In Their Own Words

Dr. Deming was a professor for nearly 5 decades, and while most of his examples and writing discussed manufacturing, he applied all the same ideas to teaching. In this episode, John Dues and host Andrew Stotz discuss points 2 and 3 of Dr. Deming's 14 Points for Management - translated for people in education: adopt the new philosophy and cease dependence on inspection to achieve quality.

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 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 we're continuing our discussion about the shift from management myths to principles for the transformation of school systems. John take it away.

0:00:29.4 John Dues: Andrew. It's good to be back. I thought since we've done a number of episodes now just to do a quick recap of where we're at folks that are following along on the Deming Institute website. We're on episode 11. In episodes seven through nine I outlined those six common management myths and you just talked about the point of those three episodes was to help the education systems leaders see what not to do. We've now turned to a set of principles that can be used by these same leaders to guide their transformation work. And in the last episode, episode 10, I introduced the 14 Principles for educational systems transformation. We talked about Principle 1 which was called Create Constancy of Purpose. In this episode I'll describe the second principle which I call Adopt The New Philosophy and the third principle which I call Cease Dependence on Inspection to Achieve Quality. And I mean I think a really important point to make that I got from Dr. Deming when I think about these 14 principles is a preemptive strike. Over the course of 60 years or so of continual improvement work Dr. Deming worked with Japanese industrial leaders, governments, top companies in the United States. Maybe a little bit lesser known was that he was a professor of statistics at New York University for nearly 50 years.

0:02:06.1 JD: And in his books he not only taught the 14 Points to the leaders with which he worked but they also guided his own teaching practices as a professor. And so there was a, sort of, a short Deming quote that stuck out in regards to the 14 Points and who they apply to. He said the 14 Points apply anywhere to small organizations as to large ones to the service industry as well to manufacturing. So I think it's sort of a preemptive strike of sorts, in case people in schools would think that maybe these 14 principles only apply to industry or only apply to healthcare and other sector but they really do apply to the education sector and in fact that was, sort of, a sector close to Deming's heart since he spent like I said five decades or so in academia.

0:03:00.3 AS: Yeah I mean so it's a good point that I think when you read Deming's material or if you watch his videos there's an overwhelming amount of information about factories and businesses and all that. And there's less about service sector. There is talk in there about service sector. But so I think a lot of people that first stumble upon it start to think, "Oh, this is just for factory quality control", or something like that. And that's been proven wrong particularly the LEAN startup in the world of startups really applied Deming's PDSA cycle as an example in very much service industries so it's a good point that this applies everywhere.

0:03:42.3 JD: Yeah. And basically what I tried to do with the 14 Principles in my 'Win-Win' book was just basically just translate the language from, sort of, manufacturing or sort of, industrial language to education sector language. So I actually literally created a crosswalk where I said here's Demings Point 1 and here's how I'd frame that for school people. And so that's, sort of, what I'm taking folks through in this most recent set of episodes. So thinking about diving in here. Principle 2, sort of, the short name is Adopt the New Philosophy. The descriptor, sort of, is Adopt the New Philosophy: Systems leaders must awaken to the fact that education reform movements often lack a sound philosophical foundation, must learn their new responsibilities and take on leadership for improvement. So this, sort of, goes back to this idea of what came out of A Nation At Risk. What was the next steps? What was, sort of, the response? And what I'm saying is that was probably the wrong response and instead we need to Adopt This New Philosophy. That's what Dr. Deming is calling us to do. And that's his point too and I've translated that for education folks.

0:05:01.8 AS: And just for clarity purposes. This principle number two and, you know, what Deming's talking about Adopt the New Philosophy is a very kind of a general statement yet it's maybe a specific statement. Is he telling us to adopt this new philosophy, like generally or is he saying the philosophy of such and such, the philosophy of quality, the philosophy of constancy and purpose, the philosophy of being a learning organization? I'm just curious how you're interpreting that.

0:05:38.7 JD: Yeah I think the 14 Principles are a part of the philosophy. Really, the philosophy is the System of Profound Knowledge though. And if I could, sort of, frame the Deming Philosophy for education what I would, how I would put that is that it's really about studying and applying the System of Profound Knowledge to do two things basically. The first thing is we wanna view teaching and learning as dynamic processes that occur within a system. That's, sort of, the first frame. The second frame is understand the nature of variation of those teaching and learning processes so that we can take the appropriate action within our systems and then we're doing that so we can accomplish improvement on this continual basis. So that's the, sort of, frame I would give the application of Deming's Philosophy to the education system.

0:06:40.9 AS: So is the goal improvement, and understanding the process and understanding variation are steps we get to, of how we improve better, faster, more sustainably or how do you see that?

0:06:56.4 JD: Yeah I think that's exactly right. I think it's all of those things. It gives us the information that we need the knowledge that we need within our systems to make the changes that need to be changed on a, sort of, continual basis. And, you know, it's something that never ends. It's a process that really never ends. It's, you know, not a recipe it's not a program to be implemented but instead it's a method it's a way of thinking that allows to, sort of, continually improve our organization.

0:07:29.1 AS: One other thing I would just mention about this is that if you take away one thing... One thing we could take away is to become a learning organization. I didn't really understand that for many years, but now I really understand that in order to truly learn you have to understand variation in the System of Profound Knowledge and all of the systems stuff in order to truly learn. And then you start to realize that if you're on a mission to truly learn the amount of improvements that you're gonna be able to do is way beyond most other people most other companies competitors most other schools. Because you have... That is part of the Constancy of Purpose is learning and that, I didn't really understand that when I first got into the Deming stuff but now I see just become a learning machine.

0:08:28.3 JD: Yeah. That's what you sort of have to commit to. And I think really what the 14 Principles do is serve as this practical guide by which, you know, systems leaders can lead. It's really that guide. So those management myths avoid those things and then here are these 14 Principles that we can, sort of, follow and some of those principles like Principle 1, Create Constancy of Purpose really tell us what to do and then, sort of, other principles in the list instruct us on how to, sort of, remove barriers in creating this environment the very environment that you were, you know, talking about just now in terms of an environment that's conducive establishing a new philosophy, establishing a learning organization, avoiding barriers to those things like management by objectives. One of the points that we'll get to is "abolish management by objective". That's something we want to get rid of. And really the backbone of the philosophy is transformation from this culture of competition where I win you lose or I lose you win. And really what we want the dominant paradigm in order to, sort of, have the environment that we need to be that learning organization is to create this, sort of, win-win paradigm based on this culture of cooperation.

0:10:00.1 JD: I think, you know, especially when Deming was speaking 45 years ago, 50 years ago when he became really popular in the United States, we had a long way to go. And I think there's still a long way to go but you can almost see, well, you can see a lot of the Deming philosophy in companies today. It is just most companies aren't anywhere close to all the way there, right? And that same thing goes for school systems. I think, sort of, that this idea of win-win philosophy it is a new way of thinking for a lot of leaders. I think one of the, sort of, primary concerns which once you've adopted, sort of, this new approach is that we want to develop joy in work and learning among students, for us as staff as well, as a prerequisite to achieving the core purpose of the organization. Because when people are joyful in their work or joyful in their learning you know you've already created this, sort of, environment that you're referring to where people can learn and improve and people are gonna use data in a way that drives towards that instead of, sort of, guarding their corner of the system like we've talked about before. And I think, you know, I think when you read Deming and I think when you think about transformation of an organization from one philosophy to another philosophy that can certainly be daunting.

