2003 Deming Institute PowerPoint Slides

09/19/13 1
Quality, Productivity, &Quality, Productivity, &
Competitive Position SeminarCompetitive Position Seminar
by
Nida Backaitis & Ron Moen
Las Vegas
13-16 October 2003

09/19/13 2
DAY 1 (Monday, October 13)
8:00 a.m. Registration
9:00 Welcome and Overview of Seminar
Quality and the customer
Dr. Deming: “How are we doing?” (Ch.1)
Facilitator Presentation: Small Group Discussion
10:40 -Break-
11:00 Small Group Discussion
Dr. Deming: “The Heavy Losses” (Ch.2)
12:00 -Lunch-
1:00 Facilitator Presentation: Small Group Discussion
Dr. Deming: “Introduction to a System” (Ch.3)
2:40 -Break-
Dr. Deming: “Destruction of a System” (Ch.3)
4:00 Working Group Session
5:00 Stop

09/19/13 3
DAY 2 (Tuesday, October 14)
8:00 a.m. Reports of Working Groups
Review of Day 1, questions
9:00 -Break-
Dr. Deming: “The System of Profound Knowledge” (Ch.4)
10:40 -Break-
11:00 Dr. Deming: “The Experiment with the Red Beads” (Ch.7)
12:00 -Lunch-
1:00 Marshall Industries
Dr. Deming: “Motivation”(Ch.4)
2:40 -Break-
Leadership and Management of People (Ch.5-6)
4:00 Working Group Session
5:00 Stop

09/19/13 4
DAY 3 (Wednesday, October 15)
8:00 a.m. Reports of Working Groups
9:00 -Break-
9:15 API Model for Improvement: PDSA (Ch.6)
Prediction Game
10:40 -Break-
11:00 Dr. Deming: “Education” (Ch.6)
12:00 -Lunch-
1:00 Dr. Deming: “Shewhart and Control Charts” (Ch.8)
2:40 -Break-
3:00 Dr. Deming: “Common Causes of Accidents” (Ch.8)
4:00 Stop

09/19/13 5
DAY 4 (Thursday, October 16)
8:00 a.m. Review of Day 3, questions
Dr. Deming: “The Funnel Experiment” (Ch.9)
9:00 -Break-
10:40 -Break-
11:00 Dr. Deming: “Some Lessons in Variation” (Ch.10)
12:00 -Lunch-
1:00 Remarks on Service Industries
Common misunderstandings of Deming’s philosophy
1:45 Memories of Dr. W. Edwards Deming
2:00 Reflections of Seminar
2:30 Close

09/19/13 6
1.0 Overview of Seminar
What topics would you really be
disappointed if we did not cover them
by Thursday afternoon?

09/19/13 7
1.1 Quality and the customer
• Where do customer expectations come from?
• Will happy and loyal customers ensure business
success?
• Will zero defects keep you in business?
• What is the source of innovation?
• Who in an organization is responsible for the
quality of a product or service that the organization
produces?

09/19/13 8
1.1 Quality and the customer
1. Where do customer expectations come from?
1. The company: “customers never asked for TV, etc”
2. Will happy and loyal customers ensure business success?
1. No – look to the future! Duties of a leader. Carburetor example
2. Example: typewriters
3. Will zero defect keep you in business?
1. No. Pg. 11 & 13
4. What is the source of innovation?
1. Employees of company, supplier, study customer.
5. Who is an organization is responsible for the quality of a
product or service that the organization produces?
1. Top management is responsible for the system, so they have to
decide.

09/19/13 9
1. A person’s performance on the job is
largely under his or her control
2. Weaknesses of an individual that are
identified by the appraisal system can
be remedied by the individual
Strongly
disagree
Disagree Agree Strongly
Agree
Strongly
disagree
Agree
1.2 Some Assumptions

09/19/13 10
3.Everyone has a need for recognition
4.Judging people is not harmful to them
Strongly
disagree
Agree
Strongly
disagree
Agree

09/19/13 11
5.Competition will improve performance
6.All variation (in a measure) can be
explained
Strongly
disagree
Agree
Strongly
disagree
Agree

09/19/13 12
1.3 Dr. Deming: “The Heavy Losses”
x + [yx] = 8
Where:
x = contribution of the individual
y = contribution of the system
yx = effect of the system on his performance
8 = performance of the individual
Small Group Discussion:
Give some examples of jobs where
1. x = 0 (or close to 0)
2. yx = 0 (or close to 0)

09/19/13 13
1.3 Dr. Deming: “The Heavy Losses”
Discuss the pros and cons of the present
practice of “Setting numerical goals”

09/19/13 14
Appreciation of a system
• Strong relationships with vendors and
distributors
– Supplier and customer working together as a
system continuously

