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May, 1999
TQM is not always a means to bigger profits.

Conventional Wisdom is that if you want to convince top management to adopt a total quality approach, tell them, "TQM will earn bigger profits!" The problem with this Conventional Wisdom is that it isn't always true. As much as I hate to admit it, there are many non-TQM actions which generate bigger profits. If that wasn't so, we wouldn't witness so much pollution, misleading advertising, downsizing, unsafe work environments, and so on. Getting people to stop doing these things because of arguments that profits will be bigger is no more effective than telling a group of thieves to stop stealing because in the long run they can make more money by being honest. Most thieves-- if they are good at it-- make far more money by robbing people than they can from real work.

I bring this up because I think the reason why TQM should be adopted is that it is the "right" thing to do in a moral sense. If a corporate vision is "make more money" without regard to how it is going to make more money, then that corporation won't differ in nature from a drug cartel. There may be less murder involved, but the internal strife and battles will be the same. Customers will be treated as patsies. Workers will be disposable.

When I first read W. Edwards Deming's Fourteen Points and Seven Deadly Diseases, I was inspired because Deming told us that how we run organizations is more important than the money we generate. When Deming criticized Ford for making exploding Pintos in order to generate a few more dollars of profits, he didn't claim that Ford would have earned bigger profits by not killing people. Instead Deming recognized that it is wrong to kill people in the name of earning bigger profits.

If competition existed to the extreme described in the "dog-eat-dog" models of classical "supply-and-demand" economics, then my plea to worry about morality would be mute. Competition would make it an impossible dream. Corporate charity, for instance, would be impossible because it could be paid for only by raising prices higher than the competition. If everyone else was polluting and getting away with it, then managers who didn't pollute would go out of business. If everyone else was underpaying their workers, then no one could pay their workers well. One reason that economics was originally labeled the "dismal science" was because of dire predictions like these. On the surface, competition would appear to drive out morality. The "moralists" then get dismissed as naive idealists out of touch with the real world. Instead of a Deming model of behavior, we instead would find that the managers who survive are the ruthless ones who perceive competition as war and justify any actions on the basis of bigger profits.

I don't believe in the classical theory of economics any longer, which is good, because it means I now believe there is a chance for people to do the "right" things even if sometimes they can't make as much profits as they could get by doing the "wrong" things. Rarely is competition so tight that any increase in costs will put a business into bankruptcy. Instead, managers do have the power to make choices. They can choose to make a better world. They can choose to have a vision which is much more than simply "make more money." They can decide to focus on the future even though that reduces profits in the now.

The strategy for approaching top management, therefore, needs to be different than the profit-driven strategy. The last thing anyone wants is a CEO who builds trust with the workforce, and then stabs them in the back in order to garner some short term gains. The distrust of some unions towards TQM stems from the fear of this happening. That kind of betrayal is, I am afraid, more common than we like to accept. It is the inevitable outcome though as long as we argue that TQM is simply a means to earning bigger profits and not an ends in-and-of itself.

What arguments do we then make with the "hard nosed" realists who run our corporations?

We need to convince them that they truly have the power to choose a goal other than simply short term profits. We need to talk about creating a better world. We need to reawaken discussions about ethics and morality. If they won't listen, then it is time to move onto an organization that will listen. There is nothing more disheartening than to dedicate one's life to an organization which is modeled after a drug cartel rather than being in business to improve the world.

Action TQM decision The drug cartel
Being honest with the customer sometimes results in the customer going elsewhere. A customer focus means looking out for the best interest of the customer even if it reduces profits.

In the long run, this should lead us to building better products so that we can keep the customer.

The guiding rule of business is caveat emptor.

It is a dog eat dog world.

Drug cartels attempt to addict customers so they have no choice about where to go.

Being honest with workers means warning them that bad times may be coming. Sometimes workers will quit if they are afraid of the coming bad times. They deserve the warning though in order to prepare.

In the long run, honesty will build trust and loyalty with the work force.

Drug cartels will kill workers who threaten the corporation. Unsafe work environments do the same thing, except that we usually don't call it murder.
A vision means that profits do not always come first. A vision should: (1) tell how the customer will be better off, (2) recognize that one purpose of the organization is to provide jobs and another purpose is to generate fair profits for investors, and (3) define the values which will guide all decisions. All decisions can be answered by determining, "What will create the biggest profits?"