0:11:39.0 JD: I think I've said it on this podcast episode, one of these episodes before but this transition is not gonna happen overnight. And I think Deming said something to the effect of when it comes to transformation there's no instant pudding. This doesn't just happen instantly. I think a more realistic goal is this constant consistent movement towards the new philosophy where you're moving towards total involvement of the entire organization everybody from top to bottom and then you're getting everybody working on this continual improvement activity of all systems processes and activities, you know, within the school system. Now it doesn't mean you're necessarily, sort of, attacking every single system or every process at the same time. It just means that you're sort of equipping everybody across the organization with knowledge of the philosophy, knowledge of the methods, and then the tools that go along with those methods like the Plan-Do-Study-Act cycle, like the Process Behavior Chart. And you're getting everybody, sort of, working towards this common aim. And again this is, this is a process and it takes, it takes time for sure.

0:12:51.9 AS: And that's why you need Constancy of Purpose too. Because if you don't have Constancy of Purpose and you have constant change, you know, change in leadership and direction, you know, you're never gonna get there. And I think about the...so many companies that we looked at when I was first studying Deming and listening and learning, many of those companies went through a 5 year phase of implementing the Deming teachings and then they got a new CEO and he says I'm not up for that. I like this. I'm, you know, I'm up for measuring everybody's KPIs and kicking ass and holding people accountable around here. Enough of this cooperation. [laughter]

0:13:36.1 JD: Yeah I think that's a common occurrence and I think, you know, in addition to the 14 Principles there's also the five... I forget what he exactly called them Deadly sins or something like that.

0:13:52.4 AS: Six Deadly Diseases I think it was.

0:13:55.0 JD: I think it was started as five and maybe it grew to six or seven but definitely one of them was the transition of senior leaders on a frequent basis because that makes this virtually impossible to, you know, to change to a New Philosophy.

0:14:08.5 AS: So that really ties together the Constancy of Purpose and Adopting the New Philosophy because then you really see that this is a real commitment. This isn't a fad, this isn't some new tool or something like that. It's a new way of thinking that's gonna require work to get there.

0:14:28.3 JD: Yeah that's exactly right and a lot of people, sort of, associate Deming with Control Charts or something like that, which obviously again he was a statistician. He used Control Charts frequently. I think the Control Charts and Process Behavior Charts are an important tool but what's more important is this way of thinking this is really what Deming was focused on more than anything else is this way of thinking that went with understanding your organization through the lens of the System of Profound Knowledge. It's really this philosophical change adopting this new philosophy that's really what he was most focused on when he worked with governments or schools or corporations, organizations. But that was Principle 2. That's Adopt the New Philosophy. It's not easy. Takes commitment, takes Constancy of Purpose. You've got to stick with it.

0:15:21.8 JD: I think Principle 3, sort of, transitioning to that, I talked about ceasing dependence on inspection to achieve quality. And when I'm talking about Principle 3 in education I'm talking about two specific types of inspection. So I'll just, sort of, read the whole principle and then we can, sort of, unpack it a little bit. So Principle 3: "cease dependence on standardized testing to achieve quality and work to abolish grading and the harmful effects of rating people eliminate the need for inspection on a mass basis. For example standardized testing by building quality into the product in the first place. The product in education systems is high quality learning." That's, sort of, Principle 3 in a nutshell. There are two, sort of, different concepts to deal with in Principle 3 and this will be probably fairly controversial for a lot of, sort of, educators but those two concepts are...

0:16:28.9 AS: Bring it on John.

0:16:30.4 JD: Standardized testing and grading. And the prescription is actually different for each of those things if you're following W. Edwards Deming's teachings. And I think that calls to attention an important point with all of this stuff this principle for sure. But all the principles. You really have to do close reading of the 14 Principles because Dr. Deming chose his words very carefully. And I think, you know, when you say, you know, stop over-reliance on standardized testing or abolish grading. A lot of people's initial reactions is probably going to be to scoff or laugh. And I think, you know, I think that's really just a demonstration of how far away they are from the standards that he demanded.

0:17:22.3 JD: So a lot of people might hear this and say oh this is fluffy stuff or something like that. He must not want real quality to exist and he was actually saying the exact opposite. So if we start with the standardized testing part, you know, when I think of... Is Deming saying that we should abolish inspection in the form of standardized tests or assessments in general? And I would say no. Of course not. And I think without assessment we are not able to answer the critical question, how are we doing? So assessments in and of themselves are useful I think. But I think we're overly reliant specifically on, sort of, mass inspection style standardized testing like in the form of state testing as the, sort of, key way that we're trying to ensure that there's quality throughout the education system.

0:18:26.0 AS: It's interesting because I'm thinking about in the case of a business, inspection is an internal activity that has happened in the past, and our objective is to get rid of that and build quality into the process and the system. But as a business, you're ultimately judged by the quality and you know, value that your product provides. And you'll instantly get the customer feedback by looking at the revenue that you're getting or not getting when you bring that product to market. Whereas in the case of education, what my question to you is, is the signal that we get from business, from the customer. Like, it's just so in your face you go start up a company, you put a million dollars in it, and you don't get any revenue. You think, oh my God, I really messed up. Or you've got a defect in something and it causes a recall and a big cost and, you know, a lot of damage to your reputation. It's just right there in the revenue numbers. But is there a disconnect in that for education? Or is there something that I'm missing in education?

0:19:42.8 JD: I don't, I don't think there's a disconnect there. One, every day a student, let's say a 10 year old student goes home and their parent says, how was school today? Do you like your teacher? Those may be a little more qualitative but they're pretty powerful, you know, 'cause you're getting this report back, every single day. In our case in our specific case where I work at United Schools Network in Columbus, we're a public charter network, and so there are no kids that are assigned to us by geographic boundaries. So we have to go out and recruit every student, sort of, in a grassroots way, knock on doors, make calls, send mail, do tours and open houses, those types of things. And so if people aren't satisfied with our school program, they literally walk out the door to another school. They have other schools they can go to. That's pretty powerful as well, that enrollment factor, that would be a little bit different in a traditional public school. But they... People do... When you think about going and buying a house, for example, one of the first things most people do is check out the school system. Or...

0:20:54.4 AS: My parents specifically, you know, looked at that when we moved to the town that we moved to in Ohio. And my dad's work was not in Ohio, it was in Detroit and other areas, but he ended up, you know, he was traveling as a salesman, but he ended up choosing, my mom and dad chose that town because of the reputation of that school. And so, yeah.

0:21:15.4 JD: Yeah, yeah. And really when you think about Principle 3 too, and specific to standardized testing, it, you know, the way I'm interpreting Deming's Principle 3 and then applying for education - it's not, it's calling for the elimination of the dependence on standardized and other types of tests as the sole measure of quality, not necessarily for their elimination altogether.

