performance Myths to Achieve Sustainable Growth.

TRANSCRIPT

0:00:02.3 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'll be talking with Jacob Stoller, who is a journalist and Shingo prize-winning author of The Lean CEO, which provides a boardroom perspective of Lean initiatives. Now, he connected with Dr. Deming's criticism of command and control management and recently wrote Productivity Reimagined to explore the reasons why organizations fail to apply the Lean and Deming style of management at the enterprise level. Jacob, welcome to the show.

0:00:37.8 Jacob Stoller: Well, thank you, Andrew. It's great to be here.

0:00:40.5 AS: Yeah it was actually really fun to talk to you before we even turned on the recorder to kind of really help people understand where you come from and why you are here. So maybe you can just explain a little bit of your journey of how you got to this point in relation to Deming.

0:00:58.2 JS: Okay, well, interestingly, I started out in sales. I was a corporate sales rep selling services and software and all that kind of high-tech stuff. And I did that for quite a while. But what I liked best about corporate sales was the dialogue that I had with customers, being able to talk to people and ask questions and explore topics. So fortunately, I was able to turn that into a career. I left that profession about 2001 and became a writer, journalist, did research projects, gave talks, did some training, did all the things I wanted to do. And through that, I discovered Lean by accident. And that, I think, wasn't probably till about 2010. And I was writing for a magazine, and someone told me to write about this Lean thing. What is it? And I started to ask questions and talk to people and eventually discovered this wonderful way of running companies. I was totally impressed, not just with how efficient they were and all that, but how they treated people. I thought, this is, boy, I would have liked to have worked at some of these companies.

0:02:14.6 AS: And for someone who's never even heard, let's just imagine someone's never heard the word Lean. What does that mean anyway? And what did it mean when you first saw it and after you really became an expert in it? What does it mean to you now?

0:02:28.4 JS: Well, I thought it was going to be super high tech. That's what I first thought. As a matter of fact, when I went to Japan to actually see it firsthand, I was expecting just flashing screens and everything. And of course, it was a very different thing. It was a lot of people, very, very people-oriented environment, people talking to each other, lots of communication. So I thought, wow. And I started to learn that it was really all about people. And so that was a gradual transformation for me. But it was very rewarding to see the human side of this. So that led me, really led me to some writing. I started working with some lean organizations like the Kaizen Institute, and I started doing writing for them, writing newsletters. I also wrote, helped Misaki Yumi the late Misaki Yumi, a very well-known Lean promoter, write the new edition of his latest book. And I did all the case studies for that. And I also helped various other initiatives. But the main thing was that I decided to write my own book, and that was The Lean CEO.

0:03:57.2 JS: And what I was interested in at the time was I saw that people doing Lean were running into all this resistance, and I was interested in exploring that a little more. And I thought, well, the people that really understand that will be the CEOs because they'll been there. They've been in the boardroom discussions. So that's how The Lean CEO came to be. And in that process, I was asking questions about management and the various practices. Now, I was expecting that there would be a sort of a standard executive playbook for Lean. That was my hypothesis, I guess. And it would have been really nice, very, very easy to write the book and neat and tidy and all that, but it didn't work out that way. They were all different. They all had different ideas. And interestingly, a lot of the thinking that went into their work, actually, they had learned before they even discovered Lean. That had been stuff that they believed in. They learned about teamwork early on, so they were somehow predisposed towards the people side of Lean. So I was really fascinated by that. But my conclusion really was that there was no one way to implement Lean, that there were just many, many different variations on it.

0:05:20.5 JS: And that's when I became and started to discover that there was a lot of the thinking that made these people successful at leading Lean outside of the Lean community. And that's where I started to get interested in some other. How the tech sector was handling change, how the sustainability people doing sustainability projects were handling change. And one speaker that spoke out loud and clearly to me was Dr. Deming, because Dr. Deming understood the fundamentals behind the thinking. I think that makes Lean successful. He understood what was wrong with conventional management and the barriers that people were running into. So, Andrew, I don't know if you remember, but the 1980s, everybody was talking about this ABC show, If Japan Can, Why Can't We? And here we are looking at a productivity crisis. I mean the US was their crown jewels in the US industry had been trounced by the Japanese. They were being outproduced two to one, right? I mean, and so this was recognized as a crisis. It was an election issue at the time. And I, they got Dr. Deming on television and they asked him what are we doing wrong? And Deming was very clear.

0:06:51.1 JS: He said you're not going to learn this, you're not going to be able to imitate the Japanese, and you're not going to learn a few production tricks. You've got to fundamentally change the way you manage. So that was a very, very strong message that I picked up when I was writing that book. And what's wrong with conventional management? What's wrong with command and control management? And why does it not why does it create companies that are so wasteful and do such a bad job at being productive?

0:07:22.6 AS: And as a devil's advocate, if I think about a Lean a company that's trying to adopt Lean, what I would assume was that at the management level, the objective of management is really to reduce resources, to reduce, if you could reduce the cost of electricity, your profit margin would go up. If you could reduce the raw materials that you have in your production process, your profits would go up, as an example, and the value of your business would go up. So how could there be any resistance to a young engineer that's picked up Lean and is bringing it through the organization? It's a little bit odd to think why would there be resistance to that?

0:08:04.1 JS: Well, the resistance is that people are used to doing what they're doing, for one thing. And Dr. Deming has identified with his knowledge of complex adaptive systems a fatal flaw in the hierarchical structures that corporations are run by. You see, if you're using corporate logic, you assume that every department and every work group is like an independent component and that if each component functions as intended and according to measured objectives, then the corporation will succeed. And Deming said that that is completely false, and he had the evidence to prove that. So what people are resisting is not that, people aren't resisting the idea of reducing costs and being efficient, but they're measuring efficiency in the wrong way. They're measuring efficiency of independent assets. And they say if these independent components produce efficiently, then the sum of the total will have an efficient corporation. But that's not true. That's only true according to 17th century logic. If you follow Newton and Newton's laws, that seems to be the case. And it's intuitively, we do tend to think that way. But if you're running a company, a company is not a simple system. It's a complex adaptive system.

0:09:38.7 JS: And it's the interdependence of all these entities and all these components that determine the success of your company. And that's what Deming was trying to teach, and that's what people didn't want to hear.

0:09:50.7 AS: So if I hear you correctly, the first thing is kind of the first wall that someone would come to at the board level or at the management level is just trying to overcome inertia. This is the way we do things. Why do we need to change? It takes effort to change. And then the second thing you're talking about is the lack of systems thinking, thinking that if we could just optimize every part, we're going to get the optimal output of this system. They didn't understand that, as you said, it's a complex adaptive system, that it's much more difficult than just saying, everybody do your best. Is there any other resistance that you saw? So the inertia is number one that I saw. The second one is a lack of systems thinking. Is there any other things that you discovered as you were working on The Lean CEO?

0:10:38.3 JS: Oh, yeah. Well, there's the elephant in the room. And this is that most large corporations anyway are focused on short-term shareholder value. Right. And the way to make your short-term numbers is not to be productive. It's not to invest in good long-term strategies to develop a long-term competitive advantage. It's to make your quarterly numbers. And that can be manipulated fairly easily. Well, maybe not easily, but it can be manipulated by creating perceptions about value, about market value and that sort of thing.

0:11:17.3 AS: And even more, even more than manipulated, it's just that if you don't follow, if all you do is just try to hit numbers on a quarterly basis, you're losing your focus on the long term.

0:11:27.1 JS: Absolutely. And there was a study, and this goes way back to 2005, but it said that corporate CEOs would sacrifice or 74% would sacrifice a long-term profitable initiative to make their quarterly numbers. They would throw it out the window. I think, if anything, that was 2005. I would think if anything, things have gotten worse since then. So we're actually talking about a slice of companies that really do want to be productive, where long-term productivity is their strategy. And that is, a lot of these are privately owned companies, manufacturers, and perhaps, there's some smattering of public companies that are doing this kind of thing, but it's rare.

0:12:24.7 AS: So let's just. So what we've been talking about is kind of the wall that you started to see, the ceiling that was Lean had a challenge, or Deming's teachings had a challenge, and that was this, overcoming the inertia, the lack of systems thinking, and this focus on short-term quality, sorry quarterly numbers. And very few companies were able to really focus on long-term goals of being productive. Now, maybe you can just take a moment to explain how your newest book, your latest book, then took what you saw from a Lean CEO and Deming and then brought it to another level.

0:13:07.8 JS: Okay, well, I interviewed about 60 people, and it's interesting. I thought it might be fairly easy, I would say. What are the basic myths? What do people get wrong? Usually, these are people that are pretty smart about Lean stuff, and people found that surprisingly hard to answer. And I think that was because a lot of these people I talked to had already been practicing this approach for a long time, so they really had to think about it. So it took some digging and a lot of interviews, but I found the thread was in five sort of primary areas, and one was the systems thinking, the pyramid that we talked about.

0:13:50.4 JS: That Deming so articulately talked about. Also, and then the other myths, I think, are somewhat derivative of that. But there's finance. The myth that the bottom line tells you what you need to know about the productivity of your company and it doesn't show up in the finances. So I did a chapter about that. The notion that the boss knows best, and that's not just the boss, it's also professionals. This idea of professional knowledge. Someone can go to school, learn how to tell people what to do, and that will accurately create the right procedures, the right kind of work.

0:14:32.6 JS: And when people follow directions from professionals, they will be the most productive. So that's a myth. Myth number four is the myth that people are motivated by sticks and carrots. And psychologists have disproved this about 70 years ago, I guess, but people still, if you look at compensation plans and you look at the way companies are managed and you look at structures, it's still assumed that people are going to be motivated by externals, by threats and rewards. So we talk about that and some companies that have dealt with that one. And then finally, there's this myth of tech omnipotence. We tend to have way more optimism about technology than is warranted, and we're seeing a lot of that in AI now. We're seeing a lot of disappointment with things not turning out the way people expected. So I really explored those five myths and how they stymie productivity and how companies can build a strategy around count.. what's the word I want? Counterattacking those myths or whatever.

0:15:45.5 AS: And then for the person who reads it, what is the outcome? So once they understand these risks, like number one, you mentioned about the pyramid and not understanding systems thinking. You mentioned number two about finance, you mentioned number three, about the professional or the boss knows best. And number four, people are motivated by sticks and carrots. And number five, tech omnipotence. Once they understand those myths, where do they go from there? How can they then apply that into their life and their work?

0:16:16.2 JS: Well, I suggest that they go into companies that are actually successful at dispelling these myths. You got to see it. But I have a last chapter, a long chapter, but I provide a sort of a roadmap for moving in. But there is really no alternative. If you want to build long-term productivity, there is no alternative to continuous improvement because you're just going to have to keep improving. And Dr. Deming explained that very well in terms of variation. It's always going to be there, and you're always going to have to be dealing with it. So you're going to have to create a culture, and it's going to be people-based. I don't care what kind of technology you have, long-term productivity gain is going to have to come from building the culture in your company.

0:17:10.1 AS: And I want to wrap up our discussion about this just so the audience understands. When you say productivity reimagined, what do you mean by the word productivity?

0:17:23.5 JS: Productivity is customarily just used as sort of a ratio. You know, people say, "Oh, yeah, I'll just take the total sales and divide it by the number of employees" or something like that. So it's seen as a sort of an indicator rather than something that you have to actually do. Right? That's something you have to actually pursue in a direct sort of way. And another, I'll make another side point, is economists like to say that take the GDP and divide it by the number of worker hours or whatever and say that's productivity. But it really, you know when you, the US government website defines productivity as increasing output with a given set of inputs. So from time A to time B, you've got to actually make more with what you have. And that's these indicators that people use for productivity don't reflect that at all. So you've really gotta... Productivity is not that easy to measure, and there's some, actually, some qualitative sides of it, right? I mean, if I'm making, say, ballpoint pens, and let's suppose I increase the production by 10% using the equivalent amount of materials and all the machinery.

0:18:51.9 JS: Well, that's great, but what if the quality goes down? You know, I haven't really gained anything. So it's kind of tricky to measure productivity. You have to get right down there in the processes to understand it. And so I would tell the finance people that it's inside that black box. You have to be in, understand what's going on inside that black box of operations to really understand whether, which direction your productivity is going.

0:19:20.2 AS: Okay. So if I hear that right, I think a lot of us could get lost in some sort of ratios or something like that and think about a measure. But in fact, what you're talking about is to really do productivity right, it sounds like you also really have to understand trade-offs. If you cut in a particular area, that's going to cause another problem, and that's going to...you may not be able to get more out of your existing resources. In addition, it's going to require work because you're organizing your company in a certain way to get a certain level of output with the inputs that you have. But in order to get a much higher level of that, you've got to rethink: How do I get the maximum out of this organization, which is a real challenge.

0:20:09.8 JS: Well, I think this is where this is, you know, it depends on how you do it, right? I mean, you can do it in a siloed way, which says, I have a quality department, I have an operations department, I have a maintenance department. And you can invest in all these and play around with your investments and see what works out. Or you can get into the process, and you can, by really, really understanding the process and letting people in the process improve it. That's where you get Deming's magic chain reaction, which is that you improve quality, and then your efficiency is going to improve and your costs are going to go down. But that's only if you're looking at productivity in a very broad way. It's not looking at quality in terms of the tolerances that I made on my grinding or whatever I'm doing. It's about the quality of the processes themselves. Right? So Deming was looking at quality with a big Q that encapsulates a lot of things.

0:21:16.0 AS: Well, I think what, what's, this is very interesting. And I know we're going to have a series that we're going to start doing, going through more detail of what you've discovered and what you want to share. So I'm really looking forward to that. And so, I appreciate this introductory discussion. And Jacob, 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 can find Jacob's book, Productivity Reimagined, at jacobstoller.com. This is your host, Andrew Stotz. And I'm going to leave you with one of my favorite quotes from Dr. Deming: "People are entitled to joy in work."

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In this new series, John Dues and Andrew Stotz discuss John's model for improvement. This episode includes an overview of the model and how John uses it for goal-setting and planning in his school.

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 John Dues, who is part of the new generation of educators striving to apply Dr. Deming's principles to unleash student joy in learning. The topic for today is building an improvement model. John, take it away.

0:00:24.8 John Dues: It's good to be back, Andrew. Yeah, so we sort of wrapped up this last series. We had a six-part series on organizational goal setting. And we, if you remember, we talked through those four conditions that are important for organizational goal setting, especially healthy goal setting, where before we set a goal, we understand sort of how capable our system is. We understand how our data is varying within our system. We are looking at our system and seeing if it's stable or unstable. And then, of course, we want to have a method for how we go about improving. And so you kind of have to have an understanding of those four conditions before you set a goal.

0:01:03.6 JD: And I thought sort of as an extension of that, or possibly a new series, we could kind of take a look at an improvement model that would help us sort of better set ambitious goals. Because when we did those four conditions, it kind of leaves you wondering, well, how ambitious should my goals be? Should I still do stretch goals, those types of things? And I think this improvement model that we're building here at United Schools sort of addresses that. And it's something we're building.

0:01:34.4 JD: And so I think the listeners kind of get like a little bit of behind the scenes on what it looks like now. I think we'll see a version of it. And perhaps through this dialogue, through the series, we'll even think about ways to improve it.

0:01:48.4 AS: Can I ask you a question about that?

0:01:49.6 JD: Sure.

0:01:50.0 AS: One of the things, I do a lot of lectures on corporate strategy and workshops, and the lingo gets so confusing, vision, mission, values, and all kinds of different ways that people refer to things. But when I talk to my clients and my students, I oftentimes just tell them a vision is a long-term goal. And it could be a five-year or a 10-year goal. And because it's long-term, it's a little bit more of a vision as opposed to, you can see it very clearly. Like my goal is to get an A in this particular class, this particular semester. Whereas what I try to say is, a vision is: I want to be in the top of that mountain. And I want us all to be at the top of that mountain in five years. And I kind of interchangeably call that a long-term goal and a vision. And I'm just curious what your thoughts are on long-term versus short and medium as we go into this discussion.

0:02:53.8 JD: Yeah. I think as we get into the model, we'll actually see both of those things, sort of a long-term sort of goal, sort of a more intermediate thing, and then how you work back and forth between those two things. So I think that's a good segue.

0:03:08.4 AS: Let's get in it.

0:03:08.4 JD: Yeah. And so just maybe just a few other things about the model before we get right into it. So one thing to know I've come to appreciate is when when I say a model, I just mean something visually representative that helps us understand and communicate how we think things should be functioning in reality. So when I say improvement model, I'm actually like talking about a diagram on a piece of paper that you can put in front of everybody on your team. So everybody has an understanding for how you're approaching goal setting in this case.

0:03:38.1 AS: Would you call it an improvement visualization? Or what's the difference between what you mean by model and like something that I would call, let's say, a visualization?

0:03:49.5 JD: Yeah, I'd say it's a type of visualization when I say model.

0:03:52.8 AS: Okay. Excellent.

0:03:53.8 JD: Yeah, that's what I'm talking about. And I think you'll see it when we get into the model that definitely there's credit due to Mike Rother and his concept of Improvement Kata because this model heavily borrows from the work that he's done, if you're familiar with that four-step Improvement Kata process.

0:04:15.1 AS: Yeah. Very.

0:04:19.7 JD: But anytime, whatever the thing is that you call like key performance metrics, key metrics, whatever you call that thing that we all set in our organizations, there's always this gap between what we want and what we're currently getting. And this model gives us the scientific way of thinking and working to close basically that gap. In this world, the gap between the voice of the process and the voice of the customer, how do we close that gap? So that's sort of what the model is addressing. So I'll share my screen so you can see that and anybody that's watching can see what the model looks like. And I'll just kind of leave that up as I'm talking about it, put it in slideshow.

0:05:08.7 AS: Great. We can see that now.

0:05:14.6 JD: Great. So we can just start by just kind of giving an overview, especially for those people who are listening, but you can kind of picture like a path going up a mountain and that path has twists and turns. It has obstacles. In this particular diagram or model, there's rocks in the way of the path. There's a water hazard, there's trees in the way, there's a roadblock. And as you go, it's kind of strange because you're working your way up. And I'll explain this all as we go through it kind of one step at a time. But as you're working from left to right in the model, this four-step improvement model, you have a team over on the left. This team's working on a goal that you're setting. And then over on the left, you actually have step two, which is grasp the current condition. And then you have this big crack in the path that's called the threshold of knowledge. And I'll talk about what that is.

0:06:11.1 JD: And sort of the next step is actually step four, experiment to overcome obstacles as you're working left to right. You go further up this path, up this mountain. And number three, the step three is establish your next target condition. And then when you get all the way up the mountain and you have this challenge or direction. So that's what you were just talking about. So what's that long-term thing that you're trying to accomplish? We call that a challenge or direction. So the steps that you're taking actually chronologically are you're going to do number one first.

0:06:43.2 JD: You're going to set that challenge or direction, but it actually is the thing that you're working toward. That's the sort of beginning with the end in mind. So that's why it's way up on the mountain, but you're going to do that first. And the next thing you're going to do is go all the way back down to the start of the path and grasp whatever that current condition is in your organization. And then you're going to run experiments on the way to trying to get to the next sort of intermediate step, that next target condition. So four steps, and then you have this team working on it.

0:07:16.8 AS: Which I would say for the traditional American style, as from my perspective, it can be a bit confusing because you're starting with number one at the farthest point away instead of closest to you. Then you're going to come to number two. From a timeline perspective, it feels like you're kind of zigzagging back and forth in your thinking.

0:07:38.8 JD: Yep. You definitely are. And it takes a little bit to wrap your head around it, but we'll kind of work through this piece by piece. So let's start with the team. So you have these people on the left-hand side of this diagram. There's sort of three different groups within that team. And we've talked about this a number of times, but remember that there's this key concept when you're going to take a thinking systems or a systems view of an organization. That you have to have these three different groups of people. You have to have the people that are working on the system, the people that are working in the system, and then from Dr. Deming's perspective, you have to have somebody that has profound knowledge, has that lens. So again, someone from the outside that has profound knowledge. And then in our case, the people working in the system, generally speaking, are the students. And then you have to have the managers that have the authority to work on the system. So in our system, that would be teachers and school leaders. But this model is not specific to educational organizations. You could translate this to any other type of organization.

0:08:50.4 JD: So if we were a hospital, then perhaps the people working in the system, depending on the improvement project, could be nurses. And then the managers that have the authority to work on the system, maybe the hospital management team. And then someone from outside with profound knowledge could be either someone internally that has familiarity with the System of Profound Knowledge or someone that they bring in externally, like a consultant to help out. So the point is, is that, again, this team, whoever's working in the system is going to differ by the organizational sector that you're working in. But it translates in the system basically.

0:09:31.0 AS: It's interesting that I've seen this type of diagram or concept about work on the system, work in the system and a System of Profound Knowledge coach. But it just kind of clicked for me to think about it. It obviously, like when I work with a company, I'm working with the owners and the top management. And when I do that, we're working on the system.

0:09:58.5 JD: Yep.

0:10:00.2 AS: And I have the knowledge of the System of Profound Lnowledge. So I'm coaching them about the system. And then within the system, they have the employees who are executing on what they're trying to improve and do, but it just perfectly explains it. So I love that diagram.

0:10:17.8 JD: Yeah. And I have the same experience. And I think we've mentioned on this podcast before that in my world, we often have school or district-based improvement teams. And it's typically leaders of the organization, sometimes teachers, but almost never is it students working in the system that are a part of, or, providing significant input into the improvement. So, I think if you can combine, in our case, students working in the system, because they have things that they can identify in terms of how they experience the system that are different than the people that work on the system. And then having that third group that, or that person that has that outside profound knowledge, if you put all the three of those things together, I think you have a much better chance to improve. But I think in schools, that's probably never happening. I'm assuming that's the same in other industries as well.

0:11:08.3 AS: And this also explains why when Dr. Deming would see slogans and things like that, encouraging the workers to do better and higher quality, he was like, they don't have the authority to change the system.

0:11:22.5 JD: Right.

0:11:24.1 AS: And what you've said is the group that's working on the system has the authority or the ability to change the system.

0:11:35.4 JD: Yeah. This is one...the makeup of this team that's using this four-step process, that's one innovation that we've done to this model that would be different from the Improvement Kata. So in the Improvement Kata, there's just coach and learner. Usually sometimes there's a coach of the coach, a coach and a learner, depending on how it's represented, but this is in my view, an innovation where you have the work on the system group, the work in the system group, and then the System of Profound Knowledge coach. I haven't seen that in this model.

0:12:07.4 AS: And could that be because when Mike Rother was writing his book, he was particularly referring to Toyota.

0:12:18.7 JD: Could be. Could be.

0:12:19.5 AS: Where the workers have more authority to impact the system. Whereas in the typical American system, the worker doesn't really have the authority to stop the production line or something like that to the extent of the Japanese. So interesting point.

0:12:36.1 JD: Yeah, that's a really good point. My understanding of Mike Rother's work is he sort of derived this improvement model by watching, observing, working with Toyota over a very long period of time. So that very well could be the case. Cool. So we have the team, so let's go to step one, that's the challenge or direction. And I really like that because again, when we did that six part series on Goal Setting is Often an Act of Desperation, one thing that I did think was missing was like, well, still as an organization, we want to move forward. We want to improve. We want to be ambitious in how we're setting our goals, but I don't think that fully came through in the four conditions. And so I think layering this model on top of the four conditions really helps because I think it is important to be ambitious, especially when we're talking about like a mission driven organization, we need to be setting ambitious targets for student learning, coming to school, those types of things.

0:13:39.6 JD: So really what we're doing in step one of the model is we're asking the question, where do we want to be in the long run? So this is a long term goal. This is a longer range goal that would differentiate us from other schools if we achieved it. But currently when we think about this goal, it actually seems nearly impossible because it's so far from where we are currently performing. We don't know how we're going to get there. So an example in my world is, schools have been paying much closer attention to chronic absenteeism, which is when a student misses 10% or more of the school year. And those numbers basically skyrocketed towards the end of the pandemic and then for the last several years. So that's something we're focusing on as an organization. So our chronic absenteeism rate is really high, like 52%, something like that over the last several years. And we want to get that down to 5%. So there's this huge gap.

0:14:53.6 AS: That's a huge move.

0:14:54.5 JD: Huge gap, order of magnitude, right? To go from 52%, that's the voice of the process. That's what's actually happening. And the voice of the customer, what we want is 5%. And we really don't know how to get there. And that's going to be the case at the point where you're at step one, but you're doing that first. You're setting that challenge or direction. And that really is something that needs to be set, in my view, at the leadership level, at the management level. So, that's step one.

0:15:22.9 AS: And you just said something that's interesting is we really don't know how to get there.

0:15:25.6 JD: And we really don't know...

0:15:26.9 AS: I mean, if we knew how to get there, we'd probably be there.

0:15:28.6 JD: Yeah. Yep. Yep. So that's step one. That's why if you're able to view the model and you're watching the podcast and you can see the video, that's why number one happens first, even though it's on the far right hand in the upper right hand corner at the top of the mountain in the model.

0:15:45.8 AS: And is there a reason why it's a relatively vague thing, right? Challenge or direction.

0:15:54.0 JD: Yeah.

0:15:55.5 AS: Why is it vague as opposed to specific target, goal or saying something like that?

0:16:03.7 JD: Yeah. I mean, I think, I like challenge or direction. One, it fits on the page. And it sort of conveys that it's going to be a challenge. And it also, if you're going to work in this way to achieve something like that, that it's actually setting the direction of the organization, the direction that the organization is moving toward. So.

0:16:24.0 AS: In other words, is it acknowledging that we really won't, we really don't know that target. We think we know it, we see that mountain, but as we go closer to it, we want to go in that direction, but as we get closer, it'll become more clear exactly where we're going to be or want to be.

0:16:44.7 JD: Well, I think this would be something that... I think in my view, we're still learning. But when we set that challenge or direction, I guess I could see some circumstances where we would come off that, but I think we kind of want to set it in a way that really pushes us. Right. So I'd be, I mean, I think you could learn some things that would say, okay, maybe that wasn't the exact right number to set, but I'd also be careful about just adjusting it because it's hard.

0:17:13.2 AS: Okay. So you mentioned 5%.

0:17:17.9 JD: Yeah.

0:17:19.1 AS: Would that be, would you state it as achieve 5%?

0:17:25.9 JD: Yeah. 5% or less of our students are chronically absent.

0:17:30.4 AS: Okay. Keep going. I don't want to slow it down. But listeners may get it faster than I do. I'm a little bit slow and I have a lot of questions as we go along.

0:17:37.0 JD: No, no. And I think what we could do in future episodes is dig into each of the steps a little bit more too, and use this as an overview session.

0:17:46.9 AS: Yep.

0:17:48.3 JD: So that was step one. So now what's going to happen in step two, you're going to come all the way back down. Now you're at the very start of the path.

0:17:56.6 AS: Back to reality.

0:18:00.6 JD: Back to reality, step two. And the first thing you have to do, okay, we've set the target, this very challenging direction we want to head into because it's the right thing to do. The next thing we're going to do is grasp the current condition. And so in step two of the model, we're going to ask, where are we now? So we know the long-term goal and now we need to study the current process and how it operates basically. So basically this study represents our current knowledge threshold about the process. And then it's going to contribute to how we define the next target condition we've set that sort of intermediate step on the way to the challenge. And so a lot of that six-part series on goal setting is often an act of desperation, a lot of that learning is right here at what we're doing at step two, because we're creating a process behavior chart in a lot of cases, and understanding how our data is performing over time in this particular area. That's what grasping the current condition means.

0:19:02.6 JD: So part of it, it's a data thing. So in this chronic absenteeism example, what I'm gonna do is I know where I want to be. Now I need to understand where are we historically. And then also as a part of grasping the current condition, I may wanna do some things like interview students and families that are chronically absent, then sort of dig into why that is. Interview teachers about why they think that is. There's a number of things that you could do at this step on the ground where the work happens to grasp the current condition. And I think there can be a sort of quantitative component to that and a qualitative component to that. Also, we sort of understand like how are things actually working on the ground that contribute to us not being where we want to in this particular area.

0:19:56.7 JD: So that's step two. That's what we're gonna do next. After we've set the challenge or direction, we wanna sort of understand the situation on the ground, grasp the current condition. And then next what we're gonna do is step three, which is establish your next target condition. So in step three of the model, we ask where do we want to be next? So we know we can't make this leap, from 52% to, 'cause we wanna decrease it down to 5%. We know we're not, that's too big a step that we're just gonna get there somehow magically. So our target condition, then it's our next goal, usually within a time bound, achieve by date. In Mike Rother's work, he suggests something on a pretty short term scale. Something like one week or one month. So something like chronic absenteeism, I think one month would be sort of where I would set the next target condition. Just having experience with something like attendance rates.

0:21:07.0 JD: And at this point we don't exactly know how we'll achieve the next target condition, but it also, it doesn't feel as impossible as the challenge. So it's a step towards the challenge. So we're gonna do that next. So we set the big challenge that may take us three years to get to. Then we understand the current conditions on the ground and we use that knowledge to set our next target condition. So that's step three. And then the fourth step is we're gonna experiment to overcome obstacles.

0:21:45.9 AS: And before you go to fourth, let me just ask a question about establish your next target condition. One of the things that's missing from that, obviously is, you know, coming from a different perspective, is that when we say, all right, here's where we want to be, and let's go back to reality, and here's where we are. Sometimes, when people work like myself and others, work with people who say, okay, let's map out all the steps to get to that vision. What are the next five things we have to do? Whereas here you're saying, let's focus on the next target condition rather than the next five.

0:22:25.4 JD: Yep. And keep in mind when I say establish the next target condition, what I literally mean is what's our next intermediate goal that we're gonna shoot for? So if we're trying to get all the way down to 5% from 52, remember decrease is good in this case, establish my next target condition, maybe over the next month, I wanna see if I can get that from 52% down to 35% or down to 40%. Part of what I would look at when I set that next target condition is what did the variation look like when I was charting in step two? So the magnitude of that variation will give me some indication of what would be a reasonable sort of next step target for step three basically.

0:23:11.9 AS: And maybe just explain for those people not familiar with Mike Rother's work and, you know, terminology that you're using, why do you say establish your next target condition?

0:23:28.0 JD: I think, I don't know. I think that, you know, really what I mean is just establish the next target, establish the next intermediate goal, basically. Now, I think using the word condition is because when you think about something like chronic absenteeism, there's conditions that probably contribute to that and part of that condition may be the things that you wanna work on. So I kind of think of like, you know, 'cause when you look at step four, you're gonna experiment. So you're creating a new set of realities, a new set of conditions in your organization. And so sort of that coincides with the metric that you're shooting for. So it's not just the metrics, it's also like what are the conditions surrounding that metric. If that makes sense.

0:24:15.8 AS: Yep.

0:24:16.9 JD: Cool. And then step four then is experiment to overcome obstacles. So basically in step four of the model, we move toward the target condition with experiments. And by experiments, what I'm talking about is Plan, Do, Study, Act cycles or PDSA cycles, which uncover obstacles we'll need to work on. So the path, and that's the path in the model is windy 'cause it's this path to the target condition is not gonna be straight line, but it's gonna require this rapid learning to move in that direction basically. And so let's say we've set that next target condition to be one month from now, that's what we're shooting for. And we're gonna run a series of experiments. Maybe it's four one-week PSDA cycles, maybe it's two, two week PSDA cycles. Maybe it's one one month cycle. It depends on sort of the nature of the Plan, Do Study, Act cycle. But running these cycles where we make a plan, including a prediction, run the experiment, and then study what happens and see if it's moving us in the direction of the target condition.

0:25:40.0 JD: And so in that way, we're rapidly learning what it's gonna take to hit that next target condition. And the other important part of this, you'll see in between the grasping of the current condition at step two and running those experiments, there's this huge fault line, this huge crack in the path that you can't just jump over. And it's kinda labeled there, it says Threshold of Knowledge. And basically it's the point at which you have no facts and data to go on. That's the threshold of knowledge. There's always a threshold of knowledge. And so to see further beyond that threshold of knowledge, that's where you conduct your next experiment.

0:26:28.7 AS: Interesting.

0:26:29.8 JD: So because you, like you were saying, we wanna outline these five steps that we're gonna do. So with chronic absenteeism, I read somewhere a Harvard study where if you text parents what a kid's attendance rate is on a regular basis, they're then more likely to come to school on a frequent basis. So you could see where a school system would spend all this money to get a texting system, maybe even allocate a person or a half of a FTE of a person to run this system. And they faithfully implement this texting system, and it has no impact at their school to impact those chronic, because it had nothing to do with what the actual problem was in that context. And you've spent all this money. And that was just a hypothetical.

0:27:21.2 AS: And you could have done a pilot test of 10 parents or 20 and done it manually and sent out some messages and just tested a little bit.

0:27:31.1 JD: Yeah. You run a test with 10 chronically absent kids. Just to see if you can improve their attendance for a week. And maybe you learn something or for a month and maybe you learn something. And then if the early evidence is pointing in the right direction, then you can run that experiment with more kids or for a longer period of time or under slightly different conditions. Those types of things.

0:27:54.6 AS: So an example that I would say in relation to this for one of my clients is that we've identified that they need to get a higher gross profit margin.

0:28:04.7 JD: Okay.

0:28:05.5 JD: And their gross profit margin is about 23%. And I know that the average is about 30 in the industry. And so my work with them is how are we gonna get that profit margin to be 30 or 35%? 35 would be showing that you've really got pricing power because of something that we've done. And so, I'm pounding away that we've gotta improve this, but you know what? We don't have data to understand the current condition. And this week we've... It's taken us about a couple months to pull that data together. But now we have absolutely comprehensive data that my team has calculated on the profitability of every product, the profitability of every customer, and the profitability of every process. We know the capacity utilization of each part of the production process. So now we have the knowledge that we didn't have before that's gonna, that once get, digest this knowledge, it's gonna give us the indication of what to do next. Which is it's gonna be shut down a particular production process or increase price there. We may lose customers, but it's not worth doing it at this low price or so, but without that knowledge, we're just, it's a dream.

0:29:21.4 JD: Yeah. It sounds like you guys have done step one and step two in that process.

0:29:28.0 AS: Yeah. Which is exciting. 'Cause now Friday's meeting is gonna be about, all right, how do we take this huge amount of data and effort that we've put in and now it's time to come up with what are the steps that we're gonna take?

0:29:40.4 JD: Yeah. And I think even just in that situation, even just acknowledging that there's the threshold of knowledge. Even just getting people to acknowledge that in a room that they actually don't know what's gonna happen. That's the power of the PDSA because it makes you predict, okay, you say this thing is gonna work and when you put in this plan in place, this is your prediction. And then when you come back next week and it doesn't work, then you have to explain that, you know, it's not a gotcha, but it very quickly makes you think in a different way.

0:30:13.0 AS: It keeps a record so someone has gone back, well, I didn't think it was gonna work, you know, for sure.

0:30:18.8 JD: Well, right. And it's usually very like, some of the things that I found in that is when people are off on their predictions, it's very mundane things that they didn't account for. We're in student recruitment season and we set a goal for the number of calls we're gonna make to prospective families. And then hypothetically a recruitment director could fall short and it's like, well what happened? It's like, well, oh, the two part-time people that we had, I forgot they are actually out two days last week right? And so it's usually things like that are actually getting in the way of us accomplishing these grand targets that we have set.

0:31:05.5 AS: By the way, where does the threshold of knowledge fit? We've got number one challenge or direction, number two, grasp the current condition. It's after the grasp the current condition that we come to the threshold of knowledge.

0:31:17.7 JD: Yeah. Because, well, we have somewhat of an understanding of the condition on the ground, but we don't know what's gonna improve it until we run the experiments. So we start running the experiments and we try to sort of narrow that knowledge gap basically. And this is sort of the final part is basically like what do you do when you get to that experiment and when you hit that target condition, when you reach that by the achieve-by date, well now there's a new condition and you repeat the four steps because you haven't reached the challenge or the direction. You just met that sort of intermediate goal. And you basically keep running this four step cycle until that learned long-term challenge is achieved.

0:32:12.5 AS: Okay. Great. So we've got the establish your next condition down where it could be one week, it could be one month, in some cases it could be longer, but it's really our next intermediate goal. Where do we wanna go next? What's the next right step?

0:32:28.5 JD: Yeah. Well, so you go back to step two 'cause you're not gonna change the challenge or direction. Now there's a new set of conditions 'cause you've moved ahead, right? And now you're gonna go back and say, okay, what are the current conditions like? And now we're gonna, okay, let's say we move from 52% to 42%. Now we go back and sort of understand the experiments from that last cycle. And we're gonna set that next target condition. So maybe now we wanna get it down to 25%. And we're gonna run another round of experiments in a certain amount of time to see if it hits that next target condition. And basically you're just gonna keep doing this over and over again. That's really the continual improvement model that we're operating under.

0:33:22.7 AS: So how would we wrap this up?

0:33:24.4 JD: So the big thing for me is, you sort of have to have a model to bridge that gap between current conditions and future aspirations. Beause there's always a gap between those two things. And what this model does is it gives us a scientific way of thinking and working to close this gap. It's a more powerful model than I've ever sort of seen anywhere. And then literally you put it on a piece of paper like this and then you have to explain it to people over and over and over. And then you have to actually do it with people. So we're actually doing this, getting people excited about running PDSAs. And the most important thing is that the challenge or direction, especially for leaders that are listening to this, you don't stand on this mountaintop and set it and then say, go do it. That's why this team aspect is so important. We're setting this challenge or direction as a team, and then we're working together on the ground. Putting that work in, running those experiments to try to bring this thing about, is a completely different way of working. It's not an accountability system, it's an improvement system.

0:34:39.4 AS: Yeah. That's a great overview of this system that you guys are applying and it's exciting to learn more. So I wanna thank you on behalf of everyone at The Deming Institute, John. And I thought the discussion was very interesting myself. And for 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 wanna leave you with one of my favorite quotes from Dr. Deming. "People are entitled to joy in work."

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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."

View Details

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."

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Where did your "quality journey" start? In this first episode of a new series on quality, Bill Bellows shares his "origin story," the evolution of his thinking, and why the Deming philosophy is unique.

TRANSCRIPT

0:00:02.3 Andrew Stotz: My name is Andrew Stotz, and I'll be your host as we continue our journey in 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 a new series called Misunderstanding Quality, and the topic for today is Quality Management, what century are we in? Bill, take it away.

0:00:35.7 Bill Bellows: Thank you, Andrew. [chuckle] All right.

0:00:39.5 AS: Exciting. I'm excited to hear what you've got going on in your mind about this Misunderstanding Quality.

0:00:45.6 BB: Well, first let me say that whether you're new to quality or looking for ideas on quality and quality management, quality improvement, quality management, the aim I have in mind for this podcast series is to improve your ability to manage quality through deepening your appreciation of the Deming philosophy and how to apply it. But specifically, a focus on quality, time after time, which is where most people heard about Deming, was through Quality, Productivity and Competitive Position. For example, the title of his first book. And relative to the title, what came to mind is an anecdote shared with me by two mentors that both spent a good deal of time with Dr. Deming. The first, Gipsie Ranney, who was a professor of statistics at University of Tennessee when she met Dr. Deming, went on to become a senior statistical consultant to GM and the first president of the Deming Institute, when Dr. Deming and his family, shortly before he died, formed a nonprofit called The Deming Institute. Gipsie and I used to speak literally every day, driving to work, driving home, we... "What's up, what's up?" And we always... It was so cool. I wish I had the recordings. Anyway, she once shared that she once asked Dr. Deming, "What do they learn in your seminars? What do attendees learn in your seminars?" To which she said Dr. Deming said, "I know what I said, I don't know what they heard."

[laughter]

0:02:26.0 BB: And along those lines, in the same timeframe, Bill Cooper who just turned 90, he and my wife share a birthday. Not the same year. Bill turned 90 last November and he was senior civilian at the US Navy's aircraft overhaul facility in San Diego, known as North Island. So as aircraft carriers are coming into San Diego, which is like the... I think they call it... It's like the headquarters of the Pacific Fleet. So as aircraft carriers are coming back, planes for which the repair work cannot be done on the carriers fly off to North Island. And Bill was in charge of, he said, some 5,000 civilians. And his peer on the military side, Phil Monroe was in charge of all the military people, and they got exposed to Dr. Deming's work in the early '80s, went off, left there, became Deming consultants. Anyway, Bill said he once asked Dr. Demings, says, "What percent of the attendees of your seminars walk away really understanding what you said?" And he said... Bill said Dr. Deming said, "A small percentage."

[laughter]

0:03:44.0 BB: And so what I had in mind in this series is... One is, what makes it hard to understand what Dr. Deming is talking about? And so for the listeners, what I'm hoping we can help you understand, what might be some invisible challenges that you're having in your organizations trying to explain this to others. So maybe you think your understanding is pretty good, but like Dr. Deming, maybe people are having a hard time understanding what you're saying. And I know what it's like to be in a room, presenting to people. And I had that same experience. I had one Rocketdyne executive... Rocketdyne was sold a few times. Every time it got sold, our Deming transformation efforts got set back a few years. So when the latest management team came in six, seven years ago, I met with one of the very top people, was explaining... Trying to explain to him for the first time what we had accomplished with some, I thought, absolutely amazing work by managing variation as a system. And he said something like, "So are people rejecting what you're saying?" And I said, "No, that's not it." He says, "So they're accepting what you're saying?" I said, "Well... " he said, "What's the problem?" I said, "What they accepted is not what I said." [laughter]

0:05:19.5 BB: I said, we're not in disagreement, but what they think they heard is... And that's when I found that I've experienced that. So anyway, so I wanted to get some background. So my first exposure to quality circles, and this is like... So I was living in this parallel universe, a heat transfer engineer working on rocket engines, and Quality comes into the organization. And unbeknownst to me, there's this quality movement going on, inspired by Dr. Deming, and we're on this wave. I had no idea. All I know is all of a sudden, we got Quality Circles, quality teams, every department...

0:06:03.8 AS: What year was that, roughly?

0:06:06.1 BB: 1984.

0:06:08.9 AS: Okay.

0:06:10.5 BB: Yeah. And I remember a book I was... I remember there was a pamphlet... You mentioned that. The company was AVCO, A-V-C-O, the Aviation Corporation, which is nearly as old as the Boeing Company. So it was one of the... So, Boeing gets into airplanes, the Wright Brothers get into airplanes, people are... Investors getting in, and AVCO, A-V-C-O, was formed by someone you likely heard of, Averill Harriman, major Wall Street guy at the time. And so anyway, I remember there being an AVCO book on quality circles. As you mentioned, I remember seeing that. And I remember just going along for the ride. I'm new to corporations, I'm just a subject matter expert in gas turbine heat transfer, and we're going to the... We got these things called quality circles, whatever. And I remember our department formed... Our department was a team, we had goals, and I remember going to these quality meetings, and let's say the goal would be that we read an article about heat transfer or something. I was just kind of fumbling with this thing called quality circles.

0:07:28.6 BB: But I remember, looking over the shoulder of the department secretary with a IBM Selectric typewriter, and this is before PCs, so we're using IBM 3270, dumb terminals. And I remember being over near the secretary, Kathy, and she's typing away the weekly activity reports, Friday morning kind of thing. And on a routine basis, I'd be over there and she'd be typing along. And then on the very last page, under the title, "Quality Circles," she would type in "Quality Circles are progressing as planned." [chuckle] 'Cause then these would be distributed to people in the department. So I'm watching her now create the next original. And it dawns on me, two things. One is, it's the very last topic in the meeting, in the weekly minutes, and two is it's the same damn thing every time, "Quality Circles are on plan." And I remember saying to her, "Why don't we just have that printed into the stationary?" [laughter]

0:08:39.5 BB: This is before I knew... For me, quality was just a seven-letter word. I don't know. So this is my exposure. And I remember thinking one of the quality goals we're thinking of in our department is... I think somebody even really brought this up, is we're gonna answer the phone by the second ring. That's gonna be our quality goal. And then, I remember we're negotiating for cleaning services. The floors were a mess. Tile floors, they were just a mess. And I remember in our department, we were lobbying to get better janitorial services, have the things cleaned more often. And next thing, we're negotiating with the VP of Engineering relative to, "Well, if your quality circles are on track, then I'll think about that." And it was just like... So it's some really ugly memories [chuckle] of this whole quality thing.

0:09:34.3 BB: But then I got into... I mentioned on the very first of our previous podcast, getting involved as a problem solving decision-making facilitator. I was hanging out with the HR training people, they had some... Their director of training, our director of training was a very astute guy and he was... I'm convinced, having met many people in that role, he knew what was going on. He knew a lot of the names in quality, not so... He knew of Deming's name, he knew of De Bono's name, Kepner-Tregoe, but he seemed to know his stuff. He's a fun guy to be with. And so, that's likely where I first heard Deming's name and that first book would've been Quality, Productivity and Competitive Position, which is... It's almost impenetrable, but I can remember at some point looking at that.

0:10:29.7 BB: But anyway, but in the fall of '87, I started being assigned a taskforce as helping... 'cause now I'm a problem-solving facilitator. But I still don't know... I don't know what quality is. All I know is I get invited to help solve problems. And we were looking at a very bad wear problem, these gears wearing each other out, enormous visibility to the Pentagon, because the tank engines we were making, 120 a month, were being shipped to the tank plant. And then, these tanks with these engines were being sent... The majority of them, sent to Europe. And they were the frontline of defense in Western Europe. This is the Cold War, Andrew.

0:11:17.4 AS: Right.

0:11:19.2 BB: And so the problem that came up was that a couple of these tanks had these gears wear through each other within 50 hours. And I've never been on such a high visibility taskforce because the Generals concern was that every one of those tanks was likely to not operate. And that might be the opportunity for the "Russki's" to launch World War III, because, what a great time, the tanks... If they knew these tanks weren't working. So it was a lot of stress, a lot of pressure. And after months of slow progress, the Army said, "Hey, why don't you guys go look at this Taguchi thing. The transmission people from General Motors who make the tank transmission, anytime they have a snafu like this, they use this Taguchi stuff." So I got assigned the action to go look at that. And I remember, this is pre-internet. And somehow, I did a literature search. I remember it was through something called Nerac, N-E-R-A-C. And out comes these pages. And the thing on Taguchi was... So first of all, who is this Taguchi guy?

0:12:29.0 BB: What is this quality stuff? I don't know. I'm a problem solving guy. And then I remember the first article on reference to Taguchi says, "Quality is the minimum of loss imparted to society by a product after a shipment to the customer." And I thought, "What does that mean?" So I don't know what... I mean, minimum of... I'm thinking... And I thought, "This can't be anything." So anyway, went out to General Motors and got exposed to what they were doing, and a few years later, realized it wasn't exactly Taguchi, but it was... There's some nuances there. But anyway, they exposed me to Design of Experiments and what's known as fractional factorial testing. And coupled with shifting how we look at the measurement process, we solved this problem within weeks, a problem that had been going on for months. So then I got excited about... This Taguchi thing's kind of cool. I'm liking this. And it was a lot more exciting than what I was doing. And I thought, "I think I wanna do this." So the following year, I went to the Taguchi conference. So we had the application and I was so excited, Andrew, that I was turned down for funding. The Army would have paid for me to go to this conference, 'cause the Army, by that point, had invited me to work on at least two problems.

0:13:54.4 BB: Once we solved the first one, when problems came up, the Army literally turned to the program management people at Lycoming and said, "Do a Taguchi study, get Bill Bellows involved." So I was walking on water. I thought it was kind of cool. So I wanted to go to this Taguchi conference, and it was turned down. And they said, "It's not your job." So I told my boss when they told me it was gonna be turned down, I said, "I'm going to this conference." I said, "Whether the company pays for it or not, I am going." So I drove 14 hours each way to Detroit. And in the room are all the US experts on Taguchi's ideas at the time. I didn't know who Deming was at the time. I still didn't know what quality was, but I walked outta there thinking, "This is what I wanna do." And then, where I'm getting to is, a few months later, I was gonna go out on medical I had surgery planned.

0:14:53.1 BB: I was gonna be out for about two months. So my wife and I lived in New Haven, maybe 10 miles north of Yale. And I remember going to the... Again, this is pre-Amazon. I mean, talk about dating ourselves. What century are we in? So I remember going with my wife to the Yale bookstore, the Yale co-op bookstore, and every book they had on quality, I bought. And I'm gonna sit home for two months and read all these books. And I remember buying books. I'm pretty sure I got books about Deming, some about Taguchi, some by Phil Crosby about Zero Defects. Six Sigma Quality entry was a year away.

0:15:35.7 BB: And so I sat down... I got out of the hospital, I'm resting at home, sitting on the couch every day and reading, and also calling the Taguchi people that I had met, I think, at the previous conference. I met some big names. So I'm reading the books, calling them up. And again, these are like my personal professors. And I remember saying to a few of them... What blew me away, and I don't... It somehow dawned on me, I was naive. In the world of engineering, we use... Most of my exposure, at least in heat transfer, we use the same terms the same way. We talk about radiation heat transfer, conduction heat transfer, convection heat transfer. So many of the terms are the same terms, so we can have a conversation. So I'm thinking the same thing applies in quality, that we're all like the heat transfer people. It's easy to communicate 'cause we got the same models. We're using the same words the same way. Then I started thinking, I'm no longer... And this is a real shock. I'm no longer thinking we're using the same words the same way, hence my introduction to misunderstanding quality, [laughter] or I would say, the beginning of a journey to better understand the... I think there are incredible opportunities for people in quality organizations, or people that wanna get into quality.

0:17:08.3 BB: I think it's an ideal opportunity to introduce Deming's ideas. And I say that because everybody else is doing their own thing. Engineering's off designing, Manufacturing's off producing, and Quality has an incredible opportunity to bring together Deming's sense of a systems view of quality. Nobody else has that charter. So my hope is in our conversations, we can help people that are trying to do some things, whether it's jumpstart their continuous improvement program or get their quality program out of what it currently is. In fact...

0:17:52.4 AS: By the way, I wanna...

0:17:55.9 BB: Go ahead, go ahead.

0:17:56.0 AS: I wanna ask a question about that, because what you've mentioned is interesting, that the systems aspect... Is that unique? Would you say that's unique to Deming? I mean, if we think about Taguchi and I think about the Taguchi Method, I'm thinking about a really powerful tool for understanding variation. But explain what you mean by that.

0:18:24.0 BB: A couple of things come to mind when you ask that question. One is the predominant explanation of quality. And if we have time, I wanna talk about that. The term quality, "qualitas," comes from Cicero, a Roman in ancient times. But by and large, in manufacturing, in corporate quality, in corporations, the operational definition, what do we mean by quality? This thing is... What are Quality organizations doing? And what I find they're doing is calling balls and strikes. They're looking at a given quality characteristics, whether it's the fuel economy of an engine, of a gas turbine engine, the performance, the thrust level of a rocket engine, the diameter of a hole, and asking, "Does that characteristic of surface roughness diameter, does it meet a set of requirements?"

0:19:30.4 BB: And the requirements are typically set... There's a lower one and an upper one. We don't say the meeting is gonna start at 10 o'clock, because if you understand variation, we can't get exactly 10. We can't get exactly 1.00 inch thickness for the plate, for the hole diameter. So then, we define quality. Typically, this is what people do in organizations. This is what I... I didn't know anything about this until I started... Well, what are quality people doing? They're asking, "Does this thing meet requirements?"

0:20:07.4 BB: And even towards that end, I remember asking a... I had a coworker who's a quality engineer, I've got many friends who are quality engineers, and this one guy came into a class one day that I was doing, and he's just beating his head against the wall over... I said, "What's...what have you been doing lately." He says, "All I'm doing Bill is dispositioning hardware, dispositioning hardware," which translates to trying to find out why something doesn't meet requirements and coming up with a corrective action, or buying it as is. So either changing the requirements or explaining why we can use it as is. But he's just like, "That's all I'm doing lately. I'm just getting overwhelmed with all this." So I said, "Well, what if overnight, by some miracle, you were to come in, and beginning first thing tomorrow morning, everything meets requirements." And that's the goal of quality in most organizations, is that everything meets requirements. So I said, "If everything beginning tomorrow morning, through some overnight miracle, meets requirements, hence forth, how would your life change?" He says, "I wouldn't have a job." [laughter]

0:21:26.9 BB: I said, "What other changes would you begin to see throughout the day, the coming days?" He says, "My boss's job wouldn't exist." I said, "Okay, keep going, keep going." He says, "Well, the whole organization will have no reason to exist." [laughter] And that's not farfetched. And I throw that out, the challenge to our listeners is, seriously, if everything in the organization beginning tomorrow morning met requirements through some... Dr. Deming would say as you know, by what method? Let's say the method exists, what would change? Now, I'm not saying these people necessarily get laid off. Maybe they get moved elsewhere. Maybe we set our sights higher and try to do things we've never done before, 'cause now everything's gonna be a home run. But that's what I find in corporations, I think, a very extremely commonplace 21st century Andrew explanation of quality is, "Does it meet requirements?" And that goes... And this whole idea of setting requirements, setting a lower and an upper, allowing for variation, that goes back to the early 1700s. And I've also read that it might go back even longer in China. We were talking earlier about China.

0:22:58.2 BB: And so if it goes back longer, all the better. And the point being, fast forward to today, that's largely where we are today, in this early 1700s. Does it meet requirements? Yes or no? And what Dr. Deming is talking about is not acceptability. First of all, he would say there's a place for acceptability. There's a place for meeting requirements, maybe based on the circumstances, all that matters is that it meets requirements. So if you're a pitcher and you're throwing a ball and the batter can't hit the ball, and as long as it's somewhere in the strike zone, or if you're kicking the ball into the net in a football match or otherwise known as soccer in the States, maybe the goalkeeper's so bad, all you gotta do is... They'll jump out of the way.

0:23:49.7 BB: Now, on the other hand, there may be a different batter or a different goalkeeper where you've gotta go where they aren't. And that gets into understanding variation and where we are in meeting requirements matters. And what I find is most organizations I've ever interacted with, and this is through Rocketdyne, as owned by Boeing, going to many different divisions of Boeing around the country, doing seminars across England, across New Zealand, university classes and university lectures, hundreds of them. I've never come across... With rare exception have I ever come across anyone who says, "Bill, in our organization, quality is more like what Dr. Deming is talking about." Meaning, "We are doing more than meeting requirements, we are focusing on where the ball is placed in the strike zone, where the ball is placed in the net, and we specialize in that because we have seen great advantage." Most people I present this to don't even know that's a possibility, don't even know it's anything to lobby for.

0:25:12.0 BB: And so to that I'd say, whether you're looking at Operational Excellence, which is kind of a hybrid of Lean and Six Sigma or Six Sigma alone, or Lean alone, everything I've studied in all of those go back to the question of quality being... Quality's defined Phil Crosby-wise, which is striving for zero defects, striving for everything meeting requirements, and then we're done. And when I joined The Deming Institute, part of my excitement was helping the organization differentiate Dr. Deming's ideas over these other quality management ideas and other management ideas as uniquely positioned to differentiate, to understand that there's an opport... There are incredible opportunities for realizing that everything that meets requirements is not the same. And how do we put a value on that? And one is, the better we understand that, the better we can minimize scrap and rework problems if we're paying attention to where we are, if the process is in control, if we can use that concept from variation. And then simultaneously, another...

0:26:35.7 BB: There's two opportunities. One is, I think the better we manage variation, the less likely we're gonna have scrap and rework. Wouldn't that be great? And two is that that buys us time to think about... 'cause now that we're not in that constant firefighting mode, now we can start to think about how to manage variation of the system and to improve how things integrate. And we did both of those at Rocketdyne. But I've yet to find many organizations who say, "Been there, done that. Been there, done that."

0:27:12.1 AS: So, if we think about the takeaways for someone listening or watching this, you've talked about Misunderstanding Quality, you've talked about everything meet requirements, you've talked about, what century are we in? So, what should they take back to their business from this discussion that can give them a foundation of a starting point of this series and what you're saying on this point? What do you want them to take away?

0:27:40.3 BB: First, I would say I wouldn't necessarily go tell anybody about this yet. [laughter] I'd say, "Hmm, this Deming stuff. There's something to this. What I'm hearing from Bill is there's something here that I can't get elsewhere." You can listen to our prior sessions. There's 22 of them. We're gonna be adding new aspects to that...

0:28:07.9 AS: Okay. So, let's talk about that for a second. So, learn on your own first. Maybe it's a personal transformation. Start with that?

0:28:09.9 BB: Yes.

0:28:14.8 AS: Okay.

0:28:16.1 BB: Absolutely... Yes, absolutely...

0:28:18.1 AS: What would be number two that you want them to get away from this?

0:28:22.9 BB: Well, my advice is, you're not crazy that there's things about the Deming philosophy that are unique, that are... I think so much... There's a lot of people excited by what Dr. Deming's offering. I think there's more than meets the eye. I mean...

0:28:46.1 AS: Okay, so let's talk about that for a second. So, there's unique things about Deming, and one of them that you talked about is the systems thinking?

0:28:54.6 BB: Yeah. I mean, imagine... What I liken it to, instead of zero defects being the goal, which is what most organizations are striving for, and their quality systems are about, "We wanna get zero defects over here, over here, over here." We're juggling all these places, trying to get to zero defects all over the place. What if they saw zero defects as not the destination, but the starting point? That, to really understand continual improvement, zero defects is not the goal. Imagine that as the starting point. At least, imagine the ability to go across that apparent finish line and realize... Or the analogy I would use is, go through the door called "zero defects is the end," and realize there's a lot more, there's so much more to do when you start to look at things with a Deming view. And so, instead of thinking, we're striving for zero defects and then we're done, to me, that's the starting point to really begin to appreciate what it means to look at systems.

0:30:07.7 AS: Okay. So we've got, start with your own personal transformation and learn the material, and understand that there's some unique things about the Deming teachings, in particular, systems. And understand that... I kind of visualized while you were talking, a person walking along with no knowledge of many things, but they're inquisitive, and what they find is a wrench. And then they start to find that there's ways to use this wrench in their daily life. And then later, they find that there's other tools like a screwdriver. And all of a sudden, they found this world of tools, and now they have this amazing toolbox. But then all of a sudden, they meet someone that's taking those tools and creating a car, or a this, or a that. And then they realize, maybe the tool has gotta be the starting point, or is a starting point. But what the tools can create and what additional tools can create is so much bigger than just that first wrench that you picked up.

0:31:14.2 BB: It's the appreciation. And I'm glad you brought those points up. Dr. Deming talks about tools and techniques. A control chart is a tool. A run chart is a tool. Design of Experiments are... These are tools. And so that's a tool. A technique is, how do we create a control chart? That's a technique. What I try to do with audiences, whether it's clients or university classes or whatever, is help them differentiate. Tools and techniques are about improving efficiency, doing things well. Doing something faster or cheaper... What's unique to Dr. Deming is not the tools you'll find him talking about, but the concepts he's talking about, and the idea of looking at things as a system. Dr. Deming defines quality, and it can be obtuse for people. I find it fascinating. He says, "Product or service possesses quality if it helps someone and enjoys a sustainable market." So, traditional quality is me throwing the ball to you, Andrew, or passing a football or basketball, whatever it is, and judging the quality of the pass when the ball leaves my hand. And we say, "That was a good pass."

0:32:49.9 BB: What Dr. Deming's talking about is, it's a good pass, just as if it's a good conversation, if you can hear what I say, we can go back and forth. And so, Deming's perspective on quality is not what's good for me, the producer, but it's how well does it fit you that I'm delivering something that matches... That we're synchronous, that... It has to be good for you, not just me checking off and saying, "This is good, this is good, this is good. Boom." That it's not good until you say it's good. That's a different view. It's the same thing as, "Well, I told you." Then you say, "Well, I didn't hear it." I says, "Well, then why don't you have your ears checked?" [laughter] Dr. Deming's talking about, it's not a conversation if you can't hear it. And so, when he's explaining to Bill Cooper and Gipsie that people are having a hard time, he was struggling to improve that 'cause he knew that when you begin to understand that what you're saying is not heard, Deming understood it was his obligation to try harder. And part of the Deming philosophy is understanding that it's not just me throwing it and saying, "There it is." It's listening for the feedback as to, "Did it make sense?" So, quality in that arena is a mutual phenomenon, not unilaterally my thing.

0:34:16.7 AS: Okay.

0:34:17.8 BB: And I would welcome anyone, as we've done in the past, to reach out if there are questions, comments, observation you'd like to share, and we can use that feedback in future sessions.

0:34:30.6 AS: Fantastic. Well, that's an excellent kickoff. And let's end with the idea that quality is a mutual phenomenon. I think that's a good statement. So 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, "People are entitled to joy in work."

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In the final episode of the goal setting in classrooms series, John Dues and Andrew Stotz discuss the last three of the 10 Key Lessons for implementing Deming in schools. They finish up with the example of Jessica's 4th-grade science class.

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 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 six about goal setting through a Deming lens. John, take it away.

0:00:26.4 John Dues: Hey, Andrew, it's good to be back. Yeah, for the past handful of episodes or so, we've been talking about organizational goal setting. We covered these four conditions of healthy goal setting and then got into these 10 key lessons for data analysis. And then we've been looking at those 10 key lessons applied to an improvement project. And we've been talking about a project that was completed by Jessica Cutler and she did a Continual Improvement Fellowship with us here at our schools. And if you remember, Jessica was attempting to improve the joy in learning of her students in her fourth grade science class. So last time we looked at lessons five through seven. Today we're gonna look at those final three lessons, eight, nine and ten applied to her project.

0:01:15.7 AS: It's exciting.

0:01:17.1 JD: Yeah. So we'll jump in here. We'll kind of do a description, a refresher of each lesson. And we'll kind of talk about how it was applied to her specific project, and we'll look at some of her data to kind of bring that live for those of the folks that have video. Let's jump in with lesson number eight. So we've talked about this before, but lesson number eight was: more timely data is better for improvement purposes. So we've talked about this a lot. We've talked about something like state testing data. We've said, it can be useful, but it's not super useful for improvement purposes, because we don't get it until the year ends. And students in our case, have already gone on summer vacation by the time that data comes in. And you know that the analogous data probably happens in lots of different sectors where you get data that lags, to the point that it's not really that useful for improvement purposes.

0:02:15.8 JD: So when we're trying to improve something, more frequent data is helpful because then we can sort of see if an intervention that we're trying is having an effect, the intended effect. We can learn that more quickly if we have more frequent data. And so it's, there's not a hard and fast rule, I don't think for how frequently you should be gathering data. It just sort of needs to be in sync with the improvement context. I think that's the important thing. Whether it's daily or a couple times a day or weekly, or monthly, quarterly, whatever, it's gotta be in sync with whatever you're trying to improve.

0:02:50.5 AS: You made me think about a documentary I saw about, how they do brain surgery and how the patient can't be sedated because they're asking the patient questions about, do you feel this and they're testing whether they're getting... They're trying to, let's say, get rid of a piece of a cancerous growth, and they wanna make sure that they're not getting into an area that's gonna damage their brain. And so, the feedback mechanism that they're getting through their tools and the feedback from the patient, it's horrifying to think of the whole thing.

0:03:27.7 JD: Yeah.

0:03:28.3 AS: It's a perfect example of why more timely data is useful for improvement purposes 'cause imagine if you didn't have that information, you knock the patient out, you get the cancerous growth, but who knows what you get in addition to that.

0:03:43.7 JD: Yeah, that's really interesting. I think that's certainly an extreme example, [laughter], but I think it's relevant. No matter what our context, that data allows us to understand what's going on, variation, trends, whether our system is stable, unstable, how we should go about improving. So it's not dissimilar from the doctors in that example.

0:04:06.8 AS: And it's indisputable I think, I would argue. But yet many people may not, they may be operating with data that's not timely. And so this is a reminder that we would pretty much always want that timely data. So that's lesson eight. Wow.

0:04:22.6 JD: Lesson eight. Yeah. And let's see how we can, I'll put a visualization on the screen so you can see what Jessica's data look like. All right. So now you can see. We've looked at these charts before. This is Jessica's process behavior chart for joy in science. So just to reorient, you have the joy percentage that students are feeling after a lesson on the x-axis, sorry, on the y-axis. On the x-axis, you have the school dates where they've collected this survey information from students in Jessica's class.

0:04:57.0 AS: Can you put that in Slide Show view?

0:05:00.4 JD: Yeah. I can do that. Yeah.

0:05:02.7 AS: Just it'll make it bigger, so for the...

0:05:06.5 JD: There you go.

0:05:07.8 AS: For the listeners out there, we're looking at a chart of daily, well, let's say it looks like daily data. There's probably weekends that are not in there because class is not on weekends, but it's the ups and downs of a chart that's ranging between a pretty, a relatively narrow range, and these are the scores that are coming from Jessica's surveying of the students each day, I believe. Correct?

0:05:34.2 JD: Yeah. So each day where Jessica is giving a survey to assess the joy in science that students are feeling, then she's averaging all those students together. And then the plot, the dot is the average of all the students sort of assessment of how much joy they felt in a particular science lesson.

0:05:54.7 AS: And that's the average. So for the listeners out there John's got an average line down the middle of these various data points, and then he is also got a red line above and a red line below the, above the highest point and slightly below the lowest point. Maybe you can explain that a little bit more.

0:06:15.4 JD: Yeah. So with Jessica, you remember originally she started plotting on a line chart or a run chart when we just had a few data points just to kind of get a sense of how things are moving so she could talk about it with her class. And over time what's happened is she's now got, at this point in the project, which she started in January, now this is sort of mid-March. And so she's collected two to three data points a week. So she doesn't survey the kids every day just for time sake, but she's getting two, three data points a week. And so by March, she started just a couple months ago, she's got 28 data points. So that sort of goes back to this idea of more timely data is better for improvement.

0:07:00.9 JD: And a lot of times, let's say a school district or a school does actually survey their students about how, what they think of their classes. That might happen at best once a semester or maybe once a year. And so at the end of the year you have one or two data points. So it's really hard to tell sort of what's actually going on. Compared to this, Jessica's got these 28 data points in just about two months or so of school. So she's got 28 data points to work with. And so what her and her students are doing with this data then, one, they can see how it's moving up and down. So we have, the blue dots are all the plotted points, like you said, the green line is the average running sort of through the middle of the data, and then those red lines are our process limits, the upper and lower natural process limits that sort of tell us the bounds of the system.

0:07:50.4 JD: And that's based on the difference in each successive data point. But the most important thing is that as Jessica and her students are looking at this, initially, they're really just studying it and trying to sort of see how things are going from survey to survey. So one of the things that Deming talked about frequently is not tampering with data, which would be if you sort of, you overreact to a single data point. So let's say, a couple of days in, it dips down from where it started and you say, oh my gosh, we gotta change things. And so that's what Deming is talking about. Not tampering, not overreacting to any single data point. Instead look at this whole picture that you get from these 28 data points and then talk about...

0:08:41.5 JD: In Jessica's case she's talking about with her students, what can we learn from this data? What does the variation from point to point look like? If we keep using the system, the fourth grade science system, if we leave it as is, then we'll probably just keep getting data pretty similar to this over time, unless something more substantial changes either in the negative or the positive. So right now they...

0:09:10.1 AS: And I think for the listeners, it's, you can see that there's really no strong pattern that I can see from this. It's just, there's some, sometimes that there's, seems like there's little trends and stuff like that. But I would say that the level of joy in the science classroom is pretty stable.

0:09:32.1 JD: Pretty stable. Yeah. Pretty high. It's bouncing around maybe a 76% average across those two and a half months or so. And so, they, you kind of consider this like the baseline. They've got a good solid baseline understanding of what joy looks like in this fourth grade science classroom. Did that stop sharing on your end?

0:10:00.2 AS: Yep.

0:10:00.2 JD: Okay, great. So that's lesson eight. So clearly she's gathered a lot of data in a pretty short amount of time. It's timely, it's useful, it's usable, it can be studied by her and her students. So we'll switch it to lesson nine now. So now they've got a good amount of data. They got 28 data points. That's plenty of data to work with. So lesson nine is now we wanna clearly label the start date for an intervention directly in her chart. And remember from earlier episodes, not only are we collecting this data, we're actually putting this up on a screen on a smart board in the classroom, and Jessica and her students are studying this data together. They're actually looking at this, this exact chart and she's explaining sort of kind of like we just did to the listeners. She's explaining what the chart means.

0:10:54.2 JD: And so over time, like once a week she's putting this up on the smart board and now kids are getting used to, how do you read this data? What does this mean? What are all these dots? What do these numbers mean? What do these red lines mean? That type of thing. And so now that they've got enough data, now we can start talking about interventions. That's really what lesson nine is about. And the point here is that you want to clearly, explicitly with a literally like a dotted line in the chart to mark on the day that you're gonna try something new. So you insert this dashed vertical line, we'll take a look at it in a second, on the date the intervention started. And then we're also gonna probably label it something simple so we can remember what intervention we tried at that point in time.

0:11:42.7 JD: So what this then allows the team to do is then to very easily see the data that happened before the intervention and the data that happened after the implementation of this intervention or this change idea. And then once we've started this change and we start plotting points after the change has gone into effect, then we can start seeing or start looking for those patterns in the data that we've talked about, those different rules, those three rules that we've talked about across these episodes. And just to refresh, rule one would be if we see a single data point outside of either of the limits, rule two is if we see eight consecutive points on either side of that green average line, and rule three is if we see three out of four dots in a row that are closer to one of the limits than they are to that central line.

0:12:38.3 JD: So that again, those patterns tell us that something significant, mathematically improbable has happened. It's a big enough magnitude in change that you wouldn't have expected it otherwise. And when we see that pattern, we can be reasonably assured that that intervention that we've tried has worked.

0:12:56.0 AS: And let me ask you about the intervention for just a second because I could imagine that if this project was going on, first question is, does Jessica's students are, obviously know that this experiment is going on?

0:13:08.3 JD: Yes.

0:13:09.8 AS: Because they're filling out a survey. And my first question is, do they know that there's an intervention happening? I would expect that it would be yes, because they're gonna feel or see that intervention. Correct?

0:13:25.1 JD: Sure. Yep.

0:13:25.2 AS: That's my first point that I want to think about. And the second point is, let's imagine now that everybody in the classroom has been seeing this chart and they're, everybody's excited and they got a lot of ideas about how they could improve. Jessica probably has a lot of ideas. So the temptation is to say, let's change these three things and see what happens.

0:13:46.5 JD: Yeah.

0:13:47.1 AS: Is it important that we only do one thing at a time or that one intervention at a time or not? So maybe those are two questions I have in my mind.

0:13:58.6 JD: Yeah, so to the first question, are you, you're saying there there might be some type of participant or...

0:14:02.3 AS: Bias.

0:14:03.3 JD: Observer effect like that they want this to happen. That's certainly possible. But speaking to the second question, what intervention do you go with? Do you go with one or you go with multiple? If you remember a couple of episodes ago we talked about, and we actually looked at a fishbone diagram that Jessica and her students that they created and they said, okay, what causes us to have low joy in class? And then they sort of mapped those, they categorized them, and there were different things like technology not working. If you remember, one was like distractions, like other teachers walk into the room during the lesson. And one of them was others like classmates making a lot of noise, making noises during class and distracting me. And so they mapped out different causes. I think they probably came up with like 12 or 15 different causes as possibilities.

0:14:58.7 JD: And they actually voted as a class. Which of these, if we worked on one of these, which would have the biggest impact? So not every kid voted for it, but the majority or the item that the most kids thought would have the biggest impact was if we could somehow stop all the noises basically. So they came up with that as a class, but not, it wasn't everybody's idea. But I think we've also talked about sort of the lessons from David Langford where once kids see that you're gonna actually take this serious, take their ideas serious and start acting on them, they take the project pretty seriously too. So maybe not a perfect answer, but that's sort of what we...

0:15:38.0 AS: I was thinking that, ultimately you could get short-term blips when you do an intervention and then it stabilizes possibly. That's one possibility. And the second thing I thought is, well, I mean ultimately the objective, whether that's an output from a factory, and keeping, improving that output or whether that's the output related to joy in the classroom as an example, you want it to go up and stay up and you want the students to see it and say, wow, look, it's happening. So, yeah.

0:16:11.7 JD: And there's different ways you can handle this. So this joy thing could go up to a certain point. They're like, I don't know if we can get any more joy, like, it's pretty high. And what you could do at that point is say, okay, I'm gonna assign a student to just sort of, every once in a while, we'll keep doing these surveys and we will sort of keep plotting the data, but we're not gonna talk about a lot. I'm just gonna assign this as a student's job to plot the new data points. And we'll kind of, we'll kind of measure it, but we won't keep up with the intervention 'cause we got it to a point that we're pretty happy with. And now as a class we may wanna switch, switch our attention to something else.

0:16:45.2 JD: So we started getting into the winter months and attendance has dipped. Maybe we've been charting that and say, Hey guys, we gotta, gotta kinda work on this. This is gone below sort of a level that's really good for learning. So let's think about as a group how we could come up with some ideas to raise that. So maybe you turn your attention to something else, 'cause you can't pay attention to everything at once.

0:17:07.2 AS: Yeah, and I think I could use an example in my Valuation Master Class Boot Camp where students were asking for more personal feedback and I realized I couldn't really scale this class if I had to get stuck into hundreds of grading basically. And that's when I came up with the concept of feedback Friday, where one student from each team would present and then I would give feedback, I would give a critique and they would be intense and all students would be watching, it would be recorded, and all of a sudden all the issues related to wanting this personal feedback went away. And therefore, once I instituted it on a regular basis, I went on to the next issue and I made sure that I didn't lose the progress that I had made and continue to make feedback Friday better and better.

0:17:56.2 JD: Yeah. Yeah. That's great. That's great. I'll share my screen so you can kinda see what this looked like in Jessica's class now, what the chart looks like now. So now you see that same chart, that same process behavior chart, exact same one we were just looking at except now you can see this, this dashed vertical line that marks the spot where the intervention was started that we just talked about. And what the kids are actually doing, and Jessica are running a PDSA cycle, a Plan-Do-Study-Act cycle. That's the experimental cycle in her class. And what they're running that PDSA on is, again, how can we put something in place to reduce the distracting noises. And so what the students actually said is if we get a deduction for making noises, then there will be less noises. And so in the school's sort of management system, a deduction is sort of like a demerit.

0:19:00.0 JD: If you maybe went to a Catholic school or something like that, or some public schools had demerits as well, but basically it's like a minor infraction basically that goes home or that gets communicated to parents at the end of the week. But the kids came up with this so their basic premise is, their plan, their prediction is if there are less noises, we'll be able to enjoy science class. And if we give deductions for these noises, then there'll be less noises. So some people may push back, well, I don't think you should give deductions or something like that, but which, fine, you could have that opinion. But I think the powerful point here is this is, the students created this, it was their idea. And so they're testing that idea to see if it actually has impact.

0:19:44.8 JD: And they're learning to do that test in this scientific thinking way by using the Plan-Do-Study-Act cycle, and seeing if it actually has an impact on their data. So at the point where they draw this dashed line, let's call that March 19th, we can see a couple of additional data points have been gathered. So you can see the data went up from 3/18 to 3/21. So from March 18th to March 21st, rose from about, let's call it 73% or so, up to about 76% on March 21st. And then that next day it rose another percent or two and let's call that 78%.

0:20:28.1 JD: And so the trap here is you could say, okay, we did this intervention and it made things better. But the key point is the data did go up, but we haven't gathered enough additional data to see one of those patterns that we talked about that would say, oh, this actually has had a significant change. Because before the dashed line, you can see data points that are as high or even higher than some of these ones that we see after the PDSA is started. So it's too early to say one way or another if this intervention is having an impact. So we're not gonna overreact. You could see a place where you're so excited that it did go up a couple of days from where it was on March 18th before you started this experiment, but that's a trap. Because it's still just common cause data, still just bouncing around that average, it's still within the bounds of the red process limits that define the science system.

0:21:34.2 AS: I have an experiment going on in my latest Valuation Master Class Boot Camp, but in that case, it's a 6-week period that I'm testing, and then I see the outcome at the end of the six weeks to test whether my hypothesis was right or not. Whereas here it's real time trying to understand what's happening. So yes, you can be tempted when it's real time to try to jump to conclusion, but when you said, well, okay, I can't really get the answer to this conclusion until I've run the test in a fixed time period, then it's you don't have as much of that temptation to draw a conclusion.

0:22:14.1 JD: Yeah. And if I actually was... I should have actually taken this a step farther. I marked it with this Plan-Do-Study-Act cycle. What I should have done too is write "noises" or something like that, deduction for noises, some small annotation, so it'd be clear what this PDSA cycle is.

0:22:32.1 AS: In other words, you're saying identify the intervention by the vertical line, but also label it as to what that intervention was, which you've done before on the other chart. I remember.

0:22:42.1 JD: Yeah. And then it'd be sort of just looking at this when she puts this up on the smart board for the class to see it again too. Oh yeah yeah, that's when we ran that first intervention and that was that intervention where we did deductions for noises. But the bigger point is that this never happens where you have some data, you understand a system, you plan systematic intervention, and then you gather more data right after it to see if it's having an impact. We'd never do that ever, in education, ever. Ever have I ever seen this before. Nothing like this. Just this little setup combining the process behavior chart with the Plan-Do-Study-Act cycle, I think is very, very, very powerful and very different approach than what school improvement.

0:23:33.4 AS: Exciting.

0:23:34.6 JD: Yeah. The typical approach is to school improvement. So I'll stop that share for a second there, and we can do a quick overview of lesson 10 and then jump back into the chart as more data has been gathered. So lesson 10 is: the purpose of data analysis is insight. Seems pretty straightforward. This is one of those key teachings from Dr. Donald Wheeler who we've talked about. He taught us that the best analysis is the simplest analysis, which provides the needed insight.

0:24:08.1 AS: So repeat lesson 10, again, the purpose of...

0:24:11.6 JD: The purpose of data analysis is insight.

0:24:14.7 AS: Yep.

0:24:15.6 JD: So just plotting the dots on the run chart and turning the run chart into the process behavior chart, that's the most straightforward method for understanding how our data is performing over time. We've talked about this a lot, but it's way more intuitive to understand the data and how it's moving than if you just stored it in a table or a spreadsheet. Got to use these time sequence charts. That's so very important.

0:24:42.2 AS: And I was just looking at the definition of insight, which is a clear, deep, and sometimes sudden understanding of a complicated problem or situation.

0:24:51.6 JD: Yeah. And I think that can happen, much more likely to happen when you have the data visualized in this way than the ways that we typically visualize data in just like a table or a spreadsheet. And so in Jessica's case, we left off on March 22nd and they had done two surveys after the intervention. And so then of course what they do is they continue over the next 4, or 5, 6 weeks, gathering more of that data as they're running that intervention, then we can sort of switch back and see what that data is looking like now.

0:25:28.3 AS: Exciting.

0:25:30.3 JD: So we have this same chart with that additional data. So we have data all the way out to now April 11th. So they run this PDSA for about a month, three weeks, month, three, four weeks.

0:25:47.9 AS: And that's 11 data points after the intervention. Okay.

0:25:54.0 JD: Yep. Purposeful. So what was I gonna say? Oh, yeah. So three, four weeks for a Plan-Do-Study-Act cycle, that's a pretty good amount of time. Two to four weeks, I've kind of found is a sweet spot. Shorter than that, it's hard to get enough data back to see if your intervention has made a difference. Longer than that, then it's you're getting away from the sort of adaptability, the ability to sort of build on an early intervention, make the tweaks you need to. So that two to four week time period for your PDSA seems like a sweet spot to me. So she's continued to collect this joy in learning data to see... Basically what her and her class are doing is seeing if their theory is correct. Does this idea of giving deductions for making noises have an impact? Is it effective?

0:26:44.0 JD: So if they learn, if the data comes back and there is no change, no indication of improvement, then a lot of people will say, well, my experiment has failed. And my answer to that is, no, it hasn't failed. It might not have worked like you wanted, but you learn very quickly that that noise deduction is not going to work and we're gonna try some other thing, some other intervention. We learn that very very quickly within 3 or 4 weeks that we need to try something new. Now, in the case of Jessica's class, that's not what happened. So you can actually see that dotted line, vertical dotted line is still at March 19th, we have those 11 additional data points. And you can actually see, if you count, starting with March 21st, you count 1-2-3-4-5-6-7-8-9-10-11 data points that are above that green average line from before.

0:27:45.5 JD: So originally the red lines, the limits and the central line would just be straight across. But once I see that eight or more of those are on one side of that central line, then I actually shift the limits and the average line, 'cause I have a new system. I've shifted it up and that actually is an indication that this intervention has worked, because we said... Now for those that are watching, it doesn't appear that all the blue dots are above that green line, but they were before the shift. Remember the shift indicates a new system. So I go back to the point where the first dot of the 8 or more in a row occurred, and that's where I have indicated a new system with the shift in the limits and the central line. So this, their theory was actually correct. This idea of giving a deduction for noises actually worked to improve the joy in Jessica's science class. It was a successful experiment.

0:28:52.7 AS: Can I draw on your chart there and ask some questions?

0:29:00.5 JD: Sure. Yeah.

0:29:00.6 AS: So one of my questions is, is it possible, for instance, in the preliminary period, let's say the first 20 days or so that things were kind of stabilized and then what we saw is that things potentially improved here in the period before the intervention and that the intervention caused an increase, but it may not be as significant as it appears based upon the prior, the most recent, let's say 10 days or something like that. So that's my question on it. I'll delete my drawings there.

0:29:46.3 JD: Yeah, I think that's a fair question. So, the reason I didn't shift those before, despite you do see a pattern, so before the dotted line, I considered that period a baseline period where we were just collecting 'cause they hadn't tried anything yet. So Dr. Wheeler has these series of four questions. So in addition to seeing a signal, he's got these other sort of questions that he typically asks and that they're yes/no questions. And you want the answer to all those to be yes. And one of 'em is like, do you know why an improvement or a decline happened? And if you don't, then you really shouldn't shift the limits. So that's why I didn't shift them before. I chose not to shift them until we actually did something, actually tried something.

0:30:33.2 AS: Which is basically saying that you're trying to get the voice of the students, a clear voice, and that may be that over the time of the intervention, it could be that the... Sorry, over the time of the initial data gathering, that the repetition of it may have caused students to feel more joy in the classroom because they were being asked and maybe that started to adjust a little bit up and there's the baseline, so. Yep. Okay.

0:31:01.6 JD: Yeah. And so this is sort of where the project ended for the fellowship that Jessica was doing. But, what would happen if we could sort of see what happened, further out in the school year is that, either Jessica and the class could then be sort of satisfied with where the joy in learning is at this point where the improvement occurred. Or they could run another cycle, sort of testing, sort of a tweaked version of that noise reduction PDSA, that intervention or they could add something to it.

0:31:43.0 AS: Or they could have run another fishbone point, maybe the noise wasn't actually the students thought it would be the number one contributor, but, maybe by looking at the next one they could see, oh, hey, wait a minute, this may be a higher contributor or not.

0:32:01.2 JD: Yeah. And when you dug into the actual plan, the specifics of the plan, how that noise deduction was going to work, there may be something in that plan that didn't go as planned and that's where you would have to lean on, 'cause we've talked about the three sort of parts of the improvement team that you need. You need the frontline people. That's the students. You need the person with the authority to change the system. That's Jessica. And then someone with the knowledge of the system, profound knowledge. That's me. Well, those, the Jessica and her students are the one in that every day. So they're gonna have learning about how that intervention went, that would then inform the second cycle of the PDSA, whatever that was gonna be, whatever they're gonna work on next. The learning from the first cycle is gonna inform that sort of next cycle.

0:32:51.4 JD: So the idea is that you don't just run a PDSA once but you repeatedly test interventions or change ideas until you get that system where you want it to be.

0:33:01.1 AS: So for the listeners and viewers out there, I bet you're thinking gosh, Jessica's pretty lucky to have John help her to go through this. And I think about lots of things that I want to talk to you about [laughter] about my testing in my own business, and I know in my own teaching, but also in my business. So that I think is one of the exciting things about this is the idea that we just, we do a lot of these things in our head sometimes. I think this will make a difference and, but we're not doing this level of detail usually in the way that we're actually performing the tests and trying to see what the outcomes are.

0:33:43.9 JD: Yeah I think that for school people too, I think when we've attempted to improve schools, reform schools, what happens is we go really fast and the learning actually happens very slowly and we don't really appreciate what it actually takes to change something in practice. And what happens then is to the frontline people like teachers... The reformers have good intentions but the people on the front line just get worn out basically, and a lot of times nothing actually even improves. You just wear people out. You make these big changes go fast and wide in the system and you don't really know exactly what to do on the ground because the opposite is having Jessica's classroom. They're actually learning fast but trying very small changes and getting feedback right in the place where that feedback needs to be given right in the classroom and then they can then learn from that and make changes.

0:34:49.8 JD: And again, it may seem smaller. Maybe it doesn't seem that revolutionary to people but to me, I think it's a completely revolutionary, completely different way to do school improvement that actually kind of honors the expertise of the teacher in the classroom, it takes into account how students are experiencing a change and then I'm kind of providing a method that they can use to then make that classroom better for everybody so and I think in doing so students more likely to find joy in their work, joy in their learnings, teachers more likely to find joy in their work as well. So to me it's a win-win for all those involved.

0:35:34.9 AS: Fantastic. Well, should we wrap up there?

0:35:40.6 JD: Yeah, I think that's a good place to wrap up this particular series.

0:35:45.1 AS: And maybe you could just review for the whole series of what we've done just to kind of make sure that everybody's clear and if somebody just came in on this one they know a little bit of the flow of what they're gonna get in the prior ones.

0:36:00.4 JD: Yeah. So we did six episodes and in those six episodes we started off just talking about what do you need to have in place for healthy goal setting at an organizational level, and we put four conditions in place that before you ever set a goal you should have to understand the capability of your system, you have to understand the variation within your system, you have to understand if the system that you're studying is stable, and then you have to have a logical answer to the question by what method. By what method are you gonna bring about improvement or by what method you're gonna get to this goal that you wanna set. So we talked about that, you gotta have these four conditions in place and without those we said goal setting is often an act of desperation.

0:36:49.7 JD: And then from there what we did is start talking about these 10 key lessons for data analysis so as you get the data about the goal and you start to understand the conditions for that system of process we could use those 10 data lessons to then interpret the data that we're looking at or studying and then we basically did that over the first four episodes. In the last few episodes what we've done is look at those lessons applied to Jessica's improvement project and that's what we just wrapped up looking at those 10 lessons.

0:37:23.7 AS: I don't know about the listeners and viewers but for me this type of stuff just gets me excited about how we can improve the way we improve.

0:37:33.4 JD: Yeah. For sure.

0:37:34.9 AS: And that's exciting. So John, 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 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."

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In this episode, John Dues and Andrew Stotz apply lessons five through seven of the 10 Key Lessons for implementing Deming in classrooms. They continue using Jessica's fourth-grade science class as an example to illustrate the concepts in action.

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 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 five about goal setting through a Deming lens. John, take it away.

0:00:23.2 John Dues: Yeah, it's good to be back, Andrew. Yeah, like you said, for the past few episodes we've been talking about organizational goal setting. We covered four healthy conditions, or four conditions of healthy goal setting and 10 key lessons for data analysis. And then what we turn to in the last episode is looking at an applied example of the 10 key lessons for data analysis and in action. And, if you remember from last time we were looking at this improvement project from Jessica Cutler, she's a fourth grade science teacher, and she did the improvement fellowship here at United Schools Network, where she learned the tools, the techniques, the philosophies, the processes behind the Deming theory, continual improvement, that type of thing. And in... And in Jessica's specific case, in her fourth grade science class, what she was settled on that she was gonna improve was, the joy in learning of her students. And we looked at lessons one through four through the eyes or through the lens of her project. And today we're gonna look at lessons five through seven. So basically the next, uh, the next three lessons of those 10 key lessons.

0:01:34.8 AS: I can't wait. Let's do it.

0:01:37.3 JD: Let's do it. So lesson number five was: show enough data in your baseline to illustrate the previous level of variation. Right. So the basic idea with this particular lesson is that, you know, let's say we're trying to improve something. We have a data point or maybe a couple data points. We wanna get to a point where we're starting to understand how this particular concept works. In this case, what we're looking at is joy in learning. And there's some different rules for how many data points you should, should have in a typical base baseline. But, you know, a pretty good rule of thumb is, you know, if you can get 12 to 15, that's... That's pretty solid. You can start working with fewer data points in real life. And even if you just have five or six values, that's gonna give you more understanding than just, you know, a single data point, which is often what we're... What we're working with.

0:02:35.6 AS: In, other words, even if you have less data, you can say that this gives some guidance.

0:02:40.9 JD: Yeah.

0:02:41.1 AS: And then you know that the reliability of that may be a little bit less, but it gives you a way... A place to start.

0:02:46.9 JD: A place to start. You're gonna learn more over time, but at least even five or six data points is more than what I typically seen in the typical, let's say, chart where it has last month and this month, right? So even five or six points is a lot more than that. You know, what's... What's typical? So I can kind of show you, I'll share my screen here and we'll take a look at, Jessica's initial run chart. You see that right?

0:03:19.3 AS: We can see it.

0:03:21.2 JD: Awesome.

0:03:22.3 AS: You wanna put it in slideshow? Can we see that? Yeah, there you go.

0:03:24.9 JD: Yeah, I'll do that.

0:03:25.4 AS: Perfect.

0:03:26.3 JD: That works better. So, you know, again, what we're trying to do is show enough data in the baseline to understand what happened prior to whenever we started this improvement effort. And I think I've shared this quote before, but I really love this one from Dr. Donald Berwick, he said "plotting measurements over time turns out in my view to be one of the most powerful things we have for systemic learning." So what... That's what this is all about really, is sort of taking that lesson to heart. So, so you can look at Jessica's run chart for "joy in science." So just to sort of orient you to the chart. We have dates along the bottom. So she started collecting this data on January 4th, and this is for about the first 10 days of data she has collected. So she's collected this data between January 4th and January 24th. So, you know, a few times a week she's giving a survey. You'll remember where she's actually asking your kids, how joyful was this science lesson?

0:04:24.4 JD: Mm-hmm.

0:04:27.2 JD: And so this is a run chart 'cause it's just the data with the median running through the middle, that green line there, the data is the blue lines connected by, or sorry, the blue dots connected by the points and the y axis there along the left is the joy in learning percentage. So out of a hundred percent, sort of what are kids saying? How are kids sort of evaluating each of these science lessons? So we've got 10 data points so far, which is a pretty good start. So it's starting to give Jessica and her science class a decent understanding about, you know, when we, you know, define joy in science and then we start to collect this data, we really don't have any idea what that's gonna look like in practice. But now that she started plotting this data over time, we have a much better sense of what the kids think of the science lessons basically. So on the very first day...

0:05:25.4 AS: And what is the... What is the median amount just for the listeners out there that don't see it? What would be the... Is that 78%?

0:05:33.8 JD: Yeah, about 78%. So that very first day was 77%. The second day was about 68%. And then you sort of see it bounce around that median over the course of that, those 10 days. So some of the points are below the median, some of the points are above the median.

0:05:50.4 AS: And the highest point above is about 83, it looks like roughly around that.

0:05:54.4 JD: Yeah. Around 82, 83%. And one technical point is at the point that it's a run chart we don't have the process limits, those red lines that we've been taking a look at and with a run chart and, you know, fewer data points, we only have 10. It's fairly typical to use the median, just so you know, you can kind of better control for any outlier data points which we really don't have any outliers in this particular case but that's just sort of a technical point. So, yeah, I mean, I think, you know what you start to see, you start to get a sense of what this data looks like, you know, and you're gonna keep collecting this data over an additional time period, right? And she hasn't at this point introduced any interventions or any changes. Right now they're just learning about this joy in learning system, really. Right.

0:06:51.8 JD: And so, you know, as she's thinking about this, this really brings us to... To lesson six, which is, you know, what's the goal of data analysis? And this is true in schools and it's true anywhere. We're not just gonna look at the past results, but we're also gonna, you know, probably more importantly, look to the future and hopefully sort of be able to predict what's gonna happen in the future. And, you know, whatever concept that we're looking at. And so as we continue to gather additional data, we can then turn that run chart from those initial 10 points into a process behavior chart. Right. You know, that's a, sort of a, you know, it's the run chart on steroids because not only can we see the variation, which you can see in the run chart, but now because we've added more data, we've added the upper and lower natural process limit, we can also start to characterize the type of variation that we see in that data.

0:08:00.1 AS: So for the listeners, listeners out there, John just switched to a new chart which is just an extension of the prior chart carrying it out for a few more weeks, it looks like, of daily data. And then he's added in a lower and upper natural process limit.

0:08:18.9 JD: Yeah. So we're still, we're still plotting the data for joy in science. So the data is still the blue dots connected by the blue lines now because we have 24 or so data points, the green line, the central line is the average of that data running through the data. And we have enough data to add the upper and lower natural process limit. And so right now we can start to determine do we only have natural variation, those everyday ups and downs, that common cause variation, or do we have some type of exceptional or special cause variation that's outside of what would be expected in this particular system. We can start making...

0:09:00.7 AS: Can you...

0:09:02.2 JD: Go ahead.

0:09:02.8 AS: I was gonna... I was gonna ask you if you can just explain how you calculated the upper and lower natural process limits just so people can understand. Is it max and min or is it standard deviation or what is that?

0:09:18.3 JD: Yeah, basically what's happening is that, so we've plotted the data and then we use that data, we calculate the average, and then we also calculate what the moving range, is what it's called. So we just look at each successive data point and the difference between those two points. And basically there's a formula that you use for the upper and lower natural process limits that takes all of those things into account. So it's not standard deviation, but it's instead using the moving, moving range between each successive data point.

0:09:52.9 AS: In other words, the data that's on this chart will always fall within the natural upper and lower. In other words it's... Or is, will data points fall outside of that?

0:10:05.7 JD: Well, it depends on what kind of system it is.

0:10:07.8 AS: Right. Okay.

0:10:09.8 JD: If it's a stable system, that means all we see is sort of natural ups and downs in the data. And we use those formulas for the process limits. The magnitude of the difference of each successive data point is such that it's not necessarily big or small, it's just based on what you're seeing empirically. It's basically predictable. Right. And if it's not predictable, then we'll see special causes. So we'll see special patterns in the data. So I think maybe last time we talked about the three patterns, or you know, in some episode we talked about the patterns that would suggest there's a special cause that goes to the study. Those three patterns that I use are, is there a single one of these joy in science data points outside of either the upper or lower natural process limit that'd be a special cause.

0:11:05.4 JD: If you see eight data points in a row, either above the central line or below the central line, that's a special cause. And if I see three out of four in a row that are either closer to the upper limit or to the lower limit than they are to that central line, that's a pattern of the data that suggests a special cause. So we don't, in this particular dataset, we don't see any special causes. So now we have... Now we have a very solid baseline set of data. We have 24 data points. And when you're using an average central line and get... Getting technical, once you get to about 17 data points, those upper and lower natural process limits start to solidify, meaning they're not gonna really change too much 'cause you have enough data unless something really significant happens. And then if you're using the median, that solidification happens when you get to about 24 data points.

0:12:07.5 JD: So when you're, you know, when you're getting to 17 to 24 data points in your baseline, you're really getting pretty solid upper and lower national process limits. So, as of this March 1st date, which is the last date in this particular chart, there are 24 data points. So you have a pretty solid baseline set of data. Right now, the upper natural process limit is 95%. That lower limit is sitting at 66%, and then the average running through the middle, that green line is 81%. So this basically tells us that if nothing changes within Jessica's fourth grade science system, her classroom, we can expect the data to bounce around this 81% average and stay within the bounds of the limit. So we would call this a common cause system because we don't see any of those rules that I just talked about for special causes. And that's important.

0:13:07.4 JD: So do we have an unstable system or a stable system? We have a stable system. A stable system means that the data is predictable and unless something happens, you know, and this could be something that happens in the control of the teacher in the class, or it could be out of the control of the teacher in the class, but unless something happens that's significant, this data is just kind of keep humming along like this over the course of March, April, May of this particular school year. Right. So once we get to this point, so we have baseline data we've collected in a run chart, we start to understand how that data is moving up and down. We got some more data and we added the upper and lower natural process limits. Now we can assess not only the variation, but also the stability and the capability of the system, all of those things, those questions can start to be answered now that we have this process behavior chart.

0:14:09.3 JD: And this brings us to the final lesson for today, which is lesson 7, which is the improvement approach depends on the stability of the system under study. So that's why one of the reasons why the process behavior chart is so powerful is because now I have an understanding of what I need to do, like what type of approach I need to take to improve this particular system. Right? So in this particular case, I have a predictable system. And so the only way to bring about meaningful improvement is to fundamentally change this science system, right?

0:14:52.6 JD: The flip side would be if I did see a special cause let's say, it was an unpredictable system. We saw special cause on the low side. I'd wanna study that, what happened on that particular day. Because if I see a special cause, let's say on February 2nd I saw a special cause, let's say I saw a single data point below the lower natural process limit that's so different and unexpected, I'd actually wanna go to her classroom and talk to her in her class and say, okay, what happened on that day? I'm gonna try to remove that special cause. Study of that specific data point is warranted. If you don't see those special causes, then those, even though there are ups and downs, there are increases and decreases. They're within that, you know, the expected bounds of this particular system. Right.

0:15:46.9 AS: And I was gonna say, I can't remember if I got this from Dr. Deming or where it came from, but I know as an analyst in the stock market analyzing tons and tons of data in my career, I always say if something looks like a special cause or looks strange it's probably an error.

[laughter]

0:16:03.2 AS: And it could just be for instance, that a student came in and they didn't understand how to fill it out or they refused to fill it out or they filled out the form with a really bizarre thing, or maybe they thought that number 10 was good and number one was bad, but in fact on the survey it was number one that was good and number 10 that was bad. And you find out that, you know, that special cause came from some sort of error.

0:16:26.6 JD: That's certainly possible. That's certainly possible.

0:16:29.5 AS: As opposed to another special cause could be, let's just say that the school had a blackout and all of a sudden the air conditioning went off for half of the class and everybody was just like really frustrated. They were burning hot. It was really a hot day and that special cause could have been a legitimate cause as opposed to let's say an error cause but you know, it causes an extreme, you know response on the survey.

0:16:56.9 JD: Yeah. And the thing is, is yeah, it could be a number of different things. Maybe she tried, maybe she had gotten some feedback about her lessons and maybe even she tried a different lesson design and it was new to her and it just didn't work very well. Maybe she tried to use some new technology or a new activity and it just didn't go well. But you know, if I'm seeing that data show up as a special cause and let's say I'm seeing that the next day or a couple days later, it's still fresh in my mind and I can even go into my chart and label what happened that day. Okay. And I... Now, okay, I'm gonna remove that thing or I'm, you know, if it's a lesson I'm trying, maybe I don't wanna give up on it, but I know I need to improve it 'cause it led to some issues in my classroom, but it's close enough to the time it actually happened that I actually remember what happened on that particular day and I can sort of pinpoint that issue.

0:17:52.9 AS: Yeah.

0:17:54.5 JD: And the data told me it was worth going into studying that particular data point because it was so different than what I had seen previously in this particular 4th grade science system.

0:18:06.5 AS: Makes sense.

0:18:09.9 JD: But in this case, we don't see that, that was a hypothetical. So all we see is sort of the data moving up and down around that green average line. So we have a stable system. So again, that tells me I need to improve the science system itself. There's no special causes to remove. So, the next question I think I would ask, and if you remember one of the data lessons is that we sort of combine the frontline workers, which is the students in this case. We have the manager or the leader, that's the teacher, and then someone with profound knowledge from the Deming lens, that's me, we're bringing these people together and we're saying, okay, you know, we're seeing this hum along this joy in science thing, hum along at sort of like an 81% average. So I think it's a reasonable question to ask, is that good enough? And should we turn our attention to something else. Now, there could be some situations where it's not good enough or some situations where that is good enough. They chose to keep moving to improve that joy in learning. But I think it'd be perfectly reasonable in some context to say, well, you know, sure, maybe we could get a little better here, but maybe it's not worth the effort in that particular area. Maybe we're gonna turn our attention to something else. You know.

0:19:23.7 AS: So you learn something from the chart and that could be...

0:19:26.4 JD: Learn something from the chart. Yeah, yeah.

0:19:27.9 AS: Because when I look at this chart, I just think hard work is ahead.

0:19:31.2 JD: Yeah. Yeah.

0:19:34.7 AS: 'Cause in order to, if you have a stable system with not a lot of extreme... Firefighting is kind of a fun thing, right? When you got special causes, you feel really important. You go out there, you try to figure out what those individual things are, you're the hero. You fix it, you understand it, you see it, whatever. But then when you get a stable system, it's like, oh man, now we got to think about how do we make some substantial changes in the system. It doesn't have to be substantial, but how do we make changes in the system, you know? And then measure whether that has an impact.

0:20:06.4 JD: Yeah. And to your point about fire... Fighting fires, like I didn't know, we had never measured joy in learning like this before, so I didn't know what we were gonna get with Jessica. And so you know what I think you also see here is a pretty well-run classroom. These are kids that are finding a pretty high amount of joy in their lessons. I think that you can kind of objectively say that, but they did choose to move on with the project and keep focusing on this particular system. And I thought it was really interesting. They actually... I'll flip slides here.

0:20:45.6 JD: They actually made this sort of rudimentary fishbone diagram, so you can, if you're viewing the video here you can see that Jessica just took a pen and a piece of paper and put this on the overhead in the classroom, and basically just drew a fishbone. And on the fishbone diagram is also called a cause and effect diagram. So out on the right it says effect. And she wrote low enjoyment, so she's meaning low enjoyment of science class. And they started brainstorming, those are the bones of the fish, what's leading to what's causing the effect of low enjoyment in science class. And so they... She did this brainstorming activity with the kids. So some of the things they came up with were why is there low enjoyment with science class? Well, the computers are sometimes lagging when the kids are trying to use them. They're mad at Ms. Cutler for one reason or another. There's a lot of writing in a particular lesson. There's a lot of reading in a particular lesson.

0:21:58.2 AS: Other teachers coming into the room.

0:22:00.7 JD: Other teachers coming into the room and disrupting the class.

0:22:02.7 AS: Stop bothering me.

0:22:04.1 JD: Yeah. I mean, you know, these are the things you don't often think about. And then they talked about classmates making noises throughout classes, another distraction. And they basically categorized these into different categories. So there were sort of things that made the lesson boring. That was one category. Accidents happening, those are like the computers not working correctly. Scholar... We call our student scholars. So students getting in trouble was one, and then distractions was another category. And so then they did another activity basically after they had this fishbone. And they basically did like a voting activity where they would figure out which of these is the most dominant cause of low enjoyment. And actually what they came up with is their classmates call, like making noises, like students making a lot of noise, making noises, random noises throughout the lesson, they identified that particular thing as the thing that they're gonna then do something like design a plan, do study around, like how are we gonna reduce the amount of noise in the class?

0:23:12.7 JD: And this is all the students coming up with these ideas. Of course, Jessica's guiding these conversations as the adult in the room, but the kids are coming up with this. Like I never would have, well, maybe I shouldn't say I would never have, but it probably wouldn't likely have been on my radar that teacher, other teachers coming into the room was a main source of distraction. You know, who knows what they're doing, dropping off papers that have to be passed out, that dismissal or coming to find a kid for this thing or that thing. Who knows why they're stopping by. But schools are certainly rife with all kinds of disruptions, announcements, people coming into the room, those types of things.

0:23:51.0 AS: It's interesting too to see mad at Miss Cutler because... I was just reading a book about or some research about how to get rid of anger and that type of thing. And they talk about meditation and I do breathing exercise before every class, when every class starts. And it's a way of just kind of calming down and separating the class time from the chaos of outside, but it also could be something that could help with feeling mad.

0:24:27.9 JD: Yeah. And I think if in certain classrooms that certainly could have risen to the top. And then what you do is then design the PSA around that. So how do you do meditation? How do you know if you're going to do... How do you know if you're doing it right? How long do you do it? You know? Does it have the intended impact? You could study all kinds of different things with meditation, but...

0:24:52.4 AS: And are you really mad or is there... Are you really mad at Ms. Cutler or are you... Are you frustrated about something else? Or that...

0:24:58.1 JD: Exactly. Yeah. Is it warranted? Is there actually something that she should stop doing or start doing? There's all kinds of possibilities there. But the main point, and I think this kind of would bring us to the wrap up is taking this approach is very different. Even just the step, Jessica's step of saying, I'm gonna work on joy in science, joy in learning in science class. That's a very different approach. And then step beyond that, I'm gonna involve my students in this improvement approach. And we have these various methods and tools for systematically collecting the classes input, and that those are improvement science or continual improvement tools that we're using. And then we're applying some of the knowledge about variation, Deming sort of data methods to understand that data, that we've systematically collected from students.

0:25:58.7 JD: And now students are involved. So they're actively coming up with both the reasons, the problems that are happening. And then they're like what we'll get into in the last few lessons is their input into the solutions, the change ideas that are gonna make things better. But all of this represents a very different approach than what's typical when it comes to school improvement. These things are not being handed down from on high from someone that has no connection to this classroom whatsoever. Instead, it's actually the people in the classroom that are developing the solutions.

0:26:36.9 AS: I just was thinking about the idea of imagining that this group of students is working really hard on that, and they come up with so much knowledge and learning about how to create a more joyful classroom. And then imagine that they've now codified that together with Ms. Cutler to create kind of the standard operating procedures. Like we put up a sign on the door outside that says, do not disturb until class is over, or...

0:27:06.1 JD: Something simple. Yeah.

0:27:07.0 AS: And that they come up with, and a breathing exercise or whatever that is. And then you imagine the next group of students coming in for the next year, let's say, or whatever, that next group who can then take the learning that the first group had and then try to take it to another level, and then upgrade how the operations of the room is done. And you do that a couple of iterations, and you've now accumulated knowledge that you are building on until in a business, you're... You're creating a competitive advantage.

0:27:40.4 JD: Yeah, absolutely. And another thing that these guys did was they didn't say we're gonna improve X, Y, or Z and then set an arbitrary goal, which is one of the things we've talked about that often happens at the outset of any type of improvement. They didn't... They sort of avoided this act of desperation. We talk about goal setting as an active... Are often goal setting is often an act of desperation. They avoided that completely. Instead, what they did was we gathered some baseline data to understand what is the capability of our system when it comes to joy in learning. That's what they did first. They didn't set the goal first. A lot of wisdom, a lot of wisdom in 10 year olds for sure.

0:28:22.1 AS: That's interesting. Well, John, 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. 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, and its absolutely applicable to today's discussion. People are entitled to joy in work.

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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."

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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?

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Can a 4th grade class decide on an operational definition of "joy in learning"? In part 4 of this series, educator John Dues and host Andrew Stotz discuss a real-world example of applying Deming in a classroom. This episode covers the first part of the story, with more to come in future episodes!

0:00:02.3 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 four about goal setting through a Deming lens. John, take it away.

0:00:22.6 John Dues: Good to be back, Andrew. Yeah, we've been talking about organizational goal setting last few episodes. A couple episodes ago, we talked about those four conditions that organizations should understand prior to setting a goal. Then we sort of introduced this idea of trying to stay away from arbitrary and capricious education goals. And then we got into these 10 lessons for data analysis. And so what I thought we could do now is we've got that foundation in place is that we could take a look at an applied example in real classrooms of those 10 key lessons in action to kind of bring those alive. And I ran this project a few years ago with a teacher named Jessica Cutler. She's a fourth grade science teacher in our network. And she was going through something we call a Continual Improvement Fellowship. So we do this sort of internal fellowship where people can learn that sort of way of thinking, the tools, techniques, the theories related to the science of improvement. And then they actually take that right away and apply it to a problem in their classroom or their department or their school, depending on who it is.

0:01:55.0 JD: And so what Jessica was doing, what her project ended up being was she was trying to improve the joy in learning in her fourth grade science class. So it's interesting to see how that sort of project evolved. So I thought we could revisit each of the 10 lessons and how that lesson was applied in Jessica's improvement project. And we'll maybe get through three or four of the lessons today. And then over the course of the next few episodes, kind of get to all 10 lessons and think through how they were... How that went in her improvement project.

0:02:08.1 AS: Sounds like a good plan, practical application.

0:02:12.0 JD: Yeah. I mean, it was interesting too, because she didn't initially sort of consider joy as a possibility. She was thinking like, I'm gonna work on improving test scores or something like that was sort of her initial brainstorm. And then sort of pivoted to this when we kind of talked through what was possible from the Deming philosophy type of standpoint. So it's interesting to see how things evolve. But just to kind of revisit, so we talked through these 10 lessons. Lesson one was "data has no meaning apart from their context." So we talked about these questions that are important, like who collected the data? How was it collected? When was it collected? Where was the data collected? What are the values themselves represent? What's that operational definition for the concept under measurement? Have there been any changes to that operational definition as the project unfolds? And so even with a project with a teacher and her students, all of those questions are relevant. They're still important just because you're dealing with students that doesn't mean anything changes on that front. So it was important for her to sort of think through all of those things as she thought through the start of her project.

0:03:28.9 JD: And what her and her students came up with after they sort of decided that they were gonna focus on joy, they focused on this problem statement. And they were like, well, what do we want science class to look like? 'Cause that was sort of their starting point. And what her and her students...Oh sorry go ahead.

0:03:45.9 AS: One thing you started off talking about her, now you're talking about her students. So she got her students involved in this process. Is that what you're saying?

0:03:56.2 JD: Yeah. So they were working together from the very outset even...

0:04:02.0 AS: As opposed to a teacher talking through this with a principal or something in a faculty room and then thinking of how do I... Okay.

0:04:09.2 JD: Yep. That's right. Yeah. And so what they came up with is the sort of desired future state of science classes. "We are able to stay focused through science, enjoy science class and remain engaged." And so to give some context, what was happening is that she taught science and social studies and it was sort of like a back-to-back class period. And they would do science second. And so by the time they were doing science, sometimes the students were getting off task, disengaged. They weren't as engaged as either the students wanted to be or the teacher wanted them to be in that second lesson. So they, they came up with that as the thing they were gonna focus on. And then because they were gonna focus on joy in learning, they had to define what that meant. So what did joy in learning mean to that fourth grade science class? And what they came up with as a definition, which I really like, is "we wanna have fun learning, finding things we like to learn and have fun completing classwork and activities." So they came up with this operational definition. And keep in mind, these are fourth graders and Jessica's having these conversations like, what's the operational definition? That's not probably typical language you're gonna use with fourth graders. But if you walk them through these things, they actually pick up on it pretty quickly.

0:05:26.1 JD: It's actually pretty cool to see.

0:05:28.1 AS: And to them, a more simpler word sounds like was fun.

0:05:35.0 JD: Yeah, right. They wanted that to be a part of the science learning process. So basically, once they had the operational definition, they had to think through, well, how are we going to measure that concept that we've defined? And what they did was they just developed a simple survey. Jessica did it in Google Forms. just had, really just had two questions. The first question was, on a scale of 1 to 10, how much did you enjoy science class today? And then there was a second open-ended question that said, what made you enjoy or not enjoy class today? So it was fresh in the kids' minds. So basically, at the end, each kid has a Chromebook in Jessica's science class. She would just sort of share the link to the survey, and the kids would complete that as the closing activity for the lesson. So she would get two things out of it. So 1 to 10, just a real quick sort of numerical quantified value, how much the kids enjoyed science class that day. And then, because it had just happened, the students could say what they did and didn't like about the lesson. Oh, we haven't used computers in a few days. Or it'd be nice if I had a video to help bring this concept alive. Or there's a few words that you use that I don't know the definitions to. Could you add those definitions to the glossary? So just things like that, simple things like that.

0:06:55.9 JD: Right away. And then what Jessica could then do is take that information and actually adjust her lessons as she planned maybe for the next week, she could make those adjustments based on this feedback she was getting from the students. So that's sort of the application of lesson number one. So what are we measuring? How are we gonna measure it? When are we collecting this data? That type of thing. Lesson two, if you remember back from when we covered the lessons was "we don't manage or control the data. The data is the voice of the process," right?

0:07:28.9 JD: So we talked about this ideas that while we don't control the data, we do manage the system and the processes from which the data come, right? So, and this is really key conception of the system's view. You, you say you're going to improve this particular classroom. So that's the system. So you're not necessarily controlling the data. You're not controlling how the kids are evaluating, the numbers that they're putting one through 10 to assess joy in learning, but what the teacher and then the students, because of this project do have control over are the learning processes that are happening throughout science class, right? And so back to your point about you switch from talking about Jessica, the teacher to the students. And then you said "we" that's also a key conception of taking this approach, right?

0:08:24.4 JD: So what I think Deming would say is that when you're going to improve an organization, you have to sort of combine sort of three critical pieces. One thing is you need someone from the outside, from outside the system that has Profound Knowledge. And then that person or persons has to be collaborating with the people working in the system. So those are the students, they're working in the science class system. And, then you that third group or that third person is the manager or managers have that have the authority to work on the system. So in this case, Jessica has the authority to change what's happening in her science class.

0:09:10.2 JD: The students are the workers working in that science system. And then that third part is that person that has the sort of understanding of the System of Profound Knowledge and it's sort of bringing all of these parts together that really is how you begin to transition sort of conventional classrooms to those guided by the Deming quality learning principles, right?

0:09:33.1 JD: So in in the case of Jessica's project, that person that was, that had a System of Profound Knowledge lens was me. So I was sort of acting as an, the outsider, 'cause I'm outside of the science system. But I have this understanding of the System of Profound Knowledge. And I'm working with Jessica as she's working with her students, to sort of bring that lens to the projects.

0:10:00.4 AS: And what's the point of doing all that if she doesn't have the ability to make the changes necessary to test, if you're gonna if we change this, it's gonna result in something why go and do all this if you're just stuck in a system that you simply cannot change because of government regulation or whatever, maybe.

0:10:17.5 JD: Right. Yeah. So it's bringing all those pieces together. But what I found thinking about the three parts of a team that's working toward organizational improvement, what I've found in the past is, in my experience, whether it's a school improvement team or a district based improvement team, most of them are devoid of at least one parts of one of those components, usually two of those components, 'cause usually students aren't involved.

0:10:45.9 JD: And then in most school systems, there's no one with this outside knowledge, the System of Profound Knowledge lens, right. And I think it's what we're really doing is the students can identify the waste, the inefficiency, the things that aren't going well from their perspective, but we don't often ask them. Or if we do, we do it in a way where it's an end of year survey or an end of semester survey, but this is collecting that feedback in real time and then acting on it. We're not planning to do something next year with this feedback, we're actually planning to do something the next day, or maybe the next week, to adjust the science lessons.

0:11:24.8 AS: And it's one of those two things that come into my mind, what, how do you handle the idea that what's causing the impact on joy in learning could be that the student had a bad night, the night before. And I guess by doing many samples that starts to kind of wash out. And then the other question is since the students know that the teacher could likely make an adjustment, is there any possibility that they could be gaming or playing the system.

0:11:57.1 JD: Well, that's interesting, because I think, well on the first point. I think pretty quickly, my experience with this and David Langford I know you've talked to has echoed this sentiment is you know, he was working with high school students, this is an elementary project but either way. You may get some students that don't take this seriously. At first. And you may get some kind of crazy answers crazy brainstorms or crazy survey submissions, although I don't think Jessica got much of that.

0:12:30.2 JD: But in other projects I've gotten some stuff at the outset that was a little bit off the wall. But like David said to me when I first started this and then it's been my experience since is that kids, once they realize that you're actually gonna act on the feedback, as long as the feedback is in good faith. They actually start to take it seriously, pretty, pretty quickly. And so I think pretty quickly, those sort of types of worries go by the wayside. Now, I will say I did say that the...

0:13:01.1 JD: One of the components that has to be on this improvement team is the person that has the authority to change the system. So at the end of the day, even though we're gathering this input, Jessica's really the person as the teacher of that classroom that has the authority to make the changes to the system based on her judgment or, her professional judgment as a science teacher of what should happen. And so the students certainly offer feedback and inform that process, but ultimately it's Jessica that's gonna determine the changes to the system.

0:13:34.0 AS: I hear David in my ears saying, you know what, Andrew? You don't trust the students? They probably have a more honest, view of what's going on than most adults do. So yes, I hear the voice of David Langford.

0:13:49.2 JD: Yeah. Well, and interestingly, and we'll get into this towards the end, not today, but when we get to some of the other lessons, interestingly, not to give away the story, but, one of the things that was getting kids off track was a lot of noise during class, kids making noises. And they actually came up with this system where they were kind of penalizing each other. This was their own idea. And so, kids know exactly what's going on in class. And so it was interesting to see how they came up with some ideas to rectify that. But yeah, so it was really just bringing together, these three groups or, the group of students and then Jessica and then myself. It's that combination that's really where the power for improvement lies. And again, I, that type of partnership is just not typical in school improvement situations.

0:14:45.7 JD: So that's lesson two, applied. Lesson number three is "plot the dots for any data that incurs in time order." Right? So we've talked about this a lot. The idea behind the primary point of "plot the dots" is that plotting data over time helps us understand variation, and that in turn leads us to take more appropriate action. I think that what we decided to do with Jessica's project is, start plotting the points on a run chart and connect those points with a line, and then it becomes pretty intuitive as we're looking at that data, what joy in learning looks like in this science class. And then once we have enough data, we can turn that run part chart into a process behavior chart and actually add the limits.

0:15:40.2 JD: So, like I said, Jessica, once her and the class determined that what they were going to improve was join in learning, and they defined that concept operationally and created the survey, right away they started gathering this survey data as a part of the project, and usually they would gather the data maybe, two or three times a week across the course of this particular improvement project. So maybe I'll share my screen just so you can see what that initial run chart looked like. So, you have this run chart, and I left this in the spreadsheet so you could see the actual data. So as she began administering these surveys, she would send me the data and then I would create it the run chart for her, start plotting that data so that both of us could sort of see the variation in that survey data over time. And then she could actually take this, she would put this run chart on a slide, and every week or so she would actually show the students what the data looked like.

0:16:49.7 AS: And just to be clear, we've got a chart for those that are listening, we've got a chart that has a blue line and it's going up and down kind of around the level of about 79. So they've got points that are based, that are days. Some days are below that 79 some days are above. But also I'm assuming that those points are the output of all the surveys. So the average answer on that day from the survey as different from the average or median of all the day's output, correct?

0:17:31.1 JD: Yeah, that's right. So this is, the run chart from Jessica's class that's displaying the survey results. And what they're measuring is joy in science class as assessed by the students.

0:17:44.3 AS: On the first day, the students basically said, 75% of the respondents said that they had joy in science.

0:17:51.9 JD: That's right. So in this particular school year, which was two years ago, so we had done some of the project planning before kids went on winter break, and then when they came back from winter break, they were ready to start administering the survey. And we started plotting the dots, charting the data over time. So the X axis for those who are listening are the dates.

0:18:16.2 JD: The, Y axis is the joy in learning, percent of kids that the rating of the kids from one to 10. And then I just turn it into a percent. And so you have the green line, the central line running through is the median. We're using the median 'cause that's fairly typical for a run chart because typically run charts don't have as much data as a process behavior chart. And so, outliers can have a greater impact. So we're using the median to sort of control for that. Although this data's fairly tight. So on day one, like you said on January 4th of this school year 75, the kids sort of rated the joy in learning of that particular lesson as a 75% of 100. And then you sort of see it bounce around.

0:19:04.7 JD: That median of 79. And so what I'm showing is the data from the first 10 surveys that Jessica administered at the end of class. So over the course of 20 days from January 4th through January 24th, she administered that this survey 10 different times. So about two to three times a week. And so we see a high of about 83% joy in learning and a low of 67% joy in learning. And you have about half the points above the median, about half the points below the median. So even though it's only 10 data points, Jessica and her class, and then myself, we were starting to learn about what did joy in learning, joy in science class actually look like? Now that we have this definition and we're measuring it with these surveys and then plotting these data points. So again, she's actually putting this up on, on the, up on the screen so kids can actually see this. And what she said was after the 5th or 6th survey, and she's plotted this and put this up on a screen a few times, the kids are actually getting excited. And they're wanting to see their data. They're wanting to see what the results look like for each survey as she started plotting this.

0:20:30.6 AS: It's funny because I, when I was a loading supervisor at Pepsi, I started putting up the percent correct for each of the loaders in the warehouse. And I didn't make any comment or anything, I just put it up there. And yeah, people are interested when they start seeing numbers, they start thinking, they start asking questions.

0:20:54.3 JD: Yeah, and you can see too at a school, in a fourth grade science classroom, you can see all types of lessons, you can sort of build up this reading graphs, calculating percentages, using when do you use line graphs for some other type of graph?

0:21:10.2 AS: And why use median versus mean? Because a small amount of data could be distorted if you have a huge outlier.

0:21:18.8 JD: Yep, all kinds of practical lessons. So this brings us to sort of the last lesson for this particular episode. I think lesson four is two or three data points are not a trend, right? So, we've said that you should start plotting the dots as soon as you've decided to collect some type of data that occurs over time. And really when people ask me what type of data can you put on a run chart or a process behavior chart, there's almost any data that you're interested in improving in schools unfolds over time, almost all of it. Whether that's a daily cadence, a weekly cadence, monthly, quarterly, yearly, whatever it is, right? But the problem is the vast majority of data that we look at as educators and really probably most people, it's typically two or maybe three data points. But that doesn't tell you anything about how the data is varying naturally. So when we start thinking about this particular data, we start learning quite a bit. For one, as a teacher, I would have no idea how my kids would evaluate their joy in my classroom.

0:22:29.9 JD: And so I think if I was Jessica, I'd be pretty happy off of that, that the sort of average or the median rating is close to 80%, basically the rating each lesson has an eight out of 10. Right. I think a second thing is let's say we were a school district and we did systematically give our kids some type of survey that assess their satisfaction with the school. Right. Maybe they do it twice a year or annually. Right. And so after at the end of the year, you have two data points, but you don't really have any idea for what to do with that data. You have no idea if you collected three or four or five data points, what that would look like. And here she is in just 20 calendar days and a couple of school weeks. She's got 10 data points to work with already. So she's building that baseline of data. So I think what this is to me is just a very different approach to school improvement.

0:23:39.4 JD: And the tools are relatively simple. The ideas are relatively simple. But I think overall this really, the takeaway I want for folks is that this project really illustrates a very different approach to school improvement, guided by these sound sort of Deming principles for how to use data, to how to understand variation, to how to include the people working in the system, right?. We've talked about these arbitrary targets throughout this series, and you could see that when Jessica and her class would go to maybe set a goal for joy after collecting some of this data, that goal would be tied to something real. It's tied to actual data from the classroom. And you can sort of avoid goal setting as an act of desperation when you take this type of approach.

0:24:38.4 AS: Joy in the joy of bringing joy in science.

0:24:44.2 JD: Yeah, it's really all about this process, right? It's the kids getting into this process, that's the psychological part. They're involved in their educational process. And so that is completely different than what's happening in the typical classroom, I think, in the United States.

0:25:00.5 AS: You can imagine somebody not wanting to do this because they're afraid of what they're going to see.

0:25:07.0 JD: Certainly [laughter]

0:25:08.3 AS: Yeah.

0:25:08.7 JD: Certainly. Yeah. Hopefully they would be open to sort of collecting the data and being reflective as a professional. But I could see, maybe that's not, tha's not always the case. And another question, I kind of shared this project with some folks, in different settings, and one of the questions I typically get is, well, what about the science test scores? Like, this is great if kids have joy, I guess is kind of the reaction. But what... How does that impact the academics?

0:25:44.0 JD: And my response is, well if kids don't find joy in their learning and they're not engaged, what kind of results are you gonna get? [laughter] To me this is sort of like a part of the process that leads to academic outcomes, when you enjoy the things that you're doing, when you feel like you have some control over a process, maybe not the full control, but when you have some control, when you have input into something that you're doing all day long, you're gonna have more investment because, you know, because you're seeing that your input has meaning. That's really that psychological component.

0:26:18.2 AS: It's obvious, but maybe not proven.

0:26:21.9 JD: Yeah, I think so. I think so.

0:26:28.4 AS: Okay.

[SILENCE]

0:26:30.9 JD: Yeah. I think that's a pretty good spot to wrap up this opener with the... We covered those first four lessons and started to look at how this project unfolded in, Jessica's classroom. And I think, next we can kind of see as she gathered more data, what this looked like over time. And then as she sort of had that baseline in place, then the next thing we'll look at is: what did she do as a change idea or an intervention to try to make these rates go higher in her classroom?

0:27:08.4 AS: That's interesting. I mean, in my wrap up of this, I think how lucky, is Jessica to have someone from the outside? I think a lot of teachers and a lot of people in business, they don't really have anybody to go to. And the company's not providing that type of stuff or the school is not providing that. And so you just kind of make it up as you go along. And I think that's, that's one of the things, 'cause I'm, I think like probably other listeners and viewers who are, listening to this, they're thinking, I wonder if John could help me do that in my area? The idea of, we all know there's places that we could improve that we may not be. And if a school system can provide that, wow, that's a big... That's exciting.

