W. Edwards Deming - Part 3

Summary

The Florida Power and Light Company embarked on a quality improvement journey, inspired by the Japanese power company Canai Electric's Deming Prize win. This initiative involved all 15,000 employees and led to innovative solutions like portable computers to reduce meter readers' dog bite incidents. Despite the prize, the company did not adhere to all of Dr. Deming's philosophies, notably his opposition to performance-related pay. Dr. Deming's management principles emphasize continuous improvement, teamwork over competition, and understanding variation's causes. His 'Red Bead Experiment' illustrates the futility of competition in a flawed system. The company's dedication to quality improvement and Deming's teachings, including the importance of cooperation and lifelong learning, are highlighted as key to their success and the potential for future progress.

Takeaways

• 🏆 Florida Power and Light Company pursued the Deming Prize to improve service quality and corporate image, inspired by a Japanese power company's previous win.
• 📈 The company underwent significant organizational training involving all 15,000 employees to achieve continuous improvement.
• 🐾 Meter readers, facing high accident rates from dog bites, suggested using a portable computer to identify risky houses, showcasing employee involvement in problem-solving.
• 🔭 Introduction of binoculars for meter readers and tree growth analysis by foresters exemplify the company's commitment to innovative solutions for safety and efficiency.
• ✂️ Despite winning the Deming Prize, the company did not adhere to all of Dr. Deming's philosophies, particularly his opposition to performance-related pay.
• 💡 Dr. Deming emphasized the importance of understanding variation and the fallacy of ranking systems, advocating for team results over individual performance.
• 🧪 The Red Bead Experiment by Dr. Deming illustrates the futility of quality control in a flawed system and the negative impact of competition and fear-based management practices.
• 🤝 Dr. Deming's philosophy advocates for cooperation over competition, arguing that teamwork leads to better outcomes and aligns with the American spirit of collaboration.
• 📚 A room dedicated to Dr. Deming at the American Statistical Association in Washington honors his contributions, but he continues to pursue continuous improvement.
• 👴 At 91, Dr. Deming remains a lifelong learner and a proponent of his philosophy, demonstrating dedication to democratic institutions and the founders' dreams.
• ⚠️ Dr. Deming warns against the dangers of complacency and the need for a crisis before action is taken, suggesting that the West is in worse trouble due to a lack of awareness.

Q & A

Why did the Florida Power and Light Company decide to improve its service quality?

The company believed that improving service quality would be beneficial for business and its image.

What award was Florida Power and Light Company striving to win?

The company was working hard to win the Deming prize.

Why was it significant for the company to be eligible for the Deming prize?

The Deming prize had never been offered outside of Japan, making it a notable achievement for an international company.

How many employees were involved in the company's quality improvement program?

All 15,000 employees of the company were involved at some stage of the quality improvement program.

What was the solution proposed by meter readers to reduce their accident rate?

Meter readers suggested the use of a portable computer to identify houses with dogs that could potentially bite.

What does continuous improvement mean in the context of the Deming prize?

Continuous improvement means there is ongoing organizational self-assessment and the implementation of a true quality process.

How did Florida Power and Light reduce power cuts caused by falling trees?

They introduced intensive tree pruning and analyzed the growth rate of different trees, focusing on the fastest growing ones to reduce power failures.

What was one aspect of Dr. Deming's philosophy that Florida Power and Light did not follow?

The company did not follow Dr. Deming's opposition to performance-related pay.

What is the main point of Dr. Deming's caution against performance-related pay?

Dr. Deming believed that rewarding individual performance can introduce fear into the workplace and that team results should be emphasized over individual achievements.

How does Dr. Deming's red bead experiment demonstrate the flaws of bad management?

The red bead experiment shows that even willing workers can't produce quality goods in a bad system, and that quality inspectors can't make a difference if the system itself is flawed.

What does Dr. Deming advocate for instead of competition in the workplace?

Dr. Deming advocates for cooperation, stating that it is not competition but teamwork and cooperation that leads to success.