0:21:42.4 AS: What damage does...I mean, for those, there's a lot of people that may be listening or viewing that think, wait a minute, I mean, standardized testing is what it's all about. I mean, I want everybody in the school system to be tested on the same thing so I can figure out, you know, which one's doing a good job, which one's not, which students, you know, blah, blah, blah, blah, blah. So just for a moment, if you could just explain why standardized testing, what are the flaws with standardized testing?

0:22:07.0 JD: Well... Well a big thing is I think there's a big difference between mass testing as an attempt to provide, you know, sort of the customer or the student or the family with something they won't complain about, and the use of assessments to provide guidance toward improvement of, you know, a learning process. And I think, you know, too often or not, we're focused on the former and not the latter, right? So I think standardized testing, let's say state testing I think can provide some useful data hypothetically, but what often happens is it gets used in all these other ways.

0:22:53.8 JD: It's sort of this mass inspection through testing, it's costly. A lot of times, you know, it's unproductive. It basically sort of sorts out sort of good from bad, but doesn't really contribute to progress, right? Just , sort of,year after year low score or the low scoring schools, sort of, score low and the high scoring schools score high, right. I think another thing, another problem with, sort of, mass standardized testing at the population level is that it sort of introduces this idea that there's an acceptable level of defectives, right? Because in most states, there's, sort of,some goal for the percent of students that are gonna be proficient on state tests. In Ohio for grades three through eight, that goal is 80% of the kids will be proficient, and that's acceptable. But then that also means that one in five students, 20% aren't meeting that standard. And that sort of, you sort of lose sight that there's [laughter] this whole bucket of kids over here that you know, you can meet the goal, but you're really leaving behind a whole sort of a significant minority of the students taking the test.

0:24:21.9 JD: I think there's also this, sort of,direct contradiction to the philosophy of continual improvement. You know, the Deming philosophy is to build quality into the process in the first place. And that quality doesn't come from this inspection mechanism. You have to go upstream to improve the teaching and learning processes. And I think something like classroom assessments are a much better tool for identifying these upstream processes. And that's kind of a cool analogous to what you were talking about. You know, in businesses where there is inspection that is happening sort of at the local level, and there's not, sort of,like a regulatory or government agency doing that work for a private business.

0:25:07.4 AS: It's interesting that you highlight the word dependence and when you talked about it earlier, and if you think about what we're being told by Dr. Deming is to focus, shift our focus from the end of the, or the output of the system to the input and the processes of the system. And I think that that, you know, helps us to frame, it doesn't necessarily mean that we absolutely no longer do any inspection and there's no more testing. But what the important thing is, is we've got to shift our focus to the beginning of the process rather than the end. And I suspect most, you know, senior politicians and government officials are just focused on the end, just get the result. Come on.

0:25:52.7 JD: Right. Right Yeah. I think, sort of, to capture this, you know, Deming said, this system of sort of make and inspect, if it's sort of applied to toast, it would be expressed sort of, you burn I'll scrape, right? So that's, we've sort of already burnt the toast, so to say, and we're scraping it by sort of saying, "Oh, well we have the state testing system, that's got how we're gonna improve things." And really alls we're doing is scraping the toast.

0:26:21.2 AS: So let's talk...

0:26:23.1 JD: Oh, sorry, go ahead.

0:26:23.5 AS: I was gonna say, I wanna hear your thoughts on grading next, but good.

0:26:28.2 JD: Yeah this is where things...

0:26:29.4 AS: You got more on standardized testing, feel free.

0:26:29.8 JD: No, no, No. This is a good segue. You know, I think in that turn to grading, it gets a little even more controversial probably because Deming didn't suggest that we merely cease dependence on grades. He said we should abolish them. And again, this is where in, sort of, credibility as a practitioner, those 50 years as a professor, he did this, he did not, he did not issue grades to his students.

0:27:00.7 JD: I think it's really worth noting here, this has nothing to do with making things easier for students. It doesn't have anything to do with low-scoring students' self-esteem. Has nothing to do with that. Instead, it's, this idea is based on this more sort of fundamental premise. And this is really key. We want students to experience success and failure on schoolwork as information rather than reward and punishment. And grades themselves are inherently about experience things as reward and punishment. And that really comes... Those ideas come from author and, sort of, social science researcher, Alfie Kohn, who many Deming practitioners and followers would be aware of Alfie's work as it relates to education and parenting and cooperation and competition and those types of things. And I think one of the things that, sort of, pulled me into this way of thinking when... I think it's in this book called Punished by Rewards. He did this... Alfie Kohn did this comprehensive review of the research literature on grades. And it really compared students who got grades to those who didn't. And he found these pretty robust differences. Three of them. So the first one is that kids who are graded tend to become less interested in the topic they're studying. I think that's really important. This includes, actually, the specific topic, as well as the, sort of, subject area more generally, such as math or writing compared you know, to students who got the identical assignment but with no grades involved.

0:29:00.1 JD: Second thing is that kids who are graded, when they have a choice to pick, they pick the easiest possible task. Because if the point is to get a high grade, it's only rational to pick the easiest book to read or the easiest assignment to do. So what that tells us is that grades, sort of, inherently lead to kids avoiding intellectual risk taking. That's problematic. And then the final thing, the third thing is that kids who are graded are more likely to think in a superficial or, sort of, shallow fashion. So they're more likely to ask questions like, "Do we have to know this?" as opposed to more thoughtful questions about the content itself. So...

0:29:41.7 AS: And just to highlight, is that book called Ungrading: Why Rating Students Undermines Learning, and What to Do Instead?

0:29:50.3 JD: No, this is Alfie Kohn's "Punished by Rewards."

0:29:52.9 AS: "Punished by Rewards." Okay, that's another book that he did a forward to. Okay, I see.

0:29:57.7 JD: Yeah.

0:29:57.9 AS: Okay, "Punished by Rewards." I'm looking for it. And I know everybody could search for that too. So, keep going.

0:30:03.5 JD: Yeah. And it's got a longer subtitle about gold stars and things like that. But I think fundamentally, it's this displacement of the, sort of, core priority from learning to the grade that's at a heart, that's at the heart of both Deming and Alfie Kohn's philosophy in this area. I think Deming went as far as to say that the specific losses from grading practices are "unknown and unknowable, but likely catastrophic." [chuckle] So he didn't mince words there. So just sort of recapping that one, it's you know cease dependence on standardized testing to get to quality. And then he is saying abolish grading, because it does so much to put kids on the path to, sort of, gaming the system, shifting the focus from the learning itself to trying to get the reward that comes with a high grade or this thing or that thing that's handed out as a reward for high grades.

0:31:15.0 AS: Got it. "Punished by Rewards."

0:31:16.6 JD: "Punished by Rewards."

0:31:16.7 AS: It's the 25th edition that's come out, "The Trouble with Gold Stars, Incentive Plans, A's, Praise, and Other Bribes."

[laughter]

0:31:24.0 JD: Yep, that's the one. That's the one. It's a heavy read. It's worthwhile. It's a good read. It's... Yeah.

0:31:30.2 AS: It comes as an audio book too, so that could be, read by the author. So, interesting one.

0:31:35.3 JD: Absolutely.

0:31:35.8 AS: I'm gonna check that out. All right.

0:31:37.3 JD: That's a good one. It's a commitment.