0:27:56.6 JD: Yeah. I'd be happy to. And it was like a, it was definitely a mutual effort. Jessica put a lot of work into sort of, 'cause she has gone through that fellowship, she had to sort of learn all of these tools and then actually, turn around and put them into practice in her classroom. And she found ways to do this in a way where, she could still do the things she was required to do, like delivering the lessons that she was required to deliver and those types of things. But then she found ways to sort of incorporate what she learned in the fellowship to make her classroom better. Seeing that, seeing her openness to feedback that really made this like a, I think a, mutually beneficial experience. And I think the kids enjoyed it too.

0:28:39.2 AS: And the purpose of this series too is, the idea of how can you do this at home and how can you start doing it in your own school, in your own classroom, in your own life? And so I think I'm looking forward to the next session where we're gonna go deeper into... I've already got, a series of questions and things that I'm wondering, and then I saw some tabs in your, in your worksheet that I thought, okay, there's gonna be some more interesting stuff. So I think we're all gonna see you in that next section.

0:29:09.9 AS: And on behalf of everyone at the Deming Institute, I want to thank you again for this discussion and, taking the time to go through these steps with us. And for 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, and it's particularly apropos, people are entitled to joy in work.

View Details

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.

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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."

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In part 3 of this series, John Dues and host Andrew Stotz talk about the final 5 lessons for data analysis in education. Dive into this discussion to learn more about why data analysis is essential and how to do it right.

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 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 23 and we're talking about goal setting through a Deming lens. John, take it away.

0:00:30.8 John Dues: It's good to be back, Andrew. Yeah, in this first episode of this four-part series, we talked about why goal setting is often an act of desperation. And if you remember early on, I sort of proposed those four conditions that organizations should understand about their systems prior to ever setting a goal. Those four were capability, variation, stability, and then by what method are you going to improve your system? And then in the last episode, I introduced the first five lessons of the 10 key lessons for data analysis. And remember, these lessons were set up to avoid what I call these arbitrary and capricious education goals, which are basically unreasonable goals without consideration of those four things, the system capability, variation, and stability, and then not having a method. So, it might be helpful just to recap those first five lessons. I'll just list them out and folks that want to hear the details can listen to the last episode.

0:01:31.8 JD: But lesson one was data have no meaning apart from their context. So, we've got to contextualize the data. Lesson two was we don't manage or control the data. The data is the voice of the process. So, it's sort of, you know, the data over time shows us what's happening and we don't really have control over that data. We do have control under that underlying process. Lesson three was plot the dots for any data that occurs in time order. So, take it out of a two-point comparison or take it out of a spreadsheet and put it on a line chart that shows the data over time. Lesson four was two or three data points are not a trend. So again, get beyond the typical two-point limited comparison this month and last month, this year and last year, this same month, last year, those types of things, this week, last week.

0:02:25.6 JD: And then lesson five was, show enough data in your baseline to illustrate the previous level of variation. So, we want to get a sense of how the data is changing over time and we need a baseline amount of data, whether that's 12 points, 15 points, 20 points, there's sort of different takes on that. But somewhere in that 12-to-20-point range is really the amount of data we want to have in our baseline. So, we understand how it's moving up and down over time sort of naturally. Sort of at the outset of those two episodes, we also talked about centering the process behavior charts, like the ones we viewed in many of our episodes. And we put those in the center because it's a great tool for looking at data over time, just like we've been talking about.

0:03:11.4 JD: And I think when we use this methodology, and when you start to fully grasp the methodology, you start to be able to understand messages that are actually contained in the data. You can differentiate between those actual special events, those special causes, and just those everyday up and downs, what we've called common causes. And in so doing, we can understand the difference between reacting to noise and understanding actual signals of significance in that data. And so, I think that's a sort of a good primer to then get into lessons six through 10.

0:03:51.2 AS: Can't wait.

0:03:53.3 JD: Cool. We'll jump in then.

0:03:56.1 AS: Yeah. I'm just thinking about my goal setting and how much this helps me think about how to improve my goal setting. And I think one of the biggest ones that's missing that we talked about before is by what method. And many people think that they're setting strategy, when in fact, they're just setting stretch targets with nothing under it. And they achieve it by luck or are baffled why they don't achieve it. And then they lash out at their employees.

0:04:31.4 JD: Yeah, there was really... I mean, that goes back to one of those four conditions of setting goal capability. You have to understand how capable your system is before you can set, it's fine to set a stretch goal, but it has to be within the bounds of the system. Otherwise, it's just maybe not an uncertainty, but a mathematical improbability. That's not good. Like you're saying, it's not a good way to operate if you're a worker in that system. So, lesson six then, to continue the lessons.

0:05:06.8 JD: So, lesson six is "the goal of data analysis in schools is not just to look at past results, but also, and perhaps more importantly, to look forward and predict what is likely to occur in the future," right? So that's why centering the process behavior charts is so important, because they allow you to interpret data that takes variation into account, allows you to classify the data into the routine or common cause variation or the exceptional, that's the special cause variation, and allows us to turn our focus to that underlying or the behavior of the underlying system that produced the results. And it's this focus on the system and its processes that's then the basis for working towards continual improvement.

0:06:00.6 AS: And I was just thinking about number six, the goal is to predict what is likely to occur in the future. And I was just thinking, and what's likely to occur in the future is exactly what's happening now, or the trend that's happening, unless we change something in the system, I guess.

0:06:16.4 JD: Yeah. And that's why just setting the stretch goal is often disconnected from any type of reality, because we have this idea that somehow something magical is going to happen in the future that didn't happen in the past. And nothing magical is going to happen unless we are intentional about doing something differently to bring about that change.

0:06:39.5 AS: And that's a great lesson for the listeners and the viewers. It's like, have you been just setting stretch targets and pushing people to achieve these stretch targets? And not really understanding that your role is to understand that you're going to get the same result unless you start to look at how do we improve the method, the system, that type of thing.

0:07:05.0 JD: Yeah. And usually when you have those stretch goals, you've looked at what happened last year, and then you base the stretch goal on last year. But perhaps, you're seeing, for the last three or four years, the data has been steadily decreasing, right? And you can't realize that if you haven't charted that over the last three or four years, hopefully beyond that. So, you have no idea or it could have been trending positively, and you may under shoot your stretch goal because you missed a trend that was already in motion because of something that happened in the past.

0:07:44.8 AS: You made a chart for me, a run chart on my intake for my Valuation Masterclass Bootcamp. And we've been working on our marketing, and I presented it to the team and we talked about that's the capability of our system based upon for me to say, I want 500 students when we've been only getting 50 is just ridiculous. And that helped us all to see that if we are going to go to the next level of where we want to be, we've got to change what we're doing, the method that we're getting there, the system that we're running and what we're operating to get there or else we're going to continue to get this output. And so if the goal is to predict what is likely to occur in the future, if we don't make any changes, it's probably going to continue to be like it is in that control chart.

0:08:42.8 JD: Yeah. And that example is, in a nutshell, the System of Profound Knowledge in action in an organization where you're understanding variation in something that's important to you, enrollment in your course. You're doing that analysis with the team. So, there's the psychological component and you're saying, well, what's our theory of knowledge? So, what's our theory for how we're going to bring about some type of improvement? And so, now you're going to run probably something like a PDSA. And so now you have all those lenses of the System of Profound Knowledge that you're bringing together to work on that problem. And that's all it is really in a nutshell.

0:09:22.2 AS: Yeah. And the solution's not necessarily right there. Sometimes it is, but sometimes it's not. And we've got to iterate. Okay. Should we be doing marketing in-house or should we be doing it out using an outsourced service? What if we improve and increase the volume of our marketing? What effect would that have? What if we decrease the... What if we change to this method or that method? Those are all things that we are in the process of testing. I think the hardest thing in business, in my opinion, with this is to test one thing at a time.

0:09:58.5 JD: Yeah.

0:09:58.7 AS: I just, we I want to test everything.

0:10:00.4 JD: Yeah. Yeah. I read in the Toyota Kata that I think we've talked about before here, which talks about Toyota's improvement process. I read this in the book, I don't know if this is totally always true, but basically they focus on single factor experiments for that reason, even in a place as complex and as full of engineers as Toyota, they largely focus on single factor experiments. They can actually tell what it is that brought about the change. I mean, I'm sure they do other more complicated things. They would have to write a design of experiments and those types of things, but by and large, their improvement process, the Toyota Kata, is focused on single factor experiments for that reason.

0:10:48.1 AS: And what's that movie, the sniper movie where they say, slow is smooth and smooth is fast or something like that, like slow down to speed up. I want to go fast and do all of these tests, but the fact is I'm not learning as much from that. And by slowing down and doing single factor experiment to try to think, how do we influence the future is fascinating.

0:11:20.9 JD: Yeah, absolutely.

0:11:22.4 AS: All right. What about seven?

0:11:23.2 JD: Lesson seven. So "the improvement approach depends on the stability of the system under study," and there's really two parts to this. But what approach am I going to take if the system is producing predictable results and it's performing pretty consistently, it's stable, there's only common cause variation. And then what happens if you have an unpredictable system? So two different approaches, depending on what type of system you're looking at in terms of stability. So you know the one thing to recognize in thinking about something like single factor experiments, it's a waste of time to explain noise or explain common cause variation in this stable system, because there's no simple single root cause for that type of variation. There's thousands or tens of thousands of variables that are impacting almost any metric. And you can't really isolate that down to a single cause.

0:12:17.5 JD: So instead we don't, we don't try to do that in a common cause system that needs improvement. Instead, if the results are unsatisfactory, what we do is work on improvements and changes to the system, right? We don't try to identify a single factor that's the problem. So what we do then is we work to improve a common cause processor system by working on the design of that actual system including inputs, throughputs that are a part of that. And to your point, you sort of have to, based on your content knowledge of that area, or maybe you have to bring in a subject matter expert and you sort of start to think about what's going to make the biggest difference. And then you start testing those things one at a time, basically. That's sort of the approach. And then if you're working in an unpredictable system and that unpredictable system is unpredictable because it has special causes in your data, then it's really a waste of time to try to improve that particular system until it's stable again. And so the way you do that is at that point, there is something so different about the special cause data that you try to identify that single cause or two of those data points. And then when you've identified, you study it, and then you try to remove that specific special cause. And if you've identified the right thing, what happens then is it becomes a stable system at that point, right?

0:13:51.9 AS: I was thinking that it's no sense in trying to race your boat if you've got a hole in it. You got to fix the special cause, the hole, and then focus on, okay, how do we improve the speed of this boat?

0:14:06.5 JD: And the key is recognizing the difference between these two roadmaps towards improvement. And I think in education for sure, there's a lot of confusion, a lot of wasted effort, because there's really no knowledge of this approach to data analysis. And so people do their own things. There's a mismatch between the type of variation that's present and the type of improvement effort that's trying to be undertaken. I think the most typical thing is there's a common cause system, and people think they can identify a single thing to improve. And then they spend a lot of time and money on that thing. And then it doesn't get better over time because it was the wrong approach in the first place.

0:14:55.9 AS: Number eight.

0:14:57.6 JD: Number eight. So, number eight is, "more timely data is better for improvement purposes." So we've talked about state testing data a lot. It's only available once per year. Results often come after students have gone on summer vacation. So, it's not super helpful. So, we really want more frequent data so that we can understand if some type of intervention that we're putting in place has an effect. I think what the most important thing is, the frequency of the data collection needs to be in sync with the improvement context. So, it's not always that you need daily data or weekly data or monthly data, or quarterly data, whatever it is. It's just it has to be in sync with the type of improvement context you're trying to bring about. And no matter what that frequency of collection, the other big thing to keep in mind is don't overreact to any single data point, which is, again, I see that over and over again in my work. I think ultimately the data allows us to understand the variation and the trends within our system, whether that system is stable or unstable, and then what type of improvement effort would be most effective. And, again, in my experience, just those simple things are almost never happening in schools. Probably in most sectors.

0:16:25.9 AS: Can you explain a little bit more about in sync with the improvement process? Like, maybe you have an example of that so people can understand.

0:16:34.2 JD: Well, yeah. So, you mean the frequency of data collection?

0:16:39.0 AS: Yeah. And you're saying, yeah, this idea of like, what would be out of sync?

0:16:44.7 JD: Well, one, you need to... A lot of times what happens is there might be a system in place for collecting some type of data. Let's say, like, attendance. They report attendance, student attendance on the annual school report card. So, you get that attendance rate, but that's like the state test scores. Like, it's not that helpful to get that on the report card after the year has concluded. But the data is actually available to us in our student information system. And so, we could actually pull that in a different frequency and chart it ourselves and not wait on the state testing date or the state attendance report card has attendance...

0:17:27.5 AS: Because attendance is happening on a daily basis.

0:17:31.0 JD: Happening on a daily basis. So, if we wanted to, daily would be pretty frequent, but if we did collect the data daily, we certainly can do that. We could see, that could help us see patterns in data on certain days of the week. That could be something that goes into our theory for why our attendance is lower than we'd want it to. You could do it weekly if the daily collection is too onerous on whoever's being tasked with doing that. I think weekly data pretty quickly, would take you 12 weeks. But in 12 weeks, you have a pretty good baseline of what attendance is looking like across this particular school year. So I think when you're talking about improvement efforts, I think something daily, something weekly, I think that's the target so that you can actually try some interventions along the way. And...

0:18:29.3 AS: And get feedback.

0:18:31.1 JD: And get feedback. Yeah, yeah. And you could also peg it to something that's further out. And you could see over time if those interventions that are impacting more short-term data collection are actually impacting stuff on the longer term as well.

0:18:49.1 AS: And I guess it depends also on what is the priority of this. Let's say that attendance is not a big issue at your particular school. Therefore, we look at it on a monthly basis and we look to see if something's significance happening. But otherwise, we've got to focus over on another idea. And if, if, if attendance becomes an issue, we may go back to daily and say, is it a particular day of the week? Or is it something, what can we learn from that data?

0:19:20.0 JD: Yep, that's exactly right. And then the next step would be in lesson nine, you then, and this is why the charts are so important, then you can clearly label the start date for an intervention directly on the chart. So, what you want to do is, once you've chosen an intervention or a change idea, you clearly mark that in your process behavior chart. I just use a dashed vertical line on the date the intervention is started and also put a simple label that captures the essence of that intervention. So, that's right on the chart. So, I can remember what I tried or started on that particular day. And then that allows the team to easily see, because you're going to continue adding your data points, the stuff that comes after the dotted line, it becomes pretty apparent based on the trends you're seeing in the data, if that intervention is then working, right?

0:20:21.2 JD: If it's attendance, I may try, I do a weekly call to parents to tell them what their individual child's attendance rate is. And then we can see once we started making those weekly calls over the next few weeks, does that seem to be having an impact on attendance rates? And then I can actually see too, we've talked about the patterns in the data, there's certain patterns I'm looking for to see if there's a significant enough change in that pattern to say, yeah, this is a signal that this thing is actually working. So, it's not just because it increased, that attendance rate could go up, but that in and of itself isn't enough. I want to see a signal. And by signal, I mean a specific pattern in the data, a point outside the limits.

0:21:17.3 JD: I want to see eight points in a row in the case of attendance above the central line or I want to see three out of four that are closer to a limit, the upper limit, than they are to that central line. And again, we've talked about this before, those patterns are so mathematically improbable that I can be pretty reasonably assured if you see them that an actual change has occurred in my data. And because I've drawn this dotted line, I can tie the time period of the change back within that dataset to determine if something positive happened after I tried that intervention.

0:21:56.7 AS: It's just, you just think about how many times, how many cycles of improvement and interventions that you can do in a system and how far you will be a year later.

0:22:12.3 JD: Yes, yeah. And "cycles" is exactly the right word because really what you're doing, I didn't mention it here, but really what you were doing at the point you draw that vertical line when you're going to run an intervention, you're going to do that through the PDSA cycle, the Plan-Do-Study-Act cycle. So that's your experiment where you're testing one thing to see what impact it has on the data. So if I was going to boil continual improvement per Dr. Deming down to two things is, put your data on a process behavior chart, combine it with a PDSA to see how to improve that data. And that's continual improvement in a nutshell, basically, those two tools.

0:22:51.7 AS: Gold, that's gold. All right. Number 10.

0:22:55.3 JD: Last one, lesson 10, "the purpose of data analysis is insight." So this comes from Dr. Donald Wheeler, but he basically just teaches us that the best analysis is the simplest analysis, which provides the needed insight. But what he would say is plot the dots first on a run chart. Once you have enough data, turn it into a process behavior chart. And that's the most straightforward method for understanding how our data is performing over time. And so this approach, I think it's much more intuitive than if we store the data in tables and then the patterns become much more apparent because we're using these time sequence charts. And again, I know I've said this before, but I keep repeating it because I think it's the essence of continual improvement to do those two things. Yeah.

0:23:47.1 AS: And what's the promise of this? If we can implement these 10 points that you've highlighted in relation to goal setting, what do you think is going to change for me? I mean, sometimes I look at what you've outlined and I feel a little bit overwhelmed, like, God, that's a lot of work. I mean, can I just set the freaking goal and people just do it?

0:24:13.2 JD: Yeah. Well, I think, this is, in essence, a better way. I mean, this is really the wrap up here is that, well, one, when you understand the variation in your chart, you actually understand the story, the true story that's being told by your data. And so many people don't understand the true story. They sort of make up, that's too strong, but they don't have the tools to see what's actually happening in their system. So if you really want to see what's happening in your system, this is the way to do it. That's one thing. I think it also... I tried many, many things before I discovered this approach, but I didn't have any way to determine if something I was trying was working or not.

0:25:07.1 JD: I didn't have any way to tie the intervention back to my data. So what most people then do is tell the story that this thing is working if you like it. And if you don't want to do it anymore, you tell the story that it's not working, but none of its actually tied to like scientific thinking where I tie the specific point I try something to my data. So that's another thing. I can actually tell if interventions are working or not or can have a... I always try to use, not use definitive language. Scientifically, I have a much better likelihood of knowing that an intervention is working or not.

0:25:47.7 JD: So I think especially the process behavior chart, I think, and the way of thinking that goes with the chart is probably the single most powerful tool that we can utilize to improve schools. And we can teach this to teachers. We can teach this to administrators. We can teach this to students, can learn how to do this.

0:26:07.1 AS: Yeah. And I think one of the things I was thinking about is start where you have data.

0:26:12.3 JD: Yeah. Start where you have data.

0:26:14.2 AS: Don't feel like you've got to go out there and go through a whole process of collecting all this data and all that. Start where you have data. And even if attendance is not your major issue, let's say, but you had good attendance data, it's a good way to start to learn. And I suspect that you're going to learn a lot as you start to dig deeper into that. And then that feeds into, I wonder if we could get data on this and that to understand better what's happening.

0:26:41.4 JD: There are so many applications, so many applications. I mean, even just today, we were talking about, we get a hundred percent of our students qualify for free and reduced lunch because we have a school-wide lunch or breakfast and lunch program. And so we get reimbursed for the number of meals that are distributed. And sometimes there's a mismatch between the number that are distributed and the number we order just because of attendance and transportation issues and things like that. But the federal government only reimburses us for the meals we actually distribute to kids. And so if we over order, we have to pay out of our general fund for those meals that we don't get reimbursed for. And so, I'm just bringing this up because we were looking at some of that data just today, that mismatch, and even an area as simple as that is ripe for an improvement project.

0:27:40.7 JD: Why is there a mismatch? What is happening? And prior, I would just say, prior to having this mindset, this philosophy, I would say, well, they just need to figure out how to get the numbers closer together. But you actually have to go there, watch what's happening, come up with a theory for why we're ordering more breakfasts and lunches than we're passing out. It could be super, super simple. No one ever told the person distributing the lunches that we get reimbursed this way. And so they didn't know it was a big deal. I don't know that that's the case or not right, that's purely speculation. Or it could be, oh, we want to make sure every kid eats so we significantly over order each day. Well, that's a good mindset, but maybe we could back that off to make sure we never... We're always going to have enough food for kids to eat, but we're also not going to spend lots of extra money paying for lunches that don't get eaten. So there's all different things, even something like that operationally is ripe for improvement project. And the great thing is, is if you can study that problem and figure out how to save that money, which could by the end of the year, you know, be thousands of dollars, you could reallocate that to field trips or class supplies or to books for the library or art supplies, whatever, you know? So that's why I think this methodology is so powerful.

0:29:02.1 AS: Fantastic. That's a great breakdown of these 10 points. So John, 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 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."

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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.

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Do you struggle to meet your goals or targets? Find out how you can change your thinking about goals and your process for setting them so you can keep moving forward. In this episode, John Dues and host Andrew Stotz discuss the first five of John's 10 Key Lessons for Data Analysis.

TRANSCRIPT

0:00:03.0 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 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 two of four in a mini-series on why goal setting is often an act of desperation. John, take it away.

0:00:32.3 John Dues: Hey, Andrew, it's good to be back. Yeah, in that last episode, that first episode in this mini-series, we talked about why goal setting is often an act of desperation and I basically proposed these four conditions that organizations should understand prior to setting a goal. So it's not the goals in and of themselves that are bad, but it's with this important understanding that's often lacking. So those four things that organizations should understand, one, what's the capability of a system under study? So that's the first thing, how capable is the system or the process? The second thing is what's the variation within that system or process under study? So that's the second thing we talked about last time. The third thing is understanding if that system or process is stable. And then the fourth thing was, if we know all of those things, by what method are we going to approach improvement after we set the goal, basically? So you gotta have those four things, understanding the capability of the system, the variation of the system, the stability of the system, and then by what method, prior to setting a goal. And so I think I've mentioned this before, but absent of an understanding of those conditions, what I see is goals that are, what I call it, arbitrary and capricious.

0:01:48.8 JD: That's a legal characterization. You look that up in the law dictionary. And it basically says that an "arbitrary and capricious law is willful and unreasonable action without consideration or in disregard of facts or law." So I'm just now taking that same characterization from a legal world and applying it to educational organizations and accountability systems, and I just switched it to "a willful and unreasonable goal without consideration or in disregard of system capability, variability, and/or stability." And we see these all over the place for education organizations, for schools, school districts, teachers, that type of thing.

0:02:31.6 JD: And so what I tried to do in the book and tried to do here in my work in Columbus is develop some sort of countermeasures to that type of goal setting and develop the 10 key lessons for data analysis. An antidote to the arbitrary and capricious goals seen throughout our sector. And this process behavior chart tool, looking at data in that format is central to these lessons. So what I thought we would do in this episode and the next is outline those 10 key lessons. So five today and then do another five in the next episode. And in the fourth episode of the series, what we would do is then apply those examples to a real life improvement project from one of our schools. It's helpful, I think too, to sort of, to understand the origin of the key lessons. So there's the lessons that I'll outline are really derived from three primary sources.

0:03:36.0 JD: So the first two come from Dr. Donald Wheeler, who I've mentioned on here before, a lot of Deming folks will, of course, have heard of Dr. Wheeler, who's a statistician in Tennessee, a colleague of Dr. Deming when Dr. Deming was alive and then has carried on that work to this day. The two books, two really great books that he wrote, one is called Understanding Variation, a thin little book, a good primer, a good place to start. And then he's got a thicker textbook called Making Sense of Data, where you get in really into the technical side of using process behavior charts. So I'd highly recommend those. And then the third resource is a book from a gentleman, an engineer named Mark Graban called Measures of Success. And I really like his book because he has applied it, the process behavior chart methodology, to his work and he's really done it in a very contemporary way. So he's got some really nice color-coded charts in the Measures of Success book and I think they're really easy to understand with modern examples, like traffic on my website, for example, in a process behavior chart, really easy to understand modern example. But all three of the books, all three of the resources are built on the foundation of Dr. Deming's work. They're, you know, Graban and Wheeler are fairly similar and I think Graban would say he's a student of Wheeler.

0:05:00.4 JD: He learned of this mindset, this approach to data analysis by finding a Donald Wheeler book on his own dad's bookshelf when he was in college and starting down that path as a young engineer to study this stuff. And basically what I've done is take the information from those three resources and make some modifications so they can be understood by educators, basically. I think it's also worth noting again that process behavior chart methodology is right in the center of this, really for three reasons. One, when you plot your data that way, you can start to understand messages in your data, I think that's really important. Second, you can then start to differentiate between special and common causes, special and common causes, translate that into regular language. I can translate between something that I should pay attention to and something that's not significant basically in my data. And then in so doing, I know the difference between when I'm reacting to noise versus when I'm reacting to signals in my data, so I think that's really important. So the process behavior chart is at the center of all this. So we'll go through five of these lessons, one by one, I'll outline the lesson and then give a little context for why I think that particular lesson is important.

0:06:25.4 AS: That sounds like a plan. So capability, variation, stability and method. You've talked about Donald Wheeler, excellent book on Understanding Variation, that's the one I've seen. And of course, Mark Graban's book, Measures of Success, very well rated on Amazon and a podcaster himself, too.

0:06:49.6 JD: Yeah. And if I was a person studying this and wanting to get into process behavior charts and really knowing how to look at data the right way, I would read Understanding Variation first because it's a good primer, but it's fairly easy to understand. And then I would read Measures of Success 'cause it's got those practical applications now that I have a little bit of a baseline, and then if I wanna go deep into the technical stuff, the Making Sense of Data, that's the textbook that drives everything home. Yeah. So we'll dive into the lesson then.

0:07:19.5 AS: Let's do it.

0:07:20.0 JD: Yeah. Okay. So the first lesson, and I've talked about this in various episodes before, but lesson one, the very first lesson is, "data have no meaning apart from their context." So this seems commonsensical, but I see this all the time where these things aren't taken care of. And what I'm talking about is answering some basic questions. So for anyone looking at my data, they should be able to answer some basic questions, very simply, anybody that looks at my data. First thing is who collected the data? That should be apparent. How were the data collected? When were the data collected? Where were the data collected? And then what do these values represent? So oftentimes I see data either in a chart or in some type of visualization and almost none of those things are known from looking at the data, all important questions.

0:08:18.6 JD: The second question would be, well, that first set goes together. The second question is what's the operational definition of the concept being measured? So we have to be on the same page about what it is exactly being measured in this data that I've collected. I also wanna know how were the values of any computed data derived from the raw inputs? That's important. And then the last thing is, have there been any changes made over time that impact the data set? For example, perhaps the operational definition has changed over time for some reason. Maybe there's been a change in formula being used to compute the data.

0:09:05.4 JD: So an example would be, from my world, high school graduation rates. You know, 20 years ago there was one definition of how you calculated a high school graduation rate, now there's a different definition. So when you compare those two sets of data, you've gotta be careful because you're actually, you're actually working from different definitions and I think that happens all the time. More recently here in Ohio, what it means to be proficient on a state test, that definition changed about 10 years ago. And so if you look at test results from 2024 and try to compare them to 2014, you're really comparing apples and oranges 'cause there's two different definitions of proficiency, but no one remembers those things a decade later. So you have...

0:09:52.3 AS: And then a chart will be presented where the different methodologies are shown as one line that says...

0:10:00.8 JD: Yes.

0:10:00.8 AS: That no one's differentiated the fact that at this point it changed.

0:10:04.6 JD: Yeah, at this point it changed. So first lesson, data have no meaning apart from their context. Second lesson is we don't manage or control the data, the data is the voice of the process. What we control is the system and the processes from which the data come. There's a difference there. Right? So I think this is one of the key conceptions of that system's view, that system's thinking in an organization. When we wanna make improvements in our schools, we need a few things in place. We need the people working in the system. So that would be the students for us, they're working in the system, people that have the authority to work on the system, so that'd be teachers if we're talking about an individual classroom, at the school building level, maybe we're talking about the principal. And those two things are, at least the teacher principal thing is usually in place, the students being a part of improvement projects, definitely less so, but maybe there are places where that's happening. But the third thing is someone with an understanding of the System of Profound Knowledge, I'd say that's almost always lacking in the education sector, at least. And I think the reason the System of Profound Knowledge becomes important, 'cause that's really the theoretical foundation for all the things that we're talking about when we're looking at data in this way.

0:11:38.8 JD: If you lack that conception, then it's hard to bring about any improvement, because you don't understand how to look at that data, how to interpret that data, you don't understand how to run a plan-do-study-act cycle. Because what you're gonna ultimately have to do is change some process in your system and there's some knowledge that you're gonna need to be able to do that, and that's, that third component of an improvement team has to be in place to do that. But I think the most important thing is that we're not in control of the data, we're in control of the processes that ultimately lead to the data. It's a distinction, maybe a fine distinction, but I think it's an important one.

0:12:17.5 AS: The idea of the System of Profound Knowledge and understanding what to do with the data and really understanding the whole thing, I was just thinking what would... An analogy I was thinking about is rain. Everybody understands rain as it comes out of the sky, but not everybody understands how to use that to make a pond, to make an aqueduct, to feed a farm, to, whatever that is. And so having that big picture is key, so, okay. So number...

0:12:57.8 JD: Yeah. Well, and a part of that is something really simple is constantly understanding data is the voice of the process. And so when you're looking at data, what often happens is I'm gonna walk into a meeting with my boss, and I'm looking for some data point, maybe we just got some type of performance data back or survey results or something. I'm gonna pick one of those items where the plot, where the dot from last time has improved when we look at it this time, and I take that and say, "Look how we've improved in this thing." And you need someone to say, "Well, wait a second, while there is a difference between those data points, if I look at the last 12, things are just moving up and down." And there's gotta be someone in the room that constantly points back to that, constantly. And that's where that person with the Profound Knowledge is helpful in improvement work.

0:13:54.5 AS: So the voice of the process is a great way of phrasing it that's been used for a while now and I think it's really good. I remember when I worked at Pepsi as a young supervisor, I saw some problem on the production line and I raised it to the maintenance guys. And they kept coming and fixing it and it would break and they'd fix it and it would break, and I basically got mad at him and I was like, "What the hell?" And he's like, "Bosses won't pay for the things that I need to fix this permanently, so get used to it constantly breaking down."

0:14:33.4 JD: And that's the best I can do.

0:14:34.0 AS: That's the voice of the system, here's what I can produce with what you've given me to produce.

0:14:40.8 JD: Yep. Yep. Yeah. Those guys had a very keen understanding of the system, no doubt in that example. Yeah. Yeah. And that kind of thing happens all the time, I think. That was lesson two. Lesson three is plot the dots for any data that incurs in time order. So a lot of people in this world know Dr. Donald Berwick, he started the Institute for Healthcare Improvement. He was a student of Dr. Deming's, he's done a lot of work in this area. He has a great quote where he says, "Plotting measurements over time turns out, in my view, to be one of the most powerful things we have for systemic learning." And that's what really plot the dots is all about, it's all about turning your data into a visualization that you can learn from. And the National Health Service in England has this #plotthedots. And I think the whole point is that plotting the dots, plotting the data over time helps us understand variation and it leads us to take more appropriate action when we do that. So whether it's a run chart or a process behavior chart, just connecting the consecutive data points with a line makes analysis far more intuitive than if we store that data in a table.

0:16:03.6 AS: Yeah. And I was thinking about if you're a runner and you wanna compete in a marathon, plotting the dots like that is so valuable because you can see when changes happen. For instance, let's just say one night you didn't eat and then you ran the next morning and then your performance was better. Was it just a noise variation or is there something that we can learn from that? And then just watching things over time just give you ideas about what... Of potential impacts of what something could do to change that.

0:16:42.0 JD: Yeah. And we can start with a simple run chart, it doesn't have the limits, it's just a line chart. And then once we have enough of the data collected, enough plotted dots, then we can turn it into the process behavior chart.

0:16:56.3 AS: Some people don't even want to see that, John, like when we looked at your weight chart, remember that?

0:17:03.0 JD: I do remember that. Yeah.

0:17:04.0 AS: So for the people out there that really wanna let's say, control your weight, put a dot plot chart on your wall and measure it each day and just the awareness of doing that is huge.

0:17:18.7 JD: Yep. It is huge. It really is huge. And that works for any data that occurs over time, so almost everything that we're interested in improving occurs in some type of time order, time sequence. So these charts are appropriate for a wide array of data. But the bottom line is that... Oh, yeah, sorry, go ahead.

0:17:33.5 AS: The bottom line?

0:17:35.0 JD: Well, I was just saying the bottom line, whether you're using a run chart or a process behavior chart, it's always gonna tell us more than a list or a table of numbers, basically.

0:17:44.5 AS: I was gonna explain this, a situation I had when I was head of research at a research firm, a broker here in Thailand. I, my goal was to get more output from the analysts, they needed to write more and we needed to get more out. So what I did and I had already learned so much about Deming and stuff at that time. So what I did is I just made a chart showing each person's, what each person wrote each week, and it was a run chart in that sense where people could see over time what they wrote and they could see what other people were writing. And I purposely made no comments on this chart and I'd never really discussed it, I just put it up and updated it every week. And one of the staff that worked for me, an analyst, a really smart Thai woman asked, she said, she went to... She said, "I wanna see you in your office." I was like, "Oh, shit, I'm in trouble." And so she came to my office and said, "You know I went to, so this was maybe six months after I had put that chart up, she said, "I went out to lunch with my counterpart, my competitor, and she's writing research just like me on the same sector, and she asked me how many research reports do you write in a week, and I told her my number, and she was like, "Oh my God, that's a huge number."

0:19:16.6 AS: And she said, "Oh, I didn't really even think about it. But okay." And then she says, "What is Andrew's goal or target for you?" And she had naturally had thought that I had set a target of that amount, that's where she said, "I think I really figured you out." And I was like, "Well, what do you mean?" She said, "You just put that chart up there and you didn't give us any goal, but you knew that we were looking at it, and then it would provide us information and incentive and excitement, and the fact that you said nothing about it, got us to probably a higher level of production than if you had said, "I want everybody to read my reports."

0:19:57.9 JD: Right. Yeah, that's great.

0:20:01.0 AS: The magic of data. What's number four?

0:20:02.4 JD: The magic of data. Number four, so two or three data points are not a trend. So the first thing is, as soon as you've decided to collect some set of data, plot the dots, that should start right away. And again, this really includes all data that we're interested in improving in schools. And I know before I understood this way of thinking, this way of data analysis, I often relied on just comparing two points, that's the most common form of data analysis. What did last month look like, what does month look like? What did last year look like, what does this year look like? What did last week look like, what does this week look like? So that limited comparison is the most typical form of data analysis, especially when you're talking about something like management reports or board reports, revenue over time, those types of things. What was revenue last January? That type of thing. But the problem with looking at just two or three data points is that it tells you nothing about trends, it also doesn't tell you anything about how the data varies naturally.

0:21:17.5 JD: I remember looking at attendance data at one of our schools, and they had up... Last month was 92%, and then had gone up to 94%, but then I just said, well, what did it look like... January is 92, February is 94 in this particular school year, and I just said, well, what did it look like before, and then when you plotted it, what saw very quickly is there was no improvement, the data was literally going like this, up, down, up, down, up, down, up down, right? But no one had that picture, because all you could see was, Here's January and here's February, just numbers written in percentage form, that's almost all the data that I see in schools is in a similar format.

0:22:02.7 AS: On this one, in the stock market, my area of expertise. People always see the up data, the people who have made a lot of money in the stock market, and they see that as evidence that they could make money in the stock market, or they attribute that to skill of that particular person as we want to, with Warren Buffett as an example. And I have, in fact in my class, I asked the students, "Do you think that Warren Buffet outperformed, underperformed, or performed in line with the market over the last 20 years?" And the answer to that is, he performed in line with the market, and I proved that by doing a demonstration through a website that I can do that with, but it was shocking because obviously he's gonna end up with the most amount of money because he let his money compound, and he made huge gains in the beginning years, which compounded over many years.

0:23:02.0 AS: And still he's doing very well, but the point is, is that... The reason why I say this, I also tell the story of, if you had 10,000 people in a stadium and you flipped coins, and asked them if they flipped heads consecutively or tails consecutively to remain standing, and you're gonna end up with 10 people at the end of 10 flips with 10,000, and if you've got a million, you can end up with 20 or 30 or 40 flips that could potentially be heads consecutively or tails consecutively. So my question is, given that long streaks can happen through just plain probability, what if two to three data points are not a trend, can we definitively say, what is a trend?

0:23:50.9 JD: Well, not with certainty, but what this type of data analysis does is it gives you some patterns in the data to look for that are so mathematically improbable that you can be reasonably assured that some changes happened.

0:24:09.4 AS: Right so this is enough of a trend that I'm gonna go with the assumption that there's something significant here.

0:24:21.9 JD: Yeah. I mean it's...well, think back to that attendance example that I just used, so if I went from... If I'm writing this up on, let's say a whiteboard that's in a teacher work room, it says, this month and next month, or last month and this month, and I write those attendance rates up and remember, it's a dry erase board, and I'm gonna erase the last month to put this month's up and so I'm not gonna be able to see that one anymore, I'll have two data points and I'll erase the old one, and so in that example, I used where they went from 92%. It was actually like 92.4% to 94.1%. So it wasn't even two full percentage points. And then you celebrate that as a win, as an improvement, but like I said, you didn't know what happened before, and then you didn't chart after, so you don't really know how things are just bouncing around naturally versus if you had it on a run chart and you did see, let's say, eight points in a row that are above the average attendance for that school, that's one of the patterns that suggest that something different has happened. So you just have increased mathematical probability that there has been meaningful improvement.

0:25:39.4 AS: So it sounds like what you mean in this number four is a little bit more on the end of, Hey, just a couple of data points doesn't have anything, you need to get more rather than somebody looking at a lot of data and trying to understand what is a trend or not?

0:25:56.9 JD: That's exactly right. That's exactly right. And that actually is a segue to Lesson 5, which is "show enough data in your baseline to illustrate the previous level of variation," basically. So this is gonna get a little technical for a second, but the non-technical thing is, we talked about when you have a run chart when you're starting and you have, let's say, three or four or five, six data points at a certain point, you can now have a process behavior chart, which is the addition of that upper and lower natural process limit that defines the bounds of the system, so the limits are not a part of the run chart.

0:26:34.9 JD: In making sense of data what Donald Wheeler basically says is that if you're using an average line, the mean for your central line, then those limits, you begin to have limits that solidify when you have 17 or more values, and then if you're using a median for that central line, that solidification starts to happen when you have 23 or more values. So there's a mathematical theory behind that. But the point is, at a certain point, you start to get enough data to be able to add the limits and feel confident that those limits actually represent the bounds of your current system. But that's getting fairly technical and what Wheeler does go on to say is that, in real life we often have fewer data points to work with.

0:27:31.4 JD: So you can actually compute limits with as few as five or six values, and they can still be meaningful, now they're gonna be not a solid, meaning that each individual data point for a while that you add could potentially shift those limits more than you'd like, because there are a few data points that the limits are based on. But once you get to 17, 18, 19, 20 points, they start to solidify pretty good unless there's some significant change, like one of those patterns I talked about in your data. But an important thing to keep in mind is, is we're using a process behavior chart for continual improvement, so we're taking improvement measurements, not accountability measurements. I'm not trying to paint a certain picture of what my system looks like, I'm not trying to write a fiction about what's happening in my system, I'm actually trying to improve, so I don't really care what the data looks like. I'm not worried about being judged or rated or ranked, it's not an accountability thing, it's an improvement thing. And so I'm just trying to represent the system accurately so that I actually know that what I'm trying is working or not working. It's a completely different mindset. That whole sort of like trying to look better is completely removed from the picture through this type of mindset.

0:28:55.7 AS: I'm just picturing some sort of process where there's a measurement of temperature and the temperature keeps rising, but the worker says, "Boss there's a fire." And the boss said, "There's not enough data yet to confirm that." It only seems like a small fire right now, so I need more data points. Well, sometimes you have to act without thinking about the data and make an assumption that you may be wrong. You turn on the fire sprinklers, boom, and it wasn't a fire, but the damage of letting that go for long and saying I need more data doesn't make sense.

0:29:34.1 JD: Yeah, yeah, that doesn't really work. But the idea with the baseline is, basically, if you wanna improve something, the first thing you do is before you try anything, just gather some baseline data first so you can understand the current conditions. And in that attendance as an example, maybe you don't wanna wait for monthly attendance data, maybe wanna look at daily attendance day, what you have in a school, and just plot that over 12 days, 15 days, two or three weeks, and you can start to get a sense for what this looks like on a daily basis, and then you could try to improve it and see if that improvement has an impact on the data over time.

0:30:15.6 AS: Good, well, let me summarize this, but I have to start off with... My grammar is not particularly great, and since you're more of a school teacher than I am, I may need help with what you said. I think what I got correctly was data have no meaning apart from their context.

0:30:33.6 JD: Yeah, what did I say? Let me see.

0:30:38.5 AS: I always get confused if data is plural or singular.

0:30:41.8 JD: Yeah. Well, it can be either. So in this case, I was using data as a plural, so that's my point. I think technically the singular of data is actually datum. Obviously, nobody uses that 'cause it sounds really weird, but data can be plural, I think so.

0:30:57.4 AS: That sounds awfully Latin of you, alright. Number two, the data is the voice of the process, and that we control the process, not the data, and number 3 we plot the data in time order. Number four, two or three data points are not a trend. And number five is show enough data to illustrate the baseline. Anything you need to say to wrap all this up.

0:31:20.4 JD: Yeah, I just think that... I've mentioned this multiple times. I think when you're talking about continual improvement, primary tool is that process behavior chart, it allows you to visualize your data in a way that makes sense, and then the skill set that you have to learn is how to interpret the process behavior chart. How to use them effectively, how to create useful charts and then underlying... Understanding that underlying logic of process behavior charts. There's other tools, obviously in the improvement tool kit, but I actually think that that particular chart is the most important in my view. And I think with those charts, that tool in hand, we can avoid then those arbitrary and capricious goals that are so pervasive in our sector, basically.

0:32:10.6 AS: Well, that's exciting, and I'm excited for our next session when we talk about the final five. So John, 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 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."

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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.”

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Did Dr. Deming forbid setting goals? Dive into this discussion about healthy goal setting, learn why your process matters, and the four things you need to understand before you start on goals. This episode is the first in a 4-part series about goal setting.

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 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 21 and we're talking about goal setting through a Deming lens. John, take it away.

0:00:26.9 John Dues: Yeah, it's good to be back, Andrew. Yeah, 'tis the season for resolutions, I suppose, so I thought we could talk about organizational goal setting and sort of doing that through a Deming lens. And I was thinking about, at a recent district leadership team meeting, I put the following quote up on a slide. I said, "Goal setting is often an act of desperation." You got to watch people's faces when they see that. And to give some context, we're sort of updating our strategic plan at United Schools Network and my point in putting that on the slide as a part of strategic planning was to start a discussion on sort of what I think is healthy goal setting and how that's not typical to what I've seen across my career in schools, education organizations.

0:01:22.4 JD: And I wanted to provide a framework for the team so that anyone that's setting a goal as a part of the strategic planning process sort of had this sort of mindset as we're going through the goal setting process. I think that the typical reaction to that quote, at least in my experience, has been something like, "But I thought that goal setting was something that highly effective people or highly effective organizations do." And my basic argument is that I think that that's the intention, but it's rarely the case, whether that's individuals or organizations. And there's these, what I've come to sort of frame as four conditions that have to be met during the goal setting process. And without those, you kind of get fluff for a goal setting, probably more likely just completely disconnected from reality. I think... Yeah, go ahead.

0:02:22.5 AS: I just wanted to talk to everybody out there that's listening and viewing. I mean, I'm sure you're going through goal setting all the time and as we talk about, it's the beginning of the year right now, this is actually, we're recording this in mid-January of 2024. So it's like I've been working on what's our vision? What's our mission? What's our values? Where are we going? What is our goal? What is our long term goal? What is our short term goal? And I don't know about you guys, but for me, it gets a little confusing and round in circles sometimes and overwhelming, and then this whole idea about, that goal setting is often an act of desperation. It's like I've been working on this stuff for recently over the last week or so and then I just heard you say that and I was like, "Oh, I'm really interested to learn more." So let's go through those four conditions.

0:03:18.5 JD: Yeah, I'll get to those in a second. But I... So I'm not saying don't set goals necessarily. And people have that same reaction typically to that statement, but it's goal setting is often an act of desperation. So it's not the goal in and of themselves, but generally it's the process that you go about and the lack of sort of logic behind the goals that I'm talking about. And I know on these podcasts, many of my examples have sort of I've been banging on like State Department accountability systems and stuff like that. I'm going to continue to do that today but I think the same sort of errors happen at the school system level, at the individual school building level, at the individual teacher or principal level, it's just the stakes are higher when you're talking about states and countries, systems of education.

0:04:11.8 JD: But what I've seen is over the last two decades, certainly post-No Child Left Behind, what it seems like is that there's often these goals set and they're sort of, the targets are sort of chosen out of thin air. And then there's this whole accountability system built around those goals and then in the case of states, we then rate and rank school systems or schools based on how they perform in relation to those goals. And again, the same type of thing is happening at the school system level, at the school level but probably the state accountability systems is what most educators are familiar with when I'm talking about goals. And in Ohio, like a lot of states, we give state tests, we give them third through eighth grade.

0:04:58.5 JD: They take reading and math every year, third through eighth grade in Ohio and you have to hit this 80% benchmark in terms of the percent of kids that are proficient in your school to meet the state standard. So the first question is, why not 60%? Why not 95%? Why not 85%? Why not 82.5%? Just random, you know? And my hunch is, the first problem is that that benchmark for passage rates, if you asked 100 people at the State Department or 100 people working in public school systems in Ohio, I'm not sure if anybody could give you that answer, why 80%? So the first problem is that that target itself is chosen arbitrarily and without sort of a deep consideration. And so that's sort of where the fork initially comes...

0:05:58.3 AS: And I would say that if I look at that 80%, it's like below that and you would seem like you're really underachieving, and above that, it's like, let's be realistic here of what the system can produce.

0:06:11.6 JD: Well, it's a B, it's a B minus. You know, that's familiar, a C, you're not allowed to bring home a C, but a B is okay. So, I mean, my guess is, I don't know where that particular target came from, but my guess is it's something maybe not too far off from, "well, it's sort of a B minus" in the typical grading scale in the United States.

0:06:32.4 AS: Probably came just the way we just discussed it.

0:06:35.1 JD: I would not be entirely surprised. So a lot of the problem with goal setting and when I'm saying act of desperation, it has to do with that arbitrary nature of the goal in and of itself. And so what I've sort of told the team here is that let's put forth some conditions that came up, I mentioned four, that we should understand prior to ever setting a goal. So the first thing we want to understand is what I call the "capability of the system" under study. So in this case, we've talked about third grade reading because that's such an important time period in a student's life.

0:07:13.4 JD: The states, lots of states put a lot of emphasis on it. In Ohio, there's a third grade reading guarantee that exists in other states as well. So we'll kind of look at data in that realm. So the first one, what's the capability of that third grade reading system? The second condition is we have to understand the variation that that system produces. So what are the ups and downs in the data? What are the patterns in the data? So capability, variation is the second condition. The third condition is, is the system that we're studying, is the data stable? When we look at the patterns of the data over time, is there predictability to it?

0:08:01.8 JD: Is there stability to that data or is it all over the place? And then the third thing or sorry, the fourth thing we want is a logical answer to the question, "by what method?" So let's take sort of a deeper look at each of those four conditions, kind of unpack those a little bit. We'll use third grade reading state testing data. I have some data on a chart, but I'll share my screen in a second for those that are viewing the data. And then for those that are only listening, I'll sort of narrate what we're looking at so you'll still get some value out of the description. So you see my screen now?

0:08:42.5 AS: Yep.

0:08:43.3 JD: Okay, cool. So we've looked at these charts before in previous episodes. It's been a while. So this is what some people call a control chart. I call it a process behavior chart because it's literally a description, a visual description of a process unfolding over time.

0:09:01.7 AS: And maybe I'll just describe it. At the title it says, Ohio Third Grade Reading State Testing Proficiency Levels. On the y-axis is the percent proficiency ranging from, of course, zero to 100. And on the x-axis, we have seven school years going from the 2015 to 2016 school year all the way to 2022 to 2023 school year. And then most importantly, we have points, that's a blue line here, but the points that are showing the movement of third grade reading state proficiency levels year by year or school year by school year. Continue.

0:09:51.1 JD: Yep, that's right. That's a good description. So those blue dots are the percent of third graders that are proficient each testing year. And to give you some context, in Ohio about 125,000 third graders take that state reading test each year. One thing you'll notice is that there is no data for 2019-'20. That's because we give the test in the spring of a school year. So in the spring of 2020, schools were shut down due to the pandemic so there was no state test. So we missed one year of testing, but that's really not, that's not really pertinent to this discussion. So the other thing you'll see on here is the green line is the average of the data running through there.

0:10:38.4 JD: And those red lines that are on either side of the data are, some people call them control limits, I call them the lower and upper natural process limit. And they're based on a statistical calculation. They're not where I want the lines to be, they're where they are based on the data. And for those watching, the data points are 54.9% proficient in '15 -'16. The next year in '16 -'17, 63.8% of the third graders were proficient. In '17 -'18, 61.2% were proficient. In '18 -'19, 66.7% were proficient. In 2021, er, 2020 -'21, kind of dipped down to 51.9%. Then in '21 -'22, 59.8% of the third graders were proficient. And then in our most recent year, 62.3% of kids were proficient.

0:11:35.3 AS: So out of all those points, let's just say a high of about roughly 70% and a low of a little bit higher than 50%.

0:11:45.5 JD: Yeah. Yep. Yep. So the low was like, I think 59%. I can look back. Low was 54.9%, the high was 66.7%.

0:11:57.5 AS: Okay.

0:12:00.3 JD: And that works out to about an average of 60% across that seven-year time period.

0:12:08.3 AS: And when we talked about the 80%, is that 80% related to these test results?

0:12:13.7 JD: Sure. Yep.

0:12:13.8 AS: This is what the state is saying it should be?

0:12:18.1 JD: So the state says that in any individual school building, in any individual school system, and so as a result, in the state as a whole, 80% of third graders should meet the proficiency benchmark, basically. So in the state, on average, across the state, when you look at all the third graders, 80% of the kids are not at proficiency. It's lower than that year in and year out across the last seven years. And I should say I picked the starting point as 2015-'16, that was the first year of a brand new test. So it's really a new testing system as of that year. And then it stayed pretty consistent in terms of what the kids are being asked to do. Prior to that, the test was a different format. So it was sort of like a different system.

0:13:04.6 AS: And this is from all schools, so it's Ohio, it's not your school?

0:13:09.6 JD: Right. So this is all Ohio public schools.

0:13:12.9 AS: Okay.

0:13:13.9 JD: Yep. Which are required to give the state test once a year. So, like I said, beginning with this spring 2016 testing season, Ohio began administering this new state test, which is why I started with 2015- '16. And that's where the data starts. So again, schools need to have at least 80% of their students score proficient or higher in each tested area, including reading. So what we're doing here is sort of looking at that first condition. We're trying to figure out what's the capability of this third grade reading testing system. And when I say system, I'm literally talking about everything that could impact third grade reading test scores.

0:14:00.4 JD: Now, I mean, you could almost make an infinite list, but I'm talking about the actual students in Ohio public schools, the third graders themselves, their teachers, the various reading curricula that's being used in schools, technology related to reading programming, supplemental materials, the schools themselves, how the schools themselves are organized. And you can go on and on about any number of in-school and out-of-school variables that might impact a third graders performance on a state test.

0:14:37.2 AS: And I think about resources like between schools and parents and teachers and administrators, everybody's putting forward... Putting forth resources to try to get to this.

0:14:46.9 JD: Yep. The reading standards themselves, the reading test, that's all a part of the third grade reading system. And basically, for those that are viewing the video or heard the description, the capability is outlined in the process behavior chart. I mean, that's literally what the process behavior chart doing. It's, it's, it's visualizing the capability of that third grade reading system. So one thing that's pretty clear when you look at this seven years worth of data is that it's very unlikely that the state of Ohio is incapable of hitting that 80% mark. Now, seven years of data is not 20 years of data, but we, in none of the seven years that have occurred have we gotten anywhere close to that 80% mark. So that's one thing we can see.

0:15:39.9 AS: Sorry, what was the conclusion that you just said?

0:15:42.8 JD: Well, we're, we can see from the data here, even though it's only seven data points, which is something to work with, but it's not 20 data points, it's not 25 data points but it's pretty likely that the third grade reading system, that we're incapable as a state of hitting 80%...

0:16:00.9 AS: Okay, so the capability of the system, the goal of the, of the state representatives that set the 80% seems to be slightly outside of the capability of the system.

0:16:14.4 JD: I'd say more than slightly.

0:16:15.8 AS: More than slightly. 0kay.

0:16:16.9 JD: Yeah, I'd say it likely... I would go as far to say, I try to talk scientifically so it's, we are likely incapable of hitting that 80% mark as a state.

0:16:26.5 AS: Okay. Got it.

0:16:27.7 JD: Not impossible.

0:16:29.0 AS: That's point number one.

0:16:30.5 JD: Yeah, well, and these red natural process limits actually tell us what we could expect from this particular system based on what we've seen so far. So those process limits, kind of way to think about them is as you get more data points, especially as you get 20, 24 data points, they sort of start to solidify. So an individual data point has less of an impact on the limits. So I would call them a little bit soft right now, an individual data point kind of could have an outsized impact because we don't have tons of data but what these red lines are telling us is that our reading system, this third grade reading system is capable of hitting rates somewhere between 41%, where that lower line is, and 79%, where that upper line is.

0:17:19.8 JD: That's why I say that the 80% is unlikely, rather than impossible. It's technically within the capabilities of this system as illustrated by this process behavior chart. But based on the way the limits are constructed, the limits come from the data itself, how the data, not only the magnitude of the individual data points, but it's also taking into account the point to point variation. So time is an important factor in that formula that's used to calculate the limits. And so based on how the limit is constructed, there's about a 3 in 1000 chance that we would hit that 80% mark. So that's why I say...

0:18:03.4 AS: So you're saying there's a chance?

[laughter]

0:18:06.5 JD: Very unlikely, very unlikely, right? So that's capability, that, this, that's sort of looking at the chart and talking about how capable is our system. The next thing we want to look at... Well, the last thing you could say is that that 60% average across those seven years is a pretty good descriptor, especially as you look at where the dots fall, some above, some below, that's a pretty good descriptor of the overall capability of the system, that's 60% proficiency.

0:18:37.6 AS: Right.

0:18:39.3 JD: So the second thing we'll take a look at is using the chart to understand the variation in our system. So again, we have seven data points. We just mentioned that they're bouncing around this average of 60%. And actually with seven data points, you have three that are below the line and four that are above. So about as even as you could be between how many points are below the line, how many points are above the line. So if you describe the year to year test results starting back in '15-'16, they increase and then decrease and then increase and then decrease and then increase and then increase again, a little bit in that last of the seven years.

0:19:27.8 JD: So when you look at the data, there's no sort of signals in those patterns that indicate that the increases or decreases are of significance. So in the Deming language, probably most people aren't familiar with the "common cause" language, but basically it's just saying that the thousands of variables that impact these test results are part of a common cause system. Just like, they're bouncing around, but the bouncing around is not meaningful. But what actually happens is, you know, inevitably when people describe these results, they'll pick two years. Let's say they look at, well, let's even say they look at the last three years and people will say, "Oh, we've increased the third grade reading test scores 'cause they went up a little bit from 2021 to 2022 to 2023."

0:20:19.5 JD: But again, the increases are meaningless when you're viewing this through the sort of understanding variation, knowledge about variation Deming lens. So, but again, even though seven data points isn't a lot of data, it's pretty clear from what we see so far that that, setting that 80% goal, holding schools and school systems accountable from a state perspective, it's not having any impact on the outcome of this third grade reading system. So that's what I mean to connect back to this goal setting is often an act of desperation. It's a hope and a dream that 80% of kids in this system are gonna meet this proficiency standard. It's just not happening by setting a goal.

0:21:10.2 AS: Right.

0:21:15.4 JD: The third thing is looking at stability. So we want to know if the results are predictable in this particular system. So the thing to think about here is if the system is in fact predictable, it means that the results are sort of performing as consistently as the system is capable of making it. And this Ohio third grade reading system is in fact a stable system. So based on these results so far, we can reasonably expect that future results will continue to bounce around this current average. That's just what's gonna happen. So the results might be a little bit below the average, maybe they'll remain a little bit above the average, but in all likelihood, unless something else of significance changes, this is what we can expect from this system. Now...

0:22:13.1 AS: And for some people that may not totally understand the Deming lens, point number two and point number three may be a bit confusing because you're thinking, what's the variation of the system? Well, doesn't the variation of the system also tell you if the data is stable? How would you describe the difference in those two points?

0:22:39.9 JD: Well, it's stable because there's no patterns in the data that signify instability. So there are different sets of patterns that different organizations like Western Electric had a set of patterns that they sort of established because that's sort of where these charts were invented. The Institute for Healthcare Improvement has a set of rules that they use. They are big in training and using control charts. I sort of, my basic approach is to try to keep things as simple as possible. So I default to Donald Wheeler who wrote a book literally called Understanding Variation among many others on using these charts and interpreting these charts. But he basically says, and I sort of have adopted this idea of just three simple rules that I look for.

0:23:29.0 JD: So I look for a single point outside of the red lines, either above or below that's so unexpected, that's a significant pattern, just one data point. I'll also look for three out of four that are closer to one of the red lines than they are to that average green line. And the other big thing I look for is eight successive data points that are on either side of that average line. So if a single point is outside either the upper or the lower limit, that's a pretty high magnitude chance that there is something very different going on now in your system. The eight points in a row is sort of like a moderate but sustained indication that something has changed in either direction. But in this case, we have a stable system. There's no patterns in the data that suggest instability.

0:24:33.0 JD: So it's good in the sense that the system is predictable. And so, let's say I sort of would then try something new, an intervention of some kind, and then look to see what happens. I know at the outset of the experiment that it was a stable system and I can be relatively assured that it's the thing that I introduced that brought about the change. But stability should not be an indication of good, necessarily. You can have a stable but unsatisfactory system, which is how I would describe this particular system. It's stable, meaning it's predictable based on what we see so far, but it's also unacceptable that 40%, two out of five kids are not proficient on the third grade reading test.

0:25:30.1 AS: The good news is your cancer is stable, the bad news is you have cancer.

0:25:33.4 JD: Your cancer is stable, right. It's the cancer is stable, but maybe not growing. How about that analogy?

0:25:39.5 AS: Yeah.

0:25:41.2 JD: Yeah. So we have a stable system but producing less than desirable outcomes. So at that point, the only thing that I can do is work on the design of the system itself. Something about the inputs, something about the throughputs. Maybe I... One big push here in Ohio is to sort of adopt the principles called the science of reading. So teaching reading in a scientific way, like a research-backed way. And so perhaps that's an intervention that could be attempted and Ohio's sort of attempting it. But that sort of everybody getting behind an approach that's been shown to work, that's very different than just setting a goal and then holding educators accountable to the goal.

0:26:26.3 JD: And that's typically what's happening. And when you do that, then you cause frustration. Because if people knew what to do to make things better, then they'd probably do it. So they're being held accountable for something that they maybe don't know how to improve, or maybe they don't have the resources to improve. And so that's why Deming would say "substitute leadership." And that's what he was talking about, leadership towards improvement. And that's a good segue to the last condition, we've mentioned this idea that the 80% goal is beyond the capability of system, so we have to think about methods. By what method then can we improve because this setting a target isn't gonna work. Nothing's changing just because we have this target.

0:27:21.3 JD: And so instead, what happens, and I've seen this my entire career, is that some schools in Ohio regularly surpass this benchmark. Many other schools are nowhere near it. But my sort of a priori hunch, so my pre-testing hunch would be sort of like the overall system, the individual school's third grade reading test results are fairly stable. So what I mean is that low scoring schools stay low scoring, and the high scoring schools stay high scoring. And we sort of admonish the low scoring ones and celebrate the high scoring ones but there are people doing great things in all of those different types of schools.

0:28:14.3 JD: But the fact is, if you took the staff at one high scoring school and put them into a low scoring school, I think you'd be hard pressed to get the same results because so many of the other things that are in place at that high scoring school would not travel just because the staff travels. You know? And so that's, again, where frustration comes in. Then this 80% target really just becomes this sorting mechanism. It's not a roadmap towards improvement and it's literally sorting the schools, the ones that don't hit this benchmark and the ones that do but then you have these other things that happen. What teacher wants to consistently work at a low scoring school when they don't feel like they can do anything else? They can't affect change, what do they...

[chuckle]

0:29:05.3 AS: Have you seen the chart of that school?

0:29:08.4 JD: What did you say?

0:29:09.4 AS: Have you seen the chart of that school you're gonna go work at?

0:29:11.5 JD: Have you seen the chart, and so I'm gonna go work somewhere else that gets all the awards. And so you have this, if anybody studies systems, you have this sort of self-fulfilling thing that the rich get richer, sort of, right? The resources tend to pile up. And so instead what we need to do is think about this last sort of condition, by what method, by what method. Okay, if you're gonna say we're gonna set this 80% goal, by what method can we work together and achieve that? So I brought up one possibility is to sort of implement the science of reading. Now, doing anything as an initiative statewide is very challenging for any number of reasons because the obstacles are gonna be different in different locations that are low scoring.

0:30:02.1 JD: So I don't want to paint the picture that you can just sort of, when people say use evidence-based stuff, well, the evidence-based stuff often doesn't take into account many, many different contextual factors that are important. So I don't want to say there's some silver bullet because there's not. But what I do know is that I think you could argue that having these targets set like this that just sort are not good for anybody. And so maybe they're doing more harm than they are good. And I just want to at least take that into account, because this could work, not only for people working in schools, but also policymakers to think about these things, to at least understand. So if you told me, I've looked at the data for 15 years, I understand the capability of whatever system that is being studied.

0:31:05.8 JD: I understand how the results have shifted up and down over those 15 years, I understand the stability level of those results and I'm still moving forward with the target, I mean, I could accept that a little bit more than just completely arbitrary, but it still sort of begs the question, by what method? Who can do this? So I just think that's... That's really what I'm talking about when I'm saying goal setting is often an act of desperation, that the targets are arbitrary and that this thinking that should underlie this substitution of leadership for just picking targets is really the sort of the approach that we should be looking as, especially systems leaders, school systems or state education system leaders, that type of thing.

0:31:56.4 AS: And for the technical listeners or viewers who want to understand how you calculated the upper and lower natural process limits, maybe you can describe using standard deviation or tell us how you're doing that.

0:32:12.0 JD: Yeah, well, so it's, in this particular type of chart, you can see up here it says X chart, which there's, typically with an X chart, there's another chart below that charts the moving ranges between each successive point. So usually it's two charts together and it's called an XMR chart. Just to simplify things, I just included the X chart, but the XMR chart is sort of like the Swiss army knife of charts, meaning that it basically works with any type of data. It doesn't need to be normalized, as long as it's data that occurs over time. Now, people have strong opinions that that's not the case, but again, I sort of follow the teachings of Donald Wheeler and that's sort of his take on things and I you know, I've subscribed to that.

0:33:00.2 JD: But basically what the chart is doing is it's looking at each data point and it's using the moving range along with some scaling factors that were sort of invented by Walter Shewhart 100 years ago and then refined over time by statisticians like Deming to develop the formula. So it's not standard deviation. Your standard deviation doesn't take into account time. Standard deviation is the distance from the mean, but it's a sort of a static measurement. Whereas this is taking into account not only the variability, but also the time that variability occurred. So that's the key...

0:33:46.6 AS: In other words, if you had a process where you had 20 years and you've made a significant shift in the way you're doing things, if you were calculating a standard deviation based upon the whole data set, you would be using a data set that's really not reflecting the behavior of the system now...

0:34:08.5 JD: That's right.

0:34:10.5 AS: As opposed to sort of a rolling style or using the most recent periods as what you should be using to set the control limits.

0:34:20.1 JD: Yeah, that's right. So I think, yeah, so the big factor is the process behavior chart, the XMR chart, takes into account the point-to-point differences and standard deviation doesn't take time and how the changes occurred over time into account in terms of that calculation.

0:34:40.3 AS: Okay, so let's just wrap up.

0:34:41.4 JD: And I should say someone smarter than me on these should definitely fact check me on that, but I think I have the basics right.

0:34:49.5 AS: I have to admit that you got me thinking about one of the goals I've been setting for admissions into my Valuation Masterclass bootcamp and is what I'm pushing for something beyond what the system's capable of? And so while you were speaking, I was gathering my data and playing around and thinking about it in relation to what you're thinking because I definitely understand point number four, by what method, that we have to think about new methods or else we're gonna get the same result. But I also can say that I didn't understand the number one capability of the system 'cause I didn't have a control chart on it. Now I do as a result of this conversation. And so I challenge anybody out there that's listening or viewing, it's time to make your control chart.

0:35:38.6 AS: The second thing is I had an intuitive feel for what was the variation of the system but when I look at the chart now, it's much bigger than what I had thought. So I can see, in fact, yeah. And then number three is, is the data stable? And I just kept it simple, for my data points I just used standard deviation. And what I found from my upper and lower control limits is that I have one data point that broke through the upper 1 standard deviation line and also the upper 2 standard deviation line. And there was something very unique that I did at that time that we stopped doing for good or bad, but at least I can attribute that to a specific action.

0:36:31.5 AS: And then the fourth point that you've made, so capability of system number one, number two, what is the variation of the system? Number three, is the data stable? And number four, by what method? Of course, that to me is the whole key, once we've got, I think most people don't understand points one, two, and three about their system that they're trying to get a goal out of. But then by what method is really hard. I mean, we've been doing it this way, now... And it's not producing the result that we want, so what's the method to get us to the goal that we want? And I think to me, that's a huge challenge.

0:37:08.5 JD: Yeah. And a key to that last point, and maybe a good point to wrap up on, from a Deming lens and thinking about the system of profound knowledge and let's say the understanding of psychology is that in the state accountability system, the by what method goes like this, "By what method are you going to improve?" Right? But in the Deming methodology, it's, "All right guys, by what method are we going to improve these third grade state reading results?" Right?

0:37:37.5 JD: And in that first case, the finger wagging, what do people do? They try to protect their corner. "No, it's not that bad. We improved a little bit." "No, no, no, it's not us, it's them." So all the energy gets put towards trying to sort of write fiction about our results, which we talked about before, versus actually trying to improve things. And that's part of that, why you need all parts of the System of Profound Knowledge, including psychology, to actually bring about improvement with a group of people.

0:38:10.4 AS: So a great place to wrap up, as you're thinking about improving things, instead of saying "by what method" as a command, why not say "by what method" as a question? John, 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 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.

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"The Cloud" is a metaphor for the top level of corporate authority - the CEO, CFO, CTO and maybe some Vice President positions. And if you're trying to transform an organization, your ideas need to penetrate the Cloud - but how? In this episode, Bill Bellows and host Andrew Stotz talk about influencing others with the aim of transformation.

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. Today is episode 16, and the title is, Get Off of My Cloud. Bill, take it away.

0:00:29.5 Bill Bellows: Hey. Hey, hey. [laughter] Mick Jagger, Keith Richards, get Off of My Cloud. Yeah. Alright, so here we are, 2024. So before we get to the Cloud, some opening remarks. And in particular looking at session 15, which is soon to be released. And one thing I... What I tell people is, what's exciting about understanding Deming's work is how revealing, how you see the world differently, and Dr. Deming used the metaphor of a lens. But it's not only what you see, but what you hear.

0:01:19.5 AS: Right.

0:01:22.3 BB: And, and I tell people I can go into an organization and within a few minutes between what I see and what I hear, I can get a pretty good sense, is it a ME or WE organization. And we think back to the comment I shared in episode 15 where the Boeing executive said, "Let's be honest," to the room full of 300 plus internal audit people who just do great, great work.

0:01:54.4 BB: I mean, if they didn't do great work, why would they be there? Everyone in our organization does great work, otherwise, why would they be around? But when they said to them, "Let's be honest, we don't make the airplanes." And I thought, that's right up there with my wife saying to me, "Look at what your son did."

0:02:22.4 BB: My son? Or is it, look at what our son did. Another giveaway expression is, we're gonna do a root cause analysis or RRCA, which is Relentless Root Cause Analysis. Well, every, and from a Deming perspective, instead of talking about a root cause, we can say there's root causes, and there's... They're dozens, hundreds of root causes, or sorry, common causes, common causes. And then every now and then there's a special cause.

0:03:01.0 BB: But even when a special cause appears so does a bunch of common causes. So from a Deming perspective there's never a root cause. So I... One poke I have for people that like to think in terms of root cause, 'cause they have this sense of, you can explain everything by a series of connected root causes. This cause leads... It's like the five whys. That this leads to this leads to this. But it's always, this leads to that, this leads to, and it's singular strands. And I think of it like a strand of spaghetti and everything is along some pathway. And I thought, no, that's not the model Deming had in mind. Deming had in mind a multitude of strands that are all woven together that you can't... What comes out is a bunch of contributions, not just one thing. So my poke at people like to believe in root cause phenomenon is, "If life can be explained by a series of root causes, then why do you need two parents? Why isn't it a single parent?" Sorry.

0:04:18.9 BB: I just finished the fifth cohort at Cal State Northridge in a eight-week class as part of an 18-month program where the students, we start with about 30, by the time it gets to me there may be 24 or so. And one course after another, after another, it's a very rigorous program. And I do a class called Seminar in Quality Management. And I love at the beginning of the course when I ask them about, if all the beads are red, if all the red beads are eliminated, can improvement, can still go on to, all those things we've talked about in this program. And I have them write essays on it, and it's so neat to see where they are in the beginning and where they are at the end.

0:05:07.1 BB: And in the beginning they'll be talking about human error. And so every time I see human error, I just write back, is it human error or is it system error? And one student in the class commented at the end of the course of what she learned, she said, No one had ever pointed that out to her. And she distinctly remembers the very first time I said that it was like, but wait a minute. And then it made more and more sense and I thought, yeah, I mean not... Is there such a thing as a human error? Well, Deming would say that 94 plus percent comes from the system. Another cute story, I used to host a monthly conference call for 17 years, every month for 17 years.

0:06:02.0 AS: Wow.

0:06:02.8 BB: And featured on the call was a thought leader, Russ Ackoff did it four years in a row. He became the January thought leader. And generally it was random, different people. But then when it got to Russ, it was every January Russ did it. And I would go out and stay with him and be in the room with him and the distribution list was at one point in time, 5000 people around the world, that I had somehow interacted with. And the announcement would go off out every month, and it would say, this month's ongoing discussion with thought leaders, is Andrew Stotz, Andrew's gonna talk on this topic. Please find attached his thought piece. You can join us. And there were four opportunities to call in on 12 to one and one to two on the last Thursday and Friday of the month. And there was four different opportunities for the audience to engage with Andrew, and it wasn't a presentation by you. The protocol was they would read the article, then they would say to you, Andrew, on page five, you said this can you clarify? So I said to them, it's not a presentation, it's a conversation.

0:07:08.9 BB: So a friend had in mind, somebody that he worked with as a thought leader. I said, okay, let me, She'd just written a book. And the book title was along the lines of Think Like a Champion, so I read the book and it's sports stories, all these sports stories. Turns out she has an advanced degree in sports psychology and she was hired by his company as a coach. And throughout the book, her story is about people contacting her, I need help with this. I need help with this. I need help with this. A lot of these people are in sales, I need help, I need help with this. So I read the book cover to cover, and I started to notice a pattern. It was all individuals. I need help, I need help. And so when I got on the phone with her and the role of the phone call was to talk about the book, talk about the phone call, let her know what the overall strategy of what we're trying to do with these calls, promote a word as of Deming's work and working together, all that stuff.

0:08:20.6 BB: And then with that, see if that fit, what if she felt, in fact, what I had in mind was that there's things in there she could contribute, but there's things in there that might be slippery. So I shared with her that I had a friend who was a high school coach for the Valencia Vikings and I bumped to him one day in a park. And he's walking towards me and he is wearing a T-shirt, and across the top are the letters V-K-N-G-S. So I'm looking at the letters and I said, I don't get it. To which the author says, there's no I in team, and that's what it was V-K-N-G-S. And so she beat me to the punchline. So I said, so you're aware of that story?

0:09:15.0 BB: She says, oh yeah. I said, "Your book is filled with sports stories." She says, "Yes." I said, "Did you ever consider that story for the book?" She says, "it really wouldn't fit." I said, "that's right." I said, "that is it, it doesn't." I said, "'cause your book is all about the I and not about the team." So at the end of the call, I said you know, when I got your book, I said the cover was revealing. And this is what I find, going back to language. You can be in a meeting and you can hear how people think, which then leads to how they act and you can't separate, you can hear that. So I said, "I looked at title of your book," which is something like, Think Like A Champion. And I said, "as soon as I saw that title," I thought. But I said, well I told her, "I said, there's a lot of good stuff in here." I said, "but, and I'm not saying everyone hears what I hear, but I don't want you to be caught short on that." She said okay. So then I said the title was kind of a giveaway of what the book was really about. She said, "well, what would've been a more appropriate title?" I said, "Think Like a Contributor."

0:10:34.5 BB: And so we are within our respective organizations, we're one of many contributors, we don't do it all by ourself, we contribute to the results and we talked last time about... Sorry.

0:10:47.1 AS: And that's an interesting point because that's a, maybe a difference between let's say American style thinking and Japanese style thinking, where Japanese may see themselves clearly as a contributor in a system. Whereas Americans, we like to think of ourselves as a unique person that fits into a certain place in this world.

0:11:08.9 BB: And I won the game, I won the game and I made it happen. And, um, but sure, and I've heard that about Japanese management, that it's more like, I am humbled and honored to be your executive and there's a real... And it comes across that it's not just talk, there's a real sense of humility and honor to be in this position as opposed to a sense of I'm the smartest guy in the room.

0:11:39.4 AS: Servant Leader.

0:11:41.4 BB: Yes, very much so. So, next thing I wanna bring up is, we talked last time about Myron Tribus's his comment, management works on the system, people work in the system, and the theme was making a difference from where you are and I mentioned that this gentleman came in, was one of our classes, and he wanted to, how often I met with our president. And I said, not very often. He said, oh, it's really important, you gotta go meet with him. And I said, "well what if I spent time talking with senior people at NASA or senior people in the Pentagon," which I did. And a mistake I made, a minor perhaps a minor error that somebody may or may not have caught. So I said, that I had the distinct pleasure of being invited to speak at the Army's largest annual logistics conference back in the 2000s. And the invite came from a senior officer on the staff of General Anne Dunwoody, who went on to become the Army's first woman, Four Star General, and so in the podcast number 15 I said, I was invited and spoke with the Army's first Four Star General, it was the Army's first woman Four Star general.

0:12:57.2 BB: So this is a clarification. I also talk about how pragmatism is being practical, but I think is, if you're trying to introduce these ideas into your respective organizations making a difference where you are, I think it's important to realize that everyone is acting as if they're being practical. And if practical means work on things that are bad to make them good and stopping, that’s their, that to them is practical. Now, from a Deming perspective to not work on things that are good, to make them better to improve integration - that is practical, but it might not be practical where you are. And I mentioned, I had a Lean Management journal article that talked about that, and I couldn't remember the title. The title is Profits, Pragmatism, and the Possibilities of Possessing Other Eyes. I told you I like alliteration.

0:13:56.6 AS: Alliteration.

0:13:57.5 BB: Alright, so what is an application? We start where you are. And I would say an application, first of all, relative to an application, it's thinking, can I do this by myself? Do I need help? Do I see opportunities to reduce losses? And it's one thing to see opportunities to do something. It's a whole 'nother thing to realize that the timing might not be right. I may not have the support that I need. I may not have the funding that I need. There could be other priorities. So when I would tell people I was mentoring to see opportunities is a really big thing, whatever those are. An opportunity to shift from managing actions to managing interactions and realizing that addition doesn't work, that things are not adding up and you're realizing, holy cow, there's some opportunities for synergy here. There's opportunities to work on things which are going well to prevent the red beads, work on things that are well to improve integration.

0:15:05.3 BB: There could be opportunities to stop doing incentives within your sphere of influence, to stop handing out awards to your people on your staff. Had a friend who just became a manager years ago and I had been mentoring him and within a few weeks of him being manager in operations, he came to me and he said that somebody on his team helped him do something and he gave him a $10 lunch coupon. I didn't say anything, I just let it pass. A couple weeks later, he comes to me and he says the same guy helped him again and then reached out his hand, he says, “Where’s my coupon?” I said, “I was waiting to see how long that would take.” And Andrew, that happened 25 years ago, if I was to have breakfast with him tomorrow, it would come up. Every time we meet, which is not that often, he lives a lot too far.

0:16:05.5 BB: And it was just so cool how, as I said let’s just see how this goes. So the idea is that what can you do from where you are to not pass on the pain? And so it may be flowing down to you, but maybe you, if you’ve got a team, can stop it from where you are. Maybe. Maybe you can’t. I mentioned Jim Albaugh, who went on to become CEO of Boeing Commercial, CEO of Boeing Defense. He was my boss for a number of years at the beginning of his doing these amazing things. And one day after we had some really stellar applications of Taguchi’s ideas with Deming’s improving integration, the hammers went away and things came together. Performance, we had an incredible advances in engine performance and integration. It was really cool. So he was really thrilled by all that. So I go, I would meet with him once a month and I’d poke him.

0:17:10.0 BB: So one day I went in and I said, “I wanna bring something to your attention.” And he looks at me with this smile. And I said, “I wanna put something on the table. And I’m not saying you’ve gotta do it now, but don’t ever tell me I didn’t bring it to your attention.” And he is like, “okay, Bill, what?” [chuckle] I said, “we’ve got to get rid of incentives, rewards and recognition and performance appraisals.” And then he just rolls his eyes. I said, I says, “I know you can’t do this.” And I said, “but these are ankle weights on how fast we can run as an organization.” But I knew that was... I mean, he was, at the time he was a VP, even when he was CEO, he can’t get rid of those. Those are such an institution. But I just wanted to go on record with him. I just chose the moment to go on record with him knowing the limits, but I wanted to be upfront and honest with him that if I don’t go to those events, this is why.

0:18:18.8 BB: And so it’s just making a difference from where you are and sometimes you speak up, sometimes you just keep your mouth shut. Another thing I encourage people I mentor is, if you’re out managing interactions and things are improving, you’ve improved integration. Is that, my advice to them is go about it quietly be the change you wanna see in your organization. Be the change you wanna see in the world, to quote Gandhi, I said, but unless your boss asks you how that happened, don’t explain it to them.

0:18:53.2 BB: I said, if they ask you how did you know how to do that, that’s your opportunity. But if you’re not asked that, I mean, in other words, don’t do it expecting to be asked for what, you know, to be complimented. You do it because it’s the right thing to do. Use it as a learning experience. Be deliberate about it if you’re gonna go off and do it. But if you’re doing it to get praise, you’ve missed the whole point. If you’re doing it to get your boss’s attention, you’ve missed the whole point. What I tell people is, do it’ And maybe at some point in time, they say, ’'ve noticed a pattern. Tell me how you do this. ’I've got a manager I work with, with a client, was asking me about how to praise someone. And I said, one is, there’s nothing wrong with one-on-one in the office saying, your contributions were enormous. I said, do’'t ever imply without you, we could not have done this. You’re a contributor. But I said, more important than that is, ask them, how did you know how to do that? Where else could we apply this?

0:20:07.4 BB: I said, I think that is far more, I think being asked those questions are far more thrilling than a pat on the back. Back in ‘93, it was '92, I was nominated to be an engineer of the year at the Rocketdyne, which is a really big deal. I was one of a dozen finalists. And the vice president of engineering invited everyone into his office to ask us a bunch of questions. And he used our answers for the engineer of the year dinner. And what I found out from the others is, he never asked any of us, how can your work, what is your vision, Andrew, for how your work can impact the organization? And I thought that, that never came up. And I would have been thrilled, my whole interest in going through this, 'cause I knew at that time about awards and recognition, but my hope was that, that could create visibility and help me further the cause.

0:21:13.8 AS: Make an impact.

0:21:14.8 BB: This is... But another thing I would say is, I have my knuckles rapped this way a few times. And when I would try to explain to the executives how we achieve these solutions. And once one of the VPs, my VP, his comment to me was, he was watching me, he came by to see the slides I was gonna use. And he says, Bill, don't be tutorial with us. And I thought, oh, man. So what I tell people is, a staff meeting is not the time. This is really important. If you're trying to explain in a staff meeting how you accomplish something, what makes it bad is, even if you're invited, a staff meeting is not a classroom. When I walk into a classroom as the instructor, I walk in, and I know what my role is, and everybody else knows what their role is. But when you walk into a staff meeting, and you're about to present something you did, if it comes across as being tutorial, what makes that offending is, who appointed you to be the professor? But if you have a separate meeting and, but it's just these nuances, can really get in the way, which leads to tonight's feature, the Cloud Model...

0:22:42.6 AS: Before you go to tonight's feature, I'd like to go back in time to November of 1965. It was a tumultuous year. In fact, it was February of 1965 that Malcolm X was assassinated in America. 1963, November, John F. Kennedy Jr. Was assassinated. America was going through a lot of turmoil, and the Rolling Stones were the bad boys of rock and roll. In November of 1965, I was four months old, so I don't remember this personally, but the Rolling Stones came out with a song, and it was called Get Off Of My Cloud. And I just wanted to put it in context, because for us older guys, we know that this lyrics, Get Off Of My Cloud, is referring to this song where they're oftentimes saying, "hey, hey, you, you, get Off Of my Cloud." So with that introduction, tell us why you named it, this episode, Get Off Of My Cloud.

0:23:44.3 BB: Well, you're not gonna believe how apropos that, that intro was. Oh, this is so cool. It's so cool, so cool. In 1995, I met Barry Bebb, a retired, very senior executive from Xerox, who was on a very short list to be the next CEO of Xerox after David Kearns. And Barry left Xerox and became a consultant, and I met him in the Taguchi community. And somewhere in the beginning of '95, I bumped into him. I'd met him earlier at another event with Dr. Taguchi, and, um, and then there was an event in LA, a conference, and I bumped into him, and he said, hey, I know that guy. We knew each other. And he said, hey, I'm putting together this group of people, about a dozen or so people, a couple from Ford, a couple from GM.

0:24:46.7 BB: Would you like to be part of it? I was like, well, what do you have in mind? He said, "we're gonna to meet once a quarter. I wanna mentor you and help you create change within your respective organizations." And it's like "sign me up." And I was there with a very good friend, Tim Higgins, and so we signed up. And we... Barry called the group Impact 95 'cause it was 1995. And we would get together all day Friday, all day Saturday, through Sunday at noon. We would meet either within Ford, because there was a Ford member, within GM. There was a printer company we met at their headquarters, at their site.

0:25:28.7 BB: We met at Rocketdyne. We'd meet in San Diego with Barry. But once a quarter for three and a half years, we met, all on our own time. The company didn't pay for this. I told Tim, we're just gonna go off. We're not gonna tell anybody what we're doing. But what we learned from Barry is how to create change from an organization when you're in the bottom, you're an individual contributor. And so that... And I've got the notes. I've got a big pile of notes. And some of the things that jumped out when I was pulling my notes together are things we learned in that very first session. One is you can't tell anybody anything. He said, "You can lead people on a path to discover, but you can't force them to drink." And that became really powerful that, telling people something's important is a losing strategy. So what I find powerful about the Me and the We Trip Report, Red Pen, Blue Pen, whatever it is, that's not me telling people what the organization is about. That's them telling me what the organization is about.

0:26:43.7 BB: But trying to tell people this Deming stuff will change your life, that's a losing strategy. So he says, you can't tell anybody anything. And then my paraphrase is, "telling is a losing strategy." Even if you tell a loved one. If I tell our daughter, Allison, you gotta go watch this movie. You gotta go... You need to go learn more about the Rolling Stones. She's like "Dad, I'm a Swifty." It's like her telling me, "well, I'll go do that if you go watch the Eras movie with Taylor Swift." I'm thinking, "that ain't gonna happen." But anyway, so even with a loved one telling, telling is a losing strategy. Well, another thing he told us that very first meeting, you're gonna love this. He said, he points at each one of those and he's like a drill sergeant, and he says to us, "you have to be able to do this by any means necessary." You know who used those words, right?

0:27:43.8 AS: Malcolm X.

0:27:44.9 BB: Malcolm X. I remember looking at Barry saying, said that's Malcolm X. He says, and he would say, "every morning you've gotta get up and ask yourself, am I doing everything I can to make a difference in our organization?" And it was just beaten into us again and again and again and again in a very loving way. So back to the, "hey, you Get Off Of My Cloud." Barry came up with a Cloud Model. And I don't know that he had in mind to write a book about it. I don't know that he ever did. I don't know if it was ever published. I have not, I share this in all of my classes and all my consulting. I share it with clients. I'm not sure if it's out there on the internet. Well, what Barry had in mind, his model, his mental model for organizations is there's a Cloud.

0:28:31.7 BB: The Cloud is the top of the organization where all the executives are. And Barry got to the Cloud. He was in charge of Xerox's division that made the, not office copiers, but these really big, big things. And, um, and I don't know how many thousands people worked for him, but he was in the Cloud and he's briefing us. And we're individual contributors in our respective organizations. And what brought us together was each of us was trying to introduce Dr. Taguchi's ideas into our organization. But the Cloud model is universal. It's not just, it's introducing any change in our organization. And what Barry confided with us, and it kind of burst our bubble is, he said, if you get an email that says, we want you next Monday, Bill Bellows, to go to Boeing headquarters and share with them how Dr. Taguchi's work can impact Boeing.

0:29:31.7 BB: And I'd be thinking, "what an incredible opportunity." What I learned from Barry was you have to say no. And I'd be like "well, Barry, isn't that the audience I want?" And he says "no." "Why not, Barry?" He said, "here's how it works." He said, "the people in the Cloud may not like each other, but they respect each other." He said, if you're...

0:29:56.3 AS: And the people in the Cloud, remind everybody who are the people in the Cloud?

0:30:00.2 BB: The top executives of the organization are the Cloud. So that's the...

0:30:05.4 AS: They're living in a, they're living maybe in a comfy zone. They're not necessarily dealing with the nitty gritty of the business, what's going on.

0:30:13.7 BB: They're way up there in the upper atmosphere. They are... And they're the chief executive people, the senior most people in the organization. And what Barry said is, "they create the rain. They create the KPIs. They create all those things that flow down." And what Barry says, "what we're tryna do is influence what flows down. So in order to influence what flows down, you've got to get into the Cloud." He said, but the deal is, what Barry's model was, "Bill and Tim and Larry, you can't go to the Cloud." Well, why not? He said, "because you're an outsider." And he said, "they shoot outsiders, but they don't shoot each other."

0:31:02.8 BB: So what do we do? He said, "when you go back to your respective organizations," this is the very first time we meet, this is how impactful it was. He said, "when you go back to your respective organizations, start thinking about someone in your organization above you. It doesn't have to be your boss. It could be somebody over to the right, but find someone above you that you can get smart about Taguchi's work, about Deming's work, about whatever that passion is that you wanna bring to the organization to rain down. Get them smart, 'cause you can't go to the Cloud, but you can get them smart. So make it your calling to go back to work, begin to meet with someone above you. Help them get someone above them smart. Help them get somebody..." So I, I hand, I get you smart, and then I help you get your boss smart, and then you're...your boss on up. So you have to hand off. So this is not me coaching you, and then coaching you all the way. So I have to let go. I have to be a contributor.

0:32:17.5 BB: And I thought that's not what I... I thought I could be the hero and go in there. And he is like, no, it won't work. And so I went back and immediately began to mentor my boss, Jim Albaugh, who's a VP. And that was my, my strategy was to get him smart on all the things we were doing. And then he, in turn, eventually got his boss, Alan Mulally smart. And I just, but you have to let go. And then you're trying to influence the organization - so it can be done. So in terms of making difference from where you are, it's not running into the Cloud from down there and thinking, Hey, I've got these great ideas. And what Barry said is, it's not gonna work. Don't. And he saw it not work on many occasions.

0:33:08.9 BB: Now, one time I got invited to a Boeing corporate setting, and it was not, it was halfway to the Cloud. It was pretty high up. And my first thought was, No. This, you know, Barry on my shoulder, Barry says, "Bill, don't do it. Bill, don't do it." When I found out who's gonna be in the meeting, and it was all the VPs of engineering across Boeing, space and communications, and they all reported up to the VP of engineering, corporate, senior VP of engineering, who reported to Jim Albaugh. So I thought, okay, against my better judgment, I went in. But being aware of Barry's model, I went around the room and amongst the nine VPs of engineering, I knew half of them. So I went around the room,, and hi, how're you doing?

0:34:14.8 BB: I haven't seen you. And part of what I was doing in my mind, what I was doing was preparing them to help me should the others start to shoot at me. But I knew to do that. And without the awareness from Barry, I would not have known to go around the room. So it was... I mean, it wasn't the very, very top of Boeing. It was a good ways up. But I still took what I learned from Barry and said, okay, I need some help with this. I can contribute, but I'm just gonna stop there.

0:34:56.3 AS: Well...

0:34:56.4 BB: And so when it comes to this, Get Off Of my Cloud, it's the people in the Cloud, it's their Cloud. We just work here.

0:35:04.9 AS: And in the theme of music I'm gonna wrap up my part of this and then ask you to do a final wrap up. I wanna go now to 1976. 11 years after the Rolling Stones came out with their song, Get Off Of My Cloud. By this time I was 11 years old. And in 1976, the band, the Canadian Band, Rush came out with the album 2112. And the song 2112 talks about how, Neil Peart wrote this, the drummer, about how he, that it was a society he liked to show it was like a communist type of society where it was ruled by the elders. And he found a guitar, and it was an ancient guitar, and nobody had heard of a guitar. And he figured out how to play it. And he thought it would be amazing to take this to the priests, to the elders.

0:35:57.4 AS: And he went to them after learning how to play. And he said, "I know it's most unusual to come before you, so, but I found an ancient miracle. I thought that you should know. Listen to my music and hear what it can do. There's something here as strong as life, I know that it will reach you." And the priests respond. The priests in unison respond, "yes, we know it's nothing new. It's just a waste of time. We have no way need for ancient ways. Our world is doing fine. Another toy that helped destroy dah, dah dah, dah, dah." The point is that they were in their comfort zone and they didn't want to be disturbed. And so having an awareness of that, I think is what you're trying to teach us so that when we, make a change where we are and be an influencer rather than a teller. And don't use the telling strategy.

0:36:54.2 BB: Yeah, no, it's... Exactly. It's, um, I had a VP of HR once pulled me aside and he said, "what's your vision for the organization?" I said, "don't ask me." I said, "ask them, ask them." I said, "it's not what I want" is, and this is, I told another group of people I was mentoring. I said, something like this. "I'm not gonna be here forever." 'Cause they're saying, "well, what should we do?" And I said, "my question to you is what do you want to happen?"

0:37:36.3 BB: And what was so amazing when I shared that with this one group, a couple of days later, two of them sent out an email to a bunch of their peers with announcing some opportunities. And I had tears in my eyes. I was reading it on an airplane. I was at LAX and looking at it. And what blew me away was, they didn't call me up and say, Hey, we have an idea. They just went out and did it. They became the change they wanted to see amongst their peers. And I was just overwhelmed with it all. All I said to them, is that, "what do you want? What is it that you want this place to be?" I said, "it's not what I want. It's what do you want?" But the other thing is I'll share some great wisdom from Edward de Bono. And this is the book, Handbook for the Positive Revolution. You can buy it on Amazon for probably 5 bucks. And the original copy, I'm told, this is not an original, it has a yellow cover, and there's significance there that I'll come back to, but what somebody told me is the original book not only was the cover yellow, but all the pages were yellow. Well, yellow in the Edward de Bono world is associated with one of the six colors of his so-called Thinking Hats, and yellow is the Logical Positive. Your ability to explain the benefits of something. Not your gut feel, which would be your Red Hat, but your Yellow Hat is saying, I can articulate the benefits. The Black Hat is the Logical Negative, I could tell you all the weaknesses.

0:39:29.8 BB: So this is coming from that place of yellowness. So the book came out, and I got it for a bunch of colleagues in our InThinking transformation community at Rocketdyne early on. And the introduction, Edward says, "this is a serious revolutionary handbook. The greatest strength of this serious revolution is that it will not be taken seriously." So when I'm reading that, I'm thinking, "what?" Then he goes on and he says, "there is no greater power than to be effective and not to be taken seriously." That way, Andrew, you can quietly go on with things without the fuss and friction or resistance from those who feel threatened. And that was so invaluable to our efforts is, if people don't take it seriously, fine. 'Cause what Barry talked about is, he said, "for every proponent," as you're trying to get this message to the Cloud, he said, "for every proponent, he'd say there's nine opponents." So they're out there. So as I'm trying to get my boss smart, you've got this. And I come across Edward's work, and he says, you just take it in stride. You just try not to be dissuaded. You get up every day and say, what can I do? And how do you get to the Cloud?

0:41:14.2 AS: Bam. Well, Bill, on behalf of everyone at the Deming Institute, I wanna thank you again for this discussion. And for listeners, remember, go to deming.org to continue your journey. And if you wanna keep in touch with Bill, just find him on LinkedIn. He's there. 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.

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What does it mean to "commit" to transformation? What does "transformation" mean? In this episode, John Dues and host Andrew Stotz discuss Point 14 of Dr. Deming's 14 Points for Management - with John's interpretations for educators.

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 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 20, and we are continuing our discussion about the shift from management myths to principles for transformation of school systems. John, take it away.

0:00:31.1 John Dues: Hey, Andrew. It's good to be back. Yeah, we're on principle 14 today, which is Commit to Transformation. So I'll just start by outlining the principle itself. So Commit to Transformation - "clearly define top management's commitment to continual improvement of quality and its obligation to implement the 14 principles, plan and take action to put everyone in the organization to work to accomplish the transformation. Transformation is everyone's job. Start with education for all and positions of leadership." So, basically, we've been through these 14 principles, and the final one is, put it into action, basically. So I think a good place to start is just remembering or recalling what does Deming mean by transformation? And he's saying transformation is a change in state from one thing to another. So we're going from one thing to something completely new, and there's these 14 principles that help us get us there.

0:01:34.9 JD: And of course, when Deming was talking, he was talking about the prevailing system of management and changing into this new system of management and about this sort of, older version, this prevailing style from 30 years ago, which still is the prevailing style today. He said something that was really interesting. He said, it's a modern invention that cedes competition between people, teams, departments, students, schools, universities. And so when... What he is really saying is that when you transform your organization, you work together as a system. And he is advocating for cooperation and transformation. And I think of course, people are gonna say, yes, absolutely, we need to cooperate. And that's, that's the way that everybody wins. But in reality, I think that's not always what's happening in organizations because I think what you need in order to go about this switch is what Deming called Profound Knowledge.

0:02:41.5 JD: And most people don't have an understanding of, of what that is. So what happens I think is that the prevailing style of management, it's rooted in those management myths we've talked about before we started the principles. And it's sort of this false foundation for your organization. But that's where I think most people, people are. And so part of this commitment is then if we're gonna commit to transformation, there's some things that leaders have to realize, and then there's some steps you have to take if you're gonna sort of go down this path. I think the things that you have to realize as a leader, and these are things that are true for me as I continue this process and my organization is number one, there's gonna be a struggle. There's gonna be this struggle over every one of the 14 principles because it's so different from what we're doing today.

0:03:39.1 JD: I think another thing we're gonna have to realize is that this can't be one or two people at your organization. The entire leadership structure at your organization, it's gonna have to be educated in this new way of thinking, and then you're gonna have to bring along the entire organization. And this can be a challenge because if you are the person doing this at your organization, you very well may be fairly new to this new way of thinking, this new philosophy yourself, unless you've brought in someone externally to help you through this. And even if you do that probably for a good portion of the time, you're gonna have to be leading this before you may be feeling like an expert yourself. And that was definitely true in my case. But I think the emphasis in this initial introduction is that you gotta get that system's view and you have to help people understand the theory of variation.

0:04:43.0 JD: So that has to be sort of initial part of that introduction. And then of course, you have to take your organizational context into account and so how this sort of rolls out or plays out, it's certainly gonna vary by size of organization, by organizational type. But the good thing is, is regardless of size or type of organization, industry, sector, whatever, Dr. Deming offered several steps to get started in this process. So I think maybe as a start to how you commit to the transformation, if you wanna go down this route, it might be helpful to sort of outline those steps first.

0:05:24.8 AS: Definitely. And it just, the idea of everybody, being committed to the transformation, like this isn't something where you can say, well, maintenance department doesn't wanna do it. [chuckle]

0:05:36.4 JD: Right.

0:05:38.3 AS: Or the third grade teachers don't wanna do it, but the sixth grade do. So that's... Of course things can start in kind of piecemeal as they they go, but it is a true transformation. The other thing that's interesting is if you have a situation where you have been through a transformation as a unit at a school or as a company, it's also possible that a new person could come in and destroy that transformation real fast. And I have an example of a company that I've experience with where they had implemented the Deming principles to an extreme level, and the CEO resigned eventually. He was older, a new one came in and he said, I'm not in that school, I'm not in that camp. I got a new idea. I got a different idea. And it went right back to the prevailing system of management.

0:06:35.9 JD: Wow. That's really interesting. On the first point, I think, you're not necessarily gonna get all the departments or everybody at once. Obviously it's gonna be a process. On the second point, I think that actually is a good segue into step one because basically what he says, and I've translate this for education environment or education audience, but he basically says the school board and the superintendent have to study the 14 principles. Understand them, agree on a strategic direction, and then make a deliberate decision to adopt and implement the new philosophy, so why bring this up now? As I follow on to your comment there is that it seems to me that well, assuming that this was a company that had a board, then what that board should have done is include something about the System of Profound Knowledge and the job description for the new CEO. That's interesting that they didn't make that a point of emphasis.

0:07:41.5 AS: I think what's fascinating to me about it is that I think on the one hand, cooperation and working together and not living in an environment of fear is kind of our normal state, I would argue, but society just pushes us in so many different ways, that all of a sudden you find yourself in a very different state. And another example of that is how KPIs have taken Thailand in particular by storm, and now all of a sudden you have people who have been very cooperative in the way that they work together, all of a sudden pitted against each other, and it's so painful for them, because it's not the way that they naturally operate.

0:08:33.5 JD: Interesting.

0:08:35.3 AS: And so yeah, it's just... I think you gotta work. And I guess the thing you're saying about the board is that you really gotta work to make sure that this is something precious, and you could lose it in a blink of an eye if you don't...

0:08:52.4 JD: Yeah, yeah, and I'm not hiring a CEO obviously, but I have started including... I don't use System of Profound Knowledge, I don't use that terminology when I write job descriptions for people on my team, but what I do say is, what we're looking for is someone that can think in systems, understand variation and data, run small experiments to find out what works and do that with sort of like while working with people in a cooperative fashion, so I've sort of incorporated the four elements of the System of Profound Knowledge in the job descriptions for people that I'm hiring on my team, so then when I actually do use System of Profound Knowledge, describe the elements once they're on board, it's not a surprise 'cause it was a part of that hiring process. And part of that, even the job description itself, but step one basically is so that, you know, if you do have it at your organization, it includes both board and sort of the senior leadership being bought into that philosophy and that's not a guarantee, but at least if both components have that then if that CEO moves on, maybe it's more likely to continue on in your organization.

0:10:10.4 JD: That's step one. Step two is interesting, Deming basically said that the board and the senior leader or the school board and the superintendent in my case, must feel he said a "burning satisfaction", sorry, "burning dissatisfaction" with past procedures and a strong desire to transform their management approach, so it's almost like you almost have to be hitting your head against the wall, you have to be looking for something, because what he goes on to say is that you have to have the courage to break with tradition, even to the point of exile among peers, as you're going through this transformation process, because from an outsider looking in, if you're adopting the Deming philosophy, much of the stuff is gonna look so different that people are gonna be asking you, what exactly are you doing? And this has happened repeatedly. Not, not, I don't think that to that extent that I've been exiled, but for sure people will be like, well, I don't understand why you're just not setting a goal, just tell people what the goal is and then let them get out of the way and let them achieve it. That's not the approach with the Deming philosophy. So you have to...

0:11:33.2 JD: Again, for me, it wasn't exile, but constant pushback, questioning, why are you saying this, why are you operating in this way? I don't get it, why don't we just tell departments what their goals are and let them all meet them, those types of things, the typical way of operating, and it does take a lot of time and energy to explain that, but that's a part of the process.

0:11:55.1 AS: It reminds me of working with alcoholics and drug addicts, generally, they don't turn around until they've hit a bottom.

0:12:04.8 JD: Yeah. Yeah.

[overlapping conversation]

0:12:05.4 AS: And they have a burning desire.

0:12:05.6 JD: Learning to satisfaction. I think that's right, and I think from the standpoint of someone that's really motivated to look for something new, look for a different way of doing things, that's not all together a bad thing, that they've sort of hit rock bottom. Step three is, again, it seems common-sensical. But even here, even as I was going through this, it was sort of a reminder of a number of things that I need to do on a regular basis, and one of the things he said in step three is that once that sort of senior leadership team, the board, the superintendent, whatever that make up is that your organization is that then you have to go out and explain, whether it's through community meetings or seminars or whatever to sort of a critical mass school system staff, he said, students, parents, why you're going on this transformation, why you're... This change is necessary. And then actually educating your people across the organization, what is this philosophy, what is the System of Profound Knowledge? What are the 14 principles? What are the typical ways that we work? Why are those management myths don't work.

0:13:36.4 JD: You gotta go out and do all of these things. It's gonna be a completely new language, a completely new operating for most people, and it has to be a part of the process, bringing people along and this... I think this isn't an overnight process, obviously. Deming said no instant pudding. He generally said, I think transformation was a five to 10 year process, depending on the size of your organization, but I've definitely found that to be true. There's fits and starts, there are some things that you seem to be able to sort of put in place pretty quickly, and then there's other things where there's a couple steps forward, a couple steps back, and you gotta bring people along, people turn over, you gotta re-educate those types of things. So it's a process. It's definitely a process.

0:14:27.4 AS: I was thinking about. I can't remember whether I heard Dr. Deming said that or whether it's somebody, or I read it or somebody told me, but that somebody asked him, "How long has this transformation take?" And he said, "Well, it can take as long as 10 years or as short as 10 years."

0:14:49.8 JD: [laughter] Yeah, so no matter what. It's a significant amount of time. There's no doubt about it. Step four, he basically says that every job and every activity within the school system or your organization is a part of this process that can be improved. And he talks about using flow diagrams for important processes within your organization so that people can see that this is about optimizing that whole system, and not the individual stages. But he really wanted people to see visually, even if it's just a simple sort of flow diagram, how one stage connects to other stages for us, maybe it's the teaching and learning process going from kindergarten to first to second to third grade.

0:15:37.3 JD: That again, seems obvious that that should be how the system works, what I think is less typical and common is actually doing activities from a systems thinking lens, where you are making sure people understand that the kindergarten teacher is also serving the first grade teaching team in addition to the students and families in their classroom and simple things like we have two elementary schools, two middle schools, do the middle school principals leave their school at some point and go to the elementary schools on their side of town and introduce themselves to the fifth graders, so things as simple as that is what I'm talking about.

0:16:28.8 JD: There are lots of other things. For sure. But how often does that happen? In some places, it may be fairly typical, in other places, it's not happening at all, but in the case, even where it's happening, do you explain why it is that you're doing this activity. Are people making that connection that they're part of a bigger system. I once consulted at a very small rural school district here in Ohio, and when we talked about systems, they just had two buildings, they had a sort of an elementary building and then a seven through twelve building. And talking to people, they said, I've never been to the high school - an elementary teacher, I've never been to the high school. And so people may say, Well, that seems strange. But when you were in the school system, it is very difficult sometimes to get out, so you actually have to make it... The leader has, or the leaders have to facilitate this, bring this about... There has to be some coordination of efforts, so that's step four. I think step five is you have to teach and then utilize the Plan-Do-Study Act cycle. You have to use it as a procedure to learn how to improve the organization's processes.

0:17:48.1 JD: I think that we've talked to your... And the Deming community is familiar with the Plan-Do-Study Act cycle, PDSA cycle, but most people aren't. Most people don't have this... Some people might call it sort of like a scientific thinking approach to testing ideas and see if they work, but most people don't approach change like that. They just try something, there's no system for collecting data, a lot of times it's just sort of a mass implementation, there's no process for testing on a small scale, seeing if it works, getting feedback on a short time frame, like a week or two weeks or three weeks, and then trying that next test. So that's, that's in terms of putting the Deming philosophy into action, I think that's a critical part using the PDSA cycle.

0:18:44.0 AS: Yeah, I'm just thinking about my Valuation Masterclass Bootcamp, and we're just about to start our round 13. And so having taught it 12 times before, but part of our PDSA, part of our process of understanding the cycle is that, at the end of every bootcamp, every single student gives us their recommendations for improvement. And we do it through a survey where they're all excited at that moment in time, because they're at the end of the process, but they've gotta go through the survey. And they give some great ideas, and then we capture all that into a document, and then we go through it and we see there's some ideas that just seem like obvious we should have implemented that a long time ago, or we knew. And then, so we say, okay, how do we implement this? But then there's others that are also a question. Right now, one of the ideas is to do one of our class sessions per week as a live session.

0:19:52.4 AS: And it's the feedback session where students get feedback, and in that case, people from outside can watch it. And it has some benefits. There's a marketing angle to it for us, but also, there is the excitement of showcasing your work and all that. But on the other hand, it could be terrifying and it could be that it doesn't do what we think. So in the end, we asked what is it that we think we would want from this as an outcome? And then we said, why don't we just try it one night in week four? And so we've set up that we're gonna do it on one night, we're gonna prep them ahead of time, and we're gonna see how it goes. And if it produces the effect that we want, which is, we think it's gonna up the intensity in, all of that, that it's gonna work. But if not, then we'll abandon it. And so that's a little bit of our little PDSA thinking on how do we test out an idea and see the result of it?

0:21:00.5 JD: Yeah, I love that. I love that because it's not... We're gonna just do this new thing in our course. We got this feedback, we're gonna just do it. We're gonna actually test it on a very short cycle, one session and get the feedback back right away to see if this works. And if it does, we're gonna do more of it. And what's likely gonna happen is you're probably gonna learn something, and you're probably gonna have to sort of change the approach a little bit, and you're gonna do it again and again and again until this is... Assuming the feedback is positive, then you'll do more and more of it. And, you know, if it doesn't work, then you'll learn that in a very quick, easy fashion and you'll know not to do, you know, more of that thing in your course.

0:21:44.2 JD: So I think that's the exact type of thinking that Deming was trying to get us to do, to improve our organizations, versus this sort of plan, plan, plan. We're planning these grand changes, then we put them in place, and then they don't work out like we thought, and then all of a sudden, we've had this significant investment in time and/or resources and sunk costs. And maybe we even keep doing it because we feel like we can't make a change at that point. So that sounds...

0:22:12.1 AS: Iterate, iterate.

0:22:12.2 JD: Iterate. Yep. Small, small, small test of change. So that was step five is use the PDSA cycle. Step six I really love, he says, Deming says, "Transformation is everyone's job." So no matter who you are in the school system, student, staff member, parent, you have to play a role in this transformation. And one of the ways that this can be set up is that you have these cross-functional teams on which parents, students staff members from various departments can be set up to work together on a problem. And one thing that we're doing right now, we have a new position in our network called Network Medical Coordinator. We're very fortunate. We actually have a pediatrician that's on staff, and one of the projects she's working on is critical care. So basically, when students require some type of critical care at school for something like, let's say diabetes, that's not something schools are used to sort of dealing with or maybe don't typically have the internal expertise to deal with. And in this case, there's a team of people figuring out the best approaches for various critical care areas.

0:23:35.3 JD: And this includes the Network Medical Coordinator. It includes one of the operations managers at one of the schools. It includes a parent and some outside partners, a pediatrician from a local hospital, for example. So you have this cross-functional team that's coming together in a way that's not super typical in a school system, but for a very important reason, it includes these various functional areas. And I think the outcome, what comes out of this project is gonna be better because it's not just the doctor saying, this is what we're gonna do. There's the parent, there's the ops manager that understands like how the office works, and how kids come to the office to get this care and things of that nature. And so you have this sort of cross-functional team working in a way that's gonna improve our system. So transformation is everyone's job, putting everybody to work for the transformation is step six. And there's various ways to do that a cross-functional team is one of those areas or one of those ways of bringing that to fruition.

0:24:37.1 JD: And then step seven is interesting. He basically said to deliberately construct your system for quality with certain percentages of staff understanding continual improvement at different levels. And sort of the way we've characterized that is sort of everybody, the goal is to have everybody have sort of like a basic level understanding of continual improvement. And by basic level, everybody knows what a run chart is in our network. The goal was, so everybody can sort of put one of those together. That's a pretty simple chart. Everybody could put together a process map to understand how do we map out, how a process unfolds at one of our schools. So everybody sort of gets that basic level of understanding.

0:25:28.8 JD: And then there's this sort of next level, we call it intermediate level understanding. And basically, this centerpiece of this level of understanding is, this is maybe 25% or 30% of the people really understand the process behavior chart. They really understand how to construct a chart, interpret a chart, and understand data over time and how to use that as an improvement tool. And then at the advanced level, that's something we're still working toward. Maybe you have one or two people. We have about 120 staff members. We have one or two people that have an advanced level of understanding. And so an example there would be, someone knows how to run design of experiments, basically something you may use on a limited basis outside of like an engineering sort of setting. But it would be good to have some advanced understanding. But I think the biggest bang for the buck is at those first two, that everybody has a basic level understanding of certain tools and techniques. And then you have this intermediate group that really has an understanding of how to use the process behavior chart to drive change and bring about improvement in your organization. Those are sort of the seven steps. So sort of concrete advice on how to bring the 14 principles to life.

0:26:53.1 AS: How would you... We've gone through so much stuff in this series. How would you wrap it up? How would you... I guess the first thing is like, what is the core takeaways? And the second thing is like, what would be your advice to the people who've made it to the end of this, who are by this time in their own process of transformation at various stages. So maybe the sum up of kind of what's the core concepts you want people to know? And then the second thing is, how would you advise people to continue their journey?

0:27:29.4 JD: Yeah. I mean, I think, just like, I think step one was this does require study. But what I found is, reading the 14 principles is really helpful after you read about the System of Profound Knowledge, because the 14 principles are sort of a logical extension of the System of Profound Knowledge, and give you a little bit more sort of concrete sort of...it's not a list of do's and don'ts, it's not a recipe, but it's some concrete stuff that you can start to understand, okay, and this is how you actually put the System of Profound Knowledge into action. I think it also again, not a recipe, but the 14 principles do paint a picture for what a healthy work environment looks like. So I think that's really helpful to understand those things. They're not a checklist, they're not... The 14 principles aren't completed in sequence. Rather, they're this interdependent mutually supporting sort of set of guiding principles for system leaders that do help make that transition to the Deming philosophy a bit more concrete.

0:28:52.5 AS: And so for someone who's on their journey, they've been following this. What words of encouragement or words of wisdom would you provide for them?

0:29:11.4 JD: Yeah. It's like a two-parter. There's like, I just sort of reiterated, the study is important. This takes study. You're gonna have to dedicate time to this. You're gonna have to commit to understanding this first yourself, and then starting to sort of dip your toes in the water in terms of talking about this approach with other systems leaders in your organization. And that's sort of the long term play. On the short term, there are things you can do just to start to put the System of Profound Knowledge into action. And I think to me, that's also a good way to learn that doesn't take years and years. And I've said it before, but I think pick one thing that you wanna improve, let's say that thing is attendance rates in your classroom. And just start plotting those rates on a line chart over time. Just see what happens. Plot it over two weeks.

0:30:13.3 JD: So two school weeks is 10 days. Look at those points over the course of two weeks, and start thinking about what you learn when you see that pattern of your data, the ups and downs. Anybody can do that. Anybody can make a simple line chart. And for two weeks, just jot down, okay, on day one, 94% of the kids in my class came to class that day. On day two, it was 91%. On day three, it was 95%. I can start looking at that data over time. And then at the point where you've gathered that baseline, simply draw a vertical line and say, I'm gonna try something to improve this problem. I'm gonna plan it, I'm gonna do it. I'm gonna study what happens when I try this one small change, and then I'm gonna decide on the next thing to do, and I'm gonna do this with the students in my class. I think that's a way to put, basically combining that data over time with this small change, what I call a PDSA cycle, basically an experiment, that's the System of Profound Knowledge in a nutshell. And I think anybody can do that. And I think that both the long-term study and putting some of this into action right away are both sort of important ways that people can continue on this journey.

0:31:40.3 AS: I'll, I'll end on with little story. When I was 20 something, maybe 23, my grandfather passed away and my father and I, and the family went to the funeral, and it was my father's father. And we were in the car driving there, and I was sitting in the front seat with my father. By this time, my father and I had had, begun to have a really good relationship, a deep relationship. And I asked my father, "Dad, why is it that I haven't seen you cry when your dad died?" And he said, "I cried 30, 40 years ago when I lost him." And what he was explaining to me was something he never told me. And that was, that his father treated him in a lesser way. He just didn't pay attention to him. He didn't give him time. My grandfather was kind of a famous guy in the world of architecture and history, and I don't think that he disliked my father, his son. I think he just was so busy, he just didn't give time to him and he didn't really show that he cared.

0:32:56.1 JD: Interesting.

0:32:57.5 AS: And what I respect the most about my father was that, he made a conscious decision not to treat his children that way. He married a woman who believed that you don't treat people that way, but he also made a conscious decision, and it took effort. And it wasn't until as we started getting older that the fruits of that effort started to pay off. But I can say that my dad created a trusting environment. And when my dad was close to his death, I asked him, what was your biggest proudest moment in life? And he could have said my best golf game I ever did which he was, he was almost a professional golfer or the great accomplishments, he had in work and life and whatever. And he just looked at me and said, "I created a trusting family."

0:34:00.4 AS: And I think about when you're going into this world of Deming, you're going into a world of chaos, of grading and scoring people, and blaming and all of this crap that goes on in schools and in businesses. And Deming is providing us a way to think differently and provide a more of an environment that drives out fear and sees the potential of humans. And funny enough, you're gonna have to work hard to create that environment. And you're also gonna have to work hard to protect that environment.

0:34:37.5 JD: Yeah.

0:34:39.4 AS: And my dad was an example of somebody where I learned that you can do it, and you can change. And so that's my words of inspiration for everybody listening. You can make a major change and make it a lasting change.

0:34:54.5 JD: Yeah, that sounds like transformation. It sounds like he had the psychology component down too. He sounds like an incredible guy.

0:35:00.9 AS: Yeah. So, John, on behalf of everyone at the Deming Institute, I wanna thank you for taking this time to go through all of the stuff that we've been through over this time that comes from your book and your work, and your experience. It's very valuable. And for listeners, remember to go to deming.org to continue your journey, and 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.

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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."

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What's the difference between education and training? Why is the distinction important? How does the Deming lens offer a new perspective on teacher effectiveness? In this episode, John Dues and host Andrew Stotz talk about why it's important to go beyond skills training and encourage education for personal growth.

TRANSCRIPT

0:00:00.0 Andrew Stotz: Here we go. 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 19 and we're continuing our discussion about the shift from management myths to principles for the transformation of school systems. John, take it away. 0:00:31.2 John Dues: Andrew, good to be back. Yeah, principle 13 today, Institute a Vigorous Program of Education. I'll just start by reading the Principle, "Institute a vigorous program of education and encourage self-improvement for everyone. The school system needs not just good people, but people that are improving with education. Advances in teaching and learning processes will have their roots in knowledge." It's interesting, when I was reading about sort of this particular principle, Dr. Deming took this actually pretty far when he was asked where would you draw the line? And he basically said, I would allow any educational pursuits that people are interested in. So that was his sort of take on this particular principle. But I think it's maybe the first thing is to differentiate between training and education. When he was talking about those things, we talked about instituting training on the job back when we talked about principle six, and he basically said the training is for a skill and a skill is something that's finite because it ends when performance has reached a stable state for a person when thinking about that particular skill.

0:01:51.3 JD: The differentiator with Principle 13 is that it's focused on education and it's meant for growth. And in the Deming philosophy, this is sort of a never ending process of education. So skills, so training is focused on skills, whereas education is focused on knowledge and theory. And this is really an important distinction in my mind, and you need both, training and education are complimentary components I think of an effective school system or really an effective organization in general. So I think, I mean, obviously training is important. It's something that's necessary, especially when you come into a new job. We have lots of new teachers that come to us 'cause we're a relatively young organization. And it's pretty typical for these new teachers to come even if they majored in education many times, they don't have sort of the basic classroom management skills, the basic lesson planning skills, the basic lesson delivery skills that they need to be successful in the classroom.

0:03:00.9 JD: So we have a training program, and in the absence of that training program the teachers would probably flounder or it would take a lot longer time to get their legs under them. So training is important, but we have to sort of shorten that runway. So we have to be good at training 'cause we're like a relatively young organization and we have students that come to us on average that are below grade level. And so they can't wait a long time for these sort of teachers to get up to speed. And I think we've talked about the fact that we have this sort of three week training program before the school year starts for new teachers for that reason. And so training is obviously important, very important. But I think what I've sort of come to appreciate is this idea of... And Deming stressed this, that leaders, systems leaders understand this idea of a stable system.

0:04:00.7 JD: One of the things that he said was that "The performance of anyone that can learn a skill will come to a stable state upon which further lessons will not bring improvement of performance." And this for me, reading Deming at this point in my career was really an interesting revelation because for many years I had heard sort of policymakers, education reform types sort of lament the fact that teachers improvement largely levels off in about year five of their career. Now, there has been some more recent longitudinal teacher research in terms of effectiveness over time. And basically people have found that that's not quite true. And that teaching experience is positively correlated with student achievement gains sort of across the teacher's career. But it's definitely true that the gains and effectiveness are steepest in those initial years.

0:04:55.2 JD: And so when you put those two ideas together that there's sort of this leveling off in about year five with Deming's sort of concept of stable systems, it really sort of dawned on me that it was this perfect explanation for this phenomenon. When a teacher is in their first five years there's a lot of foundational skills like the things I was talking about, like lesson planning, lesson delivery, classroom management, those basic things. There's sort of this period of rapid improvement or growth, and then it sort of levels off after you get the basics of how to be a teacher. And then after that happens, you have this... The potential for improvement sort of lies within the organization, within the system itself and not in the individual. So this really lined up with this thing I had heard for a long time, even though I think sort of it was misinterpreted.

0:05:52.0 JD: And I think a lot of those people that were talking about teacher skills leveling off after five years, they didn't have this lens of a stable system. They didn't have that part of it. And so they were saying, well, teachers aren't improving. Well, it really wasn't the teachers not improving. It was the fact that most of the capacity, like we've talked about here for improvement lies within the system itself and not the individuals. And I would also make the argument that this is not just educators, that this is other sectors as well, healthcare or whatever that thing is.

0:06:27.0 AS: Yeah. I mean, a good way of imagining that is a person who knows nothing that has the prerequisites, the education or whatever's necessary to get the job. And they know nothing about teaching and about the school system or anything that you can just imagine that so much of the initial phase is just understanding how the system, how they operate within that system to do certain tasks, which can be a process of trying to understand all of that. But then it's like they become, it's like entering the stream and then they become the stream floating down the river where everybody's kind of doing the same thing. And then you realize, okay, by this time now their, their, the amount that they can improve has been hit for some specific tasks and things like that. And then all of a sudden their output is a function of the system.

0:07:23.0 JD: Yeah. Yeah. And I think where this can really go off the rails is when people don't understand the stable state of systems. I think that, and I think a lot of the educators from reformers were sort of talking about it as if teachers were kind of replaceable because they didn't improve after those initial five years, especially 10 years ago that was sort of the common way people talked about this. And you could then sort of the next step is to draw the conclusion that experienced educators aren't that important since that improvement sort of levels off pretty early in their career. But I think that is the completely wrong conclusion to draw. I think experienced teachers are incredibly important because of the stability they provide a school. They can provide mentorship to inexperienced teachers, they have longstanding relationships with families as multiple students come through the system.

0:08:25.0 JD: That stability is really important for all those reasons, which are hopefully fairly obvious to anybody that's worked in a school. But I think even maybe more importantly is this idea that once teachers have that baseline level of knowledge and skills, they can run a classroom, they can deliver a well-planned lesson. The reason that it then becomes important for improvement to have those folks is because once those basic things are in place, now we can actually start to work on the system where the real potential for improvement lies. And I think that was a point that was missed or glossed over in a lot of those conversations about education reform and this idea of the teacher skills leveling off after year five.

0:09:23.8 AS: Mm-hmm. One of the the things about education that I have a story that's... I guess one of the conclusions is that the next level of improvement of the system oftentimes comes from outside the system. And that's where education takes the mind into another space.

0:09:40.9 JD: Yeah.

0:09:49.2 AS: From that other space, they're getting knowledge and theories of what's going on out there. And I had an example, John, that was... When I was the head of research at Citibank, and I had been head of research before taking care of a team of analysts, and analysts are always late in their reports, they're writing long reports about whether to buy or sell a company. They're trying to gather as much information, talk to the company, things get delayed. They set their deadlines and then they... The job of a head of research is juggling those delays so that the sales team and the clients need an idea day. And it's always the case that you're juggling around and okay, we don't have something this day, let's make something up with what we've got. Okay, this guy couldn't produce on that day, but he's gonna come in on Monday. So I felt pretty good about my skills at managing that process. And then I got a job at the number one foreign, the number one broker, let's say, or investment bank at that time in Asia called CLSA. And when I talked to them, I asked them how do you handle the flow and how bad is it here [chuckle] with the analysts being late? And they said, the analysts are never late.

0:11:13.3 AS: And I was like, that's impossible. My whole career it's been about handling the analysts being late. And they said, no, analysts are never late here. And I was like, how are you doing that? And they're like, well, we have a three week plan ahead. Everybody knows it. You know your day. There is no excuse, there's no shifting, there's nothing, it has to be delivered on that day. So it's up to you to kind of bring your project to a head so that you're ready to present on that day. And if you have some kind of major setback or problem, talk to another person and switch the day with them and sort it out. And every single day we had great stuff coming out. And I would've never, I mean, I was operating at a certain level thinking I was really knocking it out of the park, 'cause I was accommodating. I was careful, I was thoughtful. I understood the pressures that people were feeling. I was doing my best, but I didn't have a knowledge that it could be a very different way of doing it. And that's where I think about going outside of your own system to observe and learn and see. And then all of a sudden you're like, oh, [laughter] Okay. And that's where I feel like what you're talking about, about the education aspect is really the most amazing part.

0:12:33.2 JD: Mm-hmm. Yeah. That actually... I hadn't planned to talk about this, but I've been reading recently about the... Called the... Well, there's a book called Toyota Kata and Kata is from martial arts. It's the various movements that you have to do sort of repeated deliberate practice so you can sort of, they become ingrained in your muscle memory. Well, the same idea is in place in Toyota. They call... Well, they don't, but the author called it... They don't call... They don't have a name for it, but he sort of observed it and gave it the Improvement Kata name Mike Rother. Yeah, there it is. Yep. There it is. That one. And one of the things that was interesting, and it kind of reminded me of this as you were talking, is that part of the improvement kata is there's a sort of a target that's aligned with the organization's vision that guides anything that the folks in the organization are working towards.

0:13:27.0 JD: And so there's always a target condition. There's an understanding of sort of where each individual is and the departments are. And they're always setting a new target on the way to that sort of vision target and running these experiments all the time. And they constantly set those targets so that they are ambitious but within reach. And then they're coached on the way repeatedly. And in that way they're sort of always moving forward the organization. And so I think of when you've changed investment banks and you're at this new bank and they're saying, Hey, this thing is possible, it's possible to do this. Here's the way we do that. Here's how we work towards that. And so you can imagine a place like Toyota being so successful, because if everybody has got this mindset, this scientific thinking where they're constantly moving towards a target and there's a method for doing so, [chuckle] that is an incredible education right there if you're an employee working in an environment like that. So that just made me think of the Toyota Kata.

0:14:41.4 AS: Yeah. And it's a great example of how reading books is part of education because you're getting exposed to new ideas and exploring and thinking about things. And that's where, well, think about the repetition in let's say a martial arts as an example. And when Dr. Deming talks about opening up education to everything for everybody, there's something to learn in almost everything out there. Like if it is about... What is it about those repetitions and why is that important and could that benefit our business? And he talked about painting and other things, you know? Like education very widely can bring you new ideas that can come back to improve your system.

0:15:27.3 JD: Yeah. And I think you have to invest in that sort of broader education, 'cause it's sort of an investment in the future, you know? Especially right now, things are changing fast. And you could have the best training program in the world, but if you are not also sort of looking out for what's next beyond that, to adapt to whatever's changing in your environment... A good example is this, we have a much better understanding of cognitive science than we did 20 years ago. And so if we didn't adapt... If we didn't sort of learn that and then adapt that and sort of include that learning in our training system that we're gonna start falling behind pretty quickly. And I think this can get... This may be part of the most important responsibility of a leader on the learning front.

0:16:28.5 JD: Because what I also see is that education leaders are often getting enticed by many, many fads that sort of come along. And so how to sort of actually latch onto something that represents a potential advantage, that's a real important skillset to have. And I don't think... That's a key... I think a key function of systems leaders is sort of to know what to let go of or what not to latch onto at all and what to sort of sink resources into because if you're gonna go do these educational pursuits, you're obviously gonna have to sink time and money resources into these things. And so being able to differentiate between what is good and what is bad is a real key skill.