Nothing else matters. No morality restricts decision making. No loyalty to customers or workers counts.

Anything goes.

Drug cartels are very successful. If we start with the premise that "Profits are our metric for success," then drug cartels may be considered more successful than any TQM organization.

While "greed" can lead to innovation, efficiency, and better products, unbridled greed is not acceptable. The essence of what TQM is all about is learning to bring a balance to the notion of "greed."


April, 1999
Defensiveness, The Great Undoer of Change

There are only three things people can count on in life: paying taxes, death, and being defensive. Defensiveness is the great undoer of change processes. Not only does defensiveness aid in the resistence to change, but more significantly it causes the advocates of change to do themselves in by capturing them in a downward spiral of one defensive response triggered by another.

Of all the defense mechanisms people have invented, the two most deadly ones for change are aggression, ("Do it my way,") and withdrawal, ("I don't want to talk about it.") In both cases, communication stops. Feedback loops stop. And any hopes for change stop.

Defensiveness is not inevitable. As long as change agents keep in mind four critical needs of people, change can occur without the huge battles that get triggered when defense mechanisms kick into high gear. The four critical needs are:

The interesting thing about these four needs is that they do not include the necessity for people to get their own way. People may be disappointed by change, but defensiveness does not automatically get triggered by change itself. Instead, defensiveness comes when one of the four needs is not met.


February, 1999
Symptoms that "systems thinking" isn't real.

One of the buzz words of the nineties has been "systems thinking." Virtually all managers we encounter claim to be systems thinkers. The words sound nice. Unfortunately our experience has been that most so called systems thinkers are still doing things the same old ways. In spite of the nice sounding concepts, nothing has really changed.

The following are some of the symptoms that suggest systems thinking has NOT really taken hold in an organization. They make a simple rubric which can be used for a bit of self-assessment.

SYMPTOM #1: Standardization through coercion instead of mimicry There is no doubt that standardization is a basic mechanism for reducing system errors and speeding up processes. When imposed from above though, standardization frequently is not appropriate and eliminates the flexibility needed by people doing the work. Standardization should occur from empowered dialogue in which best ideas are shared and people start to mimic one another's most successful functions. Mimicry leads to voluntary standardization which will be followed enthusiastically without the "end runs" and passive resistence which most bureaucracies unintentionally create when they attempt standardization through coercion.

SYMPTOM #2: Using benchmarking as a disguise for "management by objectives" (MBO). There is probably no single concept more mis-abused than benchmarking. The original intent of benchmarking was to identify processes worthy of study. Those studies will in many cases reveal that a particular process is not appropriate to an organization and should not be replicated. Unfortunately, the intended process focus of benchmarking has been lost in too many cases, and benchmarks have simply become "win or die" objectives used to evaluate managers. W. Edward Deming would be appalled that MBO has not just survived but has flourished by taking on the coloration of the Total Quality movement.

SYMPTOM #3: No profit sharing. No measures of success for teams As long as people are evaluated and rewarded individually and not as a team, systems thinking will not take root. Profit sharing is the ideal reward for encouraging systems thinking because it makes it obvious that everyone is in this together. Too often, managers limit profit sharing to top supervisors. The entire team needs to be involved to a much greater extent that is the norm.

SYMPTOM #4: No time for continuous improvement. All through the nineties, work weeks got longer, family time suffered, and people wore out. One of the principal lessons of Toyota is that they shut down their assembly lines in order to give people a chance to talk and think about how to do a better job. Systems thinkers understand the need to provide opportunities to learn together as teams. When organizations opt out of continuous improvement by claiming they can't afford the down time, it means they have missed the whole point of TQM and systems thinking.

SYMPTOM #5: No constancy of purpose. Deming pointed out many times that a system without a vision is a system out of control. He lamented the job hopping tendencies of top management, and the over-reliance on quarterly stock market behavior which makes long term thinking so very difficult. Deming was right. One of the primary symptoms of organizations who do not understand systems thinking is that they lack a constancy of purpose about basic values and visions of who they are.


January, 1999

Organizations continue to be cursed with the annual evaluation in spite of Deming's and Ishikawa's warnings not to use them. Organizations have not been able to give up the annual evaluation process mostly because they haven't figured out how to develop alternative feedback mechanisms to let people know how they are doing.