0:31:40.1 AS: So how do we wrap this up?

0:31:43.2 JD: Yeah, that's a good question. I mean, I think again, I think a key thing to, sort of, understand is, sort of, we're studying these 14 Principles, one or two at a time. But anybody listening to this, I think it's really important not to lose sight that these things are mutually supportive. It's a System of Principles, and you have to have all 14 connected together in addition to the System of Profound Knowledge. That's why this gets so hard. You have to understand all of this. And you can't just put it together like a recipe or, you know, pick this one. I can get behind ceasing dependence on standardized testing, but I can't get behind abolishing grading, right? You can't do it like that. You can't disconnect these things. They're all sort of tied back to the underlying philosophy.

0:32:38.3 JD: So I think that's a really important thing. And, you know, because it's not a program or, you know, a project to be implemented, it really requires a, sort of, neverending commitment to both learning and quality. But it is discontinuous. You don't have to do everything at once. You can't do everything at once. Instead, what this allows you to do when you start to understand some of the methods is you start to understand, okay, what is our system capable of on any number of fronts? And then we can set more realistic goals together to, sort of, step towards improvement, real quality. So that's, sort of, what I would take from this entire distillation of the 14 Principles.

0:33:27.2 AS: And I would wrap up by saying, you know, there's a pot of gold at the end of the rainbow that most people don't see. [laughter] There's... We see what's in front of us, but the truth is, by starting to adopt the principles, what's happening is you're just trying to make a transformation. And part of that transformation is that you're seeing the opportunities in the world that you didn't see in the past. And conventional thinking, what we've been taught in the past has given us our perspective. But when you start to remove the blinders and say, "what would happen if we remove grading? What would happen if we ceased dependence on standardized tests?" And we said, "We are gonna look at other ways of doing this."

0:34:09.6 AS: What would happen if we really started to adopt this philosophy and the System of Profound Knowledge to really set a long-term direction? What you are gonna find is so much unfolds. And so today's discussion, just to kind of wrap up, adopting, Principle 2, adopting the new philosophy, talking about the teaching process, understanding variation with the ultimate goal of improving, and improving the outcome for students. And ultimately that's a transformation that your organization can go through. The other one is Principle 3, which is ceasing dependence on inspection to achieve quality.

0:34:51.2 AS: And you really focused in on: hey, standardized tests and grading, which I think is a challenge for everybody to think about. If you are saying that so strongly, and Deming was saying that also there's gotta be something there, right? And ultimately, as you said, the product of education is high quality learning and, it doesn't say, completely get rid of any kind of tests or any kind of assessment. But I think that what you are also trying to get us to do is look at the beginning of the process and then use feedback that we are getting through tests and assessments to go back and improve the beginning of the process. And ultimately, I think, I would end my summary of what you said with, of this discussion with what you said about, that you want students to experience success and failure as information, not reward and punishment. Anything you would add to that summary?

0:35:49.0 JD: Yeah, the only thing I would say is, a disclaimer. I certainly have not figured this all out, and I work in a system and we have not abolished grading, for example. Because you, another thing you have to do is you have to design a replacement that has to be a part of the process. So in the book, I suggest some questions. I don't suggest necessarily an alternative system. I haven't got to that point with grading, but I have a series of questions people can ask to start to think about what their grading policy is. So it's a process, I'm not, I definitely don't have it all figured out. I'm still working on it.

0:36:26.4 AS: Yeah. And, I'll just wrap up that last bit right there and say that if you were in your own environment where you weren't under government regulation or you weren't required to do this or that, you don't have to have a replacement. So for instance, in my case, in my coffee business, we just heard so much negative about the performance appraisal system that eventually we just, like, we are gonna stop and people ask, "well, what are we gonna do instead?" And I said, "I don't care what we are gonna do instead." This is, we've already evaluated that this is bad. Everybody's saying it, we know it, we've learned that, we've seen it internally. So our first job is to stop what is not working. Now, it would be a dream if I could replace it with something amazing that is working, but wouldn't we all already have that? So sometimes we are caught into this system that this thinking that we have to have a substitute or new way. And that's not always the case. But when you are under a lot of constraints, then, you are kind of forced to that. So I just wanted to open people's minds to that. And, anything you would add to that before I close?

0:37:38.4 JD: No, that's really interesting. I... I'd love to hear more about how that's gone since you guys did that.

0:37:44.1 AS: Yeah, it's okay. We never really done a replacement. We did it a long time ago and we never really...

[overlapping conversation]

0:37:48.6 JD: That's cool.

0:37:49.5 AS: So our, I mean our replacement is feedback, coaching, sitting down, having meetings and, but we don't, and when it comes to compensation, we came to some, different conclusions that we wouldn't compensate people for their individual performance. The compensation would be related to the performance of the company with a very clear system of how the success of the company comes up in additional profit and how that's allocated to each person based upon, first their salary. So there's a market component, the market rate component, then based upon their years of service, which we want to reward, and then based on a fixed amount so that people who aren't making the biggest salaries in the place still always get something, that's meaningful to them. So there's lots of alternatives and, let's keep thinking about it. And that's, I think what you bring to the whole Deming sphere is to start thinking about that in education.

0:38:48.6 AS: So 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. Also, you can find John's book Win-Win, Dr. W Edward 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" and that counts in education.

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."

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.

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 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."

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."

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."

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."

Data represents raw numbers and information represents the what, when, where, etc. of something. Knowledge requires looking inward at how something works. Understanding requires looking outward at a bigger system for an explanation of what lies inward. Wisdom is the ability to utilize these elements. So how do we go from having data to having wisdom? Bill and Andrew talk about tools, techniques, concepts, and strategies.

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 discussion with Bill Bellows, who has spent 30 years helping people apply. Dr. Deming's idea is to become aware of how their thinking is holding them back from their biggest opportunity. The topic for today is: Tools and Techniques and Concepts and Strategies. Bills, take it away.

0:00:30.2 Bill Bellows: Thank you, Andrew. And as we get into number five, I was listening earlier to episode number four, and I just want to start off with a clarification and addition. I shared a quote, "I'd rather know a little less than to know so much that ain't so." Which is the opening quote of The New Economics. Every chapter of The New Economics has a great quote. And that quote is attributed to Josh Billings, who is an author who lived in - the author, humorist in the late 1800s. And I thought that was attributed to Will Rogers. Will Rogers is kind of the Josh Billings of the early 1900s. And Will Rogers quote, which a little similar is, "It isn't what we don't know that gives us trouble. It's what we know that ain't so."

0:01:26.8 BB: And to that end, we've been talking about black and white thinking, question number one, shades of gray thinking, question number two. And something I learned from Ed Baker who's a genius who worked at Ford, followed Dr. Deming around the world, a really sweet guy. And one of the first times I met him, he said something about having the ability to realize that the more you know something may be the less that, we're so used to thinking that I know it better and better and better. And where he was coming from my interpretation was, there's a possibility of getting to a point of questioning your understanding, which means your understanding goes backwards. And that's where I think these quotes from Billings and Rogers are so appropriate. Are we willing to let go of dogma? I mean, that's what we were talking about last time. Zero inventory, zero variation, and that's all dogma. And what these two people are talking about is that understanding is relative.

