Deconstructing Deming I – Constancy of Purpose

File:W. Edwards Deming.gifMy 20 December 2013 post on W Edwards Deming attracted quite a lot of interest. The response inspired me to take a detailed look at his ideas 20 years on, starting with his 14 Points.

Deming’s 14 Points for Management are his best remembered takeaway. Deming put them forward as representative of the principles adopted by Japanese industry in its rise from 1950 to the prestigious position it held in manufacturing at the beginning of the 1980s.

Point 1. 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.

In his 1983 elaboration of the point in Out of the Crisis, Deming explained what he meant. Managing a business was not only about exploiting existing products and processes to generate a stream of profits. It was also about re-inventing those products and processes, innovating and developing to retain and capture market. Deming was fearful that management focused too much on short term profits from existing products and services, and that an effort of leadership was needed to reorient attention and resource towards design and development. The “improvement” that Deming was referring to is that through design and redesign, not simply the incremental improvement of existing value streams. Critically, Deming saw design and redesign as a key business process that should itself be the target of incremental continual improvement. Design and re-design was not an ad hoc project initiated by some rare, once in a generation sea-change in the market or motivated by a startling idea from an employee. It was a routine and “constant” part of the business of a business.

Some of Deming’s latter day followers sometimes deprecate the radical redesign of processes in approaches such as Business Process Re-engineering, and instead promote the incremental improvement of existing processes by those who work in them. That is exactly the approach that Deming was warning against in Point 1.

It is worth recalling the economic and geographic climate within which Deming put forwards this principle. During the early 1980s, the US and Western Europe suffered a significant recession, their populations beset with the dual evils of unemployment and inflation. The economic insecurities were aggravated by social unrest in the West and the intensification of the Cold War.

In 1980 Robert Hayes and William Abernathy, academics at the Harvard Business School, attacked US management in their seminal paper Managing our Way to Economic Decline. They found that fewer and fewer executives were from engineering and operations backgrounds, but increasingly from law and finance. Such managers had little understanding, they said, of the mechanics of the businesses they ran or the markets in which they competed. That in turn led executives to tend to pursue short term profits from existing value streams. These were easy to measure and predict on the visible accounts. However, managers were allegedly ill placed to make informed decisions as to the new products or services that would determine future profits. The uncertainties of such decisions were unknown and unknowable other than to a discipline specialist. Franklin Fisher characterised matters in this way (1989, “Games economists play: a noncooperative view” Rand Journal of Economics 20, 113):

Bright young theorists tend to think of every problem in game theoretic terms, including problems that are easier to think of in other forms.

This all appeared in contrast to Japanese manufacturing industry and in particular Toyota. By 1980, Japanese manufactured goods had come increasingly to dominate global markets. Japanese success was perceived as the (Lawrence Freedman, 2013, Strategy: A History, p531):

… triumph of a focussed, patient, coherent, consensual culture, a reflection of dedicated operational efficiency, or else a combination of the two.

Certainly in my own automotive industry days, my employer had come to see its most successful products literally as commodities. They belatedly realised that, while they had been treating them as a mere income stream, admittedly spent largely on unsuccessful attempts to develop radical new products, Japanese competitors had been filing dozens of patents each year making incremental improvement to design and function, and threatening the company’s core revenues.

But did Deming choose the right target and, in any event, does the exhortation remain cogent? It feels in 2014 as though we all have much more appetite for innovation, invention and product design than we had in 1983. Blogs extol virtues of and strategies for entrepreneurship. Slogans proliferate such as “Fail early, fail fast, fail often”. It is not clear from this web activity whether innovation is being backed by capital. However, the very rate of technological change in society suggests that capital is backing novelty rather than simply engaging in the rent seeking that Hayes and Abernathy feared.

In 2007 Hayes reflected on his 1980 work. He felt that his views had become mainstream and uncontroversial, and been largely adopted in corporations. However, information and globalisation had created a new set of essentials to be addressed and to become part of the general competencies of a manager (“Managing Our Way… A Retrospective by Robert H. Hayes” Harvard Business Review, July-August 2007, 138-149).