0:17:22.6 AS: And one of the things about Toyota is it's like the ultimate Asian family business. And although it's now a big public company, the largest automaker in the world, and the family's ownings in the company is relatively low, it still has the influence of the family. And I was thinking about another huge company that I know of in Thailand here that shifted its focus away from, let's say, Deming in this case, to when a new CEO came in, he said, well, there's a different way and this is my way. And one of the things that's interesting about what Toyota's done, you know, Toyota gets a lot of blame for being slow to progress and stubborn and all of that, but man, they have built a machine and a... You just can't change the direction of that quickly, you really nurture what has been developed and how do you not just throw away. I was presenting to my students last night in my finance class here at Sasin School of Management in Thailand and I was showing them the DuPont Analysis in the world of finances where you break down the return on equity of a company. And I explained why they call it the DuPont Analysis, and that's because the DuPont company bought shares in General Motors in 20- or 1912 or something like that and they instituted this method of financial controls on General Motors. And I said to my students in passing, General Motors has been going bankrupt since 1912.

[laughter]

0:19:00.9 AS: And it's like every... It's not a cumulative level of learning. And that's where I feel like Toyota, what Toyota has achieved is a cumulative learning process.

0:19:16.9 JD: Mm-hmm. Yeah. You know, and it's a part of their DNA. I think certainly there have been challenges as they've grown across Europe and the United States and the world really. And a lot of the challenges that I understand is because people... That improvement Kata is sort of combined with a coaching Kata, like an approach to coaching and managers at different levels coach folks that are sort of a level down from them. And everybody in the organization, especially early, had sort of this mentor-mentee relationship. And so part of the challenge with growth was the fact that there are only so many of these folks that are grounded in this scientific thinking in the coaching part of this. And so that was a challenge as they grew, you know, in California and Kentucky and other places across the world.

0:20:17.9 JD: They had to build this coaching capacity across all of these new production facilities and other types of facilities across the world. So... But I think that what I really like about this principle...I, you know, if push came to shove, I started this by talking about Deming would basically allow almost anything when it came to allowable educational pursuits. And I think I would be much closer to that than I would be to limit those things. I think that is a really... That's a good sort of approach to take as a leader. I think here where I am at United Schools Network, one of the things that I was able to do was go take an improvement advisor course which required significant resources and time and money at the Institute for Healthcare Improvement.

0:21:19.6 JD: And so someone could look at that very easily and say, well, why are you an educator going to a healthcare organization? And I think it's one of those things where people maybe don't realize that the Deming philosophy and some of the continual improvement stuff, it's sector agnostic. And so when you can learn the philosophy, the methods, the techniques, you can bring them back to your own organization. So I think had I not gone down this path to study Deming, I wouldn't have made it to IHI and then bring this stuff back to my organization. I think it's benefited our organization in lots of ways, even though that might not have been immediately apparent to folks, you know, initially.

0:22:09.8 AS: So how would we wrap this up for the listeners to make sure that they truly understand the idea of vigorous education, self-improvement, this type of stuff?

0:22:14.0 JD: Yeah. I mean, for me the main point is that systems leaders should really encourage education among the whole workforce with a pretty wide latitude for allowable pursuits. I think especially for educators, when we seek those types of opportunities, we're also modeling this idea of continual learning to students as well. They see that just because I have a degree or a master's degree or even folks here that have a PhD, we have I think an organization that's pretty hungry for learning. And that's a model for students. Oh, this doesn't end when you graduate high school. This doesn't end when you graduate college. It doesn't even end when you graduate from graduate school. People all across the organization have books piled up on their desks and we're sending people to various learning programs and stuff like that.

0:23:09.4 JD: And I think that's a good model for students. And I think within that another big thing is to think about do you have an understanding of the stable state of systems and understanding that training programs are only gonna take you so far? Individuals are gonna come to a sort of a stable state once they've sort of maxed out on any particular skill. And that's why this idea of education is so important. Skills are important, training is important, but this other side of the coin, you have to pay attention to education. What's on the horizon? How are you gonna push the boundaries within your system? And I actually think to your point about outsiders or having an outside perspective, that's sort of, I think the benefit of education, because I think without that sort of push from an outsider, the push from the education, breakthrough improvements aren't possible in our school systems. They're not gonna come from training programs. They're gonna come from this continuous learning, this idea of continually pushing the targets, having sort of an improvement mindset. Having a coaching mindset that's always pushing towards those things. And I think this requires not just skills, but it requires new knowledge and new theory continually. And I think that has to come from this vigorous program of education.

0:24:39.7 AS: And the beauty of capitalism is that if you don't go out and get the education, your competitors will, and you don't want your source of learning to be facing constant defeat from your competitors.

[laughter]

0:24:56.2 JD: Yeah, you can't sit around and wait, that's for sure. That's for sure.

0:25:00.0 AS: Exactly. Or someone's gonna take it. And that's the beauty of the capitalist system, the adversarial aspect between companies definitely gets people riled up when they see that all of a sudden someone's doing much better with some new technique or idea. Well, I think that was a great discussion to help us understand the difference between training and education and why it's so important. John, 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. 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."

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How do grading systems, teacher ratings, school rankings, and other programs like those create barriers to learning? Should we eliminate them entirely, or do they have their place? John Dues and host Andrew Stotz talk about how to preserve joy in learning.

TRANSCRIPT

0:00:02.4 Andrew Stotz: My name is Andrew Stotz. 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 18, and we're continuing our discussion about the shift from management myths to principles for the transformation of school systems. John, take it away.

0:00:31.3 John Dues: Good to be back, Andrew. In this episode, we're doing the 12th principle. So we're on 12 of 14, remove barriers to joy in work and learning. So that's a certainly a concept that we've talked about, but I'll start by just reading the principle. "Principle 12, remove barriers that rob educators and students of their right to joy in work and learning. This means working to abolish the system of grading student performance, the annual rating of staff and accountability rating systems for schools and school systems. The responsibility of all educational leaders must change from sheer numbers to quality." There's two really great quotes I like from Deming. One on joy in learning where he says, "Our schools must preserve and nurture the yearning for learning that everyone is born with. Joy in learning comes not so much from what is learned, but from learning."

0:01:24.4 JD: And then for joy in work, he says, "Joy in the job comes not so much from the result, the product, but from contribution to optimization of the system in which everybody wins." So he is saying basically the same thing in those two quotes, but he is talking about the contributions to the process is where the joy comes from, not necessarily the outcome. And so much of the time, we're focused on the outcome, be it the work product in a work setting or the test scores perhaps in a, in a school setting. But he's really talking about what is that process that you're contributing to? And, and you know, how do you feel because of that, those contributions you're making? I think whether you're talking about joy in work or joy in learning, sort of unifying theme in principle 12 as it's, this concern with the pride of workmanship, whether that's the workmanship of making a product or in the learning that you're doing or something you're doing as a result of that learning, like a report or a poem that you've written or whatever.

0:02:31.6 JD: And so I think as a result, it's barriers that get in the way of joy in work and learning. And you know, maybe one of the most important obstacles to improvement of the quality of our education systems in the United States. And you know, just like, sort of, it says in the outline of the principle, there's really sort of three levels that these barriers exist at. You got the students and the grading of students. And then you have oftentimes some type of rating system, evaluation system for teachers, for principals, perhaps sometimes those rating systems use test scores or other similar metrics. And then that third level is, you have the actual schools or school districts themselves that are being rated within these state accountability systems. So you sort of have, you know, these three levels. And then there's this common problem at all three levels, regardless of which one. And that's basically this thing that we've talked about repeatedly, where you under-appreciate the contribution of the system to the performance of the people, whether you're talking about students, teachers or, or you know, school systems. So I thought that's where we could focus today.

0:03:49.8 AS: Yeah, you know it strikes right at the heart of everything that we believe, as particularly as Americans, but certainly spreading that around the world, that it's all about measuring, ranking, tracking. You know, when a parent puts a kid in school, what do they want to know? What was their grades? When a student's in trouble, it's 'cause of grades. And what a student wants to know, like everybody wants to know and rely on grades. So it's just so, it's so difficult. You know, I was talking with someone else talking about why Dr. Deming's philosophy hasn't been adopted as as widely as you'd hope. And I think it's part of, it's just because it's just sacred, the sacred heart of everything that we believe. And if you can measure it, you can track it, you can feed that back and give it to people and show them where they are and you deserve where you are based upon your efforts, and you've gotta move yourself from there. That is so ingrained. And I'm just curious, like what's the hope from your side that this can be seen. I think it can be seen if you stop and look, but it's so hard to implement.

0:05:18.7 JD: Yeah. Well, I mean, I think one thing that can be confusing is obviously Deming was a statistician. So he is, has no problem with using data to improve the quality of our schools or even an individual lesson that a teacher delivers, gathering some data on how students are doing and tracking that over time. There's no problem with that. There's no problem with that I don't think at the school level either. I think the problem comes in when you create a reward and sanction system around that data. And I think that's, Deming actually think he indicated that, that system of reward or sanction on the other side is one of the main constraints from being able to develop this win-win culture. Whatever level of the system that you're talking about, that student level, the educator level, or the school and system level. They're, all those grading systems are really reward and sanction systems. And I think when you take the data and use it in that way, that's when I think Deming is talking about the real problems, the manipulation, you know, the competition for top spots that leads to all kinds of strange behaviors, those types of things. That's really where he's focusing most of his attention.

0:06:49.1 AS: And if you had no constraints from governments or other outsiders and you were setting up a new school right now with zero constraints, the only thing was absolutely optimizing the learning of young people. How would you handle this - grading? How would you handle all of this? Would you do it in a different way? Would you just do it and de-emphasize it and say, oh, well, it's not so critical? It's just information feedback, or would you teach them how to use that data like Deming may, or like how he uses data? Or would you say, no, that's just that there's no redeeming benefit, if we're not required to do it, then we wouldn't do it?

0:07:43.4 JD: Yeah, I mean, I think it'd be some combination of the things that you mentioned. I mean, on just from a practical sense, Demings certainly understood that we live within the world that we live within. And so if that hypothetical school that you're talking about is a public school and I was in Ohio, I would obviously give the state test and take whatever data I could use and use that in a positive way that I can. So I'm gonna do the thing that I'm caught on to do as a educator in a public school system. So I wouldn't opt out or anything like that. I think in terms of how I set up internal systems, I think, ..GAP. Yeah, I thought a lot about this but I haven't maybe put to paper exactly how I would do it.

0:08:36.2 JD: I think...I certainly would use assessments. I certainly would track how students are doing on standards. I would involve students in doing so they could track that over time. In terms of grading, I don't know exactly what I would do. I would definitely de-emphasize that to the extent that I possibly could so that the emphasis is on the learning and not on the grades. That would be a key sort of guiding principle. There's certain things that I think are outlandish that schools do, where they do pep rallies or pep rallies or something like that to, as the buildup to state testing comes, I find those things ridiculous. So I would stay away from doing anything like that. Kind of how we've treated state tests in the past, even prior to discovering Deming was matter of fact.

0:09:47.2 JD: Like, this is something we're preparing for, we're gonna do our best. We're gonna try our hardest, we're gonna learn from the experience, we're gonna work hard on it, and then we're gonna move on. You know, that's the type of mentality we had. In terms of like the mindset of the school I led, there was a poster in the hallway that said, you get it wrong and then you get it right. So that was the mindset is, we learn from our mistakes. We talked about creating a culture of air in our classrooms so that students felt, you know, safe, I guess is the word I would use to, or willing to call out when they didn't understand something, or they did make a mistake, and then we work together to rectify that. So that's a little bit a long-winded answer. I don't have it all worked out. I have some ideas, but I think overall using data is fine. I think it's, when you get into the rating and the ranking, that's where the problems and the rewards and the sanctions, I think that's where the problems generally come from.

0:10:50.8 AS: Yeah. I mean, I'm kind of unconstrained in my Valuation Masterclass Bootcamp, because I'm not under any, there's no supervision of what I'm doing by anybody. It's just me trying to make a better experience for the students. And the idea of grading never really came into my process. It's interesting, John, that one guy who was a student of mine, he graduated and then I hired him to work with me to take care of the other students. One of the first things he did was come up with a matrix and a grading system, [laughter] just because that's what he knew. And now he uses that system and he has little points that he gives. That system doesn't have any connection to whether you're gonna pass the class or not, or there's no ranking or anything related to it. It's just that, okay, you only got six points out of 10, which means you haven't really done the assignment. He's clearly defined what are the things that you need to have done? And then he goes through and says, did you do them? So it's definitely a, I think it's a good feedback mechanism.

0:12:08.4 JD: Yeah.

0:12:10.2 AS: But, you know, whether it's valuable. I think what I'm trying to do is create the experience that young people are learning how to value a company through the process of learning and discovery and, and discussion and, and, and going online and going through my material, asking me questions, and then demonstrating, showing different things. And then they're slowly putting those pieces together. And I can also see that it takes time. You know, it can't all happen in one week. We have six weeks and where they're at at the end of the six weeks is so much further along than where they were at the beginning. But I guess my point would be if I was completely unconstrained, which I am, it's just that it wouldn't be pro or con grades and ranking, it wouldn't even really exist because it's not a core part of learning. Core part of learning is providing the environment, the excitement, keeping people on track, helping them see, okay, here's what you gotta do now, see if you can do it. You know?

0:13:18.8 JD: Yeah. And I think what I was gonna do today is bring this alive. You know, we've talked about grading of students and even the performance appraisals in some of the past episodes. So what I thought we would do here is, sort of, focus on why grading schools could also be you know, a barrier to joy in work, how this might play out. So I think generally most people are now familiar with, because in the public school system, we've had various types of rating systems. You know, each state has their own. And I think it's, what's important here is to look at examine if the ratings help the public differentiate between schools that are doing a good job of educating kids and those that are not, because that's the point.

0:14:09.7 JD: Right? At least one of the points. And on its face, it sounds simple, you know, up until this year, Ohio has like an A through F grading system for schools, and there are sub components and you get an overall grade A to F. Right? And so it sounds simple. Schools with more A's are better schools, except for it's not that simple when you go beyond like a surface level analysis. So I thought it'd be helpful to just zoom in on two schools located here in Columbus. One's called Jones Middle School. It's in the Upper Arlington School District, which is close by. And then Columbus Collegiate Academy, I'll call it CCA, it's also a one of our middle schools. Both the schools serve grades six through eight. They're less than 10 miles apart here in Columbus.

0:15:03.6 JD: So they're geographically proximate. And this analysis comes from an article I wrote in 2020. So it's from a few years ago. So the results are a few years old, but you know, I think they're fairly representative of how the schools have performed over the last decade or school or so. So let's start with just the grades that the schools received. So the schools get an overall grade. Jones Middle School has an A, CCA has a B, so you know, fairly close there, but Jones outpaces. And then there's the achievement grade. And that's basically looking at all the kids' test scores, how they do overall. Jones gets a B, CCA gets a D, right? So Jones has quite a bit better performance. And then there's a progress category. So how much progress did the kids make during that particular school year?

0:15:57.9 JD: How much growth did they make? Now this is interesting now, CCA gets an A and Jones got a B. So just to recap, the overall grade for Jones was A, achievement B, progress B, for CCA overall, B achievement D, progress A. So basically a higher percentage of students at Jones begin year on grade level 'cause they have that higher achievement grade, but they don't grow as much as the students at CCA once they're there. This difference between achievement and progress grades becomes even more interesting as you start to factor in not only the school characteristics, but also the neighborhood characteristics. So let's talk about inside the school just to start with. So in terms of student population, Jones and CCA are pretty similar in terms of students with disabilities. So those kids with special education needs tend to, as a general rule score lower on standardized tests.

0:17:02.9 JD: So those populations are roughly equal, but 100% of the kids at CCA are economically disadvantaged as defined by the state. At Jones, just 2.4% of the kids are economically disadvantaged. When you look at other report card measures such as attendance, chronic absenteeism, Jones has much better rates. So 97 plus percent attendance rate, just 2% of their kids are chronically absent. At CCA 93% attendance rate, 21% of the kids are chronically absent. But when you start to look at these, some of these metrics framed in terms of the poverty rates in the community surrounding CCA, these numbers start to take on a different meeting. And I think what they're, especially things like chronic absenteeism, that's all the rage right now, attendance, I think what you start to need to understand is these are indicators of inequity, housing instability, neighborhood violence, lack of access to healthcare.

0:18:15.5 JD: I think they're more an indicator of those types of things than they are of school performance. So as you start to think about things in those ways, what you realize is that the students at CCA are just as capable as the students at Jones, but they face sometimes overwhelming obstacles related to poverty. It's also interesting to take a look outside the schoolhouse. So the median family income in the census tract where Jones is located is $184,000. So the median family income in that neighborhood, so it's a pretty affluent area. In the neighborhood surrounding CCA in that census tract, the median family income is just over $20,000. So we're talking about an order, orders of magnitude higher family income in upper Arlington than in the neighborhood that CCA sits in. And then there's all types of factors. Some grounded in historical reasons that relate to this, but they're also compounded by funding disparities. So the per pupil revenue at CCA for this year is $10,600. In Upper Arlington, it's nearly $17,000...

0:19:35.0 JD: This Jones Middle School has almost no students living in poverty, yet gets $6,000 more in additional revenue per student than the students that attend CCA. So think of the implications of that.

0:19:52.3 AS: When you say they get more revenue, you mean the state or the government's providing them more money per student?

0:20:00.1 JD: Yes, all in. From all sources. So when you look at what the federal government provides, the state government, and then local funding sources. When you look at all those sources combined, this more affluent middle school gets $6,000 more students, dollars per student.

0:20:14.5 AS: Obviously, it's not based upon need. Is that based upon the grade or some other?

0:20:19.0 JD: Well, it's because the funding is heavily influenced by local property taxes. And because of the affluence of...

0:20:26.7 AS: They have the resources.

0:20:28.2 JD: They have the resources. And in Ohio, charter schools don't have access to local money. So that explains most of the gap. Most of the gap. But back to my point, when you think about CCA, having kids with more challenges, less money per student, less resources to pay for a facility, to pay teachers a competitive salary, extracurricular activities, all those types of things that we want to equalize are highly inequitable between those two schools. So then you start to ask yourself, well, what are the report card grades measuring exactly? Are those grades on those state report cards a fair representation of what's happening inside the school? Or can a significant portion of those grades be attributed to this larger context in which the school sits? And I think that's where you sort of put on this systems thinking lens and realize that, sure, what teachers and the principal is doing inside the schools, they are certainly making contributions to those state report cards. But you cannot ignore what is going on outside those schools and those neighborhoods when you're thinking about these grades.

0:21:54.1 JD: And so if you're sort of thinking about... Like a formula that would sort of lead to the school's results and you just... Let's just call it A+B+C+D+E=71, where 71 is the score that the school gets. Let's just call it that. And let's call the school's contribution letter F. A, B, C, D, A+B+D+C... Or A+B+C+D+E+F=71. The school's contribution is F. Well, that equation cannot be solved unless you know the values of A through E or at least some of those values. But what we try to do with this state report card system is that we assign this value to F, the contribution of the school, with no knowledge of the effects of these other variables.

0:22:57.3 AS: So it's, in other words, the contribution of the school is 100%. You mean you're responsible for your results? Is that what it means?

0:23:04.4 JD: Well, right. So if you're going to give me... If you're going to give CCA Main Street a D in achievement, that means the only thing that contributed to that grade was the school. But there's all those things that we talked about. Some, sort of, when you look at the variables A, B, C, D, and E, those other variables, you could look at things like, what are the state standards? Or what's the test design? What's the school funding? Household income? Home environment?

0:23:34.1 AS: Education level, maybe, of families.

0:23:37.2 JD: Education level of parents. Teaching methods. All of these things are variables that are outside of the school's control, or most of the ones that I just mentioned. But we don't, we don't see that when we look at these report cards. Right? You know, and just like I said at the beginning, despite all of that, I'm in favor of administering these state tests that are standards aligned, reported annually to the public. I actually think understanding how students are performing in a standardized way is actually... Could be useful information, I think. But when you extend those systems to the grading, the rating, and the ranking, I think that's a misuse of the information. Because too much of the rating and ranking comes from the system, as opposed to being directly assignable to the school or to the individual educators within that system. I mean, I think, if you analyzed report cards in this way, I think my opinion is that a reasonable person would conclude that the comparison between Jones Middle School and CCA is not a fair one.

0:24:56.4 JD: Because those students that arrive in those schools are not on equal ground upon enrollment. And I think our time would be better spent figuring out how to make things more equitable between those two groups of students than constantly recalibrating these rating systems that at best communicate confounding information, conflicting information.

0:25:27.5 AS: KPI experts around the world listening and viewing this are saying, "oh, come on, John. What? All you got to do now is you just got to break it down. And now we're going to do the KPI by adjusting for these factors. And now we're going to compare schools based upon that." Of course, what we've learned and I've learned over my life is that every time you think you're going to break it down and make it more comparable, it gets harder and harder to do that. And it just becomes less reliable and less useful in a lot of cases. Not completely. I mean, making some simple adjustments just for, let's say, yeah, I suspect that just one factor could probably represent A, B, C, D and E probably pretty well. Maybe that's the income of the area or the amount of funding that they got. One or two of those factors probably is enough to say, okay, we gotta compare schools that have these factors similar as a first step. But every time that I've ever gone down to go deeper into measuring, it just gets...it, it, the answer isn't there.

0:26:40.6 JD: Yeah, and I'm going to tie this back to joy in work. So if you think about that current school rating system, what we fall prey to is that fundamental attribution error that we've talked about before, where we have this tendency to underestimate the impact of situational factors on other people's behavior and overestimate the impact of individual factors, you know, when it works in our favor. But what happens is if I'm a teacher at CCA, there's a likelihood that I'm going to get blamed for the results. Let's say the achievement results. If I'm at Jones Middle School, there's a likelihood for praise. Because the school is doing pretty well. But in both cases, in both cases we're vastly underestimating the impact of the situational factors or the system on those results. So over time, I think this can have an impact on joy in work of educators working in these challenging schools.

0:27:49.3 JD: Even, even in the case where in many of these schools, like the one I just talked about with CCA, that there's solid evidence that staff and these schools are often getting better outcomes if you go beyond the surface level analysis. Because if you remember, they did quite a bit better on the progress, meaning they grew the kids more in a single year, even though they may have not hit the proficiency standard at the rate that Jones did, they grew the kids more. So you could make a solid argument that CCA is actually better, even though they got lower grades on the report card, right? I've often said, what would happen if you just switched the two staffs?

0:28:33.6 AS: Yeah. Problem solved.

0:28:36.3 JD: What would happen to the report card? You know. That's interesting. Obviously, it's never going to happen, but it's an interesting hypothetical experiment. My guess is a lot of teachers will find out that would go from Jones Middle School to CCA in a much more challenging environment would find out pretty quickly, that a lot of their methods don't work as well, right? So I think that these are the types of things that we're talking about. Imagine if you're at CCA year after year after year after year, get these lower grades. Right? And even if there's some evidence, like the progress score, who's digging in to find this? That score is often harder to find than the overall grade. That score is often not in the headline and what makes it into the newspapers. You know? And so you start to ask or you start to doubt yourself. You start to think about, am I really good at my job? Those types of things come in. And if you don't have someone there doing this deeper analysis, putting this in context, that's not easy to do.

0:29:52.1 AS: Yeah, when the pressure's on.

0:29:54.4 JD: When the pressure's on. And even if you're good at doing that type of analysis, sometimes people won't believe you because, well, that's not what I'm hearing. That's not what I'm... That's not what my family's saying. Those types of things. And then, and then, if you have those good teachers that at a certain point say, I'm just going to go somewhere where it's easier. Then those kids at CCA wind up in a worse place. And that's, I'm using CCA as an example, but I think this plays out at you know challenging schools all across the country all the time.

0:30:36.2 AS: Yeah, when you were talking about the morale of the CCA teachers, I was just thinking some brilliant bureaucrat would probably come up with the idea of why don't we post this grade right on the front of this school?

[laughter]

0:30:51.4 JD: Well, yeah, they're easy to find. That's for sure. These are all public, public reports. Sure. And in fact, actually, back during, I think, during the Obama administration, during Race to the Top, when it became really in vogue to rate teachers based on their progress scores, the individual teachers. The school report cards are easy to find, like a report card on any public school in Ohio or any public district. But in some cities, what started happening is they were, newspapers were getting a hold of the list of the progress rankings for individual teachers and posting those. I remember some of those were in the newspaper. And I think we've talked about this here as well, that what researchers have shown over time with these progress scores, these value added scores, is that some of the score is attributed to the teacher from before. Teachers that take on more challenging groups of students tend to have scores that are... Progress scores that are lower, all types of things And you want good teachers in those rooms. And what you're doing is disincentivizing that to happen when you have these types of rating and, rating and rating systems. So it's a tough thing.

0:32:15.2 AS: It's such an interesting topic. And I think, it got me thinking that we should start a new series on the Deming Institute podcast, which is, bad use of data. Like examples of, you know, here we have a misuse of data or just the simple thing of not making adjustments for situational factors and the misattribution. You could argue if you just improve that, maybe there's a little bit more meaning to this. But then, of course, there's also all the unintended consequences. And I just would imagine, I'm thinking about a book I have called the... By Terry Mueller, I think, or Jerry Mueller, which is the Tyranny of Metrics.

0:33:05.9 JD: Yeah, we got a lot of copies of that in our, right in this room where I'm sitting.

[laughter]

0:33:10.8 AS: Yeah. And I think that that would be kind of fun to bring out from the audience examples of what you're seeing.

0:33:17.4 JD: Yeah. Well, and one thing I didn't even mention that is also a key contributor here is, so let's say these two middle schools get this state report card. And another contextual factor is that most of the kids that go to Jones Middle School went to, I don't know the name of it, Upper Arlington Elementary School. And a very stable neighborhood. And of course, there's a few families here and there that will move in and out. But for the vast majority, I guarantee a vast majority of the kids that took these tests in sixth, seventh and eighth grade at Jones have been in Upper Arlington since kindergarten or preschool.

0:34:00.4 AS: Yeah.

0:34:01.2 JD: CCA Main Street, because of the nature of charter schools in Ohio, is a standalone 6-8 middle school. So that means 0% of the kids went to our elementary school during these years. And now whatever happened K-5 in a school, those kids school career, that certainly plays a big role in how they're going to show up when they enroll at CCA. So the only rule in terms of counting for CCA's test scores is that the kid had to be enrolled by October, let's say the first week of October. And they take the test in March. So six months later, let's say.

0:34:49.2 AS: Yeah.

0:34:49.6 JD: So let's say probably 50% of the kids at CCA, were brand new to that building, to that district, that school year, whereas the vast majority of Jones middle school students had been in that district for seven or more years. Because kindergarten is a year, and then when you're a sixth grader. So the time that they've been there, that's not taken into account either. And that may be the most important.

0:35:19.0 AS: Yeah. That's fascinating. So how would you summarize the one thing you want the listener, the viewer to take away from this.

0:35:30.5 JD: Yeah, I mean, I think it can be easy to start to think that data is bad. That is not the problem. You need data to help inform your decision making.

The problem comes when you then take the data and attach the ratings and the rankings to it, that's when the problem comes in. So you need to detach those two things.

We need to keep it public, keep it transparent, keep it known by all stakeholders, be it parents, the public, policymakers, students themselves. But it's the rating and ranking, that's the problem. That's the key takeaway.

0:36:11.9 AS: Great. Well, 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 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'm going to leave you with my favorite quote from Dr. Deming, which is totally pertinent to what we just discussed. And that is: people are entitled to joy in work.

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Many businesses equate "manager" with "leader," excluding potential leaders from across the organization. In this episode, Bill Bellows and host Andrew Stotz talk about leadership in Deming organizations - with a great story about senior "leaders" making a huge error in judgment at a conference of auditors.

TRANSCRIPT

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 opportunities. The topic for today, episode number 14, is Beyond Management by Extremes. Bill, take it away.

0:00:29.7 Bill: Number 14 already, Andrew.

0:00:32.0 AS: Incredible.

0:00:32.6 Bill: It's a good thing we skipped number 13. That's an unlucky number. [laughter]

0:00:37.0 AS: Not in Thailand. It's a lucky number.

[laughter]

0:00:40.6 Bill: No, we didn't skip number 13. This is 14.

0:00:42.1 AS: Yes, we didn't.

0:00:43.5 Bill: Alright, so I just enjoy going back and listening to all of our podcasts, once, twice, three times. And then I talk with friends who are listening to them. And so I'd like to start off with some opening comments and then we'll get into tonight's feature, today's feature.

0:01:00.9 AS: So let's just, to refresh people's memory, episode 13, which we just previously did, was Integration Excellence, part two.

0:01:09.2 Bill: Yes. And that's what we called it. [laughter] So... [laughter] So last week I...

When we thought about getting together, but I had the wrong time, and it worked out well in my schedule. Last week, Andrew, I did three presentations. A two-hour lecture for Cal State Northridge, which is part of a master's degree program, where I do a class in quality management. That was Tuesday night. Wednesday morning I did a one-hour presentation with one hour of conversation afterwards with the Chartered Quality Institute, which is kind of like the American Society for Quality in the UK, and this... So this was several hundred people from the UK and also the Caribbean chapter from Trinidad Tobago, Jamaica. And so there's a bunch there. And then on Thursday morning I did a three hour session for a group in Rotterdam, which was really early for me and late afternoon for them.

0:02:25.4 Bill: And in all three, I covered similar material for all three groups, which included the trip report that we've done on the ME Versus WE, how did you do on the exam? How did we do? And so it was really neat to present that to the three. And in each case, when I threw out the question, "how did you do on the exam?" And then explained as I did one of our earlier podcasts that if you've got a long list of inputs, which includes - the woman I was talking to and, 'cause I said to her, the question is how did you draw on the exam? What are the inputs? And she said, the inputs are, my energy, my enthusiasm, my commitment that she got stuck. And I said, have other students helped you? And she said, yes, other students have helped you. I said, that's another input.

0:03:17.3 Bill: I said, given that input, how many can you see? And she said, oh my gosh. She said, my professor, my parents, my brother. And then all of a sudden there was this long list of inputs that she couldn't see. And so I explained that to the people and then say, "if you've got that long list of inputs and the original question is, how did you do on the exam? Does that long list of inputs change the question or are you okay with that question?" And what I look for is, and what we've talked about is, does the whole idea, how did we do on the exam jump out at you? No, it doesn't jump out. So, in each case, I said, here's the situation, might you reframe the question? And in all three situations, most of them that I asked said, there's essentially nothing wrong with the question. And if they did restate the question, they kept the "you," "do you think you could have done better?" Do you think... And that's what's so cool is that they just hold onto the you. Well, and for one of the groups it came a... It was kind of like what I was saying was semantics.

0:04:32.6 Bill: And I said this is not semantics. I said, there's a big difference between somebody, you know referring to our kids as my son and my daughter and our son and our daughter. And this, "my," is singular ownership, "our" is joint ownership. And so what I was trying to explain is that, saying “How did you do versus how did we do?” is the difference between being an observer of your learning if you were the student, Andrew and a participant. Those are not... Those are enormous differences. It's not, just, it's not just a simple change in pronouns. And so when I... And when I got to next, I was at a meeting years ago, I was at the annual, you ready Andrew? I was at Boeing's Annual Auditor's Conference.

0:05:40.5 AS: Sounds exciting.

0:05:41.4 Bill: 1999. So I got invited to be a speaker, Andrew at Boeing's Annual All Auditors Conference. Right? So I'm thinking going into this, that these are a bunch of people that don't feel valued. Because it's not like I get a phone call and I say, hold on, hold on. Hey Andrew, I got good news. And you say, you're a coworker, what's the good news? Annual... Andrew, we're gonna be audited next week!

[laughter]

0:06:10.2 Bill: You're like, "Holy cow. Hold on, lemme go tell everybody." So I thought going into this meeting is, these are a bunch of people that don't feel valued. I'm an auditor at least that was, so that was my theory going into this, so it's a Monday afternoon gathering with a dinner and then all day the next, all day for a couple days. So the opening speaker, speaker on Monday night was the senior executive of a big Boeing division, it might have been Boeing defense let's say. And my theory was first of all, you got a bunch of people that don't feel valued and I came away from the three days thinking there's a whole lot going on in audit whether it's financial audit, data integrity audit, quality audit, these are necessary roles. And so I came out of it with great respect for that whole organization otherwise would think right, but I'm thinking this executive is going to come in, going to do the Friday, Monday night presentation and I'm thinking it's like they drew straws and they say well okay I'll go, I'll go up there and talk with them.

0:07:22.8 Bill: Within minutes of him speaking I'm thinking this guy's excited to be here. So I'm thinking he's going to kind of phone it in, now I'm watching this I'm thinking he is, he is really engaged with the audience. He's talking about, the future role of the audit organization being partners and all this and he's talking, I mean he's giving them an enormous bear hug and I'm thinking this is not what I thought and again and so... I'm still thinking he's either a really good actor or he really wants to be here. Then my theory was and I thought, holy cow, now I get it. How many people in the room Andrew would it take to leave the room with their nose out of joint and shut down the F18 program by noon tomorrow? How many people would it take?

0:08:21.3 AS: Not many, one.

0:08:22.9 Bill: Right, so then I'm thinking these, he needs these people to love him, because if he disrespects them, it's a bad day. So I went from thinking why would you want to be here if you were here, then I'm thinking, oh no. Now I'm thinking this is brilliant so then I look at the program and I'm thinking which other executives have figured out how valuable this is and I see the next day at lunch is Boeing Commercials I'm thinking they figured it out but the organization I was within was Boeing Space and they weren't on the program so I contacted a friend that was connected high up in Boeing Space, I said we've got to be in this program, right? So the program ending, it ended nice and I'm thinking wow, wow. So then just prior to lunch the next day is the number two guy for Boeing Commercial. Not the number one. The Monday night guy was the number one. The number one guy for Boeing Commercial at the time was Alan Mulally, it wasn't Alan Mulally, it was his number two person.

0:09:33.7 Bill: So he's up on stage, he's up on stage, he's up on stage. And he's talking to the audience and in parallel Jim Albaugh who at the time was CEO of Boeing Commercial, no Boeing Space and none of Jim's people were there, Jim wasn't there. Jim a couple weeks prior he had asked me to get with his speech writer at a presentation he was doing and he wanted some words in there about investment thinking and all the things we've been talking about in this. He said get with him and put some of that stuff in there put there some of that stuff in there. I said okay. So as I'm listening to the number two guy speak there's a lot of "we" and "you" but who's the we? And who's the you? So I'm making notes to myself to tell Jim don't say "you." Say "we" and make the "we" inclusive, 'cause the guy on stage is, the you and the we and the you and the we, and I said no no stay away from "you" focus on we but make sure they understand that "we" is all of us, right?

0:10:35.1 Bill: So this is what's going through my head and I'm writing it all down, writing it all down and then this guy says and I'll paraphrase. I wish I had the exact words and the paraphrase is pretty close to what he said as judged by what the audience heard, right? So when I heard the comment and I'm thinking to myself, you said what? Then I look around the room and I thought he did. Here's what he said again the paraphrase is: he made reference to those within Boeing that do the real work, and he said it in a way that was present company excluded right? Right, so I hear him say 'cause I'm getting, I'm making literally I'm making notes to myself and then I hear that comment and I'm like, did you just say what I thought you said? And I look around the room with 300 people and I'm thinking, Oh my gosh, you did and I'm seeing I am seeing people irate, you see the body language, right?

0:11:44.3 Bill: And I thought wow, how could you say that? So then the lunch speaker was Harry Stonecipher, the chief operating officer. And he was up, walking around the stage. I don't think he knew anything about what happened prior so he's up there talking, okay. After Harry we're getting back to the program and the guy running the entire event is now up on stage and he's very deliberately he's got a, he's got a piece of paper rolled up, he's walking around on stage, "yeah Scott misspoke no doubt about it. He misspoke, I hear you." I hear you, you are ready Andrew? You are ready, you are ready?

0:12:36.8 AS: Give it to me.

0:12:37.4 Bill: And then he says then he says "But let's be honest we don't make the airplanes." And I thought, really? And as soon as he said that, I had this vision of 250,000 employees, which was about the employment at the time. And so as soon as he said that, I just imagined being at the Everett facility, which is huge, where all the twin-aisle plants are made. And I had this vision of 250,000 people in the building. And the CEO Phil Condit says on the microphone, "Okay, I'd like all of you who make the airplanes to move to the west end of the building."

0:13:26.4 AS: And everybody else.

0:13:27.4 Bill: And it's what you get, is all the flight line mechanics move all the way over there. And then you show up and somebody looks at you and they don't see any grease on your hand, and they say, "ahhh you don't make the airplanes." And you say, "you see that tool in your hand? Who do you think ordered it?" And so this "we" and the "you" stuff, how did "you" do? How did "we" do? It was just, it was...

0:14:00.3 AS: He wasn't deliberately setting up the auditors to be pissed and then to be really, really tough on the rest of the organization. I'm teasing with that.

0:14:12.7 Bill: It was, it is just, I shared that with you and our audience as how uniting language can be and how divisive language can be. And so how did we do, how did you do, and what, with just, this is what I find fascinating is - these words bring people together. What I love, I love watching politicians or State Department people speak and 'cause what dawned on me is they are very deliberate on, I mean they to great lengths to not be divisive.

0:14:57.1 Bill: That's their job. And so they introduce people in alphabetical order, countries in alphabetical order. But they, and I thought, what a neat way of not inferring that the first one I list is the most important one and I just thought there's a just an art of diplomacy. And that's what, to me, that's what diplomacy is, is that the art of uniting, not dividing.

0:15:25.7 Bill: Alright. So now I wanna get into, in the three different groups last week we were doing the trip report and we got down to the hallway conversations and the ME Organization versus a WE Organization. And then a question I asked him was, who are the managers in a ME Organization and what do they do? And you got, those are the ones that set the KPIs. Mark the KPIs, beat you up, sit in their office. Okay. Who are the managers in the ME Organization? What do they do? Who are the managers in a WE Organization? And what do they do?

0:16:01.8 Bill: They are mentors. They're out there on the shop floor, they're working with people. People work for managers in a ME Organization. They work with managers in a WE Organization. So I get that and I think "Okay, pretty good. Pretty good. Pretty good." And then I follow with "Who are the leaders in a ME Organization and what do they do?"

0:16:26.4 Bill: And what's really cool is you get the same answers as the managers. And that's when I started noticing in a ME Organization, we'll refer to the senior leadership team, the senior management team, and we're talking about the same group of people. And I said, what we've just said is that manager and leader are the same. And then I say to people, so what is that message in a ME Organization? The message is, if you're not a manager, Andrew, then you're not a leader. Which means what? Which means you have permission to wait for direction.

0:17:12.5 Bill: Boeing had a leadership center in St. Louis. It was called the Boeing BLC, the Boeing Leadership Center. Yeah, Boeing Leadership Center. And in order to go there, you had to be a manager. You either had to be a first level manager, you would take frontline leadership, a middle manager, which I was, which is leading from the middle or an executive. But the model... So then I think part of the confusion is in a ME Organization, on the one hand we say, our managers are our leaders. If you're not a manager, wait for the direction, wait to be told.

0:17:49.7 Bill: But then we said, we want our managers to be leaders. But that's the ME Organization. In a WE Organization, in a Deming organization, I think of leadership is the ability to bring forth a new order of things, a new order of designing hardware, a new order of designing software, a new order of marketing, we're talking earlier and the ability to create a new order of things and the ability to create a path for others to follow.

0:18:20.6 Bill: And so then in a WE Organization, it's like show and tell. When we were in elementary school, you go in and say, I have discovered this. And I thought, in a WE Organization, everyone has the ability to be a leader on something within their realm. And why would you, why would you make leadership incl...exclusive, which is the ME Organization. And when I tell companies that I consult for I said, when you make leadership exclusive in a ME Organization, to me, that's a kiss of death 'cause you're telling a few people, you're in charge and you're telling everyone else, you're inferring that everyone else, you wait for direction, again.

0:19:09.0 Bill: And I'm not proposing, everyone's all over the place doing it. No. There's got, this is not chaos. And if I have an idea on something and it's not my assigned responsibility, then I know to reach out to you because you're the marketing guy and I just throw the marketing idea to you and then you do with it what you want. But I look at leadership in a WE Organization as being inclusive. And then we get into this idea of, driving...driving change.

0:19:38.0 AS: Let me just ask you about that. Would this really be down to the core principle of Appreciation of a System? That somebody who appreciates a system knows that there's all kinds of components to that system?

0:19:55.5 Bill: Yes, yes.

0:19:55.6 AS: And that you can't say, oh, well this system really is only the people that are working on the production line, when in fact we know that there's all kinds of people working in that system. If I think about my coffee business as an example, we have a hundred employees and not all of them are working on production. And some are moving paperwork and making phone calls and others are out in the field. So an appreciation of a system brings you to the "we" rather than....

0:20:23.0 Bill: Yes.

0:20:23.5 AS: And a person who gets up and says about me, or, tries to identify that there's a certain number of people that are really driving the performance of this company are, they just have no appreciation for a system.

0:20:39.1 Bill: They have a narrow, a narrow view, a narrow view. So what you just said triggered another thought. But, um, the thing I wanted to add to this, in a ME Organization, it's about driving change. And we've talked about this in prior podcast. I go to, you put a gun to your head and I say, I want this KPI by Friday, Andrew. And you're like, yes, sir. And then I said to people in the past is, if driving change is the mantra of a ME Organization, like you're driving cattle driving, driving, and which is not an endearing concept. It is, it is, this is the where we're going. And I say to people, so what would you call it if driving is the ME construct, what is, what's the language of a WE Organization? And people will be wondering "ah," I say "lead, lead, lead." And if we like where you're going, we will follow. That's you creating the path that we will follow.

0:20:40.0 Bill: So I just wanna throw that out. But the other thing you mentioned about the metrics and the design of the organization and the thinking that, these are the critical people. At lunch with an old friend today, and I was sharing with her I taught a course at Northwestern's Business School, Kellogg Business School in the late '90s. And Kellogg then, and today is the number one or number two business school in the country. And I had a friend who was a student there in..., they liked what I was saying. So they hired me to teach a five week course for four years. And I presented, these ideas to them and it was pretty cool. I was, what was exciting is one of them told me that, what I was sharing with them about Deming, you are ready Andrew? contradicted what they were learning in their other classes.

0:22:46.2 AS: Huh. Funny that.

0:22:48.7 Bill: Yep. And so I did that for four years. There were three classes in quality. One was the use of control of charts, mine was called Quality Management, or TQM or something like that. And so there were roughly 80 students in the program, and they had to take two of the three, five week courses. So I got two out three students in the program. Then after four years, they waived the requirement. And so nobody signed up. And so I, um, after, right after 9/11 was when this happened, they invited me back because the person I was working with really liked what the course was about. But they wanted to, make it optional for people to attend. And he said, why don't you come out and talk with them and, that'll inspire them to sign up for the following year. I said, okay, fine. So I went out and he says there'll be 80 people there. I said, why are you so confident? He said, well, we've made it mandatory for everyone to show up. I thought, well that's, I said, that's one way to get people in the room. I said, do me a favor. I said, let them know I'm coming out and I'll have breakfast, I'll have lunch with whoever would like to meet with me beforehand.

0:22:50.7 Bill: So a dozen of them show up. And one of them says to me he says, you're gonna have a, he says something like, it's only fair to say we had a presenter like you last week. And to be honest, it's gonna be a really hard act for you to follow. So I'm thinking, "well, tell me more." "Well, we had a presenter last week who works for a company that makes pacemakers," I'm thinking, okay, "he had a video and showing people before and after their pacemaker one of the fellow students fainted. It was emotional." And I'm thinking, I'm talking about rocket engines. I don't even have a video. It's not gonna be emotional. I let the guy talk. And at one point he says "they keep track." He said "they keep track of who makes each pacemaker." I said "what do you mean?" He says, "they have a list of the people."

0:23:42.9 Bill: Every pacemaker is associated with a team of people who made the pacemaker. And part of what they saw on the video is people who have received a pacemaker now and then go to that company and they meet the people on their team, Andrew, who made their pacemaker. How do you like that concept? Right? Does that, when you graduate from this MBA program, Andrew, isn't that a neat idea that you can take away and use with you? Right? Right? Isn't that a takeaway? Right? So I'm hearing this [laughter] so I said, "let me see if I got this straight. So you're saying they keep track of who makes each pacemaker?" "Yeah, they do." And that's because, when people come well, people come to visit and they keep track. So let's say I said to the student, "let's say I'm the guy who orders the plastic that goes into the pacemaker. Would I be on the list?" you know what he says, Andrew?

0:26:01.9 Bill: No, you didn't make it.

0:26:04.0 Bill: He says, "no," let me try this. I'm the one who wrote the check, Andrew, that paid for the plastic. Would I be on the list? What he says Andrew? "No, you wouldn't be on the list."

0:26:20.2 Bill: So, I said, "well, why not?" And he says, "you have to draw the line someplace." So, I had with me, post 9/11, ready? I had with me a United We Stand two-foot by three-foot poster, which were all over Los Angeles and likely all over the rest of the world, at least the States. So, I held up the poster, and I said, "Have you seen this before?" He said, "Oh, yeah, United We Stand. I'm all about that." I said, "No, you're not." [laughter] I said, "You think you can draw the line and know who contributes and who doesn't, right?"

0:27:02.8 Bill: And you can suddenly see him kind of back up. I said, "Well, let's be honest." I said, "If teamwork doesn't matter, then draw the line any way you want. It doesn't really matter. But if teamwork does matter, be very careful where you draw that line." And to me, in a WE Organization, "we" is, who is the "we"? It's a big list of people. It's the employees, it's the suppliers, it's the customers. And so anyway, it's just that, so what's neat is, go ahead, Andrew.

0:27:41.6 AS: While you were speaking, I was able to go online and find the website of North, what was it? North?

0:27:49.5 Bill: Northwestern.

0:27:50.3 AS: Western, yes. And I was able to actually find the course that you're talking about that was the one that the students said that what you're teaching is contradicting. The name of that course, I just found it, here it is, "How to apply KPIs to drive in fear and division in your company." No, no, I just made that up. [laughter] "How to apply KPIs to drive in fear and division in your company?"

0:28:16.7 Bill: All right. And so, and we're gonna get to that. So, so as, so I look at management, there's management as a position, but I look at management as an activity of how we allocate resources. And so, are the resources mine or are they ours? And are we proactive or reactive? And then we talked in the past about purposeful resource management, reflective resource, reflexive resource, resource management, which is being highly reactive. Another thing that came to mind. Well, actually, let me jump to the loss function. We looked at last time because I was going through and listening to it. And I thought, let me, let me clarify.

0:29:00.7 Bill: And so when Dr. Taguchi would draw his, his parabolic loss function, a parabola is a curve that goes higher and higher as you get farther and further away from the center. It's like a bell and it just gets steeper and steeper and steeper. And his loss function would be an upward facing bell. And, and then, and he would draw it sitting on the, on the horizontal axis. The idea of being, when you're at the ideal, the loss is zero. And that's, if you're getting exposure to this for the first time, that's okay. But in fact, let me even throw in here a quote from Dr. Deming. Do I have it right here?

0:30:00.4 Bill: Oh, gosh. Anyway, Dr. Deming made reference to, he said, the Taguchi loss function is a better description of the world. And he talks about how loss continuously gets higher and higher and higher. The point I wanted to make is, what I tell people is, once you get used to that concept that loss gets higher and higher, and what matters is how steep that curve is. And so if that curve is very flat, then no matter where you are within the requirements, nobody really notices. And in that situation, you could have a lot of variation 'cause it doesn't show up. It's not reflected in terms of how...

0:30:40.2 AS: And maybe just to help the listener to visualize this, imagine a V.

0:30:44.6 Bill: Yes.

0:30:45.1 AS: And imagine a U. And a V has a very tiny point that is at zero loss. And it very quickly rises to both sides where loss is getting higher and higher. Whereas a very, kinda, let's say, a deep U could have a tiny little loss that's happening for a distance away from the minimum loss point, and then eventually turn up.

0:31:14.4 Bill: Well, but even, even Andrew, and I like the idea of the V. We could also be talking about a V where the sides, instead of being steep, are very flat. So it's a very wide V, and it never goes high because there's situations where, where the impact on integration is very minimal no matter what. All right. So anyway, um, the point I wanted to make is, I would say to our listeners and viewers, loss, the consequences of being off target, are the difference between what happens downstream at integration. And what I love, I went back and listened to the podcast, the one, you talked about your partner in the coffee business.

0:32:12.2 Bill: The point of integration is when they drink the cup of coffee. And that's integration. I mean, the point when they're, when we're eating a food, that's integration. So the piece of coffee is out there, whatever it is. But when the customer's using it, drinking it, that's integration, Andrew. And a...

0:32:32.2 Bill: And so... What I look at is what the loss, loss is the difference between what you see happening at integration and what you think is possible. So if we're at the Ford factory banging things together with rubber mallets day after day after day and you're the new hire and I show you how to do this, as soon as you begin to believe this is how we do things, then loss is zero. Because that's what we think is the norm. But if you have the ability to rise above that and say, I don't think it needs to be that difference, when you look at it and say, I don't think it needs to be the difference between what you think is possible and what it could... Difference between what is and what you think could be that's loss. And what I also say to people is it takes a special eye that you have to see that. It's like your coffee business, somebody's tasting that coffee and you're thinking this is pretty good. Then they say, "well, try this", whoa.

0:33:40.1 Bill: So it takes a special eye to see loss. But then it takes a whole lot of other people to make that happen. So whether that's people in engineering, manufacturing. So a WE Organization is where someone has the ability to see that opportunity, but it's dependent upon all the others to make it happen. So now let's talk about Beyond Management by Extremes. And these are... Has a lot to do with KPIs and also say in one of our last, wasn't the last one, it was a couple before that you had made clear your firm belief that KPIs need to be thrown away in the morning trash. And I remember on the call listening to you and I'm hearing you, we ought to get rid of them, we ought to get rid of them, we ought to get rid of them.

0:34:38.5 Bill: And I'm thinking they aren't bad, it's how they're used. And so I wasn't sure I was in agreement with you on that call. But when I went back and listened to it and that's what what I, what I told the friend is, I said, if you listen to what Andrew says, I don't say anything at the end. And the reason I didn't say anything is I wasn't sure I agreed. But when I went back and listened to it most recently, I said, yes! yes! yes! 'Cause what you said is: if they can be used without an incentive system. And I thought, yes, yes, yes, yes. And so we are in agreement on KPIs, [laughter] they are... But what we have...

0:35:25.2 AS: Which, which my, which my point is, number one, that as long as you don't attach some kind of incentive or compensation system, then, you're not that, you've eliminated a lot of risk that they're causing damage. The second part is a lot of times what I'm looking at is individual KPIs. And what I'm trying to say is that even if you don't add in compensation, it's, it's, it's a fool's errand to try to set up, three KPIs for a thousand people, three thousand KPIs individually and think that now we've got that set. Our organization is going to really rock now.

0:36:06.0 Bill: Well, then what you get is the KPIs are always round numbers. We want to decrease by 5%, increase by... And you're thinking, so how much science getting to these numbers anyway? And you're thinking, but early on in your career, you look at this, you think, well, somebody's thought about this and you realize, no. And so what management by extremes is about is KPIs that are extreme. And so I my PhD advisor in graduate school, I was studying heat transfer and fluid mechanics and and before each of us graduated, went to work in corporations, he'd pull us aside and he'd say, he'd say, "Bill, he said you're gonna be in a situation one day where your boss is gonna come by and is gonna give you.... He's going to give you an assignment, that gives you, he's gone give, that gives you five minutes to figure it out."

0:37:05.7 Bill: And he says, "so, if he or she comes he comes to you, she comes to you and they give you five minutes to figure out, he said there's only three possible answers and I'll tell you what they are and you got to figure out which of them it is and so it'll take you a minute to figure out which one it is. And then the rest of the time you're going to explain it." I remember saying to him, I says, so, "Okay, so what are the three possible answers?" And he says "zero, one and infinity", 'cause it turns out in the world of heat transfer and fluid mechanics, those three numbers show up pretty often as ideal solutions for different cases. And so what he's saying is when your boss comes to you and says, boom, then you have to say, which case is that? 'Cause if that's this case, it's zero.

0:37:51.0 Bill: This case, it's one. This case is infinity. So I thought, okay. Well, in Dr. Taguchi's work, he talks about quality characteristics. So we're running experiments to improve something and a quality characteristic could be as large as possible, infinity being the ideal, the strength of the material. We want to make it stronger and stronger and stronger. But it's referred to as larger is best, meaning infinity is the ideal, smaller is best I'm trying to reduce leakage. I'm trying to make something smoother and smoother.

0:38:25.9 Bill: That's smaller is best. Zero is the goal. And the other one is to get your first who is nominal as best, where a finite number is the answer. And so what I had in mind with this management by extremes, inspired by my Ph.D. advisor, inspired by Deming, Dr. Taguchi, is that, if the KPI is driving to zero or driving to infinity, we want the inventory Andrew to go to zero. We want sales to go to infinity. I said, if you're thinking about things systemically, I don't think zero or infinity is what we're going to do. And so I throw that out as not all the time, but I think quite often if the KPI, if you're working on something where you're heading to zero, heading to infinity, to me, that's a clue that you're looking at something in isolation. And I would say to people.

0:39:25.2 Bill: Let's say you're, you call me in Andrew and you say, "Bill, we need your help getting the cost down of this project." And I say, "well, what'd you have in mind?" You say, "Bill, we'd we'd love to get 10% out of this cost. Boy, 10%." I said, "Andrew, I can double that." "No way. No way" And I say, "Andrew, on a good day, I could do more than that." And then what I say is that the more you get excited by how much we could lower that cost, eventually I'm going to say, "Andrew, gotcha." And you say, "what do you mean?" "Gotcha. Andrew, you're looking at cost in isolation." What's the clue? You'd love it to go to zero. Or... And that's what we end up doing is we want to drive variation to zero. That's the Six Sigma people. Well, first of all, cloning does not produce identical.

0:40:30.6 Bill: Photocopies don't create identical. Dr. Deming would say that of course there's variation. There'll always be variation. And then there are people, and and I cringe. But Dr. Deming was once asked. He was interviewed by somebody I believe with the BBC back in the '80s. And the interview ends with "So Dr. Deming, if we can condense your philosophy down to two, down to two words, what would it be? Or down to a few words, what would it be?" And he said, "reduce variation" or something like that. And I said, "no, it should be manage variation. We should have what the situation needs." And so I'm going to absolute agreement with you. On how can we have KPIs without goals which make make things even more isolated. And then we talk about by what method are we going to achieve those goals? But I think if we're talking about driving variation to zero, then you're looking at things in isolation. If you are driving waste to zero.

0:41:20.8 Bill: then you're looking at things in isolation. If you're talking about, the non value added efforts driving to zero. I'd say value shows up elsewhere. I had somebody within Boeing once say to me "Bill, you know, being on target, you know being on that ideal value, I've had people tell me that once you achieve the minimum size of a hole, going further doesn't add value." And I'd say "If all you're doing is looking at the hole, I can understand that. But if you're focusing on what goes in the hole, that's different." And the other thing I throw out is I was doing some training years ago. There was a guy in the room that I, I mentioned the term "value engineering" 'cause I remember when I got excited by Taguchi's work and Deming's work, somebody said, "The last big training, big thing was value engineering." "What do you mean?" And they pulled out their "That was the wave of the sixties was value engineering." So I asked this guy in class. I said, so, he mentioned he worked at GE back in the '60s and value engineering was really big. So I said, well, "So tell me about that. What was behind that?" He says, “We were taught to look at a contract and all the deliverables. And our job in the value engineering department was to figure out how to, how to meet each deliverable minimally because anything more than that doesn't add value." And I thought, you can't make that up!

0:42:53.0 Bill: Let's look at all the requirements and how do we go to? What's the absolute minimum we have to deliver on the term paper, on the project.

0:43:06.5 AS: How could we kill this through a thousand cuts?

0:43:10.8 Bill: So that's KPIs. Driving to zero driving to infinity. But, but we're in agreement that if you, in a Deming organization where we're not driven by incentives then KPIs are measures of how we are doing. And why isn't that enough to be able to say, how are things? How are things? We can talk about how might we improve this? But then we're going to look at: Is that a local improvement that makes it worse elsewhere? Are we driving costs to zero and screwing this up? So that's what, that's what I wanted to throw out on this management by extremes zero and infinity, and getting beyond that.

0:43:47.6 AS: Well, I think that's a great point to end it went through so many different things, but I think one of the biggest takeaways that I get from this is the idea of appreciation of a system. When you have a true appreciation of a system and understand that there's many parts and, you know, adding value in that system basically comes from more than just being on a production line, for sure and creating value in an organization comes from not only working on improving a particular area but the integration of the many different functions. And if you don't understand that, then you end up in not a Deming organization, not a WE Organization, but more of a ME Organization. That's kind of what I would take away. Is there anything you would add to that?

0:44:51.9 Bill: Well, what, what reminds me of what you're just saying is I was doing a class years ago for a second shift group in facilities people, painters, electricians, managers, and one of them says, he says "so Bill, everyone's important in an organization." I said, "absolutely. Absolutely everyone's important."

0:45:13.2 Bill: Then he says, "everyone's equally important" right? And as soon as he said that, I thought to myself, "I remember you from a year ago." So he says, "So so everyone's important." "Yeah, everyone's important!" "Everyone's equally important." So as soon as he said that, within a fraction of a second, my response was, "No, if you wanna get paid what a quarterback gets paid, you better, you better train to be a quarterback." So what Dr. Deming is not, he's not saying everyone's paid the same. We're paid based on market rates for quarterbacks, for linemen, for software people. And the, and the better we work together, ideally the better we manage resources, the better the profit, we get in the profit sharing, but we're not equal. Our contributions are not equal. The contributions cannot be compared. They are, they're all part of the sauce, but we don't get into who contributed more." Right, and I think that'... We're all contributors.

0:46:28.3 AS: The more you learn about Dr. Deming's teaching, you just realize that there's an appreciation of a system, but there's also an appreciation of people.

0:46:40.1 Bill: There we go.

0:46:43.2 AS: That's really where, as I have said before, when my friend was working with me on my book, Transforming Your Business with Dr. Deming's 14 Points, after many many weeks of working together, he's like, "I figured it out. Dr. Deming is a humanist. He cares about people." It's pretty true. So appreciate the people around you, appreciate the contribution that everybody makes. Nobody makes equal contributions. And even great people who are making amazing contributions could have down months or years where there's things going on in their family or other issues. They're not contributing what they did in the past.

0:47:17.1 AS: That's a variable that we just can't control. But ultimately, appreciation of the system is what I said in my summary. And now I'm gonna add in appreciation of the people.

0:47:30.6 AS: Bill, on behalf of everyone at The Deming Institute, I wanna thank you again for this discussion. Again, entertaining, exciting, interesting. 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".

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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."

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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.

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Quotas, arbitrary targets, work standards with numerical goals - these don't seem to apply to schools. But, as John Dues and host Andrew Stotz discuss, quotas show up a lot in classrooms, causing harm and preventing improvement.

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 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 17, and we are continuing our discussion about the shift from management myths to principles for the transformation of school systems. John, take it away.

0:00:34.3 John Dues: It's good to be back, Andrew. Yeah we've been working our way through these 14 Principles for Systems Transformation. Last week or last episode we did eliminate slogans and exhortations. And so we're on to principle 11, which is Eliminate Arbitrary Numerical Targets. So I'll start with the overview. So principle 11, eliminate arbitrary numerical targets in the form of work standards that prescribe quotas for teachers and numerical roles for people in management, substitute leadership in order to achieve continual improvement of quality and productivity. And the first thing I wanted to start with was just this really powerful Deming quote on quotas. In Out of the Crisis, he said, "A quota is a fortress against improvement of quality and productivity totally incompatible with never-ending improvement." I just love that quote because it's just such a forceful pushback in the other direction. It's a fortress against improvement. There's really no gray area there in that quote.

0:01:43.0 AS: It's not a fort, it's not a barrier, it is a fortress.

0:01:48.2 JD: Fortress. It kind of brings together a mental image in your mind when you hear fortress, a fortress against quality, a fortress against improvement. So why did he say that? One of the things that's interesting is, especially thinking about work standards that prescribe some type of quota for teachers, it's like, well, when you think of a quota, you typically think of a worker and some type of production facility. And that, of course, is largely what Deming was talking about with his Point 11 'cause he was doing a lot of work in manufacturing and that type of setting. However it does, like all of this stuff, it translates into education. And, you know, so that's why I decided to keep Principle 11 'cause it does show up in different ways in the classroom setting. And I think examples are really good because when I initially read this quote and I was thinking, well, how do quotas show up in a classroom setting?

0:02:40.5 JD: And I thought of one that really stood out from when I was a principal here at one of our middle schools here in Columbus, at United Schools Network. We, we had this quota of sorts for homework. So in the middle school where I was, teachers had to assign homework nightly in their classes to students. And they had to grade two to three of those assignments a week and then return the graded assignments to students within 24 hours. And as I stopped and read this particular principle, and I thought about how it applied to my time as a principal, I really learned that that was the wrong approach. And as you start to think about that and reflect on it, you start to think about why Deming said quotas are a fortress against improvement. And there's this...

0:03:31.5 AS: And before you go... Before you go on, I just wanna highlight how normal that sounds.

0:03:38.4 JD: Very normal. Yeah. Very normal.

0:03:39.8 AS: And anybody here, like the first thing I'm gonna do or the first thing I do when I take over as principal is I'm gonna require that there's a minimum amount of this, and it has to be da, da, da, da, da. And it just seems like it is the responsible thing to do as a manager.

0:03:56.4 JD: Yeah. And there was a noble premise behind the quota, and that was that students needed frequent feedback on their work in order to learn. That was the premise, right? So it was this work standard, it was well-intentioned, but like a lot of these things that Deming talks about and quotas are no different, is the actual effect was that teachers spent less time giving feedback and more time grading this high volume of work. So this is what happens when you have a quota, is the focus became meeting the quota, grading the two to three assignments per week, rather than giving that quality feedback to students. So in this case, this sort of numerical target for graded assignments, then superseded the quality of the feedback. And this is, this is what happens, I think, generally speaking, with quotas and practice.

0:04:56.3 JD: And so when you step back and you think about that particular quota, you say, well, what was the teacher's job? Was it grading two to three homework assignments per week or was it giving students quality feedback? And it really couldn't be both. It couldn't be both those things. So then I started thinking about, well, what would've been a better approach? You know, had I had the Deming lens when I was a principal, I think the thing that I would've done is start with, well, let's come up with a sort of a well articulated aim for why we give homework. And included in that process, or included was, developing a process so that students received timely and high quality feedback 'cause that's really what this was about. So I think that sort of brings to mind substituting leadership, that second part of the principle.

0:05:58.4 JD: And in this case, I think, you know what I should have done is replace those work standards or that quota with some type of a better understanding of the job of the teacher. So, you know, I think in doing that, then I also... Leads to higher quality work-life for teachers. I would say, in thinking about this homework example, time spent grading homework was probably the number one complaint that I got from teachers. And this better approach to the two, three, assignments per week quota would've been to work with teachers to design a better system. Like how could we design a system that would give them the time to deliver high quality feedback to students on a timely basis? That was really the aim. And that's really where I should have concentrated my time as a principal. But again, I didn't have that Deming lens 10 years ago when I was serving as a, as a principal in our network. And reading the Deming stuff, it was very quickly like, oh, aha. Like, here's how I should have been thinking about this. Rather than being so hyper-focused on: you gotta grade those two to three assignments every single week.

0:07:29.9 AS: I like the word substitute leadership, you know, and Dr. Deming said that a lot. And the best way that I've kind of tried to explain it, and it just happened recently, where a client of mine was talking about having what they would consider to be underperforming staff. And they were older. They'd been with the company for a long time, and like the mindset is not there. And so their idea was to use KPIs as a way of basically catching these people out and then eventually firing them from the company. I'm making it kinda crude, but that's kind of the way it came across.

0:08:09.7 AS: Yeah.

0:08:10.1 JD: And I was like, wait a minute, let's just get down to the meat of this. The fact is, is that you hired these people [laughter] and you led these people for 20 years, who's responsible for this? And then I said, look, don't substitute leadership... Don't substitute KPI for leadership 'cause people say, so if I don't have KPIs or I don't have this, how am I gonna manage the people who aren't performing? I'm like, you know the people who aren't performing, they're probably in the wrong job. They may be in the wrong company, they may be the wrong thing, I don't know, but you need to talk to them and work it out and figure out a solution, that's leadership. But hiding behind some sort of quota or target and thinking that that's gonna solve the problem, no, that's why we need leadership.

0:09:06.4 AS: Yeah. And knowing the staff that I was working with at the time, the group of teachers, I am sure I am 100% sure that we as a group could have come up with a way, a better way to do our feedback system than the way it was set up. I have, I have no doubt. If we said, look, this actually isn't really working that well for teachers the time it's taking just to grade the homework. The kids, the students are, do they really need homework every single night? And when they're getting these papers back in the morning, do they have any time to actually look at whatever feedback is provided? Sometimes it was pretty minimal. Sometimes there was, depending on the teacher and the assignment, sometimes there was some feedback there. But are we giving kids time to look at that and actually learn from that feedback in any way? And so, again, you know, well-intentioned as it was, the volume superseded the, you know, the quality of the feedback. So I can think of all types of ways that I would sort of redo that system in retrospect with a clear aim is where I would start, what's the aim of this? Whether it's homework or classwork or whatever it is.

0:10:23.9 AS: And with technology now too, it's just such, it's gotten a lot easier. Such as give the students a five question online quiz that tests the topic that you taught that day. Then accumulate the data and understand what was the hardest one or two questions. Then in the first 10 minutes of class or five minutes of class, say, okay, last night's assignment, the hardest question was number three. And now I'm gonna randomly select one person to tell me how did you answer number three? And then let's have a discussion on that. And then that way you're getting feedback. It's the same thing I did with Feedback Friday just 'cause you were talking about feedback. Where everybody wanted, they requested in my Valuation masterclass bootcamp, they requested more feedback and I designed Feedback Friday where I gave them the exact assignment, then a certain number of them will present their work, the ones who volunteer in this case, and then they present their work on Friday. And then I give feedback that everybody witnesses and can learn from.

0:11:44.8 JD: Yeah. I mean, I think there's so many different ways, like what you're describing to set up the practice, to set up the feedback system, to have students pair up or someone present their work or you know, there's all types of better ways that would would've saved a lot of people, a lot of time, a lot of headache. There were many, many ways we could have redesigned that system.

0:12:06.4 AS: And why use the word arbitrary? You've said eliminate arbitrary numerical targets. We've talked about the numerical aspect of it, but why do you say arbitrary?

0:12:19.5 JD: Yeah. I wrote an article that actually called them arbitrary and capricious goals. So not just arbitrary, but also capricious, but yeah.

0:12:26.8 AS: What does capricious mean? How would you define it?

0:12:28.4 JD: Well, it's sort of the same as arbitrary. It's sort of like without any sort of grounding in logic or reality. [laughter] Flippant, sort of, I think I have that right. You can fact check me on that definition. But that's actually a perfect segue into that 'cause there's that second part of the principle that talks about also eliminating numerical goals for people and management. So not just teachers, but also school or network leaders. And we've talked a lot about, and across the series about various types of targets that exist in education. But I think it's still worth discussing a few points. Like what does arbitrary mean in this setting?

0:13:07.2 AS: And capricious means "given to sudden and unaccountable changes of mood or behavior." [laughter]

0:13:12.5 JD: Yeah, and I think in that article I've used capricious because in education, you know that the targets are changing so often, especially associated with test scores or other sort of parts of state accountability systems. One year it's some type of label, another year it's letter grades that schools are rated on. Now in Ohio we're given star ratings. So they've gone away from A to F and now it's schools get rated based on a five star system. And so that's what I mean by capricious. It's just...

0:13:42.4 AS: So five is A?

0:13:44.5 JD: Five is good. Yeah, five is good. Five is an A, I suppose. If there's a difference between a star, a five star and an A, I don't know, [laughter], but that's the new thing here in the Buckeye state. Yeah, but so back to the management. I think, well one thing I think when you're talking about teams or departments or a school or the whole organization, I think they should have an aim. So I think that's really important. But by aim, I'm talking about some type of clear purpose statement, but that's not so specific in detail that it stifles initiatives, that's one part. And I think a clear aim statement sort of in that spirit is something very different from a numerical goal. So that's one part of it. I think another part, and I'm getting to the arbitrary part, is that so many times that internal goals either set for management or set by management of an organization are basically a burlesque,you know, if they don't include a method.

0:14:52.8 JD: And that's what I've seen so often where, we've sat down to create a scorecard or whatever, or we see these things imposed on us from some type of organization that holds us accountable like the state department is, we have these goals, like increased student attendance rates by 10% or increase math scores by 5%. And the thing is, is part of the arbitrary is that sort of natural variation in those attendance rates or in those test scores are viewed as a success if they're going in the direction of good, but fluctuations in the other direction sort of send everybody scurrying around looking for explanations. And we end up sort of writing fiction to explain away or to explain causality when there's not actually causality there. And I've been just as guilty. We're gonna improve test scores by 10% next year without some clear plan.

0:15:53.7 JD: But then what Deming would say is, if we can do it next year with no plan, why didn't we do it this year? [laughter] And why did we stop at 10%? Why not just make it 20%? That's again part of the arbitrary. Now there is a caveat and Deming I think makes this caveat Out of the Crisis that's important. And that's when... When we are setting numerical targets or talking about numerical targets that he categorized as, he called them, facts of life. Meaning, they're just sort of plain statements of fact with respect to survival. So a good example would be, for a school would be, unless student enrollment improves by 10% next year, the school will have to shut down. But that's not arbitrary, that's a fact of life.

0:16:43.3 JD: If we don't get the revenue associated with increase in enrollment, then we're gonna have to shut down. That's not an arbitrary target. That's something sort of something, you know, altogether different that we should pay attention to. But I think getting to this idea of arbitrary, I would probably characterize it this way, and this is probably the main point of principle 11 for leaders is that they have to understand system capability. And that's often what's sort of missing from the understanding when these arbitrary targets are set. So if the system is stable, you'll get what the system will deliver. If the system is unstable, then there's no way to predict capability. So I think it's fine for organizations and individuals to have goals, but the problem is so often just like what you zeroed in on is they're arbitrary.

0:17:50.8 JD: And that's been my experience during the vast majority of my career is, why is this target set at 80%? And then no one can really tell you why that was picked as the target. For whatever the thing is, I just picked 80%, sometimes it's 75%, sometimes it's 80%, sometimes it's 90%. But I think that type of goal setting is really inevitable when as a sector, we have really no understanding of the theory of systems, we have no understanding of the theory of variation. And so without that understanding, what we tend to do is blame individuals working within school systems instead of working to improve the system itself. And I think that's really the key for me and why I'm so zeroed in on the Deming philosophy 'cause it does offer this other way. And so thinking back to system capability and before we as leaders set goals, there's really four kind of things that I've tried to focus on. And one of them is: what is the capability of the system or process under study?

0:19:13.3 JD: And when I say what is the capability, the easiest way to think about this is, if I display my data, let's say it's third grade reading state test scores. By capability, what I mean is, if I've look at the last dozen years of those third grade test scores, there's gonna be an average. And that average of those twelve years is basically the capability of my system. So I'm not just looking at last year or even the last two years, I'm looking at a dozen or more data points preferably, to see how capable that particular system is. So that's sort of the first thing I'm gonna look at is, what's the capability of that particular system or process over time? The second thing I'm going to do is ask, what's the variation within that system? So we've talked about the process behavior chart a lot. I do think I'm sort of in the Donald Wheeler camp and thinking that that is the most important tool. And so it's very easy using a process behavior chart because I have the limits, the upper and lower limit.

0:20:29.8 JD: And however wide or narrow those limits are, that's gonna tell me the variation I can expect in that particular system over time. The tighter those limits are, the less variation, the higher the quality, or at least the higher the predictability of that system or process. The third thing I am gonna wanna know is, is that particular system or process stable over time? Do I see any signals in the patterns in the data that would say that this is a stable system and therefore it's predictable or is it unstable and therefore it's unpredictable? So that's the third thing I'm gonna ask. And then once I've answered those questions, the last thing I'm gonna say is, do I have a logical answer in thinking about whatever goal we're setting to the question by what method? And so I think if you don't have that sort of picture in your head, the goals that we set are sort of arbitrary and capricious. If we are setting a goal, we can answer those four questions, then the goal is probably reasonable, logical, and grounded in some type of understanding of our systems. That's what I think Deming meant when he talked about arbitrary targets or arbitrary goals.

0:21:58.1 AS: So let me review that for the listeners out there. Number one, what's the capability of the system? Number two, what's the variation of the system and understanding a process behavior chart? Is the system, number three, is the system stable over time? Is it predictable? And number four, do I have a logical answer to the question by what method? And what you get from that is that, clearly if you can answer those questions, you understand your system pretty well. And therefore it's less likely you're gonna come up with an arbitrary goal. You're gonna go to the, say, here's what I think we can do with a deeper understanding of the system. But if you have a bureaucrat from the state education department, as an example, say, I want 5% more. Why not 5% less? [laughter]

0:22:50.4 JD: Right. Based on what?

0:22:51.4 AS: But where? Where does that come from?

0:22:53.5 JD: Yeah. Yeah. I think another thing I mentioned Donald Wheeler, he said, goal setting is often an act of desperation. And I think I talked about earlier in this series of episodes, I've talked about third grade reading test scores in Ohio. The goal is 80%. The system right now is capable of about a 60% in terms of looking at the system of third grade reading test scores in the state of Ohio. So 80% is a hope and a dream. It's somewhere out in la-la land. You know, and and what's happening is schools are being held accountable for that number in a system that is not capable of meeting that target, far from it, as a state. So I'd wanna know, like who set that and on what basis was that goal set for third grade, for third grade reading in the state? And that sort of thing is happening over and over and over and over again. What's the latest thing that we're gonna focus on? I think chronic absenteeism is one of those things right now that everybody's talking about. Kids aren't coming to school like they did pre-pandemic without any understanding of the theory of systems and the theory of variation. And so people are just running around talking about it without any understanding of what that data looks like over time.

0:24:27.2 AS: Yeah. And I'm looking at Donald Wheeler's goal is often an act of desperation, part one. And some of his discussion on that is great, great stuff. I was thinking about, in my own case with my Valuation masterclass bootcamp, when I first started the bootcamp, now we're on bootcamp number 12, but the first ones, I just told the students, okay, pick any company and then you can write a report on that company. And the outcome of that was disaster. Like it was just so... And I realized I didn't have that much teaching involved in how to get them to where I wanted to get them. So I had to... First I had to start to improve my teaching knowing that I'm trying to narrow the outcome to be, you know, somewhat consistent. And then I realized I can't just let them do any one company by choice, I have to kinda give them a list 'cause there's a certain companies that just don't have much information.

0:25:23.3 AS: If they choose it, it's a bad company for them to work on. So then I would give them a list of a hundred companies and say, pick one out of this, and each person had a different company. So that started to improve it that I had more information. And so I'm iterating through this and then I realized, some people just state that it's harder for them to do this assignment. It takes six weeks to do it and it's just overwhelming for some people. And I thought, what if each team did the same company? And I assigned it. And so what I did is I set up teams and now I encourage the teams to work together. They each wrote their individual report on that company, but now they start sharing information. And now I'm narrowing down, and I'm getting my system more and more narrow and the outcome is getting more and more narrow.

0:26:07.1 AS: And then I have a deadline that by the end of the fifth week, you've got to submit your draft. If it's not up to the standard, I can't put you in a time slot. We're gonna have to figure out something else to do.

0:26:21.5 JD: Yeah.

0:26:22.0 AS: And so that prevented someone who's postponing until the last minute, we're giving them a deadline that's a week before to give them some time to wake up and fix, make sure they got the stuff fixed as much as they could.

0:26:35.6 JD: Yeah.

0:26:37.4 AS: And then recently, so we've been iterating through this and improving the system. And now the outcome is better and better and better of what they're doing and the way that they're presenting. The way that I'm able to... I can't teach about a hundred different companies, I can teach about a few and help them in that process. And then in this particular bootcamp, my idea for improvement was what if we... Instead of starting the first week by assigning them that company and the team gets all excited and they start working on that company, let's say the company's Tesla, as an example. Why don't I pick an industry? And in the first week, everybody in the bootcamp works on an industry report, which is just a one-page report. What are the key features? And now everybody's going out and getting industry analysis, third-party research, and that's helping them.

0:27:26.1 AS: And I had four groups that are later going to be assigned the actual company. So we looked at the automotive industry and then there'll be assigned companies like Ford or Tesla or Toyota or whatever. And so by the time we get to the second week, they've now got a really good picture of the industry. And all of a sudden it adds a lot. My hypothesis is it's gonna add a lot of context to their assumptions in the final report. The reason why I'm explaining that is the idea of a process, a system. And in this case, I have to say, I'm not like measuring it very, very specifically, I'm judging the outcome based upon my experience in the prior outcomes. But if somebody came along and they said, hey, why don't you improve this? Why don't you do this with the system and set an arbitrary goal? They would have no understanding of what we've been through, what we've learned, how we've iterated through it. And without that understanding, almost anything would be arbitrary. They're interesting ideas and I listen to what people say, but almost everything would be arbitrary in a system that you're not studying or that you are studying in detail.

0:28:33.9 JD: Yeah. I also think about our previous conversation about, I don't know how you evaluate the final project, but I think of the Deming admonition to abolish grades. And you can very clearly picture if you... How many cohorts have there been of the, that class?

0:28:53.8 AS: We've had 12.

0:28:55.1 JD: 12. So let's say you lined up the sort of reports, a representative sample from cohort one to cohort 12, and you looked at the quality of the reports from cohort one compared to the quality in cohort 12. It sounds like because of all these iterations you've done, the quality is much higher in cohort 12 than cohort one. But then the question would be, who do you assign that evaluation of that grade to? See what I'm saying? Like now you can start to see why Deming said that. Because the lack of quality or the lower quality in earlier cohorts is as much attributable to you and what you were doing as the instructor as it was to the students.

0:29:42.8 AS: It was almost 100%.

0:29:44.5 JD: Yeah, so you can see... [laughter]

0:29:45.0 AS: Because I was setting the whole system. And I think that's where you get the idea of substitute leadership.

0:29:54.3 JD: Yeah.

0:29:55.7 AS: Like it's you, for the listeners, for the viewers out there, it's you, it's your responsibility. The outcome is your responsibility. The outcome is an outcome that's happening because of the system that you're running and participating in and operating. And I could go back and look at my bootcamp number one students and go, they were terrible. [laughter] But the fact is, there's no difference between the raw material that came into the bootcamp in the first group versus the one that came in in the 12th group, but they're just so... The output's so much better, so you can't argue that it's the students, it's an improvement in the system. And let me just add one thing about grade. I really don't know how to grade them truthfully. So what I just say, first, you've got to hit that deadline of having a good quality draft. I said, it doesn't have to be perfect, but it has to show that you've put time in. Otherwise, I can't spend time in your presentation with you during the final presentations, which means you're not gonna graduate. You can come back and try it again, and we can do it in another way.

0:31:03.4 AS: We'll talk about that later. But then the second thing that I do is say, if you can submit on time and you can present on time and according to the guidelines that we give, which they can do, then you pass. So I guess it's kind of pass/fail. Now, what I do is I pick out what I think was the best one of that particular cohort. And I have never announced that, and I've thought about it in my team. My other team members have said, wait a minute, what about... All you talk about a Deming, and here you are highlighting this one person and all that. And I was like, yeah, that's a good point. So we haven't really done it, but what we did do is take that one and we use that in the next cohort to say, this is the high bar. That this is one of the best ones that was done in the last group and my goal is to have you exceed that.

0:32:03.6 JD: Yeah. Yeah. To me it sounds like sort of what you've been doing to improve that particular, that class, that system, follows the Deming philosophy to a T, really. Yeah. Yeah.

0:32:21.4 AS: And I think in the end, I think the key thing and maybe we'll wrap up on this is just the... I like the idea of the arbitrariness because what it tells you is that really to set, as you said, Dr. Deming didn't particularly, he's not against goals and he's not against plans and all that, but it is that arbitrary nature of somebody just coming into a system that they didn't really know much about and setting some arbitrary goal. And really that just disrupts the system. And so for the listeners and viewers out there, if you are setting some arbitrary goal without having a clear understanding of the system, then what's holding the system back could be you. And that to me is a big takeaway from this. Any last thing you would add?

0:33:08.3 JD: Yeah, and I was looking at that article that I wrote. I was in a series called Goal Setting is Often an Act of Desperation. And the definition I used for capricious came from a law dictionary 'cause that's where capricious most often shows up is in the legal world. And it's "a willful and unreasonable action without consideration or in disregard of facts or law." And so that's what I was feeling is that often what's happening is educators are given these targets that have no basis in reality and that can only cause consternation and we're seeing churn. And so, and the people that work in education, teachers leaving and those types of things, and I'm not saying it's all for this reason, but it certainly doesn't help when you're constantly being given goals that are not set in reality. So I think if we took those steps to do those four things when we're setting goals, what's the capability, what's the variation? Is there stability and do we have a method? I think we'd be far ahead of where we are now.

0:34:09.8 AS: Boom. John, 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. 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.

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Should we strive to better understand what happens "downstream" to our defect-free work? No matter the setting, if our work meets requirements and we pass it on, are we responsible for how well it integrates into a bigger system? In this episode, Bill Bellows and Andrew Stotz expand on the interaction between variation and systems and why Dr. Deming regarded Genichi Taguchi’s Quality Loss Function as “a better description of the world.”

TRANSCRIPT

0:00:02.8 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 am 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 episode 13, Integration Excellence, part two. Bill, take it away.

0:00:31.4 Bill Bellows: Thank you, Andrew. Always a pleasure to connect with you. Alright.

0:00:40.1 AS: Mine too.

0:00:40.1 BB: [laughter] In episode 12, I thought it was great. We shared perspectives on the human side of integration, what it means to be connected, to be synchronous, to feel included, to feel connected, to feel included or connected when something good happens where you're like, well, I was part of that, or to feel separated is when something bad happens. And, we somehow have the ability to not feel associated with that. I pass the puck to you and you hit the slapshot, it goes into the stands, off the goalkeeper. Y'know, girl gets hit in the head and you feel bad, but I go home and I can sleep. And so why is that? And so anyway, but I thought, and listening to it, and I thought it was a lot of fun to look at the human side of feeling connected or feeling separated. And what I wanted to get into tonight, and perhaps in another episode as well, is the physical side of connections.

0:01:46.5 BB: One thing I wanted, and I got a couple anecdotes. I had a woman in class at Rocketdyne years ago, and she said, "Bill, in our organization, we have compassion for one another." And I said, "Compassion is not enough." And, and so you, Andrew, could be in final assembly at this Ford plant, where you're banging things together with a rubber mallet 'cause they're not quite snap fit, and you're banging them together. I mean they all meet print perhaps, but where they are within the requirements is all over the place, and you're having to bring them together. That's called integration. And so when this woman said, in our organization we have compassion for one another, I said, well, that's like me saying, "Andrew, I feel really bad that you're, I can't believe, Andrew go home. You can bang that together tomorrow. You've been banging it together all day." And what I said to her is that "compassion is not enough."

0:02:54.7 BB: When I feel connected to what you're doing, when I begin to understand that the parts you're banging together meet requirements, but how they meet requirements is causing you the issue. Now, the compassion plus my sense of connection, now we're talking. But short of that, what I think is we have organizations where as she would say, we might feel bad for others. And it means I hear about your injuries and your ergonomic training because of all this, but I don't, until I feel associated with that, I just feel bad. But feeling bad is not enough. But I like that, that sentiment. But what I wanna look at tonight is a greater sense of Dr. Taguchi's so called Loss Function and look at more why we should feel more connected to what's happening downstream. So I wanted to throw that out. [chuckle] On the topic of variation, I just started a new cohort with Cal State Northridge University. And this is my, fifth year in the program doing an eight week class in, seminar in quality management. And the cohort model is, anywhere between two dozen and 30 some students that start, the ones I'm getting started a year ago.

0:04:23.5 BB: And they have class after class after class after class. Then a year into the program they get to meet for eight weeks so then onto other professors in the program. So I was showing them, first quarter, second quarter data points from an incident that happened at Rocketdyne years ago. And I was in a staff meeting and the vertical axis is number of accidents per employee. And the horizontal axis is quarter one, quarter two. So the quarter one data point is there, and I don't have the original data, the original data doesn't matter. But what I say to the students is, imagine we've got the first quarter data, what would you expect for the second quarter data? And what's funny is a number of them said, it should be lower. And I said, "Well, based on what?" And it's like, said "Well, we're gonna go off and study what went wrong and we're gonna improve the process."

0:05:20.6 BB: And I said, "Okay, that's all right." So then, I said, "I'll accept that, that's a possibility." Well, then I showed them the actual second data point was lower than the first, which in the meeting I was in, led to the question from one of the senior managers to one of the more, let's say the vice president of operations, "Hey, Andrew, why is safety improved?" To which the executive said, "Because we've let them know safety is important." And so I asked him, "So what do you hear in that?" And we went around and we went around and we went around. It's not the only time it has happened that what they're not hearing is the separation that "we" have let "them" this this. And so in part, I think with my Deming perspective finely tuned. I pick up on those things. And they're not picking on it picking up on it yet which is which is fine. And then but I kept asking, kept asking, kept asking. And then one person said, "Well maybe we need to look for a pattern." I said, "Oh brilliant. What if we've got this run chart of all this extra data?" So then I got them to buy into how easy it is to take two data points draw conclusion up and down. That's called variation. And so it was neat to... The first conversation with them on the topic of variation was really cool. And there's so much more to follow. Well then it, what I wanted to follow with this once upon a time our son when he was in third grade this is 20-some years ago invited me to come to his class.

0:07:07.6 BB: And I don't recall why other than he said, Can you come talk to the class? And I said, Okay fine. So my biggest concern was that the teacher wouldn't know I was coming but she knew I was coming so it was good. So I walk in talked with her briefly and I said I've got some things I'd like to do. She's like oh, I didn't wanna monopolize. But she said okay why don't you show your video? I said I got a video of rocket engines blah blah blah. And then I've got a little exercise I wanna do. Okay we'll do the video then we'll do some reading. So we're doing the reading. And so I'm helping her with the reading. And then what I noticed is now and then a word would come up and she'd write the word on the whiteboard and ask the students if they understood the word. So I clued in, I cued in on that. So when it got to me I wrote the word theory on the whiteboard. This is third graders Andrew, third graders. [chuckle] And I said do any of you know what a theory is? And a one of the girls Shelby whose name I'll never forget, she raises her hand and she says a theory is a prediction of the future. Third grade Andrew third grade! [chuckle] right? Now...

0:08:18.8 AS: And you know what they'd say now they'd say Ethereum is a type of cryptocurrency. [chuckle] Oh Ethereum. No no "theory" not "Ethereum." [laughter]

0:08:30.2 BB: You're right. You're right.

0:08:31.6 AS: Okay. That's a great answer.

0:08:33.9 BB: Well oh but what I tell my students is I didn't correct her. I didn't say well technically a theory is a prediction of the future with a chance of being wrong. But we'll just, I just, oh we'll just stop with that. So I invited her to the front of the room. So she comes to the front of the room and I brought with me this little plastic bag with half a dozen marbles in it. And the bag was also a holes from a three hole punch, little dots of paper. So I held the marble up and I said Shelby I'm going to drop the marble from this height predict where it will land. And what I tell students is she was able to predict where it would land without any data.

0:09:18.3 BB: So she predicts the first data point, the marble lands someplace else. I marked the spot with a marble. I then said okay Shelby I'm gonna drop it the second time. Where will it land? And I'll ask people in class so where do you think she predicted, exactly the same spot of the first drop [chuckle] Exactly right. That's what we do as adults. And so we went through this cycle again and again. And and finally after about 10 drops where these you know 10 different dots on the floor I said Shelby where's it gonna land? And she drew a circle, she said somewhere in here which is kind of like a control limit you know kind of thing.

0:09:55.9 BB: So the one thing I'll say is and I'm sure you've heard people say well you can't predict the future. No, as Dr. Deming would say [chuckle] you know he gave the example you might recall of how will I go home? I'm gonna take a bus. Will the bus... I'm gonna take the train. Will the train arrive? And so I'd ask adults in the class that says how many drove here today? All the hands go up. And I said so at the end of the day will you walk in the direction of where you left your car? Yes. What is your theory? It's still there. [chuckle] Is that a guarantee? No! [chuckle] So I throw that out as a predictions and her sense of variation and this sense of a third grader not acknowledging, I mean one understanding having some sense of a theory, not a lot of understanding of variation but I don't think that's unique to third graders.

0:10:51.8 BB: So that brings us to...there's variation. We can look at the variation in the Red Beads. Okay the Red Beads are caused by the system not the workers taken separately. Then we got into variation and things that are good. And when I introduced the students to last night in class is, I asked them "So how often do you go to meetings where you work to discuss things that are good and going well?" And I get the standard answer, "rarely." I said, "Well, why is that?" "Well 'cause we got, we're focusing on the bad." They said, "to make it good." "Well why do we focus on the bad to make it good? Why don't we focus on the good?" "Well the good is good." And we went around the room, went around the room online and and I said "what's the likelihood that we could prevent bad from happening by focusing on the good while it's good?" And it's like, "...interesting." And so where that leads us to is, is two aspects of looking at things that are good.

0:11:57.1 BB: One is the better we understand the variation of things that are good whether that's on a run chart or a control chart. My theory is we could prevent bad from happening by keeping track of the bad. Whether it's your pulse, your weight, [chuckle] how much gas is in your car. And so there's if we focus, if we pay attention to the good with some frequency you know every second, every hour, once a month, whatever it is, we could prevent an accumulation of damage to an appliance at home. Another aspect to focusing on things that are good is that it can improve integration which is boom, here we are. And that integration that I mentioned last time that understanding integration could be looking at candidates for a new hire and looking for who is the best fit because there's degrees of fit. Fit is not absolute. Last time we talked about reflections of an engineer who is worried that his hardware on the space shuttle main engine may have contributed to the disaster of the second... Of the Columbia space shuttle blowing up in reentry. Well let me share another story from a coworker at Rocketdyne.

0:13:19.8 BB: And this guy's father worked at Rocketdyne in the '60s. So in 1999, 30 years after the lunar landing, there's news teams, you know, from the local TV stations and television. It's 30 year anniversary of the Lunar Landing. And Rocketdyne was known for the Apollo engines that get the vehicle off the ground, as well as the engines that got the, Orbiter off the moon. So there's an article in the newspaper a couple days later, and this coworker is quoted and he says, "Boy, I would've loved... My father worked here back in the '60s, just to be a fly on the wall would be so cool. Oh my gosh, it'd be so cool." And the article ends with him saying how exciting it is to feel like you're part of something big. That's what we talked about last time.

0:14:09.8 BB: And I used to use that quote from him on a regular basis because it, the article was about something that happened at Rocketdyne. Then I would share that this is a quote from a coworker. And after quoting him for several years, it dawned on me, I've never met this guy, so I call him up one day and he answers and I say, "Hi, this Bill Bellows." And he laughs a little bit. And I said, "have we ever met?" And he says, "No, no, no," he said, "But you quote me in your class." And I said, "Well, I apologize for never calling you sooner." I said, "I do quote you." And I said, "Let me share with you the quote." I said, "you feel how exciting it is to feel like you're part of something big?" To which he says, "I wish I still felt that way." [chuckle] And I said, "can I quote you on that?" And so you can join an organization with this sense of being connected, but then depending on how the organization is running and you're blamed for the Red Beads, that you may lose that feeling.

0:15:15.6 BB: And on another anecdote, it's pretty cool. Our daughter, when she was in fourth grade, was in a class, they were studying water systems. And the class assignment was to look at a, they had an eight and a half by 11 sheet of paper with a picture of a kitchen sink on it, like a 3D view of a sink with a pipe out and a pipe in. And the assignment was, we're about to study water systems. How does the water get to the sink, where's the water go?

0:15:47.2 BB: And so my wife and I were there for the open house and there were 20 of these on the wall colored with crayons showing all these different interpretations of water coming in, water going out. And I was fascinated by that. And eventually got copies of them and the teacher wasn't sure what I was doing with them. Well, I turned them into laminated posters. And so I gave one to our daughter one day. I said, take this to Mrs. Howe so she sees what we're doing. And so the following weekend I bumped into this woman at a soccer field, but she wasn't dressed like a teacher. She's dressed in a hoodie. And she says to me, "Allison shared with me the posters." And I'm looking at her thinking, "how do I know who you are?" She pulls the hood back. She says "I'm Allison's fourth grade..." Oh! I, her comment was when Allison shared with me how you're using those posters, handing them out, and people are inspired by them. And she says, "I cried." So that you get that emotion for free Andrew. [chuckle] Right. And that's all the integration stuff.

0:16:58.5 BB: Now let's talk about Dr. Taguchi and his Loss Function. So, um, the Taguchi Loss Function says Dr. Deming in Out of the Crisis is a better view of the world. The Taguchi Loss Function is a better view of the world. Dr. Taguchi says following...

0:17:15.3 AS: Wait a minute. I was confused on that. You're saying Deming is saying that Taguchi is better, or Taguchi is saying Deming's better?

0:17:22.3 BB: Dr. Deming in The New... In Out of the Crisis, Dr. Deming wrote "the Taguchi Loss Function is a better view of the world."

0:17:30.3 AS: Okay, got it.

0:17:34.5 BB: And that's what amongst the things that I read into Deming's work and I thought, boy, that's quite an endorsement. Dr. Taguchi is known for saying quality is the minimum of loss imparted to society, to the society by a product after shipping to the customer. So what does that mean? And we'll come back to that. Deming met Dr. Taguchi in the 1950s. There's a, at least once, there's photos I've seen in Deming's archives of the two of them on stage at a big statistical conference in India, and I know they met in September, 1960 at the Deming Prize ceremony where Dr. Taguchi was honored with what's known as the Deming Prize in Literature. There's Deming prizes for corporations, and there's also Deming prizes for individuals.

0:18:35.0 BB: And Taguchi won it 1960 for his work on the, on his, this quality-loss function concept. 1960. So then in 1983, Larry Sullivan, a Ford executive, was on a study mission to Japan, and he wrote an article about this for the American Society for Quality in 1983 the title of the article is “Variability Reduction: A New Approach to Quality,” so if any of our listeners are ASQ members, well I'm sure you can find a copy of it. The Variability Reduction: A New Approach to Quality. Well, Andrew in 1983, Sullivan's article, 23 years after Taguchi's awarded this Deming Prize in literature, I'm convinced that's the first time Taguchi's Loss Function was heard about in the States. 23 years later. And in this article, Sullivan says, he says, "In March of 1982, I was part of a group from Ford that visited Japan, we studied quality systems out of variety of suppliers," this is ostensibly the first time the auto industry in the States is sending people to Japan.

0:19:52.8 BB: Right so 1980, summer of 1980 is the Deming documentary Why Japan? If Japan Can, Why Can't We? And so here Ford is in 1982, sending a team over. I know it was the late '80s, I believe, when Boeing sent executives over. So then in this article, he says, "The most important thing we learned, right, in this study mission, is that quality in these companies means something different than what it means in the US. That it's a totally different discipline." And so this is like the beginnings of people hearing about Dr. Deming in 1980. They're now hearing about Dr. Taguchi's work through Larry Sullivan. And it turns out Larry Sullivan and Dr. Taguchi became business partners and set up Dr Taguchi's consulting company in the States, which still exists. So they became fast friends and I've met the two of them many times.

0:20:53.6 BB: What Taguchi is saying is, is when it comes to things coming together, we talked about integration, whether that's combining, mixing, joining, weaving, this is the synchronicity. So in sports, we're talking about not, not where I am on the field, but where I am relative to the others, in music, and we're talking earlier about music and I've, I've played a musical instrument one time, Andrew with a group and I was with a, hockey band on a road trip when I was in college. And the cymbal player, they were missing, so they asked me to bang the cymbal, "you want me to do what?"

0:21:36.9 AS: When we signal you.

0:21:39.4 BB: So I'm boom! and what I didn't realize is I'm controlling the pace, like being in is like, okay, slow down, slow down. And I and a former student last year in the Cal State Northridge class who plays with one of the Beach Boys, and I went to watch her in the play and I was asking about these speakers, which are on stage, facing the players. And I said, so what are those about? She said, "Those help us stay synchronized." I said, "what do you mean?" She says, "the speakers next to me," she's the keyboard player. She said, "What I'm listening to in those speakers is the drumbeat. I need to make sure that I am playing synchronous with a drummer." And then what about the others? "Well, the others have their own speakers synchronized. They get to select who they wanna be synchronized to." And so I throw that out because we take for granted when we're listening to Coldplay, whoever these musicians are, we're not paying attention, at least I'm not paying attention to what if they're playing it... What if they're not as synchronous? How would that sound? 'Cause we're so used to it sounding pretty good.

0:23:00.1 BB: And, um, so there we go with synchronization and things fitting together, it's not just that the note was good, but is it played at the right rhythm and pace and, um, you know, with timing. So we talked about the Loss Function. We talked about last time about ripeness of fruit. Depending on what we're doing with the bananas, we wanna put it into a muffin mixed or eat, slice it up. Are we looking for something soft and hard? And I say that because what Dr. Taguchi is talking about is for a set of requirements, a min and a max, we're used to a sense of anything between the min and the max is okay, is "good."

0:23:45.2 BB: What Taguchi is saying is there's the possibility that there's an ideal place to be. And how do you know what that ideal place to be is? Well pay it, as you're delivering that piece of fruit to the next person, whatever it is, to the next person, deliver them something on the very low end of the requirement and see what they do with it. Then, it could be the next hour or the next time you give them something a little bit, a little bit further along that axis. How are they doing? How are they doing? How are they doing? And what you're looking to see is, how, how does, what is the effect of where you are within requirements on them? And this is how Toyota ends up with things being snap fit, because they're not just saying, "Throw everything to Andrew in final assembly." They all come together.

0:24:42.3 BB: My theory is they're doing what we do at home, at home I create the part, I cut the piece of wood. I'm, making the part, but I'm also using it. So I'm the one responsible for the part and integration, in a work setting that may not be the case. So what Taguchi is talking about is there could be a sweet spot in the requirement. And so towards that end, if we're talking about baseball in a strike zone, the World Series is teams are defined, not that I was gonna watch this year, the Dodgers, we're out of it. But in baseball, there's, for those understand baseball, there's a strike zone. If the ball somewhere in that rectangular ball zone is called a strike, outside is called a ball. And depending on who the batter is, it might not matter where the ball is in the strike zone, 'cause this player can't hit the ball anyway. But for another player, you may have to put that strike somewhere in particular to make it harder for them to hit. And that's what the loss function is about, is, is paying attention to how this is used and I wanna share a couple of stories that are, one that's kind of hard to believe. Well, I'd say one that's easy to believe. As you're driving down the highway, Andrew, in Los Angeles, right? You've lived out here.

0:26:07.2 AS: Oh, yeah.

0:26:07.4 BB: And no matter where you're driving down, right, do you stay to the left side of the lane, Andrew? Do you stay to the right side of the lane? Or do you kind of go down the middle of the lane, Andrew?

0:26:17.9 AS: I'm kind of middle of the lane guy.

0:26:20.5 BB: Yeah. And I think that people in the other lanes, you know, like that 'cause I know when I drift to the left, you're like, Hey, what are you doing? So being towards the middle is saying, I get the entire length of myself, but being down the middle is probably, what is that? It's minimum loss to myself and others. So I spoke at a, at a NASA conference ages ago and learned, this is uh '97, '98 timeframe, and I learned that the two greatest opportunities for destruction of the space shuttle are at launch, you can have a catastrophic failure, or at landing. And so at launch, it could be a problem with the engine, any of the engines or the solid rocket motors. Okay, so that I can understand. But I'm thinking, what's the issue with landing? Well, I say, well, the issue with landing at that time was the space shuttle's coming in at a couple hundred miles an hour.

0:27:24.9 BB: And when you're landing on a dry lake bed called Edwards Air Force Base, it's not a big deal. You got all that open space anywhere you want. You just get her down. But then in that timeframe, NASA converted. It was easier for them to have the shuttle land in Florida because they don't, they don't have to fly the shuttle across country. The shuttle is going to land there, launch there. So what they were talking about is, a lot of the pilots for the space shuttle are military pilots. They're used to landing in the center of the runway, Andrew, in the center of the runway. Why? 'cause they're landing on an aircraft carrier. And if I'm a little bit too far from the center, one way or the other, I either crash into the structure or I'm in the ditch and enter the water. So they've got these military pilots landing the space shuttle, wanting to be right down the center. And so they said what happened was if they land and they're a few feet to the left or to the right, going a couple hundred miles an hour, should they quickly steer the nose gear to be on the center?

0:28:32.5 BB: And he said, when you're going that fast, if you steer, you may cause the shuttle to just flip. When you're, once you touch down, don't steer to the center of the runway. Just go, go straight. No more steering. And they kept having this message and it kept being ignored and they kept having the message that kept being ignored so what was the solution, Andrew? You ready?

0:28:58.7 AS: Yes, here, tell me.

0:29:00.8 BB: They painted the center stripe to be wider. [laughter]

0:29:05.5 AS: I was thinking they were going to paint like 10 stripes so that there was no center one.

0:29:10.3 BB: So the center stripe is like three feet wide. You can't miss it. Well, and so I use that because what they're saying is when you land at the Kennedy Space Center, you could be off target left and right a lot, and it's not a big deal, we got a lot of space here.

0:29:29.4 AS: Yep.

0:29:29.6 BB: And what does that mean relative to loss of the vehicle, relative to bad things happening downstream? The loss function that Dr. Taguchi would describe as a parabola, and a parabola being a curve that has a minimum, and then the curve goes up faster and faster to the left, faster and faster to the right. That's if the parabola opens up, it could open down. But in this case, Taguchi draws the loss function as being opening upwards as like a bell and it gets steeper and steeper. But, what, but depending on your system, it could be very steep, which is you're landing on an aircraft carrier, or it could be very shallow.

0:30:13.6 BB: So when I ride on a bike trail in Santa Clarita where I live, I go down the middle of the bike trail. And to my right, depending on which direction I'm going is a split rail fence so I don't go into the Arroyo, which is this gully for all the water running off. And so there's... I go down there and the worst, I stay away from that split rail. When I ride in Long Beach where you went to college where our daughter lives, there is no split rail. So I stay not in the center when I ride in Long Beach. I ride to not the center of my lane, I steer closer to the to the center of the overall lane, which means I'm closer to the bikes going the other way. And that's and that's my understanding of: I go off that off that side is gonna be a bad day.

0:31:08.0 BB: And so that's what Taguchi is saying relative to the loss function. But I think a better way to think about loss, I think that may be kind of a weird concept. I think if we think about integration, and in making the integration easier or harder. So again, if we're talking about space shuttle landing, maybe the loss makes sense. But if we're talking about putting things together, we've talked about the snap-fit that Toyota pickup truck that Toyota was producing in the late 1960s. And what struck me when I first read that is, Holy cow, they've developed a system of hardware which goes together without mallets, and I immediately associated that with what I had heard that Dr. Taguchi was influencing, working with them, consulting with them back in the '50s. And I thought that kind of fits. And so why aren't things here in the States, why are they being banged together? Because over in the States, going back to Larry Sullivan's article, we've got an explanation of quality which is "part" focused. Everything meets requirements. And so what really amazed me is that Toyota in the late '60s, had things which were going together well.

0:32:25.9 BB: Ford in 1982/83 timeframe, they had been working with Dr. Deming for a couple years. They discovered that a transmission they had designed and were building was also being built by Mazda. And part because they owned one third of Mazda and they were outsourcing production. And these transmissions went into Ford cars. And what I've mentioned in a previous episode is that the Ford warranty people figured out that the Mazda transmission, which was designed by Ford, but built by Mazda, had one third fewer complaints than the Ford transmission designed by Ford, built by Ford. And in this study that Ford did, led by their executives, and then they sent out the documentation to their supply chain and it, and it talked about the need to... Their explanation was what Mazda was doing was what's known as "piece to piece consistency." And what they found is that the parts, instead of being all over the place in terms of dimensions and whatnot, that they were far more uniform, yet what you won't hear in that video, what they talk about is within Ford, we're all over the place we're consuming the greatest, a big portion of the tolerance. We've got scrap and rework. But these Mazda parts, boy they only consume a fraction of the tolerance compared to us. And that's the difference. And that's the difference.

0:34:02.6 BB: And so what I wanna close with is, having less variation is not the issue that gets us back to precision, but not accuracy. So my explanation is that Mazda was actually focusing on accuracy - being on target of the respective parts. And as a result, they got great functionality outta the transmission. But what Ford, at least, I'm willing to bet the path Ford was going, was saying, "oh look Andrew, their parts are more consistent than ours. Consistency is the name of the game." And that's precision, not accuracy. So what I wanted to do tonight is build upon what we did last time, bring it to this loss function as being a parabola. Depending on what happens downstream, you don't know how steep that parabola is, and not knowing how steep it is, we don't know how much effort we should spend on our end upfront providing those components to improve integration 'cause we don't know how bad the integration is.

0:35:17.6 AS: And that's a wrap. 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 want to keep in touch with Bill, you can just find him right there 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."

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Slogans and exhortations don't work to motivate people. Targets usually encourage manipulation or cheating. John Dues and Andrew Stotz discuss how these three strategies can hinder improvement, frustrate teachers and students, and even cause nationwide scandals.

TRANSCRIPT

0:00:02.4 Andrew Stotz: My name is Andrew Stotz. 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 16, and we're continuing our discussion about the shift from management myths to principles for the transformation of school systems. And today we're gonna be talking about principle 10 "eliminates slogans, exhortations, and targets." John, take it away.

0:00:37.1 John Dues: Good to be back, Andrew. Yeah, we've been talking about these 14 principles for educational systems transformation for a number of episodes now. I think one, one important thing to point out, and I think we've mentioned this multiple times now, but really the aim in terms of what we're hoping the listeners get out of hearing about all these principles is really about how they all work together, as a system themselves. So, we started with create constancy of purpose. We've talked about a number of other things, like work continually on the system, adopt and institute leadership, drive out fear. Last time we talked about break down barriers. We're gonna talk about eliminating slogans and targets this time, which is principle 10. But really, as you start to listen to 1, 2, 3, 4, 5, 6, 7, 8, 9, and now 10, what should start to become clear is how all of these things work together.

0:01:34.5 JD: If you are operating as a leader, for example, within sort of the Deming philosophy, one of the things you are gonna do is eliminate these slogans. So all these principles shouldn't be studied in isolation. We study them together, see how they all work together. But let me just start by just reading principle 10 so you have the full picture. So principle 10 is "eliminate slogans, exhortations and targets for educators and students that ask for perfect performance 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 teachers and students." So really what we're talking about is, what's wrong with slogans, exhortations and targets for educators and students, because these things are, pervasive, I think.

0:02:29.5 JD: We've seen them, we've seen the posters on the walls with the various slogans. And, of course targets are everywhere in our educational systems. In my mind the main problem is that they're directed at the wrong people. The basic premise is that teachers and students could sort of simply put in more effort, and in doing so, they could improve quality productivity, anything else that's desirable in our education systems. But the main thing is that, that doesn't take into account that most of the trouble we see within our schools are actually coming from the system. And I think we've talked about this quote is probably one of Deming's most well-known quotes, but he said, "Most troubles and most possibilities for improvement add up to proportion, something like this, 94% belong to the system, which is the responsibility of management, 6% is special." And that's more like, can be sort of tagged or pinned to individual students or individual educators working within the system. So I think that's a really important thing to revisit 'cause it sort of is at the heart of all of these, all of these principles.

0:03:47.7 AS: It's interesting, like, maybe you could give some examples of what type of, slogans or targets or exhortations that you've seen, in your career and what's going on in education these days.

0:04:06.5 JD: Yeah, I mean, I'm gonna give an example here, kind of walk through an example in a second. But there, they're really everywhere, I mean, to varying degrees probably in different places. But, one, that one that sticks out in terms of, a target is when I first started my career in 2001, I was a teacher in Atlanta Public Schools. And No Child Left Behind had just come out. And, basically as they, as the leadership at the school sort of presented what was in this legislation, you know, they would always put up a just chart that basically said, a certain percentage of students are expected to be proficient across the country on state tests. And that, that percentage would increase over time starting in 2001 when the legislation was rolled out. And by the 2013, '14 school year, the way the tables were laid out is that 100% of students would be proficient in reading and math across the country in third through eighth grade. And of course, that didn't come to fruition. There's no chance that that ever would be the case. And it was also the case that there was really no methods attached to that target. So that's a really good example of a target that was sort of pulled out of the sky. And, basically, over the course of a dozen years, it was supposed to sort of, so somehow magically come to be.

0:05:38.2 AS: That's great. The idea of 100%. I mean, like what fool would say that, you would have 100% of anything. I mean, you just can't get anything to that point. But one question I have about that, I suspect that in those types of cases, it just gets swept under the rug and nobody's looking at that number the way that they looked at it back then, but maybe, maybe they do look at it. But my question would be that No Child Left Behind if we were able to objectively measure the improvement that was caused by that, or a devolution, like did, if it was, what was the starting point, for No Child Left Behind?

0:06:26.0 JD: Well, so, it, that would vary by district. If I remember right, I think the, the target early in the 20000s was something like in the 50 or 60%, something like that, right? And then it would...

0:06:40.3 AS: Right, so let's say 50 to 60%. And I wonder at the end of that period of 2013, if we could objectively compare and calculate that number, what would be your estimate of where it would be if it was 50 to 60 originally, where do you think it was at the end of 2013?

0:07:00.0 JD: 50% to 60%.

0:07:02.4 AS: So no improvement?

0:07:02.5 JD: No. I mean...

0:07:02.5 AS: Incredible.

0:07:04.2 JD: That could vary a little bit by time and place, but it's a little bit even hard to pin down because, the way that the test was constructed in 2001 in Georgia, for example, would be different than the way the test was constructed by 2013-14. So even, even the test itself had changed, the standards had changed, a number of things had changed over time. Also, for folks that know much, about what was going on in Atlanta by, by 2013-14, the superintendent, who would've been the superintendent from about 2001 until, I don't know, 2010 or something, she was actually charged under the RICO statute for sort of, yeah, I don't know if that was warranted or not. I think it was unprecedented, that's for sure. But there was a cheating scandal that was systematic from superintendent to principals down to even teachers. That was pretty pervasive because there was a lot of, in Atlanta at least, there was a lot of monetary incentives tied to the test score improvements. And so I know that it did result in a number of people being charged with various crimes, including the superintendent and number of principals.

0:08:18.3 AS: That's incredible.

0:08:20.6 JD: Incredible. Yeah. Yeah.

0:08:22.8 AS: Yeah. And there was a trial, there was a trial, I'm looking here on the internet. The trial began on September, in September of 2014 in Fulton County Superior Court.

0:08:32.3 JD: Yeah. Right around that time.

0:08:33.7 AS: Incredible.

0:08:33.8 JD: And so I was gone from Atlanta by that time. So I don't know all the details, but I have read a little bit about it, and I think, again, because there's these targets, that's certainly not an excuse for systematically cheating on these tests for sure. But, a byproduct of some of these testing regimens and some of the monetary incentive systems that were put in place was, cheating did happen in, in a number of places in the United States. Especially at the height of when the scrutiny was highest on these test results. So again, it's not, that shouldn't be the expectation even in a system where there's a lot of focus, certainly, but it was a byproduct. So you, you would wanna ask the question, why did that, why did that happen?

0:09:20.5 AS: Yeah.

0:09:21.9 JD: I mean, I think, yeah, go ahead.

0:09:25.2 AS: I was just gonna say that I also wanted to talk about, we were talking before we went on about the word "exhortation," which is kind of an, an old word, kind of a, and so I was looking it up on the dictionary. It says, "an address or communication emphatically urging someone to do something," and they use an example of "no amount of exhortation had any effect." And then I thought about, one of the questions I always ask students when I start my class, is "who's responsible?" And I want the listeners and the viewers to think about this answer to this question. Who's responsible for students being on time to class, the student or the teacher? And of course, the majority of students are gonna say the student. And if I ask the teachers, of course they're gonna say, student, it's personal responsibility. And most of the listeners and viewers would probably say the same. And then I want to explain a situation that I do every time I start my class. My class starts at 01:00 PM in this particular semester. And as soon as the door, as soon as 01:00 PM came, I just locked the door and I started teaching.

0:10:39.8 JD: And this is university setting?

0:10:40.7 AS: This is at university.

0:10:44.0 JD: Yeah.

0:10:44.6 AS: And when I did that, the university students, some of them had the, they were outside and kind of knocking on the door or no, wondering if they can come in. And I didn't let them in until after five or 10 minutes of teaching. And then I let, I went out and talked to them a little bit about, being on time and, please, be on time to my class or else I'm gonna lock the door and you're not gonna be able to come back in. And so I did that a couple times until all the students, I have 80 students in that class, and they all were in. And the next time that I, had my class, 100% of the students were on time. They were in there and ready to go. In fact, I had a funny case, John, I was, I was visiting a client of mine, which is north of the city of Bangkok. And I told my client, I gotta get outta here now because if I'm late to my class, my students are gonna lock me out.

0:11:32.7 JD: They're gonna lock you out. Yeah.

[laughter]

0:11:33.0 AS: But the point of the story is for the listeners and the viewers out there, if you said that the students are responsible for being on time, but I've just presented a case where the teacher changed something about the way that the, the class was done. That changed the outcome of the students. Can you still say that it is the students, and in fact, if you were to, to listen, if you went, we went to a, a high school or university and we sat down with all the teachers that would they be saying no amount of exhortation had any effect on the students being on time. These guys are just irresponsible.

0:12:17.4 JD: Yeah. Yeah. It's interesting 'cause I think, David Langford, on one of the episodes he did, talked about the problem of kids being, or students being late to class. And in that particular scenario as a high school, and, when you ask the kids, why were you late? They said, "well, the teacher doesn't start until five or seven minutes into the period anyway, so why, why do I need to come on time?" So, there is some truth to thinking about who, who is creating the system, what is that system? What types of behaviors does that system encourage? That's certainly a good way to sort of analyze each, each situation.

0:12:53.7 AS: Yeah. I mean, it makes you think, and I think what David highlights too is like, what's the priority here? And, where do we want, is it so important that someone's gonna be there at exactly this moment or does it matter if it's five minutes before, five minutes after? And I think that there's, there's an interesting discussion on that.

0:13:13.1 JD: Yeah.

0:13:13.8 AS: And for the listeners and the viewers out there, you're gonna make up your own mind. But I think that the key thing is that what you're saying when you talk about 94% of, the output or the result of something is the result of the system. And that helps us to focus beyond just, putting the pressure on students or administrators or educators or employees.

0:13:36.1 JD: Yeah. Yeah. And I think, one of the tools that I've talked about repeatedly and I'm a very big fan of is, is the process behavior chart or what some people call a control chart. And the reason for that is because when you use that chart, you can then tell what problems are coming from the system itself, and that's the responsibility of management and what problems are coming from other causes and may take some other types of sort of approaches. I think just knowing that is a really important sort of upfront step when you're considering that 94%, 6% problem. You can actually tell what's coming from the system, and then there's one approach and what's coming from special, special causes. And then there's another approach to, to improvement. And I suspect that, you know, when you chart data in this way over time, the vast majority of systems are stable, but unsatisfactory.

0:14:38.5 JD: And I think that's probably where things like, targets, exhortations, these slogans when you have a stable but defective system, that's the point where, these exhortations, et cetera are particularly pernicious, you know? I think, goal setting seems like a good idea, but it's really useless in that type of situation. It's really often an active desperation actually, when you set a goal in a stable but defective system. So I was gonna sort of talk you through a, through an example of how this, perhaps, could show up.

0:15:23.6 AS: Yep.

0:15:26.2 JD: We... This is going back a couple years, but as the pandemic rolled out, and I think we've talked about this data before, but we were really closely charting and paying attention to: are kids engaged in remote learning? And again, this example's from the pandemic, but this can come from any data that that's important to you. And almost all of this data unfolds over time. But we were looking at, how, how engaged are kids in remote learning? And it was really important for us to first define engagement. And so for us, this question always comes up, what do you mean by engagement? For us, this meant, kids did a remote lesson with the teacher and then they had a practice set in math. So what percent of the kids completed that full practice set?

0:16:17.6 JD: And basically when we, when we charted this, what we see, we did this for, about five weeks. We charted the data. So we had about 24 days worth of data. This was eighth grade math. And the first day 62% of the kids were engaged the second day, 67, the third day, 75%, fourth day, 84%, and then down to 77%. And then the next day, 71%, the next day, 58%, the next day 74%. So you can kind of get the picture here that this data was sort of bouncing around. And when we took that out to 24 days, that first day was 67%, the 24 day was 68%. And then sort of, we looked at the average over those 24 days, it was about 67%, a high of, 84%, a low of 49%. But when you put this on a process behavior chart, what you see is it's a stable system.

0:17:17.3 JD: Meaning there are these ups and downs, some are above that 67% average, some are below it. When we look at sort of the natural process limits. So those are sort of the boundaries of the system based on the magnitude of the variability over time, it was sort of suggesting with this system, we could expect a low of 42% engagement, a high of 91% engagement, but mostly it's bouncing around this average. Now if imagine, that you're this eighth grade math teacher and the principal comes and says, this engagement data is not high enough, we're gonna create these posters across the school, we're gonna start this campaign. You can almost picture this in different places, right? And it says these posters say 100%...

0:18:06.3 AS: Graphic design.

0:18:07.0 JD: Yeah, that design, you have this poster and it says "100% engaged. We can achieve it if you believe it." Right? And you can almost imagine these posters going up in a school, and it's just this sort of proclamation. But when you look at the data, it's just a stable system. And what we can expect is this, these data points bouncing around the 67% average. School, the school leadership wants higher engagement rates. They want fewer days with the low rates. But the problem with a poster or a target or exportation is that you're, you're basically asking the teacher to do what they're unable to do. And we do this in all types of settings, all types of, work settings, not just, not just in education. If you look at this particular system, the upper limit's at 91%. So basically the...

0:19:10.0 JD: The system's not capable of achieving 100% remote learning engagement, and so basically the effect is then fear and mistrust towards leadership, and I think, you know, when you look at this remote learning engagement data, that's probably what happened to a lot of people, but if we go back to that No Child Left Behind example, the Federal Government, 'cause that's who is setting the proficiency targets, for No Child Left Behind, its federal legislation, teachers knew, principles knew that in many places, the system that was in place for education was not capable of hitting those targets, it just...

0:19:50.1 JD: It wasn't in the capability of the system, and then so if you are an individual operating within that system, you're trying to navigate that, you're gonna try to hit that target no matter what, and then in some places, they chose to do things that went as far as cheating, because they were trying to hit that target. Now, I'm not absolving those individual educators of responsibility, but it was that system that they were operating in that sort of caused that behavior to then happen. You know the worst case scenario is people did, the adults did cheat. And I'm sure there were other things that were happening in other places that didn't rise to the level of cheating, but I think we've talked about it before, there's really only three options in response to data that's not satisfactory. You can improve the system. That's the ideal. That's what we're talking about here. That's what we're going for here. You can sort of... What do you wanna call it? It's not as far as cheating, but you can sort of...

0:21:02.6 AS: Manipulate or...

0:21:04.4 JD: Manipulate the data in some way, or you can manipulate the system in some way, and that's I think what we were seeing. So the worst case scenario in Atlanta, they manipulated the data. But I think in many places, this idea of manipulating the system is less clear, but what happened in many places, and I think we've actually talked about this, that there was this over-emphasis on reading and math at the expense of other types of academics, and that's a manipulation of the system. That's not cheating necessarily, but it is sort of in my mind, sort of cheating kids out of a well-rounded education, and that was a product of so much emphasis on just reading and math test scores, and again, a lot of this was well-intentioned because people were...

0:21:53.5 AS: It's all well-intentioned. What are you talking about a lot of it?

0:21:56.9 JD: It's all well-intentioned but what actually happens as a result of putting these systems and these testing systems in place, and especially the sanctions or even the incentives on the positive side, the money. What actually happened...

[overlapping conversation]

0:22:10.6 AS: Holding back funding or providing additional funding, if you can hit these targets or that type of thing.

0:22:15.4 JD: Right, right, yep. And so you get all these unintended consequences that are produced as a result of the system, and we talk about these things as side effects, just like with drugs, there's these side-effects, but they're not really side effects, they're things that commonly happen, they're things that you would expect to happen as a result of doing these things, but we sort of put them in this... We've given this language as if they're these small things that happen over here, but really they're the sort of the typical unintended consequences that you could expect when you design a system in that way, whether the side effects of a drug or the side effects of cheating in a very strict, sort of, and regimented testing system, an accountability system in a school district.

0:23:03.6 AS: I couldn't help but laugh 'cause I thought about Robin Williams, and he had this skit he used to do when he was alive, and he talked about the drugs, drugs that people that the companies are marketing. And he said I was going through the side effects and I was like reading these horrific things that they had a list and he's like, I'd call that an effect.

0:23:21.4 JD: [chuckle] Right, right, yeah. Yeah.

0:23:24.0 AS: Let me ask you about this slogan, "We can achieve it if you believe it." Now, some students may respond to that, John, what do you say about the fact that... You know, because every time that you talk about getting rid of targets and getting rid of slogans and stuff, that people say, sometimes it works and it works for some people, and some people are driven that way, and when they hear that, they respond to it. What do you say to that?

0:23:57.5 JD: Well, I would say prove it, I wanna see if you're telling me that was actually successful, sometimes people will sort of dress up an anecdote. So, one, I'd wanna see the evidence that that did have the intended...

0:24:13.2 AS: Okay great answer and that's a lesson for everybody listening and viewing is always go back and say, prove it, 'cause I'm making an assertion.

0:24:21.3 JD: Yep. Yeah.

0:24:22.1 AS: And my assertion is that it helps certain people, actually, the burden of proof, of course, is on me as I make that assertion and you're asking me to prove that, which is a very, very logical and sensible thing to do. What else would you say?

0:24:38.0 JD: Well, well, I would say that, you know, Dr. Deming often talked about this idea, I think he got it from Taiichi Ohno, this idea of the loss function, which is basically like...

0:24:51.9 AS: Taguchi.

0:24:52.0 JD: Taguchi loss function, sorry.

0:24:54.4 AS: Yeah.

0:24:54.9 JD: And basically, think of an inverted parabola inverted U basically... And here is an optimum.

0:25:03.3 AS: Or think of a U. Think of a U.

0:25:03.4 JD: Now either side of it... An inverted U, yep, and the optimum is at the bottom of the U, but there's loss as soon as you start to move away from the U, but that loss comes on both sides. So, you know, the people that are anti-testing versus the people that wanna put strict sanctions and rewards in place, probably the answer is somewhere in between there, because we have to know how our students are doing, so we do need some data, so I would be probably a proponent of kids being given some type of standardized tests and can we sort of know the scores at the aggregate level, perhaps at the school level, by subject and grade level, but there's not sanctions and rewards tied to that in any way, it's just information. So that's one thing that'd be a big difference between, you know, between what we could be doing with this data and what's actually being done.

0:26:06.1 JD: So like taking the eighth grade math engagement data, for example. In terms of what would you do? I mean, I think if I was gonna put a poster up with sort of an explanation of how we're gonna approach the remote learning, maybe the first poster that I'd want staff to see is a list of what we're gonna be doing month by month to sort of deal with the reality of remote learning, maybe that first month, it's just making sure... The strategy is to make sure every kid has a device and access to reliable internet connectivity, right? That's very different than this proclamation, that 100% of kids is gonna be engaged, because as soon as I see that, as a teacher, I know that's not gonna happen. Especially if there's no other sort of methods tied to that. Maybe in month two, after I get all the kids devices and connectivity, that's reliable, we can do some training on, well, how do you even teach? What are the methods that a teacher can employ in a remote learning environment, and maybe all along, I am tracking the data, there's nothing wrong with tracking the data, but I'm putting it on that chart, I'm tracking it over time, and as we implement these various approaches to remote learning, I can see how that's impacting, but I'm doing that with students and teachers, and I'm not just plotting the data and then not giving a set of methods that sort of accompany the sort of march towards continual improvement.

0:27:47.2 JD: And the same thing, the same approach could be used with that test data from Atlanta, you know if the idea was, I'm gonna sort of start charting this data and seeing how we're doing over time, and I'm working with teachers and students to come up with ideas to how to improve this, to march closer to that 100% proficiency goal, I mean that's a noble goal, assuming that the test is well-constructed and that we want obviously more and more kids to be marching towards proficiency for sure, but we don't want all these other side games going on that come about when you sort of just simply have targets without methods, and I think that's the point. And if you take that approach, I think then teachers sort of understand that the leaders, the school leaders or the district leaders, they're taking some of that responsibility for a lack of engagement or low test scores or whatever it is, and they're trying to remove those obstacles systematically, that's a very different, different approach, 'cause I'm not suggesting that people shouldn't have goals. That's not what I'm suggesting. I set goals for myself all the time, I think they're actually helpful and necessary tools for individuals, but I think when you set numerical goals for other people without a set of methods to accomplish those goals, then you get the opposite effect of what was intended and you know, that's what I see happen over and over and over again in the education sector.