What is the significance of the room dedicated to Dr. W Edwards Deming at the American Statistical Association?

The room is a collection of his writings and souvenirs, honoring his contributions to the field of quality management and continuous improvement.

Outlines

00:00

🏆 The Quest for the Deming Prize and Continuous Improvement

The Florida Power and Light Company embarked on a mission to enhance customer service quality, viewing it as beneficial for business and image. Inspired by a Japanese power company's Deming prize win, they pursued the prestigious award despite it never being offered outside Japan before. After proving their organizational improvements and quality process application, they trained all 15,000 employees in a novel way. The company listened to employees' suggestions, like using portable computers to avoid dog bites and binoculars for safety, leading to significant reductions in accidents and power cuts. They focused on continuous improvement and organizational self-assessment, but notably, they did not adopt Dr. Deming's stance against performance-related pay, believing in the importance of recognizing and rewarding employees for their performance.

05:01

📈 Dr. Deming's Philosophy and the Red Bead Experiment

Dr. W. Edwards Deming, a prominent figure in quality management, is highlighted for his philosophy of continuous improvement and teamwork over competition. The Red Bead Experiment, a central part of his seminars, illustrates the futility of expecting high quality from workers in a flawed system. It emphasizes that even the best workers cannot succeed if the system is inherently bad. Dr. Deming criticizes performance-related pay and short-term contracts, advocating for cooperation and understanding the causes of variation. Despite his teachings, the Western world has been slow to adopt his ideas, with a focus on competition that Dr. Deming believes is detrimental. His work is celebrated, and he is seen as a lifelong learner and patriot, dedicated to the improvement of democratic institutions and the prevention of societal decline.

Keywords

💡Florida Power and Light Company

The Florida Power and Light Company is a utility company that provides electricity to customers. In the video, they are highlighted for their efforts to improve service quality, which is a central theme of the video. They sought the Deming prize to further enhance their image and business, indicating their commitment to quality and customer service.

💡Deming Prize

The Deming Prize is an award that recognizes companies for their quality improvement efforts. It is named after Dr. W. Edwards Deming, a statistician and management consultant known for his work on quality control. In the video, the company's pursuit of the prize symbolizes their dedication to continuous improvement and quality.

💡Continuous Improvement

Continuous improvement refers to the ongoing effort to enhance products, services, or processes. It is a key theme in the video, as the company seeks to reduce power cuts and improve safety for meter readers. The concept is exemplified by the company's initiatives, such as introducing binoculars for meter readers and focusing on tree pruning to prevent power outages.

💡Quality Process Application

Quality process application involves implementing systematic methods to ensure consistent quality in products or services. The video discusses how the company trained all its employees in quality improvement, demonstrating the application of a quality process across the organization.

💡Meter Readers

Meter readers are employees who read and record meter data for utilities. In the video, they are mentioned in the context of safety improvements, such as using a portable computer to identify houses with potentially aggressive dogs, which reduced the accident rate among meter readers.

💡

💡Performance-Related Pay

Performance-related pay is a compensation system where employees are rewarded based on their individual performance. The video discusses the company's decision to maintain this system despite Dr. Deming's opposition, highlighting a point of contention between the company's practices and Deming's philosophy.

💡Organizational Self-Assessment

Organizational self-assessment is the process by which a company evaluates its own performance and identifies areas for improvement. The video emphasizes the importance of continuous organizational self-assessment as part of a true quality process.

💡Tree Pruning

Tree pruning is the practice of trimming trees to maintain their health and prevent hazards. In the video, the company's intensive tree pruning program is presented as an example of continuous improvement, as it significantly reduced the number of power cuts caused by falling trees.

💡Red Bead Experiment

The Red Bead Experiment is a management teaching tool developed by Dr. Deming to illustrate the impact of a system on quality. In the video, it is used to demonstrate that even willing workers cannot produce quality goods in a flawed system, emphasizing the need for system-wide improvements rather than blaming individual workers.