Clearly feedback is critical for everyone. If we have no basis for knowing how we are doing, then we have no basis for knowing if we are getting better or worse over time. One of the key management roles is to help people develop meaningful feedback loops so that they know on an ongoing basis how they are doing. Waiting a year for such feedback is too long. Relying on a boss to provide all feedback is too limiting.

There are four roles which I believe are most important for feedback: (1) supplier, (2) customer, (3) peer, and (4) leadership. These roles require differing kinds of feedback and rely on different people for the feedback.

Suppliers need feedback in terms of how well they are meeting customer needs (both internal and external.) Five questions are of particular importance.

This kind of feedback should be quite frequent since this is the fundamental purpose for working. There are many different mechanisms for getting feedback including the Customer/Supplier Interview, use of surveys, mail-back postcards from customers, and spot-checks with customers. In most situations, suppliers may need their feedback not as individuals but rather in the context of teams who are supplying different services and products. Ideally, this kind of feedback should come directly from customers and not be filtered through supervisors. There is a place for periodic feedback, but there is also a need to generate this feedback whenever customers become dissatisfied.

Customers need feedback in terms of how well they are expressing needs, how they respond when problems occur, and how they could go about bringing up issues so as to be less likely to generate defensive responses by suppliers. Customer/Supplier Interviews are also useful for bringing out these issues because they get suppliers talking about what kinds of feedback are useful and what kinds get ignored or even possibly make things worse. Frequently, the reason why suppliers lose their "customer focus" with internal customers is not resistance to wanting to do a good job, but rather defensiveness because the suppliers feel attacked by internal customers whenever anything is not perfect. Four questions should be asked by people of their suppliers. These can be asked periodically, but they should also be asked whenever suppliers are feeling attacked and blamed by customers.

Peers are teammates who frequently work jointly in the roles of suppliers or the roles of customers. Peers need feedback from each other especially regarding interpersonal relationships. These relationships are the heart of work for most people and can make work a joyful place or a living hell. Development of relationships are critical for peers so that problems are not allowed to fester and grow over time. This means that feedback needs to be very fast whenever problems develop. Waiting for an annual evaluation to deal with such issues would be destructive. A key role for supervisors to help facilitate peer dialogue.

Lastly is an ambiguous role which I label "leadership." Leaders are not always supervisors. Leaders think interdependently, work introspectively to reduce their own defensiveness, have a customer focus, are committed to continuous improvement, keep the vision of the organization foremost in their actions, and generally act in what Stephen Covey calls a "principle centered" manner. I view leadership as being part of developmental maturity. In that sense, I think people grow into being leaders. Hopefully leadership will be a key attribute looked for in potential supervisors. Leadership as a trait is critical for high level managers.

Feedback on leadership issues needs to come from supervisors, peers, and subordinates. The precise questions which people will need answers to will vary depending upon their level of maturity and their roles in the organization. This area is especially important for managers and becomes increasingly important as more responsibilities and authority are taken on.

Feedback should not be on any sort of numerical scale such as "1= needs improvement" or "4 = excellent." People don't need ratings. People need "mirrors" which reflect back to them how they are being perceived. People need "suggestions" for helping them to improve (as long as we can develop a method for generating "suggestions" which does not lead to defensiveness and shut-down).

There may be times when job performance is so low as to jeopardize a person's job. In these cases, the inadequacies need to be clearly identified so the individual can respond to them. This will be rare though. Most people, especially once they have completed their probationary periods, will be keepers who are "satisfactory." Since no one is perfect though, there will always be room to improve. We need to break out of the rating systems which assert people are either "satisfactory" or "need improvement."

Most organizations have some sort of merit pay system, especially for managers, which tie pay raises to evaluations. Deming was especially critical of these for being unscientific. It is very difficult to rate people except in subjective ways. Usually the difference in pay raises has more meaning in symbolic terms than in financial ones. I agree with Deming that most merit pay systems should be scrapped. Instead, pay should be tied to overall team performance and organization performance relative to profits, productivity, quality measures, and customer satisfaction. I reject the notion that we can manipulate people into striving for continuous improvement by dangling the prospect of merit raises in front of them.

Merit raises are deserved however when people take on greater responsibilities or in other ways become more valuable to the organization. There needs to be a clear formula for such cases. Seniority is also a legitimate basis for pay raises, but the seniority formula should flatten over time. The difference between a person with one year's experience and six years' is usually quite profound. The difference between six years and eleven years, though, is significantly less. And the difference between eleven years and sixteen years is probably undetectable.


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