0:02:42.1 BB: It's not absolute. And also that it can go backwards. So you could look at what you're knowing and all of a sudden say, "Maybe I'm not as confident." And if I go there and say... I met a really cool guy, it was at Deming's first seminar in the UK, he worked for Ford. And I used to meet him at this annual UK Deming forum. And at the end of the days there we'd go to the pub, and I liked to hang out with him 'cause he is just, he had so much great wisdom. And one of the things he said is that he constantly challenges his understanding, and not just of Deming, but is this, is it, 'cause he found himself really passionate, but he was questioning, he had the ability to step back and question why he thought it was so important. "Am I crazy?" And, I said, "You're not the only one who does that." But I think that's really healthy, that you can step back, read other people's stuff. But the ability to keep challenging and I think in the world of continuous improvement, we use that phrase, the ability to question your understanding I think is absolutely important. So anyway, I just want to get that off first.

0:04:05.8 AS: It made me think when I teach my finance classes at university, one of the first things I say to my students, is I say, if I'm successful in this class, you'll be less confident when you leave.

0:04:18.0 BB: Yes.

0:04:19.3 AS: And they just can't understand that at that moment in time. But at the end of the course, they realize that nothing's written in stone and that it is a shifting sands, particularly the stock market. Stock market is just a, as one of my guests on my podcast on investing said, "The stock market is a predator, and it's just constantly evolving ways to take money from you." But the point is that if you think that you've got it licked, then it's your, it may be your time up next. And then the other thing I was thinking about is, does knowledge go backwards or does it just become that we have a different vantage point? And also, what's the motive of learning? In the beginning it was just to gather information. The ability to interpret that information strongly didn't come until you really start to feel better and you have more experience. But then the further you go, it's like playing a piano solo and you go far away from what you learn in the rudiments. Does that mean the rudiments are wrong? No, you're just coming at it from a very different angle now.

0:05:32.1 BB: Well, let me add, and this adds to where we're going. And I've shared my, what I've learned from Dr. Deming. I met him twice and never asked him a question. I learned a whole lot from Russ Akoff, who I asked a lot of questions, Dr. Taguchi I asked a lot of questions. And one of the things I share in all my classes that I learned from Russ, and I find... I use the word profound. It's a model he refers to as the D-I-K-U-W model. Others have used four letters. I like Russ's model, D-I-K-U-W. So what is D? "D" is data. And what is data? Data are temperatures, pressures, sales numbers. Those are, that's data. "I" is information. And as Russ would say, information is what a newspaper reporter writes. It's what, where, when, how, and a car accident occurred at this time. That's information. And what's neat is what Dr. Deming said was the dictionary is filled with information.

0:06:52.4 BB: But the "K" is knowledge. And Russ uses K the same way Deming uses knowledge - as in Theory of Knowledge - which is, what is my theory for how this thing works?

0:07:06.8 BB: If I tweak this, then this happens. So the ability to understand causes and effects, that's knowledge. I take something apart and I understand the springs and this turns this, and I would turn it clockwise and boom, boom, boom. That's knowledge. Understanding, the "U," comes from stepping back. And an example I used with my students is, a number of years ago, I took apart our washing machine, 'cause I heard the bearing is starting to hum. And I thought, well, given the experience in corporations, I can either continue to let this hum and at one point it breaks, in which case I am where I am, or I can be on top of it and get ahead of it. And that's what I decided to do. So I went online, found a couple websites, and got great instructions, took the whole thing apart, and was able to get back together. Taking it apart, putting it back together, looking at how all these things work together, is that I gained great knowledge. But what Russ would say is, understanding how the washing machine works doesn't tell me why it's sized for a family of four.

0:08:27.5 BB: Russ would say, taking an automobile apart and putting it back together doesn't tell you why it's designed for four passengers and why the driver sits on the left. So understanding is when you look outward at the greater system, and Russ also refers to that as synthesis, as opposed to analysis is when we bore in. And he said... And what's really also, we'll get into this. I mean this, these terms will come up in this conversation later, so it works out well to throw it in now. So there's data, information, knowledge. Okay, fine. Again, understanding is: we step back and say, why is the car, why does the car have four passengers? And that's also what Russ calls synthesis - which is when we look outward at the containing system. And analysis is when we go inward. So there's analysis inward, which is where the knowledge piece comes in, stepping back.

0:09:28.9 BB: And then the "W" piece is wisdom, which is, what do you do with all this stuff? So I'm sitting in a staff meeting at Rocketdyne, and they're talking about the results of the latest survey. And every director in the room has got a solution on how to improve their issues, and every solution involves some awards program. And I'm listening to one person after another, after another, after another. And this is a, I knew all these people, but I was recently assigned to this vice president, and I was all set after the 12th or 13th of them said, "and I'm gonna implement an award system." And I was all set to say, "for the record..." but I bit my tongue, and it's a good thing I did, because immediately after the meeting was the monthly awards and recognition luncheon for the buyer. But I say that that's the wisdom piece. The wisdom piece was, I was lucky. I just, but the wisdom piece is knowing, when do I use this knowledge and when do I just shut up?

0:10:45.6 AS: That's true isn't it?

0:10:47.5 BB: Yeah. And I would say I was, I was lucky. But still, with what we're sharing with people, it's one thing to be aware of it, but you have to pick your battles. You have to pick your opportunities, and you can't be a bull in a China shop. All right. So back to tools and techniques.

0:11:08.6 AS: Okay. But wait, I want to go back through this just to highlight it because I think it's a good... I teach students how to value companies, and I've been doing it for 30 years. So, I would argue I'm close to the wisdom part, further away from the data part. But when I bring students in the class, the first thing they do is, hey, I got data, I got data, I got these charts, look at this, look at this. But then I say, okay, so what, what, tell me more. And then they say, then they get into the information. Okay, what, when, how, where, but they still don't have an interpretation of what this means. And then we get to knowledge where they start to ask more questions: okay, how does this all work together?

0:11:49.2 AS: And then as you get better and better in what you're doing, you get an understanding of how it all works together. You're not just valuing one stock, you're looking at that stock relative to the overall market. And then when you get to wisdom in the valuation and in the finance world, you've now seen many different parts of this overall system. And when you come back and look at the idea of: how am I valuing this particular stock? So many more elements come into that decision. What's the FED doing? What's happening in that country? What's happening in demand? If it's a car company, like I've just valued Toyota, what's happening? And we going into recession? Has that been put into the...is that already in the price? So Data, Information, Knowledge, Understanding, Wisdom. Alright, great. Let's continue.

0:12:35.2 BB: Oh yeah. And then again, we'll see where it shows up. So first one, talk about tools and techniques. And when I presented my classes I said there's tools and techniques, and then there's concepts and strategies. So what are tools? Tools are the implements that we use to complete tasks. So in the backyard I've got an axe, I've got our hammers, screwdrivers, pliers, those are tools. So is my cell phone, it's a tool. The computer, the cameras these are tools. The microphone, these are tools. Techniques are the methods of how they're to be employed. So when I get ready for the podcast, I turn off anything that would just come on board and distract us, things like that, close the door. So the technique is: what is the method by which I use the ax, use the screwdriver? Okay. Now we get to concepts and strategies.