💡Cooperation vs. Competition

The video contrasts the concepts of cooperation and competition, suggesting that while competition is often seen as a driving force for success, cooperation is the true key to sustainable improvement and progress. Dr. Deming's philosophy, as presented in the video, advocates for a cooperative workplace environment over a competitive one.

💡Dr. W. Edwards Deming

Dr. W. Edwards Deming was a prominent statistician and management consultant who developed the philosophy of continuous improvement and quality control. The video discusses his influence on the company's approach to quality and his opposition to performance-related pay, highlighting his philosophy as central to the narrative.

Highlights

Florida Power and Light Company aimed to improve service quality for customers, viewing it as beneficial for business and image.

The company pursued the Deming prize, motivated by a Japanese power company's previous win.

The Deming prize had never been offered outside Japan, requiring significant negotiation to make it available to Florida Power and Light.

All 15,000 employees were involved in the quality improvement program, marking a new level of organizational training.

Meter readers, facing high accident rates from dog bites, suggested using a portable computer to identify risky houses.

Continuous improvement is a key requirement for winning the Deming prize, with new ideas such as binoculars for meter readers.

Employee involvement led to a significant drop in accident rates, emphasizing the importance of consulting workers.

Quality improvement involves continuous organizational self-assessment, exemplified by a campaign to reduce power cuts caused by falling trees.

Florida Power and Light won the Deming prize but chose not to follow Deming's advice against performance-related pay.

The company believes in informing, guiding, and recognizing employees for good performance, differing from Deming's theory.

Deming's red bead experiment illustrates the futility of quality control in a flawed system and the importance of understanding variation.

The experiment criticizes workplace competition and incentive schemes, advocating for cooperation instead.

Deming argues that the United States' decline is due to an overemphasis on competition rather than cooperation.

A room at the American Statistical Association was dedicated to Dr. W. Edwards Deming, showcasing his writings and philosophy.

Deming is seen as a lifelong learner and a patriot, committed to continuous improvement and preserving democratic institutions.

The transcript suggests that a crisis may be necessary for people to pay attention to and implement new methods.

Deming introduced new methods to Japan that were not simply American practices, indicating a need for innovation and adaptation.