09/19/13 15
1.4 Introduction to a System
A system is a network of interdependent components that
work together to try to accomplish the aim of the system.
Properties of a system include:
• A system must have an aim. The aim is a value judgment.
• A system must be managed. It will not manage itself. If
components are left alone, they will tend to optimize
themselves.
• Optimization of the components does not optimize the whole
(because of interdependence).
• The larger the system, the more difficult it is to manage.
• A system cannot understand itself. Help must come from
outside the system.
• The performance of a system depends more on how its
components interact than how they act independently of each
other

09/19/13 16
Suppliers of
Raw Materials
A
B
C
D
E
F
G
Consumer
research Consumers
Distribution
Test of processes,
machines, methods,
costs
Production, assembly, finishing, inspection
Receipt and
test of
Materials
Design
and
Redesign
1.4 Deming’s view of
Production as a System (1950)
Aim
Stage 0:
Generation
of ideas

09/19/13 17
Evolving View
• Deming (1950) - anything by this author
• Senge (1990) The Fifth Discipline and Fieldbook
• Margaret Wheatley (1992) Leadership and the New Science
• Russell Ackoff: Recreating the Corporation: A Design of
Organizations for the 21st Century (1999)

09/19/13 18
Whole consisting of two or more parts that satisfies the following
five conditions:
(1). The whole has one or more defining properties or functions.
(2). Each part in the set can affect the behavior or properties of the
whole.
(3). There is a subset of parts that is sufficient in one or more
environments for carrying out the defining function of the whole; each of
these parts is necessary but insufficient for carrying out this defining
function.
(4). The way that each essential part of a system affects its behavior or
properties depends on (the behavior or properties of) at least one other
essential part of the system.
(5). The effect of any subset of essential parts on the system as a whole
depends on the behavior of at least one other such subset.
Ackoff’s Definition of System

09/19/13 19
Properties of a System (Ackoff)
System is a whole that cannot be divided into
independent parts without loss of its essential
properties or functions
When the performance of the parts of a system,
considered separately, are improved, the
performance of the whole may not be (and usually is
not) improved.

U.S. Fishing Industry - New England Waters

Profitability Brings High Tech Foreign Competition

U.S. Fishing Industry Lobbies
•Low interest loans to upgrade
technology
•Better enforcement of
international borders

Results
• Help U.S. industry be
more competitive by
equipping them with
better technology and by
better border
enforcement
• Increased yields and
profitability
• Low interest loans attract
additional entry into the
U.S. fishing industry
• Waters become more
crowded with better
equipped ships
• Decreased yields and
profitability
Intended Unintended

USG to the Rescue Again
Solutions:
1. $Incentives$ to EXIT the Industry
2. Sink ships to create artificial reefs - fertile breeding
ground for fish

Sales blitz
1.5 Sub-optimization of a System
Design
and
Redesign
Consumer
researchSuppliers of
Raw Materials
Receipt and
test of
Materials
Consumers
Distribution
Test of processes,
machines, methods,
costs
A
B
C
D
E
F
G
Stage 0:
Generation
of ideas

Point of View of Salesperson
Quota
Quality?
Com
m
ission Hawaii
Impact on
Organization?
Impact on the
Customer?

09/19/13 27
MBO’s Create Local Optimization and Supplant
the Aim of the Organization; Customer often
Gets Lost
• Credit dept: days outstanding
• Division managers: division P&L
• Marketing: Sales vs forecast
• Sales: Gross profit dollars, quotas
• Manufacturing: Quality
• Operations: On time delivery

09/19/13 28
Design
and
Redesign
Consumer
Raw Materials
Receipt and
test of
Materials
Consumers
Distribution
Test of processes,
machines, methods,
costs
A
B
C
D
E
F
G
Stage 0:
Generation
of ideas
Aim
Supplanted Aim Distorts Effort within the Organization
“Does anyone give
a hoot about making
a profit?”

09/19/13 29
“Does anyone give a hoot
about making a profit?”

09/19/13 30
1.6 Deming’s view of
Production as a System (1994)
Design
and
Redesign
Consumer
Raw Materials
Receipt and
test of
Materials
Consumers
Distribution
Test of processes,
machines, methods,
costs
A
B
C
D
E
F
G
Stage 0:
Generation
of ideas

09/19/13 31
1.6 Advantages of viewing your organization as
a system
The diagram directs the knowledge of the organization
to the aim of the system, geared to the market
• The built-in cycle to design and redesign allows the
organization to develop new products and services
• The diagram shows people what their jobs are and
how they should interact with on another as part of a
system
• The diagram makes it possible for managing the
components as a system toward achievement of the
stated aim (optimization)

09/19/13 32
• What? Products and services,
Processes and systems
• Why? To better match the present &
future needs of the consumers
• Methods?
– Plan for improvement
• Integrate with business planning
• Develop objectives, establish charters
– Manage improvement efforts
• Provide guidance, remove obstacles
• Redirect & redeploy resources
Stage 0:
Generation
of ideas
Design
and
Redesign
Consumer
research
The drivers of the system
• What? Communication and
feedback between the
manufacturer and users
and potential users of
the product or service
• Methods?
– Sampling and design of
experiments
– Art of questioning and
interviewing

09/19/13 33
Deming on Stage 0:
Generation of ideas (1994)
“The 0-th stage is the foundation for the
whole project. The 0-th stage is the place
for ideas and brainstorming, to avoid so far
as possible changes in direction and
backtracking in later stages. Changes in
direction cost more and more with each
stage”
(Chapter 6 on Management of People)

09/19/13 34
Stage 0: Generation of Ideas
Why?
Deming (1994): “…it is necessary to
innovate, to predict the needs of the
customer, give him more. He that
innovates and is lucky will take the
market.”