0:29:28.2 AS: And what I like to say is that two things about that, which is one is that if, if you're setting a goal, just don't tie compensation or other benefits to the goal or other punishment. Set the goal and then use it as a tool and track the information and discuss it. It's the same thing with compensation, once you start to tie compensation to specific goals, then you start to mess around with the incentive structure. And that's the first thing I also think the other thing I'd like to say is that if the object that you are measuring through your goal or target or whatever knows that it is being measured, look out. Now, I have a ruler right here, and if I measure the height of this glass, the glass doesn't know I'm measuring it, and so there's no change in anything in the glass, but when a human being knows that they're being measured, it causes a change. Just the knowing of that.

0:30:46.9 JD: Okay.

0:30:49.6 AS: So. Okay. So that helps us to understand about slogans, and what you're talking about is the idea of maybe replacing slogans with "How are we improving the system?" And, you know, I've started doing that in my Valuation Masterclass Boot Camp, where I was at the end of each session... At the end of each six week period, I have a survey that I give to students and I asked them for feedback, and how can we improve this? And then what I do is I take all those and I give them to my team and then we have a discussion and we kind of rank them, and then we go back on the final day and we say, by the way, these are the improvements we're making. And these are the improvements we did the last, this current time that you guys didn't realize, and then that way, the students also are kind of involved and interested in what we're doing, that we're asking for their feedback on how to improve the system, and we're telling them.

0:31:44.9 AS: I don't generally announce it beforehand, like put up something about, "Here's all the changes that we're making in this boot camp," 'cause I just want them to have a natural experience, I don't necessarily need them to be thinking like, "Okay, so this is new", and also some of the things that we're trying, we're testing and we're observing how they work and if they work, and so we may abandon that thing, so it may not make sense to just necessarily advertise it, but when we have some big things like this time, we got some excellent feedback in our last one, and now, I decided that when we do the boot camp, we're gonna have, let's say, 30 or 40 people, and we're gonna cover it one industry, we're gonna value companies in one industry, so we're gonna do the automotive industry, and then that allows everybody to work together in the first week, say, "Let's analyze this industry before I tell you which companies each of you are valuing." And so that's a new innovation that we're trying to do this time, and so there's a lot of work on our side to get that prepared.

0:32:46.7 JD: Yeah. And it sounds like there's methods, there's methods attached to the goal of improvement. That's the most important thing, I think.

0:32:58.1 AS: Yeah, I mean I feel like... One of the things I feel like, and I think maybe some of the listeners or viewers may feel like this, sometimes I don't measure it the way I maybe should. What I do is I get feedback from the customer, from the student in this case. And then I bring that feedback to my team and I ask my team to kind of rank what they think about those, and then we identify, let's say three of those recommendations that we think, Okay, this is good. Let's implement it. And then we test it. We don't have an exact measurement that say, "Okay, well, you wanna say, "Did that work at the end of a six-week period?" We just kind of know whether it worked or not, how much trouble it was, how much benefit we thought it got, and then we get some feedback at the end, and maybe the feedback from students at the end is part of the data. But I'm just curious, what are your thoughts about people who are doing things necessarily, they may be doing the right things, but they may not necessarily be measuring it in the way that they could or should, including myself. What are your thoughts on that?

0:34:08.7 JD: Yeah. I mean... Well, I mean, I think there's quantitative data and qualitative data, and it sounds like what you're doing is relying more on qualitative data, including this experience of the students. I mean, I think generally, probably some things lend themselves to more quantitative data, some things lend themselves to more qualitative data. I mean, I think the key here is to set up a system for improvement, identify what's most important to you in terms of... 'Cause you can't focus on everything at once, what are you gonna focus on? Get, you know, get other people involved. So it's not just coming from you, and it sounds like there's a team here working together, you're also doing it repeatedly over time. I don't think there's necessarily a right or wrong answer on this. I think the most important thing is to, for me, I think about looking at this stuff, putting the data on a chart over time, again, that can be quantitative or qualitative data, determine what the sort of capability of the system is, get some baseline data. I think that's really, really important. And then understand, is what you're seeing sort of typical, is it bouncing around an average within some limits, or do you see special causes in your data? I think those are the most important things.

0:35:57.2 JD: And then the other thing, I think if we're talking about a school and if we really wanna make breakthrough improvements, then I do think at the end of the day, that continual improvement sort of approach has to involve students and teachers, I think it has to. And so I think there's different ways to go about doing that, but I think if you do those things, then you're well on your way to improved outcomes.

0:36:25.1 AS: I do have one question I ask them at the end, and that is, I give them a range of value, and I say, now that you've experienced the Valuation Masterclass Boot Camp, how, what would you say is the value that you received? And definitely in the beginning that kept going up because we kept improving and they could feel that value, and I didn't give them any guidance, the rating did never change, but it was moving up. Now it's kind of flattened off, and so I think we've, we've got a challenge if we wanna bring that to another level, but that's one of them. Well, John, without, without any exhortations to the listeners, I would love it if you could just wrap up the main takeaways that you want us to get from this discussion.

0:37:15.7 JD: Yeah, I think you know, maybe putting a fine point on those things, I think what I've come to appreciate is continual improvement is really the combination of plotting data over time and combining it with that Plan Do Study Act cycle, which we've talked about multiple times. So the first recommendation is whatever metrics are most important to you, plot them on a chart in time order, and then... It can be intimidating at first. But the calculations on the process behavior chart, to add in the upper and natural process limits or control limits is really, really valuable, because then you can start to understand the capability of the system And then you start to understand what would it really take, what would we really have to do to actually shift those limits and indicate a pattern of the data that actually indicates that we've brought about improvement. The other reason those limits are really important is because it does help you understand, do you just have this common cause system where there's lots of different cause and effect relationships, but there's not really a single one you can hone in on, and so then you know you're not trying to improve one component, but the entire system systematically. So I think for those reasons, it gets a little technical with the process behavior chart, or the control chart but they are...

0:38:46.7 JD: I think it's the most powerful tool that we have in the continual improvement tool box. So I would highly suggest at least a couple of people on, on your school district team have that sort of skill set, because then you don't waste your time on improvement efforts, and you can also tell when something you tried has actually resulted in improved outcomes for kids or for teachers or for schools.

0:39:13.1 AS: John, on behalf of everyone at the Deming Institute and the listeners and viewers, I wanna thank you again for this discussion. For listeners remember to go to deming.org to continue your journey. You can find John's book, "Win-Win: Dr. 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."

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What does it mean that people feel connected and included when something good happens yet dissociate when something bad happens? In this episode, Bill Bellows and Andrew Stotz discuss the human side of integration.

TRANSCRIPT

0:00:02.9 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 today's episode, number 12, is Integration Excellence. Bill, take it away.

0:00:32.2 Bill Bellows: Thank you, Andrew. So before we talk about integration excellence, I wanted to throw out a couple thoughts. And listening to the podcast, I was reminded that when I share examples, there are times when I mention companies by name, and there's times I don't. And my hope is that people in those organizations don't feel offended. So what I found with students is, if I use the name, there's the risk of someone in the class having worked for that company who feels offended. If I don't use the name, then there's a sense that I'm making the stories up. [chuckle] So I just want to say I um... But there are... What I find is that most organizations are run with what Dr. Deming would refer to as a prevailing style of management, in which case examples such as replacing the cardstock paper with regular paper, and all organizations have those types of stuff. So I just want anyone to feel offended by that.

0:01:40.1 AS: Well, we can make an announcement.

0:01:43.3 BB: Go ahead.

0:01:45.3 AS: Remember those shows that we used to watch that says the names have been changed to protect... but here we're going to say the names have been changed to protect the guilty, [chuckle] not the innocent.

0:01:57.3 BB: Well, there are some stories, I can't share the names for a number of reasons, but they're all the same. Anyway, next thing I wanted to share is, again, on a recurring theme, we talked in the past about red pen companies and blue pen companies, or me and we, or last straw and all straw. And I was recently in... I was in the Netherlands last week doing a class live session for a group that I'm just starting to work with, and we did a physical simulation, a live experiential thing that built upon all the ideas we're talking about here. And I had the group do the trip report, looking at blue pen companies and red pen companies, or however you want to look at the contrast.

0:03:00.1 BB: And we talked about what are the hallway conversations in both organizations? And another was, what are the survival skills in both organizations? And the fairly straightforward survival skills in a last straw organizations are, be really good at shifting blame, be really good at hiding errors, hoarding information is power. And I look at, what are survival skills in a blue pen company or an all straw organization? That's sharing knowledge as power as opposed to hoarding it, it's sharing it. And so we got into those, all those, the usuals. And then I said to them, "Okay, so imagine we are, here we are in a last straw organization, I'm the president of the company and we're in a Friday afternoon staff meeting.

0:03:56.7 BB: And because it's a last straw organization, that means you work for me." I said, "If it was an all straw organization, you would work, and people always say with,": I said, exactly, it's with versus for, but it's a last straw organization. So you work for me. I walk in to the end of the week staff meeting. I apologize for running late. And then I turned to you and say, "I just got off the phone with a customer. I need to know who's responsible for last week's shipment." And then I turned to you, Andrew, and I say, "Andrew, was it you?" And you say, "No, it was Joe." [chuckle] And then I go to Joe and I say, "Joe, according to Andrew, it was you. And he says, "No, no, no, it was Sally."

0:04:44.6 BB: And then I'll go to Sally and actually I won't go to Sally. I'll then go to somebody next to Sally and I say, "It sounds like Sally was involved in this. Can anyone corroborate that?" Then someone else raised their hand and said, "Okay." 'Cause in the olden days, we went by one witness, but nowadays we need two witnesses. Okay, so we've got two witnesses. So, okay, Sally. So then I turned to Sally and I say, "I need you in the front of the room right now." And they're like, "Right now you want me to come?" "Yeah, I want you to come to the front of the room in front of the entire class."

0:05:18.0 BB: And I've had times people get really anxious. I've had times when people walk up on stage and they're like, "You want me to... " "Yeah, I want you up here right now." And they stand alongside me and I say, "So Sally, I understand you're responsible for last week's shipment." And she's like, "Uhhh, yes." And I say, "I just want to thank you. The customer has never seen such high quality before." [chuckle] And then there's this great sigh of relief. And I turn to the audience and I say, "Meet your new boss, same as your old boss." And then kid them that this is a point of time where Andrew says, "Oh, well, I provided the packing tape... "

0:06:00.6 AS: Yeah, I was involved.

0:06:00.7 BB: "That allowed that to happen." And then somebody else says, "And I licked the stamp and put it on... " So what you get is, in a last straw organization, what you have is failure is an orphan, as John F. Kennedy would say, and success has many fathers. So what I point out to them is survival skill in a last straw organization is now and then it might be good news. So when everybody else is playing duck and cover, that might be your opportunity to ask for a little bit more information and find out something good happened. Now you raise your hand, you get promoted because you're now the one who was responsible for this. And then the others then realize, "Well, wait a minute, I played too." And so what I find interesting is in organization is, we don't know if we were connected until we know it's good news or bad news.

0:06:55.2 BB: So what you get is situational association. And that leads me to a real story. I was mentoring a young engineer who worked in the Space Shuttle Management Program at Rocketdyne and I was, had been away, I was in England for about a week. And so I was just getting back to work. And on the day I landed in England, I landed at 9 o'clock in the morning. So it was middle of the night back in Texas. And so I walked in, my friend, Alan Wendlandt picked me up at the airport as usual. We went back to his home, walked in the front door and his wife's in tears because the Columbia shuttle had blown up on re-entry.

0:07:46.9 BB: And so back in the States, people are, yes, middle of the night. So I get back to work the following week. There's an engineer I met with regularly and he comes into my office and he tells me that, you know, what it was like. I said, "So... " I wasn't there. It was the first time I was at Rocketdyne when a disaster happened. Back in '86, I worked in Connecticut, wasn't on the program, wasn't at Rocketdyne. So it was interesting that, so I said, "What was it like?" And he said, "Everyone got a phone call. Everybody goes to their station and we follow this protocol." And I said, "So what was the protocol?" He said, "Every component, team, every component team in the space shuttle and men engine goes through their hardware, looking to see, could they have done something?"

0:08:39.5 BB: 'Cause he said, the early indications were it could have been a spark in the engine cavity, the rear, and that could have led to, led to, led to. I said, "So what'd you do?" He said, "Well, we each went through our planning." And he said, he in particular was thinking, "Oh my God, oh my God, oh my God. We recently came up with a new version of one component. I hope we followed the new process." And he's panicking. He said he was feeling a lot of anxiety over this. Yeah, at first, until he goes in and he's thinking, "Oh my God, oh my God, did we follow the new process?" 'Cause if not, that could have been a contributor. So he found out that he did follow the new process. Which means what, Andrew?

0:09:29.7 AS: He feels relief.

0:09:31.9 BB: A huge sigh of relief, because he followed the process, he's no longer associated. And that's what I started thinking is, we go through life and there's times we feel connected and there's times we dissociate. And I asked a psychologist friend years ago, and I said, is that how we survive? We have the ability to feel connected sometimes and other times we dissociate. There was a hockey game in the National Hockey League in the early '90s where on a shot off the goalkeeper, the puck went into the stands and hit a teenage girl. She would, eventually into a coma, died a few days later. And so I have the headline and the headline says, "Player Distraught Over Death of Girl."

0:10:29.5 BB: And so I would show people that headline and say, "Which player is distraught over the death of the girl?" And people say, "Well, it's the guy who hit the slap shot…was the one feeling distraught." And I thought, why not the goalkeeper? Why doesn't the goalkeeper feel distraught? What about the person who passed the puck to the one who took the slap shot? How do they feel? And so this is this last straw mindset that, and I think psychologically we go through life and if we were that last straw, we feel all this weight. And if we're dissociated somehow, we don't feel it. Well, integration is about understanding how things come together.

0:11:14.7 BB: And in the world of integration, there is no separation. It's it’s understanding that there's many contributions to the performance of a system. And I used to ask students, "If I gave you a 10 minutes to list all the people who contributed to who you are, would you miss some people?" "Yes." And then once you come up with a list, could you measure their contribution? And measuring it means that number, if you take all those numbers, like 10% from your mother, 10% from your father, X%, you add them all up to 100. There's no such thing. So in the world of integration that I wanna get into with Dr. Taguchi's work, it's about understanding that things are connected as in an all straw mindset. They are not separate. Okay?

0:12:10.2 BB: So then next I wanna get into, I've taken, I've been fortunate to take some training in the Lean manufacturing, Lean management, Lean thinking, whatever you call it. And it's not uncommon, there'll be simulations where there's a bunch of parts to put together a car, or you're building something out of Legos. And there's a model, you need so many rectangular Legos of this size, so many square ones and you... And, you know, we're creating a flow, putting all these things together. And I've been in situations, university classes where the students are doing that and they're doing that ahead of me presenting something to them. And I remember one time, they're putting, you know, these cars together, they had four wheels and a little motor and a windshield, and they're putting it all together, this assembly line.

0:13:02.6 BB: And I participated in that. And then when it came my turn, I held up a tire. And I said, what is this? And they said, "It's a tire." And what is this?" That's a tire." I said, "Are they the same?" And they're like, "Yeah, they're the same." I said, "Well, actually they're not." If you understand variation, and no two snowflakes are the same, then no two tires are the same. And so I say that because we get stuck in this model of: if the parts are good, which means they conform to a set of requirements, then the sense is because they're good, when we pass them onto the next station, then they all come together, just like that, with no effort.

0:13:48.9 BB: And I say, sometimes that's the case. There could be degrees of effort, but this model that says, because they're good, they fit. And then we treat good as it's good or it's bad, which is black and white. It fits or it doesn't. And then the model we have is because they are good, all the things that are good are equally good, and then they fit equally well. And that's just not the case. And an everyday example would be going to a supermarket and sorting through the fruit. And I would ask students or attendees of a seminar to say, if I told you all the fruit in the supermarket was bruised or otherwise physically damaged, would you sort through it? And there'd be people that say yes, and then people say, no, I don't sort.

0:14:35.8 BB: Well, I point out is the reason we sort through the fruit is because there are different ripenesses of the bananas or the oranges different levels of juiciness. And our needs depend upon either something very juicy or very ripe or something green or something that's gonna be ripe later. What is that? That is saying that we're looking at the integration as we're going to use those oranges and integrate them into our breakfast by making orange juice out of them or taking the banana and turn it into a smoothie. So the bananas and the oranges don't exist in isolation. We have a sense of how we're going to use them. And then we have a sense of how much variation do we want or more so within a set of requirements, we're looking for something in particular and we're looking for a particular parking spot. We're saying there's all these parking spots and we're looking for the one with the most shade because there's degrees of shade. When it comes to hiring...

0:15:39.5 AS: Bananas is a good example because if I'm just gonna buy the banana to eat it, it needs to be reasonably ripe. If I'm gonna buy it to put in a smoothie, it's less critical that it's ripe.

0:15:52.3 BB: That's right. Yes, exactly. And what we're saying is that your integration of that banana depends upon its use. Since you have in mind I'm making banana bread, what does that mean? I want one which is very soft, it doesn't really matter because I'm not eating it as I'm out cycling. Then when it comes to what I've also shared with students, you'll say, well, is there a place for meeting requirements? And that's all. I said, yeah, there's a place for meeting requirements and that's all we need. And then there's a place for going to the next step and saying, I want the juiciest one, I want the freshest one, I want a parking spot which is furthest away from the door, closest to the door. And the same thing happens with staffing.

0:16:37.3 BB: We hire, we're looking to fill a position in our organization, we post something on LinkedIn and we put down the requirements we want and we go from 20 people down to three people. We invite them in for an interview. And what are we looking for? We're looking for, on paper we're saying these people are relatively…on paper, they are the same. The reason we're inviting them in is we want to know what is the degree of fit of each of these people into our organization? And what we're saying is fit is not absolute on a scale from zero to infinity, where are these people on that scale? And our judgment is which one fits in best.

0:17:18.7 BB: I'd say the same thing goes in when you're dating, thinking about marriage or thinking about a long-term relationship even with a supplier, you're looking for degrees of fit. And that's where Dr. Taguchi's loss function comes in. What he's saying is, is all these things meet requirements but depending on how the requirements are met from the very minimum to the very maximum, chances are there's a place in there which has the best integration. And that could be it goes together the easiest. And then, and then in terms of integration excellence, what I want to speak to is shifting from the model that things are good, then they fit. And then when you turn the thing on, it works. That we think about an alternate model, which is there's degrees of good, which leads to degrees of fit, which leads to degrees of performance. And an advantage of that model is it allows for improvement. The model of good equals fit equals works. How do you improve once you get everything good? And that goes back to a far earlier conversation we had over the red beads and the white beads. And of all the beads are red or gone, we're stuck with the white beads.

0:18:39.0 BB: Can we continually improve? Yeah, when you begin to think about improving integration, what we've also spoken about, Andrew, is, you know, we ended a conversation, you said, "So what's the aha moment for people listening?" And I said, "Would you like your organization to be known for products or services that integrate incredibly well in terms of how they perform in the use, as used by a customer, whether their customers are using it exactly or next immediately, or it gets plugged into their system. And do you wanna have... " The reputation that I find... Well, the reason I buy Toyotas is they tend to last very long. And I associate that with their appreciation of Dr. Taguchi's work, which supposedly goes back to the '50s, that they are looking at the parts as a system, how they work together and looking, not just meeting requirements minimally or maximally, but trying to find out where in the requirements of the associated parts should you be for this entire system to come together easily on a scale from zero to infinity and perform incredibly reliably. Andrew, you're gonna say?

0:20:01.0 AS: There's a couple of things. The first one, when you talked about the act of separation that people go through when blame's being tossed around, as an example, let's say, but it's happening all the time. What I was just thinking about is that act of separation is in their mind only.

0:20:20.5 BB: Yes, absolutely.

0:20:21.6 AS: Just because, just because you declare separation doesn't mean that there's not integration of the system. You're just denying it, running away from it. And the other thing I was thinking about about Toyota, it's a very interesting situation with Toyota because the company's being totally beat up for not having electric vehicles to the level that the market wants them to have, the investors want. And when you go against the, the EV crowd, the people that want this for climate or whatever reason, you're gonna get beat up. And they really have been attacked. And to the point that their share price went down seriously low. But when you listen to the CEO of Toyota, he's trying to speak in a system thinking way.

0:21:13.2 AS: He's trying to develop hydrogen as a possible solution. He's got hybrids. Yes, he hasn't moved as fast on the EV, but he also sees other problems. And he sees the research and development that they're doing, which they've just recently announced that they've got some fast charging and long mileage EV vehicle. And so he's trying to manage this whole system. Whereas take a weak manager or a manager, maybe he just... The CEO came in for the last five years or so at Ford or at GM or wherever. And they're like, "Hey, the market says EV, let's go." And then without thinking about the whole system, they end up losing billions of dollars in EV. Whereas now I think that what I've seen with Toyota, and the reason why I'm talking about this is because I've been working with students in my valuation masterclass.

0:22:10.5 AS: They're valuing Toyota and some say it's a buy, some it's a sell, some are beating them up just like the crowd is on EVs, but others are seeing, some, that integration. But ultimately the job of a manager, I guess, is to figure out, I like the degrees of fit. That is such a great thing of how it's good enough. Like Taguchi's loss function was specifically can be a tool to look at one particular thing. But the idea of then bringing that all into the whole system is fascinating. And it's hard.

0:22:44.3 BB: Oh, yeah.

0:22:44.9 AS: The last thing I would say is it's hard. And I think most people, most managers spend their lives trying to break that because it's just too hard to manage. I would rather say, "Okay, you guys do this. You're responsible for this. You're accountable for this. And you guys do that. And I want accountability around here." It's just, it's easier. It's hard and complex what you're talking about.

0:23:12.2 BB: Well, and let's go back to this, this separation. And I don’t, and a couple of things come to mind is, one is when the young engineer found out on the Space Shuttle Main Engine that his component was manufactured using the most current process, he was able to go home and sleep. So what I would propose is that we live in a society where when our task meets requirements, we don't, we can separate it. And that's what that, failure is an orphan. It wasn't...It wasn’t…I didn't contribute to that. I passed the puck to you. You're the one, Andrew, who hit the slap shot. It wasn't... Yet, let's be honest that, where the, where the puck ended up that you hit did contribute. But that's what I find is, is that the newspaper article says, "Player Distraught," which player? You who hit the puck last.

0:24:39.9 BB: And then I thought, well, I wonder if we ran a study at what point would the goalkeeper, the goaltender feel responsible? Yeah, because it's just, it's off his or her stick. And that's what I find is that we have the ability to separate physically. So when I hand my part off to you, I'm separating physically, but then, when you're having trouble putting those parts together, my claim is that I didn't cause that. So I hand off to you because it's good you accept it. If it's not good, you give it back to me. But when I hand off to you physically, and there's nothing wrong with handing off physically, we have to hand off physically. But I find in a, in an all straw organization, I do not hand off mentally. So if you come back to me, "Bill, I'm having trouble getting these together." I'm thinking, but of course, of course.

0:25:37.9 BB: Right? I am contributing to that. So I don't have... This is... What I also find is, if you understand the psychology of an all straw organization, success has many fathers, but then failure has many orphans. And so you have to be able to go both ways. We're used to associating, all of us associating with success. But what I would want to, Andrew, going back to Toyota's, how do they deal with an organization where everyone feels responsible for the good times, and then but we also feel responsible in some way for the others. And this is the psychology piece of Dr. Deming's work, but notice how it’s, there's a bit of variation in terms of how each of us feel contributed.

0:26:25.9 BB: We're talking about systems. And so there's a psychological piece of this. There's a physical piece of this. And what I admire, I think what we both admire about Dr. Deming's work is that he's tying all of this together in his System of Profound Knowledge, that in order to improve integration, integration is not just a physical thing, how these parts go together, but it also requires us to mentally be connected and, and, and feel each other's pain. And that we're not, instead of this, we've got a few hidden figures associated with putting man on the moon. You know what, Andrew? There's a lot of hidden figures that help helped put man on the moon and everything else that happens. But the other thing is I wanted to throw... Go ahead, Andrew, you want to say?

0:27:14.4 AS: I was just going to say that one of the interesting features living in Thailand, and I often wonder after 31 years in Thailand, if I went back to manage people in America, you know, how would I do it? I don't really know, 'cause Thais are so different. And one of the ways that they're different is if you're working in an office with a bunch of people and one person is going to have a late night, they’re gonna have to work instead till 6:00, they're going to work till 7:00 or 7:30. The other people in the office, many of them, not all, but the ones that are closest to that person, they'll stay with that person.

0:27:53.2 AS: They won't leave until that person leaves, even though they don't have any work to do. They may ask them if they can help, but they may not. They just will be there. And I just thought that's so fascinating because in America, I remember, you could be like, "That's your problem, dude. You didn't plan or you didn't do this or you didn't think about that. So I'm out of here. Have fun, see you tomorrow." But here there's this connection in the workforce that's really important to Thai people. And I would say probably important to Asians in general, but Thais specifically is what I know best. And it's just, there is that connection that I think particularly for Americans, it's a lot easier to disconnect than it is maybe for the Thai worker.

0:28:40.3 BB: Well, what we're talking about in large part is, what does it mean to work together? And that second word “together” is not separate. This is not working independently. You and I opposite ends of the ditch, one plus one equals two, one plus one equals...you know, right? The opportunities we find appealing in Dr. Deming's work is that when we focus on relationships, not just I hand the part to you and you know you say, so you say, "It's good." And so I say, "Whew." So I separate physically... And I would do that with people in a classroom. I would hand the part to you, Andrew, and I say, "What if I deliver a part to you that doesn't meet requirements? What do you do?" And you say, "Hey, not on my watch." You didn't dot that I, you didn't cross that T. Hey, and you send it back to me. Then I cross the T, dot the I, and I give it to you. And what do you say? And I would physically give you something. And I say, "What do you say now, Andrew?"

0:29:44.8 BB: Actually, what I would say is, "What just happened?" So I would say to the audience, I just gave Andrew something, which is good. What just happened? I don't know what just happened. I said, I separated physically and mentally. So when you come back to me the next day and say, "I can't get this to fit quite right." I'll say, "Why are you calling me?" But I mean, so this integration is about together, working together, thinking together, learning together. And I think what Dr. Deming is offering us is insights that one plus one could be three, could be four, could be five, in terms of the positive synergy within the organizations. And really what it comes down to is, do we want to have no synergy? One plus one equals two. Do we want negative synergy? We're working at odds because how we're meeting requirements is pushing us against one another. And, and we're none the wiser for it.

0:30:47.1 BB: Or are we interested in what's called positive synergy in terms of getting performance out of the system, which you cannot explain by looking at the parts taken separately. So there's a lot of economics here when you begin to shift from looking at the parts in isolation, there's good/bad thinking. And again, there's a place for good and bad thinking. What we talked about last time is compliance excellence. But there's also an opportunity where depending on how we manage the components, we can end up with exceptional performance that they are, "Snap fit," that the transmission lasts much longer. And there's plenty of examples that when you manage the system that way, you get something out of it, which cannot be explained by looking at the parts taken separately.

0:31:39.3 AS: I wanna wrap up, but I also wanna just tell a quick story. In my ethics and finance class that I teach, which I was mentioning I'm teaching this afternoon, I have debates because part of ethics is independent and objective thinking. And I want to help students think independent and objectively. And so the first debate topic that I have, which will come up next week, the proposition is: individual performance-based compensation such as KPIs are the best way to get the most out of an organization. I'll have a group arguing for that proposition and a group arguing against that proposition. And I don't get involved in the... I raise the questions, you know, at the end of the debate, but I let them go and try to see what they come up with. But the point is, is that individual performance-based compensation is a great way to destroy integration.

0:32:48.5 BB: Yes. Yeah, exactly.

0:32:51.0 AS: So, all right, I'm gonna leave you with the last words on this. So let's have you sum up, we talked about integration excellence. Let's wrap up all the different stuff that you've talked about and say, how can we apply this in our lives?

0:33:09.1 BB: Well, one is I would say the recurring theme we've been focusing on from the very beginning is an understanding of systems variation, the psychology piece, that's the human spirit piece and the opportunities. And the last piece being that, this Theory of Knowledge from Dr. Deming, all we know is what we know and can we articulate our theories and a theory being a prediction of the future with a chance of being wrong. And I find that what Dr. Deming is offering is great insights on to how to, how to prepare your organization for an uncertain future. And I find that what a last straw organization does is get people to focus on themselves as you're just describing, avoiding blame, shifting blame to others when mistakes happen.

0:34:11.3 BB: And when you're living in that environment, now you're back to, you get into firefighting modes, you get into, is this a manufacturing problem or a design problem? And all that finger pointing associated with that. And I find is what you're really doing as an executive team in such an environment is you're praying that the future is like the present. And why do I say that? Because when you turn your people into concrete, when you turn your people inward as opposed to outward and they become all about avoiding blame, then boy, what's gonna keep your organization in business is if the future is like today.

0:34:58.0 BB: But if the future is not like today, then you're in a really bad situation because your people have become concrete, they have ossified. And the beauty of a Deming organization is that you've got people who have flexibility. So after the concrete is poured for the walls and after the tables and the equipment are put in place, yeah, you've got chairs on wheels, you can move some equipment around. But boy, if the most flexible part of your organization, your people, aren't flexible, then boy, you better hope the future is like the present. But if you're a betting man, as you and I would be, boy, I would not bet for the future to be like the present. I'm expecting there's gonna be changes going on either caused by people, caused by who knows what. And we want an organization where people are flexible and I'll just close on that thought.

0:35:55.2 AS: 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. 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.” Now go get yours.

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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."

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Most people agree: teamwork and collaboration generate greater results than isolation and silos. So why do we let barriers get in the way? In this episode, John Dues and host Andrew Stotz talk about barriers to collaboration and how to break them down.

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 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 15, and we are continuing our discussion about the shift from management myths to principles for the transformation of school systems. John, take it away.

0:00:34.9 John Dues: Good to be back, Andrew. So we're talking about these 14 Principles for educational system transformation, like you said, I think last episode we talked about Drive Out Fear, so this episode I thought we'd focus on that next Principle, which is Break Down Barriers. So Principle nine, break down barriers. The way I have this framed is "to break down barriers between departments and grade levels and develop strategies for increasing cooperation among groups and individuals, everyone must work as a team to foresee problems in the production and use of high quality learning experiences" in the case of schools. I was looking back through some notes, and I just happened to come across a quote from Out of the Crisis that I thought was a good quote to sort of start off with, in that book, Deming said "Teamwork is risky business. He that works to help other people may not have as much production to show for the annual rating as he would if he worked alone." And I think what this does for me is really illustrate how big a job breaking down barriers is, because everybody's gonna say, yes, I'm for working as a team. Everybody's gonna say I'm for cooperation.

0:01:58.9 JD: But when the rubber meets the road, you know what actually happens? And I think that quote is a good one, too, because it very clearly connects back to Drive Out Fear. Right. 'Cause what are you going to do once you break down the barriers? What's the behavior that you hope to see? And, you know, the behavior that you hope to see is only possible if you also drive out fear, which I think is, you know, showing that there's this connection between all of these Principles, there are these mutually supporting guiding principles.

0:02:36.3 AS: One thing that's just popping in my head is if you didn't incentivize people, let's think of young people, maybe. Would people naturally be, you know, helpful and doing teamwork? We know that, you know, the annual ratings and those types of things can incentivize being, you know, selfish and not, not working across the organization. But I'm just curious, what are your thoughts on that?

0:03:06.8 JD: Yeah, I think... If, if, are you using incentives as a pejorative in this context?

0:03:13.9 AS: Yes.

0:03:16.6 JD: Yeah, I think you have to look at the system that you've set up and the behaviors that result, and then sort of step back and see that whole picture, what is it that... What's the behavior that you're causing by the system you've set up? So I think... That's the major point I think.

0:03:34.0 AS: I'm just thinking about like when someone's young and, you know, they're just living a normal life, they're out with their friends, they're playing in the woods, when I was young, you know, those types of things. Are they naturally helping each other and, you know, naturally want to help or are they naturally selfish?

0:03:53.0 JD: Well, yeah, I think that's a good question. I think that would probably depend a lot on the context. I think, you know, if you're generally talking about young kids, there's probably a sort of a natural inclination to cooperation that's sort of, I think maybe stomped out, extinguished, as you encounter the various systems that are in place in schools, in work settings, those types of things. So, I think, yeah, I mean, I think I would probably lean that way, that there's a natural inclination to cooperation that sort of, is depressed, you know, through the various work and school systems that we've set up. You know, that's a generalization, obviously, but I would probably concur with that. Yeah.

0:04:39.8 AS: You talked about departments and grade levels, and when I think about breaking down barriers, I always think about departments. But maybe you could explain breaking down barriers between grade levels too.

0:04:54.3 JD: Yeah. I mean, I think a grade level team in a school system can be very similar to a department in a business. I mean, obviously I'm working in a school system. And so, there are departments, there's, you know, operations folks, there's HR folks, there are the academic folks and so forth and so on. But there's also these grade level teams where, you know, oftentimes in a school, teachers work most closely with the four or five other teachers on their grade level team. That's a pretty common setup. And so, you know, just like you could sort of optimize the finance department at the expense of the operations department. Same thing, you could do that with the sixth-grade team versus the seventh-grade team versus the eighth-grade team in that same way in the school system. Yep. Yeah.

0:05:47.9 AS: And what's the hardest part about breaking down barriers in school environment? It's, at first, I think that, you know, everybody's overloaded. They're trying to get their stuff done. You know, like, I'm curious what you've experienced there.

0:06:05.0 JD: Well, you know, I mean, I think with any school, I see schools as sort of a complex system, lots of interdependent parts, I think especially so in schools that are located in, you know, high poverty areas, because in addition to the regular stuff of school, you're often sort of also coordinating any number of partners, providers, counselors, you know, healthcare providers even, that are coming from oftentimes outside your system, and, you know, there's all these programs and things that you're trying to coordinate on top of just normal school. So that's sort of an added challenge to coordination in my setting. I think in general, one of the big challenges is that whether you're in a high poverty or low poverty setting, there is a lot of coordination that happens in schools. But teachers are with kids all day. And so, when there is coordination that needs to happen amongst the adult teams, when do you do that? You know, there's only a few options where you can get everybody, you know, together that's, you know, before school, after school or perhaps, you know, you set aside days that are specifically for that where the kids aren't in the building. So I think that's a major challenge in a lot of...

0:07:22.2 AS: Which I would assume everybody would love a 6:00 AM meeting before school.

0:07:24.8 JD: Yeah. I mean, we try not to do too much of that anymore. But we used to do that, you know, not infrequently for certain things. And one of the things we actually did here at United Schools Network where I work, it's been almost a decade now. We reorganized our school day, so that kids used to come at 7:30 and now we have a lot of those sort of adult type meetings, grade level team meetings, building leadership team meetings. Those happen in that 7:30 to 8:30 hour now. So, we did sort of change our system, shortened our day a little bit in recognition of the fact that we need some time to coordinate all the work that's going on during the school day.

0:08:04.5 AS: What are the school hours now?

0:08:06.7 JD: For kids, 8:40 to 4:00 basically, and then adults come an hour earlier.

0:08:16.4 AS: Right. I don't know if you read that, the book Why We Sleep by Matthew Walker, I think it is.

0:08:24.4 JD: No.

0:08:25.7 AS: It's an excellent book that I mean, I highly recommend it for everybody because it really shows the importance. I didn't really wanna read it because I felt like I don't need, I don't need to know why we sleep. I need to know how to sleep more. But once you literally understand why we sleep, you realize, okay, that's the impetus for starting to sleep more. But they had some research that they talked about how, you know, basically there's morning people and then there's evening people, you know, or let's say morning and not morning. And they talked about different schools and outcomes, and they talked about how the problem that schools could be facing is that by forcing non morning people to get into class at an early time they're hurting the performance of those people, those kids substantially, and they had research showing that. And I have always felt like everybody should be a morning person. Come on! That book changed my mind.

0:09:26.8 JD: Yeah, I've heard this argument made before and it went into our decision-making sort of praxis when we decided to change our day. We sort of have it backwards. We, you know, elementary kids often go to school around 8:30 or 9:00, and high school and middle school kids often go to school in a lot of places at 7:20, 7:30. And they're generally the kids that need to sort of more sleep. But, you know, thinking of systems, it's very hard to change because it's tied to transportation systems. It's tied to athletic systems and practices and stuff like that. And so, it's a very hard thing to sort of reshape those systems for all those reasons, for sure.

0:10:12.0 AS: I'm wondering if you could give advice to the listeners or viewers about, they're facing, let's say, somebody facing a lot of barriers in their school. And they don't really know where to start. Maybe you could give some ideas about ways to start and kind of your own experience and, you know, any guidance that you would give.

0:10:37.8 JD: Yeah. I mean, I think that one good starting point in the process is just to stop and think about the question, you know, what exactly is being produced by a school system. So, I think that's something to get clear on because I think a lot of people would instinctually say students, that's what's being produced. But I think if you stop and think about it, that's not quite right. Rather, I think what the aim of a school system is, is to produce high quality learning, not the students themselves. And knowledge and skills is what's being produced by a school system. And I think when you sort of look at your system in the same way that Deming would, you know, we don't have a graphic here, but for those that have seen it, you know, you sort of have, you know, inputs into your system and then you have all these processes that you sort of undertake, you know, while kids are with you. And then, you know, kids go out and are going to other places. In our case, they're going to high schools or, you know, for K-12 systems, they're going into the military or to higher education, to jobs, those types of things. And so, I think it's, you know, be very clear about what it is that you're producing. You're not producing the students themselves. You're producing these high-quality learning processes. Then how do you bring that to fruition?

0:12:07.9 JD: I mean, I think, in thinking through that aim and how to accomplish it, I think just like we were talking about the departments and the grade levels, school systems are organized functionally, and that's for efficiency, just like businesses, you know? But what we really need to think about is how to operate cross-functionally. So that would be one thing is how to set up cross-functional teams. And you know, this is for that simple reason that we've talked about repeatedly that we don't operate cross-functionally, and we just sort of operate in our silos. We make that silo as good as it can be. Oftentimes that can come at an expense to the system as a whole. So that's one thing I think of. You know, I think of...when you think about improving your system, I think one thing to think about off the top of your, sort of at the outset of any improvement effort is what's the boundary of the system that you're talking about. Are you just talking about your school system, which sort of the school system start and stop sort of at some arbitrary geographic boundaries.

0:13:35.4 JD: So, are you talking about improving the educational system in a city or in a single school building or a single school district? So, I was thinking of a couple of examples. You know, one sort of within a system and then would be between systems. But within a system, often there's a, you know, you have general education, students in general education, and then you have students that are spending some amount of their time in special education within that same school system. So, I think, you know, if you're talking about defining your system as that, that school system, you know, I think no matter what, it's you know, what's the aim of that system? Because we're required to have these special education services within our school systems, all of us. And, I think what often happens is actually two parallel systems get created. And, you know, there's specialized staff, there's a language that goes with special education. There's a whole list of compliance items and laws.

0:14:46.9 JD: And, you know, if you make one or the other really good, general education or special education, are you actually making the system as a whole worse? I don't know the answer to that question, but there's a whole lot of questions to answer. You know, do the special education students get the same curriculum? Do they get the same testing system? Are they operating under the same academic standards? I don't have the answers, you know, and that can vary by situation. All I'm saying is, wow we've created two separate education systems, and what happens when we try to improve one corner of the system like special education, does that actually make the whole system? Are we serving the kids well that are getting those services? I think there's a whole lot of questions happen... So I think just looking at that, how those systems talk to each other is another sort of step you can take.

0:15:41.4 AS: Yeah. And I guess the other thing, going back to what you've talked about before, about the aim of the system, and you've talked just briefly here about it right now, but the idea is that if you can, maybe one of the first steps besides setting up a cross-functional team is to say, why don't we talk about what's the aim? Because if we can get to that point of what's the aim of what we're doing, chances are that will be the first kind of guiding light as to why we should break out of our silos or break down the barriers.

0:16:17.6 JD: Yeah, what's the purpose? I mean, is the purpose of special education a temporary set of supports that then leads the child back into more and more general education services? Or is that not, not the purpose? I mean, I think clarifying that in your system is really important. Another example. You know, this would be more like, sort of thinking of a larger system, not just your school system, but in a lot of places we have a traditional public school system, like in a city, like a big urban system. And then we have a public charter school system, which is a lot of times not its own district, but a series of small networks or maybe even single, single buildings. And again, I step back and say, well, what's the aim? Is it to make the system of education better in that particular city, in my case, you know, in Columbus? Or are we just trying to optimize our little corner? Are we thinking about these different pockets? We've often you know, speaking from experience, we've often been an afterthought when it comes to transportation systems or funding or facilities. And a lot of times, I don't think it's nefarious. It's just like literally there is not a representative around the table when decisions are made. And these systems were set up not, you know, originally weren't taking public charter schools into account. So there literally is no one thinking about how the needs might be a bit different in that particular type of system.

0:18:02.8 JD: And then, of course, because there's limited resources, there can be a lot of sort of, you know, people at each other. And that, that was a revelation of sorts or a mindset shift of sorts for me not to think of, you know, other school systems as competition, but really in looking at the Deming approach, it's win-win. Like if we have any chance of creating, you know, a successful system of education, especially in areas where things aren't working so well, like in a lot of core, core cities. I mean, the only way that we're going to do that is through cooperation, working together, having a shared aim. Those types of things. So, I think breaking down those barriers, whether they're internal, your own system, in a lot of cases there's a lot of barriers in place. Or it's between systems. I think that's, you know, at least as important, maybe more important, I don't know. And so that's the best...

0:19:01.1 AS: Your mic was fading out there. So, what was the last thing you said?

0:19:05.4 JD: Yeah, I said, breaking down those barriers between the systems is just as important as breaking down the barriers within your own system. Probably more important in a lot of ways. And I think that's the, you know, part of the power that I see in the Deming philosophy is this framing of win-win. You know, I used to think of other school systems as competition. Now I think of, well, how can we work together to create this system of, you know, of education that works for kids? Yeah, those are a couple, you know, thoughts.

0:19:41.4 AS: I'll tell a story to wrap up and then ask you to do a final summary. But you just, just my mind went back to like, when I was younger and how I was in some special education classes or, you know, I was just in trouble. But my story, my story is that by the time I was 17, I was addicted to drugs and alcohol. And I went into a treatment center in Minnesota called Fairview Deaconess Hospital. And then four days after I got out, I started getting high again. And then I went to Baton Rouge General Hospital. My parents bought me a one-way ticket to, on a bus, on a Greyhound bus to go there from Cleveland. I left from Akron bus station, and, and somehow I got clean at that time. That was September 15th, 1982. And I've been clean since then. So 41 years now. And I went to a long term treatment center that was in Solon, Ohio at the time. It's moved now, but outside of Cleveland called New Directions and I was there for seven months. But, so I had a real challenge with addiction in high school and prior to high school.

0:20:50.7 AS: But why this is interesting about coming back to my special education was that back when I was in third grade or so, I just knew I was in a lot of trouble, and I was just not an easy kid to handle, like a lot of kids, I had a lot of energy. My mom came to live with me seven years ago and she brought, you know, we brought some of her personal effects and stuff. And she had a little, a notebook that she gave me that was the notebook she kept of all my medical journals of my whole life where she wrote down things. And what I found in that notebook a couple of years ago was that the doctors started giving me Ritalin at the age of seven. And I had forgotten completely about that. But I don't know whether it was three years, five years, whatever. But I was on Ritalin from a young age and it was, you know, because okay, I was, you know, not cooperating probably and all that. And so I needed special help or whatever. But I started wondering, I wonder what role that had in my later addiction. And then I look at my, my skills in education, which became much, much better as I went through university. And then I went on to do my Master's and I went on to do my PhD and I went on to teach and I realized that I'm actually, you know, reasonably smart and I am a good learner and a good teacher. But I look back at that time and, you know, it just I don't know, I just wanted to tell that story because I don't think I've ever, you know, put the pieces of that together, but...

0:22:19.3 JD: Yeah, that's interesting. There's a lot of directions you can take that, for first, you know, congratulations on 40 plus years of sobriety. I'm sure that wasn't easy. I think, one, you think could there have been more coordination between the schools and the treatment centers and, you know, other maybe your own primary care physician and stuff like that? And maybe that would have made it an easier road, I don't know, for you. And then you think of the school system and what are the expectations for a seven-year-old? How is that system set up? You know, how much time are you spending sitting and things like that. And, you know, I'm not a doctor, so I can't say. Did you need Ritalin? But I do know is it's you know, it seems like I mean, it's obviously a often prescribed drug for students with ADHD, but it's also a powerful psycho-stimulant, you know, that that can have major side effects. I did my senior thesis on Ritalin in undergrad, so I have a little bit of experience interviewing kids that are taking it and stuff like that. And it can have powerful effects for sure. So yeah, I mean, I think of a lot of things like that. How could you have been better served early on, maybe at seven or eight that wouldn't have led to?

0:23:46.8 AS: And what do you do with a kid that's tormenting everybody and the teachers and you know, like it's just such a hard thing. And I probably needed to run, you know, around for, you know, an hour and a half before I got into class, maybe exhaust me. I have no idea. But for those people out there that are facing addiction or, you know, have dealt with something like that or know about that, we have Deming's 14 points, but we also have a 12-step program that you can find online that can help.

0:24:13.0 JD: Yeah, Hard questions. Hard questions. For sure.

0:24:16.4 AS: Exactly.

0:24:16.6 JD: Yeah. Well, I was just gonna say to your point about you need to run, like I went to a K-8 school where teachers would send kids out by themselves and tell them to go run a lap around the school as a sort of a management tool.

0:24:30.8 AS: It's great one.

0:24:31.5 JD: You can't do that everywhere. But, you know, you certainly sometimes sit here and think, that would be better than Ritalin, I think.

0:24:37.7 AS: Well, how many times do the listeners or the viewers realize they just get up and take a walk and then new things come into their mind? So... All right, let's wrap this up. How would you... Let's just give your final points on breaking down barriers.

0:24:50.3 JD: Yeah, I think there's some concrete steps. I think we talked about some of them. So, you know, defining the boundaries of your system, you know, where are you working? Where are your efforts when it comes to breaking down barriers, where are you gonna focus? I think when you determine that focus, you know, building that shared vision and aim is a good first step to make sure everybody's grounded in that aim. You know, one we didn't really talk about, though, I think especially for an internal, you know, effort, I think building this internal customer concept, I think that's probably more common in the business world, but less common in schools.

0:25:57.3 JD: I say that often here is, you know, who are your internal customers? I say that to people on my team, you know, and sort of taking that mindset that you are in service to a certain group. And I often say if someone's coming to you and asking for this, this and this, it may mean that you didn't sort of communicate out ahead of whatever that thing is. So that's another sort of mindset thing I think you can take. And then we talked about these cross-functional teams to build understanding and reduce adversarial relationships, I think because when you're sort of siloed and you don't see or you don't often talk with another group that, you can start to assume things about that group. And one concrete thing I did across sort of the department that I manage, the departments, we literally have a weekly meeting on Thursday called See the System Meetings, and it's operations, HR, student enrollment, health and wellness, all are in one spot, and we're sort of saying, where do we need to problem solve? Where are things showing up that are, sort of need cross-functional attention? And those types of things. I think that's been fairly successful just to get those people in a room on a regular basis.

0:26:40.6 AS: That's a great one. And I think for everyone out there, you know, See the System is a great idea, or another idea is meaning to work on the system, not in the system. You know, those are some great ways to start the process of breaking down barriers. Well, John, 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. You can find John's book Win-Win: Dr. 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."

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What's the difference between Compliance Excellence and Contextual Excellence? Is one better than the other? Which one does a Deming organization pursue? In this episode, Bill Bellows and host Andrew Stotz talk about the variety of types of excellence, and why they matter.

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 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 episode 11: In Search of Excellence. Bill, go ahead, take it away.

0:00:28.9 Bill Bellows: All right. So, as I've been doing for the last few episodes, I like to go back to the prior episode. Because I listen to these again and again and again. Oh, there's other things I wanna say. [laughter] Remember the title of the last session, Andrew?

0:00:46.1 AS: Well, that depends. [laughter] The title was, It Depends.

0:00:50.7 BB: Alright. Alright. So you know I'm fond of that phrase. So I wanna... I thought of after, you know, in the last couple weeks is, I took a class in program management at a big university in Greater Los Angeles. I mean, it could have been anywhere, but it was in Los Angeles, and there were 25, 30 people in the room, maybe more, from around the world coming into this university. It was a three day program, you know, like, $1,800. $1800. I had just joined a department called The Program Management Office, and I thought, I should go find out what program management is it all about? I had some ideas, but I thought, "I want to go take a real class on this." The class was presented by an aerospace veteran in project management. He had been involved in major programs with Hughes, installing, you know, working on airports around the world and other DOD stuff.

0:01:48.6 BB: And I mean, he was, he was a very interesting guy. I got there early every day looking, I was hoping there'd be an opportunity I could start a conversation with him, have lunch with him, that never happened. But three days long. And so, on the second day, he threw out a question to the audience, and people are sitting in a... It's kind of an amphitheater, with the rows were kind of curved. So he throws out a question to the audience and the guy in the front row answers, "it depends." [laughter] And the instructor very deliberately walked from the front of the room, a good 15 feet without saying anything, just walked right at that person in the front row, you know, all at the same level, gets right in his face and says the following, Andrew, are you ready?

0:02:47.6 AS: I'm ready.

0:02:48.6 BB: He says, "Are you an attorney?" [laughter] And I thought to myself, "All of that for the answer, "it depends," really?" And so, [laughter] later that afternoon, somebody asked the instructor a question, "Hey, what if you're in a situation where you gotta deal with blah, blah, blah, blah, blah, this, this, this, this, this, how would you handle that?"

0:03:17.3 AS: And for the listeners out there, you know the punchline here, come on, give it to me. What did he say?

0:03:23.5 BB: No, here's what he said. He said, "Well, if it involves this, I would do this. If it involves that, I would do that." And so, what did I say, Andrew?

0:03:42.6 AS: What did you say? What do you mean?

0:03:44.7 BB: I bit my tongue.

0:03:45.9 AS: Oh, you didn't say anything when he said that?

0:03:48.6 BB: Because what he just said was, "it depends."

0:03:50.4 AS: “It depends” in another way.

0:03:52.8 BB: Yeah. He found another way to say “it depends.” So it was also...

0:03:56.0 AS: He sounded kind of smart, you know, well, let's just narrow it down to two potential options.

0:04:00.8 BB: “Are you an attorney?” Yeah. But he still... What he was still saying was, it depends on the situation.

0:04:09.3 AS: Yep.

0:04:09.8 BB: And I just thought... I mean... And not that I didn't mind that answer, but I was just dumbstruck as to why he was so emphatic in challenging this answer, "it depends"? And I just thought, again, I never went up and asked, but I just thought, I wasn't sure it was gonna go anywhere. So anyway, so I wanted to throw that out. Going back a couple episodes, I wanna talk about metrics and KPIs and point out that there's nothing wrong, I mean, we're not saying KPIs are bad. What we're talking about is, when KPIs are used as goals and in a way that unnecessarily drives the organization in different directions, but if a KPI is just a metric of how we're doing in sales, that's one thing.

0:05:03.7 BB: But if the metric is, I want sales to be this number, and I go to people in procurement and say, "I want you to cut back on procurement," you know, we can end up with a conflict. You know, I had a woman in class once who worked for a gym, health club. And her job was to sell memberships and get on the phone every day, sell memberships, sell memberships, sell memberships. And she told her boss, she says, "Now, if I do a really good job, lines will form if we don't get more equipment. So, while I'm doing this, shouldn't we be working on that?" And her boss' attitude was, "You keep working on that and don't worry about that." So what she realized, it was just a revolving door of replacing old people with new people. They were just managing the parts in isolation. But another thing I think we had agreement on, you know, also had agreement on KPIs is it's... We're not saying there's anything wrong with metrics, but in organizations where we've worked, we've seen people drive change with, "give everybody a KPI."

0:06:17.5 BB: We could have great ignorance of variation. We have... Leading to dissolution of, just increased separation of organization. What I'm also reminded of is a quote that Dr. Deming used to use of his statistician colleague, Lloyd Nelson, who said, "the most important numbers used to manage an organization are unknown and unknowable." And one example from when I worked for Boeing is a good friend of mine was at the Boeing Leadership Center and there was a big emphasis at that time on what's called the Economic Profit Calculator. Making sure that business decisions close. They were not gonna build the next generation airplane unless they've got all the sales lined up and you have to have closure and closure within some timeframe, and that person came out.

0:07:12.4 BB: That was the big driving change in that era. Well, right after that presentation by somebody senior, the Chief Operating Officer, Harry Stonecipher presented. And what was near and dear to Harry at that point was something he started when McDonald Douglas was separate from Boeing, then Boeing bought McDonald Douglas, and he was really big on an education program that allowed anyone to pursue any degree, all reimbursed. So if he wanted an AS degree, a Master's degree, a law degree, not only were they paying for the degrees, but there were people getting a Bachelor's and then getting a Master's in Science and a MBA, so he just go at it, go at it. And he's very proud of that.

0:08:00.5 BB: So, my friend Tim is listening to all this and he says, "This afternoon, we heard from so and so in finance about Boeing business decisions needing to fit into this Economic Profit Calculator, how does your education reimbursement program fit into that model?" And his answer was, I thought really profound, he said, "there are some things you just do." And to me that fits in with Deming saying, you can’t measure the price of education. We brought an instructor in, we had you away for so many hours...

0:08:34.6 AS: You can measure the cost.

0:08:36.1 BB: And so, we can put some numbers on it. But what are the benefits? The benefits show up in the future. So I really admire that Stonecipher's answer was, I think very much in keeping with Deming is, we're gonna spend money on education. So, I just wanna throw that out for in terms of metrics and what not.

0:08:52.9 AS: And I would just throw in my thoughts on KPIs, which has gotten stronger and stronger over the years, and that is that, I really think people should stop KPIs. And the reason why is, because I think they've gotten to the point where it's just so misused and so, people are so reliant on it. Now, I know that that's an extreme view and so... But I say it to also challenge people to think about it, but if you can't stop the KPIs, then I would say the most important thing from my perspective, is make sure that compensation is not linked to the KPIs. Which of course, people will come back and say, that's the whole point of KPIs.

[laughter]

0:09:44.4 BB: Exactly.

0:09:44.5 AS: And if you remove compensation connection to KPI, and instead of that, you use coaching and working with your team, and you have metrics of what you want to achieve as a company, as an organization, as a department, and you look at those metrics... Nothing wrong with that, but it's when you bring in the personal, particularly the personal incentive or the division incentive that can then sub-optimize... Can optimize a part of the organization, either an individual or a department, and therefore, sub-optimize the total.

0:10:22.0 BB: Oh, yeah. If you tie those metrics... Yeah and that becomes the... What makes them sinister, when you provide that incentive that... And I'm sure we've both seen people given incentives and they're not gonna leave, what I tell people is, they're not gonna leave a penny on the table, whether it's get rid of that division, lay off so many people, they are going to achieve that metric, because there's money on the table and in the way of that problem.

0:10:55.2 AS: And for those people who are listening or viewing, who feel like, "My God, what would I do if I don't have KPIs, because that's kind of the way we've been managing?" The first thing is, I would say is that, if you know that... So first, talk to your staff, because once you go out and talk to the people in the company, you realize that almost nobody is in favor of KPIs, because they're being manipulated in many ways and they all see it. But if you know in your heart that it's not the right thing to do, my argument is, don't wait to stop doing the wrong thing until you know what the right thing is. You know? Stop... "I don't wanna stop beating my child, because I don't know the other way to do it." [laughter] No. Stop beating your child today, that would be a first step. Don't worry about what it is you're gonna do next. Anyways, that's enough on KPIs.

0:12:00.4 BB: You've reminded me of a story that's coming to me, but it's not coming in loud and clear, so I made a note, I'll share it next time 'cause you're gonna love it. I wanna give an example of what, of what, of what a narrow focus on KPIs can do. Just a couple of little ones, that are, you just can't make these up. In 1999, while at Rocketdyne, there was a focus on reducing costs. And this is, all organizations have these stories. And this is one I use to talk about in class all the time. So I don't think anyone's gonna be offended. Hopefully they'll laugh more than be offended by it.

0:12:37.9 BB: So there's a big focus across the company of reducing cost. Reducing cost. What do people do in a non-Deming organization? They look at cost in isolation. Where I wanna reduce the cost of this, not look at how it affects the others. And so, at that point of time, again, we're talking over 20 years ago, all the documentation to make every space shuttle main engine was on, was on paper. Every page used to fabricate the engines on paper. And there were page by page instructions of manufacturing to do this, do this, line by line by line, and on every line it might say, torque this bolt to 55 inch pounds, and it was stamped by me, the mechanic, and by you the inspector. Boom, boom, boom.

0:13:28.2 BB: So if NASA ever wants to know, was that bolt torqued on that engine on... And we have all the documentation. Guess how many pages of documentation there are? Nowadays it's likely all electronic, but in that day it was all paper. Guess how many pages of documentation for every single space shuttle main engine of which they're on the order of 18 made? Take a wild guess.

0:13:55.9 AS: Gosh. I'm just thinking thousands.

0:14:00.5 BB: 18,000 pages of documentation. So Andrew, that's like, 60 3-Ring Binders and I mean, 300 pages in a 3-Ring Binder, right? So imagine every engine's got 60 3-Ring Binders. So in 1999, all the pages in those books are on card stock heavy... Card stock paper, heavyweight paper, right? And why is that, Andrew? Because these are a storage document, right? So, I kid you not, one week I'm doing a class, you know talking about paradigms of variation and all the things we've been talking about. And somewhere in the conversation, somebody mentions that the card stock paper was replaced by lighter weight photocopy paper. And then, the person mentioned that, shared that, as a result of that, in the use of these 3-Ring Binders, the pages were falling out.

[laughter]

0:15:05.4 BB: And when I... And then the person went on to say...

0:15:07.1 AS: Oh, that's okay.

0:15:09.3 BB: Oh, no. Hold on, Andrew. So, as a focus on reducing costs, the heavy card stock paper is replaced by a lighter weight paper. The pages are falling out. So when I asked the guy, what are we doing with it? And the answer was, we're putting hole reinforcement circles on the pages to put them back in the binder.

0:15:34.2 AS: Absolutely.

0:15:35.1 BB: Right? And so, for those who don't know, hole reinforcement circles are little circles about the size of a, of a cheerio that get put on either side of the sheet of paper...

0:15:46.9 AS: With adhesive on the back of it.

0:15:48.1 BB: And it's a heavy cloth to keep it from pulling up. So, I mentioned that a couple of days later to some colleagues and they looked at me like I was from Mars. They're like, no, I mean, you've got some great stories, Bill, but they weren't buying the story. So the following week in class, [chuckle] I said, Hey, last week somebody mentioned, anybody know anything about that? And the guy in the front row, not only does he nod and say, yeah, he pulls out of his box a roll... Pulls out of his pocket a roll of like, 300 of these. And I said, so, this is really going on. He says, Bill, I go through a box of these a day.

0:16:29.9 AS: Oh, my God.

0:16:34.5 BB: So when you focus on the cost of the paper and forget that the paper is actually a storage document, not just a sheet of paper, you end up with hole reinforcement circles as a solution. Now...

0:16:46.1 AS: And the cost of the circle, the reinforcement, hole reinforcement adhesives that you put on and the cost of the labor that's spending time doing that by these high value added people.

0:17:04.6 BB: Well, and I also realized, if the space shuttle is on the pad and ready to go, fueled, if you're in that window and something comes up and somebody in NASA calls up Rocketdyne and says, we need to know for the second engine in that vehicle, if this work was done? If this work is done? If you delay the launch, if you're in the window, the vehicle was fueled, it's like a million dollars a day. So imagine going to the binder and the phone call back is, we can't find that sheet of paper. So this is...

0:17:46.8 AS: That was on page 47. I've got 46.

0:17:52.7 BB: We've got 40...

0:17:53.3 AS: And I got 48.

0:17:55.5 BB: So, but I use that. Okay, well, pre-pandemic, I was doing some training in New Zealand at a university. I needed to staple... I needed... [chuckle] I needed to staple these documents together. And so, the instructor who was hosting us, said, "What do you need?" I said, I need staples. So he goes to his office, comes back five minutes later, gives me a couple reams of staples and I go to put them in the stapler. And he says, "You're using these?" I said, “yeah, I'm using them.” He said, “wait.” He says, "Let me go get the good staples." I said, [chuckle] “what do you mean?” He says, "The university buys us really cheap staples. So all of us in the faculty keep a private stash of good staples. Let me go get the good staples." Right?

0:18:48.8 BB: You can't make up... Right? This is little stuff. All right. So now I wanna get to what Dr. Deming said last time I used a quote from Dr. Deming about it would be important for people to work together. And what I share in some of my seminars is an Aesop fable, from Aesop the Greek fablist. So we're talking like, 500, 600 BC and the particular fable I referenced is the four oxen and the lion. Are you familiar with that one?

0:19:23.7 AS: No.

0:19:25.1 BB: Okay. Well, I came across this, because I was doing some research on the expression "United we stand divided we fall." And I'm thinking united, divided, I'm thinking Abraham Lincoln, Civil War and to come up with, no, that's the punchline for Aesop's Fable about the four oxen and the lion. And the storyline goes that these four oxen would stand looking outward with their tails connected. That's the united we stand, they looked outward and the lion would circle them, but the lion couldn't do very much, because we're protecting one another. And then when the oxen broke rank, the lion jumped in and ate them. So the united we stand divided we fall. So the reason I use that is, I'm not proclaiming that Dr. Deming is the one who figured out the importance of teamwork. [laughter] I think that was figured out a long time ago. I look at what Dr. Deming's work is about - is helping us understand what are the obstacles to what I think we all really want. But I don't think he... So when he references teamwork, that's an old concept. That's why I like to use the Aesop fable, as it goes back a long way.

0:20:41.3 AS: Yeah.

0:20:42.2 BB: All right. But in terms of division, I'm gonna share from Russ Ackoff one of the many things I learned from him and that is that the adjective in front of the word "problem" is divisive. And so, when I worked in Connecticut for the jet engine company, we're making 120 tank engines a month, 1500 horsepower $300,000 each. And at least once a year there'd be an issue. We gotta stop production. Which would lead to the conclusion that it's a design problem in which case manufacturing did what, Andrew?

0:21:24.5 AS: Not sure.

0:21:25.1 BB: Breathed a huge sigh of relief.

0:21:26.7 AS: Not our problem.

0:21:28.4 BB: Or if it's not a design problem, it could be a manufacturing problem, in which case engineering said... And the engineering people felt slighted, because the president of the company was a manufacturing person. And so, what I saw was, yeah, as soon as you define the problem from that vantage point, then it's stuck on someone. And everybody else just says, whew! Thankful it wasn't us this time. So, I wanna share from Russ, what if we aren't so divisive?

0:22:02.4 BB: So Russ has a really neat story going back to, could be the '60s and you'll know by the punchline the timeframe. So at that point in time he was invited to GE's Appliance Center in Kentucky and he brought a graduate student with him. And he said, in the room, in the center of the room of this conference table, they're discussing this issue they're having. And around the perimeter of the room are all the major appliances that GE is selling at the time from refrigerators, freezers, stoves, washing machines, dryers, they're around the perimeter. And the issue they're facing is, what is labeled a "forecasting problem." And store owners are complaining that when the people are coming in to buy the appliances for the kitchen, they need to remodel the kitchen, they need a new refrigerator, they need a new washing machine, I mean a dishwasher and a stove.

0:22:54.2 BB: They need those three. And the forecasting issue is they come in and we only have two of the three, or we don't have the right... We don't have the matching colors, the matching styles. And so, that's why we're losing sales to the others. And we needed a better forecast. And in addition to having the right colors and the right model, another feature in that timeframe was the refrigerator door had to either open from the left or open from the right to match the configuration of the kitchen. So you may have the right... All three are right, but now you've got a left-handed door and the refrigerator needs a right-handed door. Oh. All right. So the graduate student upon hearing this uses a Swiss Army knife, Russ said, to take a door off of the refrigerator and said, have you ever thought about a reversible door design?

0:23:49.1 BB: And so, the reason I share that story for our audience is, that's what happens when you involve design in a solution to a forecasting problem. You get their inputs. And so, anything short of that, when we, when we focus on a manufacturing problem, only invite manufacturing, not invite others and as is prone in a non-Deming organization you end up with solutions that don't involve the others. And so, I just wanna throw that out that these are... The everyday things we do in organizations to divide. Alright. So now let's talk about the featured movie tonight.

0:24:27.3 AS: Yes.

0:24:27.8 BB: In Search of Excellence inspired by the book by Tom Peters and Robert Waterman. Correct?

0:24:35.3 AS: Yes.

0:24:35.9 BB: Roughly '82, '83 timeframe. And so, Dr. Deming's work has been known for a couple years and Tom Peters and Waterman wrote a book talking about... There's US companies doing excellent work, so let's go look at them. So at Dr. Deming's last seminar there were three assistants helping him. He was very frail, he was in a wheelchair, ended up dying 10 days after the seminar ended. And I think I mentioned sitting next to me for all four days was a rabbi praying for him. So, Dr. Deming is very frail in the wheelchair the entire time, when he would get fatigued, he'd be wheeled off the stage. One of these three assistants would come up and pick up the pace. Couple hours later Dr. Deming comes up. And so, during one of the breaks I went up and introduced myself and, to them. And one of them told me that...

0:25:30.0 BB: You know, he traveled with Dr. Deming. He was one of what's called a Deming Scholar. So at that point of time, there was a cadre of people that would travel with Dr. Deming if he was doing a seminar or he's at GE headquarters, wherever he was that week, this cadre came with him. So he said, somebody once in one of these sessions, said to Dr. Deming, “what's the difference between Jerry Falwell and Tom Peters?” And he says, Dr. Deming says, “who's... Well, who's Jerry Falwell?” And he says, “oh, he's a Baptist minister.” He says, oh, he says, so.

0:26:02.8 AS: A very famous one at the time.

0:26:05.0 BB: Very famous Baptist minister. And he says, “so what's the difference?” Dr. Deming says, so what's the difference? He says, "Jerry Falwell has a message." And so in that timeframe, I remember... I used to remember... And you likely watched these as well. So Tom Peters would be working on his next book and whatever the theme of the book was, he's doing research. And I give him credit. I mean, he's a Stanford Business School graduate. He's doing all the research, incredible at marketing. So he picks a topic, does his research, writes the book, goes on PBS to do this presentation with a thousand people in the room. And he's using real life people and companies to tell this story one at a time, one at a time, one at a time. So I thought, well, what if Tom Peters was to write a book about how to live to be a 100? Well, what do you do, Andrew? You've got to go find people who are a 100, right?

0:27:05.3 AS: Yeah.

0:27:06.2 BB: You can go find them, right?

0:27:07.1 AS: Yep.

0:27:07.8 BB: And so, I used to imagine that if Tom Peters is, you know, writing a book about how to live to be a 100, he's gonna go... The recipe is find the people, find the successful companies, go research them, a chapter on each one of them. Each of them comes up and presents. And so, there we are on PBS and the first guests that come out are a 101-year-old gentleman. And he comes out and he's chain smoking and he explains that, how does he live to be a 100? He says, well, "you...smoking is good, cigars sometimes, shots of Old Granddad and that's how you live to be a 100." And then next we have the sisters, live together, twin sisters, never married, lived together their entire lives, don't drink a thing, teetotalers, and that, you know, vegetarians. And so, you say, oh, so that's how you live to be a 100, Andrew, you drink, you drink tea, no, you stay away from alcohol, stay away from red meat.

0:28:14.6 BB: Next one comes out, right? And the point is that all these companies are different and you're left to figure out which one to think. And whereas what Dr. Deming's talking about is a theory by which to understand organizations that you could take to your organization and figure out how to live to be a hundred, not just what we see otherwise. So anyway, I was aware of all that, studied all that. I wasn't aware at the time that's what was going on, but as I started to research this Peter's and... Why Dr. Deming thought of him that way. And so, Rocketdyne was sold by Pratt and Whitney, sold to United Technologies after Boeing, and they had a big Lean Six Sigma program, but they didn't call it Lean Six Sigma.

0:29:02.7 BB: And the Rocketdyne people are asking, why did you call it Lean Six Sigma? He says, well, it is Lean Six Sigma, but GE calls their program Lean Six Sigma, and we're not gonna use the same name as those guys. Those are the light bulb people. So we've got our own name. Well, what's your name? Well, we call it ACE. What is ACE? Achieving Competitive Excellence. But it's really Lean Six Sigma. So I spent a few years trying to wonder, what does it really mean? And I'm and I'm embarrassed that it took me as long as it did, but it dawned on me what it really means is achieving Compliance Excellence.

0:29:42.9 BB: And it was all about, does this meet requirements? And so that's what I referred to early on as question number one. Does this characteristic, have you passed... You know, have you met all of the requirements? And that's all it was, it was meeting requirements, meeting requirements, meeting requirements. And then, and what it reminds me of is, I was doing a seminar in England once for a one-on-one, went over for three days through a translator, and the audience was a physician from Kazakhstan who was anxious to learn as much as he could about Dr. Deming's work and that led him to England. And through some fortunate situation, I had a chance to meet with him one-on-one and went through and explained to him, Me and We organizations, Red Pen and Blue Pen companies, all that, all through a translator. So I had asked a question in English, the translator would translate, boom.

0:30:36.5 BB: So the question I asked him was, that I wanted to share is, I said to Ivan, I said, "what's the fastest way for a Red Pen company to become a Blue Pen company? What's the fastest way?" So that gets translated into Russian. Then it comes back to me and he says, "what?" I said, "spray paint." [laughter] And to me, that's the epitome of Compliance Excellence where we're... You get a really light surface texture, where it's looking good, but it misses the deep sense of the theory of Dr. Deming's work. But I'm not saying Compliance Excellence is bad. And so, when I wrote an article about this, and if any of the listeners want to contact me on LinkedIn, I can send them an article I wrote about it. And so, 'cause when you go to write about something, now you start to think deeply about this, does this make sense as opposed to just having a conversation? And it dawned on me that Compliance Excellence is not a bad thing.

0:31:39.3 BB: And the example I want to use here is, I was listening to two friends, husband and wife who spent a whole year serving society. They were compelled, had incredible military careers, and they decided we wanna pay back society. So the plan was that the husband, Doug would ride his bicycle every day through every state in the United States, including Alaska and Hawaii over the course of one year. So they started upstate New York, crisscrossing around the country. So he was on his bike every day riding, raising awareness for veterans' issues. 'Cause for those who don't know, there's... The the suicide rate of veterans is enormous. And so, they're looking... They're out there trying to help veterans. They were compelled to do that. And Doug's wife Deb, rode the motorhome, either ahead or behind, hooking up with local radio stations, trying to get PR.

0:32:38.8 BB: Then Doug would show up and he says one day they're riding through the Rockies, having dinner... And they're having dinner that night. But all day long, Doug is going up these hills, down these hills, up these hills. And so at dinner, Doug says to Deb, he says, I mean, "how'd you like that hill?" [laughter] Deb says, "what hill?" [laughter] So to Doug, every mile is not the same. [laughter] Right? So it's 18,066 miles. Doug felt the difference in every one of those miles, more so than Deb did. So if somebody says, how far was that route, Doug? For Doug to say 18,066 miles, 67, that's ups and downs, he felt every one of them. For Deb, it was a little bit... They were more of the same. So I'm not saying there's anything wrong with answering the question 18,067, but to me that's a compliant... That's looking at every second being the same, every hour being the same, every widget being the same, not understanding the differences or how they're being used.

0:33:49.1 BB: So now I wanna talk about, instead of Compliance Excellence, again, I'm not saying Compliance Excellence is bad. What I would say is that non-Deming organizations thrive on Compliance Excellence in this sense of interchangeability. Everything is the same, looking at things in isolation. So then I started thinking, well, if that's what they do, what is it that that Deming organizations do? And that's what I would call Contextual Excellence. There's an understanding of context, understanding of the context of the system. Tom Johnson, who has written about, Management by Means, which I wanna look at in a later episode, when Tom was doing research, this is around the time I met him, 1997, '98 timeframe. He was, he was visiting Toyota Plants, definitely in the United States. I'm not sure how many overseas, but he is taking copious notes, going behind the scenes. So this was before the world was all over Toyota.

0:34:47.3 BB: So Tom had free access. He said eventually they start charging for all this stuff. But Tom was there way ahead of the crowd. And he said one day he is with his notebook and he is walking around, he is looking at the stamping presses. But they're notorious for stamping out one part at a time. One single minute exchange of dyes. So they don't make a thousand parts and then figure out how to use them. They figured out how to change the dyes quickly. So Tom said, he asked the guy, "how long does it take to change this dye?" And the guy says something like, 28 minutes. And so Tom writes down 28 minutes and later the guy came back to Tom. He says, "just so you understand" he says "28 minutes is not world class, but this does not require world class."

0:35:32.3 BB: And so this is when I was explaining Contextual Excellence to Tom. And he says, is that what you're talking about? I said, that's exactly what I would expect to see within Toyota, that things are... They fit the situation. So it's not speed for the sake of speed, it's speed that fits the context of the situation, which is also like saying, have card stock paper where it makes sense. Have the appropriate staples where it makes sense. And so, when I talk about "in search of excellence," with my classes or in presentations, what I'm trying to get across is, there's a place for Contextual Excellence and there's a place for Compliance Excellence. But I think that difference is far better understood in a Deming organization that has a great understanding of systems and connectedness and synchronicity and teamwork, and lacking that non-Deming organizations, I think unknowingly default to Compliance Excellence, driving things to zero, thinking you could have zero waste in these things.

0:36:39.9 BB: And then you end up with cheap staples, lightweight paper, and you end up paying for it somewhere else in the system. So I just wanted to point out that there's... I'm not saying one is better than the other. What I'm saying is, I believe a Deming organization would have a profound appreciation of when to use each. And as simple as, if you were to say to me, Bill, how far is it to the nearest airport? I could say, it depends Andrew, what are you... How are you getting to the airport? You say, I'm riding my bike. I said, "okay." Right? And again, not that we're always gonna say it depends, but that's what I think that appreciation has. Let me just stop there and...

0:37:19.6 AS: Yeah.

0:37:20.2 BB: See where you are.

0:37:21.6 AS: So, I have two little stories that I wanna share in relation to this. One of them is about my uncle Ham. Hamilton.

0:37:28.4 BB: Yes.

[laughter]

0:37:29.8 AS: And then the other one is about my own business, Coffee Works. And when we set up our factory 28 years ago, my business partner Dale, was absolutely passionate about coffee. He roasted every bean for our first 10 years. And he sold and he did the accounting and he did everything basically, until eventually he trained staff. And some of those staff still, they've been with us for years, for decades, and they take care of the roasting now. But what Dale really understood was what he called, "in the cup quality." The idea that when... When it's in the cup, that's about to touch the customer's lips, that's the quality that matters. Nothing else matters.

0:38:15.1 AS: If you don't get that right then, you know, it doesn't matter how much you've documented or did whatever you've done in the past, in the temperature of the water, in the grind, you know, in all of these different things. So he was really all about excellence, and we didn't get... We never got complaints. Maybe we got an occasional one, but it wasn't very common. Anyways, we got a big, big multinational company came to us and said, we want you to bid along with some other coffee companies for our business, and we bid for the business. And they said, "We're picking you. And now we're gonna go out to your factory and we're gonna inspect your factory. And if you get a score in our quality audit below 70, you're basically in trouble, [laughter] already, and you're gonna have six weeks to fix it or else you're fired."

0:39:05.9 AS: And this was a huge amount of volume and a prestigious company for us. So we pulled everything together to get ready for their audit. And they came and they gave us their score and we felt like we were pretty damn good. And they said, 65. [laughter] And you know, what we realized to them, quality was about paperwork and quality was about, you know, compliance to that paperwork. And so, we had to do that, because that's what quality was to them. We'd never done anything like that. You know, now, 15, 20 years later, we still supply that same customer and they still do their annual audits and our scores are much... They're in the 90s, which puts us in like, world class. But the point is, we learned a lesson, you know, the difference between contextual quality or let's say, intrinsic quality that Dale was working on versus this kind of, what did you call it? Compliance Quality.

0:40:08.5 BB: Yes.

0:40:09.9 AS: So that's my first story. The second one is about my uncle in Germany where he was in charge of the, of the logistics of a base of a US military base. And the commanding general came to see, and they had cleaned up everything. And they got to the end of the whole thing, and they kind of dumped out to the parking lot where there's, you know, 700 or 500 vehicles lined up in different ways and whatever, all kinds of different sizes of vehicles. And Uncle Ham said, "Sir, so how did you like the tour of the facility and all that?" And he says, “of the base?” And he said, "Ham, everything was great except one thing."

0:40:48.4 AS: And my uncle's like, "Okay, what is that, sir?" And he said... And he looked at the vehicles, a long line of vehicles parked side by side. And he asked him, he said, "Next time I come here... " Now remember, these vehicles are all different lengths. "Next time I come here, I want these vehicles all lined up. It's a mess the way you've got it done." Yeah. And so, my uncle said, "Yes, sir!" And he said, "Before you leave, sir, could you walk to the back of the vehicles for a moment with me?" "Yes, yes, I will." And he said, "Sir, would you like them lined up in the back or in the front?" And they had lined them up in the back, which meant their noses were in different lengths. And the point is, is that you can't have it all, right? Everything's a tradeoff. You want it this way. There's a compromise here, there's a challenge there and all that. And that's a lesson I learned from Uncle Ham.

0:41:46.1 BB: Well, and then he, I'm sure he learned it from that point on is, you know, when, when he is asked to line them up and make them more uniform, the question is, help me understand what that means.

[laughter]

0:42:00.3 AS: And the answer's gonna be, it depends. 'Cause this general likes them lined up in the back and this general likes them lined up in the front. We're gonna need to wrap up. So how would you close out this episode?

0:42:17.0 BB: The main thing I want to get across saying is that, first of all, Contextual Excellence is the bedrock of investment thinking. To look, when you begin to look at things as a system and to understand that every mile is not the same or do I need to... Does that matter to me? But to me, instead of everything could be improved, you know, we focus on where are the most red beads, get all the red beads to zero and then go across the organization. And what is that? That's managing actions. We talked about that months ago. And to me that's Compliance Excellence. It's looking at the parts in isolation. But to me, what Contextual Excellence is about is the better we understand, the greater how things fit together.

0:43:10.5 BB: And there, the challenge is that everything we work on is part of a bigger system, which is part of a, then again, bigger system, which is part of, then again, bigger system. So we're not proposing that you're going to infinity, you know, that there's this big picture of you, whatever that means. It's, it's, and I like it... You know, people talk about, well, you know, Andrew's a systems... You and I, Andrew are systems thinkers, as if the others aren't. What does that mean? That means that we think of the big picture. There's no such thing as a big picture. So there, what we're talking about is Contextual Excellence, is trying to gather as much context for the system as it makes sense with appreciation that you might still be missing something.

0:44:00.3 BB: And that's where learning comes in. But that understanding is part of, is fundamental to investment thinking. You know, is the education system paying off? How would you know? Where are we gonna see that benefit? What is your theory for that? So I just wanna point out is, I'm not trying to condemn Compliance Excellence. I think Deming organizations are gonna have a place for that. Just like there's a place for, you know, does it meet requirements? Yes or no? It's just becoming more mindful of these choices is, is what I'm suggesting or proposing.

0:44:31.1 AS: Yes. 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. There's so much there for further learning. And if you wanna keep in touch with Bill, just find him on LinkedIn. He's right there. 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."

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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."

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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."

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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."

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"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."

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In this episode, John Dues and host Andrew Stotz discuss what Dr. Deming meant by "institute training on the job" and "adopt and institute leadership" (principles 6 and 7). How do you follow those principles in the context of education?

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 13, and we're continuing our discussion about the shift from management myths to principles for the transformation of schools systems. John, take it away.

0:00:30.0 John Dues: Good to be back, Andrew. Yeah. We've turned to this set of principles that can be used by systems leaders to guide their transformation work. In the last few episodes, we've discussed the first five principles, the five of the 14. Just to recap real quick, we did constancy of purpose was number one. Principle two is adopt the new philosophy. Then we did principle three, cease dependence on inspection to achieve quality. Four was maximize high quality learning, and the last time we talked about working continually on the system. And then the plan today is to talk about the sixth principle, which is institute training, and then the seventh principle, which is adopt and institute leadership. So, I figure we just dive in with principle six. So sort of the short version is "institute training on the job." And this really is training for everybody in the system. So in our system that would be students, teachers, staff, management, basically so that everyone can make better contributions to the school system.

0:01:42.7 JD: And just to clarify, when I'm talking about training, I think what it's important to know is that I'm talking about learning how to do a particular job within the system using a particular set of methods and tools. And basically the purpose of training in a system is to allow a worker or a student to know exactly what their job is. Now, we're constantly updating that training because in our world for teachers and principals, you have to constantly develop new skills to keep up with changes in whatever it may be, cognitive science, new curriculum, lesson design, new technology, better teaching techniques. Any number of things that we're training on and improving our training on on an ongoing basis. But a major aim of the training in our system is to reduce variation in methods, basically. I think no matter what type of training you get as a teacher, I think you've experienced variation in methods.

0:02:51.3 JD: And if you go to pretty much any school building in the United States, I think most educators would very quickly tell you, and I think even parents and students, you could sort of go room to room and say, yep, that's the strict teacher. That's the teacher that lets you get away with anything. So this is sort of commonly known when it comes to how teachers run their classrooms, especially on the classroom management level. Everybody knows who has the highly structured classrooms or the disciplined classrooms, but this really does cause problems when you think about it, 'cause there's this mixed message about what a classroom is supposed to look like. And I think on the flip side of classroom management is instruction. And I think there's a lot of variation there. And that's more hidden, I think, but probably possibly more important to sort of consider. And so when you have a typical, let's say an elementary school, an elementary school has three third grade classrooms, and each of those three teachers in most schools in the US, they operate pretty independently of each other.

0:04:05.6 JD: And a lot of schools, each of those teachers would have their own sort of preferred methods. And even sequencing for how that, let's say, a math class is taught. But then the problem is that some combination of students from each one of those classes in third grade that following year are gonna end up in a fourth grade classroom. And now this fourth grade teacher has to deal with this. And really the fourth grade teacher is this customer of the third grade teachers. But if each of the third grade teachers are sort of doing their own thing, then they've sort of optimized each of their own classrooms at the expense of the system. So that's what I'm talking about when I'm talking about sort of reducing variation in methods through training.

0:04:58.9 AS: So there's a few things to discuss in this that I think are interesting. The first thing is, let me just repeat what you said. The aim is to reduce variation in methods. I think most people, if they expected you to say something, they would've expected you to say, "The goal is to reduce variation in outcomes." So tell us why... Now, it may be that methods get to reduce variation in outcomes, but you're focusing on methods. So just tell us a little bit more, because also as we know, there's teachers want some independence and there's some academic independence, at least at let's say university level. They try to have more of that. But maybe you could talk a little bit more about the methods and why you focus on methods instead of just saying you do it the best you can. And one other thing I would say about that is that you could say that if you had three different teachers, different styles, some students would perform better in one style versus another. But a counter argument is, well, we're not sorting them by that to put them into those classrooms. So it's only by luck if that happens. So tell us more about that.

0:06:05.5 JD: Yeah, I think when I'm talking about methods, maybe I should maybe use a little bit different language, but I think probably the most important thing here is that the same sort of high quality curriculum is in front of students. And let's take a math curriculum, for example. Many schools, even at the school building level, there could very well be variation in what the teachers are putting in front of the students, and even in the same school, in the same grade level, let's take those three third grade math classrooms. Now, it's certainly possible that those teachers have taken upon themselves to have a highly sort of coherent system, it's also possible that their school or their district has a highly coherent system, but a lot of times what I found is that, each teacher is sort of making their own decisions, and they sort of say, I'm following the state standards, but those state standards are often general statements, and there's a lot of wiggle room [chuckle] into what you could sort of fit into that.

0:07:11.6 JD: And so what ends up happening is people go to the internet and go to various websites and they print off their preferred worksheets a lot of times. And so when I'm talking about variation in methods, what I'm mostly talking about is a high quality curriculum that's coherent and it's used in kindergarten, first grade, second grade, third grade, fourth grade and fifth grade. Now, within that, teachers have... Still have many, many, many, many decisions to make in terms of how that curriculum gets used, how they sort of adapt it to their students, how they design individual lessons, there's all kinds of room for sort of creativity, individual decision-making, responding to how your students are doing when you actually put it in front of them, but that's mainly what I'm talking about when I'm talking about variation in methods.

0:08:04.8 AS: Okay, got it.

0:08:07.5 JD: Yeah. So, I mean, I think we sort of recognized this as a school network here in Columbus, we have the two elementary schools, the two middle schools. We're a fairly young organization and our oldest building is 15 years old, our newest building is only five years old, and so because we're a relatively young organization, many of our teachers are very early in their careers. So this sort of training, having a set of methods, a set of curricula that we're training on was really important, and so we thought it was so important in fact that we actually have a three-week... It's three and a half weeks that we call a summer institute for teachers prior to the start of the school year. It's a little bit shorter for veteran teachers, but for new teachers, it's three and a half weeks and they actually just finished it 'cause this is our first day of school actually today, so we have the summer institute, and so that was important to us, we're gonna have this training program for our early career teachers, but then the question quickly becomes, what is it that we're doing during that summer institute time period?

0:09:22.4 JD: And so that's where I think this sort of deliberate thought about training comes in, so one of the things that we did is design a capacity matrix for teachers, and so we've talked about this, but just basically outlining what are the capacities that we want teachers to learn and develop during their time with us, not only as new teachers, but it's a sort of an ongoing development road map really, and we have this capacity matrix that outlines the skills, the mindsets, the knowledge that we want teachers to sort of gain over time, some of it through this summer institute, and it sort of defines, "Here's the capacities." It breaks those capacities down into things that we're then linking to specific training sessions throughout that summer institute. And it's not really an evaluation tool, it's more like a road map for, "Here are the things I wanna be working on, here's how I'm doing, here's some areas where I can go learn this even, outside the training because the capacity matrix also has readings linked, it also has podcasts or videos or books that are linked, that if there's an area that a teacher is particularly interested in, they can do a deeper dive in it, and then there's also a way to sort of track their learning over time. So that's a way to sort of add some structure to this idea of instituting training on the job.

0:10:55.6 AS: It sounds like I would be excited to sit into that 3.5 week... Three and a half week summer institute. Like just the excitement of new teachers and of prior teachers sharing their experience. I imagine that they don't get that much time to do that during the school year.

0:11:15.7 JD: Yeah, it gets tough, I mean, unless you're really deliberate about building that into your schedule because most teachers are with students obviously the majority of the day, so we have this three and a half week summer institute for new teachers, and then we also built in at least an hour a week of PD on an ongoing basis, and then we also have eight days that are so...

0:11:35.1 AS: To the listeners out there, PD means Professional Development.

0:11:38.9 JD: Oh, right. Professional Development. Yep, Professional Development.

0:11:41.4 AS: Okay. Got it.

0:11:41.9 JD: Cheers. But you mentioned teachers are excited to share what they learn, and so this summer institute has a deliberate design on that front as well. So all teachers that are in their first and second year with United Schools Network go to this three and a half week training, and then it's about half that for more experienced teachers. But the reason we do that is because early on we got this feedback that for new teachers and the amount of stuff they're trying to download on the curriculum front, on the classroom management front and other areas is basically a blur. And then they come back after living it for a year now, they're going through that full summer institute as a second year teacher, they say, "Oh, I actually can sit at a table with the new teachers and they're actually a second teacher within the training." And that's a part of the deliberate design is you've kind of lived it, you've learned it, you've applied what you learned, and now I can come back, I'm still learning as a second year teacher, obviously, early in my career, but now I have a lot to sort of pass on during each of those trainings in addition to what they're getting from who the actual trainer is up in front of the room.

0:13:03.1 AS: Well, it's interesting because I was also thinking about a production line, like a worker on a production line doesn't say, "Okay, on my shift, we're gonna do this differently." A worker on a production line learns how that process works, how it's measured, why it's important to do it this way, so that it... How it impacts the next part of the process. So whether we talk about a worker on a production line, whether we talk about a worker in an office doing software development, the fact is is that ultimately what we really want is to standardize what we're doing and then innovate over time. It's not that we don't want an employee or a teacher to stand up and say, "Okay, I think we can improve this now. Yeah, we've been doing this for a year this way, but I see more improvements that could be done." And that's where you get into this process of PDSA and thinking about how do we improve this in a methodical way.

0:14:06.7 JD: Yeah. Well, and there's two things that come to mind. So I used to be the point person on curriculum development training. I led that training in our network for I think a dozen years. And so what I would tell the first year teachers... So I had first and second year teachers in my training every year. I would tell the first year teachers, you're gonna get a curriculum that's been built and tested over a number of years. Do not touch it across the school year. And here's the reason why. One, you're learning all these new procedures and processes, you're learning this new curriculum, and you're sort of learning it just in time to teach it to students in terms of the curriculum that you're gonna put in front of students. And all of these different stages are linked.

0:14:50.1 JD: And if you start making changes in an early stage, there's sort of this waterfall that happens throughout the entire process that you're not gonna be aware of initially. And so I tell them, wait till your second year that you have the full sort of system picture in your head of your curriculum before you start making changes. And that works pretty well, and and then you'd have the second year teachers there saying, "Yes, yes, do that, do that." [chuckle] 'Cause what he is saying is, "Basically, I learned this the hard way, or you know, I thought I could do this and what happens is, I had to... I thought I was changing a lesson and that ended up meaning I had to change a unit and then I had to change an assessment that's tied to this unit and so I didn't have that full picture." So that was one thing I'm thinking of. And another thing is, you know, we want feedback on this summer institute delivery. So many of the people that are delivering this training are senior leaders.

0:15:46.3 JD: Many have been with us for more than a decade. But even just this week we got this long feedback from a first year staff member on summer institute. And an organization can respond to that in different ways. It could be, well, "Who do you think you are sending me this feedback? You just got here." But the response to that staff member was, "This is great. School starts soon, let's... We'll wait a few weeks, schedule a time so this is still fresh in our heads, and we're gonna sort of take notes on this and think about how we could incorporate this feedback into the design of summer institute next summer." And so that's sort of the continual improvement mindset, be it... Could be at the individual teacher level, or in this case it's the whole network's summer institute that we're taking a look at, but everything is on the table for continual improvement, yeah.

0:16:35.9 AS: Well, and it raises another point, which Dr. Deming talks about. I know Toyota talks about too, in the stuff that they talk about, about being a learning organization. And what does it mean to be a learning organization? The most important thing about being a learning organization, to me, is the cumulative learning. It's not the training and we do this and we have this training and we support learning and all that, it's the cumulative learning. Like you said, we've been improving this, this process, this curriculum, this teaching process over many iterations and we've gotten it to here.

0:17:14.3 JD: Yep.

0:17:15.1 AS: The objective is to bring it to the next level.

0:17:17.3 JD: Yeah.

0:17:17.7 AS: Now, you can imagine, a way to think about that is, imagine you're a new CEO, you go in and you say, "We're throwing all that out and we're going with this." And it's like all that cumulative learning is gone.

0:17:30.5 JD: Yep. Yep.

0:17:31.3 AS: Now, it's not to say that that cumulative learning ended up in the right place. That's a whole another discussion about being in touch with the customer.

0:17:40.3 JD: Yep.

0:17:41.2 AS: And making sure that you're delivering with your cumulative learning.

0:17:44.5 JD: Yep.

0:17:44.8 AS: But if you are delivering what you're supposed to be delivering to your, you know, what your customer wants, then, then it really is a matter of how do you keep that learning in your organization? And I think that's... So your three and a half week summer institute is a great example of a training method and the response about, "Hey, that's a... We are going to get all this feedback of lots of improvements, but we're not gonna do it right now, we're gonna put that together, think about it, observe, and then try to figure out, okay, one of these is particularly good." For instance, in my case with my valuation masterclass bootcamp, I'm just about to launch my 11th bootcamp.

0:18:23.9 AS: So, and I can do my iterations in about eight weeks. Bootcamp lasts six weeks, I take two weeks off, then we do it again. And I'm trying to do as many iterations as I can. And the newest iteration, after many great iterations is we are gonna test a buddy system. And we've been designing it, discussing it, looking at how do we build this into the program with the objective that the buddy system basically helps our pass rate. In other words, the people that feel like dropping out don't drop out because they've made a connection with one individual, they're already on a team, so they got a team feedback. So that is a new, just one new learning piece that we're gonna test and then see where it ends up at the end of the, you know, of the, of the six weeks. So that's an example.

0:19:11.0 JD: Yeah, that's a really good example. And I know we talked about the, that class prior, that eight-week class and... Sorry, the six week class and how it's sort of a natural sort of PDSA cycle that you're running through each of those. So you have a lot of those cycles. You just kind of keep making it better and better, you know?

0:19:28.7 AS: Well, that's what... When I heard you talk about, we'll look at that at the next three and a half week summer institute I thought, "Gosh, does it, is that," I mean, I guess that you've got improvements that you're doing throughout the school year, that you're already determined this is the things we're gonna work on, but also you have to accept the fact that everybody's probably overloaded. And so it isn't that easy to say we're gonna improve a zillion things. And that's for the listeners out there, you know, it's an important thing to understand your own capacities in your organization and to understand the cycles that you're doing through your process. If you can speed up the cycles, then you can speed up your testing and your learning. And that's something that most of the time we'll just say, well, my cycle is my cycle, but maybe not. Maybe there's some way to speed it up, 'cause I know we used to teach the valuation masterclass bootcamp every six months, and I'm like, no, it's not enough cycles.

0:20:25.0 JD: Yeah. Yeah. No, that's, I mean, being able to do those sprints like that on a repeated basis is definitely an advantage, you know. I think when I was leading that curriculum development training, so there was, it was usually a two day training, the one I was doing. And, you know, I would get some on the spot feedback. I'd say if there's something that's, I can improve to make this a better experience tell me, just write, you know, if it's something I can fix quick. That's how I handled that in the moment. And then I would have some more formal surveys and, you know, some of that feedback I could take and apply to other things that were similar workshops I was doing, you know, throughout the professional development I was leading throughout the year. And then the first thing that I did as I started making that two day session better for the next summer institute was go back through that more formal feedback that folks had left. Then I have, I have those boxes of trainings going back that dozen years, including all the feedback that I got over the dozen years. So, yeah.

0:21:25.5 AS: So let's, I think that wraps up a great discussion on principle six. And I'll just summarize a couple things from it before we move on to principle seven, which is, principle six is institute training on the job. The point is, you want to get everybody to make better contributions to the system. And training is for skills as you've talked to us about. Whereas education is maybe for the acquisition of knowledge. And training is about learning how to do a job with a particular set of tools. And the aim is to reduce variation in methods. And you talked about classroom management, you talked about instruction and you talked about the same high quality curriculum in front of the students. We also talked about your three and a half week summer institute, which is happening before the school term starts. And the value of that. And you talked about the capacity matrix where you're looking at, you know, a roadmap and trying to link specific training sessions to activities and stuff. Is there anything you would add to wrap up principle six?

0:22:26.3 JD: Yeah, it's just in that capacity matrix is, sort of begin with the end. It's, that's where we started with the roadmap and sort of then worked our way backwards to the training from that, what was the end goal, these things in the capacity matrix. And then we sort of plan backwards from there, map that back to the summer institute.

0:22:44.6 AS: Got it. And now, principle seven, leadership.

0:22:48.6 JD: Yeah, principle seven is adopt and institute leadership. And basically the aim of the leadership is to help people that are working in a system do a better job. And that's management's responsibility. And Deming here is specifically talking about shifting from that focus on outcomes or solely focusing on outcomes to focusing on the quality of learning experiences or other types of services that are being produced by the education system. I think in Deming's language, he was talking about the transformation and he was talking about this, including in the transition of managers and supervisors to become leaders. And so he was I think looking at abolishing this focus on outcome, the management by numbers, the numerical goals, performance appraisal, merit pay, and installing what he called leadership. And then, you know, he sort of operationally defined what he meant by that.

0:23:52.8 JD: But basically, you know, leadership following Deming philosophy, I think the most important thing is that leaders are responsible for creating this environment, in our case, where educators and students can have sort of genuine interest in their work and that, you know, they're supported to do it well. And I think, you know, this becomes like a mutually reinforcing activity. Meaning that if people are interested in their work and learning, then they'll wanna do it well, they're gonna accept help to do that. You know, and if we set up the conditions to help them do that well, then their interest will increase and this sort of virtuous cycle is created. But then I think in many cases we have the opposite that occurs, sort of, when we don't have this type of leadership, get this vicious cycle where people just aren't, they don't feel like they're doing a good job, their interest in work or learning plummets, and then this causes them to in turn do a poorer job, which in turn lessens interest further.

0:24:58.6 JD: And I think one of the things I think of is education sort of broadly in the United States is sort of in one of these vicious cycles. We talked about the number of new teachers that are coming into the system and then being spat out of the system each year. There's this constant churn, we're sort of in this vicious cycle where we get all these new teachers across the United States, and many of those new teachers are leaving because of dissatisfaction, not feeling like they're doing a good job, not feeling like they have been set up for success. Those types of things. And I'm convinced and that's why I wrote the book and talk about these things. I'm convinced that the virtuous cycle is more likely to occur when we transform following the System of Profound Knowledge. I think when you truly appreciate your organization as a system, you have sort of logical theories of variation and knowledge and at least a basic understanding of psychological concepts like intrinsic motivation. I think that's when you truly have a chance to transform your organization.

0:26:11.2 JD: And I talked about Dr. Deming operationally defining leadership. What was he talking, cause there's many different sort of, probably we'd have many different definitions if we surveyed a hundred people about what it means to be a leader. And there's this great resource that Dr. Deming distributed at many of his four day seminars, especially the ones closer to the end of his life called Some Attributes of a Leader. And there's sort of nine points to that really, when I go through those, they really paint a clear picture, okay, this is really what leadership means when you're following the Deming philosophy. So I think it's worth unpacking those a little bit.

0:26:56.7 AS: And do you think... I mean, where do people fall down? Where they're supposed to be bringing leadership to an organization and instead they're bringing, I don't know, something else.

0:27:11.7 JD: Yeah, something else. And maybe even people that would um, maybe sometimes display some of these attributes, I think where we often fall down as leaders is when things get tough. And that's when we actually need to double down on these attributes, these leadership attributes. And when oftentimes we sort of revert back to the prevailing system of management, 'cause it's easier, maybe maybe even get some short-term impact, but it's always worse in the long-term, and that's the problem. And these things are hard. Some people probably could pinpoint some on this list of nine that they do well and others that maybe where they struggle. And I think that's fine, but I think having this list that explicitly defines leadership within the Deming philosophy is important. So I just go through these?

0:28:11.4 AS: Yeah. Go ahead.

0:28:11.9 JD: And we can talk about... I think the first one, and we've talked about elements of all of these things, but the first one is just really whatever I'm a leader of, whether it's a department or a school or whatever, whatever business unit that I'm a leader of, I think understanding how that fits into the overall aim of the system is really, really important. How does my grade level, or how does my classroom, or how is my school, how is my school system, how does it fit into the larger system? And I think you have to know that. That's key. A second attribute would be in that recognition of where you fit in the system is that you have a responsibility to work with preceding and following stages.

0:29:02.0 JD: This is pretty easy to sort of identify in a school system. If I'm a third grade teacher, I need to work with second grade teachers. I need to work with the fourth grade teachers. And that doesn't... That type of vertical sort of work doesn't often happen in a school system. But, you know, that focus has to be on our customer, both internal and external. And if I'm a third grade teacher, one of my customers is the second grade teacher, and one of my customers is also the fourth grade teacher. I think many managers, I think sort of see as one of their primary responsibilities to motivate the people that work on their team. And I think a sort of a better frame, and this is attribute three, is that leaders should work to remove barriers to joy in work and learning.

0:29:58.4 JD: And that's a slightly different conception. Maybe it's a very different conception than, you're not trying to motivate folks. You're trying to remove things that would lead to joy in work and learning, removing those barriers, that's what your job is as a leader. I think attribute four is, you are really there when you're a leader to act as a coach and counsel, not a judge. So I think that's an easy one to default to acting like a judge when things aren't going well. And one of the things about being a leader is knowing when someone is truly outside of the system and in need of special help. And that could be an employee, a teacher, a principal, or it could be a student.

0:30:53.2 JD: It's not, when we understand variation using the sort of Deming philosophy, we're not asking are our students or our employees different, but rather are they significantly different? And that's where some of these statistical methods come in. And when you have this in your leadership toolkit, then you know what questions to ask and you also know what action to take. Sure, some students might be performing lower than others, but are they statistically significant differences? And if they are, I'm gonna react to that. I think of, there is this really great figure that demonstrate this, where you have like a bell curve and you're trying to shrink the variation of that bell curve.

0:31:44.8 JD: You're trying to move it to the right, assuming right is better performance. And then you're sort of looking, is there anybody that requires special help 'cause they're outside of that system. And then if they are, then you have to provide that. That's a responsibility of leadership. But something like a process behavior chart or a control chart can help point you toward those data points that you should be paying attention to. I think another sort of key attribute of a leader is you're obviously always working to improve teaching and learning processes. Everybody's gonna say that. But what you're doing is trying to improve those processes instead of doing the sorting, the tracking, the ranking, the grading, those types of things. So that's what I was talking about when things get hard, yout know that's what people default to because it's sort of known.

0:32:46.4 JD: Attribute seven is creating trust, which, I think that, it goes without saying, whether people do that I think is another thing. I think there's lots of different ways to do that. But a key thing when you're a manager I think is follow through. I think you don't follow through on plans, if you don't follow through on commitments, I think that's where I see a lot of leaders sort of drop the ball and people stop trusting.

0:33:17.5 AS: Let me ask you about, number four I believe was act as a coach, not a judge. What was number five?

0:33:23.7 JD: Number five was, was, I don't think I stated it really explicitly, but basically, basically using data to help them understand people and themselves. So basically using knowledge about variation to understand who, if anybody, is in need of special help.

0:33:43.0 AS: Yeah. And six?

0:33:44.4 JD: Six was, working to improve the teaching and learning processes versus relying on the sorting, the tracking, the grading, the ranking. And that could be students or rating and ranking employees too. Seven was create trust.

0:34:00.2 AS: And then seven is creating trust.

0:34:03.5 JD: Yep. I think eight is, don't expect perfection. Forgive a mistake. People are gonna make mistakes. And in fact, you wanna, part of our capacity matrix for new teachers is how do you create a culture of error with students in your classroom? And that means instead of hiding mistakes, students are comfortable, when they make a mistake, highlighting that so that we can give feedback and fix it basically. Yeah.

0:34:34.2 AS: Yep.

0:34:34.2 JD: That's learning is, you get it wrong, then you get it right. Right? But you can't do that if people are always trying to sort of protect their mistakes, that type of thing. And then nine I think is, you know, listening and learning without passing judgment on the folks that they're listening to. I think that's... Again, a lot of these things are, you know, people have heard them before. I think many people would say they do them. I think, again, in reality, [chuckle] if you got that feedback from the folks that are in your department or in your school or in your school system, you might not be doing as well on those things as you may have thought.

0:35:16.7 AS: Let me summarize this a little bit for all of us. So we're talking about principle seven, adopt and institute leadership. The idea is help people in the system to do a better job and shifting from focusing on outcomes to quality of services. And I remember when I was in university, MBO was the big thing. Now it's KPI, but MBO was management by objective. And a lot of what he, Dr. Deming was talking about is by what method? It's not just, hey, let's just agree on, what, you get the result. I don't care how you get it.

0:35:50.2 JD: Right.

0:35:50.3 AS: And then you also talked about how leaders are responsible for creating the environment. You also talked about without leadership, there's like a downward spiral. And that maybe the US is in that downward spiral. And you see that when leaders really fail is when times get tough and they gotta make tough decisions. And then finally on that, you talked about how the System of Profound Knowledge could possibly be a way out of this downward spiral and into a cycle of learning. You talked about the nine principles, number one, understand how my area fits into the larger system. Two, you need to work with the preceding and following stages. You need to understand that. Number three, work to remove barriers to joy in work. I love that. Number four, act as a coach, not a judge. Number five, use data and knowledge of variation to help people better understand. Number six, work to improve the process rather than spending your time on rating and ranking. Number seven is create trust. Number eight is don't expect perfection. And number nine is listen and learn without passing judgment. Is there anything you would add to wrap up this awesome discussion?

0:37:02.0 JD: Yeah, I mean, I think just being really deliberate with the language instead of principles so we don't confuse people. I would call those, those are attributes of a leader.

0:37:11.5 AS: Okay.

0:37:11.8 JD: Just to kind of keep that clear, and, you know, a common question for Dr. Deming, I think at his seminars, because since he railed against performance appraisal, you know, a typical audience sort of follow up question then is: "Well, how do you choose candidates for promotion?" And his typical answer was, "What better than the ability to be a leader?" And then, so what he was talking about were those nine attributes. You identify those nine attributes, those are the people that you wanna be promoting in your organization. Folks that possess those.

0:37:44.7 AS: Yes. And I would just add to that in wrapping up that, part of what you realize as you get more mature, and I think most people understand it even at a low level or starting out in a business or their career, is that no measure captures what you need. You need to make a judgment about a person as a potential leader. There's no measure that could have determined Steve Jobs' ability to create Apple. In fact, if you had measured it, you probably would've kicked him out, which they did. And then eventually he came back.

[laughter]

0:38:21.6 AS: And so...

0:38:22.2 JD: Yeah.

0:38:22.6 AS: Go ahead.

0:38:23.3 JD: It'd be a hard thing. Well, I was just gonna say, as a principal, one of the types of leaders I was choosing, it was who was gonna be the grade level chair. So that was like a teacher leader position in our building. And I knew when I worked through that process, people applied for it. And I would sort of name the grade level chair. When I didn't hear a single piece of feedback, I knew I picked the right person, because people were like, yeah, that's the person. Right? And when you get a lot of pushback, [chuckle] that's when you just sort of need to go reevaluate, does this person actually have these nine attributes?

0:38:57.3 AS: Beautiful. Well, John, on behalf of everyone at the Deming Institute, I want to thank you again for another awesome discussion. For listeners, remember to go to deming.org to continue your journey, and of course, 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 and learning," I'm gonna add in.

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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."

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In this episode, Bill Bellows and host Andrew Stotz talk about resource management in a non-traditional sense. Bill explains how managing the variation and integration in your product or service is just as important as increasing consistency and removing waste.

TRANSCRIPT

0:00:02.3 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 episode nine, Resource Management. Bill, take it away.

0:00:28.9 Bill Bellows: Thank you, Andrew. And thanks for our audience and thanks for joining in again. So we're picking up following episode nine, which was, I called it the Paradigms of Variation. It was, I think the title on the podcast may be a little bit different, but what we've been building up to from the beginning is, parallel tracks. But one aspect that I've been trying to bring forward is this idea of variation in the white beads. We talked about the white bead experiment and the idea that the red beads are not caused by the workers, they're caused by the system.

0:01:13.5 BB: And then what if we got to the point that there were no more red beads? Yes, we can make the red beads faster, we can make the red beads cheaper, but could we make, I'm sorry, we can make the white beads faster. We can make the white beads cheaper with the elimination of the red beads, but if we're dealing with nothing but white beads that are cheaper and made faster, can we improve the quality of the beads? And what I found is, when I press on people, they'll say, "Yes, everything can be improved. Everything can be improved. When I press, press, press, they'll say faster. They'll say cheaper. I said, "Yeah, we said that." I said, "But can they be better?"

0:01:53.4 BB: Is that what Dr. Deming's trying to say with continuous improvement that we stop it a 100% white beads? Or can we go further? And I find people get stuck. And I think it's very easy to get stuck, because that's the world we live in of good parts and bad parts. We focus on the bad to make them good. And what do they do when they're good? Well, they met requirements. But what's missing is this key word called variation. And yes, there's variation in the red beads and Dr. Deming would plot that on a control chart. But Dr. Deming also discovered in, definitely in 1960, from Dr. Taguchi who he met a few years earlier, this notion of variation in the white beads and that the, so I talked earlier also about question number one and quality management.

0:02:44.0 BB: Does this quality characteristic meet requirements? There's only two answers, remember Andrew, yes or no. But then question number two is how many ways are there to meet requirements? And I'd say there's an infinite number if you take into account, how many decimal places you can go. And that, the idea that you can have anywhere from the absolute minimum to the absolute maximum of the requirements is there's all those places be in between. That's called variation. And does it matter where you are within spec? Within spec? And again, by spec I mean specification. You've met the requirements for the activity. And so what we did in episode nine, I'm sorry, episode eight is look at what I call the Two Distribution exercise. And you may have caught me saying there are four suppliers.

0:03:41.7 BB: And at the end I said, forget about the four. There's actually two. I've done it with four, I've done it with two but the important thing is when I show people a number of distributions within requirements, and one of them will be, we'll go from the minimum to the maximum with near zero and frequency at either end to then high in the middle. And I'll say, "The middle is the ideal value." And then I'll say, let's say you also have a really narrow distribution consuming, and I said, last time, 10% of the variation, what I meant to say, and I said at least once, is 10% of the tolerance that, so you're using a very small portion of the tolerance, but you're far away from the ideal value.

0:04:27.0 BB: You're shifted to the right. And so when I give people the choice of buying from one of those two suppliers under the idealized situation, you may recall, Andrew, of same price, same schedule, everything's guaranteed to meet requirements. We've got histograms, we've got control charts. The processes are in control with all those, what Ackoff would call idealized situations. Make it really, really simple. Do I go with the wide one centered on the ideal value or the narrow one over to the right? And time again, people take the really narrow one, which we said was about, why do you like the really narrow one? Because they're more consistent. Then I explained that that's precision. And that's the most popular answer. And I'm reminded of that every time I use the exercise. Within the last few days, I've used it again.

0:05:19.6 BB: And that narrow one gets people's attention. What I find really fascinating is if the goal is to meet requirements, then why is the answer not, I'll take either one of them, which was one of the choices. You could take the wide one in the middle that covers the entire, or the narrow one. Why does it matter? Why not say in the world of meeting requirements, what's the driver behind the narrow one? Why don't people say it doesn't matter anymore? And I think because there's something about variation and consistency. I was talking with somebody the other day and they said, "Being consistent is, that's everything in terms of quality." And I said, "Not quite. Not quite." What... And this will become the focus of a later episode, that you could, ideally you could put the variation where you want it to be along the ideal and end up with improved what?

0:06:18.4 BB: The answer is improved integration. Because the very simple model we use in organizations is that if the parts are good, whether it's two parts, three parts, four parts, number of parts going together, you have to have at least two. And I say if the parts are good, then they fit. That's the model. If the parts are good, then they fit, then is there anything wrong with that model? And people are like, "No, that's the model we use." If the parts are good, then they fit. Now, if you're developing an airplane or a rocket engine, you've got a wing and a fuselage, then you've got all the parts to make the wing, all the parts to make the fuselage, all the parts that do these separate components, you could say the same thing for a play. You have all the elements of the first act, all the elements of the second act, and then you put them together for the entire play. So the point is that what I'm talking about is that integration is not black and white.

[overlapping conversation]

0:07:23.2 AS: What... Just... Can you define integration just so we can make sure we understand it?

0:07:27.5 BB: Yeah. Integration is when I'm going to put the cap onto the bottle of water. That's integration. The cap is good, the bottle is good. Now I'm trying to put the cap, which is good, and the bottle, which is good, and I'm trying to put the cap onto the bottle.

0:07:46.0 AS: Okay.

0:07:46.5 BB: Yeah. That's integration. Or I'm trying to put the, I'm trying to put two parts of something together. I'm trying to put the cap on top of the pen. What I love about water bottles as a prop is wherever I'm presenting, someone in your room will have a water bottle. And I'll say, can I use this as a prop? Sure. And I say, if all the requirements for the cap are met, what do we say about the cap? It's good. And if all the requirements for the bottle are met, what do we say about the bottle? It's good. Then I'll say, see what we're doing? We're managing parts in isolation. We're saying the cap is good, the body is good. Then I say, why don't we focus on how well the cap mates with the bottle? And I had a co-worker once said, well, if the cap is good and the bottle is good, then won't it fit. Fit as in absolute fit, right?

0:08:39.7 BB: Not relative fit ‘cause remember in early episodes we talked about black and white thinking versus shades of gray thinking. Good versus bad is black and white. Fit is black and white. It fits or it doesn't. What I'm talking about Andrew, is the idea that there's variation in good and the variation in good cap, and the variation in the good bottle show up when I go to put the cap onto the bottle. Because if the, if the outer diameter of the bottle is on the high side and the cap, inner diameter is on the low side, then I'm gonna have trouble putting the cap onto the bottle, ‘cause one's too small, one's too large. Boom. And, so what I'm trying to imply, [chuckle] not what I'm trying to imply. What I'm stating is fit is not absolute. It's relative. Integration, which is about fit, is relative. And I don't, did we talk Andrew about a hundred percent…?

0:09:41.1 AS: Wait a minute. You gotta say that again. I didn't catch that. I know many of our listeners are a little faster than me. But say that again about relative versus...

0:09:56.6 BB: Okay, so what I'm saying is the fundamental model we're using is if the cap is good of the water bottle and the bottle is good, then the cap will fit onto the bottle. It'll fit when you go to...

0:10:05.7 AS: Yep.

0:10:07.8 BB: Put the, put it on it fits just like that. What I'm talking about…

0:10:12.1 AS: And when you say fit, are you using that as a general term in a system or are you just talking specifically about the cap?

0:10:17.8 BB: No, no, I'm really, I'm glad you brought this up. What the suggestion is that fit, there's only one degree of fit. It goes together you know with a, technically what we're talking about is how much torque is required to screw it on, how much force is required. And so fit is about how much force is required to screw it on. And the implication behind them being good and fit is that they always fit the same. So the model is that parts that are good fit together the same way each time. And that's not the case. So there's a... And I, one of my first exposures to this was reading a book by David Kearns and I mentioned this, I don't know which episode. And I said that Frank Pipp, an assembly plant manager at this Ford factory had his assembly team routinely buy competitor's cars and put them together.

0:11:19.4 BB: Because at the Ford plant, most of the time when they're putting parts together, they needed rubber mallets to bang them together because they didn't quite fit. And, so they needed help. And the help was the hammers to bang them together and out. Every now and then two parts went together without a hammer. That means fit is easy as opposed to hammers, which means fit is difficult. So imagine you've got everything between I can put them together, with little effort at all to I need a hammer to bang them together. That's degrees of fit, which I'm saying Andrew is degrees of integration.

0:12:00.4 AS: Okay.

0:12:01.2 BB: And, so the point I was trying to, what got me excited about Taguchi's work and then really excited when I saw Dr. Deming realizing it, is that when I came across this a hundred percent snap fit Toyota pickup truck story account, I thought, well, holy cow. And I found in listening to these podcasts that I use a expression quite a bit.

0:12:24.1 AS: Holy cow cow, holy spicoli.

0:12:26.3 BB: Holy... Holy cow, Andrew [laughter] But what was cool is this Ford plant has discovered that Toyota, where I know Dr. Deming had some influence, but some influence, okay, what influence? that's a whole ‘nother topic, but I know Taguchi had an influence there. So I'm looking at that with my understanding of variation and thinking, that's incredible. And brought that awareness to my coworkers at Rocketdyne. And we developed, with, I provided the education, they provided the hands-on go make it work. They developed hardware that went together beautifully. And why is this important, Andrew? And this is one of the things we got to in the end of the last podcast is if you would like your customers to have products that go together easily if they're assembling it or going together means that it, this product fits well with how they use it.

0:13:22.7 BB: That the car starts each time or the stopwatch, whatever they're using, works really well, which means there's degrees of performance. That's what excites me about the idea that if we can pay attention to the variation, we can either have designs that require hammers to assemble or we can design them to go together well. And, and all of this is to say that's what prompted me to get people excited by the paradigms of variation to get them to better understand that a mindset of meeting requirements is different from a mindset of precision, which is different from a mindset of accuracy. And what I've just repeated is Paradigm A is meet requirements. Get the darts somewhere on the dartboard. Meet requirements be anywhere within the requirements. Paradigm B is this idea that we're striving for consistency, incredible uniformity, otherwise known as, as precision.

0:14:30.7 BB: And, and there may be a place for that. But what Dr. Taguchi's talking about is different than that, that's precision is Paradigm B. Paradigm C is trying to be close to target. So that's taken the distribution, which is precise, and then finding a way to adjust it to be on the bullseye. And what does that gain us, Andrew? That, well, first of all, I would say when we're working at home looking for, working on the recipe, trying to get exactly one cup of flour, exactly 350 degrees, exactly one hour in the oven. As we pay attention to how close we are to those values, chances are we're gonna end up with an incredible product. And that's, we're trusting that the person who developed the recipe has done that.

0:15:23.2 BB: But so whether it is woodworking or working on any project, it could be making things out of cloth where you're, you’re putting together some outfit out of cloth that my father used to do for my sister when he was in the textile business. That is about the idea that things come together well is about accuracy in improving integration. And that's what I find the Deming philosophy offers an understanding of what does it take to inspire an organization where, where it takes the people working on their different elements, not to meet the requirements any way they choose, but to meet requirements in a - ready Andrew - synchronous way. So you and I are on the soccer pitch, and it's not about your position, it's about my position and your position on defense that we're trying to win the World Cup.

0:16:25.2 AS: Yeah.

0:16:26.4 BB: And so all of that is about the Paradigms of Variation. Go ahead, Andrew. You were gonna say.

0:16:29.0 AS: You referenced sports and I was just thinking about how easily we work together in team activities, team sports that are just, clearly great teams are the ones that integrate each individual's doing their own personal work and they're doing training and they're improving themselves, and then they're practicing together. How do we bring this together into an integrated system that then wins?

0:16:54.9 BB: That's right. And so when you say bring together, that's what integration is. It's bring together, right? And we're looking, we we're screened a bunch of candidates on the phone, now we bring them in for face-to-face interviews. What are we looking for? Why isn't it enough that they meet the requirements that are on the website? We wanna know which of these potential employees is the best fit with our team, whether it's to play first base, or play senior researcher. Are they a fit? They may be very consistent in what they do, but is that consistency...I mean, they have to be, their consistency has to mesh what we want. So they may be consistently tardy, they may be consistently dominating the meeting, but what we want them to do is fit into the meeting.

0:17:50.0 AS: And the other thing that I always think about when I hear you talking about this stuff is, I think about when I was younger, when Lexus came out, if you remember Lexus, when they first...

0:18:01.8 BB: Absolutely.

0:18:02.5 AS: Launched...

0:18:02.5 BB: Oh yeah.

0:18:03.7 AS: Their great video or the great advertising was stacked up champagne glasses...

0:18:09.5 BB: Yes, yes.

0:18:11.6 AS: Onto the hood of this car. And then they lifted the wheels off the ground and then, or not off the ground, but like they had a roller that they were rolling it on, and then they revved that car up to as fast as it could possibly go, and those glasses did not fall. And you know the only way you can get that is by improving not only each individual part, but how those parts work together with the end result being less vibration, less friction.

0:18:39.9 BB: Yes.

0:18:41.1 AS: All of those things.

0:18:42.0 BB: Yes. Exactly.

0:18:42.5 AS: And you couldn't do it by just improving one part.

0:18:45.6 BB: That's right. And that's a great example because together you've got minimum vibration. That's not an accident. That's they have figured out how those things come together to have an incredible product, which is consistently, it works consistently. But the consistency, there's nothing wrong with consistency. Consistency is not the issue. But it, the issue is is the consistency we're talking about striving for precision or accuracy. So a car that consistently doesn't start is consistent, but that's not helpful. I want a car that consistently starts, right? I wanna be consistent around... I want you to bring your consistency in concert with others' consistency where those consistencies matter, you know? And if we don't need you to be consistent, then that's okay. Then we save money by having lack of consistency because why have consistency if you don't need it? But all of that's about...

0:19:50.6 AS: It's hard. It's hard. Consistency is hard and fit is hard.

0:19:55.4 BB: Yes. And, and, and, to build upon what you just said, consistency is about managing variation as a system. And so, another thing I wanna point out, and I got some comments from some friends about, you know, the last podcast. The Paradigms of Variation are about the paradigms of white bead variation. So, so, Paradigm A is we've got variation within the requirements and, and is that okay? Is it enough to have variation in requirement? It doesn't matter where we are? That's Paradigm A. Paradigm B is precision. We're consistent, but we're not around the ideal. That's accuracy. And then paradigm D is....and I was searching for the word, the expression Dr. Taguchi used. He calls that Technology Development, that we're developing an advanced technology for use in... And I, the example I used last time is, let's say we're fac…we’re developing a new way of making tubes for plumbers to use.

0:21:07.6 BB: And I said in the beginning let's say we just have one inch outer diameter tubes, and that's Paradigm C because everything we make is one inch outer diameter tubes. And then somebody comes along in our research labs and comes up with a novel way to make tubes of different sizes. That's variety. So they can make them down to quarter of an inch, half an inch outer diameter. And then what we're doing with what Paradigm D is about is developing the technology that allows us to be really accurate around all these different values. That's what Dr. Taguchi calls Technology Development. I called it Paradigm D, he called it Technology Development. And in the world of sports, we talk about sports. That's the ability of the soccer player to kick the ball, or I should say a football player. [laughter] To put the ball anywhere in the net during at any time. Whether it's...

0:22:03.6 AS: That's within spec.

0:22:05.4 BB: Yeah, it's so the goalkeeper goes one way and they can hit any point in there. Because if you come up and the goalkeeper knows, oh, here comes Andrew, Andrew's gonna go to the lower left 'cause that's all he knows how to do. But you don't think I know that as your opposing goalkeeper. I know Andrew, Andrew's gonna fake, but I know what Andrew's gonna do. So the Paradigm D is in sports is the ability to move the ball around. If you're the pitcher, if you're the tennis player, and that's how you become a professional athlete, is that ability to move it around. That's Paradigm D. So, years ago, and this, I was developing this and sharing this, refining it with co-workers.

0:22:44.4 BB: And I was at a Deming Institute conference. True story, in Washington DC with Tim Higgins, a co-worker, and got a call from a really good friend, Jim. So Jim calls up and Jim was in this professional development program within Boeing doing a lot of travel. Every time he called, he was somewhere different in the country doing some really cool stuff in this incredible program to develop next generation leaders. And he definitely fit the mold. So he calls me up and he says, so he says, Dr. Bellows, have you discovered Paradigm E yet?

[laughter]

0:23:17.9 BB: I said, Jim, there is no E. He said, yeah, there's letter A, there's letter B, there's letter C, there's letter D. Oh, so there's also E. I said, Jim, A meets requirements, B is consistency anywhere, C is being on target, D is being on any target. I said, there's nowhere else to go. I said that we've run out. He said, we haven't run out of letters. [laughter] So I said, so he pushed on me and I pushed back. He pushed on me. We literally pushed on each other because I kept saying, Jim, you're you... Let's find another topic. No, no, no, no. I wanna hear about Paradigm E. And then it dawned on me, and I can remember it like it happened yesterday.

0:23:58.8 BB: And every time I have lunch with him, I say, Jim, I give him a big hug because I could not explain with the Paradigms of Variation, why would I pick up a nail in the parking lot, right? Why would I pick up a piece of glass in a parking lot? '‘Cause I viewed that as minimizing loss to society, that if I pick up the nail, prevent the flat tire, pick up the piece of glass, prevent the flat tire. I am, to quote Dr. Taguchi, "minimizing loss to society." But I don't know how to put that into his loss function, which is a subject of an of a future episode. And the idea of the loss function is there's an ideal value somewhere within the requirements. And the closer we are to the ideal value, the better the integration, and therefore the easier the effort.

0:24:55.2 BB: And, so now I'm stuck trying to say, so Jim's poking me, and I'm thinking, I'm stuck trying to explain everything through Dr. Taguchi's loss function, which is looking at the impact of variation relative to meeting requirements. And it dawns on me, and what Jim is saying is, I'm stuck in the world of variation. And, so when he mentioned...as, as he pushed and pushed and pushed, and it dawned on me that there's another whole world called managing, not... There's managing resources. I'm sorry, managing variation is Paradigms A, B, C, and D. What Jim got me to do that he called Paradigm E, and later we called it Resource Management, he realizes variation is a resource. Variation is a result of how we define our processes. There's managing cost.