0:13:29.8 BB: So concepts represent abstract ideas such as the theory of System of Profound Knowledge, as well as fundamental building blocks of thoughts and beliefs. So, those are concepts. Again, concepts represent abstract ideas as well as fundamental building blocks of thoughts and beliefs. All right. So I couple that with strategies. Strategies represent a plan of action or a policy designed to achieve a major overall aim guided by a concept. So if I want to implement Lean, implement Six Sigma. So Six Sigma and Lean are concepts, and then we have a strategy to implement - training people, whatever. And I throw those out because what I find is well, let me even back up in terms of another model I want to share with our audience. And I'm aware that there are people listening to this if they're joining online on the Deming Institute webpage.

0:14:32.1 BB: And then for our viewers that are watching us, Andrew, through DemingNext, then they can see us. They have a video. But I want to, as much as we cannot rely on PowerPoint slides that the listeners can't listen to. So I want people to imagine an input-output diagram, a rectangle where you've got inputs coming in one side, and what are the inputs? The raw materials used to create something. It could be literally materials or information or students as inputs into an education system. And then the output is whatever it is you're trying to achieve. So the left hand side is the inputs coming in the outputs are going out the right hand side. Well, what I also think about is imagine coming down from the top are concepts and strategies, and coming up from the bottom are tools and techniques. And the idea is that the tools and techniques are used to manipulate, convert these things, these inputs through concepts and strategies into the output. And so, tools and techniques offer us speed, the ability to dig the hole with a shovel as opposed to my hand. The ability to contact thousands of people in email as opposed to one at a time. Tools and techniques offer what Akoff would call efficiency, doing things well. So efficiency is about lowering cost, improving speed.

0:16:14.7 BB: And so, again, Akoff would talk, again another concept from Akoff is differentiating efficiency from effectiveness. And I don't think we've talked about this in the past, but when I first heard Russ explain this I thought, "holy cow, I use the words efficient and effective interchangeably." If I was writing something I'd talk about, let's do it efficiently then over here, not to be redundant, and I'd say, we're gonna be effective. And in Russ's work, and he is incredibly eloquent, and he says, efficiency is doing things well, effectiveness is doing the right thing. And he'd say that the better you do the wrong thing the wronger you become. And the idea being effectiveness is asking: "why are we doing this in the first place?" And I say that because concepts and strategies are about effectiveness, an overall plan of action.

0:17:17.4 BB: And my concern is we get hung up on tools and techniques wanting to do things faster and cheaper. Again what Russ would say is the righter you do the wrong thing the wronger you become, because we're not challenging that. Reducing cost of something in isolation may make the whole thing worse, and we get all hung up on driving cost of zero, cycle time to zero, variation to zero, defects to zero, not understanding the greater system. So again back to this model is the raw materials, the inputs and come in the left hand side, they're acted upon by tools and techniques, but the tools and techniques are guided by concepts and strategies and that gives us the output. Well the...

0:18:04.8 AS: Go ahead.

0:18:06.5 BB: Go ahead Andrew.

0:18:07.5 AS: I was just gonna say, I was gonna put it in the context that in my coffee factory, the main input is raw coffee beans. And then the process is roasting and packaging, and then a finished product comes out the other end. And if I think about the tools and techniques, we use thermometers, we use roasting equipment, we use coolers and we have techniques that we've worked on that we have certain recipes, certain dump times, so these are the tools and techniques. And then the concepts and strategies. Well, as far as concepts are concerned, part of it is making sure that we're making the right product. We have a lot of competitors that come in the coffee business and they're absolute coffee lovers, and they start up little roasting factories to compete with us, but what they don't realize is that we're not roasting for the best tasting coffee, we're roasting for the best match with what the client wants from a taste and a cost perspective. And it may have nothing to do with what you and I appreciate in a nice espresso. And so when I think about the concepts, it's like really understanding where are we going with what we're doing with this.

0:19:28.0 BB: Yes.

0:19:28.4 AS: And then this, the strategy is kind of, in some ways I would say it's kind of the overall, how does this fit into our overall strategy of the service that we're bringing to our clients. The machines, the coffee, the coffee doesn't brew itself. It has to be brewed in equipment. So we have to optimize for that equipment. Then we have to have service technicians that train. So there's a strategy of kind of how we implement that overall thing. I'm just trying to apply what you've said about tools and techniques and concepts and strategies.

0:19:56.9 BB: Well, that's brilliant. And what is else is cool that I've never shared with you is our... One is our, your undergraduate degree and our daughter's undergraduate degree are both from Cal State Long Beach.

0:20:08.8 AS: Interesting.

0:20:10.1 BB: And she went and studied - a few changes in direction - and came out with a degree in English. She wanted to be an English teacher. And then upon graduation decided it's not what she wanted to do. But she spent one year in Europe and somehow got turned on to coffee. And her senior year she was working in these coffee shops making lattes and espressos. And she is a coffee snob, let me tell you. She turned me on to the difference between, let's just say Starbucks Coffee and Intelligentsia Coffee. And it's never been the same. And she would say 'cause I put, cream or half and half and that she says, dad, she said, "Coffee lovers, if you have to put something in it, then you're not a coffee lover."

0:21:17.1 BB: But she worked in the coffee business and just an incredible mind for exactly what you're talking about. And then decided to go back into education.

0:21:30.2 AS: Yeah. Whenever I go out on a dinner, since I don't drink wine and they pour me a glass of wine, I always pour in about, a little about a quarter of a cup of milk into my wine just to freak 'em out. And think, now who would ever do that with coffee anyways.

0:21:46.4 BB: But no, but those are great examples. And they... But the other thing I wanna point out is, I've seen, and I'm sure you've seen, people look at Deming's work and they say, well, he uses control charts and so do the Six Sigma people. Hey both of them talk about design of experiments and both of them talk about continuous improvement. Isn't it all the same? And when I started to explain to people is to say, don't confuse tools and techniques with concepts and strategies. And it's really powerful to differentiate. And I point out to people, I'm not against tools and techniques, but I shared in the past that, when I joined Rocketdyne in 1990, I got involved in problem solving and working on things and doing training.

0:22:40.7 BB: And in hindsight, most of my focus was tools and techniques. Was showing them how to go in there and apply this and apply this. And that was kind of in the community where I was being mentored by these people outside the company. That's the path I was on was, looking at, how I was being trained by the people doing the training and that it made sense. But it wasn't until I came across Dr. Deming's work, then I said, the tools and techniques needed to be guided, and without guiding them properly, we're gonna keep solving problem, solving problem, solving problem. So I'm not against tools and techniques, I love tools and techniques. And I spent the first couple of years and I was all about tools and techniques, and then I got enamored with concepts and strategies - and see that's where the action is. And then, but when it comes to the rubber meeting the road, you're gonna need tools and techniques. And makes you may have an incredible concept, but at the end of the day, you have to bake the coffee beans.

0:23:53.1 AS: Yep. And you and I were talking before we turned on the recorder, about how I've had a little back and forth on LinkedIn with someone who posted something about KPIs. And it was all about how... And it was actually, I think it was a company that has KPI training and all that. But I...