09/19/13 35
Stage 0: Generation of ideas
By What Method?
• Change Concepts
• Using Technology
• Critical Thinking
• IDEO Brainstorming
• Metaphorical Thinking
• Observation of customers and users
• Provocation
• Prototyping
• Idealized Design

09/19/13 36
WORKING GROUP SESSION
Stage 0: Generation of ideas
• Using the method of observation at a Las
Vegas hotel, generate some new ideas for
design or redesign of:
– A) Hotel registration
– B) Gambling at a casino
– C) Service at a restaurant
– D) All of the above
• Report out at 8 am tomorrow

09/19/13 37
2.1 A System of Profound Knowledge

09/19/13 38
A System of Profound
Knowledge
• Is
– A contribution to the emerging paradigm in the
sciences and in business
– Deming, Senge, Argyris, Ackoff, Schein,
Wheatley, Capra …………….
• Is NOT
– SPC, Quality Circles, self-managed teams, re-
engineering, TQM, ISO 9000

09/19/13 39
W. Edwards Deming
• 1900-1993
• Humble beginnings
• 1960 - Second Order of the Sacred Treasure -
Emperor Hirohito
• Deming Prize
• 1980 - “If Japan Can, Why Can’t We?”
• 1986 - Science and Technology Hall of Fame
• 1987 - National Medal of Technology - Reagan
• 1988 - National Academy of Sciences -
Distinguished Career in Science

09/19/13 40
What Was Deming Aiming for?
The aim of this book is a transformation of
the style of American management . . . Not
a job of reconstruction, nor is it revision.
It requires a whole new structure, from
foundation upward.
Mutation might be the word, except that
mutation implies unordered spontaneity.
Transformation must take place with
directed effort.
Out of the Crisis (1982, 1986)

09/19/13 41
The New Economics
• This book is for people who are living
under the tyranny of the prevailing style of
management . . . (which has) led us into
decline.
• Most people imagine that the present style
of management has always existed, and is
a fixture. Actually, it is a modern invention
- a prison created by the way in which
people interact.
• The Route to transformation is what I call
Profound Knowledge.

09/19/13 42
The New Economics
• The aim of this book is to start the reader
on the road to knowledge, and to create a
yearning for more knowledge . . .
• 97% of the gains have not yet been
realized

09/19/13 43
Deming’s View of his Legacy
When asked how he would like to be
remembered, Deming replied:
“I probably won’t even be
remembered . . . Well, maybe . . . As
someone who spent his life trying to
keep America from committing suicide.”

Reaching Limits of Progress with
Current Way of Thinking
The present system
limits performance
and has put us into
decline
Transformation
makes possible new
levels of
performance

09/19/13 45
Reaching Limits of Current
System
• Learn faster - prepare for a future that cannot be
predicted
• Be more sensitive to environmental change and
respond faster
• Encourage innovation
• Access employees’ intelligence and commitment
• Increasingly demanding customers
• From - Cheaper better faster
• To - Free, perfect, now
• To - Anything, anywhere, anytime

09/19/13 46
Deming’s Organization
• People are able to learn and are willing
to contribute that learning
• Organization is able to benefit from that
learning
• Organization can respond and adapt
quickly to changes in the environment

09/19/13 47
Paradoxical Proverbs -
Waitley
• You must learn from your past mistakes,
but not learn on your past successes
• You must stick to your convictions, but be
ready to abandon your assumptions
• You must continue to gain expertise, but
avoid thinking like an expert
• You must act self-employed, but be a team
player
Dennis Waitley, Empires of the Mind: Lessons to Lead and Succeed in a
Knowledge-Based World

09/19/13 48
Deming: Progress by
Reconceptualizing World View
• The way we see the world
determines how we manage
• If we expand our understanding of
the world, we can change the way we
manage, and change the course of
our nation - jump into a new age

09/19/13 49
Deming Worked on the
Individual
• “What do you do?”
• Attempt to uncover world view
• Aim: begin reflection in the
individual; first step in opening up
thought process; get to level of
assumptions
• “Need we proceed in ignorance?”

09/19/13 50
“We have a lot to learn”
• What passes for knowledge cannot
be looked at outside of the context of
assumptions and value systems that
generated it
• Knowledge develops within a system
of beliefs, values, assumptions
• “We have a lot to do. Let’s do some
thinking.”