0:25:52.3 BB: What is the cost of what we're doing? How much time is required? So, I look at resources as all the things we have in our organization from people to equipment to software to hardware and tools and techniques. Those are all resources. And picking up a piece of glass in the parking lot is a way of managing resources to improve the system, just as being on target is a way to improve how resources are managed. I started, I just jumped back and thought, holy cow, it's bigger than variation. And I think Dr. Deming really had this in mind. It's not just about variation, it's about the system includes variation, but it also has resources. Again, people, time, ideas, money. How do we use our money? That's a resource.

0:26:39.4 BB: Are we using, 'cause the other thing that was bugging me was are we using our money to improve things that are good? No, we're using our money and our time and our resources to focus on what is bad to make it good. And so that's what started off as Paradigm E then became Resource Management. So that's the genesis for Paradigm E. Managing resources is, should I get a college education, right? Should I exercise? How often should I go to the doctor, right? How often should I go shopping for groceries? Should I go shopping every day on my way home or should I go once a week? Those are resource management questions. Should I have a garden in my backyard? Should I buy the groceries? What's a better use of my time when I'm running errands?

0:27:33.2 BB: So on Saturday morning, I'm gonna run out and I'm gonna pick up the dry cleaning, go to the drug store, go to the veterinarian, pick up something for the cats. Do I do each of those randomly, come home and I say, what do I do next? Or Andrew, do I line up the errands and figure out what time the store opens? When do the lines occur? What time does traffic start to pick up? Am I making right-hand turns or left-hand turns? And I find what I do is I'm trying to figure out how do I get all these things done as fast as possible? And that directs my route. What I'm I doing, Andrew? I'm managing resources.

0:28:11.7 AS: And you remind me of the book I'm reading right now, Steve Jobs by Walter Isaacson.

0:28:16.8 BB: Yes, I listened to it, it's fantastic.

0:28:18.9 AS: Yeah, and there's just these times that Steve Jobs would just go into an absolute focus into some minute detail that all the people around were thinking that, and rightly so in some cases, that he was wasting resources, the resource of time. But there was another component that I think they couldn't see maybe was the passion that he was conveying to people around them that this matters.

0:28:48.0 BB: Yes, well, I don't know if this story shows up on that book, but that book was a fantastic read, oh I just loved it. Do you know the subject of Walter Isaacson's next biography? I don't know when it's due, but the very next auto, biography that Walter Isaacson is doing, take a guess who it is?

0:29:07.7 AS: No idea.

0:29:08.4 BB: Elon Musk.

0:29:10.9 AS: Oh, great.

0:29:12.7 BB: Yeah, yeah. So I think Fortune Magazine had an article that Jobs, well, first of all, let's go back, let's say 15, 20 years when I would go into work with others and we'd turn on our computers and then go get a cup of coffee. You know what I'm talking about, Andrew? You know where I'm coming from?

0:29:35.4 AS: I remember that very well.

0:29:37.8 BB: And why are we going to get our coffee, Andrew?

0:29:41.1 AS: Man, it takes minutes to boot up.

0:29:43.1 BB: Yes, so because we're going to go, we gotta turn on the computer and it's going to take minutes, five, 10 minutes. And for those of you that are, I mean, really, now we're so used to turning on the iPhone and it comes right up. Yeah if you shut off the iPhone, it may take 30 seconds to turn on, but you start your computer and it, from scratch and it's within 30 seconds, your computer's up and running. No, what we're talking about, Andrew, is you go into the office, turn on the computer, go get a cup of coffee, talk with some friends, you come back in 10 minutes, your computer's up.

0:30:18.9 BB: So Jobs supposedly went to people that were working on that boot-up system and told them that if we could shave a few seconds off of the boot-up time, multiplied by the million or so users around the world, we can save society big numbers. And the person that went off and did this, or the team that went off and did it, went way beyond what he was talking about, but he's the one, he Andrew, saw that as a loss. All right, so when you're banging things together at the Ford plant and I come in on day one and, Andrew, what are you doing? You're like, and you're banging things together. I said, "Andrew, why are you doing that?" And you say, "Bill, this is how we assemble cars here." I said, "Andrew, look at those calluses on your hand." You're thinking, "Bill, you'll get used to it, but this is how we put things together." In the world of automobiles, this is how you do it, Bill." And I think, "Geez, I don't think it needs to be done that way." And what's fundamental here is, and again, the whole idea of the loss function, the integration loss function, we'll look at in a future episode, but what I want to point out here, Andrew, is if I believe you that banging it together with hammers is as good as it gets, then there is no loss.

0:31:51.6 BB: Meaning that as soon as I say that's as good as it gets and I stop, then I'm saying that this is how we do things here. But if I come in and look at that with an understanding of Taguchi's work and how to manage variation as a system or manage resources as a system, I have the capacity to look at that and say, as Jobs did, and say, "I think it can be better." And the difference between what it is and what it could be is loss. But as long as I look at what we do and say, "That's it, let's stop right here." Then what I'm saying is... What I'm acknowledging is that, that's okay. And so what I was looking for within Rocketdyne and got the president of the company to agree to this is finding some people that I was mentoring for several years and their role was to go around the organization and look for loss.

0:32:54.8 BB: And, loss is the ability…Ready Andrew, to look at what is in terms of integration and wonder what could be. And then look at the components and then ask, "Can we change the variation of the components to improve integration?" And of course, the big question is, is it worth the effort? But it's having the vision that the integration and I think that's a great example. The integration is all that time we're spending waiting is not only is it lost, but that's integration time. [laughter] Bingo. So, the next thing I wanna point out before we close is... So this conversation with my friend Jim got me out of being stuck on the loss function and then stepping back and saying that's... There's... It's a global thing. It's all about managing resources, which also means it's more than quality. It's not managing quality, it's managing resources.

0:33:51.8 BB: And if we improve how we manage resources, quality goes up, integration improves, all these things improve. Well, the next thing I wanna point out is, I started thinking in terms of a model that says, how do we allocate our resources? Again, resources are time, energy, equipment, software, ideas. How are we using them? And the first model I had in mind was, are we applying... Are we allocating the resources proactively or reactively? Are we applying the resources to go to the doctor for annual checkups just to see how we're doing. We're going to the dentist for an annual checkup. Are we having somebody come by and look at our plumbing system and getting a feeling for how is it running? Are we taking the car in for routine things. Or are we reactive? We call the plumber when it breaks, we go to the doctor when we're sick. We bring the car in when it's broken. And, so what I started focusing on is what is our preference? How are the resources being allocated?

0:34:55.6 BB: And, without a doubt, what I found is the majority of the resources, time, energy, equipment are being used reactively. Focusing on things that are broken, not good. And, and I would go into big production meetings and say, "How much time are we... How much time do you ladies and gentlemen spend every day discussing parts which are good that arrive on time?" And, no matter where I went, the answer was “little to none.” And, so what I found is the resources were being used reactively, reactively. Now, let me also throw in that if the company's doing research and developing, developing next generation products, that is proactive use of resources. But what I also found is for the products that are in production, rarely did anybody ever come to me for something in production and say, "This could be better."

0:35:52.0 AS: Mm-hmm.

0:35:53.1 BB: That's rare. So the other dimension of this model. So the first dimension... I was just... In fact... It wasn't till I discovered Taguchi, Deming's work that got me to realize this is focusing on things that are broken is the norm. It wasn't just where I work. I started to see that pattern play out elsewhere. Well, the other axis of this resource management model, so the vertical axis is... Are the resources being applied proactively or reactively? So that's let's say the vertical axis going up. Top versus bottom. The horizontal axis are, is are the resources mine or are they ours? Is it my equipment, my people, my department? Or is it ours, Andrew? And so on the horizontal axis, the left hand side is the resources are mine, my department, my, my, my... And the other side of the horizontal axis is ours.

0:36:53.1 BB: And so in this two dimensional model, the vertical axis is, are the resources applied proactively, that's the top. Reactively, that's the bottom. If you think of a two by two matrix, the top row is proactive, the bottom row is reactive. And then when it comes to columns, so the left hand column is the resources are mine. The right hand column is the resources are ours. So we've got a two by two matrix. And I say to people, so given your understanding of Red Pen and Blue Pen companies, me and we organizations, last straw, all straw. I say, according to that matrix, how do you see resources managed in a Red Pen Company, a non-Deming company? And people will say the lower left quadrant, which is what, which is my resources applied reactively. Right?

0:37:43.4 AS: Yep.

0:37:44.9 BB: And then I'll say, "Okay." [laughter] And the name for that is... And it took a while to come up with a name and you're gonna love this. We started calling that at Rocketdyne, Reflexive Resource Management. Reflexive Resource Management. Because a wise man, born in Iowa in 1900, Andrew [laughter], by the name of W. Edwards Deming, once said, pulling your hand off of a hot stove requires no thought. It's all reflex action. When I saw him and that, I don't know where it was, I said, but I know he said that. And I thought, that's it. It's all reflexes. There's no thought involved. Why are we reactive? Because! I mean, why would I be proactive? I mean, why would I work? So when I started realizing is there's no thought involved in being reactive in a Red Pen Company. It's just that's what we do. So then the question is, well, how are resources managed in a Blue Pen Company? A We Organization, a Deming organization. And, what people will say is the upper right quadrant, which is proactive ours, the resources are ours.

0:38:56.1 BB: We're gonna be proactive. And wherever I go, that's people's answers. And I say, you, are you ready? And okay, what? I say, the entire right hand side is a Deming organization. What does that mean? It means I'm smart enough to know when to be proactive, and I'm smart enough to know when to be reactive. I choose, I choose to replace the light bulb when it goes out, it's a choice. Or I choose to replace the battery in the smoke alarm when it goes out. I, being reactive in a Deming organization is a choice. Being proactive is a choice. And so the right hand side, it's about choice. And it took some time to figure this out. What do we call that? What do we call this? So we call it the left hand side, the left lower left quadrant, Reflexive Resource Management. So it took a while to find out what's the adjective for the right hand side.

0:39:55.6 BB: And I come up with an adjective, find out that it's an acronym used by somebody for something else. No, can't use that. Try it again. Try it again. Try it again. Try it again. Try it again. It took about an hour to, at least an hour and finally came up with a term used by the Bureau of Land Management in the late 1800s. And it, and it's, it was known as Purposeful Resource Management. And I thought, bingo! One is nobody's got a trademark on it, [laughter] And so we started calling the deliberate use of resources to be deliberately proactive, or we choose to be proactive, or we choose to be reactive. We started calling that purposeful, thoughtful resource management.

0:40:45.5 AS: Yeah, that choice. It made me think about there's a lot of things in business that you just, your choice is to be reactive. When that breaks, we're gonna fix that because it's not so critical, whereas we cannot have a situation where we're reacting to this particular process. Like, think about my coffee business as an example. We cannot be reactive to downtime on the roasting machines. Well, we're not just waiting for that. We're doing preventive maintenance. We've got stocks.

0:41:17.7 BB: That's right.

0:41:18.5 AS: Stock of parts. We've got, so we make a deliberate effort and resource allocation to make sure we never in that situation, but there's other parts. Let's say we have a few grinders and something like that, we'll fix those when they break. [laughter]

0:41:35.0 BB: Yeah. Well, I've shared this with a woman who, the hairstylist I go to. My kids used to go there and I've been going there ever since. And she is awesome. Just awesome. So I, these are the things I discussed with her, all kinds of things. And so I have a photograph of her, Andrew, holding a hairdryer in her hair salon. And the hair salon is called Kids Cuts because a good part of her business is kids. And then people like me bring the kids in there and next thing you know, I'm a customer, too. Well, so I'm explaining this to me and she says, "Bill, every 6 months I get rid of all the hair dryers". I said, why? She says, "I cannot afford to burn somebody's hair". And so, so I've got a photo of her holding it, so she doesn't monitor how it's performing.

0:42:24.1 BB: She just knows 6 months, get rid of it now. You know, does she donate it? I don't know where it goes. And I don't wanna get into recycling, but she deliberately, she's not gonna burn somebody's hair.

0:42:35.0 AS: Right.

0:42:38.1 BB: Alright. And, what else? Oh, but you and I talked earlier in one of the episodes, this idea of choice, that instead of following the domain that says you can't have inventory, we gotta have blah, blah, blah, you realize this? No, we can choose to have inventory, or we can choose not to have inventory. And so what we're talking about in resource management is, which gets into all those things we talked about earlier, is it's about choices. And so I would say to people, I've got a slide, then I say, it's like you get to the end of the road and you turn right and turning right is being reactive.

0:43:21.3 BB: And I say, Andrew, I've been patterning you, and you get to the end of the road and you turn right, you're always reactive. Why do you turn right? And you say, "Bill, there's only a right-hand turn". And I said, "No, Andrew, there's a left-hand turn, but you can't see it. It's in your blind spot". So the right hand turn is to focus on what's bad, to make it good, what Ackoff would also call managing actions. And that's the road that's well traveled, [laughter], the road less traveled is the left-hand turn, which is to be proactive, again, when it makes sense. I'm not saying being proactive all the time, I'm saying there's a place for it. Consider being proactive, consider being reactive.

0:44:04.0 AS: So, on that note, I think we ought to leave. Why don't you leave the listeners and the viewers with a concise statement of what you want them to take away from this discussion. We went through a lot of different things, but if you wanna bring it down to something clear and concise, how would you describe that?

0:44:24.5 BB: I'd say the, um…I'd like, I'd encourage our listeners, viewers, students of the Deming philosophy, those new to it, to expand their appreciation of quality management and realize that to managing resources period. And the better we manage our resources in our organization, knowing when to collect data, when not to collect data, when to meet requirements, when to be on target with minimum variation, when having lots of variation. Should we be proactive or re…. These are all choices. And they're, and I think the better we understand those choices about how we manage variation as a system in concert, I think the better the performance of the organization and improving productivity, improving quality, improving profit. So I think all those things we're striving for come from a better understanding of how to manage resources. And so instead of just being narrowly focused on the quality dimension, I think if we step back and realize that that's one aspect of how an organization operates.

0:45:42.4 AS: 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. 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."

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In this series, John Dues and host Andrew Stotz discuss principles that educational systems leaders can use to guide their transformation work. This episode covers principles 4 and 5: maximize high-quality learning and work continually on the system.

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 John Dues, who is part of the new generation of educators striving to apply Dr. Deming's principles to unleash student joy in learning. Today is episode 12, and we're continuing our discussion about the shift from management myths to principles for the transformation of schools' systems. John, take it away.

0:00:34.4 John Dues: Andrew, it's good to be back. Yeah, like you said, we've sort of turned to this set of principles that can be used by educational systems leaders to guide their transformation work. Two episodes ago, we sort of kicked off the principles, gave a little bit of an introduction. We talked about principle one, which is create constancy of purpose. And then the last time we talked, we kind of broke down two principles. Principle two was adopt the new philosophy, and principle three was, cease dependence on inspection to achieve quality. So in this episode, I was gonna sort of take on the next two, the fourth and fifth principles. So the fourth principle is, maximize high quality learning. And the fifth principle is, work continually on the system.

0:01:28.6 JD: So I thought we'd sort of kick things off with principle four, that idea around maximize high quality learning. And I think sort of... If I was gonna capture that principle in just a couple sentences, I would say, you wanna maximize high quality learning and minimize total cost of education by improving the relationship with educational institutions from which students come and to which they matriculate. So, we're thinking about a single source of students coming into a system, such as an elementary school student moving into a middle school, and seeing that as an opportunity to build a long term relationship of loyalty and trust. So that's sort of the overarching idea. And I think if you sort of look at this principle through the lens of United Schools Network, where I work in Columbus, Ohio, I think that's sort of a helpful lens. And when you think about our origin story, we started as a single middle school serving a few east side neighborhoods, near downtown Columbus. And I was the founding principal, school director of that particular campus.

0:02:55.3 JD: And at the time, we decided we were gonna open a middle school, 'cause this is the point often in a student's educational career where they fall so far behind, they often then drop out of school altogether just a few years later. So we wanted to get them in middle school. So, before we were this sort of network of schools in the school system, we were this one school that grew from serving just sixth grade over the first few years to sixth through eighth grade, right. And when you looked at these east side neighborhoods where we were located, there were 15 or so elementary schools from the city school system that formed this sort of de facto feeder pattern into our middle school. Most of those schools were performing in the bottom 5% of schools in the state. Which means when those students then matriculated to our middle school, they typically did so in... The typical kid was at least two, but more often three and even four grade levels below where they should be when they enrolled with us in 6th grade.

0:04:18.1 JD: And, while I didn't have this Deming lens at the time, I did sort of approach things from a process standpoint, from a system standpoint. But, as the middle school principal, I'm thinking about sort of all that entails to run a school and a new school at that, so we're doing all the things that come with a startup. There was no way for me to run around and form relationships with the 15 principals leading those elementary schools from which our students were primarily coming from.

0:04:54.0 JD: And so when we had this opportunity to grow from one school into a network that's now four schools, we elected to grow down into elementary schools. The point in doing so was to move towards this sort of single supplier relationship, that Dr. Deming outlined in his point four. And so now, we have two middle school principals, two elementary schools in our network, and they can work together on a whole host of sort of quality characteristics, like vertically planning curriculum across that K to eight pipeline. And, we were middle schools first and then elementary schools, so while we're getting some of our students from our own elementary schools we're also still getting students from other non-USN schools, non-USN elementary schools, but we're sort of increasingly moving toward that single supplier model. And I think that coordination is one of the ways that we can then maximize high quality learning, and the great thing about this is that we then minimize the total cost of education.

0:06:14.6 JD: And I think this is one of the important paradoxes of Dr. Deming's work, in that, as quality goes up, price goes down. Which that's sort of the opposite of what a lot of people think. In the case of schools, what we're talking about in terms of minimizing cost, a lot of that has to do with less remediation of students as they sort of increasingly come from those USN elementary schools and they're not as typically far behind when they arrive to our middle schools as they were previously.

0:06:54.1 AS: And for our international listeners, and also just for a refresher for myself. Is middle school what we... I used to call it junior high, I think I called it. But what is middle school and elementary as far as your grades and ages?

0:07:09.7 JD: Yeah, that's a good question. Middle school is six through eight for us. So sixth, seventh, and eighth grade. And then our elementary schools are kindergarten through fifth grade.

0:07:19.4 AS: Got it.

0:07:23.1 JD: There's also this sort of... I think when Deming wrote his point four, his version said, "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." So I sort of translated Deming's framing to one that applies directly to students as they move through that K-12 pipeline. However, there's also this second component to this principle that's more sort of directly analogous to Deming's point, and it's definitely applicable to the business side of running schools. And this is the idea of ceasing dependence on price tag alone when we're selecting curriculum or technology or supplies or any number of goods and services that school systems regularly buy. I think the main ideas here, is to understand that difference between the lowest bidder and the lowest qualified bidder. And I think one of the things that Deming pointed out on this side of things was that basically price has no meaning without a measure of quality being purchased, including that after sale service. So I think that's a key point as well.

0:08:44.7 AS: When did you guys open the elementary schools?

0:08:48.6 JD: Yeah, so it sort of unfolded over time. So the first middle school opened in 2008.

0:08:55.2 AS: Right.

0:08:55.3 JD: Second middle school 2012. And then we moved toward elementaries in 2014 and 2017. But a key thing here is, when we open new schools, we sort of have a slow growth model where we typically open with just a single grade level. So they can sort of put systems and processes in place, hire staff, recruit students, that type of thing. And so it took about five years before those elementary schools were mature enough that they were actually feeding to the middle schools.

0:09:32.1 AS: So let's say 2020, 2019-'20 and then onwards, you're starting to get the students from the elementary schools, was there a significant difference? How would you describe the difference in what you received, from your elementary school versus... In other words, did it deliver on what you had hoped?

0:09:56.8 JD: Yeah, I think we have work to do there. But for the typical student that's coming from our elementary schools, one, they're very familiar with our routines, our procedures, our sort of school culture, the way that the school's run. A lot of those students often have older siblings that are either in our middle school or had been in our middle school and are now alumni. And then academically we see a difference as well, especially for those students that started early in elementary, like in K-1, 'cause we take kids at all grade levels. But for those kids that started K-1 and went all the way through our system and are enrolling now six years later or seven years later in sixth grade with us, the difference is stark. Both from a sort of student traits and responsibilities and sort of student academic side of things.

0:10:52.0 AS: And how does that changing... Ultimately what I think about... Toyota is a good example. And in Thailand here, Toyota has a huge manufacturing base. And part of what's so critical to that manufacturing base is all the supplier relationships that come with that. So they're surrounded by their suppliers and they've built great relationships with those suppliers. In a sense, you just happen to own that supplier in this case, but whether you're owning the supplier or whether a listener or a viewer is saying, "Okay, I need to build a better relationship with the suppliers that I have." The question I have in your case is, how did that change the final result at the end of middle school? 'Cause ultimately what you're trying to do is get your final output of your system to be better over time. I'm just curious, how has that reflected in what comes out?

0:11:48.8 JD: Yeah, I think it has a dramatic impact because so much of education and what a student is ultimately gonna do, is sort of... I don't wanna say determined, maybe a little bit too strong of a word, but maybe not too far off, by that sort of early education foundation. Specifically, did you learn to read proficiently. And when students were coming to us in middle school without that foundation in reading, it makes it really, really hard now that when you get to a point in your schooling career where things have shifted from being sort of learning how to read to, you are reading as a part of the learning process. And we did some intensive interventions before we had elementary schools to try to catch kids up, especially on that reading front. And those are really hard sort of interventions to sort of put in place when a kid is 12 or 13-years-old when they're getting those interventions. Not to say that they can't help, but the older the student is, the farther they've gone in their educational career, the harder that is.

0:13:02.5 AS: And I guess the majority of public educators are dealing with that all the time. People popping into their district and all of a sudden... Coming from many different sources and all of that.

0:13:16.1 JD: Yeah. Yep. And in some places that's more than others. That sort of coming and going tends to be associated with certain conditions in which the school sits and the community in which the school sits, where there's higher poverty rates, there's more movement. So one stat that jumps to mind on this front, in Columbus City schools, which is where our kids would have gone had they not come to us, were geographically within that district's boundaries. In any given year, 30%, nearly one out of three kids changes school buildings during the year, which is just an overwhelming number, an overwhelming amount of transition. That's just within a year, that's not even across multiple years. And so that's why this sort of single supplier [laughter] relationship is so important, because we're trying to push back in an opposite direction.

0:14:23.1 AS: And is there ever a chance that you could have all of your students come from your elementary program? Or is that unrealistic or is that happening or can happen?

0:14:35.5 JD: Well, right now it really can't happen, and that's mostly due to the size of our building. So in our elementary schools, there is basically two homerooms per grade level. So there is two fifth grade classrooms, let's say. But in our middle schools, there is at least typically three homerooms in 6th grade. So no matter what, right now, about a third of the kids would be new in a typical school year.

0:15:07.2 AS: So capacity matching?

0:15:09.2 JD: Yep, capacity matching. Yep.

0:15:11.6 AS: Okay.

0:15:12.1 JD: That's right. That's right.

0:15:13.2 AS: That's a great explanation of the methodology you're using. There's people who are public school teachers that may be listening to this and going, "Oh come on, I can't do that." Well, yeah, you're gonna have different challenges and limits, but you can start to build those relationships with the schools that are bringing students to you and trying to do the best that you can with that. Because we know that... What Dr. Deming taught was that fixing things at the beginning of the process is the way to do it. Because if you're trying to solve the problem at the middle or the end of the process, it just grows exponentially more complex, difficult, more costly. And that's the reason why a high quality means low cost. Wait, what? Yep.

0:16:01.0 JD: Yeah. And some public schools do this really well, and they, for all intents and purposes, already have this set up. But sometimes I've seen even in places like a smaller school district that maybe just has one elementary and one middle - high school building. I've been to a place where I have heard people say, "I never even thought about leaving our building and going to see what they're doing in the high school." And part of it I get, you're a teacher, you're kind of stuck in your classroom, it has to be facilitated for you to have a sub or whatever, but it's not an overwhelming barrier. And I think it's a very valuable exercise to have some of that cross movement between buildings. And I don't think it's actually that hard to do. And the good thing is, in most school districts there's geographic proximity, so that's not a barrier. But someone has to say, "This is important and we are gonna do this."

0:16:58.1 AS: I think it reminds me of my discussions with Bill Bellows, where we were talking about... Also on the podcast, and trying to talk about the idea of thinking beyond specification and thinking beyond... And asking the question, "How is this product or service being used by the next part of the process?"

0:17:18.4 JD: Yeah. Right.

0:17:19.0 AS: And looking forward, you find that even if you think that you're doing really well, you all of a sudden find that there is a huge amount of opportunity to improve in just that one step forward in the process. All right. Well, does that bring us to work continuously on the system?

0:17:39.0 JD: Yeah, I would just say, the takeaway here for me is developing those partnerships with suppliers. Whether it's on that sort of K-12 pipeline side, or if it's more like Deming's version of point four, where you're actually making purchases for the school system. And I think... A change in thinking for me was that the suppliers are a part of your system. Whether they're internal or external to the governance structure of your school system or your business, the suppliers are actually a part of the system. And thinking about them that way is really important. And I think both those approaches are keys to helping maximize high quality learning and then minimizing that total cost. And when I actually started to think about that, even though we didn't, again, think about it through this Deming lens early on, we have a number of vendors that sort of operate like that. Our IT vendor, our food services vendor, have been with us since day one in 2008 when we started.

0:18:42.0 JD: And you'll see their employees doing things here almost like they work here. They almost feel like an employee. So at least in certain cases, we've been able to develop those types of relationships on sort of more on the Deming business side of things as well, and I think that's just as important.

0:19:00.8 AS: There is an interesting business in the US that is a model for that. And that is... So, to talk about business aspect, a company called Fastenal, that makes fasteners and many different things that companies need. But they changed their business model many years ago to basically, rather than having a warehouse and distribution, and you order from the warehouse and all that, they actually set... They go into your factory, and they take over your whole inventory, and they run your whole inventory department.

0:19:30.6 JD: Interesting.

0:19:30.7 AS: And the benefit for you is that you don't own the inventory anymore. So you could have a million dollars in inventory in your factory, and all of a sudden that all goes onto their books.

0:19:39.4 JD: Wow.

0:19:40.2 AS: And the second benefit is that, you only have the cost of that inventory at the moment that you take it out of their system, and then put it into the operation that you're doing.

0:19:50.8 JD: Interesting.

0:19:51.2 AS: And that is this relationship, this super close relationship of that supplier actually working at your facility. And it's amazing.

0:20:05.0 JD: Yeah. This shift a little bit from antagonistic. "I'm trying to get the lowest price out of my suppliers" to, "Wait a second, I need to get the highest quality at a fair price, and I'm gonna work with you on an ongoing basis to make sure whatever I'm buying from you on an ongoing basis is high quality as it comes into my system." That's a much better way to operate than the sort of the antagonistic feel.

0:20:31.3 JD: Yeah, so I think that's a good transition point from principle four to five. So principle five is, work continually on the system. So as I was gonna sort of sum up this principle in just a couple of sentences, I'd say this one is improve constantly and forever the system of planning, teaching, learning and service to improve every process and activity in the organization, and to improve quality and productivity. It is management's obligation to work continually on the system, whether that's school design, curriculum, incoming supplies and materials, technology, supervision, training, retraining, whatever that thing is.

0:21:13.0 JD: And if you think back to when we talked about principle one, principle one and principle five are very similar, and that they both talk about improvement of the system and processes over the long-term. The distinction would be that, principle one is talking about constancy of purpose, the aim of the organization, and this in turn facilitates this principle, principle five, continual improvement of systems and processes. Sort of a key idea that you mentioned I think even in this talk is that, we have to keep in front of mind that quality must be built in at that planning and design stage of work. And I think that a lot of times in the education sector, we see teachers blamed for a lot of things that they have very little control over often.

0:22:10.1 JD: And I think one example as I was thinking of examples was when a school system selects a curriculum, they often select a curriculum for the entire system, but we don't often consider the downstream effects on teacher lessons and in turn student learning. How many teachers have had the opportunity to select their district's curriculum? That's a number probably close to zero. But there are sort of many I think components of the education system that are analogous. And I think the same is true in other sectors as well, and I think that's why Deming really harped on this idea that it's management's obligation to continually improve the system, because they're making many of these decisions that then have these downstream effects on the frontline workers, be it teachers in a school or nurses in a hospital or line workers in a production facility. And this... Oh, sorry, go ahead.

0:23:27.7 AS: I was just gonna say that I was recently teaching an ethics class at a university in Cambodia called CamED, run by a guy named Casey Barnett. And he is an American guy who started it on his own, funded it on his own, and for decades now has built this university, and he's built it around his principles and he sources his students his way. He has great relationships with... He's teaching accounting, finance, business, which is the practical things needed in a developing economy or economy that's really growing like Cambodia. But it's just that what I saw was the constancy of purpose when I went through the whole university, and then I got to know more of the students and they've attended some of my valuation masterclass course and stuff online. And then I'm just like, "Ah, that constancy of purpose, and the constancy of management gives the ability to continually improve." And that without that, with constant turnover in leadership, it's so hard.

0:24:40.3 JD: Yeah, and management is hard, leadership is hard. I think schools are facing some challenging times right now, because... And this is true in any sector, but if you're a leader or you're in management, you have to deal with these day-to-day issues of the organization, then also sort of keep your organization moving towards continual improvement. You have to put out these fires, like Dr. Deming would often say, putting out fires does nothing to actually improve your system. I think sort of the way he would frame it is that, you know detection and removal of a special cause does not improve a process at best. Fighting fires, i.e., detecting special causes, just... It's important, 'cause it does return that process back to its previous state, but that state is not where you want it to be necessarily.

0:25:48.8 AS: Smoldering.

0:25:49.9 JD: Smoldering, yeah. And where I heard this, it was sort of stated in a great book on Deming's work called The Deming Dimension by Henry Neve, who I'm sure a lot of listeners know. He said, "This means that systems leaders must strive to make unstable processes stable, and to make stable but incapable processes capable, and to make capable processes ever more capable." So you sort of start to break that down, you can start to see why being in management, why being a leader is not an easy task.

0:26:27.4 AS: One of the questions I...

0:26:30.2 JD: Oh yeah, sorry, go ahead.

0:26:31.4 AS: Go ahead. Go ahead.

0:26:32.0 JD: No, I was just gonna say this idea of never ending improvement, depending on what your mindset is around that type of thing is, it can be daunting, even for the most stalwart of sort of continual improvers.

0:26:46.0 AS: Yeah. And that may determine where you position yourself within an organization, because if you're at the top, it's your responsibility to be focused on that and building the system, which can be a bit overwhelming for some people, and they say, "Look, I'm okay being in this spot, and I'll try to improve what I'm doing in the classroom, but I may not be able to be involved in how we're improving all the systems." I wanted to end this discussion on principle five with a little bit of hope and vision of what is potential. I think about my little case. I have my valuation masterclass bootcamp online. And I'm going into the eleventh one. Right now, we're in the 10th one. And I'm just doing it every 8 to 10 weeks and it's a six week program.

0:27:34.2 AS: I want repetition, I want to practice, I want to see how I can improve. And I've seen enormous improvements by just looking at the problems, solving them, going to the next level. And in bootcamp number 10, basically, the students are valuing the same companies over the last couple of bootcamps. A company called Taiwan Semiconductor Manufacturing Company, and then in Toyota. And so they're in groups, and they're valuing those two companies. And I was really hesitant to show them the progress of the prior students, 'cause I didn't want them to copy from there. But I've now incorporated that in the bootcamp, halfway through to say, "Alright, here's the bar. This is the minimum. This is what the last group did using all the tools that we gave them. Now, your job is to take this to the next level." And yesterday, a student posted something on LinkedIn, and that was an absolutely comprehensive takeaways of the stuff that he's been learning and applying. And it's like, it worked. It inspired them to say, we gotta go to the next level. And I just want to hear from you about when you work continually on the system, what are some of the transformations and other things that you've seen, and what's some hope for the people who are struggling in a system that needs help?

0:28:57.5 JD: Yeah, that's a really good frame. I don't know if it'll get to that level, but I think, you know, as I've sort of built my sort of Deming knowledge base and spread that here internally where I work, I think I would go back to those two tools that I talked about repeatedly. The run chart or process behavior chart, and the Plan-Do-Study-Act cycle. And why I'm saying that is because right now, internally, we are running one, two, three, four, at least four PDSAs concurrently right now with different teams. And people are starting to see the power of this, especially in areas where performance was struggling a bit. We put PDSAs in action just to take small steps to try to improve our system. And what's happening, whether we're running that PDSA, some of these are running for a week at a time. Some of them are running for up to three weeks at a time, depending on which area you're talking about.

0:30:02.0 JD: But what's happening is we get to that Act to decide what we're gonna do next. For example, we had to make a purchasing decision where we have, talent is a struggle right now in education. We had a platform that we were trialing for 10 days, the free version. And then we have to decide, are we gonna pay for this? And with the PDSA, you get to that Act, you looked at what happened over the weeks, you did the measures of the things that you thought were important, and that decision just jumps off the page. And so these things that people used to go back and forth about, do we do this, do we not? How do we know if this is effective?

0:30:44.4 JD: Now we have this structure that makes this decision, just like I said, leap off the page in terms of its obviousness, and the direction that we're gonna go. What are we gonna do? Are we gonna buy this thing? Are we gonna spend the money? Are we gonna put resources towards this? Both in terms of the money it costs to purchase in this case, plus the human resources that it's gonna take to manage this platform? And in this case, the answer was yes. And that's all because of the power of this way of thinking. It wasn't about holding people accountable, it was about designing a good PDSA, running it, gathering the data that was important to us, and then evaluating that together and then making the decision. And so I think once people try that a few times, they'll both sort of see how clear the decision making process can come.

0:31:36.2 JD: It doesn't mean all the decisions are gonna be easy, but it clarifies decisions. It gets you working together, and planning something that's important to you as an organization and as a team, you get to see how people think things are gonna end up 'cause they predict as a part of that Plan section. And then once people get comfortable with that tool, they start owning it, they start running their own PDSAs, and they come to you and they say, "Oh my gosh, look at this, look what happened, look what I discovered. I didn't know this was gonna happen. I'm gonna keep doing this. Can I go do this over here?" "Yeah, let's set up a plan for that." And so people start to get excited, because they build this momentum with this tool. And then you pair that with a way of thinking that Deming's philosophy gives you, and your organization just starts to operate in a completely new way. And it's this sort of combination of the tools which are important, but most importantly, this way of thinking that goes with the tools.

0:32:39.2 AS: Well, let me wrap up our discussion. We're talking about principles for transformation of school systems. And today, we talked about principle four and principle five, and that is principle four, maximize high quality learning, minimize total costs. And we spent a lot of time talking about the importance of working with your suppliers, the inputs into your system. And the deeper you can build those relationships and connections with them, the better opportunities you have to improve the quality of what you're doing, and to reduce the cost of what you're doing. And principle number five, the second thing we talked about was the idea of work continually on the system. You are operating within a system, we can see there's suppliers, there's also customers that you're supplying. Ultimately, what we're talking about is planning, teaching, learning, service, those types of things are all defined as the system of what you're doing.

0:33:43.3 AS: And I think that you made the point that ultimately, that's management's job, and it has to be done by management because it has a lot of downstream effects, as Deming has taught us that ultimately the output, the majority of the output of any system is really based on what the system's capabilities are. And so your job in management is to try to improve those system capability. And maybe a teacher may find that a bit overwhelming, but that's okay, that can be brought down to a small scale maybe in a classroom. Is there anything else you'd add to that?

0:34:16.4 JD: Yeah, I think just overarching is that we're replacing those management myths with these sound guiding principles. And that, we're kind of going through 'em, either one or two at a time, these episodes, but they are sort of a mutually supporting network of principles. And so, while we may learn these piecemeal, we wanna put 'em all together, 'cause it's really that's where the power comes from is when all of these principles are working together rather than in isolation.

0:34:45.5 AS: Well, John, 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. You can find John's book Win-Win, Dr. 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."

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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."

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In this episode, John describes how United Schools Network (USN) was built from the ground up based on Deming principles. Unlike public schools, USN has to recruit students and realized early on that the "feeder" schools were an important part of their system. John goes on to describe how "continual improvement" is part of USN's DNA.

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 John Dues, who is part of the new generation of educators striving to apply Dr. Deming's principles to unleash student joy in learning. Today is episode 12, and we're continuing our discussion about the shift from management myths to principles for the transformation of schools' systems. John, take it away.

0:00:34.4 John Dues: Andrew, it's good to be back. Yeah, like you said, we've sort of turned to this set of principles that can be used by educational systems leaders to guide their transformation work. Two episodes ago, we sort of kicked off the principles, gave a little bit of an introduction. We talked about principle one, which is create constancy of purpose. And then the last time we talked, we kind of broke down two principles. Principle two was adopt the new philosophy, and principle three was, cease dependence on inspection to achieve quality. So in this episode, I was gonna sort of take on the next two, the fourth and fifth principles. So the fourth principle is, maximize high quality learning. And the fifth principle is, work continually on the system.

0:01:28.6 JD: So I thought we'd sort of kick things off with principle four, that idea around maximize high quality learning. And I think sort of... If I was gonna capture that principle in just a couple sentences, I would say, you wanna maximize high quality learning and minimize total cost of education by improving the relationship with educational institutions from which students come and to which they matriculate. So, we're thinking about a single source of students coming into a system, such as an elementary school student moving into a middle school, and seeing that as an opportunity to build a long term relationship of loyalty and trust. So that's sort of the overarching idea. And I think if you sort of look at this principle through the lens of United Schools Network, where I work in Columbus, Ohio, I think that's sort of a helpful lens. And when you think about our origin story, we started as a single middle school serving a few east side neighborhoods, near downtown Columbus. And I was the founding principal, school director of that particular campus.

0:02:55.3 JD: And at the time, we decided we were gonna open a middle school, 'cause this is the point often in a student's educational career where they fall so far behind, they often then drop out of school altogether just a few years later. So we wanted to get them in middle school. So, before we were this sort of network of schools in the school system, we were this one school that grew from serving just sixth grade over the first few years to sixth through eighth grade, right. And when you looked at these east side neighborhoods where we were located, there were 15 or so elementary schools from the city school system that formed this sort of de facto feeder pattern into our middle school. Most of those schools were performing in the bottom 5% of schools in the state. Which means when those students then matriculated to our middle school, they typically did so in... The typical kid was at least two, but more often three and even four grade levels below where they should be when they enrolled with us in 6th grade.

0:04:18.1 JD: And, while I didn't have this Deming lens at the time, I did sort of approach things from a process standpoint, from a system standpoint. But, as the middle school principal, I'm thinking about sort of all that entails to run a school and a new school at that, so we're doing all the things that come with a startup. There was no way for me to run around and form relationships with the 15 principals leading those elementary schools from which our students were primarily coming from.

0:04:54.0 JD: And so when we had this opportunity to grow from one school into a network that's now four schools, we elected to grow down into elementary schools. The point in doing so was to move towards this sort of single supplier relationship, that Dr. Deming outlined in his point four. And so now, we have two middle school principals, two elementary schools in our network, and they can work together on a whole host of sort of quality characteristics, like vertically planning curriculum across that K to eight pipeline. And, we were middle schools first and then elementary schools, so while we're getting some of our students from our own elementary schools we're also still getting students from other non-USN schools, non-USN elementary schools, but we're sort of increasingly moving toward that single supplier model. And I think that coordination is one of the ways that we can then maximize high quality learning, and the great thing about this is that we then minimize the total cost of education.

0:06:14.6 JD: And I think this is one of the important paradoxes of Dr. Deming's work, in that, as quality goes up, price goes down. Which that's sort of the opposite of what a lot of people think. In the case of schools, what we're talking about in terms of minimizing cost, a lot of that has to do with less remediation of students as they sort of increasingly come from those USN elementary schools and they're not as typically far behind when they arrive to our middle schools as they were previously.

0:06:54.1 AS: And for our international listeners, and also just for a refresher for myself. Is middle school what we... I used to call it junior high, I think I called it. But what is middle school and elementary as far as your grades and ages?

0:07:09.7 JD: Yeah, that's a good question. Middle school is six through eight for us. So sixth, seventh, and eighth grade. And then our elementary schools are kindergarten through fifth grade.

0:07:19.4 AS: Got it.

0:07:23.1 JD: There's also this sort of... I think when Deming wrote his point four, his version said, "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." So I sort of translated Deming's framing to one that applies directly to students as they move through that K-12 pipeline. However, there's also this second component to this principle that's more sort of directly analogous to Deming's point, and it's definitely applicable to the business side of running schools. And this is the idea of ceasing dependence on price tag alone when we're selecting curriculum or technology or supplies or any number of goods and services that school systems regularly buy. I think the main ideas here, is to understand that difference between the lowest bidder and the lowest qualified bidder. And I think one of the things that Deming pointed out on this side of things was that basically price has no meaning without a measure of quality being purchased, including that after sale service. So I think that's a key point as well.

0:08:44.7 AS: When did you guys open the elementary schools?

0:08:48.6 JD: Yeah, so it sort of unfolded over time. So the first middle school opened in 2008.

0:08:55.2 AS: Right.

0:08:55.3 JD: Second middle school 2012. And then we moved toward elementaries in 2014 and 2017. But a key thing here is, when we open new schools, we sort of have a slow growth model where we typically open with just a single grade level. So they can sort of put systems and processes in place, hire staff, recruit students, that type of thing. And so it took about five years before those elementary schools were mature enough that they were actually feeding to the middle schools.

0:09:32.1 AS: So let's say 2020, 2019-'20 and then onwards, you're starting to get the students from the elementary schools, was there a significant difference? How would you describe the difference in what you received, from your elementary school versus... In other words, did it deliver on what you had hoped?

0:09:56.8 JD: Yeah, I think we have work to do there. But for the typical student that's coming from our elementary schools, one, they're very familiar with our routines, our procedures, our sort of school culture, the way that the school's run. A lot of those students often have older siblings that are either in our middle school or had been in our middle school and are now alumni. And then academically we see a difference as well, especially for those students that started early in elementary, like in K-1, 'cause we take kids at all grade levels. But for those kids that started K-1 and went all the way through our system and are enrolling now six years later or seven years later in sixth grade with us, the difference is stark. Both from a sort of student traits and responsibilities and sort of student academic side of things.

0:10:52.0 AS: And how does that changing... Ultimately what I think about... Toyota is a good example. And in Thailand here, Toyota has a huge manufacturing base. And part of what's so critical to that manufacturing base is all the supplier relationships that come with that. So they're surrounded by their suppliers and they've built great relationships with those suppliers. In a sense, you just happen to own that supplier in this case, but whether you're owning the supplier or whether a listener or a viewer is saying, "Okay, I need to build a better relationship with the suppliers that I have." The question I have in your case is, how did that change the final result at the end of middle school? 'Cause ultimately what you're trying to do is get your final output of your system to be better over time. I'm just curious, how has that reflected in what comes out?

0:11:48.8 JD: Yeah, I think it has a dramatic impact because so much of education and what a student is ultimately gonna do, is sort of... I don't wanna say determined, maybe a little bit too strong of a word, but maybe not too far off, by that sort of early education foundation. Specifically, did you learn to read proficiently. And when students were coming to us in middle school without that foundation in reading, it makes it really, really hard now that when you get to a point in your schooling career where things have shifted from being sort of learning how to read to, you are reading as a part of the learning process. And we did some intensive interventions before we had elementary schools to try to catch kids up, especially on that reading front. And those are really hard sort of interventions to sort of put in place when a kid is 12 or 13-years-old when they're getting those interventions. Not to say that they can't help, but the older the student is, the farther they've gone in their educational career, the harder that is.

0:13:02.5 AS: And I guess the majority of public educators are dealing with that all the time. People popping into their district and all of a sudden... Coming from many different sources and all of that.

0:13:16.1 JD: Yeah. Yep. And in some places that's more than others. That sort of coming and going tends to be associated with certain conditions in which the school sits and the community in which the school sits, where there's higher poverty rates, there's more movement. So one stat that jumps to mind on this front, in Columbus City schools, which is where our kids would have gone had they not come to us, were geographically within that district's boundaries. In any given year, 30%, nearly one out of three kids changes school buildings during the year, which is just an overwhelming number, an overwhelming amount of transition. That's just within a year, that's not even across multiple years. And so that's why this sort of single supplier [laughter] relationship is so important, because we're trying to push back in an opposite direction.

0:14:23.1 AS: And is there ever a chance that you could have all of your students come from your elementary program? Or is that unrealistic or is that happening or can happen?

0:14:35.5 JD: Well, right now it really can't happen, and that's mostly due to the size of our building. So in our elementary schools, there is basically two homerooms per grade level. So there is two fifth grade classrooms, let's say. But in our middle schools, there is at least typically three homerooms in 6th grade. So no matter what, right now, about a third of the kids would be new in a typical school year.

0:15:07.2 AS: So capacity matching?

0:15:09.2 JD: Yep, capacity matching. Yep.

0:15:11.6 AS: Okay.

0:15:12.1 JD: That's right. That's right.

0:15:13.2 AS: That's a great explanation of the methodology you're using. There's people who are public school teachers that may be listening to this and going, "Oh come on, I can't do that." Well, yeah, you're gonna have different challenges and limits, but you can start to build those relationships with the schools that are bringing students to you and trying to do the best that you can with that. Because we know that... What Dr. Deming taught was that fixing things at the beginning of the process is the way to do it. Because if you're trying to solve the problem at the middle or the end of the process, it just grows exponentially more complex, difficult, more costly. And that's the reason why a high quality means low cost. Wait, what? Yep.

0:16:01.0 JD: Yeah. And some public schools do this really well, and they, for all intents and purposes, already have this set up. But sometimes I've seen even in places like a smaller school district that maybe just has one elementary and one middle - high school building. I've been to a place where I have heard people say, "I never even thought about leaving our building and going to see what they're doing in the high school." And part of it I get, you're a teacher, you're kind of stuck in your classroom, it has to be facilitated for you to have a sub or whatever, but it's not an overwhelming barrier. And I think it's a very valuable exercise to have some of that cross movement between buildings. And I don't think it's actually that hard to do. And the good thing is, in most school districts there's geographic proximity, so that's not a barrier. But someone has to say, "This is important and we are gonna do this."

0:16:58.1 AS: I think it reminds me of my discussions with Bill Bellows, where we were talking about... Also on the podcast, and trying to talk about the idea of thinking beyond specification and thinking beyond... And asking the question, "How is this product or service being used by the next part of the process?"

0:17:18.4 JD: Yeah. Right.

0:17:19.0 AS: And looking forward, you find that even if you think that you're doing really well, you all of a sudden find that there is a huge amount of opportunity to improve in just that one step forward in the process. All right. Well, does that bring us to work continuously on the system?

0:17:39.0 JD: Yeah, I would just say, the takeaway here for me is developing those partnerships with suppliers. Whether it's on that sort of K-12 pipeline side, or if it's more like Deming's version of point four, where you're actually making purchases for the school system. And I think... A change in thinking for me was that the suppliers are a part of your system. Whether they're internal or external to the governance structure of your school system or your business, the suppliers are actually a part of the system. And thinking about them that way is really important. And I think both those approaches are keys to helping maximize high quality learning and then minimizing that total cost. And when I actually started to think about that, even though we didn't, again, think about it through this Deming lens early on, we have a number of vendors that sort of operate like that. Our IT vendor, our food services vendor, have been with us since day one in 2008 when we started.

0:18:42.0 JD: And you'll see their employees doing things here almost like they work here. They almost feel like an employee. So at least in certain cases, we've been able to develop those types of relationships on sort of more on the Deming business side of things as well, and I think that's just as important.

0:19:00.8 AS: There is an interesting business in the US that is a model for that. And that is... So, to talk about business aspect, a company called Fastenal, that makes fasteners and many different things that companies need. But they changed their business model many years ago to basically, rather than having a warehouse and distribution, and you order from the warehouse and all that, they actually set... They go into your factory, and they take over your whole inventory, and they run your whole inventory department.

0:19:30.6 JD: Interesting.

0:19:30.7 AS: And the benefit for you is that you don't own the inventory anymore. So you could have a million dollars in inventory in your factory, and all of a sudden that all goes onto their books.

0:19:39.4 JD: Wow.

0:19:40.2 AS: And the second benefit is that, you only have the cost of that inventory at the moment that you take it out of their system, and then put it into the operation that you're doing.

0:19:50.8 JD: Interesting.

0:19:51.2 AS: And that is this relationship, this super close relationship of that supplier actually working at your facility. And it's amazing.

0:20:05.0 JD: Yeah. This shift a little bit from antagonistic. "I'm trying to get the lowest price out of my suppliers" to, "Wait a second, I need to get the highest quality at a fair price, and I'm gonna work with you on an ongoing basis to make sure whatever I'm buying from you on an ongoing basis is high quality as it comes into my system." That's a much better way to operate than the sort of the antagonistic feel.

0:20:31.3 JD: Yeah, so I think that's a good transition point from principle four to five. So principle five is, work continually on the system. So as I was gonna sort of sum up this principle in just a couple of sentences, I'd say this one is improve constantly and forever the system of planning, teaching, learning and service to improve every process and activity in the organization, and to improve quality and productivity. It is management's obligation to work continually on the system, whether that's school design, curriculum, incoming supplies and materials, technology, supervision, training, retraining, whatever that thing is.

0:21:13.0 JD: And if you think back to when we talked about principle one, principle one and principle five are very similar, and that they both talk about improvement of the system and processes over the long-term. The distinction would be that, principle one is talking about constancy of purpose, the aim of the organization, and this in turn facilitates this principle, principle five, continual improvement of systems and processes. Sort of a key idea that you mentioned I think even in this talk is that, we have to keep in front of mind that quality must be built in at that planning and design stage of work. And I think that a lot of times in the education sector, we see teachers blamed for a lot of things that they have very little control over often.

0:22:10.1 JD: And I think one example as I was thinking of examples was when a school system selects a curriculum, they often select a curriculum for the entire system, but we don't often consider the downstream effects on teacher lessons and in turn student learning. How many teachers have had the opportunity to select their district's curriculum? That's a number probably close to zero. But there are sort of many I think components of the education system that are analogous. And I think the same is true in other sectors as well, and I think that's why Deming really harped on this idea that it's management's obligation to continually improve the system, because they're making many of these decisions that then have these downstream effects on the frontline workers, be it teachers in a school or nurses in a hospital or line workers in a production facility. And this... Oh, sorry, go ahead.

0:23:27.7 AS: I was just gonna say that I was recently teaching an ethics class at a university in Cambodia called CamED, run by a guy named Casey Barnett. And he is an American guy who started it on his own, funded it on his own, and for decades now has built this university, and he's built it around his principles and he sources his students his way. He has great relationships with... He's teaching accounting, finance, business, which is the practical things needed in a developing economy or economy that's really growing like Cambodia. But it's just that what I saw was the constancy of purpose when I went through the whole university, and then I got to know more of the students and they've attended some of my valuation masterclass course and stuff online. And then I'm just like, "Ah, that constancy of purpose, and the constancy of management gives the ability to continually improve." And that without that, with constant turnover in leadership, it's so hard.

0:24:40.3 JD: Yeah, and management is hard, leadership is hard. I think schools are facing some challenging times right now, because... And this is true in any sector, but if you're a leader or you're in management, you have to deal with these day-to-day issues of the organization, then also sort of keep your organization moving towards continual improvement. You have to put out these fires, like Dr. Deming would often say, putting out fires does nothing to actually improve your system. I think sort of the way he would frame it is that, you know detection and removal of a special cause does not improve a process at best. Fighting fires, i.e., detecting special causes, just... It's important, 'cause it does return that process back to its previous state, but that state is not where you want it to be necessarily.

0:25:48.8 AS: Smoldering.

0:25:49.9 JD: Smoldering, yeah. And where I heard this, it was sort of stated in a great book on Deming's work called The Deming Dimension by Henry Neve, who I'm sure a lot of listeners know. He said, "This means that systems leaders must strive to make unstable processes stable, and to make stable but incapable processes capable, and to make capable processes ever more capable." So you sort of start to break that down, you can start to see why being in management, why being a leader is not an easy task.

0:26:27.4 AS: One of the questions I...

0:26:30.2 JD: Oh yeah, sorry, go ahead.

0:26:31.4 AS: Go ahead. Go ahead.

0:26:32.0 JD: No, I was just gonna say this idea of never ending improvement, depending on what your mindset is around that type of thing is, it can be daunting, even for the most stalwart of sort of continual improvers.

0:26:46.0 AS: Yeah. And that may determine where you position yourself within an organization, because if you're at the top, it's your responsibility to be focused on that and building the system, which can be a bit overwhelming for some people, and they say, "Look, I'm okay being in this spot, and I'll try to improve what I'm doing in the classroom, but I may not be able to be involved in how we're improving all the systems." I wanted to end this discussion on principle five with a little bit of hope and vision of what is potential. I think about my little case. I have my valuation masterclass bootcamp online. And I'm going into the eleventh one. Right now, we're in the 10th one. And I'm just doing it every 8 to 10 weeks and it's a six week program.

0:27:34.2 AS: I want repetition, I want to practice, I want to see how I can improve. And I've seen enormous improvements by just looking at the problems, solving them, going to the next level. And in bootcamp number 10, basically, the students are valuing the same companies over the last couple of bootcamps. A company called Taiwan Semiconductor Manufacturing Company, and then in Toyota. And so they're in groups, and they're valuing those two companies. And I was really hesitant to show them the progress of the prior students, 'cause I didn't want them to copy from there. But I've now incorporated that in the bootcamp, halfway through to say, "Alright, here's the bar. This is the minimum. This is what the last group did using all the tools that we gave them. Now, your job is to take this to the next level." And yesterday, a student posted something on LinkedIn, and that was an absolutely comprehensive takeaways of the stuff that he's been learning and applying. And it's like, it worked. It inspired them to say, we gotta go to the next level. And I just want to hear from you about when you work continually on the system, what are some of the transformations and other things that you've seen, and what's some hope for the people who are struggling in a system that needs help?

0:28:57.5 JD: Yeah, that's a really good frame. I don't know if it'll get to that level, but I think, you know, as I've sort of built my sort of Deming knowledge base and spread that here internally where I work, I think I would go back to those two tools that I talked about repeatedly. The run chart or process behavior chart, and the Plan-Do-Study-Act cycle. And why I'm saying that is because right now, internally, we are running one, two, three, four, at least four PDSAs concurrently right now with different teams. And people are starting to see the power of this, especially in areas where performance was struggling a bit. We put PDSAs in action just to take small steps to try to improve our system. And what's happening, whether we're running that PDSA, some of these are running for a week at a time. Some of them are running for up to three weeks at a time, depending on which area you're talking about.

0:30:02.0 JD: But what's happening is we get to that Act to decide what we're gonna do next. For example, we had to make a purchasing decision where we have, talent is a struggle right now in education. We had a platform that we were trialing for 10 days, the free version. And then we have to decide, are we gonna pay for this? And with the PDSA, you get to that Act, you looked at what happened over the weeks, you did the measures of the things that you thought were important, and that decision just jumps off the page. And so these things that people used to go back and forth about, do we do this, do we not? How do we know if this is effective?

0:30:44.4 JD: Now we have this structure that makes this decision, just like I said, leap off the page in terms of its obviousness, and the direction that we're gonna go. What are we gonna do? Are we gonna buy this thing? Are we gonna spend the money? Are we gonna put resources towards this? Both in terms of the money it costs to purchase in this case, plus the human resources that it's gonna take to manage this platform? And in this case, the answer was yes. And that's all because of the power of this way of thinking. It wasn't about holding people accountable, it was about designing a good PDSA, running it, gathering the data that was important to us, and then evaluating that together and then making the decision. And so I think once people try that a few times, they'll both sort of see how clear the decision making process can come.

0:31:36.2 JD: It doesn't mean all the decisions are gonna be easy, but it clarifies decisions. It gets you working together, and planning something that's important to you as an organization and as a team, you get to see how people think things are gonna end up 'cause they predict as a part of that Plan section. And then once people get comfortable with that tool, they start owning it, they start running their own PDSAs, and they come to you and they say, "Oh my gosh, look at this, look what happened, look what I discovered. I didn't know this was gonna happen. I'm gonna keep doing this. Can I go do this over here?" "Yeah, let's set up a plan for that." And so people start to get excited, because they build this momentum with this tool. And then you pair that with a way of thinking that Deming's philosophy gives you, and your organization just starts to operate in a completely new way. And it's this sort of combination of the tools which are important, but most importantly, this way of thinking that goes with the tools.

0:32:39.2 AS: Well, let me wrap up our discussion. We're talking about principles for transformation of school systems. And today, we talked about principle four and principle five, and that is principle four, maximize high quality learning, minimize total costs. And we spent a lot of time talking about the importance of working with your suppliers, the inputs into your system. And the deeper you can build those relationships and connections with them, the better opportunities you have to improve the quality of what you're doing, and to reduce the cost of what you're doing. And principle number five, the second thing we talked about was the idea of work continually on the system. You are operating within a system, we can see there's suppliers, there's also customers that you're supplying. Ultimately, what we're talking about is planning, teaching, learning, service, those types of things are all defined as the system of what you're doing.

0:33:43.3 AS: And I think that you made the point that ultimately, that's management's job, and it has to be done by management because it has a lot of downstream effects, as Deming has taught us that ultimately the output, the majority of the output of any system is really based on what the system's capabilities are. And so your job in management is to try to improve those system capability. And maybe a teacher may find that a bit overwhelming, but that's okay, that can be brought down to a small scale maybe in a classroom. Is there anything else you'd add to that?

0:34:16.4 JD: Yeah, I think just overarching is that we're replacing those management myths with these sound guiding principles. And that, we're kind of going through 'em, either one or two at a time, these episodes, but they are sort of a mutually supporting network of principles. And so, while we may learn these piecemeal, we wanna put 'em all together, 'cause it's really that's where the power comes from is when all of these principles are working together rather than in isolation.

0:34:45.5 AS: Well, John, 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. You can find John's book Win-Win, Dr. 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."

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In this episode, Bill and Andrew discuss the shades of variation: meeting requirements, accuracy, precision, and precision around variety. Is reducing variation to zero a good thing? Plus, Bill and Andrew share stories that offer practical ways to think about these concepts.

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 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 the day is The Paradigms of Variation. Bill, take it away.

0:00:28.1 Bill Bellows: Ooh.

0:00:28.1 AS: Exciting, exciting.

0:00:33.1 BB: Alright. So let me start off by saying this is episode number eight, and I wanna just make a couple comments about episode number seven, where we talked about "all straw" and "last straw" organizations also otherwise known as "me" or "we" organizations, or red pen or blue pen companies. And I just wanna burst a bubble and say neither one of them, neither organization exists, whether it's all or last or me or we. I view it as a... It's really a matter of which direction your organization is moving, it's a really simple model that I've seen get people to begin to appreciate what Deming's talking about, because I think that contrast is very much like a Deming organization versus a non-Deming organization. But instead of black-and-white thinking, there's really a continuum, and so I think... I just want to say at the beginning, it's really a question of which direction is your organization moving? Another thing I wanna throw out is... I don't think people know, I think absent an understanding of the System of Profound Knowledge, if you're in a last straw organization or a me organization, or a red pen company, I don't think you know that. I think if you become aware of Deming's work, you become aware of what could be. And I liken it to Dr. Deming saying, "How could they learn? How could they learn? The answer is frightening, how could they know?" So I think absent an understanding of The New Economics - Deming's work, I think it's hard to appreciate what you're missing.

0:02:11.4 BB: That you're being blamed for the grade, you're being blamed for the red beads. You're being blamed for the weather, if you're the weatherman. And the other thing that comes in mind there with that, "how could they know" is... There's a great video with Peter Senge, which he did a case with Dr. Deming, and there's a blog I wrote about it on the Deming Institute website if you just search for Peter Senge and my name. And you can find the blog as well as the link to the video. And in there Senge is talking about the present state of education systems and very much in this contrast of industrial and post-industrial, and he says, very much what it comes down to is, he says it's the water. He says, "We don't know what fish talk about, but you can be damn sure it's not the water." And likewise, I think people in a red pen company are not getting together. You and I talking about, "Andrew, this system sucks. I'm being blamed for the red beads," and I don't think we're the wiser. Now, if you turn me on to The New Economics. And we started listening to DemingNEXT and we became aware. But absent that, I think we're both frustrated, but we wouldn't know better. Alright, it's on the topic of variation.

0:03:30.8 AS: It's...

0:03:31.5 BB: Go ahead Andrew, you wanna say something?

0:03:32.4 AS: I was just gonna say that... That's where I think Dr. Deming's making the point of the difference between training and education. Education is the idea of bringing outside ideas into your mind, into your business, as opposed to training, which is trying to upgrade skills. And I had a little story of that when I was a head of research at an investment bank in Thailand. The whole job of a head of research is managing all these analysts who are writing research reports on company A, buy company A, sell company B for our institutional clients. And the job of a head of research is to try to manage that schedule. And you know that analysts are always gonna be interrupted and clients are gonna call, the market's gonna do this. So they're very rarely on time when they say that they're gonna finish something. So you're constantly scrambling for the morning meeting, because on the morning meeting you gotta have a story.

0:04:22.0 AS: And so that was just the job of a head of research. So I did that really well, managing them and, kind of, all that. And then I went to the number one investment bank, the number one broker in Thailand as the head of research. And I asked them, "So how often do you guys miss?" And they said, "Never." I said, "That's impossible." Because I've spent my whole career managing the flow of analysts. They said, "No, we never miss." When an analyst is gonna be on, they're always on. "And how do you do that?" "Well, we do a three-week-ahead schedule, everybody knows that you are held accountable for being that person on that day. And if you find out that you can't do it, you're gonna talk to someone else and rejigger it and say, hey, could you do Friday? And I'll do Monday the next week?" But they never miss. And I just thought, like the water, I never even knew I could go to a different level.

0:05:15.0 BB: Yeah.

0:05:16.8 AS: And then I went to a different level.

0:05:19.8 BB: Yeah, it's...it's the ability to step back. Alright, so on the topic of the paradigms of variation, I wanna throw out four words. Variety, variation, accuracy, and precision. A variety is, there's red beads and white beads, that's variety. There could be, eight different colors, that's variety, sizes of pants 32 waist, 32 length, that, to me that's variety. As opposed to variation is that a 32-inch waist or a gallon of gasoline, every time you go to get the gallon, you get a gallon of gasoline, it might not be exactly a gallon, that's variation. The reason I throw those out to begin with is that Dr. Deming is known in some circles back in the '80s, he was interviewed by somebody at the, I think at the BBC in England and an interview ends with him, with the interviewer saying, "Dr. Deming, if you could condense your philosophy down to a few words, what would it be?" And I thought, he's gonna say... He is just gonna reject that, that "I can't be condensed." No instead of that, he says, "Reduce variation." And I thought, "Oh, no... "

0:06:50.4 BB: So, and there are people alive and well today in the Deming community, who will quote that to me? "You know, Bill, Dr. Deming said, we gotta shrink variation to zero." And I said, "So, is he saying we all ought to be the same size? We ought to be the same skin color? Is he saying that he doesn't like diversity? What does that mean? And same religion?" I mean, you could look at religions as variety, and then you could say within each religion there's variation. So part of what I wanna get at today is what I think is confusion as to what he meant by shrinking variation to zero. So there's variety, variation. Accuracy is that when I get a gallon of gas, is it a gallon, or is it a couple ounces high, a couple ounces low? You go to the gas station, you'll see a sticker on the pump that says that it was calibrated to some standard, when you go to buy a pound of meat, are you getting a pound? Are you getting 15 ounces? And so the National Bureau of Standards is looking at accuracy, are all these things... Is every customer in the United States getting a gallon's worth of milk?

0:08:15.3 BB: Now, so that's accuracy. Precision is the idea that you get the same value each time, so I could go to the scale and it measures exactly a pound, exactly a pound, exactly a pound. But is that pound the same pound as the National Bureau of Standards pound? So I could be.

0:08:37.3 BB: Sorry about that. I could get the same value each time, and that's precision, but that's not to be confused with accuracy, so I just wanna throw those terms out. Relative to shrinking variation to zero, shrinking variation to zero which I, for the record, do not believe in. Dr. Deming would say anyone could accomplish anything if you don't count the cost. I think if you start to look at what is the benefit of having less variation versus the cost of that, then we can get to some point that makes sense economically as in The New Economics. But this idea of driving defects to zero, driving variation to zero without looking at cost.

0:09:24.1 BB: And you can look in The New Economics, we'll come back to this in a future episode. He definitely had in mind that you have to consider the cost, in fact, Dr. Deming would say, anyone could accomplish anything if you don't count the cost. But there's a... What I wanted to reference is a book by Peter Block called 'The Answer to How Is Yes' and what Block talks about is... Could be like, how...we get focused on, we're gonna go off and reduce variation, we're gonna go off and drive variation to zero or non-value added to zero. What Block talks about that I really appreciate, that I think Dr. Deming appreciate is, why? Why did... Let's step back a minute, and so part of what I wanna get at tonight in this paradigms of variation is the 'Why' piece. Okay. So the first example I wanna look at a variation is throwing darts okay? And hopefully that makes sense, you're throwing darts in a dart board and imagine meeting requirements is being on the dart board, so imagine it could be a foot in diameter.

0:10:29.4 BB: And in terms of meeting requirements, you wanna be on the dart board. So I throw it three times, and if you get three that are really close together, they may not be on the bullseye, and that says, I'm very precise, but if the three are not on the bullseye, then that's not very accurate. So again, throwing three and getting really, really consistent is one thing, but then how do I move that to the bullseye? So that's an idea that I could first focus on precision, and then often I find that if I could just slightly adjust my release or my arm, then maybe I could then move it over, so I wanna look at that.

0:11:14.7 AS: And moving over is accuracy or?

0:11:17.5 BB: Moving it over is accuracy.

0:11:19.2 AS: Okay.

0:11:19.5 BB: I mean, so the first thing could be, I'm just looking for three...

0:11:22.5 AS: Get on the board.

0:11:23.6 BB: I wanna be consistent.

0:11:25.9 AS: Yep.

0:11:26.6 BB: And then make the adjustment, 'cause I find often it's easier to make the adjustment, I think it's a lot of work to get consistency. So I just want to separate those out as two different strategies.

0:11:39.2 AS: Yeah, just go to the bar and start throwing darts and you'll see it's a lot of work. Yep that helps, that helps, that helps us to understand it.

0:11:45.9 BB: Alright, so next. Next I wanna talk about what I refer to as the Two Distributions Exercise, and so here's the context. Imagine that you are in the procurement organization, and your job is to make a decision as to who to buy a given product from. So your company goes out and gets quotes from four different suppliers, and they provide you with the information. And for simplicity, let's say what you're buying are these metal tubes and... Short metal tubes perhaps used in plumbing, they're a given length, a given diameter. And imagine these four suppliers come back to you. And again, you're the procurement person, "Who are we gonna buy from?" They come back and they say, they quote you the price, and they quote you exactly the same price. All four of them quote you exactly a dollar each, $10 each. It's like, "Holy cow, they're the same price."

0:12:46.2 BB: Imagine also, they quote the same delivery schedule. So you've got a plumbing supply, you need lots of these, they all tell you they're gonna give you the volume that you need. So I think, "Gosh, volume-wise that's the same, cost-wise, it's the same." Now imagine what they tell you is relative to meeting the diameter, let's say it's the outer diameter is really critical to how these things fit together. And they quote you and say, "All the outer diameters will meet requirements." They're gonna take care of the scrap and they're gonna get rid of the red beads. All the tubes they will send will meet requirements, guaranteed. And you're thinking, "I want that same schedule, same costs, same quality," now what? Well, now imagine they send you the distributions from the control charts and they tell you that these distributions, you're thinking, "Holy cow, these suppliers are using Cisco process control." And they provide you with the histograms, and they say, "These distributions will never change, shape or location." Holy cow.

0:13:49.6 BB: And then added onto that is that you're gonna use them as is. So you're not gonna take them and modify them, you're just gonna bring them into the inventory and send them off to the plumbers to use. So you're saying, "Okay, the process is in control, the level amount of variation, location is predictable, stable, forever. How could I go wrong?" And then the last thing they tell you is, procurement that, "Here's the lower requirement, here's the upper requirement, and here's the ideal value." And so then you end up with two distributions. If I was confusing, I meant to say two, not four [chuckle]

0:14:24.1 BB: Alright, so imagine you've got two suppliers and the one distribution goes from the lower spec to the upper spec. And let's say it's a normal Gaussian distribution and it starts at the low end, goes up, high in the center, then off to the other, and that's supplier A and then imagine the other supplier uses 10% of the variation, but is towards the upper spec so it's far more uniform, but it's off of the ideal value. And so I've been using those two distributions with people as an ideal scenario saying, "You're never gonna have all that information, let alone that's all the same." And very deliberately, what I want people to do is say, if it's the same price, same schedule, zero defects, guaranteed, distributions never change and you're looking at the lower spec, the upper spec, and you're saying, "Okay, so one distribution, it has more variation, but the average is right in the middle, which is the ideal value. And the other one is shifted towards the high end of the tolerance, but incredibly uniform," who do you choose?

0:15:38.3 AS: So it's a tall curve?

0:15:39.4 BB: It's a very tall curve, let's say it uses 10% of the variation, 10% of the tolerance and so I've been using that going on 30 years, and I'll have 30 people in the room and I'll ask them to write down on a three by five card, "Who would you buy from?" And I'll say, "Here are the choices you can buy from the, the one that's the widest, we'll call that supplier A and supplier B is the narrow one to the right, or You could say it doesn't matter." And what I find is incredibly consistent inside and outside of Rocketdyne and literally around the world is the majority of people will take the narrow distribution, to the right will call that supplier B, what I ask them, "Why do you like supplier B?" To a person they will say, "It's more consistent, there's less variation." And I say, "Less variation from what?" "Well, less variation from each other." Well Andrew, that's precision.

0:16:40.9 BB: And then I ask the others, and my find is three quarters of the room will take that distribution, the one which is precise. And for the ones who are focusing on the wider distribution, where the average is on target, I say, "Why do you like that one?" And they say, "Because it has less variation from the ideal value." Alright? And so I wanna throw that out is part of the confusion I find inside and outside of the Deming community, in the world of Six Sigma quality distribution B, using a smaller percent of the tolerance, is, has the higher process capability index. 'Cause what that index is doing is comparing the amount of variation, the width of the variation to the overall tolerance. And the idea that you're using a smaller portion is valued. And I said, "Okay, well that's not quite the same as what Dr. Taguchi is talking about. What Dr. Taguchi is talking about," and this one we'll get into in a later episode, "is the closer you are to the ideal value, what you're doing is affecting how this is used in a greater system, so if I'm at home cutting a piece of wood to a given length and I want it to be closer and closer to the ideal value, then what I'm gaining is making it easier to put that piece of wood, or whatever I'm making, together.

0:18:00.5 BB: And I find that people who preferred distribution B are really confused 'cause in a big way what they're saying is, "I don't care about where I am within, all I care about is using a small portion of the tolerance." And then when I press on that more and more, they say, "Well, I want fewer and fewer defects." I said, "Well, zero defects is guaranteed, so if you really believe in zero defects as the goal, then you should have said it doesn't matter." And so the reason I wanna talk about the paradigms of variation is that one: variation is one of the elements of the System of Profound Knowledge and it's not just the variation in the number of red beads, right?

0:18:58.0 BB: And not to dismiss that the variation of the red beads is caused by the system. But what I've tried to bring to these episodes interviews with you is what I learned from Dr. Taguchi is the variation in the white beads and what is the impact of the variation on the white beads. And if we ignore that, then what we're saying is, "As long as you meet print, that's all that matters at the end of the day." And I'd say if that's where you're going then, then you could do the same thing with Lean or Six Sigma operational excellence. What differentiates Dr. Deming's work, I believe in terms of his appreciation of variation as an element of Profound Knowledge, is what he learned from Dr. Taguchi. That the closer we are to the ideal value, that affects how the system, which is another element of Profound Knowledge, comes together.

0:19:53.8 BB: All right, so going back to those two examples, what I started to do, one is I was detecting that less variation, less, I was detecting within Rocketdyne and elsewhere that there was a far greater regard for less variation, less variation from each other than being on target. And I was just wanting to one; find out why does it matter if all you have to do is meet spec? Why does it matter? So relative to the paradigms of variation, and this was back into the mid '90s when I was working with some people in manufacturing and was greatly confused over this, and the confusion was, "Is it enough to meet print, Bill? You're not sure? And then we've got these capability indices. We want to use a small portion of the tolerance and then we've got this, "Bill you're telling we wanna be on target, help me understand that."

0:20:49.7 BB: Was what these guys were asking for. And the paradigms of variation that I come up with. And I described it, I said, "Well, let's look at it this way." I said, "There's this thing called... Let's call it paradigm A, and Paradigm A is meet print." All that matters at the end of the day, we wanna meet spec. So.

0:21:06.4 AS: When you say meet print, print is a kind of a word that maybe not everybody understands what that means.

0:21:12.7 BB: Thank you.

0:21:12.9 AS: What, that means spec?

0:21:13.6 BB: Meet the requirements.

0:21:14.6 AS: Meet the requirements.

0:21:15.6 BB: Meet the requirements. And so we want the meeting to start anywhere between here and here. And as long as we're in between... So "meeting requirements" such that everything is good, is paradigm A. And so if you went back to those... Looking at those two distributions, if you said it didn't matter which one to take, that would be the paradigm A answer. And that's rarely the case. And so what I was poking at with people is, "You tell me you're striving for zero defects, and then when I give you that information that there's zero defects, why does that not trigger you to say it doesn't matter?" Because there's something else going on. So then the idea that we want incredible uniformity, precision, that's what I refer to as paradigm B.

0:22:07.3 BB: And as I mentioned earlier, that is the dominant choice. We want narrow distributions. We want what people refer to as "piece to piece consistency" to be differentiated by the second most popular answer is being on the ideal value what Dr. Taguchi would call the target, which is what I refer to as paradigm C. So in explaining these three paradigms to these manufacturing folks, I said each of them has a goal. So the goal of paradigm A is to meet requirements, but they not only have a goal, they also have an approach. And their approach typically tends to be, "If you're slightly out measure again, if you're slightly in you're good. Can we change the requirements?" And so I thought as... The paradigm A solutions are all about playing with those lines, moving them in, moving them out.

0:23:01.1 BB: Paradigm B, which has a lot to do with, I find within Six Sigma quality, is we wanna have a given fraction of a percent of the tolerance. And these indices, the Cpk Cpk, Cp Cpk, and others, there'll be goals of, "It needs to be 1.33 or 2.0, or 1.67, and we wanna strive for Six Sigma quality." Well, the question I ask those people is, "How much money are we gonna spend to achieve Six Sigma quality? And is there a corresponding benefit?" And I don't get an answer. But so the paradigm B approach would be to take the distribution, and try to make it narrower, but narrow to the point that we're only using, 10% of the tolerance. And again, what bothers me about that is that it's not addressing what Taguchi's talking about, which is what we're doing at home.

0:24:04.8 BB: Whether it's baking something, we want the temperature to be close to 350 or, whatever it is we're doing. We're, looking for accuracy in how we're pulling something together, is we're looking for an ideal value. And there, what we're trying to do is, as I mentioned earlier, we're striving for, "Can we get precision and then can we make the adjustment to achieve accuracy?" And instead of just saying, "We wanna achieve some given value." To me, what I tell clients I work with and students in my classes is, "What is it gonna cost to achieve precision, to then focus on accuracy? How much money are we gonna spend on that? And what is the benefit?" And the benefit will be improvements downstream, which is looking at things as a system. And what we'll talk about in a future session, looking more at this is examples of things I've been involved with, that address this idea of not reducing variation to zero, but to me it's about managing variation and having the appropriate amount of variation, knowing that it could never be zero.

0:25:18.1 BB: But, does it...am I in a situation where meeting requirements is all I need to be. In the world of baseball there's a strike zone. You've got a batter coming up who can't hit the ball no matter what, and you say, "Well, it doesn't matter where it is. Just get it into the strike zone." The next batter comes up. And that batter is very determined to make... And you're trying to get the ball around the bat. Now it depends on where you are within the strike zone.

0:25:46.6 BB: Alright. So the other paradigm I wanna get into, and then we'll call it over, is, paradigm D. So there's A, is meet requirements, that's all that matters. B is, I'm looking for precision. C is, I'm looking for precision followed by accuracy. Paradigm D when I explained this to Dr. Taguchi in the late 1990s, and he said, I need to differentiate having one ideal value so I can be working in a place where all the tubes we make are one inch in outer diameter. And, so there's one ideal value, well, maybe what the company is doing is getting into variety and having different outer diameters. One inch, half inch, three-quarters of an inch. And in each case they're looking for accuracy, but accuracy around different values. And that's what Dr. Taguchi would refer to as... Well, he and I agreed to call it paradigm D, which is precision around an ideal value. But depending on your product line, you may have ideal values for different customers. And that's called variety. And so paradigm D is about precision coupled around varieties. So I just wanted to throw that out as well in our session.

0:27:16.7 AS: And the risk that you're highlighting is that somebody who's skilled in Six Sigma or some other tools will be patting themselves on the back, that they've got a very narrow distribution in that... And it's inside of spec and therefore they've done their job.

0:27:39.4 BB: Yes. Well...

0:27:40.1 AS: And what you're highlighting is that there is, there is an additional cost to the business or additional benefit if that narrow distribution could be moved to the target value?

0:27:58.2 BB: Well, here's what I've seen. I've seen organizations go from a really wide distribution where, in the assembly process, they need all those different sizes to put the puzzle together. And then somebody comes in and shrinks the variation to a fraction of that, not taking into account how they're used, and instead of going around and having all the different sizes to put the puzzle together, they can no longer do that. So what I'd say, I've seen plenty of examples where a given amount of variation that people are used to, that they're accommodating could be quite well until somebody comes along and gets rid of those other options.

0:28:48.2 BB: So I've seen variation reduction gone sour, a few times leading to some near catastrophic failures of a rocket engine because we're just looking at something in isolation. And, so I went to a very senior executive in that timeframe and I said... 'cause there's this big push in the company and we gotta reduce variation, "We gotta reduce variation." And I went to him and I said, "If we have a choice between shrinking the variation and doing nothing, I'd say do nothing." And he is like, "Well, what do you mean?" And I went through and explained this scenario with him and he said, "Oh, I've never seen anything like that." And I thought to myself, "You must have worked for companies that make the tubes, but don't use the tubes."

[laughter]

0:29:33.4 BB: I said. And so, this is why when I hear people talk about reducing variability, reducing cost, trying to make improvements, and again, we'll look at this in a whole nother episode, is my concern is are they thinking about that part in isolation? Are they thinking about how that fits into a greater system? So whether it's reducing the variation in the outer diameter, whether it's reducing the cost, if they're focusing on that as a KPI, and not looking at how that KPI fits into a greater system, I'd say I'd be nervous about that.

0:30:17.4 AS: One of the interesting examples I remember from when I was young and in maybe business school or whatever, was when Toyota came out with Lexus and they talked about how they spent a huge amount of time reducing variation in every part so that you had a much smoother and more quiet ride, and the reliability was better and better. And they talked about the pursuit of perfection was the tagline that they did. But it made sense to me that, many people would be... Many companies are satisfied with a certain amount of variation.

0:30:54.8 AS: When if they could get it more narrow around the desired outcome, then the knock on effects, particularly for a new company, maybe for an old company, and the knock on effects basically lead people to go, "Go back we want more variation," because you're screwing up everything downstream. But if you're building an operation where you can get more and more narrow distribution around the target output, the target desired output, then you're bringing benefit all the way down the line for the business. What have I got right and what have I got wrong out of that?

0:31:33.2 BB: Well, that's fantastic. And a couple things come to mind. I really appreciate that question. Andrew, if you were to do a Google search for Dr. Taguchi and Toyota, because this idea of being on target associated with what he referred to as the quality loss function, which again, will be a focus of another episode, I'd rather one, look at it as an integration loss function, just to reinforce the idea that being close to the ideal value is about improving integration. And that's it.

0:32:12.7 AS: When you say integration, what do you mean?

0:32:15.5 BB: Who's gonna use that tube? What are they gonna do with it?

0:32:18.1 AS: Okay. So downstream, integrating the process with the downstream.

0:32:20.5 BB: And so if I'm not looking at how the doctor fits into the system, how the tube fits into the system. So what I find is in the Taguchi community, people will say, Dr. Taguchi worked with Toyota back in the '50s and '60s. Dr. Taguchi and Deming met for the first time in the mid '50s in India. Dr. Taguchi was honored with the Deming prize in literature in 1960, and they would've met then. Don Wheeler in his books on Statistical Process Control, and inside the cover it will say, "In September 1960, a new definition of quality being on target with minimum variation." So there's all that. So what I've tried numerous times over the last 30 years is searching for documentation of Taguchi's influence on Toyota. I found nothing.

0:33:10.7 BB: And, so here I'm flying back from Japan, having gone there while Rocketdyne was owned by Boeing to explain these concepts to people at the Mitsubishi Heavy Industries, which is the largest aerospace company in Japan.

0:33:25.1 BB: There was a big partnership going on between Boeing, the division I worked for at Rocketdyne was part of Boeing. And, Boeing's, at that time, largest supplier in the world was MHI. So I was on a study team to go over there to... And I explained these ideas to them. They knew nothing about this. They were focusing on uniform... They were focusing on... Their quality system was precision, not accuracy.

0:33:47.6 BB: And I was explaining what we were doing with that. Well, flying home, I was sitting in business class, sitting next to me is a young engineer, flying out of Tokyo. He is Japanese. And now we started talking. Turns out he is a graduate of Cal Poly San Luis Obispo in California working for Toyota at the NUMMI plant. And I explained to him red pen and blue pen companies, he loved it. I explained to him the paradigms of variation. And he says, "Bill," he says, "I'm coming back from working with supplier to get them to focus on the ideal value." He says, "That is the thinking we use."

[laughter]

0:34:29.2 BB: He says they wanna change the tolerance. And I'm telling him, "No, you've got to hold that target value." So you can search the Internet, you won't find this. And so there's two data points I want to get before we close. So one is that the majority of the flight coming home was me explaining this stuff to him, and then afterwards maintaining a relationship with him and his boss and looking to see if I could learn more.

0:34:56.0 BB: But he was... For him to say, "That's exactly what we do." Well then I spent several years poking Dr. Taguchi about his loss function concepts and all, and he said, "No company in the United States uses the loss function." And I said, "Really?" He says, "No." He said, "The leading users in Japan are Toyota and Nippon Denso," now known as Denso, a major supplier to Toyota.

0:35:21.1 BB: And I said, "What do they do with it?" He says, well, he says, "Bill, they have a database of loss functions for how different things come together." He says, "They have a database for the impact of variation." And I said, "Really?" I said, "How do they use it?" He said, "They use it to guide their investments." That's what you're talking about, Andrew. But you won't find that on the Internet. I've not found that in any literature.

0:35:51.1 BB: So, those are two things that I hold there. I believe Toyota is using this somewhere deep in the organization as evidenced by this young guy. And my interest is to expand that appreciation within our community in The Deming Institute, that it is not about uniformity. It is not about precision. And, that improving precision could make things worse. [chuckle] If you're not focused on accuracy, then the question becomes, "Is every situation worth accuracy?" And the answer is, "No. You've got to look downstream."

0:36:29.6 AS: Okay. Now it's time for me to ask the question that was asked of Dr. Deming.

0:36:34.8 BB: Okay.

0:36:35.9 AS: Explain it in one short sentence. What do you think the key takeaway is from this excellent discussion?

0:36:44.8 BB: I think what's really important is the need to manage variation, which is the same thing as Akoff would say, the difference between managing actions and managing interactions. The idea is that how I accomplish my task depends upon how you're using it. And so for me to blindly meet a requirement from you not knowing how you use it, well, whether that's you asking me to clean the table and I don't know anything about the table, you saying, "I need you to meet these requirements."

0:37:21.2 BB: You saying, "I need this by tomorrow." And I say, "What do you mean by tomorrow, Andrew? Tomorrow at eight o'clock, tomorrow at nine o'clock?" And so I think what Deming's talking about is if I just blindly take a set of requirements and meet them in a way that I interpret without asking you for clarification, is not teamwork.

0:37:41.7 AS: Great.

0:37:44.1 BB: So I need to know how you're using this.

0:37:47.1 AS: And, that's a great lesson. And I think what it's telling us is the idea of communicating and cooperating and getting to the next level has to do with really understanding what the next process is doing with it, and how what you're delivering could be improved so that the improvement is measured by a benefit to the next and the next and the next profit process. Not as a loss to the next one, which is what you explained about if variation got reduced, all of a sudden people weren't built for handling that.

0:38:23.2 BB: Well, and let me throw one other thing out along those lines. And as a colleague of mine in Amsterdam says to people in the Lean community says, "How does Lean...how does implementation of Lean explain why we love Toyota products? How does it explain the reliability of the products? We buy nothing but Toyotas." Now, we've had bad luck with Toyotas, which people I met in business school classes told me, "You never buy anyone's first model even Toyota."

0:39:03.8 BB: So we will only buy Toyotas, but we'll never buy the first model year. And I'm buying it because I want it to start every single time. I don't want a car where I've gotta replace the water pump. And so for our listeners, if you wanna have customers revere your products for the reason, I think, many people revere Toyota products, I think what we're talking about tonight is a significant part of what makes those parts come together and those cars last so long.

0:39:41.3 AS: Bingo. 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. This is your host, Andrew Stotz, and I'm gonna leave you with one of my favorite quotes from Dr. Deming, which is, "people are entitled to joy in work."

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In this episode, John and Andrew shift from management myths (don't do this) to principles for transformation (do this instead) based on Deming's 14 Points for Management. This episode introduces the principles and the context you need to get started.

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 John Dues, who is part of the new generation of educators striving to apply Dr. Deming's principles to unleash student joy in learning. The topic for today is shifting our focus from management myths to principles for the transformation of school systems. John, take it away.

0:00:31.8 John Dues: Yeah, Andrew, it's good to be back. It's good to make this shift from the sort of the "don't do this" to the "things that we should focus on" as leaders of our systems, whether it's in business or education or whatever. And just as sort of a recap, we did these three episodes on management myths, and I think I made this point where sort of the common thread amongst all those myths is that they suboptimize our systems. I think the key thing to look for, whether it's sort of something we should be doing or whether we should not be doing when it comes to management practices, is does the thing, whatever that practice is, does it fragment the whole into parts and fail to appreciate the organization as a system? I think that's sort of the key differentiator between what I would call management myths, and then the things that we should be doing, some principles that we should be following. And I think that Deming philosophy is the opposite of the management myths.

0:01:33.0 AS: It's so tempting to fragment... I like what you said, fragment the whole into parts and optimize those parts. That is just so natural for us in some way, that it's manageable, it's accountability. And what you've taught us is that well, actually it produces a suboptimal result for the system. So I think, it's exciting to move into like, okay, now I understand that, so what do we do?

0:02:06.4 JD: Yeah. And I think with the myths, a common...sometimes people are gonna push back, obviously and it can be hard to wrap your head around the myths because they're often common practices. That's how we're often trained in business schools or schools of education. But if you sort of start to unpack and say, "Okay, you say that practice is working in your organization, but tell me what you hear when you talk about a particular practice, let's say merit pay for example?” "No, that works for us. That works for our organization." But then you start to say, "What do you hear around that particular system?" And I think a lot of times people start to say, it sort of dawns in them that, oh yeah, departments are competing against each other. Well, we sort of go around the rules to do X, Y, and Z so we can get the reward. And when you start to sort of think about those things, you can see how those myths sort of lead you in the wrong direction and you wanna sort of steer towards these principles that guide you in the right direction.

0:03:03.7 JD: But I think it's important to understand those myths and then take that next step, that next step to follow the principles that Dr. Deming talked about. Of course, many people that follow Dr. Deming's work are familiar with his famous 14 Principles for Management. I basically took those 14 Principles and translated them into sort of a language that's closer to what education folks are used to. And really what I think they do is they provide this sort of strong philosophical foundation. The management myths, again, are the don'ts, the principles, the guiding principles are the dos. But I think it's always good to steer it back to sort of these central ideas, quotes from Dr. Deming or someone else that captured the essence of what you're trying to do. And I thought one of the Deming quotes that stuck with me when it came to transformation is that Dr. Deming said, "The transformation will release the power of human resource contained in intrinsic motivation."

0:04:14.3 JD: And so, a lot of times people talk about transformation, but what do you actually mean? And to sort of put it simply in the Deming world is: transformation is a process where you begin to understand the System of Profound Knowledge and that helps you pull away from this prevailing system of management, the management myths that we talked about, like accountability, or merit pay, or a number of the other things that we talked about and move to this new philosophy. That's where the transformation is actually happening. And again, these guiding principle...

0:04:47.5 AS: You said release the power of human resources contained in intrinsic motivation. Is that what you... Did I get that right?

0:04:53.1 JD: That's right. Yeah. Yeah. Yeah. So I said...

0:04:54.5 AS: Incredible.

0:04:55.5 JD: The transformation will release the power of human resource contained in intrinsic motivation. And so, what you're trying to do is set up your system to tap into that intrinsic motivation instead of stomping it out. And those management myths stomp it out. And then these guiding principles will lead us in a different direction.

0:05:13.4 AS: And one of the things I would like to just highlight is that, a lot of times I'd like to just go back to childhood and look at what do we naturally do? We naturally work together. We naturally make friends. We naturally try to solve problems and we share. There's just so much natural learning that goes on. And if we would just go back to that, instead what happens is, like you said about the myths, adults start layering on all kinds of systems that all of a sudden just crush.

0:05:52.4 JD: Yeah. I think a lot of that comes from optimizing for competition versus optimizing for cooperation. And if we really wanna make our systems work, then we have to do the latter. I think that's key. And one thing I was gonna do is sort of tie these principles and the myths back to two sort of major problems that have unfolded in education over the last 50 years. And I think we've sort of talked about this in some earlier episodes. But sort of that first problem I would frame as, you remember that Nation at Risk report that we talked about came out in the early '80s, so 40 years ago or no. So I think all of the sort of major federal education reform policies that have come out since A Nation at Risk have fallen prey to one or more of those myths. So that's the sort of problem one.

0:06:49.1 JD: About the same time in the late '80s, we saw this major shift in the demographics of the teaching profession that we've only just more recently started to realize. So this actually blew my mind when I read this in a research report. But basically in 1988, so not that long ago, the typical teacher in the United States had 15 years of experience. You fast forward to 2017, the typical teacher was in their first year of teaching. So we've had this dramatic shift where the model teacher used to be sort of mid-career, and now the model teacher, the most typical teacher in the US is in their first year, they're a beginning teacher. So that's gonna cause all sorts of problems.

0:07:39.0 JD: Now, part of the issue, I can't tie this back to the federal education policies, and I'm not attempting to do that. I think maybe a contributing factor to sort of the general ecosystem, but not maybe causality, that's too strong to say that it caused it. But there's one, there's been the significant growth in the teaching profession, meaning there's lots more teachers than there were today, or in 1988 as compared to today. So of course if you're gonna add teachers for all sorts of reasons, more specialization is required, kids receive special education services that require smaller groups and things of that nature. So that's led to this explosion in the number of teachers in the United States.

0:08:28.7 JD: But regardless of the cause, this means that large numbers of teachers are entering the profession and they're leaving the profession, so there's all this churn. And so when you tie these two problems together, so number one is you got the federal education policies following sort of a lot of those management myths, then you got this sort of significant change in teacher demographics. It's basically massive instability in the US's education ecosystem.

0:09:03.6 AS: And before you go on, that statistic is almost unbelievable. And I wanna get more from you on that later, but I just...in order for that statistic to be correct, it would seem like there was a huge drop off of older teachers exiting, as you mentioned. And also, I guess what would be correct is that it was a massive influx of brand new teachers.

0:09:34.0 JD: Absolutely. Yeah.

0:09:34.4 AS: Like huge. And it kind of depends on what year that happened, because if that's the case, that number will be changing very rapidly as those new huge mass of new teachers mature over time. I wonder, I have a lot of questions about that data and I'd love to see more of that.

0:09:53.9 JD: Yeah. And I think...I'm certainly not an expert in demographics in the US but I think what I've seen is there's both a graying and a greening of the profession. Meaning there's lots of people that are retiring or nearing retirement age and there's lots of new teachers. There's less people in the middle. And a big reason for the churn is, or to keep in mind, is that a lot of these new teachers are leaving, so they're being replaced by more new teachers. So I don't see this sort of subsiding anytime in the near future.

0:10:28.1 AS: Could you imagine running a business like that? It would be just impossible.

0:10:34.1 JD: No. No. And that's sort of one of my theses right now. And sort of tying back some of the work that I've done with the book I wrote is that there's this massive instability in the education sector. And part of the reason for that is that we as a sector lack this sort of solid philosophical foundation and a sound theory of management. And I think that's where the Deming Philosophy can actually fill in sort of this major hole in how we're operating in education. I think specifically that's where these 14 Principles for educational systems transformation, is what I call them, I think that's where these principles can come in and play a role in sort of stabilizing the education sector that's been so topsy-turvy for 30 years or so.

0:11:36.1 JD: So I think it's a good place to start with sort of an introduction to the 14 Principles. So the Deming sort of crowd will be familiar, if you're coming to this as an interested party but less familiar with Deming, you may not know. So I think there's some things to clarify that were a little bit confusing to me initially.

0:11:56.4 JD: One thing that you'll hear in the Deming community is people will refer to the 14 Points, but then also Deming sometimes called them Principles. He sometimes called them Obligations of management for clarity and just to be straightforward I just call them Principles, my 14 guiding principles. I think it's also important to sort of call out that while they're an important component of the Deming philosophy, they're not in and of themselves the Deming philosophy. I think that's really important to call out. And I think when you discover something like anytime you have a numbered list, like 14 this, or 10 this, or five this, I think there's this sort of almost human nature to sort of start to think of them as a checklist to be implemented. Really, they're not. They're not. You can't just do number one and then you do number two, and then you do number three. That's not how they're set up. Really, what they're set up to do is sort of open your mind to a whole new way of thinking in terms of how we organize and run our institutions, in this case, our educational institutions.

0:13:09.2 JD: And I think most importantly, these 14 Principles are these interlinked points within this larger management philosophy. And you can't simply put the points into action without first understanding why Deming wrote them in the way that he did. So, they're not super long. Some of the points are a couple pages, some of the points are just even a page or so in Out of the Crisis, one of Deming's books. So he is very deliberate about the words he chose and the framing of the Principles.

0:13:43.4 JD: And the last thing I would say, if you're sort of new to the 14 Principles, that you have to account for your organization's context. So you can't just adopt the 14 Principles without a deep appreciation of both the principles themselves, and that organizational context. If you just sort of tried to throw this into your system, without deep study and deep understanding that, it could cause sort of mass chaos. So I think those are some things that I would say to anybody that's considering looking at the the 14 Principles.

0:14:19.9 AS: Yeah. And the point is that the reason why it's not a checklist, it's because number one, it's hard, it forces you to think, number one. You really have to think about what it is that he's presenting. And number two is, it's even harder to implement, because once you start to realize that there's so much value in what he's saying, now you're gonna have to come up against the prevailing system of management, all the myths and all of that stuff. And that's the reason why, one of the reasons why it's not a checklist, it's 14 Points for Management. And here is what...and I can say I first read that when I was 22, 23 working at Pepsi, and now I'm 57 and I can say that I still look back at them and go, "Oh, now I see."

0:15:18.5 JD: Yeah. I think there will always be that. There will always be that, even for somebody that's done this for 30 years or 40 years, there's always gonna be that sort of continual "aha" moments, or connections. But you sort of have to go all in in the sense that you can't pick and choose like a menu, like, "I'm gonna do, of the 14 Principles I'm gonna do 1, 2, 4, 6, and 9," it just doesn't work like that. You have to sort of go in all in on the 14 Principles. It doesn't mean that you have to do them all at the same time, or at the same rate, but you can't just sort of pick and choose which ones you're gonna do. They work together.

0:15:55.9 AS: And it's interesting cause the first one talks about constancy of purpose.

0:16:00.8 JD: That's right.

0:16:00.9 AS: I would say that, that's the one that really challenges the management. I'm gonna be meeting with the management team of a...the ownership team basically of a factory in Thailand next week and what we'll be talking about is: how do you build constancy of purpose, or how do you think about that? And also the idea of constancy of purpose of thinking that our job is to improve. How do we keep learning? How do we keep improving so that we deliver more and better value to our customer, to our student, to whatever. And that, without that commitment, it's hard to do the other ones. But I agree that there's...you can jump around and think, "Okay, I can do this one right now, I can drive out fear right now. This one's gonna take more time," or that type of thing. So, yeah.

0:16:52.3 JD: Yeah. So I think that's a good segue and so, with that sort of introduction of mine, I think diving into Principle one, sort of the short version is "create consistency of purpose." And then I sort of took Dr. Deming's version and rewrote it for educators, and the way I did that was I said, "Create consistency of purpose toward continual improvement of high quality learning systems. These systems should be designed in such a way that they enable joy and work for staff, and joy in learning for students, with the aim that everyone can access opportunity rich lives in our society now and into the future." So that's sort of the long-term vision, that's the long-term purpose that we're working towards. Now you have to say, "Okay, now what do we have to do to get there?" That's the hard part.

0:17:45.8 JD: And I think, what I read from Dr. Deming is that he often spoke about two problems that all organizations face if they want to stay in business, whether they are a factory, or whether they are a school or some other type of organization, doesn't really matter. First, there's these problems of today, and second, there are the problems of the future. And both camps are a fairly daunting list, but we'll start with sort of problems of today. I think with all schools, but maybe even especially so for schools like where I work where they're... We're a network of public charter schools, we don't have any kids geographically assigned to us. But even for a traditional public school I think enrollment, student enrollment is a constant concern. "How are we gonna make sure that we are setting up our program so it best serves our students and families?"

0:18:48.3 JD: And I think if you think of the problems of today, of the typical public school, ensuring the quality of learning experiences, balancing the demands of local, state, federal education policies, attracting, retaining... Or attracting, training and retaining employees, making sound budgeting decisions, recruiting and retaining students. Fundraising is a component of our system. Acquiring, maintaining, upgrading school buildings, you could go on and on and on. It's pretty self-evident from that list that educational leaders could easily stay tied to those problems of today, and that would be more than a full-time job, just sort of keeping up.

0:19:40.8 JD: That's even before you consider this second camp, this idea of problems of the future. And that's really where constancy of purpose becomes especially important. And this is where this idea of continual improvement of the school district's competitive position within the educational ecosystem really comes into play. So why are parents gonna choose my school or my school system for their child? And a really important question for all school systems to consider: is the board and the superintendent dedicated to the short-term or are they dedicated to the long-term of the institution? And of course, short-term, maybe in a business setting may be quick profits. Short-term in a school system may be something more like really focusing on these state test scores.

0:20:47.6 AS: Pass the exam.

0:20:50.1 JD: Pass the exam, right. There are certain things we could do to increase those scores on the short-term. Or are we taking the mindset that our school is set up to ensure that our schools will be success...or our students will be successful 10 or 20 or 30 years from now. And focusing on short, long-term is not mutually exclusive. There's certainly things in the short-term you need focus on, certainly things in the long-term, but I think taking that long-term view is the most important. I am not as concerned with how a sixth grader in my system does on the state test, although that has some importance to me. What I'm most concerned about when I'm thinking about that 12-year-old is what will they be doing when they're 18, when they're 28, when they're 38. Did we set the right foundation for them on a long-term basis? And that's a really weighty responsibility for school to balance those two sets of problems, the everyday things that we have to deal with and then keeping our eye on future problems that we should be anticipating.

0:22:03.0 AS: Yeah, one of the things about that, that's interesting is that you're pretty much never pulled to future problems and you are constantly pulled into today's problems, and therefore majority of people just...all they can do is deal with today's problems and the idea of starting to think about how do we start to devote a portion of time, some of our thinking, some of our efforts. I remember Dr. Deming saying that somebody could put out fires for their whole career and never improve the system.

0:22:40.6 JD: Easily, easily. In fact, I'd say that's what most people do.

0:22:44.7 AS: Well, it's pretty exciting to be a problem solver and to walk in, "Alright, do this. Okay, I know this problem, we've seen it before, let's do this. Okay, here's how you solve that." And it's really exhilarating to go home from the end, at the end of the day, just say, "Man, I fixed a bunch of crises that came up. I'm the hero."

0:23:07.6 JD: Yeah, absolutely. And with Dr. Deming, he did give us some key things to focus on and he really talked about when it comes to this commitment to constancy of purpose, he really talked about this alignment of acceptance of these three obligations you talked about. First, one obligation is a focus on innovation. A second obligation was a focus or is a focus on research and education, kind of clump those together. And then the third obligation was to focus on continual improvement of, in our case, educational services. So it is helpful to go through just a little deeper on each of those obligations and what he meant.

0:24:04.1 JD: So obligation, one, is innovation. And so to your point about how we sort of shift some of our focus on to future planning. Well, one thing is, if you're gonna do that as a school or any type of organization, you have to allocate resources to long-term planning, whether that's staff that's focused on long-term planning specifically, or other types of resources. It could be new educational services, that better prepare students for the future of work, could be new curriculum resources. It could be educational technology. It could be the cost associated with those things. There could be new pedagogical approaches grounded in neuro-scientific discoveries as we learn how people learn, adjusting our instruction accordingly.

0:25:01.0 JD: New skills for teachers and administrators, training and retraining staff. All of these things are costs and you, and then they're upfront cost and though if we are gonna be serious about planning for the future that you then have to allocate some resources. And I think a key to this is the people that are working in your system, they have to have faith in a future. That's a pre-requisite for innovation. If all you're doing is putting out fires and not thinking about the future, if there isn't this unshakable commitment to quality, then especially middle managers, who in a school system is like principals and teacher leaders, the frontline people are the teachers, and of course the students, if they are skeptical about the future of your organization then they're not gonna put in best efforts, and then it's gonna be impossible to put any attention and energy towards innovation.

0:26:11.2 AS: So just to summarize that part, so is what you're saying is that the most important thing that you can do as a leader in a school, as an example, is to switch the focus from putting out the fires and stuff and start to say we need to think about innovation, research and education, and continual improvement, and get everybody focused on those things as the way forward?

0:26:42.4 JD: Yeah, that's certainly part of it. And I think saying things like, you know, talking about constancy of purpose explicitly. So I think saying like, teachers often get very stressed out about state test scores. So I would say okay, look, these things are important. There's something that we have to do. But what I'm most concerned about is the long-term health, well-being of our students. So that's what I'm most concerned with preparing them for. So I think even little statements like that, the sort of reorient people and how they're thinking about their sort of day-to-day, I think that's really important. And I think you also - doing things to tie back sort of that message to things concretely in your system such as having alumni come back and speak to your current students, having events where you can see sort of what students are doing now after they've left your system, that makes that connection real to that long term constancy of purpose. So I think it's all of those things.

0:27:54.6 AS: Yeah. So one of my questions you know to start to think about how we wrap this up is how does somebody take all of what you just described. We've shift from myths, now we're like, okay, let's focus on what we can do. What are some...what's one take away or something that you feel like somebody listening to this could go back to their classroom, back to their office as an administrator and say here's step number one I can take towards this?

0:28:34.9 JD: Well, I think one initial activity just to get a sense of where your system is, so let's say you're a superintendent and you have a team of five or eight people that report directly to you. I think going back and ask them to individually write what is our purpose? What's the...why are we here? What's our long-term purpose? And I'm betting that you're going to get five to eight different answers. So, I think that would be a helpful exercise, is just what do people see now as the core long term purpose of your organization, and I think there's many exercises you could build from just that simple question.

0:29:17.7 AS: Yeah, that's a...I'm absolutely sure you're going to get five different answers. 

0:29:23.4 JD: Yeah. I agree. I agree.

0:29:25.8 AS: All right. So is there anything else that you want to add before I wrap up and summarize what we've been talking about?

0:29:35.1 JD: Yeah, I would just... Maybe just touch really quickly on those two other obligations. So innovation was the first one. The second one is Deming talked about research and education and I think when he was talking about education, he was talking about self-improvement and acquiring new knowledge and he differentiated that from training. You know, whereas training is something that you're going to do and once you do it, you expect to see it the next day. That's different than education, that's sort of acquiring new knowledge about the best way to teach or do some other key function. There needs to be a focus there.

0:30:11.1 JD: And then that third obligation is continual improvement. And what he's talking about there, at least in an education setting, is systems leaders have to continually improve the design of their educational services. You have to have this growth mindset. So because this particular obligation never ceases. You never stop improving. I mean as soon as you start thinking you've arrived, your organization has already started to move backwards. So that can be - you know depending on who works in your organization that can be a hard thing to sort of hear. Like I thought I had my lesson plans done. No, your lesson plans are continually improving. You're continually making them better. That doesn't mean you have to overhaul everything that you're doing all the time, but it does mean that even in small ways, I'm going to be working on that on a never ending basis. You know, for my teacher, it's my lesson plans. If I'm a systems leader, there are other aspects of my work that I'm going to continually improve.

0:31:12.5 JD: And I think, you know, you asked about what could people do concretely is, you know, once you understand what your core long-term purpose is, everybody in the system has to understand that. So customers, be it families or higher education, government, industry, whatever, that has to be employees, that has to be the suppliers to your system, which are families, other school districts. Everybody needs to know what that long-term purpose is and they need to know even explicitly that you're committed to those three obligations, that you're committed to sort of longterm success of your organization.

0:31:53.8 AS: You'll notice over my shoulder I have a piece of paper on the wall and when you were talking I walked over...I slid back to look at it and it's a reminder from David Langford, who teaches us so much and that is continual improvement. Not "continuous" and you said "continual." So the point is he makes is that if you say continuous, it's like just constantly improving everything. It's like jumbling things up forever as opposed to continual where you're codifying the things that are working, standardizing some things, and then moving on to the next step of learning. So...

0:32:35.9 JD: Yeah. I think Deming was wise in choosing those words always deliberately. Continuous sort of implies like software, always self-improving and never ends. But humans can't continuously go on. Continual means there's discontinuous improvement. There's stops and starts. There's changes in focus, those types of things. So it's another nod to the humanistic nature of the Deming philosophy.

0:33:01.8 AS: All right. So let me summarize. We started off by talking about, it's a shift from talking about the management myths, now we're into the principles for the transformation of school systems. And basically, I think you kicked it off by saying that when people are implementing the myths, they're sub-optimizing the system and they're fragmenting the whole into parts and thinking if they can just get those parts right, that's gonna get the best result for the system and that is unfortunately wrong and we've gotta look at it from a systems basis.

0:33:39.0 AS: And then also you mentioned the quote of Dr. Deming saying, "Release the power of human resource contained in intrinsic motivation." And that, I just love that. That really helps to understand what we're trying to do is that people do want to contribute and they want to contribute in a great way. And then you also talked about, start with constancy of purpose and an aim. And you talked about the balance of problems between of today and the future. And I was adding in that you're constantly pulled into problems of today, and you're never pulled into problems of the future. So it takes some discipline, as you said, to start to strike that balance.

0:34:22.5 AS: And then, you talked about the importance of really taking that long term view. Then you mentioned about the three obligations, which all seem to look towards the future, and therefore maybe that's a good way to start to draw your people into thinking about the future. And the first one you mentioned about was, that Deming talked about, and you mentioned about was innovation. He also talked about research and education, and you highlighted, when he talks about education, he's talking about self-improvement and how do we acquire new knowledge in this organization?

0:34:56.2 AS: And then the third one is continual improvement. And the point is in education, it's design of the educational services. And then finally I think a call to action, a challenge to everybody that you have now given us to say, how do we take this back to the classroom or as an administrator back to the school? And your point was maybe ask your top three to five people, whatever, to answer the question, what is our long-term purpose? And have them do it individually. Write it down in short little statement and what you pretty much guarantee and I would second that you're gonna find probably five different statements of purpose. And I think that then, a note that I took as you were speaking was, "Use that as a starting point to clarify your long-term purpose." So great call to action at the end of this one. Anything you would add to that?

0:35:52.0 JD: No, I think, that was a perfect summary. Without an aim, there's no system. So that long-term aim that defines your constancy of purpose is that good place to start like you just said.

0:36:06.0 AS: So ladies and gentlemen, there's your challenge. Go back and do that little bit of homework. John, 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. Oh, and by the way, you can find John's book Win-Win with Dr. 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."

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David and Andrew discuss the three types of power that leaders have: authority, knowledge, and persuasion. David also explains where the current style of "command and control" management comes from and what a nearly failed family vacation can tell us about power.

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 am 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 today is the Three Power Rangers and Their Sources of Power for Improvement. We are now on item number seven on the list that was given to us by Dr. Deming in the book, The New Economics. It's called, the title of the list is called Role of a Manager of People. This is the new role of a manager of people after transformation. For those of you who have the third edition, this is on page 86, and for those with the second edition, it is on page 125.

0:00:56.7 AS: So now let's get into number seven. So we're talking about the manager after transformation. He has three sources of power. Number one, authority of office. Number two, knowledge. Number three, personality and persuasive power or tact. A successful manager of people develops number two and three, that is knowledge and personality. He does not rely on number one, which is the authority of office. He has, nevertheless, obligation to use number one, as this source of power enables him to change the process - that's the equipment, materials and methods to bring improvement, such as to reduce variation in output. Dr. Robert Klekamp says "He in authority but lacking knowledge or personality must depend on his formal power. He unconsciously fills a void in his qualifications by making it clear to everybody that he is in a position of authority. His will be done." David, take it away.

0:02:02.5 David Langford: Okay, that's great. So this is one of my favorite points, which has three subset points or Power Rangers, sources of power for improvement. And I've used this with managers around the world for the last 40 years. And in some cases, they just drop their jaws and they're just amazed at how simple this is. But the more you think about it and realize what people, managers of people are not doing, it gives a roadmap about: what do you do? How do you do something? And I get that question all the time from superintendents and principals in my field of education, and people that do have a formal position. Then they wanna know: well, how do I get these people to do stuff, make things happen?

0:02:58.2 DL: So, before we get into each of the three Power Rangers, I wanted to give a little bit of context too, because I wanna remind everybody that, Deming lived through World War II and was a part of the quality improvement effort for World War II. And what happened during World War II is that a lot of the manufacturing was being done by women in the United States especially. And so when the war ended, you had all these military people coming back to corporations and moving into top management positions, and basically the management style that they brought with them was military. And so that's where you got phrases like, "My way or the highway," and, "You're not getting paid to think. You just do what I tell you to do and everything will be fine."

0:03:51.5 AS: Attack that hill.

0:03:53.1 DL: Yeah, right, which was totally opposite to the whole manufacturing thing that had been going on during the war and was really the key to the war machine was being able to produce huge amount of military items in a very short period of time.

0:04:09.3 AS: Well, and also when you think about that, David, it's interesting to think about the patriotism and the commitment to a cause that those women went into those factories to do. And so when it was all done and the cause was met, the challenge was met, then to be faced with that, it's like, "Wait a minute, we lost something here."

0:04:30.9 DL: Yeah, and then I remember Deming talking about it one time at a conference and stuff and talking about, basically, in those factories, women liked to get together and talk about what was going on, and their performance and everything that was happening in the factory. And then when the men came back in, they said, "No, we're not gonna have groups or teams or anything like that. You're just gonna do what I would tell you to do, and if you don't like it, then find someplace else to work." One of the phrases I always remember Deming used to say was that: "pretty soon you're left with only the people who can't get a job someplace else."

0:05:14.0 DL: And I've found that to be so true in every profession that I've worked in or helped people with, etcetera, and have... So it leads us to number one, your formal position. So yeah, you have a job. You're the CEO, you're the principal of a school, you're a headmaster, you're whatever it might be. You got the job, right? And so with that comes formal position that you need to be able to...you have to do stuff and you have a job to do. And you may even be given goals by a board or something that it's your job to make this happen. Well, the question is, how do you make it happen? If it was just so simple that a new boss could come in and just start bossing people around and tell them what to do, and then they all do it and things get better, then we wouldn't actually need any of this Deming stuff, right?

0:06:13.6 DL: But it's not so simple as being able to do that. And basically what Deming is saying in this point too, is that if you act like that and you use your formal position to make change, basically, you're not gonna be around long, because pretty soon the people that work for you are gonna start to kind of revolt, and either they'll find other jobs or the pressure will become on you to get out and get somebody else in there. This is also the reason that some boards think improvement means, we'll just hire somebody else. Well, that doesn't work either. I'll never forget a superintendent of a huge school district that I worked with, and I had asked him, when we started working with him, I said, "Well, what's been your method of improvement?" And he very looked at me very clearly and just said, "Well, we fire people."

0:07:17.3 AS: That's the Jack Welch School.

0:07:19.8 DL: Yeah, exactly.

0:07:20.3 AS: Take the bottom, bottom half or the bottom quarter or the bottom 10% and make sure you're firing them often.

0:07:25.8 DL: Yeah. But that's means that you're also in that category too, right? To improve your position, all we got to do is fire you and find somebody else in that position. But are you finding somebody else with the exact same philosophy or are you actually looking for somebody else that has a different philosophy? And I think that's really what Deming is talking about here, is that, hey, if you want to stay around a very long time, yeah, it might be your formal position, but don't use that unless you absolutely have to. I often tell managers, if suddenly there's a fire in a building, you're not gonna get a bunch of people together and have a meeting and say, "Okay, what do we do? And which way should we go?" And things like that. You're probably gonna use your formal position to take charge and say, "Let's get out of the building," etcetera. But then very quickly, you should get people together to say, "Okay, how could we have done that better? And how could we work through that and improve that whole process?"

0:08:31.6 DL: And so that's where I think point number two really comes in, is that, do you have knowledge of a different way to manage, different way to think? And that's all Deming, about statistics and understanding process analysis and understanding how people work together, and do you understand how to do Plan-Do-Study-Act - the PDSA process - to improve something? And so you're using your knowledge of theory and background to improve something. And the irony of that is, when you concentrate on using your knowledge to do stuff, you actually gain authority. Just 'cause people start to look up to you as, oh, he or she, they have a process of improvement and they just stick with it. Anytime that something comes up, it's never blaming people. It's always looking at what is the process? What's happening? Let's use a few tools. Let's analyze what's happening. Let's look at a flow chart of the process and let's improve the process. That's knowledge.

0:09:40.4 AS: So the people want to follow you rather than people must follow you.

0:09:46.6 DL: Yeah, that's a good way, it's a good way to put it. Exactly. So, I think of the three, probably that's most important, right?

0:09:57.9 AS: Yeah.

0:10:00.6 DL: And the other thing about these three points is that, maybe you're working in an organization, maybe you're just a teacher. I say just, maybe you're a teacher in a school, and there's maybe 200 teachers, and you see that things are not going well. What can you do? Well, you're not the person in charge, right? And if you just march into the headmaster or the principal or whoever and start telling them what to do, you're probably not gonna be around. But what can you do? You can use your knowledge of improvement. And through that process, you actually become very powerful, because lots of people wanna work with you, 'cause every time we do, we get things done and we look at problems differently. And then pretty soon, your boss is coming to you when problems arise or when process improvement is necessary and saying, "Hey can you help here? Help us work through this problem?" And that's a level of power that's for change or improvement that is significant, if you think like that.

0:11:14.2 AS: I was thinking about, if you're a young person going into the workforce, you don't have authority. I mean, you may be given it in a small position. I was a supervisor at Pepsi when I first started, so I had a certain level of authority, but there's no way I could use it when all of my work... All the guys working for me had been there 20 years or whatever.

0:11:33.7 DL: Yeah, exactly.

0:11:34.8 AS: And do it would be foolish for me to do that. And so, I definitely used my personality and I didn't have much knowledge, so I had to try to acquire knowledge, which was making me...I took a note and just thought about, to be able to use knowledge as an a form of management, you've gotta acquire it, and it comes through your own acquisition plus also hiring people who...you can acquire knowledgeable people that are around you that can help to solve things. And then as I started, and in my case, David, what we were doing was we were filling Pepsi trucks every night, and they were all wrong. So the drivers in the morning would come in and they'd have to waste a lot of time counting their trucks, counting what's on their trucks, and then going back and getting what was missing.

0:12:24.3 AS: And I had to then develop...I had to then acquire knowledge of why were we making these mistakes? Which one on my staff was doing really well? How could we learn from that? And how could we do it so that we could lock those trucks and guarantee those drivers that that truck was accurate? And it took me many months to get to the point where I acquired enough knowledge to be able to then have the authority to go, "All right, now we've done all of this. Now, this is the way we're doing it from all that we've learned." So anyways, this is just me rambling, but that was just something that I thought about.

0:13:00.9 DL: Yes. No, that's a good... That's a really great example. That's a great, great story about that. And I'm sure that it took a while for the drivers to trust that it was actually right.

0:13:14.7 AS: I mean, I had to negotiate with them, and I'd tell them, "Look, if you find a problem out there, we're gonna fix that," and blah, blah, and all that, but then they were like, "Well, if I find a problem out there, I don't have the product to sell, so it has to be right," which basically it was, there's a lot of teaching actually involved in that to help everybody understand.

0:13:33.9 DL: Yeah, exactly. So then point number three is about personality. And so, you probably have worked for people, if you've had several jobs, everything from delivering papers on up to a current job you may be in now, you probably worked with people that are just really great people to get along with, right? And that's a source of power. I mean, they get things done because they're just really nice people and supportive, and they just have a really great personality about how to work and what to do. And I can visually see people in my mind that I worked with over the last 40 years that, just great people like that. But it's not enough, because you might be a really great person to work with. "Joe is really a great person to work with, and he's really fun and everything else, but he never gets anything done." Because he doesn't have the knowledge of basically the Deming philosophy about how to get stuff done, right?

0:14:45.7 DL: So what Deming's talking about here is that these are the three Power Rangers, the three sources of power, that if you wanna get something done and move forward and improve something, really you have to think about it as an inter-relationship of parts to the whole, of these three areas working together. So if you start concentrating...and the explanation in the following paragraph, he talks about, well, you don't have any knowledge and your personality stinks, and so what you rely on is your authoritarian position just to tell people what to do, you won't last long and also you're not gonna improve things. Things are not gonna get better when you do that. So you may have a formal position, but he talks about concentrate on two and three, your knowledge and your personality, and you will start to see a major transformation.

0:15:44.8 DL: Everybody knows you're the boss. You don't have to go around and tell people you're the boss. By virtue of the formal position, you have that. And I always take these things down to a teacher in a classroom. A teacher, that's a formal position that a teacher has. I have authority over these students during this time period, right? And I've known teachers that that's all they concentrate on, is the authority. And again, we've talked before about oftentimes, especially in like grammar school or primary school or elementary school, you're physically bigger than them and so you use that as part of your authority, that, "I'm the boss here. You do this, out you go." Well, even very little kids don't respect that.

0:16:42.1 DL: I think I told a story one time of 5-year-olds testifying for a state board of education, and they were so amazing explaining all these wonderful things that they were doing in their classroom and collecting data and improving stuff. And one of the board members said, "Well, where's your teacher when all this is going on?" And this 5-year-old, without hesitating, grabbed the microphone and said, "The teacher's not in the closet, you know." And as soon as I heard that, I thought of these three points. That little person knew they had been coached and mentored and taught a process of how to work together and improve that classroom, and the person that he looked up to was the teacher. So even at 5 years old, these things come in to play in a very real way, so.

0:17:41.6 AS: I would like to bring this back to constancy of purpose for a second, because...and I wanna think about, there's a book I recently read by Richard Rumelt, which is called Good Strategy Bad Strategy, and it's an excellent book about setting corporate strategy. But he talks about how businesses kind of move in waves, where you have a decentralization period of time where you're expanding and your giving authority. And then, basically the organization can lose focus, and then it's gonna require the authority of the senior management to say, "Okay, we have to, at some point, restructure and refocus this," and then you rely on more centralized, and he was just talking about the waves of that. And then I was thinking about the authority, from a positive perspective, is the role of the leaders of an organization, of the school, of a business, the role of those leaders is to set that direction.

0:18:37.5 AS: And you do have to claim authority or else you can't...that's what I also liked about what I learned from Deming when I first started learning, is that you can't just go, "Okay, what do you guys think our direction should be?" I mean, that is a fun question, but ultimately, as a leader, you got to really make sure that the constancy of purpose and the aim is there, and that sometimes requires what I would call good authority, authority coming from a knowledgeable and experienced perspective, but there must be authority.

0:19:07.3 DL: Right. Well, you could be the manager that comes and says, "Look, we need to reestablish our constancy of purpose. So let's talk about some ideas about how we can go about that and that are different than what we've done before, because obviously that's not working. So let's work together to figure out a good pathway that we can make that happen." So that's using your personality to run a meeting and get what you need to have happen, but you're bringing people with you instead of doing stuff to them, so.

0:19:39.2 AS: Yeah, I have one little story to tell about this authority concept, is that in our coffee factory many years ago, my business partner Dale was sitting in the office up above the roasting area and he started to smell smoke. And roasting coffee has... We have roaster fires that happen in the roasting machine. And basically, he went rushing down to realize that a fire was raging in the roasting machine, particularly in the chimney, and was getting down into the machine. And so the first thing he did is he just started yelling, "Everybody out!" And he got everybody out of that building first thing, except for one or two men that were there working. And with one of the guys, he said, "Grab that little hose," and he's got this little hose that they had to try to cool down the plate that he had to unscrew all these screws on. And he told the other guy, "Get up to the top of the building and start pouring water down the chimney of this roaster to start putting this fire out."

0:20:49.6 AS: And then they eventually got the whole thing out. But it required authority at the time to save the factory and to save the lives of the people. And so authority is necessary. It's just that that authority came at a time of emergency. Also, the other question is, is it good authority? There are people that give really bad advice in the middle of an emergency. And so, you know...

0:21:14.2 DL: Yeah, but then, points two and three come into play, personality and knowledge, because the very...soon as that crisis is over, the very next thing that guy should have done is bring everybody in and say, "Okay, what do we do to make sure this never happens again?"

0:21:31.8 AS: Which is exactly...

0:21:31.9 DL: Yeah, and if it does happen, what's going to be our process?

0:21:38.7 AS: Which is exactly what happened. And they analyzed why it happened and it was because they hadn't been maintaining the machine by the schedule that they had set. So they had to set up a better schedule to make sure that all of the husk that's coming off of the coffee, the chaff, is taken out on a daily basis and all clean. And so, we've never really had a major fire like that, and that's been, probably be 15 years ago.

0:22:00.3 DL: Wow. No, that's really a great example. So if you have a crisis, my advice to managers always is get through it. And then as soon as you get through it, bring everybody together to just say, "Okay, how do we make sure this never happens again?"

0:22:15.6 AS: Yeah, it's the balance between short-term and long-term. Last thing, I want to just highlight something that you talked about at the beginning that many people may not really understand is that, that workforce change that happened after World War II. And this is something that shaped a lot of Dr. Deming's observations. And that is, the estimates are that there was about 4-5 million American men who came back from Europe after World War II. And we know that there was a large amount of women in the workforce there. And so about 4-5 million men was about 3-4% of the 140 or so million population of the US. So, it wasn't a small number, but if you actually look at the labor force of the US, it was roughly 50-60 million of that 140 million that were in the labor force at the time. So we're talking about 7-8% of the labor force.

0:23:11.4 AS: And so this wave of command and control men who had been trained through boot camps and all of that, of command and control, it kind of explains why Dr. Deming railed against what then started happening was that all of a sudden, the joy was just destroyed. The aim that the women in particular that came to these factories producing, that aim was kind of demolished by these marching men that came in. So any thoughts on that, David?

0:23:43.3 DL: Well, in wartime, it's just constant crisis management. That's all it is. And that's why the military relies so heavily on chain of command and who's in authority and who's in command here and all those kinds of things, because you're just trying to survive a situation. But when you're not in wartime, that's the time to actually improve processes, get things done, understand a different way to work and operate. But even in those kinds of situations, military commanders that concentrated on two and three, knowledge and personality, got a lot more done and saved a lot more people than just "do it my way" kind of thing, so.

0:24:29.9 AS: Yeah. Well, in wrapping up, let's just now revisit what we've been talking about, and that is, ultimately, it's authority, knowledge, and personality. And these are the three factors that Dr. Deming is talking about. And ultimately, we want to develop personality and knowledge, and then ultimately that leads to higher authority. And the idea of command and control type of authority is only really useful in times of emergency, but most of the time, you need to use the others. Anything you would add to that?

0:25:10.0 DL: Yeah, that's a perfect way to think about it. That's a great, great wrap up to it. And Deming talked a lot about business, but I always gonna wanna bring it back that this applies to anything, a classroom, a family. If you're treating your family like that, you have a different kind of problem. And I don't know if I've told this story, but I have five children and I live in Montana. And so we had a really bad snow year, one year, and there was, just terrible in February, just so much snow and everybody's sick of it and everything else. So my wife and I dreamed up this scheme that we would get tickets to take all the kids to California and go to Disneyland and all these great things, but we wouldn't tell them. We would just get up in the morning like we're getting ready for school.