I remain unpersuaded that there has been such a broadening in the skill set of managers. The game theorists, data scientists and economists seem to remain in the ascendancy. Whatever change of mind in attitudes to design has taken place, it has happened against a background where CEOs still hop industries. There are other explanations for lack of innovation. Daniel Ellsberg’s principle of ambiguity aversion predicts that quantifiable risks that are apparent from visible accounts will tend to be preferred over ambiguous returns on future inventions, even by subject matter experts. Prevailing comparative advantages may point some corporations away from research. Further, capital flows were particularly difficult in the early 1980s recession. Liberalisation of markets and the rolling back of the state in the 1980s led to more efficient allocation of capital and coincided with a palpable increase in the volume, variety and quality of available consumer goods in the West. There is no guarantee against a failure of strategy. My automotive employer hadn’t missed the importance of new product development but they made a strategic mistake in allocating resources.

Further, psychologist Daniel Kahneman found evidence for a balancing undue optimism about future business, referring to “entrepreneurial delusions” and “competition neglect”, two aspects of What you see is all there is. (Thinking, Fast and Slow, 2011, Chapter 24).

In Notes from Toyota-Land: An American Engineer in Japan (2005), Robert Perrucci and Darius Mehri criticised Toyota’s approach to business. Ironically, Mehri contended that Toyota performed weakly in innovation and encouraged narrow professional skills. It turned out that Japanese management didn’t prevent a collapse in the economy lasting from 1991 to the present. Toyota itself went on to suffer serious reputational damage (Robert E. Cole “What Really Happened to Toyota?” MIT Sloan Management Review, Summer 2011)

So Deming and others were right to draw attention to Western under performance in product design. However, I suspect that the adoption of a more design led culture is largely due to macroeconomic forces rather than exhortations.

There is still much to learn, however, in balancing the opportunities apparent from visible accounts with the uncertainties of imagined future income streams.

I think there remains an important message, perhaps a Point 1 for the 21st Century.

There’s a problem bigger than the one you’re working on. Don’t ignore it!

Advertisements

The truth behind takt time

A few months ago my wife ordered a hole punch from Amazon one evening. It cost £5.49. The following morning at 8.00 there was a knock at the door. The hole punch was delivered.

That really is as much as I know for a fact about Amazon’s business processes. I was, therefore, shaken by an item on BBC News alleging Amazon workers face ‘increased risk of mental illness’. I don’t think the quotes make that anything other than an alarming headline. The item trailed a BBC documentary The Truth Behind The Click. UK readers can see the documentary here on BBC iPlayer. I thought that I would wait until I watched the documentary before I commented.

Having now watched it, I think it is difficult to draw any conclusions from the programme. Its tone was so plainly tendentious. The BBC had sent a covert reporter with a video camera into an Amazon warehouse, he having misrepresented himself as a job seeker. Some of the video, taken from the perspective of an Amazon employee picking in a warehouse, looked to me as though it was shown speeded up.

Professor Sir Michael Marmot, an expert in public health, was shown the video, I presume the same limited and selective one shown on the BBC. He observed that:

The characteristics of this type of job, the evidence shows, increase the risk of mental illness and physical illness.

Sadly there is no analysis. We were not told what characteristics, what the supposed levels of safety or what the supporting evidence. There was no quantitative data drawn from more than one individual.

Part of the problem with the programme was, I think, that three principle issues have been conflated here.

  • The general nature of repetitive manual work.
  • The psychological impact of working to an externally set “drum beat”.
  • The physical and cognitive effects of working at a particular rate.

Repetitive work

Repetitive work has always been with us. Some people find in it dignity and liberation. The Buddhist practice of samu, repetitive physical work performed with mindfulness, is part of Zen spiritual dicipline and the quest for enlightenment. Conversely, socialist pioneer William Morris believed that we should all be composing epic poems in our heads while sat weaving at the loom.