09/19/13 51
Organization
• Includes the set of assumptions under
which the organization operates as
well as the systems, work processes,
and management practices built on
those assumptions

Aspects of Organization
Culture, paradigms,
assumptions, beliefs, values
Systems
• people
• work
• management
Behaviors, methods,
practices
Economic
social
political
environment

What is this concept called
“wet?”

09/19/13 54
Newtonian/Cartesian/Machine View of
World
• Developing since 17th century
– Galileo, Newton, Descartes, Bacon, Darwin
• Many gifts
– Man on the moon, food supply, atomic energy,
life span, medicine, mass production,
management system
• Some unintended effects
– Acid rain, ozone hole, nuclear bombs,
starvation in spite of improved agriculture,
deforestation, drop out rate, crime

Facets of Machine-View of
World
• Galileo (1564-1642)
– Science should be restricted to what could be
measured or quantified or put into mathematical
terms - should not rely on logic alone
• Descartes (1596-1650)
– Separation between mind and matter
– Analysis: anything can be understood by
reducing it to its constituent parts
– Material Universe is a perfect machine, governed
by exact mathematical laws
– Scientific knowledge should be used to render
ourselves masters and possessors of nature

Facets of Machine View of
World
• Newton (1643-1727)
– General laws of motion govern objects in the
universe; events can be understood without
reference to the environment
– Picture of the world as a perfect machine
(Descartes)
• running according to Newtonian laws of motion
• Completely deterministic
• Future can be predicted with absolute certainty
• All that happens has definite cause and effect

09/19/13 57
These ideas applied to
Organizations
• Organizations are machines that serve the
owner’s purpose
• Machines are more reliable than people as
sources of energy to do work; people assigned
tasks that cannot be mechanized
• People are poor substitutes for machines
• Managers’ job is to ensure results; enforce
rigorous rules
• Any results that deviate from the expected are to
be punished
• MBO - manage complex organizations by
breaking them into parts

09/19/13 58
Systems View
• World is evolving and dynamic
• Whole cannot be understood in terms of
its parts
• Systemic properties destroyed when
system is broken up into isolated
elements
• Structure arises from interaction of parts
• Interrelatedness of body and mind;
physical, biological, psychological, social,
cultural.

A System of Profound Knowledge
Appreciation for a System
• Interdependence, dynamism
• Non-linear cause and effect
Knowledge of Variation
• World is not deterministic
• Variation is to be expected
• Prediction - analytic studies
• Measurement is not objective
Theory of Knowledge
• Theories are not true or untrue; they are useful or
not
• Theory and experience are needed to learn
Knowledge of psychology
• Interaction between people
• Motivation
• Change

System of profound knowledge Ch4
the system of PK provides a new map of theory by which to understand
and optimize the organization that we work in and thus to make a
contribution to the whole country. – W.E. Deming, The New Economics
• Elements of the
system of profound
knowledge
– Appreciation for a
system
– Knowledge about
variation
– Theory of knowledge
– Psychology
Appreciation
for a system
Theory of
knowledge
Knowledge
about variation
psychology
benchmarking

09/19/13 62
2.3 Lessons from the red bead experiment
1. What information do you need to set the price
of white beads?
2. How could the “White Bead Factory” have
stayed in business? How do you know?
3. What is the difference between mechanical and
random sampling?
4. What is meant by "the results will not change if
we follow the same procedure?"
5. What was the impact of the manager?
6. What were the manager’s theories about
performance improvement?

09/19/13 63
2.5 Leadership and
Management of People

09/19/13 64
Job of a Leader
1
2
Leaders work to improve the systems that they manage,
not just analyze and dissect the results of the past

09/19/13 65
Ranking vs. Improvement
1
2
1
Ranking
Focus on individual
results within the
system
Improvement
Focus on cause
system to improve
performance
Does ranking help improve performance?

09/19/13 66
Deming on ranking . . .
In place of judgment of people, ranking them,
putting them into slots (outstanding, excellent, on
down to unsatisfactory), the aim should be to
help people optimize the system so that
everybody will gain

09/19/13 67
What may happen when people are
asked to reach a goal that is outside
the current system?
• People tend to do what makes sense to
them:
– Improve the process so that the goal is
achievable
– Distort the process to achieve the goal
– Fudge the numbers

goal
UCL
LCL
People material methods
equipment environment

09/19/13 69
Another look at Ranking and Rating
Do they help achieve the aim?
• Shift focus away from aim and from serving the
customer
– Is the job to get a good rating?
– What about the customer?
• Demotivating
• In a world of limited time, is this the best way to
spend it?