0:26:01.9 DL: And so we're sitting around the table and my wife says, "I'm sick of this snow. I'd like to get out of here, and who else would like to get out of here?" And the kids are all like, "Yeah, I would like to get out of here. When can we do that?" And she said, "Well, our plane leaves today at 11 o'clock, so here's a list. Go pack these kinds of things." And they were like "Wow, where are we going? What's happening? This is so exciting." And we didn't tell them anything, so they had to figure out when they got to the airport, where the plane was going. And then they said Orange County, and they, "What? Orange County? What's in Orange County?"

0:26:39.6 AS: Oranges.

0:26:39.8 DL: So, they figuring all that out. So we just thought we were so clever using our position of authority to do this. And after about three days, we are sitting around a dinner table and the kids are all kind of moping and we'd been taking and spending money going to Disneyland and all this great stuff in Southern California and all these wonderful things, and they liked it, right? And I said, "Gee, what's going on? You guys are just tired or just all kind of silent and kind of moping and everything else? And didn't you like what we did to today?" "Oh, yeah, that was okay," and da, da, da. And then finally, one of my daughters said, "You know, we talked about it and we just want to go to the beach," because they'd never seen the ocean.

0:27:29.3 DL: And I was like, "Oh, these three points," right? Yeah, I had the position of authority as father and I could make this decision and spend all this money to do these wonderful things, but if I just used some personality and knowledge and asked them to begin with, "Hey, if we go to California, what would you really like to do?" "Hey, we'd like to go and hang out at the beach 'cause we don't have an ocean." I could have saved thousands of dollars and lots of headache if I just had a little bit of personality and knowledge certainly in the situation, so.

0:28:02.5 AS: What a great story. And kids can play on the beach for weeks. I know.

0:28:03.9 DL: Oh, yeah.

0:28:04.1 AS: I was young, so yeah, that was crazy.

0:28:09.1 DL: That's what we did. The rest of the trip, we canceled everything and we just went to the beach every day, and they were happy as could be.

0:28:13.5 AS: And it's easier on you.

0:28:15.7 DL: Yeah.

0:28:17.7 AS: Yeah. 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 will leave you with one of my favorite quotes from Dr. Deming. "People are entitled to joy in work."

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Learning Deming is like seeing the world through a different lens. In this episode, Bill Bellows uses various examples to show us how powerful that new vision can be. 

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 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 Vision Therapy. Bill, take it away.

0:00:29.9 BB: Welcome back, Andrew. Yes, I wrote an article, gosh, maybe 10 years ago now for the Lean Management Journal under the title Vision Therapy: Shift from Big Problems to Great Opportunities. And in the article, I talk about vision therapy - as getting glasses is one form of vision therapy or perhaps you need surgery on your eyes. I also talked about therapy our son once went through which is hand-eye coordination. And all of that is leading up to a vision exercise I put together 1998 timeframe and was inspired by a number of things. One is I had read a book written by David Kerns, former CEO of Xerox, and it's called 'Prophets in the Dark.' And he shared a story in there of a senior executive who had come from Ford. And he said, this guy named Frank Pip, who went on to become an outstanding leader within Xerox. If there was... I get the feeling if there was a hall of fame within Xerox, David Kearns would be in it. Frank Pip would be in it.

0:02:02.0 BB: And quite likely Barry Bebb, who's a mentor of mine, would be in it. And others, and... Anyway, relative to Frank Pip: Pip started his career at Ford and he got to the point of being a plant manager for the Ford final assembly plant. And there was an account he gave to Kearns of whenever they did final assembly of automobiles, rubber mallets were used to bang the mating parts together. They didn't quite fit. And every now and then, two parts would go together without a mallet. And the Ford, at Pip's plant, they called the parts that assembled without a mallet Snap-fit - everything else required mallets and mostly it was mallets. But every now and then there'd be Snap-fit. And then he explains how they, Pip was inspired to go off and buy competitor's cars for the purpose of buying them, taking them apart, putting 'em back together. And unfortunately, Pip died a few years ago, and I... And it never dawned on me to reach out to him. I thought by the time I heard of him, it was maybe too late then, it turns out I had plenty of time to reach out to him. So I don't know what inspired him, but I get the feeling he was routinely buying competitors' cars, taking 'em apart, putting 'em together, just alike, and they assembled just like theirs, just like theirs, just like theirs.

0:03:26.7 BB: And then there was a pickup truck they took apart, put together, and never used a mallet. It was, in Ford's language, 100% Snap-fit. And Pip was so astounded by the results he had the assembly team take it apart again and put it back together again 'cause he couldn't believe it was a 100% Snap-fit. Well, when he found that it was 100% Snap-fit twice, now he thought, "Holy cow," he calls up corporate, had someone come out from Dearborn, which was Ford's corporate headquarters, and I don't know if it was his boss, whoever the person was, came out very, very senior. And he says, they met with the team. The team's answering his questions. And as I explain it to people, you can imagine what it's like when somebody from corporate comes out. That's typically in my experience, somebody coming from corporate that's either, they're there to celebrate something or it's a bad day or it's a routine, but it... Anyway, it's a big deal for him. And as Pip's account was when the plant manager, when this executive came out from Dearborn and heard this account first hand, blah, blah, blah, his comment to the team was "The customer will never notice the difference."

0:04:38.1 BB: And in the book it said Pip was so frustrated with that attitude that he quit 'cause he thought, "We have uncovered something and this guy is treating it as no big deal.” Well, then I point out to people that was the late '60s and which was at the beginning of Ford, I'm sorry, of Toyota selling cars in the States. It was a Toyota pickup truck. So I just... I shared this story in part for this term, Snap-fit. Well, then in the late '90s I was teaching a graduate class in quality management at the Kellogg School of Management, Kellogg Business School, Northwestern University, which I checked very recently. It's the number two business school in the United States. And I'm teaching a class there. Through some interesting occurrences, I was invited to teach this class there. And I wrote up this contrast between the very simple black and white model. And we've been talking black and white models and I was using a black and white model of organizations which were about continuous improvement versus black and white thinking in that kind of contrast. And I gave them pairs of words and I said...

0:06:16.5 BB: You could have "good versus bad" - is one model. What I was showing 'em is, is black and white words versus continuum words versus relative words. I said, there's, let's see the good versus bad, and then that would be a black and white. And I said, "If you take the good versus bad and put it into a continuum, what would it be? And people would joke, "Gooder." And I said, "Well, faster, it could be tall versus short - taller, cheap versus expensive - cheaper." And I was using those pairs, getting them a sense of relative thinking versus black and white thinking. And I put out the word Lean, L-E-A-N and I said, "Let's say you don't know anything about the word. In which category does this word apply? Does it fit into the black and white mold or the continuum mold?" And a first of them would say it's shades-of-gray thinking. And I said, "Well, why?" And they come up with explanations and finally one guy says, he says, "It's black and white thinking." And I said, "Why?" He says, "There's no 'er' in the end."

0:07:36.4 BB: Lean, Lean. It's right? And then there's a woman who pushed back on that. And she said, "No, I disagree." She said, "You can continuously eliminate waste." And I said, "How far are you gonna go with that?" And she said, "Until there's no waste." And I said, and I was trying to point out is, well then we're done. I said, "Where is the continuous improvement, the continuum thinking behind being done?" And I said, [laughter] what'd I tell her, saying to her, I said, "So if you're done, well then what do you do?" She said, "Well, you continuously eliminate waste until you're done." Well, then I said, "Well, describe to me what an organization looks like that has no waste. Is what does it look like?" She says, "I don't know." Well, I think those two things inspired me in a class later that year, this is 1998, to throw out as an exercise, a vision, and I call it vision therapy exercise.

0:08:38.0 BB: And I said to them, "Yeah, I want you to take a piece of paper, divide it into half, into half, left and right, and then top and bottom. So there's four quadrants." And I said, "Label on the left hand side Blue Pen for Blue Pen Company. The right hand side for Red Pen as in Red Pen Company." And I held up, I would have these transparency markers. I had eight different colors. And I pulled out one, which is blue. And I said, "Imagine each of you have recently visited a company which makes blue pens, only Blue Pens. And every week I'd buy one that costs a dollar." And, I pulled out a Red Pen. Why red? 'cause I wanted something the other end of the spectrum. So I had eight different colors to choose from. So one was blue, one was red. Later somebody said to me, "Why did you pick blue versus red?"

0:09:31.2 BB: And I said, "Well, Rocketdyne was owned by Boeing at the time." And when I looked at the colors, you know a lot of the, advertising the logos of Boeing were blue and white. And I thought, blue is the company I have in mind for one side, and then something not blue, not green, not brown, red is the other side. So I said, "So imagine you've recently visited a Blue Pen Company, that only makes blue pens. You buy one every week, it costs a dollar. When you need a Red Pen, you buy that from the Red Pen Company, and they only make red, you buy it, it cost a dollar." So I had them create this - left and right. Imagine you've recently visited both organizations for two weeks each. All right? And then I said on the, you've got a left side and a right side, one's red, one's blue, top versus bottom.

0:10:24.1 BB: I said, "So imagine for the first week as you're visiting these two companies, nobody's there. So give us some additional information. What I want you to do is describe the physical layout of both organizations." And this ties in really well with... So my idea, as I shared in a recent session from Edgar Schein who had passed away back in January. He was an organizational therapist for most of his career at MIT. And in his book, 'Organizational Culture and Leadership,' he talked about organizational culture can be analyzed at three levels. And I didn't know about these levels back in '98 and found about them later. And I found it fits really well. And he said the first level is artifacts. And he says, I just wanna read, he says, "The constructed environment of an organization, including its architecture, technology, office layout, dress code, visible or audible behavior patterns, public documents like employee orientation, handbooks."

0:11:27.8 BB: And, what Schein says is that those artifacts come from values, the reasons and/or rationalizations of why members behave the way they do. And values come from assumptions. And again, I'm quoting from Schein, "Typically an unconscious pattern that determines how group members perceive, think and feel." And again, I didn't know about those at the time, but going back to the exercise, there's a left side and a right side. One is Blue Pen Company, one is Red Pen Company. The top two cells are, what would you see physically as Schein would say: what are the artifacts of these two organizations? And all you know so far is that one makes blue, one makes red, they both cost a dollar. And I buy one from each. Well then in the bottom two cells, what I want you to imagine is, so for the first two weeks, you visit both organizations, write down what are the physical characteristics of both organizations for the bottom two cells.

0:12:25.5 BB: And I apologize for coming back to this. In the first week you visit, there's no one there but you, no one there but you. So you're walking around both organizations, you're the only person around. You've got a clipboard. All you can talk about are the artifacts. What do you see? And the bottom two cells, imagine the second week in both organizations, there are people there. So for the bottom two cells, describe the people in both organizations. So all of this is artifacts and they come from values, they come from assumptions. But all you're doing is saying...but what I specifically wanted to differentiate is, what does the place look like different from what are the people like? And so everybody's ready to go. I'm gonna give you five minutes to put something in each cell. And here's the additional information. Andrew, you're ready?

0:13:12.7 BB: When I go to use the Blue Pen. So I would take the Blue Pen out and I would say, "When I use the Blue Pen, the cap goes off, the cap goes on, it goes off and it goes on nice and easy." And at the time I'm explaining this, they don't know anything about the prior story of Toyota, the pickup truck, 100% Snap-fit, Frank Pip. I usually... I save that for later. I said, all you know is the cap goes on, goes off nice and easy. Now the Red Pen, when I go to use the Red Pen, I need pliers to get the cap off. And there were times I had a little pair of pliers and I would use the pliers to pull it off and I need a hammer to get it back on. And I would have a little hammer and I boom, boom, boom. Now however, the Blue Pen... The cap is said to be Snap-fit. Then I would say just like snap your fingers, it comes off nice and easy goes on nice and easy, it doesn't fall off. That's all the information I have. Spend the next five minutes putting something in each cell.

0:14:14.3 BB: I've done that exercise around the world over 500 times of all different audiences, as young as college students, people working in the fishing industry, all over. And what's really cool is what shows up in those four cells is nearly identical. There may be some caveats due to language and whatnot.

0:14:40.8 AS: Identical across the 500, or again, identical...

0:14:44.1 BB: Yes.

0:14:44.5 AS: Across the red and blue.

0:14:46.5 BB: Yes, I... Well... What shows up in those four cells is nearly identical. So I would give people five minutes. And the other thing for those who are listening, my advice when you're doing this, that it took me a while to figure out the additional benefit is, what I would do is go around the room in each cell, the Blue Pen physical and ask if anyone has an example. So for the Blue Pen physical, someone will say: an open environment, bright lights, windows. All right. Then I'd go to the Red Pen Company, physical, "Okay, what do you see over here?" People might say, "Closed doors." Then I'd go to the Red Pen people, what about the people? And the... There might be "rigid,” “looking over their shoulder,” “on a time clock." Blue Pen Company, people might be happy and smiling. So I would go around the room before I give 'em five minutes just to make sure most of us are on the same page 'cause now, and then there'd be some people who are lost. And... But in general, people are pretty good. So then I give 'em five minutes and then depending on the size of the room, I might go around the room, table by table, look over your shoulder, see how you're doing, onto the next one, onto the next one and I get a feeling that they're doing pretty good. So then when I have them stop and there's different things I do at this point. I've had people at this point after five minutes stand up. Okay, there's a couple hundred people in the room at a conference.

0:16:31.0 BB: And I'll say: okay what I'd like you to do is find someone you've not met today and go introduce yourself and spend five minutes comparing trip reports. What's in your trip reports? And the room will very quickly erupt in laughter, whether I do it having you stand up, go find somebody or whether you are sitting at a table of four or five and I say across the table share. And then after they're done with that I'll say, "Okay, what did you find when you share your answers with others at the table?" And again and again, they'll say, "Their answers are just like mine." And I'll say, "Did anything come up in any of those quadrants that you were lost? That you said, Andrew, I... What do you mean by this? I don't know where you're coming from." And that's never happened. Every single time, they may have... They're looking at a factory and somebody may be looking in the kitchen, someone's looking in the lobby area. So they may be looking at different places, but it always fits together well. In the very beginning, what I would do, is I would give them five minutes. I wouldn't have 'em share anything yet. And I would go around the room and I'd say, get in the front of the room and the very first person, and I'd say if it was you say, "Andrew, what's the first thing you have for Blue Pen Physical?" And you'd say, "Clean." In fact, what's really cool is "neat, clean and organized" came up in order again and again.

0:18:13.6 BB: So I would ask you, "Andrew, what do you see?" You would say, "Neat," next person "Clean," next person "Organized." And I go all the way around and just fill up one cell with the very first... One thing you have that you haven't heard yet. Then I would jump over to the Red Pen, fill it out, then I'd go to the Red Pen people. So I would fill up a given cell and in the beginning I would write these on flip charts. And again, I don't know exactly what I was... I had in mind, "It's gonna be interesting," but I didn't appreciate how powerful this has become. And in the beginning I would write these on flip charts and then at the end of the class, I would throw them away. Then as I began to see how common the patterns were, then I would write them onto transparency and save them and I would date them. And at one point of time I've a colleague who's working on a PhD thesis, University of Texas and his PhD research, Andrew, [laughter] came from 200 trip reports that I still had in my files that I hadn't thrown out. And he and his brother took the data 'cause we knew exactly who was in each class. And so he had... He and his brother had some methodology in his... So his research data for his PhD thesis, looking at the leadership styles of these two organizations. And so let me...

0:19:52.3 BB: So in the Blue Pen physical, it's: an open layout neat, clean, organized, what else? Harmonious and as needed, if you were to say harmonious, then I might say, "Andrew, what do you mean by that? What do you mean? What do you mean clean? What do you mean this? What do you mean?" And so there's nothing wrong for our listeners who are trying this out with people. It's just keep asking them: "What do you mean by, what do you mean by." What's most critical is write down exactly what people say. Don't interpret. Don't yeah I would just say don't interpret. So I go all the way around and people would be astounded.

0:20:40.9 BB: I mean, I'd say a couple of things. One is quite often what people see in the contrast is where they work [laughter] versus where they would love to work. [chuckle] Now let me also say, in the very beginning when I did it, I did not explain to them what Snap-fit meant. So I did not say Snap-fit is good. I just said Snap-fit. Now, there would be people who would say, "Well, does it mean because it's Snap-fit, that it's good." And I would just say, "I didn't say one is good, one is bad. All I'm saying is one goes together with the hammers, one doesn't," and then I would eventually explain to them the a 100% Snap-fit Toyota pickup truck, and it would come together nice for them. Well, when I found the uses of this are one, people can, but Dr. Deming talked about prevailing style of management, but talking about it and having conversations about it is, what I found is this exercise...

0:22:00.1 BB: I think helps people in their own words, explain to them. It allows them to create a sense of: what is the prevailing system of management? And it's the Red Pen Company's side in many ways, and then: what is a Deming organization? It's the opposite. Now this is a very simple black and white model. And as George Box's quoted saying "All models are right. Some models are useful." I have found it enormously useful to look at the two organizations and ask people, what are the conversations like in both organizations? And I would say, "Okay, you're walking around a Red Pen Company, you come across two people in the hallway, what are they talking about?"

0:22:48.4 BB: And what you'll get is: it's second-shift people complaining about first-shift people, or it's engineering complaining about manufacturing. And then people would say, there's a lot of "us and them" and I said, okay. What I've also heard people say, is they'll say, "Well, on second shift where they work, we're a Blue Pen Company." "Also on second shift we're a Blue Pen, but those first-shift people, those are Red Pen." And you know, I said, what's a conversation like in a Blue Pen Company? "I've got an idea. Hey, let me hear about it, blah, blah, blah. Tell me more. Tell me more." I'll ask them, what are survival skills in both organizations, survival skill in a Red Pen Company? What'd you find there? And people would say you know, being able to finger-point, not being blamed, protecting yourself, you know, the CYA mentality. Mentality. Don't ever...

0:23:52.8 AS: Surviving the occasional backstabbing.

0:23:55.9 BB: Oh yeah. Don't ever try anything new. You know, what will also come out is, you know, "stodgy, stiff, inflexible." Whereas I said, what about people in the Blue Pen Company? And they'll present this. And I'll ask them, "Which organization would you call a learning organization?" And people will always say, the Blue Pen Company. And I say, why? And they say, "Well, you know, they're always trying to figure out, you know, they're doing PDSA cycles, trying to figure out improvement, improvement." And I'll say, you don't think people in a Red Pen Company have learned how to survive [laughter]? You don't think they've learned how to finger-point, you don't think they've learned how to duck and cover?

0:24:39.9 AS: In a Red Pen. You were saying in a Red Pen Company or in a Blue Pen?

0:24:40.7 BB: Oh yeah I meant Blue Pen, I meant red I mean Red Pen. I said, what I was trying to point out is people will say a Blue Pen is a learning environment. What I'm trying to point out is, don't underestimate the ability of people in a Red Pen Company to also learn, but that learning is about self-protection. And, you know, so the survival skills in that environment are protecting oneself, hoarding information, not allowing others to know how to, you know, do things. So they have secret tools, secret analysis methods, and I say, what are survival skills in a Blue Pen Company? And people will say, "Sharing knowledge is power in a Blue Pen Company." And so I constantly wanna make sure that I'm sharing. And, but it's not that I inundate everyone with everything, but a week later after Andrew, you've asked me for something, a week later I come to you and I say, "Hey, I've been thinking about it.

0:25:34.3 BB: And something else occurred to me that I thought you might value." What I would also add to the conversation is, "What percent of organizations are Red Pen companies?" And I just say, just, you know, in your experience. And then I would say in this unscientific survey, people would say the majority, 80% to 90% of companies, they would say, are Red Pen companies. And I would say, "Well, what keeps them in business? I mean, how could, what is, if 80% of them are Red Pen companies? What keeps all of these companies in what Deming would call the prevailing style of management and business?" People are like, "I don't know."

0:26:17.0 BB: In my response, I shared with my boss who was once President of Rocketdyne. I said, "What keeps us in business?" He said, "What?" I said, "Lousy competition."

[laughter]

0:26:27.1 AS: Yeah. That's what I was gonna say. What keeps us in business is the other 80, 90 percent that's in the same boat as us.

0:26:32.7 BB: Exactly. Because they blame their people. Their people become dejected, withdrawn, only do as they're told, hide mistakes, which caused others to make the same mistakes. How can you keep in business focusing on the past to get back to the present when you're in this constant firefighting mode? How do you stay in business other than: others run the same way. And Deming somewhere in The New Economics, I believe in The New Economics. He says, "Be thankful for a good competitor." So that's what I mean by the vision therapy. This Blue Pen Company, Red Pen Company. I've done variants of it. The very first one was blue and red Snap-fit versus not snap-fit. I've, in the last few years, we'll get exactly the same results with a different starting point.

0:27:30.2 BB: And the starting point I use is, I tell the story of the executive sitting next to me that I think I've shared about the last straw. The straw that, what if you're in an organization where you believe the last straw broke the camel's back, what would it be like to work there? And people would say, "Oh, I wouldn't wanna work there is a culture of blame." So I would explain, imagine you recently visited an organization where everyone believes that the last straw did it, and that's called the Last Straw organization. And then there's also this All Straw organization where you understand the systemic aspect of all the straws getting together. And so if I was to start this exercise and explain this belief in the last straw that we have in society, that the basketball game has won on that last shot, or lost in that last shot, versus an all straw, I can use that starting point, Andrew, and have people go through and compare the physical aspects of both organizations and people and get exactly the same results and if it's, 'cause what I found with people, they'll say that...

0:28:31.9 AS: When you say exactly the same, you're saying exactly the same as the Red Pen Blue Pen?

0:28:36.1 BB: Yes. If you were to look at the... If you had a group of 30 people and get a composite score in those four quadrants, you wouldn't necessarily know if it was started with Red Pen, Blue Pen, or All Straw, Last Straw. And I've also done it when I worked for the Deming Institute in that timeframe when I left Rocketdyne, I started explaining it as what if there was one organization where there's a sense of "we," look what we did, how did we do on the exam? Andrew, you're the student, I'm the professor. A collective sense of all for one and one for all versus a "me" organization. Where the question I ask you, Andrew, is "How did you do on the exam?" And inferring that your ability to learn from the exam is separate from my ability to teach.

0:29:28.6 BB: Like I could be saying, "How are you doing in sales" versus "How are we doing in sales?" So if I was to describe it as a "me" organization, everything I do, everything is accomplished by me alone breaking things into parts. My task is done. A lot of this question one stuff that we've been talking about in terms of quality versus a "we" organization, if I explain the "me" and the "we," and there's ways to do that and then get into the trip report, me, we, and the four quadrants, very, very similar. And so I found is in terms of a vision exercise, first of all, depending on who the audience is, I'll get a... I'll figure out do I wanna use Red Pen, Blue Pen, All Straw and Last Straw, me versus we. And there's a couple others that I've used, but I know that once I get them thinking about, I just have to come up with what is the differentiator.

0:30:26.7 BB: And then I get them thinking about the artifacts. And then from the artifacts, once that is done, then I can talk about the conversations in both, the survival skills in both, the what if an... What is an ethics issue in both organizations? And I'll just say a little more about that. And I've worked in large corporations and ethics training. Really, what does it come down to the end of the day is that I didn't misuse company resources, that I didn't charge Project A using the Project B charge number [laughter], right? And I didn't fill out my timecard deliberately wrong. I didn't try to cheat the company on a trip report kind of thing. Well, then what I start thinking about is what's an ethics issue in a Blue Pen Company?

0:31:23.5 BB: And I believe, I think this comes from Dr. Deming, he would say, if, I'm pretty sure it was Deming, Deming would talk about a salesperson for a copying machine. And so Andrew, I'm the salesman and I come to your company and wanna sell, you're in need of a copier. And Deming would say, if I tried to sell you a copier that was bigger than you needed, because there's a bonus for me, Andrew, or a copier that was smaller. If I sold you a copier that I knew was much less than what you needed or much more than what you needed, then Deming would say, that would be unethical. He'd say, "My job is to sell you exactly what you need." And I view that, and I thought, "Well, that's a Blue Pen phenomenon where ethics is about how am I treating others with a sense of sharing or hoarding or whatnot?" So what I found is...

0:32:21.3 AS: Well, also ethics is how am I treating the customer?

0:32:24.4 BB: All of that. Well, how am I treating my coworkers? There's a poem I use with a great quote from Robert Frost and he said "What's the secret to selling a horse?" Have I ever shared this with you?

0:32:35.0 AS: No.

0:32:36.1 BB: The secret to selling a horse. Are you ready?

0:32:36.8 AS: Yep.

0:32:39.5 BB: Just sell it before it dies. [laughter]

0:32:41.7 AS: There you go.

0:32:44.3 BB: And so, and what Frost says in the poem is that we go through life handing off our problems to others. And I've written about this and I said, well, you mean like selling a coworker a horse? And then you come back the next day and you say, "Bill, you know this horse is dead." And I say, "Andrew, it was alive when I gave it to you." What? So I look at it as whether you're a coworker or a customer, what's that all about? And so I throw that out because...

0:33:12.2 BB: I find that that simple model is an incredible mechanism. Earlier today I was in a conversation with a coworker and the word that came up in conversation was you're "driving change." Driving change. And I said, "Driving change is what happens in a Red Pen Company." And the explanation I gave, in the Red Pen Company, I come to you Andrew, and I said, "I want this by tomorrow." And driving change is: I've got a gun to your head. And I say, "Do you understand what I'm looking for?" And you're like, "Right, 'cause I can find somebody else to do this, Andrew. I need this by tomorrow." That's driving change. And so what I'll say to people is, if driving change is a Red Pen Company, then what's the word we use in a Blue Pen Company?

0:34:05.2 AS: Coaxing.

0:34:07.4 BB: And people will say, "I don't know, what's that word?" And I'll say, "Lead, lead!" [laughter] That's what leadership's all about. You want to follow. And so, what I find is this model has allowed me to get a great number of people to explain in their own way, envision the two different organizations. And there's no doubt where they wanna work. They'd much rather be in the Blue Pen, "we" organization, an All-Straw organization. And then we can talk about, how does... The next thing I look at is with an understanding of the System of Profound Knowledge. Can you understand how a Red Pen Company might become a Blue Pen Company? Or my other proposal is that all organizations start off as a Blue Pen Company. So I started off an organization in my garage. I'm the only employee, I have customers, I have suppliers, but I know where everything goes and everything is Snap-fit because it's all about me and I wanna make sure these things integrate really well. And so how does that become a Red Pen Company?

0:35:19.7 BB: Well, here's what happens Andrew is, I hire you right outta school. You're all excited and you come in, you wanna join this organization, and I need help. Andrew, I need help. And I like your attitude. But then what happens is, I go to you and I say, "Andrew, here's what I want you to do. Your job is to answer the phone. Your job is when people call in, here's an instruction sheet, here's the order sheet. I want you to take the order. Here's what we do. We offer different sizes, different colors. You're gonna sell them what they need, not more, not less. You're gonna take their credit card information, you're gonna repeat it back to them, blah, blah, blah."

0:35:54.0 BB: And what I point out is that what I'm slowly doing, once I hire you, is putting people in separate roles. And next thing I know, I've got a baseball team where everybody's covering their own base instead of being incredibly flexible. And so I use that to point out that with the best of intentions, you could go in that direction. And, but what I've seen is I can use the four elements of Profound Knowledge to explain how one becomes the other. I can also use the System of Profound Knowledge to explain why the behaviors are the way they are. Which goes back to: what are the value systems in both organizations? What are the fundamental assumptions? Now relative to what is meant by big problems? Well, Red Pen companies, again, going for those listeners who have heard the earlier podcast. Well, Red Pen companies, all straw, I'm sorry, Last Straw organizations.

0:36:57.7 BB: They're focusing on parts in isolation. They don't work on things that are good. They focus on the things that are bad. So it's always big problems. They're focusing on the past to get back to the present, kept in business by competitors who waste their resources exactly the same way. And it's not to say you never have a problem, but it's to say instead of having a full-time fire department where that's all we're doing, all the doing all the time with a significant portion of our resources, we're using control charts in places where it makes sense. Run charts when a control chart doesn't matter as much. Or we are not even collecting data 'cause intuitively we have a sense of how things are going and where we get blinded, we have problems, but we're also in that environment. We know where can we be spending time to save a lot of time. That's the great opportunity.

0:37:49.7 BB: Things are, so I'm saving time by not having things break. I am managing variation in my resources accordingly, just to allocate my resources for the greater good. A stitch in time saves time. And that's the great opportunity focus that Red Pen companies don't know anything about 'cause they're so focused on the firefighting. And to me, what allows the shift from the Blue Pen to the Red Pen. I mean, what, either if you're unaware of these dynamics, then my Blue Pen Company will gradually become this Red Pen Company nightmare. Because I'm not paying attention to what Deming's talking about. I'm unaware of the System of Profound Knowledge. And I just lapse into that unknowingly. It's not intentional. I just don't know that addition doesn't work, you know, only works when the activities are independent. I think things that are good are equally good.

0:38:47.1 BB: And so to me, I can explain with the System of Profound Knowledge how red becomes blue, how blue becomes red. I can explain the conversations. And the last thing I wanna mention is, is when people come to me with, "Hey, how can I handle an X, Y, Z situation, something we've never talked about in the class or in a seminar?" And people will bring this to my attention and say, "Here's the issue I'm dealing with. Here's that problem I'm dealing with. How can I solve that?" And what I find is, is what I tell people is, here's my advice.

0:39:24.0 BB: And you can do it on your own, or ideally if you can explain this to others and have some others understanding this contrast, then you can - with a group - do what I'm about to explain. And that is first ask yourselves, "How would a Red Pen Company address that issue?" "We're gonna do a root cause investigation. We're gonna find the person who screwed up, we're gonna replace him, blah, blah, blah. We're gonna go that way." And then I would say, "Okay, after you've exhausted that, now ask yourself, what would a Blue Pen Company do by comparison?"

0:40:51.0 BB: And I'm not saying one of those is right, one is wrong, but my belief is that as a starting point, no matter where you are in your Deming journey, I believe, again, and the more people are involved in this, the better - I think the better we can get our minds around how a Red Pen Company handles it. And then say, "Okay, what if we become aware that the ability to learn together and work together is based on the our ability to think together?" Now you go the other way and I have individually done that when someone has asked me. And so I just want to throw that out that I find the model, this vision therapy model to be immensely valuable in brand new situations as a starting point.

0:40:51.1 AS: And in wrapping up, how would you describe kind of the number one takeaway without talking about Blue Pen, Red Pen and the exercise, how would you describe the takeaway that you want our listeners and our viewers to get from this?

0:41:07.6 BB: The number one takeaway is: don't underestimate the value proposition of a shared mental model. And this is what I find is, I can within a half hour have people imagining both organizations, imagining the conversations and that for the, and this is what is so cool that I wasn't anticipating in the beginning, is how quickly people can, without reading The New Economics, just by, 'cause essentially what you're getting them to do without talking about assumptions, they are focusing on assumptions and values. So we're not talking about the artifacts, but we're taking the artifacts and without getting... This is what's so cool is without reading Edgar Schein's work, we're really doing what he's talking about is going from the artifacts down to the values, and then we can talk about the values within organizations. And I find, and another thing I would say is, I've never met anyone that thrives to work in a non-Deming organization.

0:42:15.6 BB: They wanna work in a Blue Pen Company. And so I would, that's what I also find is without mentioning Deming's work, which is also pretty cool about this, I don't have to mention Deming, Taguchi or Ackoff. I could very simply get them and they will self-identify, reveal things. And another essential aspect of this is, this is not me telling you where you wanna work. This is me not telling you what you see. This is you sharing with others. And I learned from a colleague years ago that you can't tell anybody anything. So another immense value proposition here is that people are telling you, and then all you have to do is guide them. And that's what I find is immensely valuable.

0:43:02.6 AS: It's like you're teasing out the intrinsic desires, values and all that.

0:43:08.1 BB: All of that is coming out...

0:43:10.5 AS: Without...

0:43:10.5 BB: They're sharing frustrations. They're articulating frustrations in areas that they've not thought about. And then when they share and realize... In fact, I had a guy in a class once going through this exercise and he came up to me actually, we went through...I did this with a bunch of co-workers at an offsite location where all of them knew each other. And we went through the exercise and then took a break. As we're going to a break, one of them come up to me and he saw all the things on the whiteboard and the four quadrants.

0:43:50.3 BB: And he says to me, "These people, my co-workers," this is one-on-one. He's looking, and he says, "My co-workers got all of that over the cap fits or it doesn't."

[laughter]

0:44:09.6 BB: And he wasn't denying, but he's like, "I don't get it." He came up to me two hours later when the class is over and he said, "I can't believe what I couldn't see." [laughter] And that's when I realized this is a really exciting exercise that I've written about and helped others present literally around the world. And I find it works amazingly well to create a framework that people aren't realizing is helping them achieve what they really all want. I believe. I believe.

0:44:46.2 AS: Yap. Well, Bill, 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. 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."

View Details

If something is "good" is that good enough? Who decides? In this episode, Bill and Andrew discuss how people define "good," what interchangeability has to do with morale, and the problem with a "merit-based" culture. Bonus: Learn how Americans became the first to use the French idea of interchangeable parts in manufacturing.

Note: this episode was previously published as Part 5 in the Awaken Your Inner Deming series.

TRANSCRIPT

0:00:02.3 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, Deming Distinctions: Beyond Looking Good. Bill, take it away.

0:00:30.4 Bill Bellows: Funny you mentioned that. You remind me that I've been at this for over 30 years, and coming up in July, I'll be celebrating 40 years of marriage. Like 30 years, 40, where do these numbers come from?

0:00:44.5 AS: Okay. Yeah. Who defines quality in a marriage, Bill?

0:00:47.0 BB: Alright.

0:00:50.8 AS: Okay, we won't go there. Take us, take it away.

0:00:52.2 BB: We won't go there. So we are gonna talk about who defines quality, and to get into "beyond looking good." As I shared with you, I've listened to each of the podcasts a few times. And before we get into who defines quality, I just wanna provide clarification on some of the things that came up in the first five episodes. And so, one, and I think these are kind of in order, but if they're not in order, okay, well, I made reference to black-and-white thinking versus shades-of-gray thinking. And I called black-and-white thinking - black and white data - category data, and the word I was searching for that just wasn't coming out was attribute data. So for those who are keeping score, attribute data is probably the most relevant statistician term in that regard.

0:01:44.9 BB: Attribute data versus variable data. And what I've made reference to, and we'll talk more in a future session, is looking at things in terms of categories. And categories are black and white, or it could be red, yellow, green, that's three categories, or looking at things on a continuum. So I'm still excited by the difference that comes about by understanding when we're in the black-and-white mode or the category mode or the attribute data mode versus the variable mode, and still have a belief that we can't have continuous improvement or continual improvement if we're stuck in an attribute mode.

0:02:22.9 BB: And more on that later, that's one. I talked about Thomas Jefferson meeting Honoré Blanc and getting excited about the concept of interchangeable parts. And I had the date wrong, that was 1785, if anyone's keeping score there. He was ambassador to France from 1785 to 1789, but it was in 1792 that he wrote a letter to John Jay, who was a...I think he was a Commerce Secretary. Anyway, he was in the administration of Washington and shared the idea. I was doing some research earlier and found out that even with the headstart that Blanc had in France, 'cause back in 1785, Jefferson was invited to this pretty high level meeting in Paris where Blanc took a, I guess, like the trigger mechanism of 50 different rifles. Not the entire rifle, but just the...let's just call it the trigger mechanism with springs and whatnot. And he took the 50 apart and he put all the springs in one box, all the other pieces in their respective boxes and then shook the boxes up and showed that he could just randomly pull a given spring, a given part, and put 'em all together. And that got Jefferson excited. And the...what it meant for Jefferson and the French was not just that you can repair rifles in the battlefield quickly.

0:03:56.9 BB: Now, what it meant for jobs in France was a really big deal, because what the French were liking was all the time it took to repair those guns with craftsmanship, and Blanc alienated a whole bunch of gunsmiths as a result of that. And it turns out, Blanc's effort didn't really go anywhere because there was such a pushback from the gunsmiths, the practicing craftsmanship that jobs would be taken away. But it did come to the States. And then in the early 1800s, it became known as the American System of Production. But credit goes back to Blanc. I also made reference to absolute versus relative interchangeability. And I wanna provide a little bit more clarification there, and I just wanna throw out three numbers, and ideally people can write the numbers down, I'll repeat 'em a few times. The first number is 5.001, second number is 5.999, and the third number is 6.001. So it's 5.001, 5.999, 6.001. And some of what I'm gonna explain will come up again later, but...so this will tie in pretty well. So, what I've been doing is I'll write those three words on the whiteboard or throw them on a screen, and I'll call...

0:05:28.9 AS: Those three numbers.

0:05:31.4 BB: A, B, and C. And I'll say, which two of the three are closest to being the same? And sure enough people will say the 5.999 and the 6.001, which is like B and C. And I say that's the most popular answer, but it's not the only answer. People are like, "well, what other answer are there?" Well, it could be A and C, 5.001 and 6.001, both end in 001. Or it could be the first two, A and B, 5.001 and 5.999. So what I like to point out is, if somebody answers 5.999 and 6.001, then when I say to them, "what is your definition of same?"

0:06:14.9 BB: 'Cause the question is, which two of the three are close to being the same? And it turns out there's three explanations of "same." There's same: they begin with five, there's same: they end in 001. And there's same in terms of proximity to each other. So I just wanna throw that out. Well, then a very common definition of "quality" is to say, does something meet requirements? And that's the black-and-white thinking. I've also explained in the past that requirements are not set in absolute terms. The meeting must start at exactly 1:00, or the thickness must be exactly one inch. What I've explained is that the one inch will have a plus or minus on it. And so let's say the plus and minus gives us two requirements, a minimum of five and a maximum of six. Well, then that means the 5.001 meets requirements and the 5.999 meets requirements.

0:07:15.4 BB: And so in terms of defining quality, in terms of meeting requirements, A and B are both good. And then what about the 5.999 and the 6.001? Well, those numbers are on opposite sides of the upper requirement of six. One's just a little bit to the left and one's a little bit to the right. Then I would ask people, and for some of you, this'll ring - I think you'll be smiling - and I would say to people, "what happens in manufacturing if, Andrew, if I come up with a measurement and it's 6.001?" Okay, relative to defining quality as "meeting requirements," 6.001 does not meet requirements. So what I'll ask people is, "what would a non-Deming company do with a 6.001?" And people will say, "we're gonna take a file out, we're gonna work on it, we're gonna hit it with a hammer." And I say, "no, too much work." And they say, "well, what's the answer?" "We're gonna measure it again."

0:08:25.7 AS: Until we get it right.

0:08:27.7 BB: We will measure it until we get it right. We will change the room temperature. We will take the easiest path. So then I said, get people to realize, they're like, yeah, that's what we do. We measure the 6.001 again. Well, then I say, "well Andrew, why don't we measure the 5.001 again?" And what's the answer to that, Andrew? [laughter]

0:08:51.5 AS: 4.999. [laughter]

0:08:54.7 BB: But what's interesting is, we'll measure the 6.001 again. But we won't measure the 5.001 again. We won't measure the 5.999 again. And so to me, this reinforces that when we define quality as "meeting requirements," that what we're essentially saying in terms of absolute interchangeability, what we're pretending is that there's no difference between the 5.001 and the 5.999. At opposite ends, we're saying that Blanc would find them to be interchangeable, and putting all the things together. I don't think so.

0:09:36.7 BB: I think there's a greater chance that he'd find negligible difference between the 5.999 and the 6.001. And that's what I mean by relative interchangeability, that the difference between B and C is nothing, that's relative interchangeability. The closer they are together, the more alike they are in terms of how they're integrated into the gun, into the rifle, into the downstream product. And I just throw out that what defining quality as "requirements" is saying is that the first two are...the person downstream can't tell the difference. Then I challenge, I think there's...in terms of not telling the difference, I think between 5.999 and 6.001, that difference is minuscule cause they are relatively interchangeable. The other two are implied to be absolutely interchangeable. And that I challenge, that's why I just want to throw that out. All right, another thing I want...go ahead, Andrew.

0:10:38.3 AS: One of the things I just highlight is, I remember from my political science classes at Long Beach State where I studied was The Communist Manifesto came out in 1848. And Karl Marx and Friedrich Engels were talking about the alienation of the worker. And what you're talking about is the kind of, the crushing of the craftsmen through interchangeable parts that was a lot like AI coming along and destroying something. And after 50 or 60 or 70 years of interchangeable parts, along comes The Communist Manifesto with the idea that when a person is just dealing with interchangeable parts, basically they're just a cog in the wheel and they have no connection to the aim of what's going on. They don't have any connection, and all of a sudden you lose the craftsmanship or the care for work. And I think that the reason why this is interesting is because that's, I think, a huge part of what Dr. Deming was trying to bring was bring back...it may not be craftsmanship for creating a shoe if you were a shoemaker, but it would be craftsmanship for producing the best you could for the part that you're playing in an ultimate aim of the system.

0:12:02.6 BB: Yes. And yes, and we'll talk more about that. That's brilliant. What you said also reminds me, and I don't think you and I spoke about it, you'll remind me. But have I shared with you the work of a Harvard philosopher by the name of Michael Sandel?

0:12:24.3 AS: I don't recall.

0:12:27.0 BB: He may be, yeah, from a distance, one of the most famous Harvard professors alive today. He's got a course on justice, which is I think 15 two- or three-hour lectures, which were recorded by public television in Boston. Anyway, he wrote a book at the beginning of the pandemic. It came out, it's called The Tyranny of Merit.

0:12:54.0 BB: And "merit" is this belief that "I did it all by myself." That "I deserve what I have because I made it happen. I had no help from you, Andrew. I had no help from the government. I didn't need the education system, the transportation system. I didn't need NASA research. I made it happen all by myself." And he said, what that belief does is it allows those who are successful to claim that they did it by themselves. It allows them to say those who didn't have only themselves to blame. And he sees that as a major destructive force in society, that belief. And I see it tied very well to Deming. Let me give you one anecdote. Dr. Deming was interviewed by Priscilla Petty for The Deming of America documentary, which was absolutely brilliant.

0:13:49.8 BB: And she's at his home, and he's sharing with her the medal he got from the Emperor of Japan, and he's holding it carefully, and I think he gives it to her, and she's looking at it, and she says to him something like, so what did it mean to you to receive that? And he said, "I was lucky. I made a contribution." He didn't say I did it all by myself. He was acknowledging that he was in the right place at the right time to make a contribution. And that's where Sandel is also heavily on, is don't deny the role of being born at the right time in the right situation, which is a greater system in which we are. Well, for one of the college courses, I was watching an interview between Sandel and one of his former students.

0:14:48.1 BB: And the point Sandel made that I wanted to bring up based on what you just said, he says, "what we really need to do is get people dignity in work." And that's what you're talking about, is allowing them to have pride in work, dignity in work instead of as they're making interchangeable parts, having them feel like an interchangeable part. And I'm really glad you brought that up because when we talk later about letter grades, I would bring back one of the reasons I find Deming's work astounding, is that he takes into account psychology in a way that I hope our listeners will really take heart to in a deeper way.

0:15:30.2 AS: And so for the listeners out there, just to reinforce, the book is called The Tyranny of Merit: What's Become of the Common Good. Published in 2020 by Michael Sandel. And the ratings on Amazon is 4.5 out of five with about 2,446 ratings. So it's a pretty well-rated book I'd say. And looks interesting. Now you got me wanting to read that one.

0:15:57.0 BB: Oh what I'll do is I'll send you a... Well, what I encourage our listeners to do is find the interview... Harvard Bookstore did an interview in 2020, 2021, with Michael Sandel being interviewed by his former student by the name of Preet Bharara. [laughter] Who used to be the...

0:16:24.3 AS: SEC...

0:16:24.4 BB: Head of these...no, well, he prosecuted a number of people for SEC crimes, but he headed the Justice Department's long oldest district, which is known as SDNY or the Southern District of New York. And so he was a...in one of the first classes his freshman year at Harvard, Preet Bharara's freshman year at Havard was one of Sandel's first years. And so they had an incredible conversation. So I would encourage the listeners to...

0:16:51.8 AS: Yeah, it's titled: Michael J Sandel with Preet Bharara at Harvard. And the channel is called Harvard Bookstore.

0:16:58.6 BB: Yes, absolutely. All right. So another topic I want to get to in terms of clarification and key points, last time we talked about tools and techniques and what I'm not sure I made much about.... First of all, I just wanna really reinforce that tools and techniques are not concepts and strategies. Tools are like a garden tool I use to dig a hole. Technique is how I go about using it, cleaning it, and whatnot. Not to be confused from a concept...and what is concept? We talked about last time is a concept is an abstract idea and a strategy is how do we apply it? So tools and techniques within Six Sigma quality could be control charts, could be design of experiments. And all, by the way, you're gonna find those tools and techniques within the Deming community. So it's not to say the tools and techniques are the differentiator.

0:17:50.8 BB: I think the concepts and strategies are the differentiators, but I don't wanna downplay tools. Lean has tools in terms of value streams, and you won't find value streams per se in Dr. Deming's work. Dr. Deming looks in terms of production viewed as a system. In a later session, I want to talk about value streams versus Deming's work. But I just wanna point out that I find it...it's easy to get lost in the weeds with all we find within Lean, Six Sigma, Deming and whatnot. And this is why last time I wanted to focus on tools and techniques as separate from concepts and strategies. And what I think we did speak about last time, again, for just as a reminder, is what's unique that we both enjoy with Dr. Deming's work is that KPIs are not caused by individual departments, assigned to individual departments.

0:18:46.0 BB: KPIs are viewed as measures of the overall system. And if you assign the KPIs across the organization and give every different function their own KPI, what you're likely to find - not likely - what you WILL find is that those assigned KPIs are interfering with others' abilities to get their KPIs met. And in the Deming philosophy, you don't have that problem because you understand that things are interdependent, not independent. And so I just wanna close by saying what I find in Deming's work to be most enlightening is this sense of "what does it mean to look at something as a system?" And it means everything is connected to everything else. When you define quality in terms of saying "this is good because it meets requirements," what you've just said is, "this is good in isolation." Whether it's the pass from the quarterback to the wide receiver, saying the pass met requirements.

0:19:52.0 BB: What I think Dr. Deming would ask is, "is the ball catchable?" [laughter] And yet, what I've seen in my aerospace experience is parts being measured for airplanes in Australia that they meet requirements because the measurements are taken early in the morning before the sun has had a chance to heat the part up. And we get the 6.001 is now 5.999. You know what that means, Andrew? It's - we can now ship it.

[laughter]

0:20:23.9 BB: And send it off to America for some airplane factory.

0:20:26.2 AS: When we shipped it, that's what it was.

0:20:28.9 BB: Exactly. And so, again, interdependence is everything. Go ahead, Andrew.

0:20:34.6 AS: I wanted to point on, there's a company in Thailand that really has gotten on the KPI bandwagon, and I was talking with some people that work there, and they were just talking about how they've been rolling out the KPIs for the last couple of years and down to the number of seconds that you're on the phone and everything that you do is tracked now. And then I just witnessed that company basically use that KPI as a way to basically knock out a whole group of people that they were trying to get rid of by coming in with tight KPIs and then saying, "you're not keeping up with 'em and therefore you're out." And I just thought...and the manager that was involved I was talking to, you could just see, he saw how KPI can just be weaponized for the purposes of the senior management when you're doing KPIs of individuals. And the thing that I was thinking about is, imagine the CEO of that company in a couple of years, in a couple of months, they happen to listen to this podcast, or they pick up a book of Dr. Deming and they think, "Oh my God, what did I just do over the last five years implementing KPIs down to the individual level?" [laughter]

0:21:48.5 BB: Oh, yeah. And that's what we talked about last time is...as I told you, I had a friend of a friend who's worked for Xerox, and he said there wasn't a KPI that was flowed down that they couldn't find a way to beat. And that's what happens, and you end up getting things done, but what's missing is: at whose expense? All right. So we talked about...now, let's get into beyond looking good, Deming distinctions. Who defines quality? Well, from Philip Crosby's perspective, quality's defined by the...it could be the designer. The designer puts a set of requirements on the component, whatever it is. The unit, the requirements have latitude we talked about. They're not exact. There's a minimum of six, a maximum of...or a minimum of five, maximum of six.

0:22:48.8 BB: There's a range you have to meet, is the traditional view of quality. And in my 30 years of experience, I've not seen quality defined any other way than that. It has to be in between these two values. Sometimes it has to be five or below or six or above, but there's a range. But also what we talked about last time is Dr. Deming said "a product or service possesses quality if it helps someone and enjoys a sustainable market." But what I found profound about that definition, it is not me defining quality and saying, "Andrew, the parts met requirements when I threw it. Now, it's your job to catch it." It's me saying, "I've thrown the ball and you tell me, how did I do? You tell me how did I do?" And if you said, "Bill, if you throw it just a little bit higher, a little bit further out, a little bit faster," that's about synchronicity. Now, I'm realizing that my ability to throw the ball doesn't really matter if you can't catch it. So if I practice in the off season, throwing it faster and faster, but don't clue you in, until the first game, how's that helping? So I've got a KPI to throw it really, really hard. And you're thinking, "how's that helping?" So that's...

0:24:19.9 AS: And can you just go back to that for a second? Quality is on a product or service, you were saying that how Dr. Deming defined that, it helps someone...

0:24:26.7 BB: Yeah. Dr. Deming said "a product or service possesses quality if it helps someone and enjoys a sustainable market." And so my interpretation of that is two things. One is, it's not me delivering a report and saying the report met requirements. It's saying, "I get the report to you, and I ask Andrew, how did I do?" And then you say to me, "I had some problem with this section, I had some problem...." But the important thing is that you become the judge of the quality of the report, not me. And it could be information I provide you with in a lecture. It's you letting me know as a student that you had a hard time with the examples. And I'm thinking, "well, I did a great job." So it's not what I think as the producer handing off to you. It's you giving me the feedback. So quality is not a one-way...in fact, first of all, quality's not defined by the producer. It's defined by the recipients saying, "I love this or not." And so that's one thing I wanna say, and does it enjoy a sustainable market? What I talked about in the past is my interpretation of that is, if I'm bending over backwards to provide incredible quality at an incredible price, and I'm going outta business, then it may be great for you, but it may not be great for me. So it has to be mutually beneficial. I just wanna... Go ahead, Andrew.

0:26:03.1 AS: You referenced the word synchronicity, which the meaning of that according to the dictionary is that "simultaneous occurrence of events which appear significantly related, but had no discernible causal connection." What were you meaning when you were saying synchronicity? Is it this that now you're communicating with the part of the process ahead of you, and they're communicating back to you and all of a sudden you're starting to really work together? Is that what you mean by that?

0:26:33.1 BB: Yeah. When I think of synchronicity, I'm thinking of the fluidity of watching a basketball game where I'm throwing blind passes to the left and to the right and to the observer in the stands are thinking: holy cow. That's what I'm talking about, is the ability that we're sharing information just like those passes in a basketball game where you're...I mean I cannot do that without being incredibly mindful of where you are, what information you need. That's what I meant. That's what I mean. As opposed to - I wait until the number is less than...I'm out there in the hot sun. I get the measurement, 6.001, no, no, no, wait. Now it's five. Where's the synchronicity in that? Am I concerned about how this is helping you, or am I concerned about how do I get this off my plate onto the next person? And I'd also say...

0:27:32.6 AS: Yep. And another word I was thinking about is coordination, the organization of the different elements of a complex body or activity so as to enable them to work together efficiently. You could also say that the state of flow or something like that?

0:27:48.7 BB: I'm glad you brought up the word "together." The big deal is: am I defining quality in a vacuum, or am I doing it with some sense of how this is being used? Which is also something we got into, I think in the, one of the very first podcasts, and you asked me what could our audience...give me an example of how the audience could use this. And I said you're delivering a report to the person down the street, around the corner. Go find out how they use it. I use the example of providing data for my consulting company to my CPA, and I called 'em up one day and I said, "how do you use this information? Maybe I can get it to you in an easier form." That's together. I mean relationships, we talked earlier about marriage, relationships are based on the concept of together, not separate, together. Saying something is good, without understanding how it's used is not about "together." It's about "separate."

0:28:54.1 BB: And so what I find is, in Lean, we look at: how can we get rid of the non-value-added tasks? Who defines value? Or I could say, and Lean folks will talk about the...they'll say this: "eliminate things that don't add value." My response to them is, if you tell me that this activity does not provide value in this room for the next hour, I'm okay with that. If you tell me this activity doesn't add value in this building for the next year, I'm okay with that. But if you don't define the size of the system when you tell me it doesn't add value, then you're implying that it doesn't add value, period.

0:29:43.4 BB: And I say, how do you know that? But this is the thinking, this is what baffles me on the thinking behind Lean and these concepts of non-value-added, value-added activities. I think all activities add value. The only question is where does a value show up? And likewise in Six Sigma quality, which is heavily based on conformist requirements and driving defects to zero, that's defining quality of the parts in isolation. What does that mean, Andrew? Separate. It means separate. Nothing about synchronicity. And so I'm glad you brought that point up because what I...this idea of "together" is throughout the Deming philosophy, a sense of together, defining quality in terms of a relationship.

0:30:31.1 AS: And I remember when I was young, I was working at Pepsi, and they sent me to learn with Dr. Deming. And then I came back, and what I was kind of looking for was tools, thinking that I would...and I came back of course, with something very different, with a new way of thinking. And then I realized that Dr. Deming is so far beyond tools. He's trying to think about how do we optimize this whole system? And once I started learning that about Dr. Deming, I could see the difference. Whereas, you may decide - let's say that you wanna learn about Lean and get a certification in Lean or something like that.

0:31:15.5 AS: Ultimately, you may go down a rabbit hole of a particular tool and become a master in that tool. Nothing wrong with that. But the point is, what is the objective? Who defines the quality? And Dr. Deming clearly stated in the seminars that I was in, and from readings that I've read, that the objective of quality isn't just to improve something in...you could improve something, the quality of something and go out of business. And so there's the bigger objective of it is: how does this serve the needs of our clients? So anyways, that's just some of my memories of those days.

0:31:52.4 BB: Yeah. But you're absolutely right. And the point I'm hoping to bring out in our sessions is: I'm not against tools and techniques. Tools and techniques are incredible. They're time savers, money savers, but let's use them with a sense of connections and relationships. And I agree with you, I've done plenty of seminars where people are coming in - they're all about tools and techniques. Tools and techniques is part of the reason I like to differentiate is to say....and again, I think people are hungrier for tools and techniques. Why? Because I don't think they've come to grips with what concepts and strategies are about. And I'm hoping our listeners can help us...can appreciate that they go together. Tools and techniques are about efficiency, doing things faster, doing things cheaper. Concepts and strategies are about doing the right thing. Ackoff would say "doing the right thing right." And short of that, we end up using tools to make things worse. And that's what I'm hoping people can avoid through the insights we can share from Dr. Deming.

0:33:05.4 AS: And I would say that, would it be the case that applying tools, and tools and techniques is kind of easy? You learn how they work, you practice with them, you measure, you give feedback, but actually going to figure out how we optimize this overall system is just so much harder. It's a complex situation, and I can imagine that there's some people that would retreat to tools and techniques and I saw it in the factory at Pepsi when people would basically just say, "well, I'm just doing my thing." That's it, 'cause it's too much trouble to go out and try to negotiate all of this with everybody.

0:33:50.7 BB: I think in part, I think as long as they're managing parts in isolation, which is the prevailing system of management, then, I agree with you. Becoming aware of interdependencies in the greater system, and I'll also point out is whatever system you're looking at is part of a bigger system, and then again, bigger system, then again, bigger system. What you define is the whole, is part of a bigger system. No matter how you define it, it's part of a bigger system because time goes to infinity. So your 10-year plan, well, why not a 20-year plan? Why not a 30-year plan? So no matter how big a system you look at, there is a bigger system. So let's not get overwhelmed. Let's take a system, which Ackoff would say, take a system which is not too big that you can't manage it, not too small, that you're not really giving it the good effort, but don't lose sight of whatever system you're looking at - you'll begin to realize it is actually bigger than that. Again, what Dr. Deming would say, the bigger the system, the more complicated, which is where you're coming from, but it also offers more opportunities. I think we're so used to tools and techniques.

0:35:14.3 BB: I don't think people have really given thought to the concepts and strategies of Deming's work as opposed to Lean and Six Sigma as being different, which is why I wanted to bring it up with our listeners, because I don't think people are defaulting on the tools. I just don't think they appreciate that concepts and strategies are different than tools and techniques. And I like to have them become aware of that difference and then understand where black-and-white thinking works, where continuum thinking has advantages. There's times to look at things as connected, and then there's times to just move on and make a decision, which is a lot easier because the implications aren't as important. But at least now we get back to choice, be conscious of the choice you're making, and then move on. All right, so also on the list we had, who defines quality?

0:36:09.0 BB: We talked about that. What is meant by good: the requirements are met. Who defines good? Again, if you're looking at Phil Crosby, who defines good? Someone has to set, here are the requirements for being "good." I could be giving a term paper and me saying to the students, this is what "good" means. Next thing I wanted to look at is, "why stop at good?" And, I'm pretty sure we've talked about this. A question I like to ask people is how much time they spend every day in meetings, discussing parts, components, things that are good and going well. And what I find is people don't spend a whole lot of time discussing things that are good and going well. So why do they stop? Why not? Because they're stopping at "good."

0:36:57.1 BB: And that goes back to the black-and-white thinking. They're saying things are "bad" or they're "good." We focus on the bad to make it good, and then we stop at good. Why do we stop at good? Because there's no sense of "better." All right. And what does that mean? So again, we have why stop at good? Why go beyond good? And this is...'cause I think we're talking about really smart people that stop at "good." And I think to better understand what that means, what I like to do is ask people, what's the letter grade required for a company to ship their products to the customer? What letter grade does NASA expect from all their suppliers? And I asked a very senior NASA executive this question years ago. He was the highest ranking NASA executive in the quality field.

0:37:50.5 BB: And I said, "what letter grade do you expect from your contractors?" And he said, A+. A+. And I said, actually, it's not A+. And he is like, "What do you mean?" I said, "actually the letter grade, your requirement is actually D-." And he pushed back at me and I said, what...he says, "well, what do you mean?" I said, "how do you define quality?" And he said, "We define quality as requirements are met. That's what we require." I said, "so you think A+ is the only thing that meets requirements?" He's like, "well, where are you coming from?" I said a pass-fail system, now we get back to category thinking, if it's good or bad, what is good? Good is passing. What is passing? What I explained to him: passing is anything from an A+ down to a D-.

0:38:38.9 BB: And he got a little antsy with me. I said, "well, the alternative is an F, you don't want an F, right?" I said, "well, what you're saying is that you'll take anything but an F and that means your requirements are actually D-." And then when I pushed back and I said, "is a D- the same as an A+?" And he said, "no." I said, "well, that's what I meant earlier" in the conversation with him. And I told him that they weren't interchangeable. So when you begin to realize that black and white quality, Phil Crosby-quality, allows for D minuses to be shipped to customers. Again, in this one way I define quality, I hand it off to you. 'Cause in that world, Andrew, I make the measurement, it's 5.999, it meets requirements, I ship it to you, your only response when you receive it is to say, "thank you."

[laughter]

0:39:33.2 BB: For a D minus, right? Well, when you begin to understand relationship quality, then you begin to understand that to improve the relationship, what's behind improving the relationship, Andrew, is shifting from the D- to the A. And what does that mean? What that means is, when I pay attention to your ability to receive what I give you, whether it's the pass or the information, the more synchronously I can provide that, the letter grade is going up, [laughter] and it continues to go up. Now, again, what I'm hoping is that the effort I'm taking to provide you with the A is worthwhile. But that's how you can have continuous improvement, is stop...not stopping at the D minus.

0:40:17.6 BB: Again, there may be situations where D minus is all you really need, but I, that's not me delivering to you a D minus blindly. That's you saying to me, "Hey, I don't need an A+ over here. All I really need is a D minus." That's teamwork, Andrew. So on the one hand, and what I think is, our listeners may not appreciate it, is who defines the letter grade? So in your organization, I would say to people, you give everyone a set of requirements to go meet, what letter grade does each of them has to meet to hand off to a coworker, to another coworker, to a customer? Every single one of those people, all they have to do if they're feeling disenfranchised, as you mentioned earlier, they're feeling like an interchangeable part, well, under those circumstances, Andrew, I don't have to call you up, I just deliver a D minus. And you can't complain because I've met the requirements.

0:41:14.2 BB: So what I think it could be a little scary is to realize, what if everybody in the company comes to work tomorrow feeling no dignity in work and decides to hand off the minimum on every requirement, how does that help? And what I find exciting by Deming's work is that Dr. Deming understood that how people are treated affects their willingness to look up, pay attention to the person they're receiving and deliver to them the appropriate letter grade. So I'm hoping that helps our audience understand that if it's a black and white system, then we're saying that it's good or it's bad. What that misses is, keyword Andrew, variation in good. So the opportunities to improve when we realize that there's a range, that "good" has variation. Another point I wanna make is, what allows the Deming philosophy to go beyond looking good?

0:42:16.2 BB: Well, if you look at the last chapter 10, I think, yeah, chapter 10 of the New Economics is...like the last six pages of the New Economics is all about Dr. Taguchi's work, and it's what Dr. Deming learned from Dr. Taguchi about this very thought of looking at quality in terms of relationships, not just in isolation, Phil Crosby-style meeting requirements. And the last thing I wanna throw out is I was listening to a interview with Russ Ackoff earlier today, and he gave the three steps to being creative. This is a lecture he gave at Rocketdyne years ago. And he said, the first thing is you have to discover self-limiting constraints. Second, you have to remove the constraint. And third, you have to exploit that removal. And what I want to close on is what Deming is talking about is the self-limiting constraint is when we stop at good.

[laughter]

0:43:20.7 BB: And I'm hoping that this episode provides more insights as to the self-imposed constraint within our organizations to stop at "good." What happens when we go beyond that? And how do you go beyond that? By looking at how others receive your work and then expand that others and expand that others and expand that others. And then what I find exciting is, and the work I do with students and with clients is, how can we exploit every day that idea of synchronicity of quality, and not looking at quality from a category perspective? Again, unless that's all that's needed in that situation. So I don't want to throw out category thinking, use category thinking where it makes sense, use continuum thinking where it makes sense. So that's what I wanted to close with.

0:44:12.1 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. This is your host, Andrew Stotz, and I'm gonna leave you with one of my favorite quotes from Dr. Deming, and it's very appropriate for the discussion that we've had today. "People are entitled to joy in work."

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How do we motivate employees? Traditionally, we offer merit pay, focus on accountability, and use other extrinsic motivators tied to performance. The ideas sound good on the surface, but John and Andrew discuss the many pitfalls and unintended consequences - and what to do instead.

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 John Dues, who is part of the new generation of educators striving to apply Dr. Deming's principles to unleash student joy in learning. The topic for today is...well, in fact, we are continuing our discussions about management myths that keep fooling us. And today, we're talking about merit pay, accountability, and extrinsic motivators. John, take it away.

0:00:37.7 John Dues: Yeah, thanks for having me back, Andrew. We've sort of been on this sort of mini-series talking about some of these myths that Dr. Deming talked about. So two episodes ago we sort of introduced the idea that Deming said we're living in this sort of age of mythology. We talked about two myths: the myth of best practices, and the myth of the hero educator. And then last time we talked about the myth of performance appraisal, and really talked about sort of this failure to consider the role of the system on individual performance. And really what we're gonna do is kind of wrap up those myths with the three you mentioned today. I think when I think of the myth, I'm thinking about sort of management dos and don'ts, and the myths are the don'ts. And then sort of the idea would be after we cover the myths, we can turn to some guiding principles, and those would be sort of the dos, the things that management leaders should do, that sort of Dr. Deming talked about.

0:01:38.7 JD: So we can dive into the first one, which is sort of a continuation of last time, this idea of rating and ranking. Last time we talked about performance appraisal, and now it's sort of the merit pay side of rating and ranking. And it something...merit pay is a practice that has been sort of tried over time in education. What I can tell, it goes...the idea in education goes back at least to the Reagan administration. So at least to the '80s. So since that time, this sort of merit pay idea for teachers or other educators in the system has been taken up by various governors and presidents in the United States. I think most recently during President Obama's administration, there was the Race to the Top program. And sort of as a part of that program, there were teacher and principal evaluations where merit pay was sort of a key part of those evaluation systems.

0:02:36.1 JD: And so the basic theory is that if you pay people based on results, that motivator to make money will drive improvement of outcomes in schools. And I think one sort of key differentiation, because pay in all sectors, but especially in education, is a hot button topic. I'm not talking about sort of the core salary, whether or not teachers are paid enough or not. Those sort of base salary levels are sort of a separate discussion topic altogether. I'm just talking about sort of merit pay, bonus pay, performance pay, that type of thing. And when I think of merit pay, I mean a lot of these ideas, I think, sort of sound good before you really dig in and start to think about them.

0:03:34.0 AS: And that's, Dr. Deming would say pay for performance makes sense. Seems like you're gonna get a good outcome, but in fact it's a little different or a little bit more complex than that.

0:03:44.9 JD: It's a lot, yeah. A lot more complex, I think that's exactly right. When I was thinking about merit pay and the theory behind it, what are the problems, especially in education? So for me, problem number one is paramount, and that's how do you define a meaningful measure of performance by which to judge individual educators? That's a pretty thorny problem. I think problem two is that the basic theory suggests that additional money will incentivize these...improves teaching and in turn improve student outcomes. But for that to be true, that means that teachers were previously withholding their best efforts and if you just paid them this bonus, that they would then sort of unleash this previously withheld power. And then another really thorny problem is this idea, if you sort of create this environment where you have a merit pay system, it sort of disincentivizes the behaviors that are important to improving any complex system.

0:05:00.2 JD: Things like, cooperation and teamwork. And so, especially in a merit pay system, the ones that I've sort of been aware of, the merit pay calculation is often sort of viewed as sort of opaque. How is this calculated? Often sort of the algorithms are proprietary, they're viewed as unfair, and then they can lead to these undesirable behaviors like unwillingness to share ideas or, just as problematic, unwillingness to take on certain teaching assignments, the tougher assignments. The very kids that you want to have the best teachers are often the toughest to get results with. And so you're sort of disincentivizing people taking those assignments because of the differential pay or the poor rating.

0:05:57.9 AS: Yeah, it's interesting too - that the point that people are withholding their best work. If we just give them merit pay, then...and I just had a vision in my mind. Imagine that we had a peaceful cage of tigers, and they're all chilling out and these tigers consume, at every meal, they consume, let's say all of them consume a hundred kilos of meat. [laughter] And we end up putting in 50 kilos in there and say, "okay, you gotta fight for this."

0:06:44.9 JD: Yeah.

0:06:47.4 AS: What's it gonna look like?

0:06:48.8 JD: What's it gonna look like? Yeah.

0:06:50.2 AS: And in a way, like what we're doing with merit pay is saying there's a limited pool. We've allocated a pool that's available to you. Yes, you've got your survival pay, but here is this pool of additional merit pay. And then...yeah, some people, some of them may just some people may sit back and go, "I'm not doing the work for that. I'll stick with my monthly pay." Whereas others will be extremely competitive to get that pay.

0:07:19.8 JD: Yeah. Yeah. But all of it assumes that, let's say, today I don't have the merit pay system. I get certain results. Tomorrow, I have this merit pay system. It assumes I'd know what to do tomorrow to get the outcomes, right? And I think that's a huge problematic assumption.

0:07:42.7 AS: So is that's part... If you think about what you're saying, that's part of the myth that, you know, you just think...

0:07:47.8 JD: It's part of the the myth. Yeah.

0:07:49.3 AS: It's like "just put this in place." I mean, come on. It's internal competition. We want everybody to...well, wait a minute. Internal competition in the company?

0:08:00.4 JD: Yeah. I mean, I could work, potentially, work harder for some period of time, but if I don't have any different methods for bringing about these outcomes, then the merit pay itself is...assuming everything else went well, assuming it was seen as fair and transparent, the fact that you don't have any new methods with which to bring about this improvement is a serious impediment to just thinking that merit pay in and of itself is gonna be an effective system. Putting aside all the other issues like disincentivizing the very behaviors or taking on the various assignments that you want the sort of top-notch teachers to do.

0:08:36.5 AS: Yeah. I guess that's another way of thinking about it too, is that it's like you have a certain set of tools on the tool floor, on the factory floor or in the classroom or whatever. There's a certain set, and you're not adding to any of that. You're just saying, "we're gonna pay you to get more out of that," and it's just...there's a limit as to what you can get on that. All right.

0:09:01.9 JD: Yeah, and I think the most typical way this has showed up in, say, the last 15 years or so, are these value-added models, that instead of just focusing on the absolute test scores of individual students, what percentage are hitting that proficiency standard? The value-added models did allow you to sort of attempt to measure the progress of individual students. So even if they didn't hit proficiency, you could look at, well, did they grow a lot? And a lot of the sort of merit pay schemes, during the Race to the Top era, were based on these value-added models. But I was...just as an example, I was reading a working paper from a Cal Berkeley economics professor who looked at some of these models. And one of the things that he said really stood out, he said, Teachers gain... "Value-added model scores are evidently inflated or depressed, in part due to the students who they teach, who differ in unobserved ways that are stable over time.

0:10:04.5 JD: This bias accounts for as much as one third of the variation in teachers value-added scores, enough to create a great deal of misclassification in value-added model based evaluations of teacher effectiveness." So I think that that type of finding is exactly the thing that I'm talking about. Creating these models is very, very difficult. And according to at least that one research study, up to a third of the variance in the results of teachers value-added gains for their students was not attributable to the teacher themselves. It was for...to these other things.

0:10:41.5 AS: And so... Go ahead.

0:10:43.7 JD: Oh, go ahead. Yeah.

0:10:45.1 AS: I was just gonna say that one of the takeaways that people take from this type of discussion is, oh, I see, but okay, so merit pay needs to be better implemented.

[laughter]

0:10:56.0 AS: Right? Like, and I had...there was a LinkedIn discussion where someone posted something about KPIs, and I said the damage caused by KPIs is almost immeasurable. And I mentioned something about that and pretty much every post said it's not KPIs that are bad, it's just that we didn't train people well or they weren't explained well or they weren't implemented well. And that's a cover that can keep you doing merit pay or that type of thing for a decade - trying to create something that's fair and all of that. And I think that is part of the myth, part of the...where people get lost for years.

0:11:39.5 JD: Yeah. Yeah. And even in those systems, they were heavily focused on reading and math, because those were the heavy focus areas of No Child Left Behind, which was the key legislation at that time. Race to the Top was sort of a supplemental sort of grant-making process that sort of layered on top of No Child Left Behind. So even the models in reading and math weren't great at pinpointing where results were coming from. But then you also had this whole other problem where reading and math teachers make up a fairly small percentage of any staff. I mean, there's social studies teachers, science teachers, teachers in the arts, the physical education teacher, the administrators, the support staff and so you really have to finagle just the reading and math scores, to sort of make them applicable to all those other people, that have much less of a sort of direct impact on reading and math score. So that's just a sort of another problem with those systems, is how do you include the vast majority of school staff?

0:12:41.6 AS: And so I would say, let's wrap up this particular one by also saying that it's not about doing merit pay better.

0:12:50.9 JD: No, it's not. Nope. I think the practices themselves, whether it's performance appraisal or merit pay, they lead to sub optimization of the system as a whole. But I think what happens when you don't have profound knowledge, and this definitely happened to me with all of these myths, and I sort of latched onto them, when you don't have profound knowledge, these practices are continually recycled by education policy and political leaders, which is why I think you see them in the '80s during the Reagan administration, then you see 'em about 20 years later [chuckle] with the Obama administration. They get recycled, these bad ideas. When you don't have that solid philosophical foundation, you get latching onto these sort of policy implications or policies that have been tried before. You sort of forget that they didn't work the first time.

0:13:44.4 AS: Yeah, I think about Dr. Deming saying, how could they know?

0:13:47.8 JD: Right.

0:13:48.7 AS: And that there's just so many people that are kind of misguided by - just because something is done, that there's actually a foundational evidence that this is really the way that we optimize. So, all right, what's....

0:14:08.9 JD: And that was exactly what he said when he found out that President Reagan had, or his advisors, had proposed this merit pay system for schools. He said, "the problem lies in the difficulty to define a meaningful measure of performance. The only verifiable measure is a short term count of some kind, where were the President's economic advisors? He was only doing his best." So basically he was saying to the President exactly what you said. So I think the real key here is things like joy in work, intrinsic motivation, cooperation, are key to a healthy organizational culture. And these things sort of upend that. I think what we should have what Deming is telling us to do: just work to optimize the system, rather to try to incentivize those individuals working within the systems, the system as a whole that you want to work on.

0:15:00.7 AS: Okay. So accountability.

0:15:03.9 JD: Accountability. Yeah. So when we say "accountability" in school systems, what we're typically talking about is state education department accountability systems, so basically all 50 states have some type of district and school report cards. School system gets it, individual school within the school system, get them. And they're typically based on performance metrics, like proficiency rates on standardized tests, absenteeism rates, college and career readiness indicators - which on their face seem like sort of noble things to keep track of. In my home state where I am in Ohio, that sort of system trickles down to not only individual schools, but in the teacher rating system, those ratings are applied to individual educators at many traditional public schools as well. I think when we're talking about accountability systems, if you're reading Deming, he often labeled them something like "management by objective" or "management by the numbers." But really those are all the same thing. It's some type of practice where you're focused heavily on outcomes. But I think like the merit pay, several problems with the myth of accountability.

0:16:26.3 JD: So one we've talked about before, but I think a key one is that too often goals for accountability and goals for improvement get conflated as if they're one and the same. But accountability goals, they're sort of like inspection. They come after the fact, they don't improve the processes that produce the defective results in the first place. So when you get these results and you haven't been sort of getting sort of local data that tells you how your practices are doing, the idea is that you're supposed to then take this once a year data and then figure out what to do when it doesn't look like you want it to. And that data is not very good at that. So those two things, improvement goals and accountability goals get conflated. The sort of second problem is we talked before about how you can react to data.

0:17:20.9 JD: You can take it and try to improve your system, or you can distort the system itself or distort the data that's coming from the system. So a second problem, that I saw up close when No Child Left Behind was launched in the early 2000s, I was teaching in Atlanta, the legislation comes out. And if you ask teachers, what did you experience? Very often, they're gonna tell you some version of what I experienced, where as a teacher in Atlanta, we were required to spend an inordinate amount of the day on reading and math, recess got cut from an elementary schedule. I taught in an elementary school at first, and gym and the arts, while we had them, they were for very, very short periods of time and a couple times a week. Big chunks of the day on reading and math.

0:18:14.4 JD: And so that's a good example of distortion of the system because the legislation focused on math and reading results, to the exclusion of science and social studies and the arts and these other things. Well, that's where the school schedule then focused. And I don't think if you asked anybody that was sort of delivering schooling in that way, that that was in the best interest of kids in terms of giving them a well-rounded educational experience. The third problem is the distortion of the data. And this is something that happened many places, especially during Bush two and Obama's administrations, when No Child Left Behind was in full swing. So if you ask any educator and even many people outside of education, can you remember some major cheating scandals that happen with state test scores? Everybody can remember a few. There's a big one in Atlanta a few years after I left. I know there was a major one in DC.

0:19:13.1 JD: There was a major one here in Columbus in the Columbus City schools in like the 2013-2012 range, and they happened all over the country. I mean, even the one in Atlanta, the superintendent of the schools was charged with running a corrupt organization. They used the RICO statute because they were actually giving bonuses based on test scores that were - I forget how they were cheating exactly. And obviously, this isn't the majority of people. But it is sort of a product of a system that's putting so much focus on these test scores, and then you're layering the merit pay on top of it, and this is sort of what you get.

0:20:01.3 AS: That's the problem around here. We don't have enough accountability.

0:20:04.2 JD: Right, right.

0:20:05.4 AS: So, we're getting everybody accountable, everybody's gonna be... And we are gonna get tough on accountability.

0:20:12.5 JD: Yeah, yeah.

0:20:13.1 AS: Squeeze.

0:20:14.0 JD: I think that's the Deming sort of point with management by objective accountability system, is stop holding people accountable in lieu of improving processes. Of course accountable to our teammates, Deming talks about a system, where do you fall in the system? Understanding the system's view versus the organizational chart. Who's relying on me? Who do I rely on? Those are important...that's accountability. But what he's talking about is when all of this focuses on accountability by inspection rather than sort of working together to improve the processes that ultimately lead to the outcome.

0:20:54.1 AS: Yeah, and seeing the data as a tool, a feedback mechanism that helps us understand, and test what we're doing with the system. So, yeah.

0:21:05.2 JD: I think another thing that's really underappreciated is that one, numerical goals don't produce quality especially when those goals are outside the capability of the system as it's currently designed. So, if you remember back when we looked at those third grade reading test scores, they were sort of bouncing around about a 60% average, if I remember right. They were like 58% then up to 62% and down to 60% and up to 61% and down to 59%. And so, they're bouncing around about a 60% average, the goal is 80%. That goal is outside of the capability of the system.

0:21:40.6 JD: And so, if people over time, depending on what sanctions are being issued, realize that there is literally almost no chance that they're gonna hit that mark within the current system, what are they gonna do? Again, they can work to improve the system, which is hopefully what happens. But you're very likely to see some type of distortion of the system or distortion of the data, even if it doesn't rise to cheating on state tests. I only report out on certain data results that make my organization look good or whatever. I spend all my time trying to write this fiction instead of actually improving the system. And I think that's something that happens all the time, and we don't understand what's the current system capable of.

0:22:23.7 AS: And how do you counter the argument that some people say is that: some of your employees, some of your teachers or administrators, just they don't care that much, and they need accountability. If you don't have accountability, they're not gonna step up and try to improve the system and all that stuff. How do you handle somebody who says, "You're living in a fantasy world, John. And the fact is that we need to crack the whip around here." [laughter]

0:22:50.4 JD: Yeah. Yeah. I can appreciate that, I think I grew up with, show up on time and do your job. That was a part of my upbringing. However, it just hasn't been my experience that most people are slackers. Sure, have there been a handful of people across my 20 years in various cities and states that probably shouldn't be teaching or leading a school? Yeah. I've definitely come across some people like that.

0:23:18.1 AS: And I guess the answer to that is really, that's a management job, to assess a person and try to make a decision, coach them, help them, move them, whatever.

0:23:27.1 JD: It's a management decision or a management sort of responsibility. And I think a key thing is, when I have seen teachers that maybe would have the attitude that you're describing. If you unpack why that is, it's often in education because let's say there are a 15-year teacher... I saw this a little bit in Atlanta. I was a newer teacher, there were some 15-year teachers on my team. They were gonna do their own thing, but if you unpack why that is, it's because, "look, I've been through four or five superintendents in my 15 years, each one brought a new set of reform ideas. I had to get trained on all these new things, and then those things were gone in two or three years. And I've been through that cycle three or four or five times." Of course, you're gonna have that attitude, who's not gonna have that attitude? You sort of have initiative fatigue.

0:24:18.4 AS: Yeah. And I'm sure as those cycles went through, there was times that those people were beaten down on a particular thing that they didn't get right, and then it's like, "Sorry, I'm not taking the risk."

0:24:30.3 JD: Yeah, yeah.

0:24:31.1 AS: Alright.

0:24:31.3 JD: So that just goes back to, the problematic employee is a very small percentage. And generally what we're talking about are systems problems that require leadership to fix. Yeah.

0:24:44.3 AS: So: extrinsic motivators.

0:24:48.7 JD: Yeah. I think the things we've been talking about are extrinsic motivators too. Performance pay, performance appraisal systems, those are all sort of forms of extrinsic motivators. But I think the basic premise of this myth is that you can improve performance by putting the right extrinsic motivators into place. So, the basic theory or supposition is that if you just get the right balance between reward and punishment, then that's gonna improve your system. And I think it's definitely true that people are differentialy motivated by extrinsic and intrinsic factors.

0:25:31.9 JD: Some people require far less of the other, or one or the other than other people. But I think it is a false premise that you can improve performance using carrots and sticks. Just sort of full stop. And I think what I've seen when I've read about this is that, one, in most contexts within complex systems like schools, extrinsic motivators don't work to improve performance like some people might think they do. They typically only work in the short term, and even in those short term settings, they typically only work for simple and repetitive tasks. And those don't sound like what teachers or principals do on a daily basis, basically.

0:26:24.6 JD: I think there's also these unintended consequences that stem from practices like teacher evaluations and merit pay that heavily rely on extrinsic motivation, because they do lead to these distortions in the data or the data within the system. Distortions of the system or data within the system. Because again, they're optimizing competition within the organization versus cooperation. They actually make it harder to achieve your goals. And then I think that this all brings us to the primary issue when you try to use extrinsic motivators targeted at individuals, is that individual performance only accounts for a tiny fraction of organizational performance.

0:27:18.2 JD: And I think Deming pegged that number depending on the exact situation, that 94% to 97% of the troubles and possibilities for improvement in any given organization actually belong to the system, and are the responsibility of management. So, if you do the opposite and try to incentivize individuals who have little control over the system in the first place, at best it's pointless. And at worst, these incentive systems have the exact opposite effect and actually decrease organizational performance. [laughter] I think that's really what is behind the Deming philosophy. The common thread is that these things work to sub-optimize the system as a whole, all of them. So yeah, when you fail to appreciate the organization as a system, you're actually making the improvement of that system much, much, much harder. The Deming philosophy does the opposite of that.

0:28:20.4 AS: Yeah. I'm thinking about taking like a test tube and putting some things in it and then shaking it up, [laughter] agitating it, and really putting pressure on it and all that. And then when you open the container, it goes, pop, and it explodes because you've agitated. And you're agitating a small part of the overall, that's a part that has probably the smallest impact on the overall system, of the overall output of the system. So, yeah. Interesting. [laughter]

0:29:00.0 JD: Well, and I think a key part of this mentally is that even for people that have at least a moderate grasp of the Deming philosophy, when you're actually a leader and you're in a high pressure situation: I just got my state test scores, well, how did we do last year? We have to have done better than last year, and we have to do better than these three competitors. As long as that's okay, I'm okay, I'm okay. But then you sort of have forgotten in the moment of stress all of the things you've learned about this philosophy. Like, well, how does this data look over time? Is it really just bouncing around? It's not really improvement. But the trick is assuming that you know the philosophy in the first place, that you can then step back and employ it or fully use it in those times of stress when community members or board members, your boss, is asking you for these results and you're trying to figure out a way to sort of paint them in a positive light.

0:30:00.0 JD: And so, even if you're a believer in this, you can see how people start to distort that system or distort the data. Again, not rising to the level of the cheating scandals that I talked about in Atlanta and Columbus, but in these everyday and in these everyday ways. So, I think that's why you have to explicitly say the Deming philosophy - it's how you manage your organization. It's why you have to get top leaders an understanding of the philosophy. And then you have to live it day in and day out, not only when it's easy, but especially in those times of high pressure when you wanna revert back to the myths.

0:30:42.9 AS: And the exam results come out.

0:30:43.8 JD: When the exam results come out, and someone's calling, you have to be ready to talk about it in this way, even in those high pressure, those pressure time periods, yeah. Yeah.

0:30:53.6 AS: So, let's wrap this up. We're talking about the management myths that keep fooling us, and we're talking about merit pay, accountability, and extrinsic motivators. What we were saying about merit pay, you were saying that it assumes that additional money is what's going to get a better output from teachers as if maybe they're holding something back right now. And also, you mentioned that it disincentivizes teamwork, and it's not clear how it's calculated, and it leads to sub-optimization of the system. About accountability, you were talking about how Dr. Deming talked about management by objective or management by numbers and the problems that you face with that. You also talked about the accountability versus improvement goals. I think that was a really helpful discussion to kind of understand that improvement and accountability are two separate things. And then also, you talked about distortions of the data, distortions of the systems and that type of things.

0:32:01.5 AS: And that only also you mentioned finally on the accountability is that, if you're holding people accountable to numerical goals that are outside of the system's capability, it's not reasonable at all. And then extrinsic motivators, you talked about that there's a myth that we can improve performance with the right balance between reward and punishment. But you mentioned about unintended consequences of that and causing distortions of the system. And in a sense, you're optimizing for competition within the system rather than cooperation and coordination. And then finally you wrap that up, which probably applies to all of it, with the idea that Dr. Deming clearly stated that the output of a system, maybe, 95%, 96% or so of the output of a system is actually attributable to the system, not the individuals running about doing the best that they can within that system. And so therefore, it doesn't make so much sense to overly focus on these things when they really are not the key to getting the output that you want. Is there anything you would add to that?

0:33:18.6 JD: Yeah, no, that's exactly right. I think systems leaders have to understand the management myths, so they can avoid them. And then sort of the next step beyond avoiding the management myths is, well, what do you do? What are the things that you do? And that's informed by the system of profound knowledge. And I think it's also informed by that set of guiding principles that I alluded to at the beginning. And I think that's sort of where to go next. Those are the dos of the Deming management philosophy. So, you have some principles to operate by, so you don't get caught up in these myths when things get tough.

0:33:54.3 AS: Beautiful. Well, John, 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. This is your host, Andrew Stotz saying, I'll leave you with one of my favorite quotes from Dr. Deming. "People are entitled to joy in work."

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Dr. Deming railed against performance appraisals, listing them 3rd in his Seven Deadly Diseases of Management and calling them "Destroyer of People." In this discussion, John Dues explains our cultural attachment to appraising workers and why it is a myth to assume that appraisals have any impact on performance at all.

TRANSCRIPT

0:00:02.3 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. The topic for today is a continuation of our discussion about management myths that keep fooling us, and we are gonna be talking about performance appraisals. John, take it away.

0:00:32.1 John Dues: It's good to be back Andrew. I thought it'd be helpful first to connect back to what we've done, because it'll help listeners connect the dots between the various episodes that we've done together. I think this is the eighth episode, so episode one and two were all about the System of Profound Knowledge as a theory, and then episode three, we started working on understanding the concept of variation, special causes, common causes, that type of thing, and then four and five, we switched gears and talked about how to then apply the System of Profound Knowledge in our organizations. And so we talked about two powerful tools, process behavior charts, and then the PDSA cycles.

0:01:21.9 JD: Episode six, we started talking about A Nation at Risk and the Sandia report and how calls for education reform haven't always been built on a solid philosophical foundation. And then last time I introduced this idea of living in an age of mythology, and we talked about two myths. The myth about best practices and the myth of the hero educator. And so today, like you said, I thought we continue that discussion of the myths with a focus on performance appraisals, which is something that is a little bit hard to understand, I think it was hard for me to understand initially, but it's something that I thought was important because it's something when I listen to Dr. Deming's recorded seminars, it's something that he railed upon often.

0:02:14.9 JD: And I think tying all of the myths to a couple of key ideas is helpful. So I think that first idea is that when we see outcomes in a system, they're more than the skills and efforts of the individuals that work within the system. So those results come from more than just how the individuals within that system are working. The outcomes, that second idea is that the outcomes are mostly attributable to the system itself, and workers are only one part of that system. I think that's really important. That underlies all these myths and certainly underlies this idea of the myth of the performance appraisal.

0:03:00.8 JD: And I think that when we're talking about these myths, so we've covered the theory, we've talked about some ways to apply that theory, that System of Profound Knowledge in actual organizations. When we're thinking about the myths, what I'm thinking about is, dos and don'ts. And so the myths are the don'ts. There are specific prescriptions following the Deming philosophy that leaders should learn to stay away from and why to do so. And then of course, the do's would be a set of guiding principles to follow, and I thought, right now, we're focused on the myths and as we get through this episode and maybe one more on the myths, then we would then focus on the "what do you do?" That's where the guiding principles would come in, and so Deming outlined all of this for us. The theory, the application, the Do's and the Don'ts, and so that's where I thought we would start today.

0:03:55.6 AS: That's great. And we were talking before we turned on the recorder about how performance appraisals are such a fascinating area, and I know for a lot of people, there's nothing else. That that is the key of how you manage people. Like, you're talking about the core. Without performance appraisals, people are gonna be lazy. Without performance appraisals, people are gonna get distracted. Without performance appraisals people aren't gonna work hard because they're not gonna get compensated. Without performance appraisals, we can't get this organization to work and everybody to work together and this is the ultimate incentive that we need to motivate humans. So boy, you're taking on quite a tough topic here, John. Tell us a little bit more.

0:04:45.6 JD: We'll see how we do. And one thing to clarify when I say performance appraisal, in my world, in schools, this is typically called the Teacher Evaluation. So it has different names, but, an evaluation, an appraisal, some type of rating and ranking of employees basically. So I think one thing that, and you kinda just brought this up, is "if I don't do a performance appraisal, how am I gonna give feedback to team members?" And I think that's a good place to start is that, of course, I think that leaders and managers should, as a part of their job, provide direction and give feedback to team members.

0:05:33.9 JD: But I think it's a far cry to make the leap that giving direction and feedback is synonymous with administering performance appraisals. And I actually think that performance appraisals can actually work against giving good feedback. But like as a starting point, what makes up the typical performance appraisal? Thinking about four parts, just so we are all starting from the same place.

0:06:06.7 JD: First there's standards that are set. "Here's the standards that are gonna be outlined in this performance appraisal." Then there's a time limit set to meet those standards, then the manager makes observations and judgments, and then finally, the evaluation is given to the individuals by the person sort of in the organizational hierarchy. I think a key thing that I've learned in studying the Deming philosophy when it comes to performance appraisals is that they fail to consider the role of the system on individual performance. So that's one problem.

0:06:50.2 JD: They also fail to appreciate the variation in performance attributable to common causes. So that's why I was connecting our earlier episodes on theory and the applications to performance appraisal, 'cause you have to understand that to understand why Dr. Deming was railing against performance appraisals in the way that he did, and those are two of the key reasons.

0:07:20.2 AS: Right. So a person being evaluated or being talked to with a performance appraisal, a common thing is, they could say, "wait a minute, you're saying I didn't do this, but I couldn't do this because the system has this whatever." Or you get a boss that's focused on common cause variation going, well, "you did this, and then that, and this guy did that, and this is and then all..." What they're really doing is chasing their tail on all of these common cause variation, which is not going to improve the system and it's just rewarding and punishing what is just a natural outcome of the system.

0:08:01.1 JD: Yeah, that's a big part of it. So if I'm a teacher and part of my evaluation is something like outcomes of students and how well I deliver the curriculum, the effectiveness of the curriculum, those types of things. Well, the vast majority of teachers didn't select the curriculum. So that's a good example of something that's a part of the system that a teacher has no control over typically, but that it could play a role in an evaluation, and there's all kinds of examples like that. That second idea in terms of the appreciation of where the person is falling performance-wise within that common cause system, what that means is that, sure, people could be performing at different levels, and there could be slight variations in that, but it's very possible that those ups and downs, just like any other ups and downs that we study are just common cause. And so it's not one person different from another within the rating system?

0:09:06.6 JD: Are they far enough outside that they show up as a special cause. That their performance shows up as a special cause. Because if it does in the case of a teacher or maybe a student that is outside of the system in terms of performance, then there may be special help or special support that's needed. But I think many, many times that's not the case, and that the ups and downs don't represent anything meaningful. And I think one of the things that helps bring this into view for people is to say, "well, how did you experience teacher evaluations or performance appraisal or whatever you call it in your system, how did you experience as...

0:09:50.6 JD: How did you experience that practice as a receiver of those things?" Because that puts you in a different mindset. For me, performance appraisals, when I've been evaluated, have largely been positive in terms of the overall rating, but they've also, a lot of times not made a lot of sense on any number of fronts. And so I think of, as a teacher in Atlanta, and Atlanta Public Schools had a teacher evaluation system, the principal would come in for one hour across the school year and observe me and write it up and formally evaluate me, sit down with me and go over that evaluation. Well, if you think about that, one hour of observation, the typical 180-day school year, seven hours a day, that's about 0.08% of the school year that the principal observed. So that's a big problem.

0:10:52.1 JD: So we're saying that that represents the entire...my entire time teaching across the school year. That one hour observation. So that's a major problem. Another issue is, what is it that I'm being evaluated on? One that stands out for me, and granted we were in a different time, 23 years ago, 22 years ago when I first was evaluated, but they're still a technology category in the evaluation. And so part of the evaluation was to "use technology effectively in a lesson." And so one of my first questions would be, well, "do you have to use technology in a lesson for it to be effective?"

0:11:40.4 JD: I think that would be questionable at best. But what if I use technology in some lessons and not in others, and the one you happened to observe, I didn't use it, right? You didn't see the ones where I did. I was working in a large urban school system, I had seven computers in my room and five of them didn't work on a regular basis. So that's another obstacle, right? And so I get this rating, I take it, I don't really say anything about the computers not working, or what about my other lessons where I did use computers, I just listen to this, but...

0:12:13.3 AS: Otherwise you're gonna be labeled as argumentative.

0:12:15.4 JD: I'm gonna be labelled as argumentative and the rating was fine as it was, although I lost some points for those things. It's probably not worth...it's not.... You kind of pick your battles. But the point is, what does that leave me with in terms of the taste in my mouth about my school, about this evaluation system, granted it's one part of the system and maybe I didn't care about it too much as long as the rating without a satisfactory level, but the point is, it didn't seem fair, it didn't seem to make sense, it didn't seem to line up with what you would need to look at in terms of what you need to make an effective lesson.

0:12:55.0 JD: And how many people are experiencing evaluations in those same ways, whether it's ridiculous and being evaluated for something that doesn't work in your room, like the computer's not working, or a smaller like, do you need computers to be a part of the lesson in the first place. And so there's all kinds of things like that that I think are part of a typical evaluation system.

0:13:22.0 AS: So to summarize what you're saying is one way to think about performance and appraisal is to think about your personal feeling when you're receiving your evaluation, and I would argue that most people don't feel great, it's not something they're really looking forward to.

0:13:36.2 AS: And the second way you can look at this is look at the person who's delivering it. If you're having to deliver performance appraisals, is that like your favorite day of the year that you're working with that person? Yeah, so that's a good way to look at it so that you kind of understand that there's just something that doesn't feel right here, but continue on.

0:13:56.6 JD: Yeah, it takes a tremendous amount of time and effort. No one actually likes the process, generally speaking, and I think the thing that I wanted people would hold on to was that they don't get magically better when you're on the other side and being the evaluator. So my feeling wouldn't change whether I'm on the receiving or the giving side of the evaluation system now, I think for some leaders, unfortunately, I think that changes as long as they're on the other side, it's fine, but I think that's why I think putting yourself back in the shoes of the person receiving the evaluation is a good thing to hold on to. "I'm not special, there's not something about my personal characteristics that make evaluation unnecessary for me, but everybody else needs those things."

0:14:43.6 JD: So I think holding on to that as you move, especially if you move into a leadership role is a really important mental model. I think another key thing is after the evaluation, all of these people for the most part, are gonna still be working together, and so another key question that I learned from a Deming student named Peter Scholtes in a book called, The Leader's Handbook, a great book.

0:15:15.8 JD: He said, "what are the factors that differentiate highly effective versus lower rated people?" He outlined these five factors, so there's A, would be native ability and your early education, the second factor would be, B, your individual effort, how much work am I putting in as a teacher, as an employee. C, would be training, an orientation that I get as a part of the onboarding process or the ongoing professional development that I get as a part of the job. D would be variability of the processes and systems that are going on within my job, and E would be the system evaluation itself to some of those things that we just talked about, is it fair? Is it well constructed? Is it representative of my total work, that little sample that's seen by the manager.

0:16:17.0 JD: And if you look closely at those five items, really only one of them, that being, I think I call it D, that individual effort is under the control of the individual person working in the system. The other four factors really don't have anything do with individual performance, but what the performance appraisal system attempts to do is solve that equation, A plus B plus C plus D plus E equals my rating, let's call it 100.

0:16:54.5 JD: But if you can't solve that equation, if you don't know already what the variables A, C, D and E account for in terms of its contributions to the rating, the only thing you know as an individual effort, right?

0:17:11.2 AS: And you don't really know that either.

0:17:17.0 JD: Yeah, fair enough, fair enough.

0:17:20.1 AS: So it's a shifting sand that you're working on, which is what probably one of the counter-arguments to performance appraisals is that there's just... It's so subjective and difficult, particularly, okay, if you're a narrow-minded person and you've never thought about the fact that there is variable B, C, D and E as an example, then...but once you start to think about those things, you realize that not only is it difficult to quantify and all that what a person's doing, and how do you factor in the fact that that person just went through the loss of a parent over the period of time that you appraise them. How does that impact performance?

0:18:02.5 JD: Any number of things. Any number of things. Yeah, I can think of a lot of examples when you start to unpack those various factors, like when you're talking to the manager, "oh, well, we didn't quite onboard them like we typically do now, no one acclimated them to our curriculum system" or whatever it is.

0:18:27.3 AS: But they're still responsible for delivery.

0:18:29.8 JD: Yeah, they still move forward with that response. And again, it's not that there's not gonna be variation in performance amongst employees, it's just, are we getting what we think we are from this rating and ranking system. I think what we're doing basically is disregarding the contributions of the system on the performance of individuals that are working within that system.

0:18:57.0 AS: And I guess if you talk about that to people, they're gonna be like, "Now you're unleashing something that's just unmanageable." Okay, yeah, fine. We're gonna start talking about the system and the impact and that everybody's just gonna blame the system! John, don't you know people are just gonna blame the system, then if we start talking about why it's not your responsibility.

0:19:23.2 JD: Yeah, I think, yeah, we'll kinda get into what's the prescription in terms of...what would of the prescription be from the System of Profound Knowledge in terms of what to do instead, but one thing to do, if you did have some type of evaluation system, you could just remove the numbers and have a narrative feedback on characteristics or competencies or capacities that are important for your particular organization. I think that that would be one way to handle it.

0:20:00.4 JD: Another great tool that I learned from David Langford is a tool called the capacity matrix, where you outline what are the capacities that are important for a given role that you want to see develop. You define a series of dimensions of growing from more basic to more proficient in a particular capacity, and then you ask the person to track their own learning in those areas, and as they self-evaluate, they have to provide evidence, be it - maybe they give a presentation or incorporated a technique into their lessons on a regular basis, or maybe they presented at a staff meeting, something like that, but they have to link the capacity development to some evidence that it's been put into place.

0:20:51.0 JD: That's another way to handle... The point is to develop the person and build capacity, that's a much more powerful way to do it, and I think the goal of starting to use the Deming philosophy is transformation, and I think what Deming was talking about when he talked about transformation is this process from going from - starting to understand these assumptions and these myths and then working to move away from them. So one of the things...one of the lenses I have just in studying the Deming philosophy is to ask questions because so many of the practices like the performance appraisal, prior to studying Deming, I never even stopped and said, "well, what is the theory behind the performance appraisal? Where did it come from? Why do people think it isn't an effective practice? Are there practices that would be more effective?"

0:21:52.3 JD: So just as a starting place, you can start to ask questions about some of these things that you probably never even stopped to think about. I think that was true for me, whether we're talking about these myths or any other number of things that are common in organizations, work settings, and we have this...

0:22:14.0 AS: And for performance appraisals: what is the theory behind them?

0:22:20.0 JD: That's a good question. That is a good question. Where did they come from? Well, I don't know for sure, but I know that...a lot of corporate practices can be traced back to things like the military and early railroads, which were some of the first organizations to have a larger staff that had to be organized in a way, and I know that in terms of the rail companies that you know, when there was a crash, there did need to be somebody blamed. And so you had to nail down who in the hierarchy... Where did things break down? It had to be an individual to blame when two trains ran into each other or the train ran off the tracks. And I think what Deming is saying it is what was actually the system that led to that crash, that's what we needed to study in a lot of cases, and almost in all cases, whether it's the train running off the tracks or the Challenger space shuttle disaster, almost all of them were of system problems and it wasn't one single individual that you could pin those problems on.

0:23:37.2 AS: And you could argue that performance appraisals are not really there in that case, like what you're talking about let's say is a train crash, it's not really there to some extent to blame... To improve the system, it's there to blame someone and then, "okay, we got our scapegoat, now let's move on."

0:23:54.4 JD: That's right, yep. Yeah, so with performance appraisal, it's not quite as dramatic as the train crash, but what's happening is that it leads to this rating and ranking of teachers, we do the same things with students, students have their own form of performance appraisals, even schools within state accountability systems have their own rating and ranking systems. So they reward at the top and punishment at the bottom, that's the typical present practice. And I think the better practice, what we're trying to move towards when you're managing through the Deming philosophy is: abolish the ranking in favor of managing the whole organization as a system, and what you wanna do is study and understand how every part of that system, every component whether it's grade levels or departments, whatever, how do they contribute to the optimization of the system.

0:24:57.8 JD: And so that's... What's the aim of your system, how do you optimize that? And I think a big part of this performance appraisal thing is that that practice is running in the other direction from optimization. You are incentivizing individuals to look out for themselves versus contributing to the aim of the organization.

0:25:26.7 AS: One of the things that people say is like, "What do I replace it with?" Well, in a lot of cases in education, you may not even have that choice, but in private business, you do, and I always say that...I always say "imagine that you're lost deep in the woods, and after hours of walking in one direction, you realized that you're walking in the wrong direction. However, you're unsure of the right direction, but you've received enough information to know that you're walking in the wrong direction. What would you do?"

0:26:05.7 JD: Perhaps stop going in the wrong direction as a starting point.

0:26:12.3 AS: And the point is, is that you don't have to know the right direction if you've identified the wrong direction. And so that's one of the challenges that we often get with performance appraisal is, "what are we supposed to do if we don't do that?"

0:26:28.8 JD: Yep, yep. And I think... And that's - when you start to understand the System of Profound Knowledge, you start thinking about ways that it can offer you guidance on a practice like the performance appraisal. And so what I tried to think through is, in terms of performance appraisal, what do each of the components of the System of Profound Knowledge contribute in terms of learning about the way...in terms of your analogy: the way to move...start to move in the right direction.

0:27:08.5 JD: And so there's the four components of the System of Profound Knowledge, we have Appreciation for a System, Knowledge of Variation, Theory of Knowledge and Psychology. And so each of those components has contributions to make in terms of rethinking the performance appraisal. So I was gonna break those down as a way to round down out our talk today. Some of this is a recap, but when I think about Appreciation for a System, we've talked about this, but that system is responsible for most of the observed variation between the performance of the individuals. It's most...Deming said up to 94%, depending on the situation, even up to 97% of the results that come out of the system can be traced back to the system itself, and only 3% to 6% were attributable to the individuals.

0:28:08.0 JD: So the system is the overwhelming contributor to that ranking within that, doesn't help anyone, nor the system improve. Giving somebody a rank, sorting people into good and better and best does not point the way towards improvement for the organization. So that's the Appreciation for a System contribution.

0:28:34.1 AS: Yep. We could say changing seats on the Titanic.

0:28:37.2 JD: Yeah, exactly. Exactly. Then we have understanding variation or Knowledge about Variation. So we've talked about this a little bit, but ranking people, especially when we're ranking within a common cause system, is misleading. 'Cause remember, even if there's ups and downs in terms of the data, the question isn't: is it different? It's: is it meaningfully different? And in a common cause system, even though there are some ups and downs, there's no difference. It's not of a magnitude that you can say, "yep, that's significantly different from one point to the next." And another thing to consider is there will always be variation. [chuckle] There's always gonna be variation between students, between teachers, between schools, between school systems, between states, whatever that thing is, there is variation in a natural state of affairs. So we have to come to grips with that.

0:29:40.9 JD: In terms of Theory of Knowledge, when we rate and rank people, it's a snapshot. Kind of like what I alluded to my observation in Atlanta being less than 1% of the total time that I was with my students. So that ranking doesn't take into account and any performance appraisal system I've ever been aware of that temporal spread. So in other words, I'm really more interested in what's the performance over an extended time period. And so when people would ask Deming, okay, you're saying, the performance appraisal is something we should abolish. Well, how much data would you need on an individual worker before you could rate them? And what he would say is 15 or 16 years. [chuckle]

0:30:32.1 JD: And basically what he's saying is, I think, is that, that's the amount of performance data you would need to plot. If you're doing it once a year, once you have 15 or 16 years, you can kind of get a sense of how that data is performing over time. That last component, maybe the most important is Psychology. I think one big problem is that those performance appraisals at their worst are debilitating to people, at their best, they're perceived to be arbitrary, like what I talked about. Certainly wasn't debilitating to get my rating, my rank and my rating in Atlanta, but it did...I did see the rating and the points I lost as arbitrary and meaningless, to be candid.

0:31:23.1 JD: And then another big part of that psychological component, especially when it becomes to rating and ranking students, is that this thing called the Pygmalion effect begins and it can really start to destroy cooperation. Whether that's students or teachers, but you this is basically this idea that once, let's say a teacher has a set of expectations about students, they start to take on those characteristics, whether it's in a positive or negative direction.

0:31:57.2 JD: And they've done some pretty fascinating studies on this Pygmalion effect in classrooms. There's one where it's like in the late sixties, basically a teacher was told that a set of students had performed really well on a standardized test. In reality, there was no difference between this group of students and the rest of the students. But because the teachers thought that, over time what the researchers found is that they started treating the students differently and it actually resulted in those students scoring higher on the standardized tests at the end of the year just based on those teacher expectations. And so, talk about a powerful, powerful set of effects within a rating and ranking system. And I think that's something we really need to consider in any type of institution, but especially a school system. So, yeah.

0:32:55.0 AS: I was just reminded of a quote that Dr. Deming said, which is, and I'm gonna, I'm gonna read it for for a minute here. I'm gonna read it in my Dr. Deming voice. "So evaluation of performance, merit review, or annual review. The idea of merit rating is alluring the sound of the words, captivate the imagination, pay for what you get, get what you pay for, motivate people to do their best for their own good. The effect is exactly the opposite of what the words promise." [chuckle]

0:33:32.1 JD: Yeah. I think that's what I found in practice, before I discovered the stuff I tried to improve our teacher evaluation system. And in reality that's just an effort that's not worth my time.

0:33:47.9 AS: He also said, "Annihilates teamwork, and it's purely a lottery."

0:33:53.3 JD: Yep.

0:33:57.7 AS: I wrote a blog post on this many years ago entitled, Why We Stopped Performance Appraisals at Coffee Works, my company. And this was... I published in 2016, and I just would... Maybe I'll just read a little excerpt here. What I said is, "The system was an annual review during which bosses in our companies met employees and scored them as A, B or C. I read Jack Welch's book and I thought, yeah, kick out the C players, this has made sense in the days when I was buying into that. We would use this to allocate bonus mainly to pay, A's and B's. A's a lot, B's a little bit, and C's nothing. And for years we've been seeing the weaknesses of this system, but didn't have the guts to abandon it, because we didn't have something to replace it.

0:34:50.5 AS: And so before you ask what we did to replace it, let's consider what we didn't like about it. Number one, it was unfair. Number two, it was subjective. Number three, it fostered favoritism. We saw that certain employees were continually getting positive ratings from their bosses. Number four, it failed to recognize what quality godfather Dr. W. Edwards Deming taught was that the majority of the output of any one employee is attributable to the system. And number five, it was time consuming and costly. Number six, it did not enhance employee performance. Number seven, it increased fear and caused suspicion. Number eight, it caused employees and departments to compete against each other rather than compete against our competitors or just take care of the customer.

0:35:34.2 AS: Number nine, it was completely inward focusing, encouraging employees to shift their focus from the customer during the time of performance appraisals. It's like you can't take care of the customer 'cause you gotta get all these performance appraisals done." Is there anything that you would add to that list of what you see in the education environment?

0:35:51.3 JD: No, I mean that's spot on. I mean, I think the key summary or takeaway is for any of these practices, be it performance appraisal or otherwise, is that thing optimizing the system? Is it making your organization better at achieving its aim? And you just named a whole lineup of things that said, "no, this is why in this particular practice performance appraisals, this is why Dr. Deming railed against them." So I think that, yeah, I think that was a great synopsis of many of the things that Dr. Deming talked about in his seminars when he railed on performance appraisals.

0:36:33.4 AS: So, as we wrap up, the purpose of today's discussion is to open up people's minds to understand what are performance appraisals, what are the myths behind it? What are the weaknesses of it? We also kind of said, even if you don't have a substitute, you could argue that you don't have to keep doing something that's damaging if you know that it's damaging. But we also know in an education environment, you may not have the power to make that decision. Like we had in our coffee business, it was like, "this isn't working, we're stopping. No more resources to this." We have that flexibility. So, we haven't spent any time talking about ways to do things and the positive aspect. But let's just wrap up this whole conversation. How would you kind of wrap up the message that you want the listeners and the viewers to get from this specific discussion?

0:37:29.4 JD: Yeah, I think because a lot of this, a lot of Deming's ideas were targeted at leaders and leaders at all different levels. And I think, what constantly happened to me was someone would say "what's your leadership style?" And I would typically cobble together some type of jargon in response to that question. But what Dr. Deming offers is a management philosophy: the groundwork, the framework, the foundation, the philosophical foundation, the myths to stay away from, a set of guiding principles that actually, when you dig deep and you study these things, they offer a way forward, a lens through which to make better decisions for your organization. And that's really what I take from this.

0:38:22.3 JD: There are many better ways to run our organizations. Performance appraisals are just one component of this, but hopefully what people are taking is that, hey, at the very least, the next time I have a leadership team meeting, I'm gonna bring this up and say, Hey, why do we do this? Is it leading to the type of results - like what you're alluding to with your business - that we think it is. And if it's not, what else could we do? How can we replace this, make it better? How can we at least begin to ask these questions instead of just carrying on? Because it's the way that we've always done things. So, yep.

0:39:00.6 AS: John, on behalf of everyone at the Deming Institute, I want to thank you again for this discussion. For listeners, remember, go to deming.org to continue your journey. This is your host, Andrew Stotz. I'm gonna leave you with one of my favorite quotes from Dr. Deming. "People are entitled to joy in work."

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In this episode, John and Andrew unpack a few of the myths Dr. Deming identified that continue to destroy organizations from the inside. John explains how these myths also negatively impact schools and kids - and what to do instead.

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 John Dues, who is part of the new generation of educators striving to apply Dr. Deming's principles to unleash student joy in learning. The topic for today is, Management Myths that Keep Fooling Us. John, take it away.

0:00:28.3 John Dues: Andrew, it's good to be back, good to talk again. Yeah, I thought we could build on the last conversation, which unpacked these two education reports. One that had a seminal impact for the last 40 years called A Nation at Risk, and another Sandia Report that we talked about that has a much lesser known. And I was thinking what comes out of some of the reports often as a shake-up, and then there's various ideas about what to do about the crisis outlined in this case. But I think, a lot of the times, those management practices have the opposite of the intended effect. And I think... One of the things I was thinking about is that Dr. Deming, maybe his most radical idea that he put forth is that any outcome that we see within a system, like a system of education, is the result of more than the skills and efforts of the individuals who work within that organization. And what he would say is that most of the performance differences observed between individuals are generated by these complex and dynamic, adaptable systems, and workers are only one part of that system.

0:01:49.8 JD: And I think understanding that sort of core idea of Deming is one of the ways that we can start to move away from the common management and maybe understanding those management myths is maybe the most important part of understanding the new philosophy that Deming was sort of putting forth. I think one of the things that I learned in watching some of his videos from his famous four-day seminars is that he often began those seminars by saying, management is living in an age of mythology, and even though he was saying that throughout the 1980s and even into the early 90s, before his death in 1993. I think that idea applies just as well today across numerous sectors, including education, as it did when he was saying it 30 or 40 years ago, I think it applies the education, applies to government, applies to industry.

0:02:52.6 JD: And what he meant by the age of mythology, at least my interpretation of it, is that leaders in these various industries basically operate according to these assumptions and these myths, and these myths are harmful to our organization. And so when he talked about the transformation process, part of the transformation process is understanding these myths and then moving away from them, actively trying to move away from them. So I thought we could talk about a few of those myths today and unpack those myths, where they originated and what were they are and then what to do.

0:03:29.3 AS: Great, great idea. And I remember he would say something like, how could they know? They did their best efforts, that's all that they have. Who came up with the idea of rating and ranking? Someone just... And then you realize people just may make things up ultimately and then they stick, not based on science or something like that. Sometimes the science creeps in there, but most of the time, based upon emotion. You jarred my thinking process when you're talking about the role of an individual in a system.

0:04:07.4 AS: And I was just thinking about how the beauty of the individual is that the individual is malleable. We're malleable, we're able to be contorted. Whereas when you install a particular piece of machinery that only has... Can produce so many units or such level of quality, it's a very rigid part of the overall system. And I was just thinking how, one of the reasons probably why we're always chasing after the individual, despite the fact that the very, very rigid machine over there is what's setting the ultimate specifications of the output of this is because the human is so easily manipulated. Well, put them over here and we'll do this, we'll do that, we'll start early, go late, try this, try that, whereas with the machine, you just have a lot less flexibility. And so you just made me think about that as I was listening to you talk...

0:05:02.3 JD: Yeah, that brings a good point. One, I think some prescient on your part is you mentioned the myth of rating and ranking, which is definitely one of the myths that I wanna get to. And I think you talk about machines versus workers. I think a couple of things I think of there, one is our organizational systems have become increasingly complex as we moved from the farm field to more of the industrial age, and maybe even the post-industrial age now. And who bought the machine? I think that's a lot what Deming was talking about is who designed the system, who had control over the system. If the machine is a major part of the process, who designed the machine and who bought it? Probably not the individual workers on the line. And yet, they were held responsible, or maybe even still today, held responsible for the results when they didn't design or pick the machine themselves. So I think that's a really good place to start. And I think that also brings up like, where did these management myths originate? Because if we go back a few hundred years, I think there's probably the lack of complexity, there's the...

0:06:26.8 JD: Mostly what we were doing is managing the work of... Managing our own work, I think of the farmer in the field or the craftsman in their workshop, is that sort of first line of management. And then as things got a little more complex, they're management by directing. So think of the craftsman taking on an apprentice, but it's still a pretty simple system and it's the manager, in this case, the master is directing the apprentice directly. And then you get the Industrial Revolution and you get this sort of third wave of management thinking... And here I'm thinking about management by results. And this is numerical quotas come into play, this idea, this common quip of, "I don't care how you do it, just get it done" type thing. And I think this is third generation management, and I think that's the dominant sort of paradigm of the 20th century. I think that probably paradigm in a lot of ways continues to the present day. But I think what Dr. Deming was a proponent of was this sort of fourth generation management, which was "management by method." So he was calling on, especially leaders, management of organizations to work with people on these methods rather than judging them on results, to your point about rating and ranking.

0:07:57.1 JD: And I think that's sort of a big part of the Deming philosophy, is to move from just rating and ranking people and thinking about instead, what are the methods people... What are the processes people are using within our systems to get the work done?

0:08:13.1 AS: Yeah, one other thing it just made me think about is that when you manage people, let's say in the US, people don't wanna be micro-managed, they want... They like to be told, "Well, you figure out how you're gonna do it and then do it." And let me take responsibility for that, right? So it is a bit seductive to forget about the methods and just focus on the individual and say, "Make it happen." And there are times that, that can be a valuable tool, a valuable way of managing when there's just so much going on, but also juxtaposing that to the typical manager in Thailand, which I'm very familiar with, they don't wanna be told that.

0:09:01.3 AS: It isn't necessarily their desire to be independent in their work and to originate the method. There's many managers here that really appreciate the boss that says, "Here's how I want you to get there," or "how do you think we should get there?" And that there's a much bigger discussion on that, maybe it's because there was less of an industrialization over the years, and that that's a newer thing compared to where America is at, but I know that my experience with management here is that managers do appreciate that concept of, "Let's look at the method of how you're gonna get there."

0:09:46.1 JD: Yeah. I think method is important, and I think one of the first myths that I was thinking about is, now label these as we go, but I was thinking of this myth of best practices, which it wasn't exactly what you were talking about, but it sort of made me think of where do the methods come from that we are working with it in whatever sector we're working with.

0:10:12.3 AS: So is this myth number one?

0:10:12.8 JD: Yeah, myth number one.

0:10:16.8 AS: Boom.

0:10:17.3 JD: Myth of best practice, so I think you teed us up really well. And this is an area that I've done some deep thinking on this because this has been a very... With all of these myths, you gotta be careful. You gotta really think about what it is that Dr. Deming was saying. And I'm not... So I'm not saying when I say myth of best practices, I'm not saying don't go out and study what other people are doing and try to bring the best of that to your organization. I don't think that's what Dr. Deming was saying. But I think that you gotta be really careful when you label something a best practice, and then try to incorporate it into your organization.

0:10:58.9 JD: And I was thinking in my role over the last two decades or so, maybe decade and a half, I've been fortunate because I've been a part of an informal network of schools and I've been able to sort of leverage that network, and go on many, many school visits probably many than the typical educator, even one that's in a leadership position. Dozens, I counted them up a couple of years ago over the last decade and a half, I think I've gone on over 120 school visits, and that's all types of different schools. Traditional public schools, public charter schools, private schools, and all over the United States, in South Midwest where I'm based out of here in Columbus, the Western United States to northeastern parts of the country. And I think on one hand, these visits have been extremely beneficial. I was able to observe classrooms and school practices in these many different places.

0:12:00.3 JD: I was able to speak with teachers, building administrators, school district leaders about the many challenges they're facing, how they're counteracting those challenges and the solutions they've developed with. And I think I've always tried to pay very careful attention to what context is this particular school operating under - what's their student demographics? What resources do they have both financially and from a human resource standpoint? Where are they situated? Are they in a city or in a town? Are they in a rural area? Some of the factors associated with those different practices. So I pay attention to those.

0:12:45.4 JD: And every time you go into a school, each school has its own culture, it has its own feel. But I think that... Well, I have this appreciation of the context, I think as I've thought more about these various practices, I've grown more skeptical. I think there's really an under-appreciation for these contextual elements within which these best practices often operate. There's... I remember hosting my own school visit and we, in our own schools, in our elementary schools, we have these carpets where kids come to do reading, read-alouds.

0:13:29.5 JD: And after one of these school visits, one of the superintendent said, we're gonna go buy these carpets and we're gonna do this too. These carpets are great in the classrooms and I don't know how it worked out, but I got the sense that there was sort of like, there's a whole system, a whole set of processes and procedures that are set up. It's just not having the carpet in the classroom, it's how it's used, it's how the kids move to the carpets, it's what's happened once you get to the carpet. You can sort of under-appreciate all of the sort of thought went into something as simple as the read aloud carpet that you see in a classroom.

0:14:07.2 JD: And I think there's this part of about context, and then there's just also a part about, is this practice... Does it have a sound research-base as well? So you're looking at both of those things. And I think in education, those best practices, often the research base is very, very thin. And then there's this whole other side of things where you really have to understand what is the context, the different variables that went into making that practice work. It may have been something that unfolded over four or five years, and you just can't pull it out of that school and then drop it into your own setting. So I think one of the things that Deming said about best practices is "to copy is to invite disaster." And so I think there, he's not saying, "Don't go study other organizations," but it's not as simple as, "Oh, I see this curriculum or this teaching practice or this method in one place. We're gonna do that tomorrow." It's just not that simple. So I think this is, like I said, one of these myths that I've come to appreciate how important in the context that they're operating under is before you can take it to your own school or network.

0:15:20.0 AS: Yeah, a great way of thinking about this one is, imagine that you take a General Motors car. Let's take a, I don't know what's fancy these days, but let's say a Cadillac as an example. And we say, here is the design for the Cadillac and here's everything you need to know, all the parts and everything, and you deliver that to Toyota, and say, "You have a car factory, so build this car." What you don't realize is that in particularly with the Toyota production system, that the whole production operation at every company is built around an infrastructure or a context, as you said, that sets the stage for how that is done.

0:16:29.4 AS: And therefore, things are not interchangeable. And so if your idea is, I'm just gonna go around to these 120 different schools and look for best practices and bring them in, it's like an amalgamation of unnaturally developed things. And also the other thing that it made me think about is that the whole point of PDSA is that you're working in your own organization to build a deeper understanding of a particular problem and solution. And when you repeat that process, you are also building a unique competitive advantage. Now, whether that in, let's say, in the world of business, that competitive advantage may be kept secret or not necessarily shared - in the world of education, it may be made public, but it's very hard to duplicate something that has been constructed internally through process of learning. And so just putting amalgamation of different things onto a body or onto a facility doesn't make the combination of those something great.

0:17:35.7 JD: Yeah, and I think of, what's the idea of the day? For schools coming out of the pandemic currently, 'cause the impacts of the pandemic and learning loss and those things are still sort of obviously being felt by schools, and we're seeing that ramification show up and in test scores and other measures. So one of the things that has been sort of promulgated as a silver bullet is high dosage tutoring, which means like a significant amount of tutoring happening for an individual student or a small group of students on a regular basis where what happened three or four times a week. And you see this in education publications, you see this policy makers and even legislatures are pushing this idea.

0:18:33.3 JD: But the problem is, while the research base for that particular intervention may be strong somewhere and under some set of conditions, the question for a practitioner is, well, who are these tutors? How will these tutors be trained here? Who is training these tutors? What curriculum are the tutors using? What financial resources are there to pay these tutors and to acquire the curriculum? Where in the school day is that going to happen? What are kids that are going to high-dosage tutoring gonna miss in the school day to be able to attend that tutoring? If it's not happening during the school day, if it's happening before or after school, how will kids get home from that tutoring?

0:19:22.0 JD: Who's providing the management of the tutors? How are those tutors hired? How are those tutors replaced when they inevitably will turn over? I could go on and on and on and on and on and on about these things, well, someone tells me that as an educator leader that, yes, for sure high-dosage tutoring is the best practice that you should drop into your organization, those questions remain unanswered and those questions are actually the thing that will actually make the practice come to fruition and work or not, and oftentimes, when these different ideas are being thrown about, none of those questions have been answered. And so I think we do this over and over for certain in the school world that I'm in.

0:20:10.5 AS: It reminds me of that old time song that maybe our older listeners and viewers would remember, "Who takes care of the caretaker's daughter when the caretaker is busy taking care?"

[laughter]

0:20:22.9 AS: So who's taking care of all those different things behind the scenes and putting them all together? So that's a great one to help us realize that it's good to understand best practices, it's good to go out and survey and get them and consider them, but then what really matters is how do you take best practices that you see, narrow them down, the one that you think will fit in your system and then develop it slowly and steadily, so it becomes a permanent improvement in your system? I think that's what you're getting at. Would that be right?

0:21:02.4 JD: Yeah, that's exactly right. So I think of something that may come to us through something like a randomized controlled trial, like the effectiveness of high-dosage tutoring, I think looking at RCTs or other similar... That's sort of the gold standard research. But even...

0:21:20.4 AS: RCTs for the listener is Randomized Control Trials?

0:21:25.0 JD: Randomized Controlled Trial, a study where people are randomly assigned to groups and then there's a treatment for one group and not a treatment for another group, there's no real differences between those two groups, and then you see if there's an effect. I don't think there's a lot of the studies that sort of rise to the gold standard RCT, there are other types of studies in education for sure, but either way, I think that's to the difference between when an ideas come through a randomized controlled trial where it's worked somewhere for some group under some set of conditions.

0:22:03.5 JD: Versus the Plan-Do-Study Act cycle that we've talked about, I think reading the research base can give you a starting place, give you some indication of the types of interventions or the types of curricula, or the types of practices that may work, but the Plan-Do-Study Act cycle allows you to sort of take an idea in your context and try to get it to work under the very conditions under where the idea or the practice would ultimately have to be working for it to be effective in your organization.

0:22:36.4 JD: So I think that's the two differences. Those two things, the RCT and the PDSA cycles can be complementary, and I think that's how I actually think of those two things, but you can't just... Can't force these best practices into contexts that they weren't designed to be in. And you gotta figure out all those questions that I talked about with any idea, I use high-dosage tutoring, but those are the types of questions that you can start to... If you're gonna try that in your organization, you can start to hash that out through the PDSA cycle, so I may say... Instead of saying, we're doing high-dosage tutoring in our school district, what I may say is, "What would it take to provide targeted tutoring to one student for one week?" I'm gonna plan that, I'm gonna do it, I'm gonna study the results and I'm gonna act on it.

0:23:31.8 JD: And in that one week, what you may find is a whole host of things in your context that you did not consider where you can't even get this to work with one kid, [chuckle] let alone a 1000 kids, or if you're in a bigger district, 10 or 15 or 20,000 kids and even those kids, even though they're in your district, they might not even be all operating under a similar context 'cause they're in different buildings with different adults and those types of things.

0:24:01.4 JD: So things become much harder when it comes to implementation, when you start to think in that way, "How would I get this thing to work with one student?" Come do that with me and you see the challenges person pushing high-dosage tutoring and then you can extrapolate that out to 1,000 kids or like I said, 10,000 kids, and you can start to see how this stuff falls apart pretty quickly in practice.

0:24:27.9 AS: Well, I think that's a great description of this first myth of best practices. So what myth number two?

0:24:37.4 JD: This is the myth I call myth of the hero educator. I think we latch on the hero stories in all kinds of walks of life. Hero stories stretch back to ancient times and they capture our attention for good reason. Ya know, they have these archetypes and we can identify with those archetypes, but when it comes to education, I think... I'm thinking about outlier educators with some type of... Some center of exceptional and rare talents, and I think one of the best known movies that captures this from an education perspective is Stand and Deliver. You may...

0:25:22.4 AS: That's what thinking about when you... I couldn't remember the name of it, but I remember that movie.