0:24:10.9 BB: And again, for our audience, KPIs are a key process... Key performance indicators.

0:24:14.7 AS: Performance, key performance indicators. Yeah. And it's such a common thing now, I would say almost every business has them. And the KPI concept is that, every business, every division, every individual should have some key performance indicators of whether they're doing their job right. And that is a measure that we can use to try to understand and manage people. And so they, I basically chimed in that KPIs...I would challenge anybody that KPIs probably cause more damage than they solve. And that's a bit offensive, because, people are really relying on KPIs right now. And then one of the common comebacks to that is, yeah, because people weren't trained in them, and therefore, unless they're really carefully thought out, they don't work or it's harder. But what I was trying to explain is it's beyond that. You can't fairly design KPIs for individuals. And I said, and the ultimate way that you can understand this, and this is good lesson for the listeners, is just go to your employees, not your managers who are all talking, they're having their KPI chat rooms or whatever, but go to your employees and ask them, just ask them a simple question.

0:25:33.5 AS: Do KPIs add more, do they add value or do they detract from value of this business? However you word it. And I've done surveys like that and I found that about 80% of the people have a negative perception of KPIs. And there's a lot of different reasons. But the biggest reason based upon what you're talking about is that most of the people that are doing KPIs, they only understand the tools and techniques. They're not thinking about the concepts and strategies and understanding the motivations of individuals, the motivations of people to cheat, the motivations of how do you measure something, how do you know that I should be calling five customers in the mornings, versus 15 versus one, and have a long conversation with that one? There's just... It's nothing in the world is that objective. And you can't get there until you get to concepts and strategies.

0:26:23.8 BB: What you've just said brings a number of things to mind. One is I went to meet one of the vice president at Rocketdyne once, and I had a conversation with him on a particular topic. And he was new to being the VP. And so I went in and I said, I need your help, blah, blah, blah, blah, blah. And so we got that one done with that and that went really well. He says, "Hey let me ask you a question. Help me out here." He said - 'cause at that time, at the beginning of the year, KPIs were rolled out, right? And at the highest level, the next level. And then at the end of the quarter, how we doing? At the end of the next quarter, how we doing? So he says, so he is a VP, he's got a dozen of directors reporting to him. And he says... I've asked him to put together these goals. And they weren't called KPIs, but they were KPIs. And I forget what they were exactly called.

0:27:29.7 BB: And he says, "I know they're capable of so much more." I said, "What do you mean?" He says, it's like he didn't use the word sandbagging, but they were sandbagging. He said, "they're kind of underestimating what they're capable of." He said, "What do you... " And he was really sincere. He was a really, really nice guy. He says, so "What do you think's going on?" I said, oh, I said, "I'll tell you what's going on." I said, "You're holding them individually accountable and of course they're holding back because you expect the numbers to be met." And I said, under those circumstances, you'd be a fool to stretch 'cause he says, there's so much more capability and these people and they're holding back. And I said, "They're holding back because when you hold their feet to the fire, they need a way out." So their way out is to underestimate. And then if they go beyond that, then they look good. But instead of, but he was baffled that they were underestimating what they could do, 'cause he knew these people as peers. He used to be one of them now he is their boss. And so again, it was a really sincere question, but he was really puzzled. And that's exactly what you're, that's part of what we're talking about.

0:28:55.7 AS: And to come back to that, just the idea there is that majority of people actually intuitively know that they only have so much control over the situation that they're operating within a system. And so they'd be a fool to go out and say a big number because they can't control the other departments doing whatever needs to be done to get to their goal. I have a friend of mine that went to work for Microsoft from a small company and went to Microsoft and he had a big, big contract, multi-million dollar contract he was trying to get in Dubai, and he asked the guy in Redmond if he'd be willing to fly out - to go. He said, "I'd love to go, but I gotta hit my KPI to get my bonus and I've got two weeks to get there, so I'm sorry I can't." And so what was a $10 or $20 million contract in Dubai had to be let go of because that guy just couldn't support it. He had to focus on what could have been a $300,000 KPI. So you can't think about the system when you are incentivizing people individually. And that's where...

0:29:56.3 BB: Yeah, and we'll come back to that. But I'll throw out an example. I have a neighbor who once upon a time worked for Xerox and field service, and he was so cool 'cause we started to compare notes: what do I do, what do you do, and all. And I never forget the one thing he said, he said, there wasn't a KPI that was flowed down that they couldn't meet.

0:30:17.2 BB: And because at the end of the day they had the ability to play the game. And one story a little bit different, but an example of how the game is played. There are some people, years ago writing a book about companies that are incredibly creative, and this is a real story. So they went out and they came across a company where there was on average 20 suggestions per employee being submitted every week. Gotta go visit this place! So they go in and then we read the reports and they're like, "Yeah so how do you do this? How do you, it's like 20 ideas per person per week. How do you do this?"

0:30:58.7 BB: The guy pulls out of his pocket a bunch of three by five cards, again, this is back in the '80s or '90s. And he says well, as a matter of fact, he said, "Yeah, I come up with an idea. I write it down. I keep it in my pocket, on Friday I have to deliver 20." And the guy says, "Every week you deliver 20? I just like, how do you keep doing this?" He says, well, like, yes and no. He said, "So in my pocket, in this one here, you see this idea here?" He says, "Yeah, well this was Andrew's idea last week." And this one here Joe submitted this three weeks ago. So he, I gave him a couple of mine and so I'm gonna submit 20 but... And they aren't all mine." And I thought, that's exactly what we're talking about. They're gonna make the numbers. Another thing I've seen, which I don't think is not uncharacteristic, is people estimating how long something's gonna take, how many hours are required, resources required? And then they end up using twice as much resources, right? And then they go back and change the estimate to the actual they used. And I was like, holy cow.

0:32:18.7 BB: But what we both know is the system is causing people, as this VP, I was trying to convey to the VP, if at the end of the day you are solely held accountable as the willing worker, then you are going to go to great lengths to protect yourself by padding the budget, overestimating the resources you need, under... And you're gonna play these games, 'cause what's missing from everything is unique to the Deming philosophy, I believe over Lean Six Sigma, Operational Excellence, Six Sigma by itself, Lean by itself is... An understanding of integration and how things work as a system. Now what I've also seen is you may find the word 'System' used in those concepts in the deployment strategies, but those... That language, if you pay attention to how the focus is about question one. Does something meet requirements? We wanna lower the cost of this. We wanna drive this cost to zero, we wanna eliminate this inventory.

0:33:39.3 AS: To me, those are examples of looking at something in isolation. So even though we use the word "system" you can hear the isolationist thinking. And I was... I had an ear ache the other day, and so actually when we were on vacation, my left ear was bugging me. So I got back and waited and waited and said, okay, I'm gonna go and take a look at it...Gotta get it taken, get them to take a look at it. And so I went in and to see my doctor and she wasn't available. So I met a new guy and, so he says, "What do you do?" And I said, I consult and I do online classes. I have these podcasts with Andrew. And he said, what it's about? And I said, well... I said, the way organizations are run, I said, they give the right wrist, a goal for Pulse, and they give the left wrist a different goal for Pulse. So over here I want, 45 beats per minute. And over here, this is what I want.