09/19/13 70
Job of a Leader
A
B
•Identify and remove obstacles to the organization
working as a system, serving the customer, and making a
profit
•Continuously enhance the conditions that would permit
people to learn and be willing and able to contribute their
knowledge and energy to the organization

09/19/13 71
Deming on People
• “Precious gems”
• Dignity, self-esteem: bedrock of
creativity and joy in work
• People have intrinsic motivation
• People like to learn
• Right to “Joy in learning, joy in work”
• Sources of creativity

09/19/13 72
“We have been destroying our
people, from toddlers on though
university, and on the job”
Forces of Destruction Diagram, p122

Forces of destructions (p.122)
Life beginsLife begins Life endsLife ends
Suboptim
iztion.Every
group,
Suboptim
iztion.Every
group,
every
division,a
profitcenter
every
division,a
profitcenter
Explanation
ofvariance
Explanation
ofvariance
Num
ericalgoals
Num
ericalgoals
withouta
m
ethod
withouta
m
ethod
Incentive
pay.
Incentive
pay.
Pay
forperform
ance
Pay
forperform
ance
M
eritsystem
.Judge
people,
M
eritsystem
.Judge
people,
Putthem
into
slots.
Putthem
into
slots.
Com
petition
Between
Com
petition
Between
people,groups,divisions
people,groups,divisions
Forced
distribution
ofgrades
Forced
distribution
ofgrades
In
schools.G
old
stars.
In
schools.G
old
stars.
These forces cause humiliation, fear, self-defense,
competition for gold star., high grade, high rating on
the job. They lead anyone to play to win, not for fun.
They crush out joy in learning, joy on the job,
innovation. Extrinsic motivation (complete resignation
to external pressure) gradually replaces intrinsic
motivation, self-esteem, dignity.One is born
with intrinsic motivation,
self esteem, dignity, cooperation,
curiosity, joy in learning. These attributes are high at
the beginning of life, but are gradually crushed by the
forces of destruction.

09/19/13 74
Human Relationships
• Must be informed; understand aim and
how they fit in
• Cooperation, participation, trust;
organization needs everyone’s mind and
heart
• Leadership through knowledge and
influence throughout organization; formal
power may be needed occasionally but
should be used sparingly
• Education and development of people
crucial to organization’s ability to learn
and adapt

09/19/13 75
What kind of work is suited to
human beings?
• Humans must have a chance to take
pride in their work
– Must know the context of the work they
do and agree the contribution they make
is worthwhile
– Must have a chance to be creative, have
some discretion, choice (Edelman)

09/19/13 76
WORKING GROUP SESSION
A. Review the 14 points of Dr. Deming in Chapter 2 of
“Out of the Crisis.”
1. What are your 14 points are for today’s world? Why?
2. Which of your 14 points will still be around in 2020?
Why?
(What will work look like in 2020?)
B. Review the deadly diseases of Dr. Deming in
Chapter 3 of “Out of the Crisis.”
1. What are your deadly diseases for today’s world?
Why?
2. Which of your deadly diseases will still be around in
2020? Why?

09/19/13 77
Working Group Session 2 (October 16, 2002)
Which of your deadly diseases will still be around in 2020? Why?
1. Lack of constancy of purpose
2. Emphasis on short-term profits
3. Annual performance review
4. Mobility of management
5. Running a company on visible figures alone
• Failure to honor people
• Erosion of Ethics
• Lack of spirituality

09/19/13 78
3.1 PDSA and Responsibility

What are we trying to
accomplish?
How will we know that a
change is an improvement?
What change can we make that
will result in improvement?
Model for Improvement
Act Plan
Study Do

09/19/13
Fundamental Questions for
Improvement
• What are we trying to accomplish?
• How will we know that a change is an
improvement?
• What changes can we make that will
result in an improvement?

09/19/13
The PDSA Cycle for Learning and
Improvement
Act
• What changes
are to be made?
• Next cycle?
Plan
• Objective
• Questions and
predictions (why)
• Plan to carry out the cycle
(who, what, where, when)
• Plan for data collection
Study
• Complete the
analysis of the data
•Compare data to
predictions
•Summarize
what was
learned
Do
• Carry out the plan
• Document problems
and unexpected
observations
• Begin analysis
of the data

09/19/13
Use the PDSA Cycle for :
• Developing a change
• Testing a change
• Implementing a change

09/19/13 83
Sequential Building of knowledge Include a
Wide Range of Conditions in the Sequence of
Tests
Breakthrough
Results
Theories,
hunches,
& best practices Learning and improvement
A P
S D
Evidence &
Data
A P
S D
A P
S D
A P
S D
Develop a change
Test a change
Test new conditions
Implement
a change

09/19/13
What are we trying to accomplish?
Create a “revolutionary product” by using a new
technology
How will we know that a change is an
improvement?
Application of this new technology is given by
solving a number sequence
What changes can we make that will result in an
improvement?
Don’t know the number sequence!
3.1 Exercise

09/19/13 85
Prediction Game:
Application of the PDSA Cycle
• Teams start with $50,000
• Purpose of the game is to predict the
number sequence
• Teams have three options for their plan:
1. Develop a change (gather more information)
2. Test a change
3. Implement a change

09/19/13 86
Prediction Game
You are bankrupt if your losses exceed $50,000!