0:25:27.5 JD: Yeah, it's a prototypical hero teacher, biopic. It's Jaime Escalante in Los Angeles, basically, the movie depicts him leading his 18 inner city math students from basic math to calculus in just two years time, but then when you actually... Jaime Escalante is a real person, he's a real teacher in California at Garfield High School, but when you go study what actually happened, it's very different from... The movie is very different from what actually happened in real life, so when you look at what he actually did...

0:26:08.9 AS: Funny that.

0:26:10.7 JD: Oh yeah, can you believe it? But we latch on and say, "Oh, if he could do it... Or this is based on a true story. We can do this in two years." And what actually happened was that Escalante, the teacher, it took him eight years to build this math program that's depicted in this movie, he completely revamped the Math Department at his high school, he had to start by convincing the principal to raise the sort of math requirements at the school in general. Then he designed this whole pipeline of courses to prepare students for what they ultimately were trying to get to is AP Calculus and then he hand-selected top teachers to instruct those courses along the pipeline, and he even went to the junior high schools that fed into his high school and convinced them to offer algebra to eighth graders.

0:27:07.8 JD: So he's actually... What is actually really doing is setting up this math system basically that hadn't been there before, so he's actually thinking like Deming and setting up a system of pipeline that makes sense, and none of Escalante's actual students moved from basic math one year to AP Calculus, the following year, that's a complete misnomer, instead, it was the sort of system transformation that unfolded through the cooperation of obviously numerous educators and students over this eight-year period.

0:27:42.3 JD: Now, putting that the side, it didn't happen like you didn't move is still a pretty amazing story, whether it took two years or eight years, he set up this pretty amazing system. So I think most of us are not gonna rival Escalante and his tenacity and the results that he got with his students, his results are so far outside the norm, they made a movie about this guy. So they made the movie for a good reason, but I think my take away and thinking about this myth of the hero educator is that knowledge about variation, this component that we've talked about, part of Deming System of Profound Knowledge. Knowledge variation... Knowledge about variation tells us that the vast majority of educators perform within the enabling and constraining forces of an organization system.

0:28:35.9 JD: So most teachers, most principals, most superintendents, do not have Escalante's tenacity to set up a brand new system. Most of us just don't have that in us, but we create these mythologies around heroes like this hero teacher, they're embellished, they leave out important details, and I think these hero educators do exist, but they make up a tiny fraction of the educators in the United States, and same thing on the flip side, teachers, especially in the last decade or so, have caught a lot of slack are often blamed for test results and other sort of ills of the education system, but what I've found, and I think what the research bears out is that on the other side of the hero spectrum, those that are unfit, that really shouldn't be in front of a classroom of students, that's also a very tiny fraction of the educator workforce.

0:29:37.7 JD: And that the point I would take away is that all of this points to the fact that it's really the system where the vast majority of the improvement potential lies. So you get this hero educator myth, it makes for good drama in Hollywood, but it's a really, really poor strategy for educational transformation and improvement.

0:30:00.9 JD: We sort of go back to these myths, whether it's best practices, "Why don't you guys do it like them? They can do that over there, you make it work in your system. Well, if this guy in California can do this, why can't you do it over here?" But it's really not about the individuals, it's about creating these strong systems where the vast majority of people that are sort of in that... A majority bucket, not the heroes, not those that probably shouldn't be in front of students, how could we make the systems work for those folks? I think that's sort of my take away from that myth.

0:30:42.2 AS: Yeah, in fact... So a couple of things I was thinking about. The first thing is, I bet you if we go there and look at what's the progress in what he did, that in some cases, you could see it's all gone, because some opposing person who was upset by it or didn't agree with it, or didn't like the idea of one person standing out to that extent knocked it down. I watched the education... There was a master's in marketing program here in Thailand at one of the universities that was, I would say, world class. The lady who ran it was amazing, and what she and another guy built out of it was really about 30 years of continuous improvement. They just kept improving.

0:31:30.6 AS: And so it really was an impressive program and there was a new dean of the school that came in and he didn't like it, and he didn't like that person, and he basically, between him and his forces, knocked it out and destroyed it, and it's completely gone, and that was an interesting example that I saw. So the first point is that, is it really lasting improvement? Well, we have to admire the people who have so much tenacity, and we definitely wanna get everything that we can to improve the system, but just that one person rising up does not mean that the system's gonna necessarily be improved.

0:32:12.6 AS: So that's the first thing I thought about. The second thing I thought about was, one of the amazing defining qualities of McDonalds is everywhere you go, and I've eaten McDonalds everywhere in the world, basically. Now, we can debate about the quality of the food, but I would say that the consistency is amazing, and it's done with... That back in America when I was young, it was done with 16-year-olds on summer break, and it was done because they continually improved the system to make it so that the worker could deliver that consistent quality, and any new idea had to be implemented... Had to be able to be implemented worldwide in that system or else it wasn't gonna get into the system. So those are two things that I was just thinking about. How do those relate to this myth of the hero educator?

0:33:10.7 JD: Yeah, I think those are spot on, and I think it could be... When you build a system like Jaime Escalante did in his school, I think it could be drove...The undoing could be nefarious, a new principal could come in that just doesn't like it sort of comparable to what you were talking about, or probably what happens in a lot of cases where an amazing system has been built but it's completely reliant on that hero, once Jaime Escalante retires, it's very possible that that system then collapsed and not because anybody was working against it necessarily, but it could have been just without him and he was such an important part of it. Which would probably speak to what type of system was set up in the first place. Now, without him sort of pulling the levers, then it's very possible, but that would be enough in and of itself for that system not to live on to this day.

0:34:12.8 AS: Now, I can imagine an educator or an executive administrative, he's like, "What are you guys talking about? That was my only hope is to find this hero that could take us to the next level, and now you're just saying, no, no." I'm just curious, thinking about it from that perspective.

0:34:34.1 JD: Well, it's better because I think this is better because it doesn't rely on the hero. I think the same... I think a group of people, certainly have to be dedicated, you have to wanna change the system, but a group of people putting in place a strong process, I think is the point of all of this. That that's really what we wanna do. Do you need strong leadership? Sure, sure you do. But it's necessary, but not sufficient to building systems, you need a group of people working together and putting strong processes in place, processes that are strong enough, whether an individual or individuals over time moving on as they are inevitably really gonna do that the system or that set of processes remains intact. And I think that's what a system like Toyota, who you talked about earlier, that's what they've been able to do.

0:35:40.3 JD: People have changed over the years since the Toyota production system was put in place, but a lot of those processes, of course, they're continually being improved, but they put the process in place that wasn't reliant on any single individual to remain in, say, the CEO position and to ensure that that process or those set of processes would continue over time, that's the whole point of this, so you don't wanna be reliant on a single sort of hero educator or a hero engineer or whatever it is, you want the process... The system be strong enough that it continues to work even after that person retires or moves on to another position or whatever.

0:36:22.9 AS: So we've got two myths here. First a myth of best practices, and then the myth of the hero educator. And in wrapping up, let me just briefly summarize. So in the idea of the best practices, the main point that you're pointing out is be careful about trying to build an amalgamation of best practices, you have to understand where that best practice was developed and what was the context that it was developed under, and then you have to think about how that best practice could potentially fit into your system, and that may be the best idea here is rather than trying to just pull together a bunch of best practices to think about one or two new ideas that could be built into the system to improve the system of education. That's number one.

0:37:16.3 AS: And the myth of the hero educator is just to remember that the outlier educators, both on the great side and on the poor side, are very small group of people, very... And so to think that we can create lasting change from the power and energy of, let's say that really exceptional person is probably making a wrong bet and it's better to then think about, "How can we take from the energy of this person and implement the things that they're doing in such a way that we can build them as some lasting improvement in the system of education so that it doesn't just disappear when that man or woman disappears?" Would that be a summary? Or anything you would add to that?

0:38:09.0 JD: Yeah, it's a great summary. I think the only thing I'd add to the best practices is coming up out of a Nation at Risk, many, many times the reforms were like, if you just do X practice, whatever that thing was, standards or a certain curriculum, there's that under appreciation of context over and over and so I think the PDSA, the Plan-Do-Study Act cycle is a powerful driver for testing ideas in your context on a small scale. First, before moving on to a larger and larger scale until you get to full system-wide implementation. So I think your summary is perfect, I'll just add in the power of that PDSA as a part of figuring out what works in your particular system, in your particular context.

0:38:50.8 JD: Yeah, and with the hero educator, you mentioned you got the hero educator on one side, the positive side, those that probably shouldn't be in front of the classroom with kids on the other side, tiny fractions, a lot of what came out of a Nation at Risk, especially maybe from 2000 on targeted individual teacher performance, thinking that you could get rid of the bad teachers. But again, it's a tiny fraction of the educator workforce, and even if you did that, it's not gonna make a difference because the vast majority of people are in this sort of middle ground that needs strong leadership and strong systems, if we're gonna transform schools.

0:39:35.9 AS: So to wrap up here, we have management myths that keep fooling us, we've got myth number one, best practices and myth number two, hero educator. And we've got more myths to come up in our next episode, which I'm really looking forward to. I think these have sparked discussions and thinking about how to create lasting change and improvement in education. John, on behalf of everyone on the Deming Institute, I wanna thank you again for this discussion. And for listeners, remember, go to deming.org to continue your journey, 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.”

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In this episode, David and Andrew ask: should we tell people when they make mistakes? How do educators manage mistakes in a classroom setting, after their organization/classroom is transformed by learning and implementing Deming?

0:00:00.0 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 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 the day is, "should we tell people when they make mistakes?" We are continuing a discussion about Dr. Deming's section of the book, The New Economics. If you have the 3rd edition, that's page 86. If you have the 2nd edition, that's page 125. And this is a list that Dr. Deming has given us of 14 points. It's not The 14 points that we normally talk about, but these are... The title of this 14 points is called Role of a Manager of People. This is the new role of a manager of people after transformation, and we are on point number six. And I'll just read it before we get David to start talking on it, and that is this.

0:01:02.7 AS: "The role of a manager in a new style," basically he's saying, "If he understands a stable system. He understands... " And I know we can also say she, "understands the interaction between people and the circumstances that they work in. He understands that the performance of anyone that can learn a skill will come to a stable state upon which further lessons will not bring improvement of performance. A manager of people knows that in this stable state it is distracting to tell the worker about a mistake." David, take it away.

0:01:41.2 David P. Langford: Thank you, Andrew. It's good to be back again. Yeah, I was just reflecting on this list is... It's such a great list. I'm sure that when people first read through this book they kinda just take 30 seconds to read through the list and then you go on. I've been studying Dr. Deming's work for over 40 years now and still find so much insight into all these things. So if you go through this and you start thinking about, "Well, what can I do differently and where do I begin?" I was also thinking that, when I got my Master's in Administration, I never heard of any of this. I never heard of a stable state, control charts, theory. I never got any of this or had a list on to how to manage people, which would have been very helpful, very insightful. So if you're working at a university right now and you're a teacher of classes of administration, here's some good advice, take people through this list and they'll actually come out with capability of what to do. But now back to the list. So, the first thing he says is you have to understand a stable system.

0:03:01.1 DL: So we did a couple of previous podcasts on stable and unstable systems, and on face value, a lot of people think: "Okay, well, stable system, okay, well, it's working well." But Deming's thinking around a stable system is much, much deeper than that, and it has to do with statistical stability. And so if you understand a stable system, then the first thing you're gonna have to do is you have to find out, "Do I have a stable system?" And so often when I work with people, I'll just start with sort of disarming questions and say, "Hey, how are things going?"

[chuckle]

0:03:45.4 DL: And they'll usually say, "Well, it's going pretty good." And, "Okay, well, how do you know?" "Well, 'cause people are telling me that it goes pretty good." "Well, how many people do you manage? Oh well, I have like 30 people on the staff." So you're telling me that 30 people are telling you every day that things are going really well? "Well, no, one person told me." "Well, do we know what the other 29 think?" So, right there you realize a manager does not understand a stable system. They have no idea what they're doing, and the phrase in America is "you're flying by the seat of your pants" which basically means you're just…whatever is happening from day to day, you're just going with the flow, but you're not managing a stable system nor do you really understand it.

0:04:39.7 DL: So the first thing I wanna point out is that this is telling you, before you do anything, you have to understand the system. So you have to figure out, "Okay, what am I gonna collect data on? What's really important? How do I really understand if I have a stable system?" Then you're gonna have to set up that process and you're gonna have to do that for at least 12 data points, if not 20 data points. And in education that could mean 12 days, 12 months. It could mean long periods of time. Or the other thing is you have to go back into history and get that data for previous years. That's another way you can get the data points, put them on a run chart and see, "Is this system stable?"

0:05:32.7 DL: So what does that mean? Well, once you do that, you'll find out you have average performance over a long period of time. Okay? And usually there will be variation in that. Some data points will be higher and some will be lower. There are only three possibilities for a data point, up, down or the same. And that's called variability in a process over time. And so you have to understand that, and you can't understand that just by intuitively sort of going day by day going through things, because psychologically you're constantly reacting to a situation.

0:06:17.6 DL: You go home at the end of the day and your wife or your husband says, "How was your day, dear?" And, "Oh I've had a terrible day," and duh, duh, duh. But they usually don't say, "Well, how do you know it was a terrible day? How do you know it was worse than any other day, or better than any other day, or..." Well, until you actually understand a stable system and understand what's going on, you don't know really. You're reacting psychologically to that, and that's part of human nature.

0:06:47.5 AS: I wonder, David, would it be...do you think it would be...would it be proper to say that most systems that are kind of running, and haven't been looked at as to whether they're stable or not, are probably unstable?

0:07:04.3 DL: Not... My experience, I'd say 90% of my work has been in education, not business, etcetera, but what I found out is that intuitively people will stabilize a system over time. If they don't unintentionally do that, they kinda go nuts, they go crazy. Because one day they're in euphoria and the next day they're in hell, and then they're just... The roller coaster swings are so great that they'll usually leave the profession, go find something else. I used to see that a lot with new teachers, brand new teachers. And they call it the Fall Wall. So you start school and everything seems really great, and then you start to realizing, "Wow, this is work, and this is managing people, and this is every day, this is..." You're on and you're working through that, and then there's the Fall Wall of this huge depression cycle, and...teachers that stay with it and really have a love of kids and a purpose behind why they're there, they'll start to normally just stabilize the system. They may not get great results, but on average they're no worse or not much worse today than they were yesterday, or vice versa. But they're not gonna get a breakthrough in that system.

0:08:35.4 AS: Yeah, and I'm thinking about even when I recently did like a fast and my weight went down, and I had it down for a little while, and then I went back to eating, of course, and then all of a sudden you've realized there's this rebound and now that you're back, and now I'm back up to where I was and it's stable. It's not what where I really want it to be, but it's stable. And so you realize like there's a...as you're saying, people can't deal with chaos every day, so it stabilizes at some point, but that point may be far from the optimum of what that system could produce or something like that, I guess.

0:09:13.4 DL: Well, that's a good example, 'cause the person says he understands the stable system. Well, before you started to do that fast and actually track your weight, you were probably...your weight was probably in a normal range. That's the way it is for me. If I don't track it at all, it's usually within five or six pounds, given what's going on over a long period of time. But as soon as I track it and I start to understand what's happening and I see what the average weight is, then I have to think about, okay, am I happy with the average? So, again, this is back to the stable system. I always tell teachers, if you're happy with your average and you know it, clap your hands.

[laughter]

0:10:00.8 AS: If you're happy with your average, and you know it, clap your hands. [singing]

0:10:03.4 DL: And you know it, clap your hands. Yeah.

0:10:06.7 AS: There you go.

0:10:06.8 DL: So yeah. And they all laugh and everything else, but how do you know if you're happy with your average? Well, you're gonna have to collect some data. So it really doesn't matter what system you're thinking about managing, you have to understand...do you understand a the stable system? So let's say that: "Well, these kids today, they're always late to class." Okay, well, set up a run chart, track that for 12 days or 20 days, and find out what you're talking about. Find out. Are all the kids late to class? "Well, no, they're...no, they're not all late to class." Well, okay, well how many are late to class and what's happening with the data over time?

0:10:46.7 DL: So you have to figure it out what's important to you and how you're gonna go about that. The example I often give is, I worked with a middle school principal and he said, "Oh well, the teachers are complaining that the buses are always late." And I said: "Okay, well, that's pretty easy to track, so let's set up a run chart and you track the buses for 30 days, the arrival times of buses." Well, he did that, and not only were they not late, they were consistently really good. It was a stable system.

0:11:23.6 DL: 20 buses were arriving within a five-minute span. These people knew their jobs. But then one day they had fog, and one of the buses got delayed with the fog for like two hours before they arrived, and then all...so all these kids get off the bus and they're two hours late, and everybody in the front office has to get them caught up, the teachers have to get them caught up, it's a big emotional deal. But that's what everybody is responding to. They're not thinking about the stable system. They're responding to this one special cause, and psychologically it was a big problem, therefore "these buses are always late."

0:12:05.3 AS: Recency bias.

0:12:07.0 DL: Yeah, there you go.

0:12:08.3 AS: And it's an emotional attachment. I had two quick stories I wanna tell you, David, about this, and then maybe you can help me understand them. But the first one was that I was teaching at...I teach a program called Masters in Marketing at a university here in - Thammasat University in Thailand. 75 students that are studying in the class. And then I teach at another program in another place. And one of the things you notice is that in the other program, the students are late. You just count on it. And so you kind of don't start until five minutes after, or 10 minutes after, and let them drift in. And with the Master's in Marketing students, I've never ever seen any of the 75 students late. And here we have Bangkok traffic, you got something to blame it on. And it's never late. So is it different students or is it a different system? Well, when I investigated it more, many years ago, to try to understand it, I realized that they set a rule. They said if you're not in the classroom five minutes before, we're locking the door. Come back next time.

0:13:14.1 AS: And for some people that was really harsh, but once people signed up and they knew that that's the way the system worked, the output of the individuals was very different, the activity of what they did, just because they knew what to respond.

0:13:29.4 DL: Well, you bring up... Yeah, you bring up a good point. One way that people often stabilize systems is to make more rules. Well, let's just make a rule like that, and if you show up late something bad is gonna happen to you, or you can't get into the door or something like that, and if it doesn't work then just make it harsher. And public schools...or not public schools, but all schools, K through 12 schools especially, go through that. So if somebody's late, what happens to you? Well, you know, this is gonna happen, and then if you're late three times then this happens, and if you're late six times then this, and then so many times you're gonna lose credit and.... Does it work? It will stabilize the system to a point, but every administrator knows, there's just students that are like, "I don't care. Do whatever you want. Because I don't wanna be here in the first place."

0:14:31.8 DL: "The system you're running is so terrible and I hate it so bad, that [laughter] only reason I'm here is to avoid the punishment". And if that's the system that you're running, and soon as you stop doing those things, the variation is just gonna go back to where it was before.

0:14:51.2 AS: And is there a difference when it's...in the case of the Masters in Marketing students, they're all kind of voluntarily there, they paid a lot of money to get this education. Does that make any difference? Do you have to handle it differently or would you do pretty much the same and say, well, just squeezing down on people may stabilize, but it may not actually solve the root problem?

0:15:16.3 DL: Well, the answer to it actually is in this point that we're talking about here. Because the next sentence, he [Deming] says, "The manager understands the interaction between people and the circumstances that they work in." Okay? "Understands that the performance of anyone...they can learn a skill in a stable state." And so the answer to the question is right there. I would like to think about, you're starting class, if you want everybody there immediately, you're starting class immediately. So if I'm late to class, and you better make darn sure that what you're doing immediately is really important and really fun and really interesting. So if I walk into class late, I know immediately I've missed something. But the reverse...

0:16:06.5 AS: So it makes me think of start with a hook, start with something that's a grabbing activity that they wanna be a part of.

0:16:12.7 DL: Yeah, it could be. And sometimes I've been in situations where I had to manage like that, and so I would just start the class outside. If you're late, you came to class, you'd show up and there's nobody there, and you're like, "Where is everybody, what happened?" So the next class, you're probably thinking, "Well, I better get there on time because they're gonna be doing something." Or what I used to always, or still do, is tell teachers is, "Start class before class starts." What's that? Well, that means, well, when people are on their way to class, what do you want them to be thinking about, getting ready to do? Well, that's probably gonna have to start at the end of the previous class.

0:17:02.4 AS: Hold on, David, that's so valuable. I'm just thinking about my own students tonight, that I have my Valuation Masterclass Bootcamp, and starting class before class with the idea, I have a communication channel and I know what I'm gonna talk about tonight, and I know what we're gonna be doing. So maybe in that channel I should be throwing out some things that get them excited about, "What are we gonna do tonight?"

0:17:31.2 DL: Yeah, or you actually go through a quick process with them to set up a little flow chart, how to start class before class starts, and get their feedback about, "Well, what should you be doing when you're stuck in traffic in Thailand and trying to get to the university on time? What should you be doing?" I should be going over about, "Hey, what are they gonna be talking about this time and what's gonna be happening?" "Well, how am I gonna know that?" Well, somehow through the syllabus or the previous class. Or that's why ending a class by going over what are we gonna start with next time, is really a good thing, because people are like, "Oh yeah, okay, and now I know what's gonna happen as soon as I hit the door."

0:18:14.1 AS: So that's another practical thing right there, and I learned this from attending an online course of a guy named Brandon Gale, and he had at the end of each of his presentations, he'd say, "Up next, I'm gonna show you da, da, da." And I was just like, "Okay, that just absolutely made me wanna go to the next one." So now in all of my presentations I always have this one slide that says, "Congratulations, you've made it to the end of this section. Up next, you're gonna learn the one thing that da, da, da." And then that really helps people. And I have another...

0:18:47.4 AS: Okay, so now here's another actionable thing that a friend of mine does. He issues podcasts out to the world, but they're directed at his students. And think about following up - a preview podcast about this material that then is published out there to the world, but his students know they need to listen to it when they're in the car on the way to the class. So, yeah. Okay, these are some great, great ideas, let's continue.

0:19:15.6 DL: Yeah, So that's a really great example that: here's the process that we're gonna go through. And so you need to have listened to this podcast because when you hit the door, you're gonna be put into random groups and you're gonna be asked to start a discussion immediately on the podcast that you were supposed to listen to. See? So now the responsibility is shifted from me as the instructor to them as the students: it's your responsibility, as soon as you hit the door, get together with three other people, you got 10 minutes to go over the podcast, and what were the significant points that you got out of that.

0:19:53.0 DL: Well, somebody that didn't listen to it, is gonna be in that group and they're gonna feel very foolish once or twice, and then they're gonna start actually paying attention and doing the podcast.

0:20:05.8 AS: So for the listeners and the viewers out there, here's a challenge, here's a challenge to you: take some of these actionable ideas and play with them, enjoy them, bring them to your students, bring that into the classroom. You highlighted something that I didn't think about either, but the idea of starting class with something like pleasurable, rewarding, something like that, and when I start...

0:20:31.3 DL: It doesn't necessarily even have to be that. It has to be something that needs to be relevant, needs to be timely and it needs to be engaging. So I have to do something as soon as I hit the door. I have a responsibility as soon as I get there or online, if it's an online class, and what do you want them to do immediately as they're sitting there waiting for the online session to start or something, right? Those are all processes that's gonna get you a different stable state than if you just wait and you're gonna tell them what to do when things start. And people learn from that too, because they'll learn that, "Oh well, don't bother to read the syllabus or understand what's going on because he's gonna tell us what to do as soon as we get there." They'll learn really quick that they don't have to think or plan, or do anything, because you're gonna tell people when they get there.

0:21:38.7 AS: Right. One of the other things that I tried something kind of bold, I know my team was a little bit worried about it when we did it with the Valuation Masterclass Bootcamp, we do live sessions at 6 o'clock, two or three nights a week, and basically, what we started was a breathing exercise and I recorded it as an audio clip where I just say, breathe in for four seconds, count one, two, three, four, hold it for four seconds, one, two, three, four, let it out for four seconds, one, two, three, four, and then we go through that cycle three times and it was a risk to bring that out. I felt like some people may think, "Oh, come on."

0:22:15.2 DL: It's a yoga class or what?

0:22:18.3 AS: What's that?

0:22:19.4 DL: Is this a yoga class?

0:22:21.8 AS: Exactly, so I went... By the time we got to the end of that first class where I tested this new idea, I asked them, "What did you think about that?" And they just absolutely loved it. And I know that breathing can actually stop your intensity that you've had from your day and kind of separate that from the actual class, but I can say for myself as the teacher, I enjoy that moment that we all have together where we breathe together. And I know it puts me in a different state, and I know that the value of that is, so that is something that I think students like to be a part of, they see the value in that, they feel the value of it, and therefore they wanna be on time to be in that. So that's an idea.

0:23:03.8 DL: There you go, there you go. So I wanna get back to this. So he [Deming] says he understands that the performance of anyone that can learn a skill will come to a stable state. So that's what we've been discussing, you've taught people a skill and now you stabilized it and it's coming to a stable state, that this is what we're gonna be doing. "Further lessons will not bring improvement or performance, a manager of people that in this stable state, it is distracting to tell the worker about a mistake." And so that's the topic for our session today, are way supposed to be telling people about mistakes?

0:23:40.4 DL: Well, Deming's thinking around a stable...the interaction to create a stable system goes also to why he was so adamant against grading people. That it's not just you doing your own work in a system, it's the interaction of all these people within the system that gets the result. So if you set up a system where you are doing that, you're actually forcing individual, individuals to work alone, don't share anything, don't talk to anybody, don't... Well, what's gonna happen is you'll have an isolated few people that'll really do well, right? They get the A's, they get the top marks, the top grades, whatever it might ever be, and then you'll have everybody else stratified layers, B, C, D and F or whatever you wanna say, on down within that, because what you're really doing is shutting down the interaction of people to create a different result.

0:24:51.1 DL: Well, even in that kind of a world, teachers learn to create a stable system within that. "I got rules and no, you can't do make up work and you can't do this, and you can't do that, because I've got my stable system that I must maintain the system over everything else," which flies in the face of understanding why people are there in the first place, right? They're supposed to be there to learn not to play this game or figure out what the game is for people to go through the system.

0:25:31.1 DL: So what [Deming] he's talking about is that if you're in a system and somebody's making mistake within that system, you're actually...and you're pointing it out or whatever you're doing, you're actually blaming them, the individual.... This is what I believe he's talking about. You're blaming the individual for that mistake when the mistake may have come from the system itself and they can't change the system, only the manager can change the system, whether that's the teacher or a supervisor in a company, or a vice president, a principal, whoever it might be. The individuals typically can't just change the system, right? They can't just come up to the teacher and say, "well, I'm just not gonna play your system anymore, but I'm gonna do this system 'cause it gets better results." Most teachers would kind of freak out about that and, "No, you're not. You're not doing that."

0:26:26.3 DL: If somebody did that to me though, I'd say, "Well, tell me about it, tell me about what you're talking about and why does it get better results, and maybe we should try that as a class and maybe we should learn from that and try to figure out...maybe we will all do that, if we can figure out that's gonna get a different result."

0:26:46.9 AS: And what would happen if you have a worker who just makes a mistake, they're supposed to have done a particular step and they didn't do that step or something like that, some people would feel like, "Oh, well, he should be blamed or she should be blamed for that."

0:27:03.5 DL: Deming often talked about, he went and visited a company, I think in Ireland or something like that, and a big sign in the company, that says "465 days without an accident" in the company, right? And then they go to walk up the stairs and the railing on the stairs was so loose that he almost fell off the stairs, going up the stairs. Well, that would have been an accident, and is that the individual's fault or is that the system? And when you start thinking like that, especially in a classroom, it's the same kind of thing: if somebody doesn't understand a concept, let's say you go through a process where you train people and everything else, but then you've got one or two people out of the group that didn't do it right, don't understand, etcetera.

0:28:00.9 DL: Well, whose problem is that? Well, that's a level of variability, a variation, that eventually you want to limit that variation, so instead of having one or two people every class period that don't understand, now I'm down to once a month, somebody doesn't understand. Now I'm down to once a year, somebody doesn't understand. Now I'm down to about once every five or 10 years, I'll run into somebody [chuckle] that doesn't respond to the process I've set up, and they really are a special cause and I need to treat them like a special cause. I'm not going to change the whole system for that one individual, but I am gonna help them individually because they're not part of the stable state that I've set up and that I'm working within that over time.

0:28:51.8 AS: And so would it be right to say that, okay, once we reach a stable state, really a lot of all the variability and the mistakes, people are gonna make mistakes, that's all kind of noise that's not.... That there's nothing meaningful about that, and therefore pointing out this mistake or that and why did this happen? It's just chasing around common cause variation, and truthfully, the job of a manager should be able to be to think way beyond that, and you wanna encourage everybody through education, not training, we're talking a lot about training here of getting people to a standard stable state, but then the idea is, come on, well look at the opportunities are huge ahead of us, and that is just normal variation.

0:29:37.2 DL: Yeah, I'll give you a personal example [chuckle] from me. I was in an honors English class when I was a junior in high school, and we're all supposed to be top kids in the school, and these English class and working very hard. Well, I was sick for the whole week. And we were studying Arthur Miller, the famous playwright.

0:29:58.5 AS: Death of a Salesman.

0:30:00.1 DL: Yeah, and I came back and I had missed what the assignment was and everything else, and I went up to the teacher real quickly and said, "What did I miss? And what am I supposed to do?" And she said, "Well, everybody in the class was assigned a different aspect of Arthur Miller where things through...so she said, "What I like you to do is I'd like you to make a bibliography of Arthur Miller." Well, whether it was because I was sick or whatever, I heard her say, biography. So I went home and spent a week writing a 14-page biography of Arthur Miller's life and everything, and even hand wrote it out three times to make sure it was all clean and everything else, I was so proud of it at the end of the week, brought it back in and handed it to her before her class started.

0:30:54.5 DL: And she looked at it, she says, "What's this?" And I said, "Well, it's my assignment," and she looked at it and she threw it in the trash can, and she said you were supposed to write a bibliography," and [chuckle] I was just like stunned. I'd made a mistake, but whose mistake was it? So verbally, those two things sound a lot alike and etcetera. I turned around and walked out of the class and went up to the principal's office, and I was gonna change this situation and get it changed. So I mean there's a good example that she was pointing out a mistake that was the interaction of parts to the whole within the process. Simple change would have been to have all the students listed out and all the things that they were supposed to do on a piece of paper and not just verbal announcements about what you're going to do, right? Because there's a certain amount of variability, obviously in a verbal announcement. That make sense?

0:32:04.1 AS: Yep.

0:32:05.2 DL: And so if you keep operating like that, it makes you as the manager in total control of everything, but it actually turns everybody else into victims to some degree.

0:32:17.3 AS: Well, let's wrap this up. I just wanna go back through this one and read it again, because there's just so much to it. Number six: "He understands a stable system. He understands the interaction between people in the circumstances that they work in, he understands that the performance of anyone that can learn a skill will come to a stable state upon which further lessons will not bring improvement of performance." And finally, to wrap it up in relation to what we titled this, "A manager of people knows that in this stable state it is distracting to tell the worker about a mistake."

0:32:51.0 AS: What a great discussion. I appreciate it. I got some actionable ideas out of it, and I think for everybody out there, put some of these ideas into place. And 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. And listeners 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."

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In this episode, John and Andrew discuss what "transformation" means in education. John juxtaposes two reports, conducted a decade apart, that have influenced education for the last 40 years: A Nation at Risk and the Sandia Report.

TRANSCRIPT

0:00:02.3 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. The topic for today is, Do we really need to transform our education system? [chuckle] John, take it away.

0:00:26.7 John Dues: Andrew, it's good to be back with you. Yeah, I thought... Sort of as a jumping off point from our other conversations, I remember, I think in our first conversation, you mentioned you graduated from high school, 1983 in Cleveland area, went to a solid...

0:00:44.9 AS: Hudson High.

0:00:45.2 JD: Hudson High, good traditional public school in Northeast Ohio. And your question was, if I went back to the high school 40 years later, would it look and sound the same, would it have gotten better? Would it have gotten worse? What's going on with our schools in United States, I think was the basic question, I think... When I answered you, I said two parts, there's the question about what most people probably focus on when you think about that question about Did a school get better? Did the test scores improve or decline over time? And then there was a secondary question of, Did the school transform along the lines of the Deming philosophy? And I think that those two questions would have different answers depending on which schools you're looking at, but I thought it would be interesting to sort of think about this question, Do we really need to transform our education system through the lens of a couple reports...

0:01:48.5 JD: Education reports, one that's well known in our world, one that's lesser known, that took a look at the... At least the test results question in the education sector, and then build from there this idea of whether or not we need to transform our schools. One thing, there's no shortage of calls to transform or some people would use the word reform our schools, and those two words probably in and of themselves, probably have different applications, but we'll use them interchangeably as we go through that question and attempt to maybe answer that over this episode and maybe a couple additional episodes.

0:02:36.7 AS: I find that fascinating as I observe education around the world from my own experience outside of the US, and I look at the US, and I think about the importance of education, the role of education. There's a part of education that you could say is kind of indoctrination in the way a country educates its youth to be a certain way or to understand things a certain way, so I didn't see that part of education when I was young, but now I see every country's got their indoctrination that they do within their school system, so I see it kind of broadly, but I'm just curious, really take us through what you'd like to explain about that.

0:03:20.4 JD: Yeah, I think the sort of start... I think there's this quote in The New Economics where Dr. Deming says that people are asking for better schools with no clear idea how to improve education, nor even how to define improvement in education, and I think if that's... And he's saying this roughly the same time that these reports are coming out, and if that's true, I think what happens is when reports come out about the state of our education sector, it's pretty easy to get pulled this way and that. When you don't have a clear picture in your mind for what schools should look like or how to improve schools, these reports have large impacts. And so the first report is well known. It came out about the same time you were graduating from high school, in 1983 in the first Reagan administration, called A Nation at Risk. It's pretty well known in the education sector, and it's had a lot of far-reaching impact in both time and place, where even today, 40 years later, we still... Some of the roots of the various reforms that we've undergone in our sector, it's still playing a role.

0:04:40.6 JD: The second report is, that I'll sort of juxtapose against The Nation at Risk is a report that came out about a decade later called the Sandia Report, and I think it's really interesting just to look at those two reports and the impact or lack of impact they've had over the last 30 or 40 years in the world of education. So I think I would start with, when A Nation at Risk came out, and it was commissioned by the Reagan Administration, the National Commission on Excellence in Education is the group that released the report and one of the leading statistics that's in the report is that the SAT, the college entrance exam that high school students take demonstrates a virtually unbroken decline from 1963 to 1980, where average verbal scores fell over 50 points, and average mathematic scores dropped nearly 40 points in that roughly 20 year time period. And there's these really memorable quotes that are clearly meant to awaken the public to the state of its schools that people still remember to this day, and I'll read one. It says, "We report to the American people that while we can take justifiable pride in what our schools and colleges have historically accomplished and contributed to the United States and the well-being of its people, the educational foundations of our society are presently being eroded by a rising tide of mediocrity that threatens our very future as a nation and a people."

0:06:24.0 JD: You couldn't get much more of wake up type people language, it's really, really interesting. Like I said, this report over the last four decades has been that foundation or bedrock for the various federal reforms that people are probably familiar with, starting with...

0:06:41.0 AS: And to put it into context, that's the kind of talk that was coming out of the Reagan administration, like government's not helping and government can be a problem and we need to pull ourselves up by our bootstraps and you need to take personal responsibility, so it's very... It makes sense that that type of language was coming out of the Reagan administration.

0:07:05.4 JD: Yeah, and I think... So this report is floating around, there's a convening of all the governors in the United States in about 1989, and some pretty strong federal education legislation starts getting put together, it starts with the first Bush and then it ends up being passed during Bill Clinton's years called Goals 2000. And has various goals around increasing graduation rates and test scores and things like that, and then that transitions to No Child Left Behind with many people are familiar with that. Came out in the early Bush years and had a lot of impact on schools when my career was first getting started down in Atlanta, but it was federal legislation, so it covered the entire country, and then it even played a role even into the Obama years when he released the Race to the Top legislation, and that was more of a competitive grant program federally that was lots of strings attached a lot of focus on test scores, a lot of focus on teacher evaluations and principal evaluations and using test scores in those evaluations.

0:08:21.3 JD: And so you can see this, I think, direct linkage between A Nation at Risk, to Goals 2000, to No Child Left Behind, to Race to the Top, and even to the stuff that you see at the federal level to this day. So when a report like this comes out, it's called A Nation at Risk, the thesis of the report is right in the title. A nation is at risk because of its education sector, and so it's like... Most people say, Well, we gotta do something about this. We need to take action. There's some serious implications. And so about a decade after this report comes out, the Department of Energy sort of commissions its own report. The point of this report, as you might expect, is the department of energy, they're actually looking to do some economic forecasting, so it's not directly about our schools, but they wanna take the same data set that The Nation at Risk authors looked at and analyze it.

0:09:32.3 JD: And interestingly, they entered this analysis thinking that they are going to verify the results from a Nation at Risk, but what actually happened is that on nearly every measure of achievement, the Sandia analysts found actually steady or slightly improving trends in the test data. So they were...

0:10:02.1 AS: And in the same test data or in new test data that was coming out?

0:10:04.7 JD: Same exact data. They actually didn't look just at test data, they were actually looking at graduation rates, dropout rate, college-going rates so on just about every one of those measures, it was either steadily improving or slightly improving. And so you go back to A Nation at Risk and you have this absolute decline in SAT scores from the early '60s to the early '80s, and the Sandia authors aren't disputing that, but they're looking at their analysis and they're saying, wait a second, this decline in average scores, actually doesn't mean that the high school students of the early '80s or early '90s, weren't as capable as their 1960s peers. And so then you start to think, Well, how could this be? It's really, really interesting. And what the Sandia report authors go on to say is that when they broke out the test scores and these other measures like I said, graduation rates and other things like that, they broke them out by race and socioeconomic status, class rank, gender, they found these steady or improving rates in all of these groups, and they chalked it up to this statistical phenomenon called Simpson's Paradox, and basically what that is, is when trends that appear in this aggregated data set, which is sort of A Nation At Risk analysis, that reverses when the data is separated into sub-groups, like it was in the Sandia report.

0:11:45.6 JD: So basically what they're saying is that there are a more diverse mix of students on any number of measure, socioeconomic status, gender, race, those types of things, class rank, that there's a more diverse mix of students taking this test, and that is what causes this sort of change in average test scores and other similar measures.

0:12:10.6 AS: Which I guess A Nation at Risk should have controlled for?

0:12:17.6 JD: At least... I think breaking the scores out in the way that the desegregating the data like Sandia did would have been an important step given that the population of test takers was very different in 1963 than it was in 1983 or 1993. So the Sandia researchers basically found these improving trends on dropout statistics, standardized tests, post-secondary studies, educational funding even, international assessment comparison, so all these different measures that... This sort of earlier report is raising serious alarm bells about. This new report is saying, Well, wait a second, if we look at this data and we drill down in a little bit different way, we get the opposite results, but hardly anybody knows about the Sandia report, and just about everybody in my sector, my age and older knows about the A Nation at Risk Report, it's cited all the time. Even to this day, I just heard someone on a podcast a week or two ago talking about A Nation at Risk.

0:13:24.7 AS: So I guess one of the lessons is be careful with how you handle data.

0:13:30.6 JD: Be very careful. I think one of the principless we use here is data has no meaning apart from its context, and this is a very good example of data taken out of context. I think one of the lessons for me is that when you look at our schools, and I think this is maybe what happened with A Nation at Risk, is that for most people, what you see in educational data that comes out of our schools depends, in large part, on what you thought about our schools before we looked. I think they kind of drew a conclusion and then they sort of found evidence to support that.

0:14:14.2 AS: Supposed to be the opposite way. Good research.

0:14:16.8 JD: Yeah, I think so. I think so, should have been an open question, and the Sandia Report had... I think maybe their eyes were a little more open or their willingness to consider alternative explanations was a little bit more because they were not inside the Education Sector, they were outsiders, they were physicists and economists in the Department of Energy, and so they didn't really have a dog in the fight. I guess you'd say.

0:14:41.5 AS: Well, I guess you could probably say we actually don't really know, but the assumption is because they're outside in the department of energy, they're completely neutral, but they may have had their own biases that they brought into that too, but still...

0:14:56.3 JD: Yeah, for sure. For sure.

0:14:58.2 AS: It's a great lesson on... What was it you said, data has no meaning without...

0:15:02.3 JD: Apart from its context. Yeah. Apart from its context. Yeah, I think that's a good example. Yeah.

0:15:06.6 AS: Yeah, and what it also makes me think about. One of the things that's so interesting about the stock market is that you can take a lot of data, you can analyze it and come up with your opinion, and let's just say that you're not that good at analyzing and you've missed some very key things in that data, and then you put your money down and the market will take it away from you, boom like that. Like as an immediate punishment for poor logic and reason, and I'd say that it's kind of one of the last places where that's kind of allowed and where it's kind of supposed to happen, but I think that the immediate punishment for bad logic and reason is not that common any place anymore.

0:15:53.6 JD: Yeah, I would agree. And the troubling thing is the, like I said, the wide-ranging implications that reports like A Nation at Risk can have even 40 years later.

0:16:11.9 AS: Yeah, and I guess that's another lesson from this, so first lesson is about understanding the data and being very careful of how you're interpreting that, the second one is that I like to say first to the mind wins. It's just... I have a funny story where I moved to Thailand and I didn't have a girlfriend and I lived with my best friend, and basically there was people at that time that took that circumstantial evidence and they said, Andrew is gay. Okay, that circumstantial evidence could point to that, and I didn't make any attempt to answer that question, so 20 years, 25 years later, a friend of mine was at a bar, and he said that he overheard two people talking about me, and they were talking about how I'm gay. And my friend went up and said, Well, actually do you guys know Andrew? And they're like, No, we've never met him. And he said, Well, I'm friends with him, and I can put this to rest that Andrew is in fact not gay. They refused to accept that. And I just thought, first of all, first opinions are very difficult to reverse. It takes a lot of emotional and intellectual energy for somebody to do that, and therefore that partially explains...

0:17:46.9 AS: Now, the second part that explains it, is that when you attach emotion to something, it also emboldens it or it makes it in your mind much more so if you think... If you ask an older person, Where were you when you heard that John F. Kennedy was shot? They know exactly where they were because that scary negative painful motion was attached to that particular event. So that's another lesson. But really, John, I wanna know. So my iPhones improve. The car I drive has improved. The TV I use is improved. Everything around me, the medical advancements have improved. Has education improved?

0:18:35.0 JD: Yeah, that's a great question because, What is education? I think probably in some places, and in some times it has and in other places, in other times it hasn't. And in the same place, in different times, the answer would probably be different and depend a lot on what it means to improve, going back to that original quote from Deming, What does improvement mean?

0:19:01.0 AS: So I'm asking a very non-specific general question, it sounds like what you're saying.

0:19:07.8 JD: Yeah. Well, and...

0:19:10.2 AS: Can I ask it in a little bit different way?

0:19:12.4 JD: Sure, because I was gonna say, before we move on from your story of the bar story, I think somewhere... There's a researcher named Zeynep Tulfekci, and I was listening to her on a podcast, I think she's some type of researcher. She said, I can't remember what they were talking about, maybe it was something COVID-related or something from a few years ago, and she said, "Whatever thing is that you're researching or just hearing about, go to the primary source and read the entire thing." And I wrote that down on a post it note.

0:19:45.7 AS: Nobody does that.

0:19:46.8 JD: 'Cause nobody does it. Now, in fact, I talk about being first to mind in some training or conversation or a book, I am sure that I heard or read about A Nation at Risk, and then I just repeated a few things over and over as if it was truth in fact, for probably 15 years before I went and read the thing myself, and my first impression reading it was, Whoa, this is all that's in here. I forget if it's 30 or 40 pages. There's not a lot of data in it. There are some compelling statistics like the SAT thing and some quotes that jump off the page, but I was struck when I actually read it for myself. There wasn't a lot there, certainly not enough to base 40 years of education reform work. That's for sure.

0:20:31.2 AS: And I think that's another lesson too, related to Dr. Deming's teaching. And let's say sometimes the Japanese were kind of famous about go to the location where the problem is coming from, get out of your office and go out. I think that Dr. Deming really highlighted the importance of valuing the workers and their inputs 'cause they know what's going on, and so that's something that I think if people aren't reading some of the basic research or originations of ideas, they're also probably not going down and checking out what's actually happening and you could find a very different story.

0:21:10.0 JD: Yeah, go to the Gemba, go to the factory floor, in our case, it's go to the classroom to see what's actually happening. Yeah. And you're gonna ask that question.

0:21:17.7 AS: So I wanna break my question then... I'm gonna break it down and make it a little bit more specific in hopes that you...

0:21:26.7 JD: You pin me down.

0:21:28.3 AS: Could answer it. The first question I have is that, If we go back 40 years, and I can remember, I had to take a French class and I wasn't particularly interested in France and French language, and I had no interest in that really at the time. And now, let's say it's 40 years later and a young kid like me has to take a French class: Have we come up with a better methodology for learning a language like, Okay, we've advanced, we've been teaching French for 40 years from that time to now, and now we know that there is a better way to acquire a language that cuts the language acquisition time from 40 hours to proficiency, or let's say, I don't know, 400 hours to proficiency to 300 hours to proficiency, this has nothing to do with education or the system of education, but: Have we come upon methodologies that can allow us to acquire knowledge any better or faster than what we did 40 years ago?

0:22:36.9 JD: That's a good question. I think... how would I answer that? I would say that in many areas of education there have been significant advances in the understanding of cognitive science or the application of cognitive science to improve teaching methods. In many areas, I think over the last 40 years, there have been advances, but like in other areas, whether or not those advances make it into the hands and the practices of the front line people is a different question.

0:23:23.6 AS: Which is separate. That's a separate point.

0:23:27.5 JD: When there's two things too, and let's take medicine for example. In medicine, there are a series of landmark trials that led to standard practices in medicine, so in education, I think in most areas, there's actually fewer of the landmark trials and key areas that everybody knows about.

0:23:52.4 AS: So I guess part of what I'm thinking about is one of the arguments I read in a great book called Future Hype, where the guy talked about how everybody hypes how things are moving so fast, but in fact, most of the progress that we've made in this world was made a long time ago. And he uses one example is jet airplanes, basically, we're flying at the same speed today as we did in 1950.

0:24:15.7 JD: 1950, yeah.

0:24:17.7 AS: There's been no advancement, and I can say flying back and forth from seeing Thailand and the US, there was a slight advancement where we had a plane that could fly from New York to Bangkok, but eventually they cancelled that because it was just too expensive and stuff, so it's like there really has been no... Maybe we hit the limit. And you could argue that when it comes to education, it should be quickly adopted if there's a new technology or a new way of acquiring knowledge, repetition or whatever that is, it's pretty quickly adopted, so it could be that we're at the... There's just so much that the human mind can take in.

0:24:55.2 JD: Well, yeah, I've heard that argument, and the second part too would be, to finish off that landmark trial thing is, in medicine where there have been landmark trials that it takes on average like 16 or 17 years for that landmark trial to then be sort of standard practice in practice by doctors and actual hospitals and clinics and even in that... In those sort of... Even when it hits that tipping point, that's far from majority...

0:25:23.3 AS: So you can tell the parents just wait 17 years.

0:25:28.6 JD: [laughter] And then we'll have this best practice for...

0:25:31.3 AS: I listened to somebody say that, We want you to make an investment in our education system, and the investment is your child. We'll do the best we can, but it's an investment, we're still learning and all that. So that brings me to the second part of the question is... And let's just say that education is mainly done through government in Thailand, in Asia, in Europe, in the US, I guess it's mainly done by government, but let's just say generally: Have we improved the way that we educate? Is there... I'm trying to ask it in a way that would be maybe a better way like... Okay. I don't know how to ask it, but I'll just say, like I said, my iPhone's improved tremendously. The camera that we're using on this, the microphone, the internet service that we're using to do this, all of these things have incrementally improved and at times made a major jump in improvement. And my question is, Has our ability to educate young people improved at the pace of other things or at a certain good pace?

0:26:50.2 JD: The way I would answer that is two parts, one, Have you ever heard of the Flynn effect?

0:26:56.9 AS: The what?

0:27:00.1 JD: The Flynn effect.

0:27:00.6 AS: No.

0:27:00.9 JD: Its name for the psychologist that discovered it. Flynn, F-L-Y-N-N. The fun fact is basically, this idea that IQs rose about three points per decade over the last century or so, I think I have that roughly right, in every population. So because of the modern world over the last 100 years has gotten more complex and there's sort of more to life that's like taking a standardized test. We've gotten better at that type of thinking over the last 100 years, so IQ has risen. So in that respect, we have gotten better, I guess, at least measures that purport to approximate whatever intelligence is. However, I don't think that we've closed gaps between groups. Those gaps that exist between different groups, performance wise, I think those... And that's sort of a key area of work for education reform movement that came out of A Nation at Risk. One of the things that people are working on is closing the achievement gaps between different groups, especially kids that are living in poverty, and their more affluent peers. I think those gaps, I think over time have been stubborn, because if you consider the Flynn effect, and that's not what's being measured on state exams, but when one group is going up and the other group is going up too, right.

0:28:45.7 JD: So both are relatively higher than, let's say, IQ scores were 50 years ago, but there's still this gap between groups. So again, it depends on exactly what you're talking about and determined what happened.

0:29:02.4 AS: And when I look at Asia, knowing the education system in Asia, first of all, over the last, let's say, 20 to 30 years, you have many, many families that have finally gotten their first kids into college, and you could argue that that's real advancement for that particular family and maybe for that society. The second thing is, you can see the culture in Asia still remains that education is very important, and so there's pressure from family and all of that in society, that it still is there, so whether American education is declining or improving, also you have to think of it in context of what's happening globally. And I think there's two ways to think about it. First is the quality of a country, ultimately the education of the people should have some effect on the quality of the country and the quality of life in that country. And then the second thing is that the position of that country in a global context should have some relationship to the level of education of that country. Those are just my ideas, it's not necessary something proven, but I feel like that could be true. So I wanna wrap this up a little bit, but how would you summarize what you want people to take away from this?

0:30:37.9 JD: Well, a lot of this stuff, there's sort of two counter-intuitive ideas here. When you look at these two reports that we were talking about, so on one hand, I don't think there's clear evidence that schools have been on a steady decline for the last, let's say 50 or 60 years going back to that, the early '60s that a Nation at Risk is talking about. However, on the other hand, I think that to achieve equitable outcomes for all students, that schools must undergo this transformation on an order of magnitude that's never really been seen or seldom seen in the history of organizations. And I think both reports are mostly looking at test scores and that's a pretty narrow definition of success, or there may be some uses there because we don't know how groups are doing and maybe where to allocate resources without some of those results, but they're definitely more of an inspection and in sorting mechanism than they are an improvement tool. So I think the other problem is, is that if there's this narrative that the nation is at risk, and then... Well, then you... You're saying that things are on the decline and then, Who do you blame for that decline?

0:32:12.9 JD: And I think what happened a lot in the last 40 years of the educational reform movement, deliberately non-deliberately, what happened was a lot of a brunt of that blame was placed on teachers and principals, the people that are working in schools. By the time Race to the Top comes out, using student test results in teacher and principal evaluations is sort of like part of getting the money that was there available through Race to the Top. And so I think my whole point with these types of reports is that, something like the Sandia report can have useful insights that maybe can facilitate some sound database decision-making, but so many times these reports come with these preconceived notions, political agendas, those types of things and the only way to make...

0:33:11.8 JD: To have a sound decision-making is if our education system sits on this solid philosophical foundation, and that's where I think Deming comes in, because if you have that foundation, you're not gonna make changes simply because of changes in test scores, you're gonna make changes based on whether or not something is principled and need to change according to the philosophy, and that's where I really see Deming coming in as this solid philosophical foundation, so it doesn't allow you to get swayed by a political agenda, it's a foundation that's grounded in principles, and so that's what I was thinking, we talk about in the next episode is: When you don't have those principles, what are some of the myths that emerge? And then when you identify those myths and can set those to the side, what are the principles that come in that then drive that transformation going forward. And I think Deming's work is at the center of that.

0:34:16.3 AS: And one of the things that makes me think about is: Can the system transform itself? And one of the ways to try to answer this question, it could be right, it could be wrong is, Is there an alternative solution for educating young people? And if there is, has there been an increase or decrease in people turning to that alternative? You could imagine that if there was a competing system and there was a huge outflow of people from one to another, then parents may say, Well, yeah, you guys can't measure what it is that is great output, but I can. That my student has homework that my child is learning, that my child is... Whatever their assessment is, and so there's someone outside, you could say the customer or the outside interested party just says, I vote with my feet. And I'm just curious, as we wrap up, Is there any knowledge that you have on what... Is there an alternative for government education in America? And has that been more or less popular over the last I don't know 10, 20 years?

0:35:31.0 JD: Yeah. Well, I'm gonna say the first part of your answer, I think your hypothesis, your instinct is right, is that you focused on the system. It's that focus on the system versus the focus on the individual, solely on the individuals within the system, like what was happening with the teacher and the principal evaluations and using the test data in those evaluations. So I think Deming said something like: He estimated that 94% of the problems in organization was due to the system, 6% special, and he meant 6% was maybe attributed to issues at the individual level. So the vast majority of the potential for improvement lies with the system. So I think that's what we're talking about here, the redesign of the system.

0:36:17.5 AS: And that also goes back to constancy of purpose, it also goes back to leadership. And is it possible that the system simply can't have constancy of purpose for political reasons or other reasons, and that... It's just a question I've never even thought about, but it is a challenge to think about, Is there constancy of purpose? Is there strong leadership without leadership...

0:36:45.5 JD: Yeah. There has to be fortitude there. Intestinal fortitude for sure. A strong leadership is a prerequisite. One of the things that Deming railed against was the transition, the frequent transitions amongst management leadership in the United States, because you do need that stability of leadership to maintain that focus on the aim that's guiding the system. So I think that is... That's sort of a part of the formula for success, for sure.

0:37:13.0 AS: I kind of interrupted you and you're, I think may be attempting to answer the question, Is there an alternative and has it grown or contracted?

0:37:22.0 JD: Well, so there's government-funded schools, that's traditional public schools, certainly where I am sitting in public charters, that's a government-funded school that has a slightly different governance structure. So that sector didn't exist 35 years ago, and so that now is maybe six or seven percent of the kids in the United States, something like that, attend a public charter school, and then the other component would be kids that attend a private school or are home schooled, now both of those, as I understand it, both of those populations of students rose sort of coming out of the pandemic, for sure. Yeah.

0:38:03.3 AS: Well, an interesting topic, and the original question is, Do we really need to transform our education system and maybe before... As we wrap up here. How would you answer that?

0:38:18.7 JD: So, yes, I think yes, but it's not for the reasons outlined in A Nation at Risk.

0:38:27.7 AS: Got it. John, 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. 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."

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If something is "good" is that good enough? Who decides? In this episode, Bill and Andrew discuss how people define "good," what interchangeability has to do with morale, and the problem with a "merit-based" culture. Bonus: Bill gives us a short history lesson on how Americans became the first to manufacture using interchangeable parts even though the originator was a Frenchman.

0:00:02.3 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, Deming Distinctions: Beyond Looking Good. Bill, take it away.

0:00:30.4 Bill Bellows: Funny you mentioned that. You remind me that I've been at this for over 30 years, and coming up in July, I'll be celebrating 40 years of marriage. Like 30 years, 40, where do these numbers come from?

0:00:44.5 AS: Okay. Yeah. Who defines quality in a marriage, Bill?

0:00:47.0 BB: Alright.

0:00:50.8 AS: Okay, we won't go there. Take us, take it away.

0:00:52.2 BB: We won't go there. So we are gonna talk about who defines quality, and to get into "beyond looking good." As I shared with you, I've listened to each of the podcasts a few times. And before we get into who defines quality, I just wanna provide clarification on some of the things that came up in the first five episodes. And so, one, and I think these are kind of in order, but if they're not in order, okay, well, I made reference to black-and-white thinking versus shades-of-gray thinking. And I called black-and-white thinking - black and white data - category data, and the word I was searching for that just wasn't coming out was attribute data. So for those who are keeping score, attribute data is probably the most relevant statistician term in that regard.

0:01:44.9 BB: Attribute data versus variable data. And what I've made reference to, and we'll talk more in a future session, is looking at things in terms of categories. And categories are black and white, or it could be red, yellow, green, that's three categories, or looking at things on a continuum. So I'm still excited by the difference that comes about by understanding when we're in the black-and-white mode or the category mode or the attribute data mode versus the variable mode, and still have a belief that we can't have continuous improvement or continual improvement if we're stuck in an attribute mode.

0:02:22.9 BB: And more on that later, that's one. I talked about Thomas Jefferson meeting Honoré Blanc and getting excited about the concept of interchangeable parts. And I had the date wrong, that was 1785, if anyone's keeping score there. He was ambassador to France from 1785 to 1789, but it was in 1792 that he wrote a letter to John Jay, who was a...I think he was a Commerce Secretary. Anyway, he was in the administration of Washington and shared the idea. I was doing some research earlier and found out that even with the headstart that Blanc had in France, 'cause back in 1785, Jefferson was invited to this pretty high level meeting in Paris where Blanc took a, I guess, like the trigger mechanism of 50 different rifles. Not the entire rifle, but just the...let's just call it the trigger mechanism with springs and whatnot. And he took the 50 apart and he put all the springs in one box, all the other pieces in their respective boxes and then shook the boxes up and showed that he could just randomly pull a given spring, a given part, and put 'em all together. And that got Jefferson excited. And the...what it meant for Jefferson and the French was not just that you can repair rifles in the battlefield quickly.

0:03:56.9 BB: Now, what it meant for jobs in France was a really big deal, because what the French were liking was all the time it took to repair those guns with craftsmanship, and Blanc alienated a whole bunch of gunsmiths as a result of that. And it turns out, Blanc's effort didn't really go anywhere because there was such a pushback from the gunsmiths, the practicing craftsmanship that jobs would be taken away. But it did come to the States. And then in the early 1800s, it became known as the American System of Production. But credit goes back to Blanc. I also made reference to absolute versus relative interchangeability. And I wanna provide a little bit more clarification there, and I just wanna throw out three numbers, and ideally people can write the numbers down, I'll repeat 'em a few times. The first number is 5.001, second number is 5.999, and the third number is 6.001. So it's 5.001, 5.999, 6.001. And some of what I'm gonna explain will come up again later, but...so this will tie in pretty well. So, what I've been doing is I'll write those three words on the whiteboard or throw them on a screen, and I'll call...

0:05:28.9 AS: Those three numbers.

0:05:31.4 BB: A, B, and C. And I'll say, which two of the three are closest to being the same? And sure enough people will say the 5.999 and the 6.001, which is like B and C. And I say that's the most popular answer, but it's not the only answer. People are like, "well, what other answer are there?" Well, it could be A and C, 5.001 and 6.001, both end in 001. Or it could be the first two, A and B, 5.001 and 5.999. So what I like to point out is, if somebody answers 5.999 and 6.001, then when I say to them, "what is your definition of same?"

0:06:14.9 BB: 'Cause the question is, which two of the three are close to being the same? And it turns out there's three explanations of "same." There's same: they begin with five, there's same: they end in 001. And there's same in terms of proximity to each other. So I just wanna throw that out. Well, then a very common definition of "quality" is to say, does something meet requirements? And that's the black-and-white thinking. I've also explained in the past that requirements are not set in absolute terms. The meeting must start at exactly 1:00, or the thickness must be exactly one inch. What I've explained is that the one inch will have a plus or minus on it. And so let's say the plus and minus gives us two requirements, a minimum of five and a maximum of six. Well, then that means the 5.001 meets requirements and the 5.999 meets requirements.

0:07:15.4 BB: And so in terms of defining quality, in terms of meeting requirements, A and B are both good. And then what about the 5.999 and the 6.001? Well, those numbers are on opposite sides of the upper requirement of six. One's just a little bit to the left and one's a little bit to the right. Then I would ask people, and for some of you, this'll ring - I think you'll be smiling - and I would say to people, "What happens in manufacturing if, Andrew, if I come up with a measurement and it's 6.001?" Okay, relative to defining quality as "meeting requirements," 6.001 does not meet requirements. So what I'll ask people is, "what would a non-Deming company do with a 6.001?" And people will say, "We're gonna take a file out, we're gonna work on it, we're gonna hit it with a hammer." And I say, "No, too much work." And they say, "Well, what's the answer?" "We're gonna measure it again."

0:08:25.7 AS: Until we get it right.

0:08:27.7 BB: We will measure it until we get it right. We will change the room temperature. We will take the easiest path. So then I said, get people to realize, they're like, yeah, that's what we do. We measure the 6.001 again. Well, then I say, "Well Andrew, why don't we measure the 5.001 again?" And what's the answer to that, Andrew? [laughter]

0:08:51.5 AS: 4.999. [laughter]

0:08:54.7 BB: But what's interesting is, we'll measure the 6.001 again. But we won't measure the 5.001 again. We won't measure the 5.999 again. And so to me, this reinforces that when we define quality as "meeting requirements," that what we're essentially saying in terms of absolute interchangeability, what we're pretending is that there's no difference between the 5.001 and the 5.999. At opposite ends, we're saying that Blanc would find them to be interchangeable, and putting all the things together. I don't think so.

0:09:36.7 BB: I think there's a greater chance that he'd find negligible difference between the 5.999 and the 6.001. And that's what I mean by relative interchangeability, that the difference between B and C is nothing, that's relative interchangeability. The closer they are together, the more alike they are in terms of how they're integrated into the gun, into the rifle, into the downstream product. And I just throw out that what defining quality as "requirements" is saying is that the first two are...the person downstream can't tell the difference. Then I challenge, I think there's...in terms of not telling the difference, I think between 5.999 and 6.001, that difference is minuscule cause they are relatively interchangeable. The other two are implied to be absolutely interchangeable. And that I challenge, that's why I just want to throw that out. All right, another thing I want...go ahead, Andrew.

0:10:38.3 AS: One of the things I just highlight is, I remember from my political science classes at Long Beach State where I studied was The Communist Manifesto came out in 1848. And Karl Marx and Friedrich Engels were talking about the alienation of the worker. And what you're talking about is the kind of, the crushing of the craftsmen through interchangeable parts that was a lot like AI coming along and destroying something. And after 50 or 60 or 70 years of interchangeable parts, along comes The Communist Manifesto with the idea that when a person is just dealing with interchangeable parts, basically they're just a cog in the wheel and they have no connection to the aim of what's going on. They don't have any connection, and all of a sudden you lose the craftsmanship or the care for work. And I think that the reason why this is interesting is because that's, I think, a huge part of what Dr. Deming was trying to bring was bring back...it may not be craftsmanship for creating a shoe if you were a shoemaker, but it would be craftsmanship for producing the best you could for the part that you're playing in an ultimate aim of the system.

0:12:02.6 BB: Yes. And yes, and we'll talk more about that. That's brilliant. What you said also reminds me, and I don't think you and I spoke about it, you'll remind me. But have I shared with you the work of a Harvard philosopher by the name of Michael Sandel?

0:12:24.3 AS: I don't recall.

0:12:27.0 BB: He may be, yeah, from a distance, one of the most famous Harvard professors alive today. He's got a course on justice, which is I think 15 two- or three-hour lectures, which were recorded by public television in Boston. Anyway, he wrote a book at the beginning of the pandemic. It came out, it's called The Tyranny of Merit.

0:12:54.0 BB: And "merit" is this belief that "I did it all by myself." That "I deserve what I have because I made it happen. I had no help from you, Andrew. I had no help from the government. I didn't need the education system, the transportation system. I didn't need NASA research. I made it happen all by myself." And he said, what that belief does is it allows those who are successful to claim that they did it by themselves. It allows them to say those who didn't have only themselves to blame. And he sees that as a major destructive force in society, that belief. And I see it tied very well to Deming. Let me give you one anecdote. Dr. Deming was interviewed by Priscilla Petty for The Deming of America documentary, which was absolutely brilliant.

0:13:49.8 BB: And she's at his home, and he's sharing with her the medal he got from the Emperor of Japan, and he's holding it carefully, and I think he gives it to her, and she's looking at it, and she says to him something like, so what did it mean to you to receive that? And he said, "I was lucky. I made a contribution." He didn't say I did it all by myself. He was acknowledging that he was in the right place at the right time to make a contribution. And that's where Sandel is also heavily on, is don't deny the role of being born at the right time in the right situation, which is a greater system in which we are. Well, for one of the college courses, I was watching an interview between Sandel and one of his former students.

0:14:48.1 BB: And the point Sandel made that I wanted to bring up based on what you just said, he says, "what we really need to do is get people dignity in work." And that's what you're talking about, is allowing them to have pride in work, dignity in work instead of as they're making interchangeable parts, having them feel like an interchangeable part. And I'm really glad you brought that up because when we talk later about letter grades, I would bring back one of the reasons I find Deming's work astounding, is that he takes into account psychology in a way that I hope our listeners will really take heart to in a deeper way.

0:15:30.2 AS: And so for the listeners out there, just to reinforce, the book is called The Tyranny of Merit: What's Become of the Common Good. Published in 2020 by Michael Sandel. And the ratings on Amazon is 4.5 out of five with about 2,446 ratings. So it's a pretty well-rated book I'd say. And looks interesting. Now you got me wanting to read that one.

0:15:57.0 BB: Oh what I'll do is I'll send you a... Well, what I encourage our listeners to do is find the interview... Harvard Bookstore did an interview in 2020, 2021, with Michael Sandel being interviewed by his former student by the name of Preet Bharara. [laughter] Who used to be the...

0:16:24.3 AS: SEC...

0:16:24.4 BB: Head of these...no, well, he prosecuted a number of people for SEC crimes, but he headed the Justice Department's long oldest district, which is known as SDNY or the Southern District of New York. And so he was a...in one of the first classes his freshman year at Harvard, Preet Bharara's freshman year at Havard was one of Sandel's first years. And so they had an incredible conversation. So I would encourage the listeners to...

0:16:51.8 AS: Yeah, it's titled: Michael J Sandel with Preet Bharara at Harvard. And the channel is called Harvard Bookstore.

0:16:58.6 BB: Yes, absolutely. All right. So another topic I want to get to in terms of clarification and key points, last time we talked about tools and techniques and what I'm not sure I made much about.... First of all, I just wanna really reinforce that tools and techniques are not concepts and strategies. Tools are like a garden tool I use to dig a hole. Technique is how I go about using it, cleaning it, and whatnot. Not to be confused from a concept...and what is concept? We talked about last time is a concept is an abstract idea and a strategy is how do we apply it? So tools and techniques within Six Sigma quality could be control charts, could be design of experiments. And all, by the way, you're gonna find those tools and techniques within the Deming community. So it's not to say the tools and techniques are the differentiator.

0:17:50.8 BB: I think the concepts and strategies are the differentiators, but I don't wanna downplay tools. Lean has tools in terms of value streams, and you won't find value streams per se in Dr. Deming's work. Dr. Deming looks in terms of production viewed as a system. In a later session, I want to talk about value streams versus Deming's work. But I just wanna point out that I find it...it's easy to get lost in the weeds with all we find within Lean, Six Sigma, Deming and whatnot. And this is why last time I wanted to focus on tools and techniques as separate from concepts and strategies. And what I think we did speak about last time, again, for just as a reminder, is what's unique that we both enjoy with Dr. Deming's work is that KPIs are not caused by individual departments, assigned to individual departments.

0:18:46.0 BB: KPIs are viewed as measures of the overall system. And if you assign the KPIs across the organization and give every different function their own KPI, what you're likely to find - not likely - what you WILL find is that those assigned KPIs are interfering with others' abilities to get their KPIs met. And in the Deming philosophy, you don't have that problem because you understand that things are interdependent, not independent. And so I just wanna close by saying what I find in Deming's work to be most enlightening is this sense of "what does it mean to look at something as a system?" And it means everything is connected to everything else. When you define quality in terms of saying "this is good because it meets requirements," what you've just said is, "this is good in isolation." Whether it's the pass from the quarterback to the wide receiver, saying the pass met requirements.

0:19:52.0 BB: What I think Dr. Deming would ask is, "is the ball catchable?" [laughter] And yet, what I've seen in my aerospace experience is parts being measured for airplanes in Australia that they meet requirements because the measurements are taken early in the morning before the sun has had a chance to heat the part up. And we get the 6.001 is now 5.999. You know what that means, Andrew? It's - we can now ship it.

[laughter]

0:20:23.9 BB: And send it off to America for some airplane factory.

0:20:26.2 AS: When we shipped it, that's what it was.

0:20:28.9 BB: Exactly. And so, again, interdependence is everything. Go ahead, Andrew.

0:20:34.6 AS: I wanted to point on, there's a company in Thailand that really has gotten on the KPI bandwagon, and I was talking with some people that work there, and they were just talking about how they've been rolling out the KPIs for the last couple of years and down to the number of seconds that you're on the phone and everything that you do is tracked now. And then I just witnessed that company basically use that KPI as a way to basically knock out a whole group of people that they were trying to get rid of by coming in with tight KPIs and then saying, "you're not keeping up with 'em and therefore you're out." And I just thought...and the manager that was involved I was talking to, you could just see, he saw how KPI can just be weaponized for the purposes of the senior management when you're doing KPIs of individuals. And the thing that I was thinking about is, imagine the CEO of that company in a couple of years, in a couple of months, they happen to listen to this podcast, or they pick up a book of Dr. Deming and they think, "Oh my God, what did I just do over the last five years implementing KPIs down to the individual level?" [laughter]

0:21:48.5 BB: Oh, yeah. And that's what we talked about last time is...as I told you, I had a friend of a friend who's worked for Xerox, and he said there wasn't a KPI that was flowed down that they couldn't find a way to beat. And that's what happens, and you end up getting things done, but what's missing is: at whose expense? All right. So we talked about...now, let's get into beyond looking good, Deming distinctions. Who defines quality? Well, from Philip Crosby's perspective, quality's defined by the...it could be the designer. The designer puts a set of requirements on the component, whatever it is. The unit, the requirements have latitude we talked about. They're not exact. There's a minimum of six, a maximum of...or a minimum of five, maximum of six.

0:22:48.8 BB: There's a range you have to meet, is the traditional view of quality. And in my 30 years of experience, I've not seen quality defined any other way than that. It has to be in between these two values. Sometimes it has to be five or below or six or above, but there's a range. But also what we talked about last time is Dr. Deming said "a product or service possesses quality if it helps someone and enjoys a sustainable market." But what I found profound about that definition, it is not me defining quality and saying, "Andrew, the parts met requirements when I threw it. Now, it's your job to catch it." It's me saying, "I've thrown the ball and you tell me, how did I do? You tell me how did I do?" And if you said, "Bill, if you throw it just a little bit higher, a little bit further out, a little bit faster," that's about synchronicity. Now, I'm realizing that my ability to throw the ball doesn't really matter if you can't catch it. So if I practice in the off season, throwing it faster and faster, but don't clue you in, until the first game, how's that helping? So I've got a KPI to throw it really, really hard. And you're thinking, "how's that helping?" So that's...

0:24:19.9 AS: And can you just go back to that for a second? Quality is on a product or service, you were saying that how Dr. Deming defined that, it helps someone...

0:24:26.7 BB: Yeah. Dr. Deming said "a product or service possesses quality if it helps someone and enjoys a sustainable market." And so my interpretation of that is two things. One is, it's not me delivering a report and saying the report met requirements. It's saying, "I get the report to you, and I ask Andrew, how did I do?" And then you say to me, "I had some problem with this section, I had some problem...." But the important thing is that you become the judge of the quality of the report, not me. And it could be information I provide you with in a lecture. It's you letting me know as a student that you had a hard time with the examples. And I'm thinking, "well, I did a great job." So it's not what I think as the producer handing off to you. It's you giving me the feedback. So quality is not a one-way...in fact, first of all, quality's not defined by the producer. It's defined by the recipients saying, "I love this or not." And so that's one thing I wanna say, and does it enjoy a sustainable market? What I talked about in the past is my interpretation of that is, if I'm bending over backwards to provide incredible quality at an incredible price, and I'm going outta business, then it may be great for you, but it may not be great for me. So it has to be mutually beneficial. I just wanna... Go ahead, Andrew.

0:26:03.1 AS: You referenced the word synchronicity, which the meaning of that according to the dictionary is that "simultaneous occurrence of events which appear significantly related, but had no discernible causal connection." What were you meaning when you were saying synchronicity? Is it this that now you're communicating with the part of the process ahead of you, and they're communicating back to you and all of a sudden you're starting to really work together? Is that what you mean by that?

0:26:33.1 BB: Yeah. When I think of synchronicity, I'm thinking of the fluidity of watching a basketball game where I'm throwing blind passes to the left and to the right and to the observer in the stands are thinking: holy cow. That's what I'm talking about, is the ability that we're sharing information just like those passes in a basketball game where you're...I mean I cannot do that without being incredibly mindful of where you are, what information you need. That's what I meant. That's what I mean. As opposed to - I wait until the number is less than...I'm out there in the hot sun. I get the measurement, 6.001, no, no, no, wait. Now it's five. Where's the synchronicity in that? Am I concerned about how this is helping you, or am I concerned about how do I get this off my plate onto the next person? And I'd also say...

0:27:32.6 AS: Yep. And another word I was thinking about is coordination, the organization of the different elements of a complex body or activity so as to enable them to work together efficiently. You could also say that the state of flow or something like that?

0:27:48.7 BB: I'm glad you brought up the word "together." The big deal is: am I defining quality in a vacuum, or am I doing it with some sense of how this is being used? Which is also something we got into, I think in the, one of the very first podcasts, and you asked me what could our audience...give me an example of how the audience could use this. And I said you're delivering a report to the person down the street, around the corner. Go find out how they use it. I use the example of providing data for my consulting company to my CPA, and I called 'em up one day and I said, "how do you use this information? Maybe I can get it to you in an easier form." That's together. I mean relationships, we talked earlier about marriage, relationships are based on the concept of together, not separate, together. Saying something is good, without understanding how it's used is not about "together." It's about "separate."

0:28:54.1 BB: And so what I find is, in Lean, we look at: how can we get rid of the non-value-added tasks? Who defines value? Or I could say, and Lean folks will talk about the...they'll say this: "eliminate things that don't add value." My response to them is, if you tell me that this activity does not provide value in this room for the next hour, I'm okay with that. If you tell me this activity doesn't add value in this building for the next year, I'm okay with that. But if you don't define the size of the system when you tell me it doesn't add value, then you're implying that it doesn't add value, period.

0:29:43.4 BB: And I say, how do you know that? But this is the thinking, this is what baffles me on the thinking behind Lean and these concepts of non-value-added, value-added activities. I think all activities add value. The only question is where does a value show up? And likewise in Six Sigma quality, which is heavily based on conformist requirements and driving defects to zero, that's defining quality of the parts in isolation. What does that mean, Andrew? Separate. It means separate. Nothing about synchronicity. And so I'm glad you brought that point up because what I...this idea of "together" is throughout the Deming philosophy, a sense of together, defining quality in terms of a relationship.

0:30:31.1 AS: And I remember when I was young, I was working at Pepsi, and they sent me to learn with Dr. Deming. And then I came back, and what I was kind of looking for was tools, thinking that I would...and I came back of course, with something very different, with a new way of thinking. And then I realized that Dr. Deming is so far beyond tools. He's trying to think about how do we optimize this whole system? And once I started learning that about Dr. Deming, I could see the difference. Whereas, you may decide - let's say that you wanna learn about Lean and get a certification in Lean or something like that.

0:31:15.5 AS: Ultimately, you may go down a rabbit hole of a particular tool and become a master in that tool. Nothing wrong with that. But the point is, what is the objective? Who defines the quality? And Dr. Deming clearly stated in the seminars that I was in, and from readings that I've read, that the objective of quality isn't just to improve something in...you could improve something, the quality of something and go out of business. And so there's the bigger objective of it is: how does this serve the needs of our clients? So anyways, that's just some of my memories of those days.

0:31:52.4 BB: Yeah. But you're absolutely right. And the point I'm hoping to bring out in our sessions is: I'm not against tools and techniques. Tools and techniques are incredible. They're time savers, money savers, but let's use them with a sense of connections and relationships. And I agree with you, I've done plenty of seminars where people are coming in - they're all about tools and techniques. Tools and techniques is part of the reason I like to differentiate is to say....and again, I think people are hungrier for tools and techniques. Why? Because I don't think they've come to grips with what concepts and strategies are about. And I'm hoping our listeners can help us...can appreciate that they go together. Tools and techniques are about efficiency, doing things faster, doing things cheaper. Concepts and strategies are about doing the right thing. Ackoff would say "doing the right thing right." And short of that, we end up using tools to make things worse. And that's what I'm hoping people can avoid through the insights we can share from Dr. Deming.

0:33:05.4 AS: And I would say that, would it be the case that applying tools, and tools and techniques is kind of easy? You learn how they work, you practice with them, you measure, you give feedback, but actually going to figure out how we optimize this overall system is just so much harder. It's a complex situation, and I can imagine that there's some people that would retreat to tools and techniques and I saw it in the factory at Pepsi when people would basically just say, "well, I'm just doing my thing." That's it, 'cause it's too much trouble to go out and try to negotiate all of this with everybody.

0:33:50.7 BB: I think in part, I think as long as they're managing parts in isolation, which is the prevailing system of management, then, I agree with you. Becoming aware of interdependencies in the greater system, and I'll also point out is whatever system you're looking at is part of a bigger system, and then again, bigger system, then again, bigger system. What you define is the whole, is part of a bigger system. No matter how you define it, it's part of a bigger system because time goes to infinity. So your 10-year plan, well, why not a 20-year plan? Why not a 30-year plan? So no matter how big a system you look at, there is a bigger system. So let's not get overwhelmed. Let's take a system, which Ackoff would say, take a system which is not too big that you can't manage it, not too small, that you're not really giving it the good effort, but don't lose sight of whatever system you're looking at - you'll begin to realize it is actually bigger than that. Again, what Dr. Deming would say, the bigger the system, the more complicated, which is where you're coming from, but it also offers more opportunities. I think we're so used to tools and techniques.

0:35:14.3 BB: I don't think people have really given thought to the concepts and strategies of Deming's work as opposed to Lean and Six Sigma as being different, which is why I wanted to bring it up with our listeners, because I don't think people are defaulting on the tools. I just don't think they appreciate that concepts and strategies are different than tools and techniques. And I like to have them become aware of that difference and then understand where black-and-white thinking works, where continuum thinking has advantages. There's times to look at things as connected, and then there's times to just move on and make a decision, which is a lot easier because the implications aren't as important. But at least now we get back to choice, be conscious of the choice you're making, and then move on. All right, so also on the list we had, who defines quality?

0:36:09.0 BB: We talked about that. What is meant by good: the requirements are met. Who defines good? Again, if you're looking at Phil Crosby, who defines good? Someone has to set, here are the requirements for being "good." I could be giving a term paper and me saying to the students, this is what "good" means. Next thing I wanted to look at is, "why stop at good?" And, I'm pretty sure we've talked about this. A question I like to ask people is how much time they spend every day in meetings, discussing parts, components, things that are good and going well. And what I find is people don't spend a whole lot of time discussing things that are good and going well. So why do they stop? Why not? Because they're stopping at "good."

0:36:57.1 BB: And that goes back to the black-and-white thinking. They're saying things are "bad" or they're "good." We focus on the bad to make it good, and then we stop at good. Why do we stop at good? Because there's no sense of "better." All right. And what does that mean? So again, we have why stop at good? Why go beyond good? And this is...'cause I think we're talking about really smart people that stop at "good." And I think to better understand what that means, what I like to do is ask people, what's the letter grade required for a company to ship their products to the customer? What letter grade does NASA expect from all their suppliers? And I asked a very senior NASA executive this question years ago. He was the highest ranking NASA executive in the quality field.

0:37:50.5 BB: And I said, "what letter grade do you expect from your contractors?" And he said, A+. A+. And I said, actually, it's not A+. And he is like, "What do you mean?" I said, "actually the letter grade, your requirement is actually D-." And he pushed back at me and I said, what...he says, "well, what do you mean?" I said, "how do you define quality?" And he said, "We define quality as requirements are met. That's what we require." I said, "so you think A+ is the only thing that meets requirements?" He's like, "well, where are you coming from?" I said a pass-fail system, now we get back to category thinking, if it's good or bad, what is good? Good is passing. What is passing? What I explained to him: passing is anything from an A+ down to a D-.

0:38:38.9 BB: And he got a little antsy with me. I said, "well, the alternative is an F, you don't want an F, right?" I said, "well, what you're saying is that you'll take anything but an F and that means your requirements are actually D-." And then when I pushed back and I said, "is a D- the same as an A+?" And he said, "no." I said, "well, that's what I meant earlier" in the conversation with him. And I told him that they weren't interchangeable. So when you begin to realize that black and white quality, Phil Crosby-quality, allows for D minuses to be shipped to customers. Again, in this one way I define quality, I hand it off to you. 'Cause in that world, Andrew, I make the measurement, it's 5.999, it meets requirements, I ship it to you, your only response when you receive it is to say, "thank you."

[laughter]

0:39:33.2 BB: For a D minus, right? Well, when you begin to understand relationship quality, then you begin to understand that to improve the relationship, what's behind improving the relationship, Andrew, is shifting from the D- to the A. And what does that mean? What that means is, when I pay attention to your ability to receive what I give you, whether it's the pass or the information, the more synchronously I can provide that, the letter grade is going up, [laughter] and it continues to go up. Now, again, what I'm hoping is that the effort I'm taking to provide you with the A is worthwhile. But that's how you can have continuous improvement, is stop...not stopping at the D minus.

0:40:17.6 BB: Again, there may be situations where D minus is all you really need, but I, that's not me delivering to you a D minus blindly. That's you saying to me, "Hey, I don't need an A+ over here. All I really need is a D minus." That's teamwork, Andrew. So on the one hand, and what I think is, our listeners may not appreciate it, is who defines the letter grade? So in your organization, I would say to people, you give everyone a set of requirements to go meet, what letter grade does each of them has to meet to hand off to a coworker, to another coworker, to a customer? Every single one of those people, all they have to do if they're feeling disenfranchised, as you mentioned earlier, they're feeling like an interchangeable part, well, under those circumstances, Andrew, I don't have to call you up, I just deliver a D minus. And you can't complain because I've met the requirements.

0:41:14.2 BB: So what I think it could be a little scary is to realize, what if everybody in the company comes to work tomorrow feeling no dignity in work and decides to hand off the minimum on every requirement, how does that help? And what I find exciting by Deming's work is that Dr. Deming understood that how people are treated affects their willingness to look up, pay attention to the person they're receiving and deliver to them the appropriate letter grade. So I'm hoping that helps our audience understand that if it's a black and white system, then we're saying that it's good or it's bad. What that misses is, keyword Andrew, variation in good. So the opportunities to improve when we realize that there's a range, that "good" has variation. Another point I wanna make is, what allows the Deming philosophy to go beyond looking good?

0:42:16.2 BB: Well, if you look at the last chapter 10, I think, yeah, chapter 10 of the New Economics is...like the last six pages of the New Economics is all about Dr. Taguchi's work, and it's what Dr. Deming learned from Dr. Taguchi about this very thought of looking at quality in terms of relationships, not just in isolation, Phil Crosby-style meeting requirements. And the last thing I wanna throw out is I was listening to a interview with Russ Ackoff earlier today, and he gave the three steps to being creative. This is a lecture he gave at Rocketdyne years ago. And he said, the first thing is you have to discover self-limiting constraints. Second, you have to remove the constraint. And third, you have to exploit that removal. And what I want to close on is what Deming is talking about is the self-limiting constraint is when we stop at good.

[laughter]

0:43:20.7 BB: And I'm hoping that this episode provides more insights as to the self-imposed constraint within our organizations to stop at "good." What happens when we go beyond that? And how do you go beyond that? By looking at how others receive your work and then expand that others and expand that others and expand that others. And then what I find exciting is, and the work I do with students and with clients is, how can we exploit every day that idea of synchronicity of quality, and not looking at quality from a category perspective? Again, unless that's all that's needed in that situation. So I don't want to throw out category thinking, use category thinking where it makes sense, use continuum thinking where it makes sense. So that's what I wanted to close with.

0:44:12.1 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. This is your host, Andrew Stotz, and I'm gonna leave you with one of my favorite quotes from Dr. Deming, and it's very appropriate for the discussion that we've had today. "People are entitled to joy in work."

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In part 5 of this series, David and Andrew discuss the pitfalls of managers acting as judges versus the benefits of acting as a coach. They explore the history of traditional management practices, and how Dr. Deming's philosophy creates happier, healthier, and more productive workplaces.

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 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: management through coaching and counseling. And as a reminder, we are reviewing the role of a manager of people in The New Economics that Dr. Deming wrote. And if you are in the third edition, this is on page 86, if you're in the second edition, this is on page 125. Now we've been through steps or the list, let's say, all the way up to number four was our last one, and now we're into number five. And what Dr. Deming says pretty short to the point, and that is the new manager, a transformed manager is a coach. He is coach and counsel, not a judge. David, take it away.

0:01:07.7 David Langford: Okay, thank you, Andrew. Yeah, so this seems like a pretty short point and pretty obvious on the surface, but the more you get into it, the more you start to really think about, Well, how do you do that on a daily basis? And once again, I'm applying all this to the field of education, so when we're talking about the management of people, we're talking about teachers, we're talking about principles, professors, we're talking about administrators, so we're not... It's not just corporate thinking that we're after here. So what does that mean managing through your, somebody's a coach and counselor? Well, why, I had to always think about Why did Deming say this? Why did he make that as a point? Well, through his lifetime, 80 years in applied management, he constantly saw people that were, sometimes is called Boss management. It's: either my way or the highway management. There were the years during World War II where there's military management, and if you didn't follow orders, you could be court marshaled, or shot or whatever. And so really after World War II, all those people in the military came back, and people who had been in the service went right back into management positions in corporations, and so what philosophy are they bringing back with them. Well, they're bringing back military management.

0:02:54.1 DL: It's my way or the highway kind of thinking. And all these phrases that have bounced around for the last 50, 60 years, you're not getting paid to think, you're getting paid to do. Well, Deming was just the opposite. He was always trying to get people to think. In the previous point, we spent quite a bit of time talking about creating training and learning for people, and on the job, all kinds of training and learning, not just things that are gonna help you with your job because you wanted people to think. And why. Why would he want people to think? Because that's where creativity comes from. You get everybody in an organization and you have a Thinking Organization going on, you've really got something fantastic happening.

0:03:48.8 DL: If you don't have that and you got boss management and everybody's just waiting around for the boss to tell them what to do, you're not gonna get creativity, you're not gonna get new thoughts. In fact, creativity gets shut down in a situation like that. I'll never forget, a friend of mine talked about working in an auto plant in California during the 1960s, and his job was to put in screws. And as the cars came by, he'd put in these screws and he kept noticing that the tool that he had to put the screws in was stripping the screws out every tenth screw or so. So he actually took his time to create a special little attachment and a tool to make sure that every screw that he put in would be perfect, and he wouldn't be stripping those screws out in these vehicles, and he was so excited that when his manager came around, he's shared with him this idea about...

0:04:50.2 DL: Look what I've done, I've created this tool that goes on the end of the rivet gun or whatever it is, and to make sure that the screws are always in perfectly. Well, he got in huge trouble. Manager just ate him out and one side down the other. You're not getting paid to think, you put it back on. And that was prominent thinking then and probably management thinking that Deming encountered in our auto industry and why the Japanese suddenly started beating us in the auto industry is because they had people that were thinking and not just doing. So Deming wanted... What does that mean for like a teacher? Well, you're trying to get students always to think on their own. I've helped teachers many times, especially young kids to come up with a flow chart with their students, what to do when you don't know what to do. And there's a lot of thought in that. Right. I have a whole flow chart, well, what do you do when you don't know what to do. Do you just sit around and goof around and bother other people? Do you... What happens in those kinds of situations?

0:06:11.5 DL: Or have you gone through a process to try to solve the problem yourself? I know after a couple of years of working like this with students in classrooms, I'd have students come up to me and they'd get ready to ask a question, and then they'd look at me and they'd go, never mind. I said, No, I'd say, No, wait a minute, don't leave, why don't you wanna ask your question? And... Well, I haven't really gone through the process of trying to solve it myself yet. Oh, okay, well, let me know how that goes. Because until you do that, you're not really thinking and you're not really... The neurons are not gonna connect in a pattern that next time around, you can actually think through and solve the problem yourself. And so there's steps to going through those things and getting students of all ages to be able to think and solve problems themselves, and unfortunately, we're not getting better at this in organizations, we are still reverting and going backwards in many cases, partly because once you become a manager, there's power in that and control. And if I think that people don't need me, does that make my job sort of worthless? Maybe I don't need to be there.

0:07:39.8 DL: Well, it's actually just the opposite, that if you have people taking autonomy, solving problems, figuring things out on their own, and when they come to you, you're giving them coaching and counseling. Have you thought about this, have you thought about this way? And what do you think would happen if you did this? And rather than judging them about it, you get people thinking on a higher level all the time. I'll never forget... I can't remember if I told the story or not, but the school district I was working in, in Texas, the State Board of Education asked me to come and speak to the state board and talk about what I was doing with the schools in Texas. And I said, Well, I won't come unless I can bring a hundred of my friends. And he said, What are you talking about? And I said, Well, I won't come unless I can bring some of these students that are already in classrooms functioning this way with Deming thinking. And he said, Oh yeah, that'd be great. We never get to see any students. Isn't that odd? State board of education never sees their customers. Anyway, so a school district brought a bus load students, and in that bus load of students was a teacher and her kindergarten, five and six-year-old students, and they had told me at the state board that I had 10 minutes to make a presentation.

0:09:16.3 DL: So I talked about 3 minutes, and it's about who was Deming and applied thinking, etcetera, and then I had these kids talk. Well, I'll never forget these kindergarten kids were at the microphones and they're talking about how autonomous they are in their classroom, how they solve their own problems, how they work together, how they support each other, they're just amazing. Going on and on. And one of the state board members says, "Now, I understand that you have a lot of control and responsibility in your classroom," and all these kids are shaking their heads, yes. And she said, "Well, if you have all this control and responsibility over what you do every day, what's your teacher doing?" And this little boy without hesitating grabbed a microphone and looked right at her, and he said, The teacher is not in the closet, you know. It was stun silence. There's like 300 people in the room, it's dead silence and you hear all those whispering, What did he just say? Deming said profound knowledge is not limited to age. At five and six, he knew that he'd had a coach and a counselor in the classroom, and he was able to do this and take this kind of responsibility because of the teacher, not in spite of the teacher.

0:10:44.4 DL: So if you're not allowing your students to take responsibility and own their own situation, then you can have a rebellion going on. And you might never even know it because it could be an underground rebellion going on.

0:11:00.1 AS: Yeah, by the time you know it, it's too late. I was just thinking about some of these words, just to make sure that we're super clear, like I was looking at the word coach online, and one dictionary says someone whose job is to teach people to improve at a sport or skill or a school subject. Another one was counsel, which is to give advice, especially on social or personal problems. Another one was judge: to form, give or have an opinion or decide about something or someone. And I'm also reminded of a very good book that I found helpful in the coaching space, written by Michael Bungay Stanier, and he has some questions, it's called The Coaching Habit, and he had the questions that being a coach, he said You should ask, what's on your mind? What else is on your mind? And another question is, what's the real challenge for you that you're facing? What do you want? How can I help? If you're saying yes to this, what are you saying no to? And what was the most useful for you in that process? So those are some of the words, and I'm just curious, can you really be a coach in school? Or do you need to be kind of authoritarian to control a classroom? That's one of the questions that I'm sure some people are like, Yeah, that sounds great, David.

0:12:24.9 AS: But my classroom is out of control and I've gotta really... I've gotta squeeze down here to get things together.

0:12:32.8 DL: We need some discipline around here.

0:12:34.8 AS: Exactly.

0:12:39.2 DL: Yeah, the beatings will continue around here until morale improves.

0:12:43.4 AS: Exactly.

0:12:43.5 DL: Yeah, exactly. Yeah, every time I hear educators talking about, Oh, we got a discipline plan, or these kids need more discipline or... Every generation says, These kids today, they don't understand discipline. And I often will tell teachers, have you ever looked up discipline in a dictionary? Most dictionaries, the first definition of discipline is training.

0:13:11.0 DL: So you have a discipline problem, Oh, you got a training problem. And that totally changes things, and it actually goes to Deming's point when he says, Don't sit around and judge people. Train people in the way that you want them to go and what you want them to do and how you want them to act and let them make decisions and... Don't just judge them and heap so many demerits, this is gonna happen to you, and three tardies equal an absence, and three absences is equal this, and that's judging people and you're not actually improving the situation at all. I just read an article that Los Angeles has a chronic absentee problem. Well, partly because nobody wants to go to school there, right? You're not gonna miss something you think is fun and you're involved in, and you're actually learning. Learning is the most motivating thing that could be happening, and if students are going to school and they're not learning, then why am I even bothering?

0:14:27.8 DL: Now, you can try to discipline by heaping judgments and punishments and all kinds of things on people, but the bottom line is people are gonna vote with their feet and they're just... They just don't wanna put up with it over time or they'll show up, they won't do anything, they won't learn anything, they won't get involved. And the thing is that we always wanna blame the people and not the system, and that's what Deming is talking about, not being a judge, stop judging and blaming the people in this system and start fixing the system. And you'll get a different result.

0:15:10.4 AS: I went on the dictionary again to look at discipline, once you said that, I'm your handy-dandy fact checker here, and in fact, the first word in the description in the dictionary is training, and it says, training that makes people more willing to obey or more willing or more able to control themselves.

0:15:30.7 DL: Yes, and that's ultimately what you're after is to get people to control themselves instead of you thinking that you have to do everything.

0:15:43.9 AS: Another way of looking at this too, is to think about, How would you like to be treated? I think one of the best questions in a job interview that I've learned to ask is, What's the best way to manage you? And sometimes, I'll ask it by saying, if I was to talk to your last boss and ask them, what's the best way to manage you, to get the most out of you? And then it's amazing what that opens up. Some people say, like for me, I often explain that I'm kind of an incrementalist, so if I have a project, I want to check that it's on track, and I wanna work on a bit of it at a time, and then go from there, whereas there's some other people like, Just leave me alone and I'll produce this thing at the end of the... And when a boss or a colleague understands that that's the way my mind works, then it's easier for them to understand that doing a project with me, it's better to have daily check-ins versus someone else that may not want that, so think about how you would describe yourself to your boss, to your administrator, and describe how you would like to be treated, and surprisingly, it may be the way you should be treating other people too.

0:17:04.0 DL: Yeah. So take that same thinking and translate it to a second grade classroom. Do you really know your students and know how to coach and counsel each of those students either collectively or separately? And rather than thinking that since I'm bigger and have a stronger voice, and I'm the authoritarian person here, I can just tell you what to do and if you don't do it, I'm just gonna make your life miserable until you do do it. It's not a really good way to manage, and...

0:17:36.1 AS: Yeah. I'm imagining a little kid saying, and a teacher in that classroom saying, So how do you learn? How do you learn to memorize something? And they say, I take the first letter and then I make a rhyme. Alice likes such and such, and then I sing it in my head, and then people are like, Wow, okay, I never even thought about doing it that way. I know for me, I write out, let's say the first letter of something that I wanna memorize and think about it as a neumonic, but the idea of sharing those things in classrooms, and that's one way to coach, Counsel and discuss.

0:18:16.0 DL: Well, when you hear athletes in interviews and there's great coaches and that these athletes have worked for and they say, what about this guy? What makes him a great coach? Invariably, they'll say things like, he's a teacher, or she's a teacher. And just an incredible teacher. So when you're a manager of people like that, like whole groups of people, whether in a classroom, a team or a company or whatever it might be, and over time, you are a coach and a counselor versus being a judge with people. What does that do for you? Well, when times of crisis do come along, Covid, whatever it might be, if you've trained people up well, discipline them to think and understand and to work well with each other and support each other to a very high degree, you are now capable of taking on challenges that just across the street, the same kind of organization, they can't cope with it, they just fold because they have no internal ability to work together to a high degree to support each other to get through a crisis kind of a situation.

0:19:34.9 AS: When I think about Coach, I think about my dad and my mom to some extent, because they kicked me out when I was 18, and they said, Go make it on your own, but the deal was at that point, that was when they stopped giving any advice, it's like, You gotta do it. And we don't have any right to say, No, you've gotta make it on your own. My parents were never big on advice, but what they did is they listened to me, and then they tried to understand and all that, but I don't really remember my parents giving me advice specifically, and I can say that I remember when I had a girlfriend a long time ago in Thailand and I had some difficulty in my life that was pretty bad. It was pretty tough. And she said, You know what did you do? And I said, Well, I called my dad. And she's like, You talk to your dad about something like that!?

0:20:27.9 DL: Oh, wow.

0:20:30.5 AS: Yeah, and I learned in Asian culture, dads are not necessarily as approachable as they may be in the Western culture, which was a real surprise to me because I had seen Asian families as being very, very close, but what I just recall is just the comfort of being able to talk honestly and openly about a problem that I was facing. That was half of the solution, right there is to get rid of the anxiety and then start to think through. And so from a coaching perspective, I feel like coaching and counseling is really all about listening.

0:21:10.5 DL: Yeah, you made me think about... I grew up on a farm, and my father intuitively understood a lot of these things, even though his father was never like that with him, but my dad would take me out, we'd go to, put in a new fence or would repair something or do something, and one of the first things he'd say is, Okay, now what are we trying to do here? And the first few times, I remember thinking, Oh, don't you know? [chuckle]

0:21:42.5 AS: Fixing this fence. What are you talking about?

0:21:43.5 DL: Right, that's right. But he was trying to get me to think, and then by the time I was like 15 years old, he could just send me out to go, Hey, go down there and fix that fence or put that fence in. And he knew it was gonna be done right and done well. Because he taught me to think about situations and work through it.

0:22:04.9 AS: Well, maybe I'll wrap up this topic by... First of all, I think highlighting... We're on point number five. And that's... These points that Dr. Deming has highlighted. There's 14 of them. It's different from The 14 Points. And remember, if you're in the third edition, this is on page 86 of the new economics, if you're in the second edition, it's on page 125, and before I summarize point number five, I do wanna go back to point number four because you highlighted that, the point about being an unceasing learner, and let's just review point number four. He is... So we're talking about the transform manager, he is an unceasing learner, he encourages people to study, he provides when possible and feasible seminars and courses for advancement of learning, he encourages continued education in college or university for people that are so inclined, and that brings us to number five, which we've just been wrapping up, and that is he is coach and counsel. Not a judge. You highlighted the idea that particularly coming out of World War II, when military management, boss management or this management style of trying to tell people what to do was brought back into American industry, and all of a sudden it didn't lead to the result that it was supposed to or maybe people didn't even think about that, but what Dr. Deming is trying to teach us is that you really wanna get people to think.

0:23:34.0 AS: Particularly I was thinking as you were talking about that, the idea of continual improvement in The 14 Points, he's talking about making a long-term commitment to continual improvement. You can't get to continual improvement if people are not thinking. And so that's where I think this coaching and counseling rather than judging, is all about getting people to think and getting people involved in it, and so you've raised some really interesting points in academic setting, such as talking with the kids and that type of thing, and getting them involved. Is there anything you'd add to this summary?

0:24:12.4 DL: No, I think that's basically it. And sometimes we think that it's so difficult to give up that power of controlling people and things and making all the decisions, but when you do give it up and you train and discipline people to know what to do, when they have that power, you see a level of performance and really a joy in learning and work at a level that you never thought was possible before. Over the years, I've seen teachers over and over and over, tell me just that, that... I'll say, How is it going this year? And then say, I'm having such a great time. This is the best year I've ever had in my whole career. And they say, Well, what's happening? He says, Well, everybody just seems happier because we all work together and support each other, and instead of the other way around that we use to work.

0:25:10.9 AS: Yeah, and that's a great way to end it by also just refocusing all of us on the point that there is always an opportunity to improve, and in order to see the next improvement down the road, we can't see it until we get through our latest work that we're doing that then opens our eyes to the next opportunity. So I really wanna challenge the listeners to be focused and remember there's always opportunity to improve. David, on behalf of everyone at the Deming Institute, I wanna thank you again for our discussion. For listeners, remember to go to Deming.org to continue your journey. Listeners 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.

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Is there a secret weapon for improvement? Yes! John and Andrew discuss how students fit into improvement projects - and how that translates to businesses.

TRANSCRIPT

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 John Dues, who is part of the new generation of educators striving to apply Dr. Deming's principles to unleash student joy in learning. The topic for today is "Engaging Students is the Secret Weapon for Improvement". John, take it away.

0:00:28.0 John Dues: Andrew, it's great to be back with you on the podcast. Yeah, this is sort of a revelation to me when I was working with... It's actually working with David Langford, and we were talking about, "How do you bring about improvement in schools," and at one point, he said to me, to kinda give it away at the top of the program here, "Students are sitting right in front of you, and they are the secret weapon when it comes to school improvement." Engaging them in those improvement processes is really the secret to improvement, because almost everything we want to improve in schools has to do with students, but we almost never directly engage them in this improvement process. It was so obvious they're sitting right there in front of me, but it wasn't until David said it that way that I said, "Oh, my gosh, all this time." Of course, as a classroom teacher or a principal, students were sometimes tangentially involved in improvement efforts, but how many times are they central to it, how many times do we put the data that we want to improve right in front of the students and elicit ideas for improvement as we watch that data move up and down over time? So it was a real sort of eye-opener for me to start thinking in that way.

0:01:50.8 AS: It's funny 'cause when I first started teaching many years ago, teaching finance, I was always worried that I would get a question that I couldn't answer. And what I came to learn from that was that a question that I couldn't answer is a great opportunity for a discussion. And then I would basically say, "Hmm, well, what do you think is the answer?" Now, in a way, I was playing a little bit of a trick 'cause I was deflecting the fact that I didn't have an answer. But I said, "What do you think? Okay, what do you think?" And then we started to construct and answer to that as best we could. And it took a lot of pressure off me because I realized that that discussion was a fine discussion to be had in the classroom around a topic that I wasn't exactly sure how to answer.

0:02:37.9 JD: Yeah, I think all of us try to hide our weaknesses, especially early on. We gain experience, it gets more comfortable to say, "I don't know," which is a fine thing to do as a experienced classroom teacher as well. And I'm thinking about in this context involving students, probably the best ideas for improvement are living right there with them, just like even if you didn't know the answer in your early classrooms, that sort of elicited a discussion that maybe was richer than it would have been otherwise. So I think, yeah in either case, involving students is a real sort of key to this improvement process, whether it's a single teacher in front of a classroom of college students in your case, or in my case, where we're trying to improve our system of schools.

0:03:30.7 AS: In my Valuation Master Class Boot Camp, which is like an online course, I have so much more flexibility than you have in high school. But I found one of the students was just really engaging and really supportive of the other students, so I hired him. And I said, "Why don't you become student experience? That's... Your job is about bringing that great student experience." And then whenever I kick off the Valuation Master Class Bootcamp, I ask prior graduates to come and speak and tell the students, give them some advice, and tell about the transformation that they went through in that course. So on the first day of class, they're inspired and encouraged, and then throughout the class, they've got a prior student guiding them and helping them get through where he knows are the most difficult parts. But you don't have that kind of flexibility, I would guess in your setting. Tell us more about that.

0:04:30.2 JD: Yeah, I think well, one I think that example that you just told is outstanding, and I actually think... I think it's a little bit of a misnomer. There are a lot of regulations, there are a lot of handcuffs on... To certain things in terms of what we can do and what we can't do. But actually we have fairly wide latitude. We're a small public charter school network, so we maybe even have more latitude than the typical traditional public school. We have the latitude of a district, so we're making decisions for district of schools, basically. And we're small, we're pretty nimble. We think innovation is pretty important. We think continual learning is important, and we put some processes in place to elicit that. Where there can be some roadblocks here and there, I think one of my jobs is actually find a way around those roadblocks, if they're in service of our mission and in service of helping students be educated at a higher level.

0:05:29.4 AS: So what I do is I ask the students at the end of the whole course, I say, "Tell me what you learned. What is the number-one thing that you took away," that type of thing. And I'm putting them in a pretty intense situation for six intense weeks, but then they've got a record of that, they've thought through that. And then when they come back, then they can share, "Here's what I went through, and here's my advice on how to get through it." And it is an idea in a school to say, having a list of the people who made it through the class on the wall.

0:06:03.4 AS: And then another idea is to find one or two students that would say... Come back and talk to the students to say, "Okay, this class is about American history, and the one thing that just lit me on fire is the story of Philip Sheridan when he was attacking... The US cavalry, was attacking the southern cavalry, and how he knocked out Jeb Stuart, and it just got me reading all this stuff from blah, blah, blah, blah, and then... " So, of course, that's big brainstorming, but that's an idea.

0:06:33.5 JD: Yeah, I think that... You said a six-week course. What you're describing is essentially that Plan-Do-Study-Act cycle, so I could see a scenario where in your six-week course where you run a PDSA on how are we gonna improve the class. And at the end, when you get to that act, you sort of decide with the class... What should I focus on for the next PDSA with the next class. And so in that way, you'd sort of be... Assuming you're re-teaching this class on an ongoing basis, you'd be sort of continually improving, and that's really the sort of... We talked about the Plan-Do-Study-Act cycle, the PDSA cycle, the last couple sessions, that's really what it is. It's where you leave off at the end of that cycle and you decide what you're gonna do next, feeds into that second cycle of improvement. So whether you called it that or not, it sounds like you're basically running PDSAs with the finance classes that you're teaching.

0:07:34.6 AS: Yeah. In fact, at the end of the class, I ask them another question, which is, what could we do to improve? And...

[chuckle]

0:07:43.3 JD: It's perfect.

0:07:45.5 AS: So the question... The problem that I faced was that the students said I want more one-on-one feedback, that they submit their assignment and they just get pass/fail or a grade and they don't get the feedback that they wanted. And really, I have to say, I was kind of upset about this reply because I felt like, "I can't do it, it's too many students," and my goal is to grow it so that I've got 100 or 500 students. How am I gonna scale it if it's about personal feedback? So we talked about it a lot for the next Boot Camp that came up, because we had seen this complaint coming up, and we came up with this idea. And I said, "Maybe... " And this... Part of this is talking to people like you and David Langford and others, maybe we need to do more work on clarifying the assignment. And so we went back and I said, "Look, every week we need to make it super clear on Monday what's the assignment for the week."

0:08:48.3 AS: And we even provided them kind of a score card of the way we're gonna look at it. "Did you do this? If you did that, you get a point. Did you do that? Did you check your grammar," whatever. And so we got much more clear, and then what we decided to do was to say, "Look, the teams will meet in the week, they always meet once a week, and they need to pick one or two people to present that on Friday." And then what we had is, we had the students present their work, just the best of the best, and I would say not the best of the best, but the ones that shows... Said, "I'm ready and I can do that," and then myself and my team gave them feedback after they presented, and said, "Okay, see that? Try to fix that. Make sure that you don't... " And then once we did that, what I then did is I took notes throughout those and recorded those, and then I improved again the description of the assignments and the common mistakes that people made. And so the next time that we did it, the next launch of the Valuation Master Class Bootcamp, we now had an even more clear focus on what you've got to do by the end of this week.

0:10:00.1 AS: And then finally, what I did is I called it Feedback Friday. And I said, "A whole week, we're working on a bunch of stuff but the end result is on Feedback Friday. One person, two people from your team is gonna present and you're gonna get critiqued and see how you do, and everybody's gonna watch that, it's gonna be recorded. Anybody can go through that." So we've been doing Feedback Friday now for three bootcamps and I would say all of the complaints related to feedback and not enough personal feedback are gone. And it wasn't through personal feedback that we resolved the issue of not getting enough personal feedback.

0:10:35.0 JD: Yeah. Well, that's a PDSA cycle for sure. Another thing I think of is what you... Sounds like you did over time as you iterated this class, and how you gave feedback, you actually found the actual root cause that was causing the problem. And the third thing I was thinking of, 'cause you talked about complaints, one thing we can do is overreact to complaints. So that's another thing that you could do is put the complaints on a process behavior chart, and if you get to a certain number, that might sort of signal that you have an issue. Otherwise, there may be an acceptable level... Number of complaints and... Or a third level analysis is, it's a stable number of complaints but the number is not acceptable to you as the instructor and so you wanna go about improving the whole system. It sounds like that's exactly what you did, sort of what we've talked about the last couple sessions, is you chart something, whether it's quantitative or qualitative data, you're keeping track of that, and then you're tagging it to this structured improvement process. And, yeah, it sounds like you're running the PDSA cycles for the class. It's pretty cool.

0:11:57.1 AS: That's a comforting message for the listeners and the viewers because what it tells you is that you don't have to be super official and have all of the tools that we learn from Dr. Deming's teachings that... First, is to start with the thought process. And my first thought process is, "I want my Valuation Master Class Bootcamp to be the best course in the world." That's all I want, just the best in the world, so I'm constantly wanting to improve. The second thing, I do not ever focus on competitors because my course is just so different, and all I focus on is the students. The third thing is I'm getting feedback on a consistent basis from the student about what they like and what it's worth to them. Because I also ask them, "Now that you understand exactly what's in the Valuation Master Class Bootcamp, what is the price that you think I should charge for this?" And my goal is that that price continues to rise as the perception of the value of the course rises. So I'm getting feedback, and then I'm looking at that feedback and I'm trying to identify what I think is the most important feedback that we've got to somehow resolve.

0:13:13.3 AS: And then I'm coming up with a theory that how, "Okay, wait a minute, if we clarify more about what we want, maybe that's gonna help, but even if we clarified our assignment, it wouldn't have helped the feedback. They still could have had the same problem of, "We're not getting any feedback." But then it was the idea of coming up with the Feedback Friday and really naming it. And that's what I've learned from the world of marketing and all that, is that you've got to name something and repeat it. And so all of that is... And then I keep wanting to repeat that process, which is why I love doing the bootcamp 'cause it's six weeks, every 10 weeks or so I do it again, and that gives us a perfect opportunity. And that's what teachers are doing, they're doing again and again, right?

0:13:53.9 JD: Yeah, yeah, and it makes me think... I'm obviously living in a different world than you in terms of who the students are and who the customer is. But we... In our network of schools, we have two elementary schools, two middle schools, and a lot of your description makes me think of this first ever PDSA cycle we ran a few years ago when we were working on an improvement project we called Eighth Grade On Track, which is just like what it sounds. How do we make sure that our eighth graders are on track to go to high school? We don't have a high school in our network, but we have a high school placement process. One of the things that parents expect of us is that their child is well-prepared to go to a good academically-oriented high school once they leave us, and, of course, high schools are also expecting that from us. So the parents are the customer expecting certain things from our schools. The high schools that we feed into are expecting certain things from our schools. So of course we can't fulfill our mission, we can't be an important part of that sort of education system, if we're not preparing our students to leave us as eighth graders and matriculate into a solid high school.

0:15:09.4 JD: And I remember working through, what does it mean to be on track in eighth grade to predict that you're gonna go on and be on track and do well in high school? One of the interesting things that, as I was reading some research out of the University of Chicago on this, was that when you look at students in middle school, you see grades start to drop that's actually a leading indicator of things to come in high school, which makes a lot of sense, 'cause if you start to experience academic issues in middle school, high school is a little harder, academically, plus some of the supports that are in place in elementary and middle school start to drop away so that makes perfect sense. Bs drop to Ds in middle school, and Ds drop to Fs in high school. And, man, if you're off track, even in your ninth grade year, students have a lot of trouble bouncing back from that. So I remember there was a student I was working with named James and this exact thing happened.

0:16:19.4 JD: I was looking at his grades, I was looking at his GPA, his attendance, his discipline record in sixth grade and everything was on track. In seventh grade, it was mostly on track. Things were looking pretty good. And then all of a sudden, here we are in the first trimester of eighth grade, and his reading grade dropped from a B in seventh grade all the way down to a D in that first trimester. In a lot of places, that's not gonna... Especially if the rest of his grades are pretty good, good attendance, he never was in trouble, he's not gonna get on a lot of people's radar. But we have this on-track system in place, so once we saw that data, our team, we said, "Wait a second, James was on track in sixth grade, on track in seventh grade, and now all of a sudden, he's off track in eighth grade," and we started asking why. So we're adults, we're sitting around the table in a conference room, "Why is James off track? Why is he off track in eighth grade? Well, his B in seventh grade dropped to a D."

0:17:25.8 JD: "Well, why is that? Why did that grade drop from B to D?" We're looking at his scores, and he's got pretty high reading test scores in his class. And then we look at his homework grade. His home grade's really low in his eighth grade reading class. And so then we asked this next question, "Why is James' eighth grade reading homework grade low?" And then we get stuck, and this goes back to this whole point of this episode, which is students are the improvement secret weapon. So we're sitting around this table and we say, "How do we figure this out? Why is his reading grade and homework grade, low? Let's go get it. Let's go get it." [chuckle]

0:18:10.5 AS: And for the people who are working in a manufacturing company listening to this, it's like sitting in your office above the factory...

0:18:19.1 JD: Exactly.

0:18:19.9 AS: And looking at the chart and thinking, "I wonder why this is happening."

0:18:24.0 JD: "Why this happening?" Yeah. So this is when the conversation gets really interesting. We had never done this before. We go get James on the spot from his eighth grade classroom and say, "Hey, we're doing this thing where we're just trying to figure out what's going on with your grades."

0:18:40.0 JD: We're asking some "why" questions. We're basically using the 5 why tool, we have a piece of chart paper and listing these things out, and so now we've invited him into the room, we just say, "Why is your reading homework grade low?" And he says, "Well, I really do the easier less-time-consuming homework first, math and science and history are fairly easy for me. So I do those first." A pretty typical answer from an eighth grade boy, and so what he's basically saying is he does his reading homework last, "Well, why do you do your reading homework last?"

0:19:28.9 JD: "Well, I don't like doing my reading homework, it's too much work." "Why do you dislike doing your reading homework?" "It's too much work. It takes too much time. I wait to the last possible moment." And we said, "Well, what is the last possible moment mean?" And he said, "Well, I usually not only do it last, I do it on the bus ride to school in the morning." It's dark. It's bumpy. That's the worst possible place to do the hardest homework, but that's what he's doing 'cause he does wanna get it done, he wants to turn in something, but he's not putting any type of effort, so now what we've uncovered is, why is it exactly that his homework grade is low?

0:20:02.9 JD: Now, if I was just an administrator sitting in my office, I could see that D and say, "James needs to go to after school tutoring," or "James needs to do this," or "James news to do that." But none of that, like what you were talking about with the student complaints in your class, none of that would have been the actual root cause of James' reading homework problem. So then we said, "Okay, now we know what the problem is, what are we gonna do about it?"

0:20:35.6 JD: And I had just learned about this Plan-Do-Study-Act cycle thing, and I said, "Well, let's sit down and write... Literally write out a simple PDSA with James." And the basic question was, if we could do reading homework first, could we raise that homework grade to at least a 70%? So we kinda looked at what his homework grade had been and what he needed to do to pass, and so that's what we settled on. We said, "James, what do you think about doing your reading Homework first?" And again, typical eighth grader here's where some of the psychology comes in, he says, "I don't know...

0:21:09.6 JD: I don't know if I really wanna do this. I don't think it's gonna work. I hate reading, I hate my reading homework," I said, "James, I hate getting up in the morning and running, but when I do it... When I get myself to do it, I feel better." He said, "Oh yeah okay, I could buy that." And I said, "Could you try this for just five days," and he looked at me, he kind of nods and I said, "No," I literally got up out of my chair, he got up out of his chair to go back to class and I said, "I need you to look me in the eye and shake my hand and tell me you can do this for five days." And he said, "Sure, I think I can do this."

0:21:54.1 JD: He said, "At the end of the day, when I'm sitting in my homeroom class, when we work on homework... Do you mind if I sort of sit in the back of the room so I can concentrate better?" "No problem. Great." So we write this down for the next five days, James is gonna work on is reading homework first, we tell the teacher that's in the homeroom so she can check to make sure he's actually doing that, and then we talked to the reading teacher and said, "Hey, can you give us James' last five assignments in reading and can you put the next five in this table to see if this is working." So just over the next five days, he does this, I check in with his homeroom teacher... Yep, he's working on his homework at the kidney table back in the back of the room.

0:22:33.5 JD: And then we start seeing the data come in, so whereas... Right before this intervention, it's one out of five, that's a 20%, three out of five, that's a 60%, three out of five... Those types of grades. First homework comes in five out of five, second homework comes in a three out of five. It's gonna take some time. Then it's 6.75 out of 10, it's five out of five, four out of five. And you start seeing this sort of momentum building, and after five days, he not only has a C on those assignments, he's very nearly got a B. And so we're studying this. And we're saying, "This seems like it's working pretty well." He sort of out-did even our predictions, and so we go to him and say, "What do you think about this sort of reading homework-first intervention?" And he says, "Yeah, it's going pretty well."

0:23:27.3 JD: "You're gonna keep doing it?" "Yeah, let's keep doing it." We design a second PDSA, We're gonna check in in two weeks now, so you can kinda see how this process goes, you create this very small plan, the student was hesitant, but he gave really great answers, insights into why his grade was low, he helped develop the plan, so now he's intrinsically motivated, 'cause this wasn't something that we did to him, we did it with him, and he's starting to get some momentum, he had some immediate success.

0:24:06.7 JD: And so you can see even just the small little change had this huge impact on this kid, and then he starts to build this momentum, and this has really changed a lot about how we approach changes, whereas before we'd sit in a room and plan, plan, plan, plan, plan, and then you go implement, you're like, "Oh man, I wasn't expecting this to happen, I wasn't expecting this to happen, I wasn't expecting this... " In five days, we went and saw "What would happen if we put this plan in place," and it worked pretty well, and all of a sudden we're gonna do it for 10 days instead of instead of five days.

0:24:40.3 AS: So let's just break it down for the... For the listeners to understand, we often talk about PDSA and all that, I think the first lesson that I would take from what you've said is that, yes, it can be a formal thing where we sit down and write down Plan-Do-Study-Act, and we go through it in a formal way, but it can also be just an informal process that we go through, but let's just break it down. They'll... Explain to us, P-D-S-A, how does that break down for this specific thing?

0:25:14.1 JD: Yeah, so the P would be the plan. And so I think the important thing to keep in mind here, is one... We wrote it down. You know, that sounds simple, but that's a big first step. We wrote the plan down, we made a prediction, we said, if James does this reading homework-first intervention, we predict that he'll have a 70% or higher on each of his homework assignments over the next five days, so we've quantified what we think is gonna happen. Then it's just the who, what, where, when, and of the plan. So it was literally like on March 22nd, 23rd, 26th, 27th and 28th.

0:25:54.7 JD: So on the next five school days, James is gonna work at the back kidney table, he's gonna work on his reading homework first, his homeroom teacher, Ms. Kramer, she knows that this plan is being put in place and she's just gonna check that he is working on his reading homework and then his reading teacher who is. Dr. Brennan, she said, "I'll record his homework scores as I get them over the course of each of those five days, so we can see if this is in fact having the sort of success that we think it is." So the plan is our hunch, it's really our theory about how we're gonna improve James' reading grade, but we don't know if that's actually connected to the real world in terms of if it's gonna be successful or not, until we actually put it in place. So we made a prediction, we made a plan that plan included who's doing what, when, and then it also included a plan for collecting just a little bit of data to see if this PDSA is on track so that's the P, the plan.

0:27:03.9 JD: In terms of the Do then after those five days, we just came back together as a team and just said, "What actually happened? Did James go and sit at the back kidney table? Did he do that each of the five days? Did he work on his reading homework first?" And it actually... This is a pretty simple plan and it's only over the course of five days, so in terms of implementation, the Do, everything matched exactly with what we put in the plan, and part of that is because the plan was simple, straight forward and on a really, really, really short time frame.

0:27:43.1 AS: So that is him doing the plan executing the plan.

0:27:44.4 JD: Us running the tests. Yeah us running the tests. Now on the study, the difference between the Do and the Study is the Study has... That the plan has been run, the test has been run, and now we have the data in and so we looked at what happened for the five days before we started the study, and over the course of those five days, he had gotten a 53% average on his homework on those five days pre-intervention, after the intervention began over those next five days, he earned a 79% average on his homework, and that 79% was 9% higher than what we had predicted, so the intervention actually went better than we thought at the outset, so that gives us evidence...

0:28:36.1 JD: That one, we know what we're doing in terms of creating the plan in the first place, and two, that the implementation can actually be put into effect in a real school, in real classrooms, with all the constraints that you have with time and all that, all that stuff. And I think another big thing besides writing it down, besides having the structure of this PDSA, we had James, we had James there, so I think it was a pretty good plan because of that. And so...

0:29:01.6 AS: And then, so what happened? Okay, so we've got the Study and what about Act? What does act mean in this case?

0:29:09.3 JD: Yeah, I think I mentioned this in one of the last two podcasts that when I think of Act, I'm gonna do one of three As, I'm gonna either Abandon the idea that we put in place 'cause it didn't go so well, I'm going to Adapt the idea 'cause some of it went pretty well, but maybe there are some things that need to be tweaked or iterated on, or I'm gonna Adopt it, this intervention went so well that it's gonna become a part of my system.

0:29:41.3 JD: So in this case, because we've only done this over five days and it was successful, but that's a pretty short time period, now we're gonna adapt it, we're gonna adapt it. And in this case, we're gonna... We call this thing reading homework first, that's the name of the intervention or change idea. Now, instead of five days, we're gonna do this for 10 days, and then one other piece of the Act is going back to the appreciation for a system component, that you can improve one part of a system and destroy the rest of it, that sort of idea. We're focused on reading. And everything else was pretty good when we started this focus, but we wanna look at James' whole system. In this case, we're talking about grades, so we're not gonna do sight of writing class and math class, and science and social studies, those types of things, because we're all focused only on reading, so we added that as a sort of a second component to the second cycle so we're gonna run a little longer. We're also gonna add his other grades to the data we're collecting just to make sure that those things stay on track.

0:30:53.4 AS: And one of the lessons I've learned, John, in the stock market where I basically spent most of my life is that you have to also double-check that your process didn't go wrong in some particular area or is biased, for instance, just the fact that we're paying attention to James... And maybe the teacher is gonna grade things slightly different now because they know that we're looking and we're trying for improvement, and so you also have to ask questions and try to understand where the biases are because you may come to a conclusion, "Wow, this is great." And then you wanna think, "I'm gonna apply this more across more students or across more systems," and then you find out that it starts to fail and why does it fail because there was some kind of fatal flaw in the process. Do you have any thoughts on that?

0:31:43.1 JD: Yeah, I think that goes back that I think... Something we've talked about very early-on in this series, maybe in episode one or two. This idea is there are goals for accountability and then there's goals for improvement, and I think... Now bias can happen at any point, for sure, because we are paying attention to this more, but when you're in a system and the goals are accountability-focused, you're much more likely to get that sort of nefarious or "I'm gonna change my behavior, maybe not in the best way, because I have to meet this goal - my job's at stake, or... "

0:32:30.2 AS: In other words, when you talk about goals for accountability, let's say that you went to that teacher and said, "You're gonna get a bonus if this one particular case is able to really improve." Okay, now you've brought in a whole another element into this thing.

0:32:41.1 JD: Yeah, that would be the carrot side or the stick side, you know, "If this kid's homework doesn't improve, you're gonna get a bad rating." Something like that, and that... Like I said, I think there's still always potential for bias or doing some things subconsciously in terms of how hard your grading him or something like that, but I think it's much less likely to happen if we're sitting down and saying as a group, "Hey, what can we do to improve James' approach to reading class?" Versus those things that we just talked about, whether it's a carrot or a stick, a ranking that could be impacted, those types of things.

0:33:20.1 JD: I think in focusing on improvement-oriented goals, you're much less likely to sort of see that... See that type of behavior. I think a lot of it goes back to what's the aim, what's the aim or objective of the PDSA, what's the aim of your system in general, what's the orientation you have in terms of how you manage as a principal, the teachers or the teachers managing the students, I think that's where you have to be careful. And this sort of improvement orientation, I think helps overall rating and ranking accountability-driven system.

0:33:58.4 AS: So let me try to summarize a little bit about what we've talked about, and for the listeners, this is kind of our way of trying to make sure that we all learn from what John's sharing here. So the first thing you were telling the story about how it's important when eighth graders leave because you're preparing them for high school, and you talked about the idea of being on track and when somebody starts to fall that it's hard to bounce back, and then you identified James.

0:34:26.8 AS: And then you said, "Okay, we saw something sliding there from a B to a D, and that was his reading grade," and you thought, "What could we do about this?" And your first reaction was to sit back in your offices looking at the data and thinking about it, but instead you say, "Well, let's just bring him in here and talk to him." So this is the secret weapon you're talking about is getting the student involved, then you went through a PDSA, so let's just try to review that briefly, so the plan is, you guys came up with an idea and you wrote it down, and you had...