That being said, such work is not for everybody. I got the impression that Amazon were fairly clear to new employees as to what was involved. This is where recruitment is a key business process, identifying people who will fit with this type of role and stick with it.

However, I see nothing in general sinister about such work.

Drum beat

What delivered that hole punch so quickly was the “drum beat” that regulates work along the supply chain. This is a fundamental part of the Toyota Production System and lean operations generally.

The takt time specifies the rate at which products are being despatched to customers. That sets the rate at which pickers need to work. If the pickers work too quickly then packages build up in front of the despatch area. If too slowly, the despatch area stands idle. Both entail cost or delay that has to be passed on to the customer. The customer suffers.

The programme interviewed workers who felt the “drum beat”, announced through the bleep on a hand held electronic scanner, dehumanising. The BBC journalist clearly shared their view. The workers felt this deprived them of autonomy. They felt that they were not encouraged to think of [them]selves as human beings.

We do not show enough respect for boring work. We tend to sentimentalise and even glamorise the sort of active participation in work that too often results from having to resolve a non-conformance, a defect, a delay or an emergency. That is not useful work, no matter how much satisfaction it offers the employee.

I sometime sense a bien pensant nostalgia for the days when millions were employed in repetitive tasks on piece work. I think the BBC especially self indulgent on this matter. Piece work of course incentivises a worker to produce as much as they can even if that increases costs to the company in storing it until it can be used, if it ever is. The benefit of the drum is that the worker is required to produce no more or less than society needs. The laudable aim of lean operations is to reduce waste, Toyota use the Japanese term muda.

What I think was missing at Amazon was engagement of all employees in improvement. The usual quid pro quo for diligently following the drum is that part of the day is spent off-line in improvement work where an employee can, if so inclined, exercise their ingenuity. However, I am aware that the BBC reporter was recruited for the Christmas rush. That is not a period that anybody devotes to improvement work. Production is king. Improvement should have been prioritised earlier in the year when volumes were slow.

I think though that there is still an opportunity for a periodic review of the voice of the customer with all staff. It is focus on the customer that ultimately legitimises and justifies the discipline. I think Amazon staff would appreciate being reminded of just how quickly their orders are getting to customers, the variety of desires satisfied so promptly and the volume of transactions despatched, all through their discipline and focus on the drum.

Perhaps Amazon do this but the reporter didn’t stick around long enough to hear.

Work rate

This is the toughest part of the allegations to analyse. Was the takt time just set too quick for human capability? There is probably some flexibility in setting the rate for any individual as capacity can be increased by employing more pickers. There must be some limit on the number of pickers as the warehouse aisles will only accommodate so many on the move. However, as I said above, I found the overall tone of the programme so tendentious that I cannot take its criticisms at face value. No analysis by Professor Marmot was presented. Amazon have serious legal obligations to provide their workers with a safe system of work and to carry out health surveillance. Amazon have to cope with the real costs of absenteeism, staff turnover and litigation. I would be surprised if they had not analysed work demands thoroughly and diligently.

I do confess to feeling uncomfortable at the practice of terminating employment on the third consecutive day’s sick leave but, ultimately, it is a matter for Amazon.

I think that my conclusion from watching the programme is that it is critical to maintain all employees’ extrinsic motivation by the voice of the customer through constant review and emphasis of how an individual’s discipline contributes to the overall market impact. Goal deployment helps. Beyond that, I’m not persuaded by the BBC’s criticism.

Sushi – not as lean as you thought

We all fondly imagine that the TPS and lean permeate everything Japanese. And what could be more Japanese than conveyor belt sushi?

My wife and I went out for a quick sushi lunch yesterday. It was fairly quiet being a late August holiday Monday in London. The conveyor was not doing much business but I was alarmed to see the assistant preparing more and more plates and adding them to stock in increasingly precarious piles behind the conveyor belt.

Got an assistant with nothing to do? Get them to make for stock apparently.