09/19/13 87
Prediction Game
Options: Cost Gain
1. Develop a change $1,000
(gather more information)
2. Test a change $2,000
(predict the next number)
If prediction is correct $6,000
If prediction is off by 1 ($3,000)
If prediction is off by > 1 ($6,000)
3. Implement a change $5,000
(predict all numbers)
If prediction is wrong ($40,000)

09/19/13 88
1, 2
Options: Cost Gain

09/19/13 89
1, 2, 3
Options: Cost Gain

09/19/13 90
1, 2, 3, 6
Options: Cost Gain

09/19/13 91
1, 2, 3, 6, 7
Options: Cost Gain

09/19/13 92
1, 2, 3, 6, 7, 8
Options: Cost Gain

09/19/13 93
1, 2, 3, 6, 7, 8, 21
Options: Cost Gain

09/19/13 94
1, 2, 3, 6, 7, 8, 21, 22, 23, 66, 67,
68, …Options: Cost Gain

09/19/13 95
Prediction Game:
Application of the PDSA Cycle
• Planning requires prediction
• Prediction requires a theory
• A single observation may require us to
modify our theory
• Multiple PDSA cycles can accelerate
the learning process
• Choice of plan depends on our “degree
of belief” about the change

09/19/13
Act
• What changes
are to be made?
• Next cycle?
Plan• Objective
•Improve the process
• Questions and predictions (why)
•Cycle time improvement from 20 min
avg queue waits for 150 people through
15 queues.
• Plan to carry out the cycle (who, what,
where, when, how?)
•Manual simulation (use mockups)
• Plan for data collection
•Use pre-registration via other means
•Identify sample number (7) (due to the
nature of the existing system)
Study
• Complete the analysis of the data
•Compare data to predictions
•Summarize what was learned
Do
• Carry out the plan
•Populate representative databases
• Document problems and unexpected
observations
•Insert card correctly, dbase could be
wrong, machine failure possibility
• Begin analysis of the data
•Take stop watches and measure time
of 7th
person. Divide by 7, multiply by
150.

09/19/13 99
Peter Senge Video (learning organizations)
http://www.fieldbook.com/FDF/FDF.html
http://www.josseybass.com/WileyCDA/Section/id-101959.html
• The 5th
Discipline (give me a lever long enough and I
can move the world)
– Leg of stool:
• aspiration
– Policy decision vs. the system
– S Africa: a person exists in relationships
– Zulu greeting: I see you
– You can be sure that fish in a fishbowl don’t talk about water.
– “our prevailing system of management…”
– School and work are the same institution
– Kids learn that:
• “school is about performing for approval!”
• Also learned by mistake
• Student/teacher relationship is similar to employee/boss relationship
• Video games: bad guy is sometimes called the boss.

09/19/13 100
Peter Senge Video (cont.)
– No standardized measures for cost control at Toyota, Ford spent most of
its time measuring components to check on the system
– “Zero to landfill” program (only 3% to landfill). This has saved major cash
to the company.
– The “machine” isn’t self controlled/maintained. School is totally patterned
after an assembly line. Ex: why K-12? Where did the idea of stupidity
come from? Are you stupid because you can’t keep up with the pace?
– “No one really understood that you really understood but when you
understood, you understood!”
– Everything is speeded up
– Nature doesn’t quantify, nature’s model of intelligence is awareness of
where things stand.
– Measuring is SECONDARY to learning.
– We’ve almost convinced the species that what’s most REAL is
MEASURABLE.
– Love, inspiration, and persistence can’t be measured – we can create
measures for them but that’s meaningless.

09/19/13 101
Peter Senge Video (cont.)
– “thought shape reality” physicist said.
– People in malls aren’t smiling much but most people in huts do. Tribal organizing
has been around for a while.
– “we have to go upstream!” Deming
• Focus on reinventing the process of education or there is no hope.
• Learning Organization
– He still hadn’t seen one. Some companies and schools had gone down the wrong
paths to be learning organization
– Deep rhythm that transforms institutions
• Team and communities
• Team is a group of people who get together to get s/t done
• Communities aren’t abstract, they’re real (he talks about Visa International) as the
largest market cap company that isn’t actually a system.
– Talks about a program that no instructor – kids actually worked well together and
they actually tested well
– Kids actually arguing about work!
– Teacher wanting control is bad. ASK ABOUT LEADERSHIP
– Parents, political apparatus, and the kids are all part of the community!
• What meetings to the kids attend? Etc. Aktay is producer.

09/19/13 102
America 2000 Assignment (p. 45)
• P. 16 Whatever their approach, all new American schools will be
expected to produce extraordinary…
• What questions would you now ask to the people setting these
goals?
– What is the Aim?
– What is the benchmark that will rate:
• Learning
• extraordinary
– What is the gap between current and benchmark
– What resource are required to close/address the gap
– How do you know when you’ve succeeded
– Who will it be sustained
– When do expect result?
• What suggestions might you make in terms of methods?
– Apply PDSA! S: study existing system?
– What will the pilot group consist of?
– How widespread is the pilot group?
– What is the methodology of the pilot group?