0:34:58.6 AS: Like who, what, where, when? So that it was clear what was gonna be done, also you made a prediction, because if you don't make a prediction, you don't have some sort of theory, it's very difficult to really understand what happened, and as Dr Deming says, "Without a theory, there is no knowledge." And you also had a plan for collecting the data too, to make sure that you had that. Then Do, meaning that you ran the tests and James did what was planned... In this case, it went well, 'cause he actually did it, and then after that, you have to Study where...

0:35:36.1 AS: After the test was run, so the test has to be run first, the Do has to happen first, then you started to compare the outcome to your prediction, and as you said, it was slightly better than the prediction that you had made, and then you came to the Act section, where you had to think, "Well, do I abandon... " "Do we abandon this? Do we adapt it? Or do we adopt it?" And part of what you said was that it's about adapting a little bit, maybe and saying, "Okay, what we've... " "We've identified this as reading homework first, maybe now we're gonna test that on a 10-day basis," but you also had to think about it.

0:36:07.9 AS: This is a critical part, you had to think holistically, you had to think systems thinking, because your objective was not to increase the performance in one area at the cost of another, so you had to look at it holistically, and finally, we talked about the risks that something like, this can go wrong. And if you're tying goals to accountability to the people involved, and all of a sudden they're being punished or rewarded based upon the outcome of that result, it's gonna be much more risk that it's not gonna go properly compared to looking at goals for improvement, anything that you would add to that?

0:36:45.2 JD: I think that was a really perfect summary. I think it was spot on. Spot on and the only thing I'd say is not every PDSA is gonna work that smoothly, I think, but it illustrates the key points of what a PDSA is, how simple it can be, how to connect ideas that are sort of in the universe to reality, what actually happens in actual classrooms and schools when you try something. I think that's the power of the PDSA. I think you nailed it in your summary.

0:37:17.2 AS: So ladies and gentlemen, now it's your turn. What's something that you can do a PDSA on, just like John has described to us? And what improvements could that bring, and most importantly for the teachers and the administrators out there, my question to you is, do you realize that engaging students is the secret weapon for improvement? John, 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. 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.

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What's the difference between "perfect" and "that will work?" We use them interchangeably all the time. In this episode, Bill and Andrew discuss what "perfect" means and why it's standing in the way of innovation and improvement at work and at home.

TRANSCRIPT

0:00:02.8 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. The topic for today is The End of Perfection. Bill take it away.

0:00:29.0 Bill Bellows: The finish line of perfection. [laughter] Andrew, here we are, session four. And welcome to our audience.

0:00:39.7 AS: Yeah.

0:00:43.0 BB: And the end of perfection is a topic of a number of presentations that I've done for The Deming Institute and for others. Part of the reason it's on our list is a focus, is that I come across people who are improvement specialists, continuous improvement zealots, specialists, professionals who speak in terms of striving for perfection. And I just start sort of become... Actually, for some time now I've been bothered by that concept, but so let me just say, if I walk into a hardware store where you work, Andrew, and I'm looking for a bolt or something, some tool, something for some project I'm working on, and I'm just hoping you have it. And I come up to you and you say, How can you help me? And I say, I'm looking for this, and you bring me over. And again, I'm just praying that you've got it. And you say, Is this what you're looking for? And I say, perfect. Oh man, I am so excited. I don't have to run across town. You've got what I'm looking for. Perfect.

0:01:52.8 AS: So easily pleased.

0:01:55.5 BB: Yeah, but when I say perfect, what I'm saying is that's exactly what I'm looking for. I'm not saying it's the best saw blade ever known to man, beyond which they'll never be a better one. So I look in terms of casually, I hear the reference, the context of perfection being exactly what I'm looking for versus as lean professionals will use it and other continuous improvement professionals use it, they're implying perfect means you can't go past that point. It's a... And so what it means, Andrew, is that continuous improvement stops at perfection.

0:02:46.5 AS: There's an event horizon.

0:02:49.4 BB: And that I have a problem with. And so what I like to say that people is... Again, I don't have a problem with... I walk into the hardware, I would call it lower case perfect, small p, not capital P. Capital P, I don't believe exist, or I would say to people, you can't believe in continuous improvement and capital P perfection. And people will say, "Well, Bill, but we're... When Toyota's striving in pursuit of perfection, they're implying that, we'll never get there." I say, I don't believe there exists. And I said, it's like getting in the car saying, are we there yet? Are we there yet? So I would say a mindset of capital P perfection is the antithesis of continuous improvement.

0:03:41.2 BB: And why is that important? 'Cause I think there are incredible opportunities for improvement in any organization. I'm not saying they're all worthwhile to pursue, they have to be worthwhile, meaning the benefits from it have to offset the investment of time and energy, so I'm not saying we should improve everything in the organization. And that mind set exist. That is alive and well, that we can improve everything, we can improve everything. I say, when... People don't improve every aspect of their home, they improve bathrooms and kitchens, 'cause that's the highest return. And so likewise, we have a... I think there are people out there in their personal lives of a very pragmatic sense of we don't improve everything. So I think that's understood, but I think there's some confusion. So there, I just wanna say that capital P perfection, I challenge what that means, but where I wanna go next is how that mindset comes about and how prevalent it is. And in a future session, we're gonna talk more about this, but I just wanna hit the word perfection today. I gave some examples of where that thinking comes from. So we were talking earlier of, that Dr. Deming's Red Bead Experiment, and we appreciate, Andrew and I appreciate there are people in the audience that are wondering Red Bead Experiment, what is that all about? Another is saying, I've got a red bead kit right here in my office.

0:05:11.6 AS: Exactly.

0:05:14.3 BB: In fact, I've got a red bead kit right... Two kits right behind me.

0:05:18.0 AS: So for those people that don't know, Red Bead Experiment, we have that on The Deming Institute website. You just type in Deming Red Bead Experiment, and you can get there. There's videos also on the YouTube channel and in DemingNEXT, so there's a lot of resources and of course, there's also other people that are doing it. But for those people that know it, we've decided we're not gonna go through all the details of it, but rather talk about it.

0:05:44.1 BB: Yeah, so as a refresher for those who are familiar with it, and again, if this is brand new to you, then the suggestion is you pause here, go watch the videos on Deming Institute's web page and then come back and join us. But for those who are familiar with it, Dr. Deming, came up with this. I think someone at Hewlett-Packard exposed it to them him in the early '80s, and the way Dr. Deming had run the Red Bead Experiment as it's called, is he'd have a bowl with roughly 4000 beads that are you used to make a necklace, very small beads, maybe an 8th of an inch in diameter. And then the bowl would be mostly small white beads, and then roughly 20% red. Same diameter, roughly, again, about an 8th of an inch, and he would start off by having the beads, the mixture, and one bowl poured into another to mix them up and then pour them back into the other bowl, and then he'd have willing workers from the audience one at a time come up and put a paddle in. And the paddle is maybe the size of a 3 inch by 5 inch pad. And he put a paddle in with small holes. In those holes, the beads would collect. And in a given paddle, there would be 50 divots for the beads to collect, and so the workers with Dr. Deming's instructions would put the paddle in, shake it a little bit, remove the paddle, go to inspector number one, who would count how many red beads are in the paddle, go to inspector number two, count how many red beads, and then they'd be announced, the total is 13 red beads.

0:07:37.2 BB: Andrew, dismissed. Next worker. And so he would go through and have one worker at a time, go through this four or five times, each time being, say, a day of production. So what are red beads? What's implied in... Again, there's a chapter in The New Economics on the Red Bead experiment. The implications is red bead are defects, things the customer doesn't want, the customer wants white beads. So what are the red beads? Things that don't meet requirements: scrap, rework, defects. And if we go back to last our previous sessions, the difference between white beads and red beads is, question one, white beads meet requirements, they are good. Red beads don't meet requirements, they are bad. And so in the Red Bead experiment, Dr. Deming would go through and collect data from four workers, perhaps four times each, and the data being a spreadsheet, and then he looked row by row and point out there's highs and lows in the number of red beads in he'd start...Dr. Deming as the manager of this white bead factory, would start to berate the workers who created more red beads as if they did it all by themselves. And so the punch line, the reminder punch line for those who have seen this before, what Dr. Deming, what he was doing was blaming the workers for the red beads.

0:09:04.8 BB: And the workers had no choice but to think that they were causing the white beads. And so one of the big takeaways for people in the Deming community who really love the Bed Bead experiment is that the red beads are not caused by the workers, they are caused by the system, which includes the supplier of the red beads and the white beads, the instructions, the bowl, the paddle, the worker, the instructions. And you don't blame the workers separately, and so that becomes a really big takeaway. Well, where I would like to go with this beyond that, what I like doing in an audience or a class in a university class is we'll get to the point of collecting the red bead data, the number of red beads per day per worker, and we'll move it from a control... From a run chart to a control chart. We'll will calculate control elements, we'll talk about common cause variation, and the idea that the system is most likely not gonna produce special causes because the system is semi-closed, unless there's an earthquake and the paddle is broken or something like that.

0:10:18.0 BB: Well, the question I'd like to ask people is, now we appreciate that the red beads are caused by the workers... Are caused by the system which includes workers. But what I like to ask is, is your understanding of the Deming philosophy that the objective everywhere in the organization is to strive to eliminate all the red beads everywhere in the system, which can include going to suppliers, no longer buying them, working with their suppliers? And so I just like to ask people this, and I've had a couple of hundred people in the room and I'd just say, is that what you think where Dr. Deming is talking about, that the objective, one, is to understand that red beads are caused by the system, not the worker, but then we go the next step and say, let's strive to eliminate all the white beads everywhere, and if we do achieve that, are we done?

0:11:10.8 AS: Right. Wipe out all red beads everywhere?

0:11:12.8 BB: I'm sorry. Wipe out all the red beads everywhere? Are we done? Have we achieve perfection? And people will say... Or I'd say, but simultaneously Dr. Deming told us about the value proposition of continuous improvement. So then I'll say to the audience, do we stop at a 100% white beads, or can we improve? And if we can improve, what does that mean? And then we get, we can make them faster. I say, Okay, fine. We can make them cheaper. I say fine. I said, but can we make them better? And then people will say, "Well, we can make them faster," and I I'd say fine, we can make them cheaper, and I'd I say fine. And we're going around, around, and they'll say, everything can be improved. And I say, well, but how do you improve the white beads once they're all white? And people will say, you can always have a better mouse trap. Then I'll hold up the beads, and I say, I'm not talking about a better mouse trap, I'm saying, these beads, you can't get any... So what I love about the red bead experiment is, it's not a mouse trap with springs and wires, it's a really simple... It's just a bead.

0:12:24.4 BB: We've got white ones and red ones, how can you make the white beads better once they're all white? Now they're stumped. They are stumped, and they are... And when I lead them to... And this is the part of the Red Bead experiment that I enjoy is this piece, and the punch line is, it comes from what I learned from Dr. Taguchi is that the white beads are not uniformly white, they actually have different shades of white, which is question two, they have different diameters, which is question two, different weights, and point out that you can continuously improve the white beads once you understand that there's, questions two, that there's degrees of white degrees of diameters and things like that. And the idea being that in order to understand why that variation matters, now we get to what we look at the end of module three is we have to look at how the beads are used.

0:13:33.9 AS: And just to summarize, question one is, does it meet requirements, I think is right?

0:13:38.6 BB: Yes. Question one is does it meet requirements? Is it white or is it red. Well, it's white.

0:13:45.0 AS: Yep. So that was a fine...

0:13:48.1 BB: Good question.

0:13:49.5 AS: That was a definite or yes or no answer, as you said. So...

0:13:54.7 BB: Absolutely. That is a question one, does it meet requirements. Yes or no. Black and white thinking, we also talked about it. Question two is, there's shades of grey. And in this case, there's shades of white, there's shade... They're different diameters. And now we begin to understand, again, that the impact of different diameters and different shades shows up in how they're used, in terms of how they're used to make a necklace or however they're being used by the person downstream. And so at the end of module three, we talked about what are the types of things we could do at the end of module three to help people begin to understand the implications for Dr. Deming's work. And is go downstream and see how your work is being used. So instead of striving to make sure all you send downstream is white beads, not red beads... Again, I'm not underestimating the value proposition of getting to that point. But what I'm saying is, that's not perfection. Actually, if you look at it as perfection, then we say we are done, now let's go elsewhere, get all the red beads done and get the white. So the strategy is to... I think the overall strategy is, what's the best use of our time? Is it going from some red to all white, or is it going from all white to then look at the variation in the white, which is then looking at what are the opportunities for improving the organization by looking at how the beads are used?

0:15:28.4 AS: And if we think about this, it made me think like, let's just say that somebody's implementing Deming's teachings, and they've done a lot of great work to get down to that point of, let's say eliminating red beads, we've rooted out the red beads, and there is a huge gain there for the organization, for the customer, for costs and all of that. So you could even say that in some ways, that that's what they call the low-hanging fruit, but what's fascinating that you've talked about is going through the looking glass to the other side, and now you go to the step further where you have... It seems like it's incrementally not worth it, in some cases, because it's just tinkering around with something that's pretty close enough, but yet, if you go deeper to that, it's very possible that you reach a level of precision that brings an exponential improvement, not only in the system, but also in the outcome and also in the competitive position relative to your peers.

0:16:38.4 BB: A few things on what you just said, one, is... And I really like the metaphor you're using, and I like to say that people is that you have no idea what's on the other side of the doorway. So question one is getting to the point of, we want all the beads to be white, and then we're done. That's perfection. And so what I'm saying, there's more, there's more, and the more is going through the doorway and beginning to look at how are the beads used and what opportunities are there. But right, there's this economic sense of diminishing returns and measuring returns. I'd tell you, the excitement you're hearing is that I've seen so many situations where the gains are so significant for such a small additional effort, that I no longer... This idea that we run out of opportunities for improving. Nonsense, absolutely nonsense. What I say to people is, if you don't look, you won't find. If you do look, there's no guarantee, but also, as I said, there's three things, One is get to the doorway and move through the doorway and look at the variation in the white beads, and that gets us beyond perfection into the world of continuous...

0:18:06.8 BB: For the time, we'll call it continuous improvement. In a later session, we'll switch to continuous investment. And the reason I call it that investment is that it has to be worthwhile. We don't improve to improve, we improve because the gain we get in the marketplace, economically, market share, has to be more than what we're putting into the effort. It's gotta be worthwhile. But the other thing I wanna say is, I've seen people strive to make things... Well, just, I will save this for later. There's a lot more than meets the eye when it comes to everything being good. And again, which is why we've been talking for four sessions now about question one and question two, and the idea that I've not seen anywhere in quality management, let alone management, period, an appreciation of question two, whether it's program management, have the requirements for that task been done? In program management, they'll talk about red, yellow, green, green is good. We passed the floor. What does green mean? Mean green is good. So even in the world of program management, I see the same mindset of striving for everything being good, missing opportunities to manage the variation of things that are good to improve integration. And ultimately, everything has to integrate.

0:19:46.0 AS: Yeah, it's making me think a lot about the idea of once you get through the doorway, through the looking glass to the other side, that you're now really investigating what's happening further on down, and you may even find that the requirements, that the setting actually can be improved, then maybe they didn't even come with improved requirements 'cause they thought, Well, you can't even meet the requirements I've given you, so forget it. But then you just see that opportunities start to open up. And I think the other thing that...

0:20:21.6 AS: I remember a light bulb going off in my head about the Plan-Do-Study-Act, and thinking about it a lot and thinking about if you were to do a Plan-Do-Study-Act on one particular operation in a business, and let's say that you did it properly where you did it, you learn new information and you incorporate that information into the training manual for the people that are working in that operation, then you do another Plan-Do-Study-Act, and then you again, improve and then codify that in training. Then you do it again, and then you codify that in the training, so that you're never going back, number one, so you're never making prior mistakes, and you're bringing your operation to a higher and higher and higher level. Let's say you go through 10 iterations of that. The fact is that you've got all kinds of different improvements that have happened, but the biggest improvement is you have acquired knowledge in your company that your competitor doesn't have.

0:21:26.9 BB: Well, and let me add to that. Again, in the world of: if you don't look, you won't find, and if you do look, there's no guarantee, I've seen many a PDSA effort lead us in a direction we were not expecting, which can be disheartening. And essentially what you're discovering is not what you plan to discover. [chuckle] And I've seen people kind of fall off the horse because we discover something in the experiment... We discover something in the PDSA process which we never knew about, which turns out to be vital information, but because it wasn't what we were looking for, there's a disappointment more than a chagrin, of "darn." It's like we're using this piece of equipment, and we're trying to improve the equipment and in the process, we find out there's something wrong with how it's plugged in. Well, now, we know that. And so I've seen PDSA efforts result in great improvements, I've also seen the result and great learning. What do I mean by learning? From Russ Ackoff. Russ would say, learning is what happens when things don't go as planned. And what does that mean? It means there's financial pain, 'cause we spent a whole lot of time not expecting...

0:23:01.9 BB: Yeah, It just we fall flat. I've fallen off my bike. And as a result, changed how I ride my bike, which is a learning process. Ended up in physical therapy for months. So I say to people, learning could be financially painful, emotionally painful, physically painful, but improvement requires learning. Ackoff would say, "If we're not learning," which means making mistakes, "then how can we improve without that?" So you have to have a mindset. I think where we're coming from is, we wanna go through that doorway, we wanna continuously look for opportunities to improve, but we have to also be mindful. Let me throw another Deming quote based on what you were saying earlier. Dr. Deming would say, "The bigger the system, the more complicated to manage." So we can keep it really, really small. Deming says, "The bigger the system, the more complicated to manage, but the more opportunities... " Well, the reason I wanna throw that out to our viewers is, you may have... I've seen people focus on little things, little things, little things, and unknowingly create big trouble over here that they couldn't see. But what I don't want them to do is use that to become gun-shy that we shouldn't change anything.

0:24:25.6 BB: It's just the idea that don't underestimate how connected these aspects of the system are. Now, we go back to learning. And so it takes... It's so easy, Andrew, to just stop at the doorway, to stop at all white beads, to not go downstream and see how people use our work. What differentiates the Deming philosophy from all the others is going through the doorway, realizing that the white beads... The Red beads are not caused by the workers, they are caused by the system. But also realizing there are opportunities to improve the system, and you can't talk about system without asking how are the beads used?

0:25:08.9 AS: Yup. When I think about what you've described, to get to the door, that, I guess what I'm thinking about is, what do we call that? I wrote down some notes when you were talking, I said System of Profound Knowledge, implementation, improvement.

0:25:25.7 BB: Yeah.

0:25:27.5 AS: Getting in control, fixing the system. It's just the simple awareness of System of Profound Knowledge and that systems will get you to the door.

0:25:37.7 BB: Yes.

0:25:41.3 AS: And that's step one, and you're way beyond where you were in the beginning, so congratulations. Now, I'll use a little analogy, in that I'm in a 12-step program, and in this 12-step program, they had a thing called the 12 promises, and they said, you're gonna know a new freedom and a new happiness. You won't regret the past nor wish to shut the door on it. You're gonna know freedom and all these different things. And I thought, I want every single one of those. But what I found when I went to that 12-step program, which I've been in now for more than 40 years, is that there's many people that go to a meeting to stop drinking or stop using drugs or stop, let's say over-eating or whatever that thing is, and then they stop there. And they don't take it to the next level of really pushing themselves to dig deep and follow the 12 steps to get to the 12 promises. And that's kind of what I'm thinking about because there's a great word in the 12 promises called... It says, "If we are painstaking about this phase of our development, we will be amazed before we're halfway through," and I thought about that word, painstaking. And if you reverse it around, it's called taking pain.

0:26:50.3 BB: Yes.

0:26:52.8 AS: And that made the difference of whether someone went through the door. Getting to the door is good enough for most people, but getting through the door and to the other side is the real Holy Grail.

0:27:03.8 BB: Well, let me come back to that point you just made. There's a point of time, and I thought that I had co-workers, I thought, whose wish was for a job that I could take where I can kinda do the same thing every day for like a career, and then retire. That's the kind of job I'm looking for, where I don't have to learn new things. I could just come in, hang out, get into the routine and then go home. Do you have jobs like that at your company that I could apply for? And I think there are people that... I think there are people that have that attitude.

0:28:00.5 BB: Now, I would also say, given our mutual understanding of System of Profound Knowledge, I think people have developed that attitude by working in organizations where they're blamed, and that becomes, just get me out of here. I don't wanna raise my hand, I don't wanna be blamed, so I'm gonna keep my head down. So I'm not saying these people grew up that way, I think they become conditioned that way. But what I would also point out is that, [chuckle] for those people that want that job, I would say, how many of you would like a cell phone which has far more capacity in terms of storage and speed than your current one? And it's also cheaper. Andrew, can I sign you up for that? Or maybe a television system.

0:28:48.5 BB: Can I sign you up for that? Oh yeah, so you wanna be... What you're saying, Andrew, is that you wanna be the beneficiary of people out there doing things above and beyond, but you just want a job where you can just kind of do it... Is that what I'm hearing? You wanna receive blood, but you don't wanna donate? Because that, I think, becomes the societal compact, is we come into this world receiving... Well, we have an obligation to contribute. And I think... But again, I'm not saying people... I'm not trying to imply that people are bad, I think we have conditioned people to want that. But I don't think that's their real nature, I think organizations that follow the Deming philosophy, I've seen people have incredible turnarounds in attitudes and to become people that are willing to take on challenges. Of course, there's variation. I'm not saying everyone's gonna be watching how the beads are used, so maybe that's not you, maybe that's somebody else. But I'm gonna need you in the implementation, Andrew.

0:30:03.1 AS: Yeah.

0:30:04.2 BB: And that goes back to variation. It's hard to say that. I think we all want the same thing. And I think for many people, it gets beaten out of us in terms of our obligation to society.

0:30:19.9 AS: Okay, so let's try to pull this together, the end of perfection, what we've talked about is the idea of... We've used the red bead experiment to get through this, but I think that tool is now served it's purpose. What we're really talking about is that in the initial stages of maybe implementing Deming's teaching or getting a particular system into control, there's a lot of fantastic gains that happen, and they get you to a point that is very satisfactory.

0:30:54.4 BB: Yes.

0:30:54.4 AS: And some people may confuse that point to perfection. But the reality is, is stepping through that point brings us to a whole another phase where there's so much more that we can consider so that we can improve the outcome for the end result that we're trying to do. But we'll never get there if we don't go through that doorway that goes beyond perfection.

0:31:23.1 BB: Yeah, and it's... The bigger thing I'd like people to appreciate, continuous improvement is a real deal, that... I mean we are constantly surrounded by technologies that are advancing. We have opportunities to get to continuously learn, and that's "continuum thinking" as opposed to black and white thinking. And what Dr. Deming is talking about is... With an appreciation of the System of Profound Knowledge, we have organizations with people with joy in learning. Learning is about making mistakes, trying to figure it out as we're talking about. So again, so let's not underestimate that to really love learning, is to really love the pain of learning [laughter]

0:32:12.9 AS: Painstaking.

0:32:13.1 BB: And in willing to... If you're leading a team, you need to know this, maybe the others don't, and you need to help them get back on the horse, you need them to understand that what we've learned is not what we expected, but that's all part of this journey that we're on. And so I think it's important for those that wanna lead these efforts to be vigilant and not... Just realizing that learning is about... As again Ackoff would say, "Learning is when things don't go as planned." Russ would also say, "When things go as planned, we have an illusion of understanding."

[laughter]

0:32:54.1 AS: Shall we...

0:32:54.7 BB: We just don't know when that learning is gonna happen.

0:32:58.7 AS: Shall we wrap it up?

0:33:00.1 BB: And the other thing I was going to say is, relative to achieving perfection, I would say Thomas More, I think an Englishman, I don't know, in the 14th century, whatever, wrote a book about a place called Utopia.

[laughter]

0:33:19.7 BB: And so what I wonder is, Andrew, do you think people in the Utopia were having conversations about continuous improvement?

0:33:29.4 AS: Okay, so I think we'll leave it on that? What do you think, Bill?

0:33:34.1 BB: Okay. [laughter]

0:33:35.5 AS: Alright. Bill, on behalf of everyone at The Deming Institute, I wanna thank you again for this discussion. Fascinating. For listeners remember, go to deming.org to continue your journey. 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."

View Details

Dr. Deming encouraged lifelong learning for everyone, but particularly for managers and leaders. In this episode, David and Andrew talk about Deming's fourth point in his list for The Role of the Manager of People After the Transformation: "He is an unceasing learner. He encourages his people to study. He provides when possible and feasible seminars and courses for advancement of learning. He encourages continued education in college or university for people that are so inclined."

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. The topic for today is Learning to Learn. And just as a reminder, we're going through the section of The New Economics third edition, it starts on page 86 for those who want to follow on, and for those who have the second edition, it starts on page 125, and the title of the list that we're going through is called Role of a Manager of People. This is the new role of a manager of people after transformation. And we are now talking about the fourth point on this list, which reads as follows: He is an unceasing learner. He encourages his people to study. He provides when possible and feasible seminars and courses for advancement of learning. He encourages continued education in college or university for people that are so inclined. David, take it away.

0:01:16.8 David Langford: Yes, good to be back, Andrew. So I always have to caution people, Dr. Deming wasn't into all the pronouns and everything that we use today, so he just means everyone. So if you're a manager... Yeah. So all of these points I, over the years, have taken to heart, and even as a classroom teacher I started figuring out, "Where do I start? What do I do?" Once I have been to a Deming seminar everybody wants to know, "What do you do Monday morning?" And these are really good places to begin, and you certainly can't do them all at once. It's sort of an inter-related system, and so when you start concentrating, you're always wondering, "Well, what do I do next as a manager?" Go back to one of these points to say, "Okay, have I done anything about that?" And so when you think about your role as a manager and if you think about yourself as a teacher, you're a manager, you're administrator, you're a manager, he's talking about... Anyway, if you're a parent, you're a manager of a family, right. And so you wanna think about it in those terms all the time.

0:02:31.2 DL: I never forgot even the very first seminar or the very first time I ever got to talk to Deming, and he was really interested in talking to me because there weren't very many educators at the time talking with him, and he was an educator. He was taught at New York University for 40 years, so I was really interested in talking to him about education and we were just chatting about the application of his thinking and theories to education. And while we're talking, he says, "Just a moment," and he pulls out this little notebook and he starts writing down what we were talking about. And I was just like, "Dr. Deming's writing down something I said, or we said, or we were talking about or whatever." And then come to find out his whole life he kept these little notebooks and sometimes if you were around them at the end of the day and people would be talking, he'd pull out his notebook and he'd say to people, "Look what I learned today." And that was just - flabbergasted about that, and not only is this guy 90, 91, 92 years old, but he was actually living this point every single day of his life. He was consulting...

0:03:48.8 AS: Yeah. And you can realize that when you read his work too, because he's always highlighting, someone said in a seminar or so and so said this, and that you now picture, he's taking a note and then later he's put in into his book.

0:04:03.2 DL: Yeah. When you're at the seminars, you hear him say, I'm eternally grateful to so and so for this point, or the Taguchi loss function, or all these amazing economical ways of thinking and management and all those kinds of things. He's really great at giving credit like that, but he was also very great at explaining that, hey, he'd learn something new. Even at his age, 90 years old, he was still learning things that were new to him.

0:04:35.3 DL: I was living in Alaska, at the time we were remodeling a house built in 1898. I happened to find a box of photographic plates in the attic, and when I was cleaning out stuff and everything, and these were late 1800s, and they were photographic plates on glass. The wedding that had taken place at the house that we then owned and we were remodeling, so that was pretty cool. As I was looking at the box, it said if you find any defect, anything... I can't remember exactly the wording on it but, "If you find anything wrong with these photographic plates, please contact us at this address, and also please add the box number of photographic plates, so we may find the person guilty of making the error and remove them."

[laughter]

0:05:41.6 AS: What?

[laughter]

0:05:41.6 AS: They're terminated.

0:05:44.4 DL: "Thereby improving the quality of our product." And this is... I'm not gonna say the name of the company, but it was a major company at the time, and I was so blown away by this so I took the box, took the plates out. I took the box to Dr. Deming at one of the seminars and brought it up to him and said, "I have a gift for you," and he said, "You do?" And I said, "Yes," and I told him where I found it, and I said, "I think you will really enjoy this label." And he read it and his mouth dropped open. He said, "Oh my god." I said, "I'm gonna give it to you as a gift." And he said, "Oh no, this is too valuable for you to give it to me." And then... So he made somebody go down and make a copy of it and turn it into an overhead thing, and he started using this at seminars because it was exactly everything that he was reversing in management thinking at the time, for the next 100 years he was reversing that thinking.

0:06:50.0 AS: It was just to put some context...

0:06:52.8 DL: And I was always so proud of that that I was one of those people that said...

0:06:57.3 AS: Look at this.

0:06:57.8 DL: Thanks to David Langford for this. That was my big contribution.

0:07:01.7 AS: There you go. And for the listeners out there who... To put this in a frame of reference, back in those days, the way that we presented, and I didn't so much 'cause I was pretty young when I went to my first Deming seminar, is that we had acetates or meaning transparent pieces of A4 or letterhead paper, letter paper, the size of that, it was just a clear plastic thing and then you would write on it, and then you would put it onto a screen which would then project up on to a wall. And so it was either that or we had rollers where you could roll the acetate across, so you'd write a little bit and then you'd roll it, and so that was the way that he did his presentations in those days.

0:07:46.5 DL: Yes. He was constantly rolling forward, rolling backwards and drawing right on the screen and working through, so... He was well-known for being very, I'm going to say, curt, but very direct, very short with people. When they asked a question, like people would line up at different points in time and get ready to ask him a question, somebody would come up and ask a question, and he'd say something like, "We already covered that this morning. Where were you, in the parking lot? Next question."

0:08:23.2 AS: Yeah, which is kinda scary for people in the audience.

0:08:25.4 DL: Yeah. Well, a lot of people viewed that as, "Oh well, he's not really interested in people learning about things." But no, it's just the opposite. If you are trying to ask a question simply to discredit him or to take him down in front of, or make yourself look better in front of other people, or things like that, he had no time for you and he would openly say, "I don't have time for this. I'm 90 years old or 92 years old. I don't... "

0:08:57.0 AS: I'm on a mission.

0:08:58.7 DL: "I don't have much time left and I don't have time to waste on you." And he wouldn't ever say that...

0:09:00.7 AS: But he would...

0:09:01.7 DL: But he would cut people off, for sure.

0:09:04.8 AS: And I remember that I felt pretty safe as a young guy with pretty innocent questions coming to him. I felt like he was very welcoming to the majority of people. But there was a certain thing that either someone that completely missed what was going on and he could get a little bit annoyed with that, or if it was someone at a senior level that should know this and they don't know it and, "I'm gonna make sure you never forget this interaction." And I remember the one that I remember from being in the seminar was when someone got up and said, "Since you're the father of TQM, I wanted to ask you a question about X, Y, Z." And Dr. Deming looked at him and he says, "What is TQM?"

0:09:48.7 DL: Yeah. He knew full well.

0:09:50.9 AS: And he goes, "Wait, wait, what? Wait, what? I don't understand 'cause I didn't know what he meant."

0:09:56.4 DL: Yeah. Well, not only was he an avid learner like that himself, he wanted everybody else to be like that too. You wanna do continually questioning, continually trying to understand, continually learning, apply, thinking on a level that most people were never taught to think on that level.

0:10:19.3 AS: I wanted to ask you a question about this from a bigger picture perspective, and that is to say that you're a learning company or you're an unceasing learner or we're into learning and all that. It's such an easy thing to say.

0:10:36.9 DL: Cliche.

0:10:39.4 AS: Yeah, it's cliche, yes. But it feels good to be able to say, we're a learning organization. We're trying to learn. But the fact is, is that he's... The reason why he's raising this is maybe most people really are learning or they're not a learning organization. Can you put it in that framework before we get into a little bit more detail on it?

0:10:58.8 DL: Yeah, absolutely. I thought the first time I went to see Deming, I was a year out from getting my Master's degree, right. And so I'm thinking, well, yeah, I'm a learner, right? I got my Master's degree and like you have a whole bookshelf behind you, yet people just listening can't see it, but you have a ton of books behind you, and I might have an entire library here myself, etcetera. And so I'm a learner, but at that time, I suddenly had this realization in probably the very first four-day seminar, I had never read anything that wasn't assigned to me. I've been going through school my whole life or being a teacher myself and teaching a curriculum or dictating what other people should read based on that curriculum, but I'd been... I don't know, probably since I was a little kid that I just went to a library and looked around and just picked out a book I wanted to read. And that started really my journey of thinking, "Okay, I have to be just learning all the time, I have to be reading all the time and thinking all the time," and have never forgotten that. And so that also causes you to have a very open mind about things.

0:12:23.7 DL: In the politically charged realm that we are now, there are so many people that you can't even talk about the opposite point of view. It's just a complete shut down of, "No, I'm not gonna talk... I'm not even gonna talk about that." I think Deming would just be shocked and dismayed about that, that if you can't argue with your boss he's not worth working for.

0:12:53.8 AS: Yeah. And also as a person that's lived outside of the US for many years and look back at the US, I realize that the collision of ideas and opinions is actually the whole process of learning.

0:13:09.0 DL: That's the whole point. Yes.

0:13:10.5 AS: That is how... That is kind of the history of how we've acquired new knowledge.

0:13:18.9 DL: Quickly and move a society for it or a business forward or whatever it might be. And so what he's talking about here in a company or a school, etcetera, if you're not constantly encouraging people to think and to learn and to understand, you're gonna become stagnant or not only stagnant, you're gonna go backwards, and I think about things.

0:13:44.1 AS: Can you explain this again? Going back to the big picture. I bet you that if you and I did a survey of top US companies that are successful, or the companies they're gonna all say... They're gonna all say, we're a learning organization.

0:13:58.5 DL: Right.

0:13:58.6 AS: And I just want to understand...

0:14:00.5 DL: When I started this journey, yeah, I studied Toyota because Deming had done a lot of work with Toyota and everything at the time. And one of the things I learned from one of the managers there, I said, "Well, how much time do you spend in training and development of employees?" And he said, "20% of the time." He said, "We're hoping to get to 40% of the time." "What? You mean 20% to 40% of the time you're actually training, developing people, giving them information, etcetera, instead of actually producing their products?" That didn't make any sense. So I went back to my school, I did an analysis, how much time did we actually spend with our staff and faculty in training, and it came up to be like 5% of the school year was actually spent in us training them in new concepts or ways to think, etcetera.

0:15:00.5 AS: And it's a great point...

0:15:03.8 DL: And I thought how much time do we spend training the students in thinking?

0:15:09.6 AS: Yeah.

0:15:10.4 DL: Well, zero.

0:15:10.6 AS: Yeah. It's a great point to stop for a moment for the listeners and the viewers to ask yourself, how many hours, what percent of the time, of the week, of the month, of the year do you spend or does your school or your firm spend in learning and training, in both training and education? I bet you it's not 20%.

0:15:39.5 DL: Well, the students that I was working with, these were just high school kids, and so we were going through these points and we're having this discussion, and I showed them the data, and they said, "Well, when do we get to learn?" And... "So what are you talking about? You're going to school." And they said, "No. You're learning all this stuff about Deming and discussing it and watching videos and everything. When do we get to do that?" And I realized I wasn't doing that with students, and so I put them to work because the teachers all said, "Oh, we don't have time for that. We're already crammed. We can't get through the curriculum. We don't have time for anything like that," and so I put the students to work to come up with a new master schedule and then come back and present it to the staff, and they came up with two... I think it was 60 or 90-minute sessions per week that they wanted to come together and just and learn, and it was just an amazing way to think about it.

0:16:42.7 DL: So one of those sessions I had each week with the entire student body, and basically I'd show them a Deming film or I'd show them something new or something that's happening in education, and I'd put them into groups and have them discuss about it, and what do you think about that and how could that be applied here, and what should we do differently? And then the other session was a session where they wanted to go anywhere that they needed to go in the building to get help and catch up on anything they needed to catch up on. And this is totally a foreign concept because we were constantly following every kid down, "Where are you going? You're going to the bathroom. Here's a bathroom pass and you're gonna go here and... " What? We're going to actually trust these kids to do stuff? So it took us probably a whole year to convince the staff, the administration and everybody that, "Okay, well, let's at least try this." Right.

0:17:41.0 DL: So the first time we ran a session like that where the students could go any... They could go to the science room, they could go to the computer lab, any place they needed to go to learn and catch up and get help or work or however they wanted to do, but they just had to be learning during that hour session. Well, the principal went around and actually counted kids in all these rooms and everything else, and lo and behold found out there were like 10 kids that took off and went to town. Right. So he calls an emergency meeting after that day and says to the whole staff, "We can't keep doing this. We got 10 kids that took off and just blew the whole thing off, and so we gotta change the whole master schedule and redo it and everything, and we gotta start over again." And I'll never forget 'cause we're just sitting there, sort of stunned. Trying to think, "Well, okay, now what are we gonna do? And then we're gonna have to redo everything."

0:18:46.0 DL: And all of a sudden, the science teacher said, "You know, in my room, I must have had 60 kids doing science, and he said, I'd say a majority of them weren't even doing stuff that was assigned to Science class. They were exploring all kinds of new concepts, asking me questions about all kinds of things in Science." And English teacher said, "We were having the greatest discussion about applied Romeo and Juliet to modern issues." She said, "I never had time for that in my classroom, but a whole bunch of us just ended up sitting around and we just started talking about the application of these things in a modern society." And almost every single teacher said the same thing. And then finally somebody said, "Well, how many students we have?" And I think at the time we had about 300 students, so 10 of them left. That means 290 students were actually engaged in learning and doing exactly what we want them to do, and we wanna throw this out because of special causes. And that's when I realized, oh, special and common cause - people are getting it. Our training is actually seeping into the terminology and the way of thinking about people. So we didn't throw it out and we kept it, and within a few weeks there wasn't anybody gone, because the kids that had took off came back.

0:20:19.3 AS: They got it out of their system.

0:20:21.5 DL: While the other kids said, we're talking about the great time they had, and not only that they were catching up on work that they didn't have time to normally, and all kinds of other things that went on. It even happenened in sports, a whole bunch of them went to the gym and just worked on basketball techniques, and even the PE teacher was amazed that I just had all these kids in their learning and wanting to know about, "How do you do a shot and how do you do this and how do you make this happen?" And teachers were just sort of dumbfounded about this, that students would actually learn on their own without being given a grade or forced to do something.

0:21:01.9 AS: And what I wanted to also think about is the idea that if we read the 14 points and trying to understand what Dr. Deming is telling us, there's this, number one, constancy of purpose, there's this real focus on improvement, there's a focus on the customer, not the competitor, to try to improve what you're delivering to the customer, and then you combine this focus on learning and training. You bring these things together and in some way, it's almost like you've created kind of a tunnel vision that's between your company and the customer and your company and the suppliers, and it's this obsession on these things. And at first, it's hard to understand, but as you start to see this obsession you realize this type of focus can... And because you're learning, everything you're gaining it's taking you to another level and another level, and then you're applying it for your customer, for your student, for your school, and next thing you know, you do that over and over again, and you will be at a very different place, and you'll also be at a place where people really feel great about it. That's not what's happening in learning organizations, companies that say we're a learning organization. Tell me more about that?

0:22:25.4 DL: Well, if you're continually learning like that as an organization and constantly expanding the ways of thinking, etcetera, when you get to major hurdles like Covid, etcetera, you have a whole staff, learned staff that's used to learning and used to figuring things out and used to thinking and coping with disasters or anything that goes on, and so the system doesn't fall apart, that's what I saw happening over and over in companies and schools and universities that I worked with for a long time, that those organizations could just overcome obstacles that would just be a huge thing to other systems, because they weren't used to learning or coping or understanding. They're usually used to just being told what to do. The same thing in education, the curriculum is coming down from the state or the national edict on X and... Oh, well, we just got... So they just learned to constantly be in a response mode, so they're not in a mode of constantly innovating, thinking, what can we do next.

0:23:41.7 DL: So I know in my school, I started... Not only did we have this one time a week where we could work with all the faculty and...or all the students, we just started having a faculty come in and learn with the students, which was a novel idea. Right? 'Cause normally we segregate them out and the faculty goes off and learns this stuff and comes back and does it to people. Right? But we just set up this learning session with students, faculty, everybody and faculty were learners and lo and behold, that's probably the best model that you could be in a school, is to show students that you're constantly learning, that you're constantly reading, you're constantly figuring something. "Hey, I read this thing last night. This book, it's really great. Da da da da da."

0:24:38.9 DL: I didn't fully realize the impact of what we had done until after the first year that we'd really tried to implement this and get stuff going. And during the summer time, teachers are usually... The school year ends and all the kids leave and you never hear from them until start the next school year up, right. So I'm out mowing the lawn in the summer time and my wife comes out with the phone and she says, "Hey, one of your students is on the phone." Well, I'm thinking that there must be some kind of accident that happened or something that goes on. And I'll never forget because when I'm talking to this student, I actually stopped. I was looking at the phone like, "Who are you?" Because he said, "Hey, I read this book and I just wanted to know if you read and there's some really interesting concepts that I picked up on it and wanna know if you'd heard about it." And I was so stunned 'cause 15 years, no student had ever done that. It never ever come up to me like that? Well, that summer, I had 12 students do that. Twelve of those kids called me over the summer, and I started to learn... When they'd call up, "Hey, what have you been learning?" And they, boom, they just tell you, because we had taught them to be learners, learning to learn.

0:26:00.9 AS: And what about people that are listening that are in, let's say, public schools or other places, and they feel constrained, they've got the mandates from on high, as you mentioned, and I think what I guess what I'm hearing is the idea that you may be less constrained than you think in that there may be more room to do and still be able to follow what you got to follow. What would you advise to them?

0:26:27.6 DL: Yeah. Well, if you have management of your organization, etcetera, that wants nothing to do with this and they're not really interested in making big changes or doing anything differently, etcetera, that doesn't preclude you from doing something as a teacher and I did the same thing. I'll give you an example, one of the classes I was... I can't remember the title of it now, but it's media management or something like that. I can't remember what we called it. But I just set up the first 10 minutes of class, I said the first 10 minutes of class we would get all the newspapers from the library that were used up the previous two or three days. And you got 10 minutes to go through the paper and pick out the most relevant things happening, and then share that with the rest of the group, and then we're gonna talk about Deming Management as applied to those issues. And it was such an amazing, amazing thing because the kids would talk about how stupid some of the things were happening politically, or this was happening, and it was totally contrary to what Deming talked about, and then they talk about what should happen, etcetera.

0:27:37.6 DL: So after about three or four years, I started taking students out on a tour, and we'd take any students who wanted to go and we'd raise money throughout the year and everything else, but we wouldn't go just on a field trip just to go to Disneyland or something. We went to universities, we went to major corporations, we went to places where we could learn stuff. And I'll never forget, the kids were at Motorola, Motorola, I think, it was in Phoenix, Arizona. And they had heard all about us and everything, and they set up all this thing, and our students would come in and give this whole presentation about Deming management applied to education. Well, when we got there, we walked into this room that they had set up for us, and there was literally a red carpet laid out, and in the back of the room was this whole banquet of seafood and just huge tables of food and everything else. Kids all walked in. And the CEO from Motorola is there and everything. And the kid says, "Who's this for?" And he says, "It's for you, we think you're the most important people in the country right now."

0:28:49.6 DL: These kids, a lot of them Native American kids, a lot of them from very rural background, you could literally see them grow 14 feet in that instance. I'll never forget because after we finished our presentation the CEO got up and he said, "I wanna know two things." He said, "Number one, how do I get my son in your school because he's not learning this in his school? And number two, I'm gonna set up a room across the hall, and I just wanna start interviewing people so you can come to work for us when you get out of high school." And some of those kids did actually get hired and go there.

0:29:32.3 DL: I'll tell you another story. The same thing, we took a group of kids to Texas and we went to one of the, I think, it was one of the oil companies, I think it was. And so the whole thing was, we said, "Hey, we'd like to come in and give you a presentation about what we're doing, how we're applying quality methods and thinking to education. We'd also like your managers to give us a presentation about what goes on here, what do you do, how do you apply these things and work things through." I'll never forget, we've finished our presentation at 45 minutes, kids were very efficient, they were all... That was part of it. Everybody was helping everybody do the presentations and work through that. And so their manager, I can't remember his title, but it had something to do with quality, the quality manager for the corporation or something, he gets up and start... He's got his presentation stuff and he starts giving a normal business presentation after these kids giving multimedia presentations for 45 minutes. And he talks for about 30 seconds about some of the things they're doing, and he said... He said, "Forget it," he said, "You guys already know more about this than we could ever hope to know about it." So he said, "What we wanna do is we've got all of our executives in the room, we just wanna pair up with these kids, high school kids, 15, 16, 17 years old, and have conversations about this and why it's applied.

0:31:00.3 DL: And I'll never forget, I walked by this girl that was talking to this high level manager at this petroleum corporation and they're arguing about intrinsic motivation and how employees have to be extrinsically motivated and everything else, and this girl, 16 years old is not backing down and she's just taking this guy to task. And finally they end their conversation and she leaves, and I walked over to him and I said, "Do you realize she's only 16 years old?" And he just looked at me, he said, "I forgot all about that."

0:31:34.1 AS: Yeah.

0:31:39.2 DL: See. And...

0:31:39.4 AS: Potential. The potential.

0:31:40.2 DL: Yeah. Deming often said that profound knowledge is not limited to age, and I didn't know what that meant for a long time until I started seeing young kids adapt these... Or absorb these concepts and take them to heart and be able to do it much better than us as adults, learned a different management thinking and we had to sort of transform ourselves. These kids they didn't know anything different. I think somebody asked one of the students one time how did you learn to do this or how did this happen or whatever? And they just looked at him and said, "Well, doesn't everybody do this?"

0:32:20.9 AS: Yeah. We stamped that out.

0:32:24.6 DL: They couldn't understand.

0:32:26.3 AS: We stamped that out at an early age.

0:32:26.3 DL: I'll give you one more quick story. We took the kids to visit a huge high school in California at the time, and that was probably about around 1991 or something like that. So computer technology was really starting to get into the schools, but our schools are already one-to-one technology and we had advanced technologies for all kinds of stuff and STEM and things like that. And so the principal is... Big high school in California, a pretty brand new high school, that's why we went there to cut and I wanted them to see what a big high school looked like, and we were going around, and he goes and he says, "We're really proud of this room," and he goes and unlocks the door. And this was in the spring probably around about March, unlocks the door and turns on the light and there's like 60 computers in there, all set up, all ready to go and everything. And one of the kids says, "Well, where is everybody? Why aren't people using them?" He said, "Oh well, you know, we haven't got the teachers trained and we're not ready to start using this, but we got it all purchased, we got it all set up and we're gonna start using it for... We're starting, using it next fall in September." And I'll never forget one of our students said, "Can we just take all those back with us and we'll ship them back to you in September."

[laughter]

0:33:48.9 AS: Yeah, exactly.

0:33:50.8 DL: Said, "We know what to do with those."

0:33:52.3 AS: And if you unleash group of kids in there, before you know that they would be training the teachers on that.

0:33:57.7 DL: Yeah, absolutely, they'd be training the staff about how to do the stuff so.

0:34:01.2 AS: Yeah. I wanted to wrap up with a little bit of kind of discussion about the idea of... I'm gonna talk briefly just about business, just 'cause that's something I understand pretty well, and that is a lot of times when managers in businesses see the same mistakes happening, they're like, "We've got to stop. Who is responsible for this?" Or as you started the whole discussion, "We got to get rid of the person who's the problem." Or, "Why is everybody making these same mistakes or whatever?" And that's really the problem actually at leadership level, really it's the idea of how can we study this situation, how can we get together, pool our resources and our knowledge and make some scientific style analysis, like a PDSA, a Plan-Do-Study-Act, and try to understand and learn here what the problem is and how can we solve this problem. And that is the process of acquiring knowledge through the scientific method, but acquiring knowledge is meaningless if it's not continually applied, so then we take that knowledge and we build it into our training of the new workers or new employees that are gonna be in that area, so we never go back and make the same mistake. We've fixed it permanently, and we've trained people to another level. But of course we're gonna come up with another common problem that's showing up all the time, and we do the same thing, and then we improve that and we gain knowledge on that, and then we train so that everybody's operating at that next level.

0:35:33.4 AS: Now, when you do this over a period of years with this constancy of purpose of continually focus on learning, what ends up happening is that you have actually acquired a large amount of knowledge in your organization that does not exist in your competitor.

0:35:52.2 DL: That's right.

0:35:52.4 AS: In addition, you've codified it, you've quantified this to be in the behavior of your employees. So let's say you do that for one, two, three years, all of a sudden you have created a deep level of knowledge on a particular topic that your competitor does not have that deep of a level of knowledge on that particular topic. Now they may be... If they're a good competitor then they may be learning in another area, but let's just say that most new companies aren't learning. And the end of, end result is that you start to build a competitive advantage and that...

0:36:26.3 DL: Even though.

0:36:27.2 AS: Competitive advantage just shows that... That competitive advantage just could last for decades.

0:36:34.7 DL: Yeah. Even though defeating your competitor was not your aim. Your aim was learning and getting better all the time, but by doing that you became a very fierce competitor, you became very good at solving problems, moving forward, understanding new concepts, applying things quickly, adapting to new technology, whatever it might be. You become a very good competitor even though you're not actively trying to compete. People sometimes blame Deming saying, "Oh, you don't want... You're against competition," 'cause he talked about cooperation a lot. And he said, "No," he said, "The best thing you could have is a good competitor. Right? Somebody else that's innovating, somebody else that's thinking something. Getting you to think differently about things." So the great irony is the greater you cooperate and learn together, the greater you compete, even though you're not necessarily trying to compete. You see the same thing in sports. We have March Madness going on now. If you listen to coaches at the end of games or coaches getting ready to play really big games coming up, they'll say things like, "Well, this will be a good learning experience for us, or this will be a really good test for us." Those are the really good coaches because they're looking at every single game about, "What can we learn, how can we apply that to the next one, and how can we move forward?"

0:38:03.0 DL: One of those trips I took with students, I took them to an electronics corporation in Phoenix, I can't remember the name of it, I don't really remember what they were making, but it was very sophisticated electronics with chips and all of that kind of stuff in a dust-free environment and it's a huge room in which these panels... I think it was very sophisticated art tablets that they were making, but they had all these lights up around the room and everything red, yellow and different things, and so most... Every one of the stations had green lights and everything, and then all of a sudden a yellow light came on at one of the stations. And I said to the guy giving me the tour, I says, "Well, what happens now?" And he says, "Well, immediately, any managers that are available, we rush to that center to find out what's going on. There's an error or a problem or somebody has observed something that is going on there, and we try to actively fix it and try to understand it and fix it for tomorrow too and make sure it's not gonna happen again.

0:39:13.3 DL: And I said, "What's the red light for?" And he says, "Well, anybody in the entire corporation has the ability to stop the entire line and turn on the red light. And when the red light comes on the whole place shuts down." And this was like 300 employees that they had. The whole place shuts down and everybody has the authority to do that. And I said, "What happens then?" He said... Then he said, "All management empties out, comes down in a learning environment and tries to study what's going on, what has happened, how do we fix this, how do we make this." Well, that's totally different than if you make an error or you screw up, you might get fired. And if that's the case, you're not gonna share an error or a problem that's happening, right? You're gonna keep that and hide that or cover it up or do something else, because you have managers that don't understand this thinking so.

0:40:08.7 AS: Yeah. I saw just the opposite of that when I was working in Pepsi, that in the production and process, basically, you constantly running around trying to patch things up and not raise them to a higher level, and so you're constantly making the same mistake. I wanna wrap up this discussion by just going back to point number four now that we've been through so much about it. So this is, again, we've been reviewing the role of a manager of people. And the fourth point that he talks about here is, he is an unceasing learner, he encourages people to study, he provides when possible and feasible seminars and courses for advancement of learning, and he encourages continued education in college or university for people that are so inclined. David, is there anything you would add as we wrap up this discussion?

0:41:03.6 DL: Yeah. He does mention college or university classes, things like that, but he also was a very strong proponent that they just need to be learning. Learning a new language, learning new concepts, new things that are happening because you have active minds then and you have people making new connections and thinking, and it does something to your personality and the way you think about things, etcetera. And so he just said it could be anything, they can be learning basket weaving, but they just need to be learning all the time.

0:41:38.2 AS: Fantastic. Well, David, on behalf of everyone at the Deming Institute, I wanna thank you again for the discussion. For listeners, remember to go to deming.org to continue your journey. And listeners 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."

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In a continuation of Part 3 in this series, John and Andrew discuss how to use data charting in combination with the Plan-Do-Study-Act cycle to gain the knowledge managers need to lead effectively.

0:00:00.1 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 am 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. The topic for today is Prediction is a Measure of Knowledge. And John, to you and the listeners, I have to apologize. I'm a bit froggy today, but John, take it away.

0:00:30.9 John Dues: Yeah, Andrew, it's great to be back. I thought what we could do is sort of build off, what we were talking about in the last episode. We sort of left off with sort of an introduction to process behavior charts and importance of charting your data over time. And sort of the idea this time is that, like you said at the outset is prediction is a measure of knowledge and prediction is a big part of improvement. So I thought we'd get into that. What role prediction plays in improvement, how it factors in and how we can use our chart in combination with another powerful tool, the Plan-Do-Study-Act cycle to bring about improvement in our organizations.

0:01:15.1 AS: And when you say that prediction is a measure of knowledge, you're saying that prediction is a measure of how much you know about a system, or how would you describe that in more simple terms that for someone who may not understand that, that they could understand?

0:01:31.4 JD: Yeah, it took me a while to understand this. I think, basically the accuracy of your prediction about any system or process is an observable measure of knowledge. So when you can make a prediction about how a system or a process, and I use those words interchangeably, is gonna perform the closer that that sort of initial theory is, that initial prediction is to what actually happens in reality, the more you know about that system or process. So when I say prediction is a measure of knowledge, that's what I'm talking about is, you make a prediction about how something's gonna perform. The closer that prediction is to how it actually performs, the more you know about that system or process.

0:02:19.1 AS: I was just thinking about a parent who understands their kid very well can oftentimes predict their response to a situation. But if you brought a new kid into that house that the parent didn't know anything about their history, their background, the way they react, that the parent doesn't really have anything to go on to predict except maybe general knowledge of kids and specific knowledge of their own kid. How could that relate to what you're saying that prediction is a measure of knowledge?

0:02:52.3 JD: Well, I think that's a great analogy. One of the things that Dr. Deming said that it took me some time to understand was that knowledge has temporal spread - just a few words, but really causes some deep thinking. And I think what he meant was, your understanding, your knowledge of some topic or system or process or your kid has temporal spread. So that understanding sort of increases as you have increased interaction with that system process or in this analogy, your own kid. So when you replace a parent who knows their kid well with some other person that doesn't know that kid as well, they haven't had that sort of, that that same, that shared time together. So there's that, they don't have that same understanding. It's gonna take time for that understanding to build. I think the same thing happens when we're trying to change a system or a process or improve it or implementing a new idea in our system or process. And so the prediction at the outset is probably gonna be off. Right, and then over time, hopefully as we learn about that system or process or kid in this instance, that that prediction is gonna get better and better, as we learn over time, basically. I think.

0:04:15.8 AS: Yeah, it's interesting because saying the words temporal spread kind of gives way to the idea that Dr. Deming was educated in 1910, 1915, in speaking, reading, writing. And then he also, he said things, that his objective wasn't to just completely simplify. And I think that the messages that he was bringing were difficult to simplify, but you could say that, "improves over time" is what temporal spread may mean. Right? Okay. Let's keep going on this. This is interesting.

0:04:55.0 JD: Yeah, I think, maybe it'd be helpful if I share my screen and we can sort of connect the dots from last time to...

0:05:00.8 AS: Yep. And for the listeners out there, we'll walk you through what John's showing on his screen in just a moment. All right. Now we can see a chart on his screen.

0:05:11.7 JD: Yeah, I think, so we see a process behavior chart sort of orient, the watchers and then even the listeners. So the chart is a process behavior chart. That terminology can be a little bit confusing. Some people would call this a control chart, some people would call it a Shewhart chart, my sort of preferred terminology is process behavior chart because it's literally charting some process over time. So the example I used last time was charting my own weight. So you can use, you can chart personal items, you can also obviously chart things that are important to you in your organization. But the main thing is pull numbers out of a spreadsheet. That's what we talked about last time. Pull numbers out of the table instead plot that same data over time. So you can see how it varies naturally, perhaps, or how it varies in, special ways over time. So the, for the watchers, the blue dots are individual data points. The dates are running along the X-axis of the chart. And so you can see those moving up and down over time as I weigh myself every morning. Then we have the green line.

0:06:30.6 AS: At the beginning of the chart, we see those individual data points hovering around maybe 179 to 80, something like that.

0:06:41.8 JD: Yeah. Bouncing around in the 180, 178, 176 range. And then...

0:06:48.8 AS: And just for the international listener, John is not 180 kilograms [laughter], he's 180 pounds. Okay. Continue.

0:06:56.8 JD: That's right, that's right. On the Y-axis, we have weight in pounds. And so in addition to the blue dots and we've added a green line that is the average over time. And then we have sort of the last component of the process behavior chart, we have the red lines, which are the upper and lower natural process limits, or some people call them control limits sort of are the bounds of this particular system at a given point in time. And so, as we watch this data unfold, we can see that it does move up and down in different ways, in different patterns, but it's far more illustrative than if I was just looking at that table of numbers. So when I do this daily, I don't wanna overreact to any single data point. Instead, what I'm trying to do is get a sense of how this data is performing over time, right? So I can see this unfold over the course of days and then weeks and then months and all along, my knowledge of my weight system is increasing.

0:08:09.7 JD: Even if you don't know anything about process behavior charts, you could do this on a simple line chart or run chart without the limits, and you'd still learn much more than what you would with that table of numbers. But with the addition of the red lines, the natural process limits, what I am doing is sort of saying based on some simple mathematical calculations, that these are the bounds of my system that I would expect because of the data empirically based on the actual dots on the chart, these are the bounds of my system. And if a point would happen to fall outside of those red lines, I know something special has happened because it's so mathematically improbable that it's not to be expected. And there's a few other patterns in the data too that you can look for besides a single point outside of one of those red lines.

0:09:08.4 JD: But I'm looking for those patterns to see if something special has happened or I'm seeing if my data is sort of generally bouncing around between those red lines. And in either case, there are different approaches to trying to improve that, improve that data over time. And one other thing that I like to do, I always make my data blue, my average line green and my process, my natural process limits red. And then whenever I do this internally with data from our own organization, whether it's attendance data or test data or financial data, whatever the data is, I always use that same pattern. So people get used to seeing these colors and they associate blue with data, green with the average and red with the limits.

0:10:00.7 AS: So tell us more about, I mean, one of the things before we even talk about PDSA, what's happening here is that the upper limit and the lower limit at two points in this chart shift down. So you're, if you didn't change the upper and lower limit and you just had your, that standard one across the whole chart, then it probably starts to lose its value because the process that you're describing is going back in time to such an extent that things were different. Tell us about why you've made this adjustment.

0:10:46.0 JD: Yeah, I'd say if the natural process limits, so the red lines sort of stay in the same spot. So if I don't see those special patterns, basically what I can assume is that that system is, despite the fact that the data is bouncing around a little bit naturally, that, there's nothing sort of significant that's happened either in terms of my weight system getting worse, or in this case I want to get better. Obviously, I wanna lose a little bit of weight. If I don't see those patterns in the data, then nothing has changed. So if I'm trying something new to bring that weight down and I don't see any of those special patterns that tell me to adjust the natural process limits, that means what I'm doing is not having an effect. Right. So there's one, you wanna know what reality is for whatever the thing is that you're talking about.

0:11:37.7 JD: So on the very first day, you can see, when I weighed myself, it was like something like 182 pounds or something like that. And I could say I weigh 182 pounds, but that's not really reality, except that I weighed 182 pounds on the morning of November 28th when I recorded that data. But the very next day it goes down a little bit and then it goes down quite a bit that third day, and then it bounces back up, and then back down, and then back up and then back down a little bit. And that's the real sort of reality. And I don't really weigh 182, I'd probably weigh somewhere closer to that average of 179 across those first two weeks or so. Right? But I don't know that until I've collected, 7, 8, 9, 10, 11, 12 data points, what my reality is.

0:12:30.0 JD: And that's why this charting is so important. It helps me understand reality in a much more accurate way. So when we're trying to improve, I think, in this case, I decided to gather data on a daily basis. And I think when that's sort of another important consideration, when you're doing improvement work and charting, you wanna gather data in a rhythm that matches whatever it is, whatever that metric is that you're concerned with, you want that, you want the data to be gathered in a way that matches that metric. But in general, more frequent is better, as long as you're not overreacting, like I said earlier, to any single data point. Instead, you wanna gather data, you wanna have those 15, 20 data points, see the patterns, and then start to look for changes in those patterns. The three that I happen to look for are, a single point outside the natural process limits, or I'll look for eight consecutive points, either above or below that average line, or I'll look for three or four points that are closer to the red line than they are to that average line.

0:13:41.4 JD: Any of those three patterns emerge. I know something has changed, and I'll go ahead and shift the limits. If I know, when I'm looking for those patterns, I wanna know why that change has happened. So sometimes when I see a pattern, and if I don't have an explanation for why that data shifted, even though it shifted in a way that was mathematically unexpected, sometimes in those instances, I won't shift my limits. So I generally will only shift when I see a pattern and I can sort of pinpoint a reason for that, for that shift.

0:14:18.4 AS: And when you say shift, you're saying shift your upper and lower process limit?

0:14:20.0 JD: Yeah. I shift the limits at the point where I saw one of those special patterns begin, basically.

0:14:29.6 AS: Okay. All right. Keep going. So you got PDSA on there now.

0:14:32.9 JD: Yeah, so I think, when I think about continual improvement, there's a lot of different tools we can use and a lot of tools that are valuable, especially when you sort of facilitate an improvement team, a group of people working together, especially because those various tools can help you visualize what people are thinking. But if I had to boil continual improvement down to two tools, it'd be the process behavior chart combined with the Plan-Do-Study-Act cycle. So sort of the theory of variation is the process behavior chart, and then what Deming would call the theory of knowledge, the PDSA or Plan-Do-Study-Act cycle is a key component of that theory of knowledge part of the system of profound knowledge. So you can see on my chart, I have three cycles that I've gone through so far.

0:15:24.6 JD: So I've basically run three experiments to try to bring the weight down. So PDSA cycle one, then I made a slight adjustment based on what I learned adjusted after about 30 days, I ran another Plan-Do-Study-Act cycle, ran that for another 30 days to see how it'll impact my weight. And then I've started a third cycle, and I've been running that now for about 45, 50 days. So the idea is, you run a, basically a structured simple, it doesn't have to be overly complex, simple experiment. And then you see if what you're doing is working, and in this case it's resulted in two, two shifts or two patterns of data that tell me that that actual improvement has happened. Not that I just decreased my weight, but it decreased to such an extent that it showed up as a mathematically unlikely pattern in my data.

0:16:33.3 AS: Well, I think all of us who wanna reduce our weight, kind of wonder, what did you do that caused your weight to fall and be consistently lower?

0:16:47.5 JD: Yeah, [laughter] that's a good question. I mean, pretty simply, mostly I focused on what I was eating. I sort of cut out the sort of typical culprits, the extra carbs, the processed food, and the sugar and focused mainly on meat and vegetables, across all three meals. And I added a little bit of exercise, there's a little more detail to it than that, but that's the basic, the gist of it. But the thing was, I wrote it down in a template, a Plan-Do-Study-Act cycle template. So I had a simple plan written down. I had the dates during which I was gonna do this, and then I was gathering the data and charting it every morning to see how the experiment was working. And then after 30 days or so, I would study it a little more closely, revise the plan, and then sort of keep going with it. So it's not, certainly not rocket science, but it's a powerful method when you combine these two things. And again, you can do this for just about anything, any data that occurs over time in your organization, you can run these same experiments.

0:17:58.5 AS: So the power of the chart is that it gives you feedback to try to see if your prediction came true?

0:18:10.7 JD: Yeah. And you have the historical results. And then you can also look to see, again, if those special patterns emerge that tell you that actual improvement happened, verse, an insignificant, in this case, decline in weight.

0:18:29.0 AS: And what's interesting is after PDSA number three, you've gotten your weight down to an average of let's say 172, 173, something like that.

0:18:38.1 JD: Yep. That's right.

0:18:39.6 AS: And it's just kind of bouncing around tightly, somewhat within that level.

0:18:47.0 JD: Yeah, I mean, basically what you see is you'll see three or even sometimes four, or even close to five days in a row where it's below that average line. And so you're saying, "Oh, I'm getting close to being able to shift again." And then what actually happens is the weekend [laughter] So I'm way more disciplined during the week when I have to go to work and those types of things. And then, but you can learn from that. You can learn that that's what's showing up in the pattern. And I've also gotten to a point where it's gonna be harder. Those first five eight pounds are much easier. And then, from there, depending on what you wanna do goal-wise, it could be harder, it could require a sort of a slightly different plan because PDSA one, two, and three are all variations of each other. There wasn't a lot of change from each of the cycles, but there was some learning that happened.

0:19:35.1 JD: Yeah, I mean, I think that's, I mean, that's a good point to maybe go little deeper into the PDSA cycle. So I mean, I think, for me, it took some time to sort of understand the PDSA cycle, even though it's, again, it's a relatively simple tool, and I think it's just one of those where you just need to do it, and over time you're gonna learn. So I think the first thing, you make a plan, you do it, you carry out the plan, you study what happened, and then at the end you act and you decide what to do. And I think really, the most powerful part for me was this realization that during the plan phase of the PDSA, it is absolutely imperative that you make a prediction.

0:20:29.0 JD: And if I'm doing team-based work, I have everybody on the team make their own prediction independently. We actually record that prediction in the PDSA cycle. And then during the study phase, we compare the data that actually was produced from that system or process, and we go back and compare it to what we predicted. And the difference between those two things is the learning that drives the next cycle, basically. So it's this iterative process. So you're, you don't just run one PDSA cycle, you basically run it until you've brought about an amount of improvement on that system or process that's acceptable, not, and then you may turn your attention to some other metric in your organization that's important to you.

0:21:22.0 AS: So I think what's important about this is that what he's describing is the way to acquire knowledge within an organization. But many times we see organizations lose the knowledge that they had. And I think that brings us to the concept of training and making sure everybody understands how we're improving the system based upon the knowledge that we gain. And if you can hold that, then the next time that we wanna try to improve the system, hopefully we go to another level, and then we hold that other level through training and making sure that everybody understands the knowledge that has been acquired in the system. And once we feel comfortable with that, then we go to the next level. And let's say that we do that 10 times in a particular process. That means that we've acquired, at 10 different points in time, we've acquired additional knowledge about the system.

0:22:23.2 AS: Now since I'm a finance guy, I like to bring that into finance terms and say, and that's how you build a competitive advantage in your company. It's the acquisition of knowledge of your system and continuing to improve that. And by doing that, you start to get to a point where your competitor doesn't understand nearly as much as you do about that one area. And if you can solidify that through training, then you now are operating at a different level than your competitor. Now your competitor may be doing the same thing in another area, but you've built some competitive strength. And the end result from a business perspective is that you start to produce slightly better profitability relative to your peer until either they catch up or maybe they build some competency in another area. But I'm talking and thinking all about, business. Tell us more about how to apply this in education.

0:23:25.7 JD: Yeah, I mean, I think there are all kinds of applications, and I think you're exactly right. I think what most people have is streams of information coming to them in the form of various types of data every day. But they have very little knowledge, actual knowledge about that data, lots of information, little knowledge. What the PDSA does is allow us to gain that knowledge in combination with the with the process behavior chart. And I think having this structure is very important. I mean, I think you talked about building knowledge over time in your system. I think the fact that the PDSA, when you plan it, you write it down, just doing that is a huge advantage over how most people operate, and you write it down in this structured way.

0:24:23.0 JD: So there is this knowledge store, there's this written record that someone can go back to to see what you did on whatever area you were trying to improve at that time. You have this written record, you have this plan, you understand how that plan was put together, who was doing what, when were they doing it, where were they doing it, how were they doing it? Who was doing it? And then you can see how it actually worked in implementation. And then you can see the actual data that sort of came back when you tried something. And you can do these PDSA cycles on a very, very tight timeframe. So when I got some training on this, they suggested, some of the trainers suggested you, you do this, you can run a PDSA for one day, one hour, depending on the situation.

0:25:09.5 JD: I think in general, what I've seen is that PDSAs that I run are generally somewhere in the two to three to four week timeframe. And I try not to ever go beyond four weeks with the PDSAs. I wanna get back some learning... It may not mean that I know everything about whatever it is I'm trying to improve, but I wanna give back some data that tells me sort of what direction should I go next? What direction should I go next, and I'll keep going in that way until I learn sort of more and more over time. I do think it's helpful to have just a very simple template, which I'm happy to share with folks, in terms of the plan, I'm writing out a question or two that's most important for us to answer. And again, I'm making predictions around those questions. What do I expect to happen when we do this change, when we make this change.

0:26:07.6 AS: Like cutting carbs down to 30 grams per day from 60 grams per day, will, my prediction is that will bring my weight down over the next week or two by one or two pounds or something like that.

0:26:23.6 JD: That's right. That's right. If we have an attendance problem, we're gonna try some attendance intervention, and I predict that if I make this change, it's gonna improve X amount in the next three weeks. Right it's a concrete prediction and I, again, I mentioned that I have everybody on the team do that because then you can start to see too how people are thinking about these ideas, how much they believe, what degree of belief do they have in the change idea. You see that show up when you see their prediction and then you literally, it's the who, what, where, when of this idea. And you get, when I do this, I get very, very specific, John will do X, Y, and Z on Monday, Wednesday, or Friday for each of the four weeks of this cycle. Catherine will do this, Ben will do this, you're very specific.

0:27:11.4 JD: So everybody knows their role, what their job is in this PDSA, and then the two other things that are a part of the plan. First one is super important, it's the operational definition. So whatever the key concept or concepts are that are under study, we operationally define them. So it's very, very explicit how we're gonna measure those things when we start actually running the experiment. And then we have a plan for collecting data. And I like to put the data right into my PDSA template, so everything's in one place. Sometimes it'll be a link to a Google sheet and a series of charts, but a lot of times I'll just create a table and then link the charts. So you can see, you can see the data right there in the PDSA.

0:27:58.5 JD: I think from there we just, we run the test, we run the test on a small scale, and after the test, as the plan's been implemented, we're going to describe what happened. We're gonna talk about what data we collected and what observations we made. Now in this Do phase, you're not actually doing any analysis. All you're doing is describing how the plan was implemented in when the rubber met the road, when you actually put things into action, how did implementation go compared to how you said it was gonna go in the plan. And almost every time I do this, there is some sort of aberration, some change from the plan that needs to be noted because I didn't anticipate, or we didn't anticipate, something happening. In schools, maybe I was gonna do this for three weeks and, on the third day of the test cycle, the experiment, we had a snow day that was unanticipated, or a key person in the experiment was not there. A student that we were working with on a PDSA cycle missed three days of school because of the flu, you report those things back because they're gonna impact the data that you collected.

0:29:22.4 JD: So that's what you're doing in the Do cycle. You run the test and then you describe what happened, verse the implementation plan. I think probably the most sort of important part then is that study phase, so we're gonna analyze the results and again, compare 'em back to the prediction. So this is the absolutely critical part of the Plan-Do-Study-Act cycle. I almost think of it like a mathematical formula. The analysis minus the prediction equals the learning. This was a sort of aha moment for me. And this is where you...

0:29:58.6 AS: Which is where Dr. Deming said, what is it? Something like, testing without prediction, doesn't acquire, you don't acquire knowledge. The only way to acquire knowledge is to make a prediction and then look at the results relative. Otherwise you're just messing around. You're not necessarily acquiring knowledge.

0:30:26.7 JD: Yeah, that's exactly right. Yeah. There's like, no, there's no theory without prediction. There's no knowledge without prediction. That's what we're doing in the study phase. We're, again, we're, why, why did what we see happen? Why did that happen? Why was it so different from my prediction? Or why was I able to make that prediction? What did I understand about our system or process? So again, it's not a test, one of the first PDSA cycles I ran with a teacher, the prediction, was very different than the outcome. He said, "Oh, the test failed." And I said, no, we learned something on a very small scale before we did that same thing. Instead of with one student, we could have been doing it with a whole school of students and imagined the time and the resources that it would take to do that sort of failed effort.

0:31:22.3 JD: We learned on a very small scale not to do it that way. And in PDSA cycle two, we're gonna adjust, right? And that's what we're doing. So in the study phase, we're comparing prediction and what actually happened. And then in that act phase, basically we take what we learned and make the next test, right? This on this continual basis. And I always sort of say, think about the Act as the three A's. We're either going to Abandon that change idea because it went so poorly. Now, that's not gonna happen very often in that first cycle, or two or three, but down the road, maybe it is, we need to abandon this idea and let it go. But more generally, what happens, especially early on, is that you Adapt each cycle a little bit. Like I was doing in that weight example, I was just adapting, I was sticking with the same basic diet plan and making some tweaks as I learned.

0:32:19.4 JD: So I was adapting each of those PDSA cycles. And then the third sort of option is to Adopt. And by adopt, I mean, you're gonna make this sort of a standard approach, standard work in your system. This is how we're gonna do things from now on. And generally, we're not gonna make a decision to adopt something, an intervention, until we've tested it across, four or five, six, seven test cycles. And, as we do these iterations, in a school example, maybe we're gonna try an attendance intervention with one student, and then we're gonna try it with 15 students. If the test with the one student went pretty well, and now I want those 15 students to vary a bit from that original student, I want this next group to have, some other characteristics, whatever that may be, than that, that original kid, and then maybe I'm gonna test it with a whole classroom and then maybe I'm gonna test it with a whole grade level, and then maybe I'll test it with the whole school. But that's sort of the mindset. You sort of go up this ramp of testing, and as you go up that ramp, you sort of increase the sample size of who is included in that test. So that if you're gonna adopt this into your system, you wouldn't be pretty sure it's gonna work broadly within that particular context.

0:33:51.5 JD: So that's sort of the basic idea. And then, what I stick in all of the footers, and I stole this idea from the Carnegie Foundation for the Advancement of Teaching, but in the footer of my PDSA template and in all my sort of improvement templates, I put this phrase "probably wrong, definitely incomplete." Because that's the sort of the mindset that you have to have with continual improvement in general. And definitely with the PDSA cycle, because those first cycles, you're probably gonna get a lot wrong as you're sort of turning information into knowledge early on. You're not gonna know a lot about that thing, you're gonna learn over time. And so you sort of have to adopt this as your sort of mantra for PDSA cycles.

0:34:32.1 AS: Great. I was just looking at quotes by Dr. Deming, and the quote is, without theory, there is no learning. All right. So how would we wrap this up?

0:34:45.8 JD: Yeah, I mean, I think that's a great quote. And I think, so it doesn't, I mean, theory can be a little intimidating, just the word theory. I sort of originally thought of these grand academic or scientific theories, but that's not really what he was talking about. Generally, a theory can be a hunch. A theory can be an idea you have, a theory can be at one time I had a student that wasn't doing their homework, and I just, said, can you do this piece of homework first? [laughter], when you have study hall, you're never doing your reading homework when you go home. Can you just do this before you leave school? So that's a hunch, that's a theory, a theory to make things better.

0:35:28.1 JD: So I think, what I would do for folks that are listening to this, just grab a PDSA template, which you can find on a simple Google search. Just start plotting your data for something that's important to you. Get a bit of a baseline 10 or 12 or 15 points, and then try to run one of these PDSA cycles. I mean, I think it's this whole idea. I was in this IHI Improvement Advisor Program, and they would say, Okay, you got this whole hospital or this whole school, or this whole school system or hospital system, you need to improve. What are you gonna do on Tuesday? What are you gonna do on Tuesday when you go back into the office or the school or the hospital? That's sort of this idea of PDSA, do something, try something, get some change ideas going and see what that does to your data. It doesn't have to be this huge, huge scale thing. Try it on a small scale and see what happens. See what you'll learn.

0:36:31.1 AS: Well, there's a challenge. John on behalf of everyone at the Deming Institute, I wanna thank you again for this discussion. For listeners, remember, you can go to deming.org to continue your journey. This is your froggy host, Andrew Stotz, and I'll leave you with one of my favorite quotes from Dr. Deming. People are entitled to joy in work.

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In this episode, Bill and Andrew discuss variation, the impossibility of true interchangeability and why we need to apply "shades of gray" thinking at work. Bill shares the key question that will take your organization beyond "meets specifications" and help improve your processes, so you can delight your customers.

TRANSCRIPT

0:00:02.8 Andrew Stotz: My name is Andrew Stotz. 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 20th century quality, Bill take it away.

0:00:28.2 Bill Bellows: Thank you, Andrew. So the running joke on the 20th century quality is we could have said 19th century, and sadly it's still 21st century. And what do I mean by that? In our second episode, we've talked about the two questions of quality management. Question one, does this characteristic, does this product, does this thing meet requirements? There's only two answers. That's 19th century quality, that's 20th century quality, and by and large, that's 21st century quality. And my hope is that our conversation inspires people to move into question two, which opened opportunities for as you're talking about opportunities for investment, opportunities for doing amazing things, when we get out of the black and white of question one into the shades of gray, of question two. That's, that's so...

0:01:26.5 AS: So what century are we in now?

0:01:29.1 BB: I think the 21st.

0:01:30.5 AS: 21st. My goodness. People always get, I always get confused. We're in the two thousands, but that's a 21st century. And 19th century is the 1800s.

0:01:46.7 BB: Well...

0:01:47.5 AS: 20th century would then be from 1900s until 2000 or 1999.

0:01:54.3 BB: The... And just for some more clarity, and I was doing some research earlier today, but there's a great tie between question one and 19th century 20th centuries still: question number one, does this meet requirements? A lot of that ties back to this whole concept of interchangeable parts. Which is not what we do in the garage when we're in the garage building something - that's 21st century quality, because we design it, we buy the stuff again, whether you're building something in the kitchen, in the backyard, and we put it all together with a 21st century, a Deming-Taguchi approach to quality, which means we're not looking at the parts in isolation we're looking at how they come together, the idea of interchangeable parts, and the... A name that I usually find as being the father of this concept of interchangeable parts. People talk about Eli Whitney.

0:03:02.3 BB: But Eli Whitney heard about interchangeable parts from the first American to hear about this concept, who was Thomas Jefferson. And he heard about it when he was US Ambassador to France, in 1802 timeframe, he was Jeff, he was George Washington's ambassador to France. And while there he came across a Frenchman by the name of Andre Blanc, B-L-A-N-C. And Blanc is considered the... Not the father of interchangeable parts. There's a French general in the 1770s had this idea of you're in the battlefield, you've got all these broken weapon systems and I can't cobble together this cannon with these wheels to be able to continue fighting the battle because they're all crafts built with craftsmanship, which means these things don't come together. So this general had the idea, and I like to tell people, Blanc is the one who got the marching orders to go put this concept into practice. And so he's given credit for being the one to work through the details.

0:04:17.1 BB: And what I was reading earlier tonight I've done other reading on this before, but it was, Jefferson went to a presentation by Blanc, heard about the ideas. Jefferson wrote a letter to John Jay and I don't know exactly, I, John Jay's name, I... Name I've heard before. I don't know exactly what his role was in government. But he wrote a letter back that there's this thing, this guy Blanc, this concept of interchangeable parts. And as the story goes, Jefferson offered Blanc the opportunity to come to the States 'cause Jefferson saw this, not just on the battlefield, the ability to repair weapons quickly, quickly, quickly, but what this means to a growing society. And Blanc had no interest. And so Jefferson took the idea, gave it to Whitney. Whitney gets credit for the first contract with Congress ever for a product with interchangeable parts, which turned out to be rifles. And it took on the order of 20 years for him to figure out how to do that. But in the process, he was working on the design protocol, the quality system, which is 18th century quality, which is looking at all these parts, giving them requirements. And that's what we do today.

0:05:39.8 AS: So the US Congress kind of funded that research and development basically.

0:05:44.3 BB: Well, there's a fun story and [chuckle] is it a true story? It has the making of a true story 'cause he figured Jefferson is the, you know, the godfather of this movement. And the story is in the early 1800s John Adams is president and Jefferson goes to the Oval Office with Whitney to give John Adams an update on this thing called interchangeable parts. And so he brings in Whitney, you know, this is, you know, Mr. President, okay, this is Eli Whitney. And evidently Whitney comes in with two rifles and Jefferson says, okay, make me proud. And he takes the rifles apart and he moves the parts from one to the other and shows them this is what we're working on. And evidently Adams is blown away by the whole thing. Well, the punchline is that Jefferson working with Whitney's, hoodwinked Adams because the parts were handcrafted to be identical. What took another 18 or so years was his effort to create the tooling to mass-produce these, not hand-file them. It took some time. It took some time. But Whitney gets all that credit, but it goes back to Blanc. And also, in the very same timeframe, I've read of incredible efforts by the British in using this for pulleys and warships. And so this was going on elsewhere.

0:07:24.6 BB: What I've also heard... And I'll just throw out, I don't wanna go there. But I've heard accounts that the Chinese centuries before were looking at this. If somebody's thinking, "Well, was it them or... " I don't know. And so in the Google searches I was doing about an hour ago, I didn't find anything on China. But the important thing for our conversation is the idea of taking a product, breaking it into parts, giving the parts requirements, and having this sense of, "All these springs meet requirements. They're all good," which is question one. "All the bars are good, and we can interchange them." What I also say is that the concept behind question number one, saying that all these things that make requirements are good, all the barrels are good, all the locks are good, I would define that as absolute interchangeability, meaning the sense that any one of these can be put together with anyone else, and I could take any doctor, any of this, and I can absolutely plug and play. And what that ignores is variation. From a Deming perspective, which is question two, when you realize that all these parts that meet requirements have variation, that means they're relatively interchangeable, but they're not absolutely interchangeable.

0:09:01.2 AS: Which makes me think about the before interchangeability, which we're so familiar with in this modern world. Before...

0:09:08.4 BB: Everything is.

0:09:09.3 AS: Interchangeability, there was craftsmanship, whereas the difference is in those parts of a shoe, even though they may... My uncle and myself got the same shoe, there are some unique differences to those exact same shoes that the craftsman's not trying to get rid of. They're part of what... It's not a pressure that the craftsman feels.

0:09:33.7 BB: Well, handcrafted is expensive. These are handcrafted, a handcrafted guitar, a handcrafted... There's a place down the street where they... Essentially, it's handcrafted car wash, by hand. In the early days, handcrafted was the only thing. Then we went to interchangeable. And so we could have handcrafted truck, handcrafted this. But the point I wanted to make for our audience is question one does it meet requirements. There is a sense of absolute interchangeability, that I could replace this doctor with this doctor because they're both board-certified, this engineer with this engineer. It's like in the world of computers and software, it's this idea of plug and play. "I can take this one out, plug this one and just move on." And we have that sense of everyone in the organization is relatively interchangeable. The idea of interchangeability from a Deming perspective is workers are treated as interchangeable, products are treated as interchangeable, and what's missing is a sense of differences, that the people are actually different. They're not... And that's what we... The running joke we used to have with friends is that we've got... People are making parts that are interchangeable, and we're treating the people as if they are interchangeable.

0:11:03.5 BB: And that mindset of interchangeability is alive and well. Now, another thing just throw out, just for those that might not be familiar with this conversation, is that when requirements are set and I just like to say to people is, "Can a company go to a supplier and say, 'We want this part to be exactly 1-inch thick'?" And they'll say, "Yeah, we can pull that out." And I say, "Well, technically, no." 'Cause what exactly does 1 inch mean? Does it mean 1.000 inches? Does it mean we're gonna have that thickness all the way around the table? And what that is ignoring is variation. Even if I measure it and it's exactly 1.000 all the way around, well, when I ship it to your company, Andrew, and you measure it, are you gonna get the same value? And if you get a different value, does that mean I can't sell it to you? What we do is we take the 1.00 and we say, "Plus or minus some small number." We can say, "10 plus or minus 1/16 of an inch." And then we get into the world of requirements where there's a maximum and a minimum. And now what we're saying is good, which is question number one, is everything in between. And my explanation is, if we didn't allow for that wiggle room, we couldn't have commerce because we're not acknowledging variation.

0:12:49.3 BB: And that goes back to... Again, it goes back to Whitney and Blanc is a sense of, "We're gonna put bounds on it, anywhere in between." In the world of American football, that saying... Or international soccer, "Anywhere within the net is a goal. Anywhere within." What's missing from that is if, is what happens if we're at different values within that range, what, where does that, what do the differences in meeting requirements mean? And what I point out is the differences in how we meet requirements shows up when you take the thing from me and try to do something with it.

0:13:37.9 AS: So it's related to the application that it's being used in.

0:13:43.6 BB: And I don't... A question that I like to ask that I don't, I'm not sure if we've gotten into in the first or second session is, I'll ask people, what do you call the person that graduates last in their class in medical school? Doctor. They meet the requirements. So does the first person in class. Well, they, that's from a question one perspective, those two doctors are absolutely interchangeable. I need a doctor. Well, what I ask is, is there a difference between those two doctors? And if there is a difference, when does that difference appear? And that's what you're talking about. From a question two perspective, the difference between those two doctors shows up when they walk into your room. They know when they're providing the whatever procedure you need, when they interact with you and your family, when they interact with other professionals at the hospital. The difference between any two things that meets requirements shows up when they, when all these things come together. And my excitement over Deming's work is he learned about that from Dr. Taguchi, who I learned it from.

0:14:47.1 BB: And what Dr. Deming did was integrate that sense of understanding variation and systems with the psychology of theory of knowledge of the system of profound knowledge. And that's provides an incredible theory by which to run organizations. That's the potential of 21st century quality that I hope we can inspire.

0:15:08.7 AS: And if I kind of try to piece together what you're putting out there, I think the first thing you're saying is that absolute interchangeability doesn't exist.

0:15:18.7 BB: No, no.

0:15:18.8 AS: Because nothing can be perfectly interchangeable. The other thing...

0:15:22.5 BB: If no two snowflakes are the same, if twins aren't identical, then you can't have absolute, absolute interchangeability. If you understand variation, it can't be.

0:15:32.9 AS: Okay, so then the next thing is that because we can't have absolute interchangeability, we need to understand some parameters or requirements and of what we need for this application. And then the other part of that is to understand that then there's variation even within, once you've set those parameters or requirements, there's going to be variations within that. Help me to continue to understand this.

0:16:06.4 BB: Well, first, let me give you an example outside of manufacturing just to make it easier to understand. So one is you put out a job search that you're looking to hire someone with these skills and 10 people meet the requirements. And does a given company take those 10 people and say, "Okay, put their names in a box, we're going to randomly pull them out?" I don't think so. We narrow it down. We take the ones that meet requirements. We call them up. We do an interview. What are we doing? We're sorting amongst things that meet requirements. Why? Because they aren't absolutely interchangeable.

0:16:50.3 AS: But when we're sorting amongst those, we're sorting, as you just described it, we're sorting by different characteristics like from the way they respond to something, or.

0:16:58.3 BB: Well, we're saying these... So we're saying these 10 people all meet the requirements of number of years of experience, a bachelor's degree, this and this. But now what we're doing is seeing through phone call, likely the scenario would be we're going to interview them by phone and get it down to three, bring the three in. What we're looking for is, what we're saying is those 10 are different. They all meet requirements, but they're different. And what we're looking for eventually is which one's the best fit. Why? Because fit is relative, not absolute. If fit was absolute, we would just roll the dice and say they're all the same. It doesn't matter. No, we don't do that. And like I say, I kid people, "Is that how we find a spouse? We just go to some dating app. We end up with three people. We say, this one?" No. We're looking for which is the best fit.

0:17:52.9 BB: So this idea of understanding fit as relative is an everyday thing. All the parking spots meet requirements, which is the best fit for what I'm doing that day? That's what we're talking about. And I mean, aside from manufacturing, it's the same concept. We're saying all the fruit is not the same. I want one which is about this juiciness. These applicants are not the same. What we're looking for is which is the best fit into the system of the product or the service or the company.

0:18:29.7 AS: And this discussion helps people to think about the idea that it's kind of nonsense just to think that by defining something kind of loosely, like I want this one inch long, as an example, that there's just so many flaws to that, that it's not the best way to do it. We need to understand more. What does it take away from this?

0:18:58.6 BB: Well, let me say this, because I don't want to make it complicated, but there's a time and a place for absolute interchangeability and moving on. We go to McDonald's, that's how they make their food. We're just saying, okay, I mean, I'm not saying absolute interchangeability, get rid of it. What I'm saying is use absolute interchangeability where it's not worth doing more than that. And then where it makes sense, whether it comes to staffing, a relative... And even in every feature of a product that you make, not every aspect of it has the same fit issue. So the big thing is, where fit is most difficult, or most important, that's where you apply the meaning of question two. So if it's not worth the effort, then you don't do it because the strategy is the amount of time I put into sorting the things that are good has to pay for itself.

0:20:06.9 BB: So I go through all that trouble when it comes to who I wanna date, who I wanna marry, where we're gonna have the reception, where we're gonna go on vacation, alright? But it doesn't mean we apply that same degree of effort everywhere. Again, when you're selecting a doctor, you might wanna go to that extent. When you're selecting an attorney, but the idea is that you can, as we've talked prior, is become aware that's it's a choice. Do we focus on question one, which is absolutely interchangeability. It's a very simple model. Does the application... Is it worth any more time than that? No. Then that's the way to go versus question two. Let it be a choice.

0:20:49.5 AS: So let's wrap it up by thinking about the listener here and saying, okay, they're gonna go back into their job after listening to this. And what part... What can they do with this knowledge? Let's say an exercise at work or a way of thinking about how this can help them in their everyday job.

0:21:11.2 BB: I think the big thing is, and it's very straightforward, I don't know how much work it takes, but pay attention to how people use what you give them whether it's data you're handing off in a spreadsheet. Last week I met with our CPA who does our taxes year after year. And for my business, I give him a spreadsheet with a bunch of different columns and rows, and every year I add a couple more columns and a couple more rows. And I cut and paste and put it into a PDF file and send it to him. And I was talking with him last week and I said," You know, Mike, I can put that in a spreadsheet. It's a little bit more work for me." Because I said, "How legible is that fine print?" And he said, "It would be helpful if you did that." I said, "Boom, I can do that. I'm gonna do that." But if I didn't know, I would keep sending it to him, and he's squinting, squinting, squinting.

0:22:14.1 BB: And that's exactly what I'm talking about, is pay attention to how people use your work. It's as simple as that. Going around the corner and just asking for more clarity 'cause then the question is, "Is it possible that with a little bit more effort, I could save you a lot more effort?" [laughter] And that's what we're looking for. And relative to our accountant, it's not that hard for me to cut and paste and send him a different spreadsheet. That's a few seconds, and I think I could save him a lot more than a few seconds. So that's... The big punchline is in the world of interchangeable parts, I just say, "Hey, this is good. It meets requirements." Now what I'm paying attention to is, "What if I put a little bit more effort in this, can I make your life easier?" And that's the essence of teamwork.

0:23:11.8 AS: Yep. Well, I think that's a good place to wrap it up, Bill. 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. 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.”

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In this third discussion in a series on the Role of a Manager, David and Andrew discuss how a manager should view, and treat, people. Deming wrote, “It’s just not ranking people, it is instead recognition of differences between people and an intent to put everybody in position for development.” David applies this to education: literally looking at how to support everyone with limited resources.

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 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, and before we get started, David, I have to apologize my voice, I got a little bit hoarse. The topic for today is Optimizing Diversity. David, take it away.

0:00:28.7 David P. Langford: Well, you've been talking too much, Andrew. So we've been working in this section in Dr. Deming's book, The New Economics, and we've talking about the role of the manager, and the reason we're doing that is because I often get asked all the time, well where do we begin, and what do we do and how do we start stuff? And people get fired up about Deming concepts, and then they wanna know what to do next, and so that's why we've been talking about this about the role of a manager in a system and studying the aim of systems so on and so forth.

0:01:06.5 DL: So this is point number three, and I will just take a stab at just reading it. First off in Deming's words, so he says "A manager of people understands that people are different from each other. He tries to create for everyone interest and challenge and joy in work, tries to optimize the family background, education, skills, hopes and abilities of everyone. It's just not ranking people, it is instead recognition of differences between people and an intent to put everybody in position for development." So in today's lingo lingo, we would call that diversity, and there's lots of different diversity, of course, there's diversity in cultures, there's difference in languages, there's diversity of thought. There's lots of different ways to think about this.

0:02:01.9 DL: And I really like what Deming is talking about here. He said... He's talking about, what's your role as a manager? And so in this podcast, we're always talking about what are these things mean in education, obviously, Deming was talking mostly to corporate managers and people like that in business, but he was also an educator himself, so I always applied all these things to education in the same way. So as a teacher, you are a manager of people in a classroom, and when that group comes into the classroom, your job is to optimize the ability of them to work together, and that's what Deming is talking about here. And so there's lots of ways to do that. One of the ways that I picked up on a concept that was in Lean management called huddles, in which the Lean managers are taught to have a huddle with your employees first thing in the morning, well I transferred that into education and taught teachers all over the world have a huddle first thing in the morning. I just read a local research paper that came in on the web the other day, and a teacher was talking about the value of morning meetings.

0:03:28.5 DL: Well, call it whatever you want, but a huddle is just that basically, you just get everybody together. And it works fantastic, even kindergarten, whatever it might be, and get a chance to optimize their diversity. What happened over the weekend? What was memorable or not memorable. Does anybody have anything they wanna talk about? Something that happened that maybe you need support with or you don't have to say anything, but if you wanna say something, you can. And I've always found those things just to be amazingly helpful to everybody, because once somebody in the group knows that somebody else is hurting in some way throughout the day, they can do little tiny things, and kids have amazing hearts and will help people if they know that they need help. Another way that I've taught people to optimize the diversity through the classroom or problems and issues that people have is an exercise called fear and a hat, and with fear and a hat you get people to write down what are their fears, and works really great, like when you're trying to form a group, like in the beginning of the year, maybe even like day one, what are your fears about this year and what's happening or this class or just anything. You don't have to put your name on it.

0:04:58.8 DL: In fact, we don't want you to put your name on it and then just drop it in this hat, and everybody drops it in a hat and then you rummage them around and you pull one out. I've had kids put in things like, well, I don't know how to swim, and I'm afraid that other people are gonna find that out, and I'll get ridiculed for it. And these are high school kids. And so all we do is get in the huddle and just say, Okay, this... If you had a friend that had this fear or you had this fear, what advice could you give them about how to operate or what to do. And amazingly, kids come up with just fantastic ideas about how they could help somebody else, or sometimes kids will say things like, well, you could tell somebody else, you could tell somebody that you don't know how to swim, and so maybe they could help make accommodations for you or help you work through that, or you could take a swimming class and learn. It's never too late to learn how to swim.

0:06:03.8 DL: I have a good friend in Texas said she started taking a swimming class when she was, I think, 55 years old. Never learned how to swim really had convinced herself she doesn't know how to swim, and she started taking the class and lo and behold, she actually learned how to swim. You can overcome problems at any stage in your life, and when I read this point that Deming's making is that your job as the teacher/manager in that class, is to find out what is the diversity that you're dealing with in that class, and then learn how to optimize it within the group, because chances are the next group that comes in next year, you're probably gonna have somewhat the same diversity of thought and culture, you don't often get radically different groups in communities, you pretty much get the same kinds of kids coming through a system, unless they come from outside the country or outside the state, etcetera. And that diversity or those differences between people is something to be celebrated, not to be looked down on. And... Yeah, so I just found that to me, that's what Deming is talking about, is your job as the manager is to understand all these things about people, and then learn how to optimize that. And he goes further about... Go ahead what?

0:07:43.2 AS: At the end of that sentence. At the end of that whole section, he says, in an attempt and an attempt to put everybody in position for development. What... Is he talking personal development, is he talking development of the organization. What does he mean knowing that next section, he's gonna talk about learning, life-long learning and coaching and things like that, what do you think he meant by this word development?

0:08:10.1 DL: I think just that, that the development of the person. I've had students in classes that I didn't hear this one girl I had in class she didn't make a sound, didn't ever... You'd call on her she just look down at her desk. So I quickly learned, I can't really do that, I can't single her out, she was so embarrassed about that, and it was finally about January or February, one year, about six months into the school year, she was in a group, and they were going around the group and you could either participate or just say pass, and she couldn't even say pass. She would... It would just get to be her turn and all the kids just knew, Okay, well, we just waited a little bit here and then we're just gonna go on because she's not gonna say anything, and I'll never forget that it got to be her turn and all of a sudden, she looked up and she said, in the softest voice. Well, I think that... Around the kids and they were just like, everybody froze and it was like, oh my God, she speaks. And don't say anything, don't do anything, don't intimidate her in any way or she'll never speak again.

0:09:24.8 DL: But this was a girl that two weeks later, I had her giving a multimedia presentation in front of corporate heads at Motorola Corporation, and I'll never forget at the end of that that one of the managers came up to me and said, "Where do you get these kids?" Well, there's no way that he could see a nine months process in place, and this child had come in, and in many cases, sometimes people would have just written her off, but just gradually, tiny little challenges and getting the group to understand that their job was to support people that... You're always gonna have an issue or a problem going on. Well, that all came from this point, number three, of Deming's right here.

0:10:17.1 DL: And so when I would take students out to do presentations, we would talk about this very point, and everybody had a job of supporting everybody else. So when somebody got up to do a presentation, there was somebody running their video, there was somebody running this, there was somebody making sure their sound was correct, there was somebody who was doing this. And every time a student got up, there was this huge support network, and I will not forget, I went to a major state department, education state department at a capital in the US, and these kids gave a presentation, and I had just tons of people in education department, coming up to me saying the same thing, "Where do you get these people." And I thought, wow, you don't really even know the background of these students, some of them, we had to take them downtown and show them a stop light and go over the rules of the stop light, they'd never seen one before in high school, and these are the very same kids that are giving this presentation in front of all these people. So...

0:11:26.4 DL: To me, that's what he's talking about here, is getting everybody to work together, challenging them different levels, giving them experiences where they're learning new things and working together, but you're actually... You're creating a team, you're creating an interactive team, and it's a conscious effort that you're doing that, it just doesn't happen organically or by itself, it's a conscious effort that every day you're thinking about how can I optimize this team and move people forward? And if you do that and you think like that, pretty soon you have this amazing team of people.

0:12:10.2 DL: So I remember, I think in one of the videos that The Deming Library, there's a superintendent that I worked with in Texas for years, and he was talking about. People would come to his district and experience being around his staff, big staff, 3000 teachers in his district, and invariably superintendent from outside the district would say to him, "Where do you get these people?" Even in a system that big, and the first couple of times that would happen, he would just look at them kind of blankly and just say, "Well, I get them the same place you do, but I guess we just go about working together differently and thinking about supporting each other differently."

0:12:58.5 DL: The other thing I found out that through this process is that you have to be very patient because whether you're talking about students in a classroom whether you're talking about employees or entire student body or whatever it might be, you have to be patient that they're gonna come around over time, if given the right amount of support and challenge through that process. And be very cognizant of the small little ways that people are actually are moving forward and they are learning and they are feeling like they're supported, because if you don't have a very supportive classroom, you're not gonna get kids to take risks. You don't get kids to take risks, they're not gonna learn new things, they're not gonna try new things, and basically the only ones that achieve in an environment like that are the ones that really didn't need to be in the class in the first place, probably they could already aced everything that you are gonna have them do in that class, but you have to always remember that your job is to optimize the system and as... Get as many of these people to the highest level possible in the time that you have to work with them.

0:14:14.4 DL: And people that do that are very profound, and that's why Deming calls it Profound Knowledge, because when you see people like that, you are truly amazed that this can go on, so...

0:14:29.0 AS: One last thing for me is, why did he need to write this point, it seems so obvious that we should be trying to get the most out of everybody and get the uniqueness out of each person and bring that into value to our system, to our customer. I'm just curious, why isn't this being done?

0:14:56.1 DL: He's saying that, this is not about ranking people, so if you think your job is to rank people, you're not gonna be thinking like this, you're not gonna be thinking that, oh no, my job is not just to find out the weak ones and get rid of them or the people who can't do what they need to do, my job is to develop everybody as quickly as possible, giving them new opportunities and being supported within that organization. When you do that, you get amazing creativity at the same time. Because creativity gets shut down any time people feel intimidating... Intimidated, those kinds of things. This is also where bullying comes in, so if you're setting up the classroom where you're more concerned about ranking and rating people and grading people, then you are about optimizing the whole... Everybody's learning in that class. You're really opening it up for bullying and all kinds of things that go on. I've run into so many examples of parents telling me that all of a sudden their child was doing really good the year before, and all of a sudden this year, they're in a class and they just... They wanna quit, they wanna give up, they wanna get out, whatever it might be, and people wanna blame it on bullying, but you have to realize that 98-99% of the bullying is systemic.

0:16:33.8 DL: So the degree to which you have that going on in your organization, you need to be thinking about, okay, what am I doing that's actually encouraging bullying. And when you're grading people to 1/1000 of a point and ranking them and holding people up as being superior to other people, and things like that you're gonna get bullying, because the only way to exceed an organization that's like that is to put somebody else down. If I tear somebody else down, then somehow psychologically, that makes me look better, kind of thing, or even to the point of I'm gonna get rid of them 'cause they're a threat to my ranking and what I look like. And so... It's deep, it's profound. That's what the word profound means is deep. When you think about it in an organization, the last point I would wanna make about this is that because he's talking about your role as a manager, well, if you take this on as that, this is your job, I will guarantee you, you will be happier. You'll come every day, when you meet those students, you're just much happier about being with them because you're supporting them, but they're supporting too. They're supporting you as well.

0:18:01.5 DL: I used to do low ropes course training, and some of you may have heard of things like trust falls and things like that, where you fall back and somebody catches you, but we did a lot of those kinds of things with teachers and students to get teachers to learn to trust their students, and I'll never forget, I was in a middle school one time and I had taught all the teachers about how to run certain events and said, okay, well, here's how you do the first trust fall and then you can go all the way up to having somebody stand on a table and have all the students lined up behind them, and then they have to really trust and fall back and have the students catch him. Well, I was just kinda going around to all the groups, making sure everybody was safe and they were doing things correctly, etcetera, and I came by this one group in the cafeteria and this pretty veteran lady a teacher, she was really great at getting all her students that were in the group to do this trust fall and they well, clap and they were all happy about catching somebody and supporting them and stuff, and then this one little girl turns to her and she said, now is your turn.

0:19:12.0 DL: What this teacher came up with, oh, well, it's this, I'm too old to this, I can't do that, and they just let her go on with all these excuses, and finally one of the little middle school kids said, "Oh, but you have to." And you could just see the blood drain out of her face, but everything was... She had to step up on this step and then step up onto the table every time she would make an incremental leap in performance, kids would cheer like crazy. And she finally did it, it took a long time, but she finally crossed her arms and closed her eyes and fell back in those middle school kids caught her.

0:19:58.2 DL: And she burst into tears. And she told me later, she said, "You know, when I hit those kids hands my first thought was, in 20 years of experience, I had never really trusted my students with anything." And I thought, oh that was amazing. And I checked in with her a months later and a year later, and everything she said my whole life changed because of that kind of experience. So either you lead and you do these kinds of things to optimize the group and the diversity of the group that you have then and teach people to work together and support each other, or you end up leaving them up to their own devices, and then you end up managing the behavior that it produces all the time, because I can tell you that teachers that work in this kind of environment and really work diligently to optimize the diversity within their classrooms, they're not dealing with behavior problems, they're not dealing with bullying, they're not dealing with all the kinds of things that a lot of teachers think that that's their job. I'm supposed to keep track of all that and punish people that are doing it and etcetera. And Deming would say, well, you don't know what your job is.

0:21:23.2 AS: Well, let's wrap it up by thinking about optimizing diversity with the idea that the objective of a manager is really to get the most out of people and to get them to work as a team, and I think about it in the business world, it's the same thing and bullying that happens in schools, goes into the business world, and when you start ranking people, you start... And you have a scarce reward, you know, it just turns into pitting people against each other. You've talked about a couple of tools, one of them is the huddles, which is one way a morning meeting or a huddle, a very short morning meeting to check in with everybody and the value of that, and the second tool you talked about was

"fear and a hat" and anonymously putting fear into a hat and then discussing those, sharing those in a group. You talked about the importance of supporting each other and working together to overcome challenges, and ultimately the idea of getting the most out of people and out of the system is also about creativity and getting that creativity, you never know where things will go. Is there anything you would add to that, wrap up?

0:22:38.1 DL: No, I think that's done well with that, except the final thing we talk a lot about... Deming talking about people have a right to joy in their work. Well, the same thing in schools, students have a right to joy in their learning, and if it's mudville every day and I hate going to school, there's something systemic probably going on that needs to be looked at and understood. And it all depends on the largest system that you have to work with it. So you may not have a supporting school, but it doesn't mean you can't optimize your classroom and these 30 students that you see every single day.

0:23:22.4 AS: 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 froggy host, Andrew Stotz, and I will leave you with one of my favorite quotes from Dr. Deming, and it's very appropriate for this discussion, "People are entitled to joy in work."

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Education is often touted as data- or evidence-driven. But in this discussion, John Dues contends that educational data is often fiction, given how easy it is to distort, both via the inputs and outputs and through manipulation.

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 the educators striving to apply Dr. Deming's principles to unleash student joy in learning. The topic for today is Data is Meaningless Without Context. John, take it away.

0:00:28.3 John Dues: Yeah, thanks for having me back, Andrew. I'm thinking a lot about educational data, and I think about how it's often presented, and I think so often, what we're actually doing with our educational data is what I call writing fiction, which is taking a lot of liberties with the data that comes into our system, whether it's state testing data or some other type of data that gets reported out to the public, and we often sort of manipulate that data or distort that data in a way that paints our organization or our school system or our state in a positive light, and I think we do that sometimes at the detriment of actually working to improve those organizations or those systems because we spend so much time trying to paint this positive picture instead of just putting the data out there.

0:01:26.3 AS: And it's interesting you talked... One of the interesting things about what you're saying is that it could be accurate and good data, but it's just the context or the structure of how it's presented makes it meaningless.

0:01:39.9 JD: Yeah, we try so hard to sort of paint it in this positive light to make it look like we're doing a good job. Everybody wants to do a good job, but I think we often do that at the detriment of our systems.

0:01:54.7 AS: One of the things that made me think about it, in the financial world, we have a code of ethics, and that is basically that... Particularly for CFA charter holders, financial analysts, that you have to present a complete picture of your performance. So if you have 10 customers that you're managing their money and one of them, you really bombed out and you decide you're gonna do the average of the nine that you did well on and then go out to your clients and say, "This is my performance," that's a very... You have an obligation to accurately represent your performance. And when I think about it in all the charts and graphs that people are making in education all around, I would say that most people probably are just, I would call it CYA, cover your ass type of charts [laughter] of, "How do we make this look good?"

0:02:43.9 JD: Yeah, I think... I read somewhere that there's sort of three ways you can respond to your data. You can actually work to improve the system, which would be a positive, and then the other two ways are two forms of a negative, one is you could distort the system itself, or you could actually distort the data. And a lot of times, there's not sort of a nefarious motivation underneath that distortion, but there's sort of, again, this desire to paint your organization or your system in this positive light. So sometimes they're straight up unethical behavior or cheating, but most of the time, that's not what I'm seeing and that's actually not what I'm talking about here today. It's more of this sort of taking liberties, writing fiction. "Okay, we declined from two years ago, but it's up from last year." Those types of sort of distortions of the data that I think are fairly common in education sector, probably all sectors too, so.

0:03:49.9 JD: I think... Maybe I'll share my screen for the folks that have video and I'll talk through it for the listeners that don't have video, but one of the things I often think of and focus on is state testing data, because so many people are looking at that data all the way from State Departments of Education, the school system, the individual schools, the individual teachers and classrooms with their students, and then of course, families get these state testing reports as well.

0:04:23.8 JD: And a handful of years ago, I was looking at one of these reports from the Ohio Department of Education and sort of picture this fancy, glossy, colorful PDF. It's got this big headline on it, it says, "Ohio students continue to show improved achievement in academic content areas." Then it's got a table with all the state tests, all the different grade levels, and three columns for three different years of data. And then in the last column, there's these up green arrows for where there's been improvement from year over year and then these red down arrows for where there's been a decline, and I was thinking to myself, "Well, in some of these areas, one, some of the percentage changes are so small that just on that... In that realm, they're sort of meaningless, like fifth grade science goes from 68.3% in one year and it goes up to 68.5% in another year. That's essentially a rounding error when you're talking about 100,000 or so students that are taking the test. I think calling that improvement is a stretch at best.

0:05:39.0 JD: And then I was focusing on third grade reading specifically because that's such a critical area. In Ohio, there's actually a third grade reading guarantee, so if you don't pass the test, there's the potential there that you could get held back in third grade, so there's a lot of focus on that data. So I was reading on in that state education department document. It said, "Well, third grade did see this decrease this year, but when you look back two years, it actually had... Third graders actually had an increase of proficiency." So again, you actually have a decline from this previous school year to the more recent school year in this document, and they're still making this claim because if you go back two years versus this most recent year, you do see improvement, and so you start to think to yourself, "Well, what is improvement? Do we have a definition of improvement? And if so, what has to be present?"

0:06:43.4 JD: And a few years ago, I came across this definition in sort of a seminal work in our area called The Improvement Guide, and the author sort of outlined a definition for improvement, and it sort of has these three components, and this made a lot of sense to me. If you're gonna claim improvement, you have to, one, alter how work or activity is done or the makeup of a tool. So you had to change something. Basically change something about the work you're doing. That change had to produce these visible positive differences in results relative to historical norms, and then the third thing is it had to have a lasting impact. And so when I go back and I think about that state testing data or really any type of data, you start to ask this question, Is this really improvement, or again, is this writing fiction? Is this not really improvement, but we're twisting the numbers to sort of fit our narrative?

0:07:45.0 JD: So when we think about that state testing data, do we have knowledge for how worker activity has been altered systematically. And if I can't point to that, then how am I gonna take the so-called improvement and bring it to other places in the state that may not have had those same improvements? Do I have these visible positive differences in results going back and comparing to historical norms, not just last year or even two years ago, but five or six or eight or 10 years worth of data. And then have I been able to sustain that improvement? Has there been a lasting impact? Have I been able to hold the gains? And if I haven't been able to do those three things, point to what we change compared to historical norms and then sustain that improvement, I would argue that we haven't really brought about improvement. We can't claim that we've improved our system.

0:08:46.9 AS: It's interesting. Before we go on the numbers that you were showing, roughly, the average there is something like 60%. What's the 40? That 60% is what? And that means 40% is not that.

0:09:07.7 JD: Yeah, I'll go back. So when you're thinking about state test scores, most states have some type of threshold, like we have this goal that X percent of our students are gonna be considered proficient on any given test. So in Ohio, that threshold is 80%. So the state says, in order to meet the benchmark, any given school needs to have 80% of its students, let's say, on third grade reading test have to meet this proficiency standard. And so what we saw in this particular data is that in the 2015-16 school year, 54.9% of the kids met that proficiency threshold. The following year in '16-17, 63.8% of the kids met that threshold, and then in the most recent year in this particular testing document in '17-18 61.2% of the kids were proficient. So just about 40...

0:10:04.8 AS: So even if it was a sizable increase, it wasn't just statistically insignificant, it's still roughly 40% of the students aren't proficient. No matter even what the government says about what's the minimum standard, it would be hard to really argue too much about improvement when you're so low. [chuckle]

0:10:32.8 JD: That's right, yeah. And that's what you often see in these types of these documents. So 40%, a significant minority of students are not proficient on the third grade reading test, and 60% are, and there's these incremental increases and decreases depending on the year that you're looking at.

0:10:54.6 AS: It's like the Titanic heading for an iceberg and you say, "I've turned the ship one degree, but we're still gonna hit the iceberg."

0:11:01.9 JD: But we're still gonna hit, yep, yep.

[chuckle]

0:11:04.3 AS: Alright, keep going.

0:11:06.0 JD: Yeah. So I think what's really important thinking about data in context, when you start actually stepping back and saying, "Okay, let's look at third grade reading over the course of 16 or 17 years versus three years," this very different story emerges. Part of that story is that context, so what has changed about Ohio's third grade state reading system over the course of those years? So if you go back all the way back to the 2003-2004 school year, you see Ohio is giving a particular test called the Ohio Achievement test, and you see as that's administered each year for six or seven or eight years, the results are sort of bouncing around this average, somewhere in the neighborhood of 77-78%. Then you have a change in about the 2011-12 school year. Now, we're given this test called the Ohio Achievement Assessment, but it's pretty similar, just the name has changed, the test itself is still the same, and you see basically these very similar results. And then all of a sudden, you sort of fast forward to the 14-15 school year. Anybody that's an educator from back in that time period, they'll sort of recognize that now we're getting these new common core standards, these more rigorous college and career-aligned standards, we start giving these new tests.

0:12:38.7 JD: So Ohio switches to the PARCC Test for the '14-15 school year for one year, and even then, the test itself changed pretty significantly in terms of format, but you still see pretty similar results that you've seen for the past 11, 12, 13 years. Then all of a sudden, that next school year, that 2015-16 school year, so that's the first year from that testing document, you see the results drop off a cliff and you start thinking, "Well, what happened to third graders?"

0:13:11.7 AS: Right. From, let's just say about 77 down to the next data point is 55.

0:13:18.6 JD: Yeah, just under 55% now. So you have this just about a 20, 22% drop in one school year. Now, the test did change again. Now it's called The Ohio State Test, it was called the PARCC Test, but the test itself, the format itself isn't probably what brought about that precipitous drop. Instead, what's happened is the legislature in Ohio has changed what it means to be proficient on the test. So basically, each sort of proficiency level has a cut score, and the cut score has increased for an individual child to be considered efficient. So the kids are no different in '14-15 than the new crop of third graders are in '15-16, but what has changed is what you need to do to be called proficient, and so because of that change, you see this huge drop in test scores along with this new test, and then over the course of the next three years, you sort of see an increased in test scores, and then a decrease in test scores, and then an increase in test scores, and then a decrease in test scores. And the Department of Education is claiming that there's improvement happening, but really what's happened is a whole new system has been created. You really change that third grade reading state testing system into this brand new system, whereas the average had been bouncing around 77% or so. Now you sort of have this new average bouncing around that 60% mark.

0:14:56.9 JD: And again, the kids are no different from those previous years, it's just the test and what you need to do to be considered proficient has changed. And the problem is, is that if you don't look at data like this, if you don't sort of...

0:15:11.5 AS: As a run chart or as a continuum of genuine information that's coming out of the system as measured by some measurement style.

0:15:21.0 JD: Yeah, and annotate it with point to the year that the new test goes into effect, point to the year that the definition of proficiency has changed, point to the year that schools had to switch from paper and pencil test to computer-based test because just a year or two or three after, those sort of memories become really fuzzy, that context becomes very fuzzy and you start to forget, "What year did we switch to computer test? What year did the standard switch? What year did the proficiency cut score switch?" And so if you don't have that sort of running record, that gets completely disconnected, the data gets disconnected from the context, and then you're likely not to make sound decisions because of that lack of context.

0:16:09.2 AS: And maybe I'll raise a few points here about the chart that we're looking at, and this chart is fascinating to me. The first thing that I think about, as a financial analyst in the stock market, basically, if anything is wrong in my chart and in my data and then I put my money down on that, it's gonna get taken from me in the stock market. And I have to really be very rigorous in how I'm looking at data.

0:16:39.1 AS: And when I look at this, I just think this is just so full of so many different ways that could go wrong in the way that things are measured, the way people are incentivized, those types of things. And the other thing that you realize is what you're showing here is that it's a description of the system. It's trying to describe things that are going on, and you're trying to describe certain points, which you can't do in charts that are... Bar charts and things like that. A line chart or a continuous point chart or a run chart really illustrates that. But also I think... I just realized that so much of almost every bit of charting is meaningless or just... Or is even giving you a wrong signal. There's so many things that I think about that and I'm just curious, 'cause you also said something before to me about how maybe people just don't pay much attention to it and then they just accept it for what it says and they don't go and look at the data, think about it and go into more detail. Those are some of the things that come out of my head as I'm looking at this, but what else do you want us to take away from this?

0:17:58.0 JD: Yeah, I think one thing, without the context and the annotations on a line chart or a run chart, data shown over time, you do forget. That's one thing. That's just human nature. You're gonna forget. I'm not gonna remember what happened 10 years ago in my testing system. I'm probably not gonna remember what happened five or even three years ago. The second thing I would say is that the vast majority of data that gets presented is in a table or a spreadsheet, and that data is usually what I would call limited comparison, so this year's data compared to last year's data or this month data compared to the same month last year. And so we're usually trying to draw conclusions with just two or maybe three data points, and that gets even worse when we sort of layer sort of a color-coded stoplight type system where we label certain data red and certain data yellow and certain data green and then we look for the red and the green data, even though the differences between those two, the scales that we use to to assign those colors is often arbitrary and meaningless.

0:19:11.0 AS: One last thing I would add to it, and I think you're gonna show us a good, an example of a good use of data, but also you have to ask the question, Are the people who are preparing this data incentivized to produce a particular outcome, and when you understand the incentives involved, it helps you also understand where it could go wrong.

0:19:33.2 JD: Well, I think that's exactly right. I think what happens oftentimes is the state testing data is a part of an a accountability system, and the point of an accountability system is to sort the good from the bad and to issue sanctions and rewards, and we sort of point to that data and say, Well, your scores are low, you need to improve. And so we sort of conflate this idea of accountability data or accountability goals and improvement goals, and those are really two different things, and so you brought up sort of this idea of CYA or cover your ass type stuff, and when we point towards accountability data, that's what people are gonna do because they are being held accountable for this data, they're gonna cover their ass. If we're truly using data for improvement, there's a completely different mindset. For one, the data tends to be local and well-known to the people that are using it, and if there's not sort of sanctions tied to it, then there is this ability to be more honest and candid about that data because we're using it for improvement purposes rather than using it for accountability purposes.

0:20:51.9 AS: Okay, that's great, great description. Alright, keep going. What do you wanna show us next?

0:20:56.8 JD: Yeah, I think this last chart. And so for the listeners, I've taken the five most recent years of third grade reading test data and put it in an actual process behavior chart, or some people call them control charts, and the advantage here is like the run chart, we're seeing data over time, we're seeing the variation, we're seeing the data move up and down over time, but with the process behavior chart, we're adding these upper and lower natural process limits or some people call them control limits and define, sort of, predict the future of what's gonna happen in this particular system, as long as things move along at the current steady state, and so remember, I was gonna say, just remember in that third grade reading data, and they sort of said, "Well, we improved, and then we did decline this most recent year, but if you look back two years, it's actually an improvement," but actually what you see is, if you play that out over five years, you see the data increase and then decrease, and then increase and then decrease, and that's a very sort of common occurrence with this type of data where there's this natural variation, it becomes obvious when you plot the dots over time, and you really see what is happening with this data is it's just sort of moving about an average, about a 60% proficiency rate.

0:22:35.1 JD: Some years it's a little lower than that, some years it's a little above that, but it's all within the limits of the system, so that tells us that all of that's present is common cause variation, just sort of this every day sort of expected up and down in the data, there's sort of nothing special that's happened to use Deming's terminology, there are no special causes present that would be... So there's these signals we can look for based on patterns in the data, but that's not to say that we're satisfied with this third grade Reading System. So to your point earlier, that average proficiency rate for the state, so we look at all of the third graders in the state of Ohio, and they took this test over the course of five years, about 60% of the kids were proficient in any given year. So that means 40%, two of the five kids that are taking this test are not proficient. So we have a stable but unsatisfactory system, but because there's no special causes, no special events to study or point to what we need to do is improve that third grade reading system across the state.

0:23:47.0 JD: And so that's a completely different mindset than pointing to a single data point saying, "Oh, we've gone down, what are you gonna do, or issue sanctions to this school or to this teacher", that's not the way to improve. What we need to do is improve the system of third grade reading instruction across the state, so a completely different mindset.

0:24:08.1 AS: That's a great explanation. The idea that I get from you is the idea of taking all of the emotion out of it, and let's say how do we use this to improve? And what you're describing here is, and what you've done is you've taken the most recent period of time, now, some people would say, "Oh well, you should look at it over a longer period of time", but what you've described is that the system has changed.

0:24:30.1 JD: That's right.

0:24:31.9 AS: There's been some significant change, and so it may not make sense to look at that prior period, so now you brought it down to the most recent period, what's operating under the same type of system, and what you find is that it's pretty much random variation, which I'm even surprised for 2020, 2021, given COVID and all that, I would have thought that instead of coming down to 53 or so, that that would have come down to 40 or something, just because now maybe it does in the next year, I don't know, but... Okay, that's a great illustration. Now, you had an example to try to show the good use of a chart.

0:25:11.2 JD: Yeah, I have a personal example. I can sort of talk through, this one is a little busier, but I think what I'm trying to illustrate is one, I think when I think of continual improvement, I think that is the same thing as what I would call intermediate statistical methods, that's equivalent to continual improvement. Those two things are the same thing. So what I mean is that in order to bring about improvement, it's very, very powerful to use one of these charts, whether it's a run chart or a process behavior chart, but the point is display your data over time and see how it's performing, and then what you can do then is run these systematic tests, this is sort of that theory of knowledge component of Deming System of Profound Knowledge, specifically the Plan-Do-Study-Act cycle. So you sort of run this structured test to try something within your system, in this case, if you can see the video of this, I'm displaying my weight over the course of three or four months, and you kind of see that over time, it's slowly shifting down, but there's a lot of ups and downs in this data as I'm trying various things, so I have PDSA 1 marked with a vertical dotted line, I gave PDSA two marked with a vertical dotted line and PDSA three marked with a vertical dotted line.

0:26:46.5 AS: And for the listeners that don't know what PDSA is, it's Plan-Do-Study-Act. It's that cycle.

0:26:53.0 JD: Right, Plan-Do-Study-Act cycle, these scientific tests where I'm trying something, maybe it's related to my eating habits, or maybe it's related to my workout habits, or maybe it's sort of a combination of those two, but I'm writing those things down in this Plan-Do-Study-Act cycle. And then the second thing, I'll describe for those that are only listening, I'm also annotating when special events have happened that then lead to signals in my data. So for one, I have in December, towards the end of December, it's probably not hard to guess I have these holiday cheat days marked because you see this jump in weight that goes above the sort of upper limit, which says to me, "Oh, wait, something so different has happened in my system, and that I really need to attend to that", right. Now, if I had waited until February 21st, the day we're recording this, to look back and see this highest data point in my system over the last three or four months, I probably would not remember what caused that. Because I annotate it as it happened, I have this picture, I have this narrative tied to my data that allows me to think back and reflect and figure out what happened to make the weight in this case jump off the page. Over time, what I'm trying to do is both shrink the limits, so lessen the variation around the average, as well as again, in this case, it's weight, so a decrease is good, so I'm also trying to bring that average data down over time and so the idea would be the same no matter what type of data, whether it was those state test scores, whether it's attendance rates, whatever it is, homework completion, whatever it is that you're trying to improve, this sort of same combination of understanding variation, combining it with these Plan-Do-Study-Act cycles. This is the method, This is continual improvement, I think in a nutshell.

0:29:00.2 AS: Fantastic. Alright, I think that illustrates it well, and maybe if you stop sharing that screen and then I'm gonna show you something, John, and for the viewers, they'll be able to see it, but for the listeners, I'll explain it. I'm gonna walk over to my other part of my room here for a second, I'm gonna grab the chart that I fill out each day.

0:29:26.9 JD: Oh my.

0:29:27.8 AS: And this is my chart, and for the listeners out there, I'm holding up a big chart paper, and it's related to my top three goals. I ripped it by... But my goals are related to sales, to health as in yoga and doing exercise every day and my sleep patterns. And I'm tracking how many hours I work on each one, or how many hours I slept, how much time I did on yoga, and I'm not even putting in any kind of limits into it. What I like to do is to track data and just observe, don't try to think about it, don't try to work towards it, just chart it and start observing, and one of my goals is to sleep more. I wanna sleep seven hours, and on average I sleep about six, and I don't have a solution for it, but I know that charting it and observing it and starting to think about it just raises the awareness and gets me thinking, "Okay, I'm far away from my goal, what do I need to do"? So charting is just fantastic, and I think that what you've described is a great way of understanding it.

0:30:34.0 JD: Yeah, I think when you read Deming stuff or listen to him talk, there's often these sort of short phrases that he'll refer to or say, and over time you start to understand what he was saying in just a few words, these powerful statements. When I think of looking at data in a chart over time, Deming said, "Knowledge has temporal spread", four words, knowledge has temporal spread, so what does that mean? So it's not until... Sorry, it's not until you understand or look at data unfolding over time and how it's moving about, how it's varying from point to point, it's not until you see that over the course of 20 or 25 or 30 points that you really start to know how your system is performing, and I think that's really what I was trying to show with the state testing data, with this personal example in a process behavior chart. I think that's the power of the Deming methods when you put all this together.