0:34:42.9 BB: And that's this KPI stuff. And there's not an understanding that as soon as you assign the goal to the right wrist, you've constrained everything else. And that's the concept behind Deming's work that I so love that, with his work I understand the fallacy of assigning these things over here. Over here we wanna see zero inventory, we wanna see this, we wanna see this, we wanna see this. And you can't... It doesn't work because they're all connected.

0:35:16.8 AS: Well, I was thinking about, I used to have a sauna and a cold, plunge pool place near my house here in Bangkok, and I would love to go into the sauna and get really hot. Then I had a hot bath. So I'd get super hot and then I would get out of that, I'd go into the cold and then you get super cold and obviously your body's going through very different situations when you're in there. But then, being the analyst, I started asking myself, I wonder what would happen if I put my right foot down here into the hot, extremely hot water. Okay, what signal is that sending up to my brain? And I put my left foot in the extremely cold water? And you could just imagine what your body and your brain is trying to figure out how to react to that. And that's what you're saying about the pulse on one hand versus the other. I feel like I wanna wrap this up because we've gone through so much stuff, and is there anything else that you want to talk about before I do a wrap up?

0:36:16.8 BB: Well, lemme tell you one other story.

0:36:19.5 AS: Yep.

0:36:21.3 BB: I was in a meeting number of years ago, at a pretty high level, I was a bystander. I happened to be invited to a pretty high level meeting. And in the room where nine divisions. Each division, there were roughly 300 people in the room representing nine different divisions of the company. We'll just leave it at that. And elsewhere in the company, there's others doing similar things. So I was in a... And part of this big corporation. Then there's others working in parallel. And in the group I am, again, there's nine Presidents with their respective Vice Presidents and down to a director level. And again, I'm just there for whatever reason. And the objective is to improve the stock price of the corporation.

0:37:22.8 BB: And because the big consulting companies said that if you reduce return on that... If you improve return on that asset and increase cash flow, then you'll have stock prices like the golden companies. And that's where the company wanted to be. They wanted a huge stock price. So the plan is, for these nine different divisions of the company, to each work on a plan to improve their return on that asset and a cashflow number. Right? So we break it into in the parts, each part's gonna come up with a plan. And so the day begins with: this is the overall concept. The strategy is you nine at the end of the day are gonna go to a conference room. You're gonna outbrief tomorrow morning with your plan and blah, blah, blah. Okay, so now what? So the next presentation is on this concept called, Big Hairy Audacious Goals.

0:38:23.9 BB: And so an outside consultant comes in and "don't hold back. Go for gold. Go for gold. Don't hold back. Don't hold back the company's stock price it is dependent upon you!" So again the concept is, we're gonna break it into parts. The strategy is we're gonna go separate directions. This guy comes in and says, "go, go, go. Don't hold back." And we get to the point after that presentation and the number one guy in the room gets up and he says, okay, everybody understand the concept, understand the strategy. You're gonna go to these rooms, get back tomorrow morning with the out brief.

0:38:58.9 BB: Okay. And 300 people are standing up. And they're beginning to gather their stuff and before they could leave the room, the number two guy in the room was up on stage, comes up to the microphone and he says, "Ladies and gentlemen, hold, let me get your attention, before you leave the room. Let me just emphasize, let's not sub-optimize." So I shared that later that evening with my wife and she said, "What'd you do?" I said, "I just stood up in the back of the room and yelled, what other effect are you expecting than sub-optimization?" And she says, "You didn't?" I said, "No, I just sat there and watched." That's what we're talking about, Andrew. Every division coming up with their own thing. 'Cause the belief is if they each improve, the overall improves. But the other thing I wanna say is, and we'll talk about this more in the future, is the number two guy in the room, he knows that sub-optimization is a bad thing. So it's like if I called a guy up and I said "Hey An…is this Andrew Stotz? Yeah, Andrew, hey how'd you get…?" "Yeah, who are you?" I said "Andrew, I'm your best friend, and I've got a deal for you. I am selling sub-optimization."

0:40:29.7 BB: And you're like, hold on, hold on. That's a no no, no. That all you know is that that's a bad thing. And that's what I thought, is that's dogma. We know that sub-optimization is bad, but they wouldn't know sub-optimization if they bumped into it in a brightly lit room. And so this KPI stuff is the epitome of sub-optimization. It is every department with their own pulse. And what you and I revere about Dr. Deming's work is it's a concept of looking at things of the system, which challenges that. But this advice within the corporation came from McKinsey.

0:41:14.5 AS: Of course. Okay.

0:41:16.6 BB: So a lot of money was paid for this advice. So it's out there. It's alive and well. And so again, when we're talking about concepts and strategy is - to me, they are the differentiator. Looking at Deming's idea as a concept is an incredible differentiator.

0:41:36.6 AS: Okay. So, let's wrap up. First, we talked about the idea that, could knowledge go backwards? Like we were accumulating knowledge and all of a sudden we start to lose...we gain a new perspective and we start to lose confidence in what we're looking at. The second thing we talked about was D-I-K-U-W, data, information, knowledge, understanding, and wisdom. And it's just thinking about maturing also over time as you learn and grow. We talked about tools and techniques and concepts and strategies, and the idea being that tools are the implements that we use to achieve tasks. Techniques are the methods that we're employing. And that tools and techniques are about efficiency, which is about doing things well. And that's different from effectiveness, which is doing the right thing.

0:42:29.2 BB: Yes.

0:42:29.7 AS: And concepts represent like the abstract ideas, the fundamental building blocks, the thoughts and beliefs to understand how these things all work together. And strategy is ultimately: where are we going and how are we getting there?

0:42:46.1 BB: Yes.

0:42:47.1 AS: And the point that you've said is what you like about Dr. Deming is that it helps you not to confuse tools and techniques from concepts and strategies, in where Dr. Deming saw something out of what seems like a very innocent tool to the average person. He saw the damage that could be done. And then what you talked about at that last example about the guy that stood up. And everybody's gonna go into their rooms and their departments and then work on this project. And at the end he says, let's not sub-optimize. And the answer from the audience should have been, well then let's sit back down in this room and figure out how we're gonna all work together to get the most out of this system. Because in fact, what we know, just like Dr. Deming taught about a symphony, is that it must be part of this symphony will be sub-optimized, while another part is being optimized to get the optimum output of the system. So to think that you can drive a business 100% on all cylinders and not have an impact on the other, you're actually, it's like holding up someone's pulse on both of their hands and saying, I want a low pulse rate here and here, I want a high pulse rate. It's only one beating heart of that person. Anything you would add?

0:44:05.2 BB: No, as I would just say again, the model is we've got the raw materials coming in the left hand side. We've got tools and techniques, which are about efficiency coming from the bottom, coming down from the top, our concepts and strategies, which is effectiveness first, effectiveness sets the path, sets the plan with efficiency, and then we get a credible output. So that's exactly what we're talking about. Again, we're not anti-tools, anti-techniques. What we're talking about is, let's put effectiveness with concepts first.

0:44:38.9 AS: Right. And 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'll leave you with one of my favorite quotes from Dr. Deming. "People are entitled to joy in work."

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.

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."

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."

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."