09/19/13
4.0 Exercise
Using the lens of profound knowledge,
how do we see:
• The red bead experiment
• The practice of benchmarking
• The practice of rating and ranking
employees

09/19/13 104
The first step is the transformation of the individual . . .
Once an individual
understands new knowledge,
he will apply it in every
interaction with people. He
will perceive new meaning to
his life, to events, to numbers,
to interactions between
people.
W. Edwards Deming

09/19/13 105
Appendix: Changing Our
Minds

09/19/13 106
Nida’s (post profound knowledge)
• FAA experience as a consultant
• Swart’s book on facilitation by creating
different types of interaction between
human beings (ref. D’s prism idea)
• Looked at patterns of humans in terms
of interaction

Current
State
Possible
State
Changing from . . . To . . .

Two primary modes of thought have
been distinguished
Process
Thinking
Reflective
Thinking
Using what we already know
to be true, to make sense of
and understand the world, so
that we may take action that is
appropriate and consistent
with what we already know
Suspending what we already
know to be true and using
openness and curiosity
regarding the world to explore,
learn and gain new insights,
ideas and experiences

09/19/13 109
Faced with the choice between changing one’s mind
and proving that there is no need to do so, almost
everybody gets busy on the proof.
- John Kenneth Galbraith

09/19/13 110
Process Thinking Reflective Thinking
 Rigid reality
 Deliberate processing of data
 Bound by memory
 Automatic, conditioned and
habitual
 Controlled and self-confirming
 Past and future focus
 Functional for known variables
 Dynamic reality
 Open exploration of data
 Accesses memory + wisdom
 Reflective, unconditioned and
intuitive
 Uncontrolled and new
 Present focus - “in the moment”
 Functional for unknown variable
Process and Reflective Thinking can be
compared

09/19/13 111
Thought is at the base of human experience and
that
Thought leads to Feelings, Behaviors and
ultimately Results
Thinking
Internal
External
Feelings
Behaviors
Results
GUNN PARTNERS
© 2002

09/19/13 112
Results
Feelings
Behaviors
Thinking
• Activation of one’s neurons and cells
• Transformation of raw data into information
• Generation of beliefs, assumptions, etc.
• Includes knowledge and skills
• Actions that are taken in response to
Thinking and Feelings
• Outward verbal, physical and emotional
expressions and manifestations of the
combination of our Thinking and
Feelings
• Physiological reactions to Thinking
• Physical manifestations that are
experienced within one’s body
• The observable and often measurable
consequences of one’s Behaviors
• The ultimate outcome of one’s Thinking,
Feelings and Behaviors
The domains of the Thinking Path can be
defined in the following manner
GUNN PARTNERS
© 2002
Rein forcers
• The people, places and
things in the external
environment that
support and sustain the
Thinking Path
• The internal states of
the individual that
support and sustain the
Thinking Path

09/19/13 113
The Current/Possible States Log
• If I do not speak, there is a strong chance
that what I wanted to say will be said
• I will get a chance to share my thoughts
• Everyone cares about what
others have to say
• Conversations are driven to their logical
end one by one
• No interruptions + use of 3-second rule
• Reflective listening is employed
• Statements begin with liaisons
• Team meetings accomplish their
objectives as conversations are effective
and well managed
• Team members enjoy working with
each other
Thinking
Feelings
Behaviors
Results
Current State Possible State
• Team meetings often do not accomplish
their objectives due to lack of structure in
the conversations that drag on
• Team members are frustrated with and
cynical about working with each other
• Piling on issues during a conversation
• Frequent interruptions
• Listening not actively practiced
• Most statements begin with ‘no’ or ‘but’
• Anxious to speak and get a word in
• Uncomfortable letting the same
individuals always speak
• Angry that no one will listen
• If I do not jump in, no one will listen to me
• Every one thinks their point of view is best
an must defend their opinion to succeed
• No one cares about what others think
• Curious about the conversation
• Honoring what others are saying
• Assured that voice will be heard
GUNN PARTNERS
© 2002

09/19/13 114
Thinking
Feelings
Behaviors
Results
Current State Possible State
GUNN PARTNERS
© 2002
Current/Possible States Table
Sharing and Structuring

09/19/13 115
Observable Data
And Experience
I select data
I add meaning
I make assumptions
I Draw Conclusions
I adopt beliefs
I Do or Do Not Take Action
The Ladder of
Inference
Reflexive
Loop
Available
data

09/19/13 116
C#1
C#2
C#3
E#1, short
E#2, short
E#3, short
E#1, long
E#2, long
E#3, long
C#4
C#6
C#5
We can begin with the same data available, but our theories
and assumptions guide us to select a subset that fits them.
Available
data
Beliefs
Select
data
Interpret
data
Draw
conclusions

09/19/13 117
Available
data
Beliefs
Select
data
Interpret
data
Draw
conclusions
When testing inferences, stay LOW on the ladder . . .
Usual level
of debate
Suggested level
of conversation