Transcripts

the Florida Power and Light Company

reasoned that a drive to improve the

quality of its service to customers

would be good for business and good for

its image they worked hard for their

Demming

prize the decision was prompted by the

news that a Japanese power company canai

electric had won the prize the year

before the Demming prize had never been

offered outside of the country of Japan

so it took some doing with negotiating

with the Japanese to get them to offer

that opportunity to us once they had

said that yes you will be eligible you

may apply we think that you've made

significant improvements in in your

organization and have demonstrated the

real uh quality process application we

set about training the organization in a

in a way that we have never trained

before every one of the company's 15,000

employees was involved at some stage of

the quality improvement

program listen to the man who actually

does the job is an important Deming

nostrom meter readers have a high

accident rate the men pointed out that

many injuries came from dog bites the

meter readers suggested the solution a

portable computer now tells them which

houses to beware

of to win the Deming prize you need

continuous Improvement and other ideas

were

forthcoming they introduced binoculars

for the more scary

assignments

the meter men were at the sharp end

literally because they were consulted

accident rates

fell if you do not seek continuous

Improvement in all that you do you

really have not implemented a true

quality process quality improvement

means there is continuous Improvement

you have to do continuous organizational

self

assessment a good example of this is the

campaign to reduce power Cuts these are

of caused by trees falling across the

wires intensive tree pruning reduced the

number of power Cuts dramatically but

even more power Cuts were avoided when

Foresters analyze the growth rate of

different trees by concentrating on the

fastest growing trees they've reduced

power failures using the same men and

Equipment despite winning the Deming

prize Florida Power and Light doesn't

follow all the doctor's orders one

aspect it has steadfastly ignored is

deming's opposition to Performance

related pay 12 of the 14

points yes we are aware that that was

one of Dr deming's cautions not to do uh

we have always believe that if you're

going to be successful in keeping your

employees informed if you're going to be

successful in giving them uh guidance

and coaching on how to do better if

they're having difficulty in performing

and certainly the most important part is

if you're going to recognize your

employee for doing a good job we

couldn't find a better way than having

these performance appraisal

sessions ranking comes from failure to

understand

variation to understand that of two

three 10

people Two Three or 10

divisions one will be at the top and one

will be at the bottom no matter

what

the question is what do the differences

mean that requires

knowledge the differences may not mean

anything one of deming's theories is

that you shouldn't really reward

individual performance you shouldn't

pick people out you should drive fear

out of the sort of competitive workplace

and now at Ford you did reward on an

individual basis why yes for uh well

originally because every nobody else did

it it's just a built-in pattern

throughout uh let's call it the

developed Western uh countries uh but I

I do think his point is one that should

be given a lot of thought and that

should be consideration toward moving to

reward systems that

emphasize the uh results of the team

rather than the

individual on more step right up

here hold it one more 1 2 3 4 5

6 now what are we going to do with you

at his seminars Dr Deming illustrates

his ideas on management with an

elaborate sherad called the red bead

experiment don't get close to willing

workers Deming plays the Crusty old

manager of an imaginary Factory which

one of

you is

average from the AUD he recruits six

willing workers and three quality

inspectors he sets them to

work material comes in in a

vessel

unfortunately this incoming material has

some red beads in it your job is to make

white beads are you

clear the joke is at the expense of

management Deming shows how willing

workers can never make quality Goods in

this case white beads in a bad system

quality Inspectors make no difference as

long as there are red beads in the Box

the workers will

fail Returns the beads same

motions now he takes the paddle in the

beads not on the bead the paddle is a

wooden block with 50 holes drilled in it

the trick is to fill all the holes with

white beads only work to inspector

number one on his first day on the

production line Johnny's work is only

cont contaminated with five red beads

he's easily beaten his co-workers now

Deming shows how bad management can be

fooled by figures

Johnny our best worker gets a merit

increase in

pay no question about

it the Absurd fallacy carries on to the

second day of production Johnny on the

Merit increase in pay our best

worker no question about

it car's the work for inspector number

one

nine Ray went to his

head got careless this is what Deming

means by understanding the causes of

variation Western management he says has

failed to grasp cause and effect the red

bead experiment ridicules competition in

the workplace incentive schemes like

performance related pay fear schemes

like short-term contracts are revealed

as illogical plain wrong Deming believes

we need not competition but cooperation

isn't it competition that made this

country great no just

cooperation competition is ruin our

ruination we've been on the decline for

decades we're on the decline the decline

will continue to we

learn whether we'll learn I don't know

we make it almost like a national

religion for competitiveness but that's

not how we make our gains that's not

when we go see what is actually

happening there teamwork and cooperation

you know we won the West well all the

farmers got together and helped each

other to build their houses or the

agricultural service was teaching

everybody was cooperating and teaching

everyone and so on I think for every

example you can give me of competive

I'll show you a dozen examples of

cooperation and how that really

worked a short while ago a room at the

American statistical Association in

Washington was dedicated to Dr W Edwards

Deming it's a collection of his writings

and souvenirs but it is incomplete at 91

he has survived both his wife and his

eldest daughter there is still a job to

be done still continuous Improvement to

be

pursued he has a mission but most

importantly I think that Dr Deming is a

living example of his own philosophy

he's continually trying to improve his

philosophy of continual Improvement he

is a lifelong learner that's why his

mind is still sharp that's why he is

still able to take this punishing

schedule six days a week I think he's a

patriot in the oldfashioned good sense

of the

word

he he sees in Democratic institutions

and in the dreams of our founder

founders

over 200 years ago that there was

something very good and it ought not to

disappear and that we are destroying

ourselves and he doesn't want that to

happen I did not export to Japan

American method their practice I took to

them something

new Americans have still not learned it

nor the Western

world nothing could stopped them not a

thing

some people have said you have to be on

a crisis before you pay

attention the Japanese were in trouble

we're in worse trouble because we don't

know it the Japanese knew it was

obvious