09/19/13 118
“What are we
disagreeing on?”
“What is your
thinking on this
matter?”
“Is my interpretation
‘x’ of what you said,
what you meant?”
“What are the
facts behind what
we are talking
about?”
“Can you run
me through your
reasoning?”
“What are the
assumptions behind
what you’re saying?”
“How did you
interpret the
event?”
“What are
your beliefs
on the matter?”
In the Reflective Thinking, we can ask others certain
questions

09/19/13 119
“What beliefs am
I holding on to?”
“What could I
stand to learn?”
“What else could
be possible here?”
“Do I know what
the facts are?”
“What am I
feeling
right now?”
“What thoughts
are driving
these feelings?”
“What caused
these thoughts
to occur?”
“What
assumptions
am I making?”
In the Reflective Thinking, we can ask OURSELVES
Questions

09/19/13 120
Argyris: Unilateral Control Model
• Most people act with these core values
and assumptions (theories in use)
– Achieve my goal through unilateral control
– Win, don’t lose
– Minimize expressing negative feelings
– Act rationally
– I understand the situation; those who see it
differently do not
– I am right; those who disagree are wrong
– I have pre motives; those who disagree have
questionable motives
– My feelings are justified

09/19/13 121
• Which lead to the following strategies:
– Advocate my position
• “I am my position” -- Senge
– Keep my reasoning private
• We tend not to ask others about their reasoning
– Don’t ask others about their reasoning
– Ease in
– Save face

09/19/13 122
• Which lead to the following consequences:
– Misunderstanding, conflict, and defensiveness
– Mistrust
– Self-fulfilling, self-sealing processes
– Limited learning
– Reduced effectiveness
– Reduced quality of worklife

09/19/13 123
Argyris and Schwarz: Proposed
New Values and Assumptions
• I have some information; others have
other information
• Each of us may see things that others do
not
• Differences are opportunities for learning
• People are trying to act with integrity,
given their situation
• Valid information
• Fee and informed choice
• Internal commitment
• Compassion

09/19/13 124
Proposed New Strategies
1. Test assumptions and inferences
2. Share all relevant information
3. Use specific examples and agree on what
important words mean
4. Explain your reasoning and intent
5. Focus on interests, not positions
6. Combine advocacy and inquiry
7. Jointly design next steps and ways to test
disagreements
8. Discuss undiscussable issues
9. Use a decision-making rule that generates the
level of commitment needed
Excerpted from Roger Schwarz, The Skilled Facilitator

09/19/13 125
Argyris and Schwarz: Potential
New Outcomes
• Increased understanding, reduced conflict
and defensiveness
• Increased trust
• Fewer self-fulfilling, self-sealing
processes
• Increased learning
• Increased effectiveness
• Increased quality of worklife
• Possibility for change

09/19/13 126
Shewhart and control charts (Ch.8)
• Common causes and special causes
• Two mistakes
– Minimize net economic loss of the two kinds of mistake was
Shewhart’s objective
• Stable and unstable systems
• Capability Vs. stability
– Meeting specifications (bead experiment: no more than 5
was spec)
– The bead experiment was a stable system but not a capable
system
• Shewhart control chart
– Plotted over time, a measure
– Run chart with control limits
• Shewhart set his control limits based on economic loss
• GM used to just draw lines around variations

09/19/13 127
Why distinguish between common
and special cause variation
• Different management approaches

09/19/13 128
Common cause variation
• Variation is due to process/system design
• Produced by interaction of inherent
variables in process
• Causes affect everyone working in
process and all outcomes of process
• Process having only common causes
affecting the outcome is called stable
– Performance is predictable

09/19/13 129
S control charts action on a signal
of a special causes:
• Immediately try to understand when
special cause occurred
• Study what was different when special
cause occurred
• Identify ways to prevent or use it

09/19/13 130
The funnel (ch. 9)
See page 190

09/19/13 131
Service comp
• Non-visibility
• No inventory
• More flexibility in delivering quality
• Challenge is to do work right 100%
• Manuf brags about 2% yet airline never
brags about crashing 2% of time. Service
can’t advertise its defects

09/19/13 132
Extrinsic Motivation
• Report on 1st
day of class to parent
– Report cards
• “doesn’t get along well with others”
• “unsatisfactory”
• Kids ask a lot of questions when they’re young. We lose
that curiosity as we get older
• This stays with us when we work as we focus on
performance reviews
• Boeing: closest thing to a learning organization, Bellos,
in Canoga Park.
• Lots a companies are adopting this model but they’re
keeping it quiet so as to avoid subversion.

09/19/13 133
Dr. Orsini
• Improvement
– Product/service
• customer
– Process
• Employees
• Innovation
– Product/service
– Process

09/19/13 134
RFP
• Paper example
– White #37
– 20% moisture
– Etc.
• 3 bids
– A, B, C co submit bids
– Lowest price gets it
• This does NOT guarantee quality or benefit in the long
term
• Company needs to work with supplier to understand the
manufacturing and development for the long term.
• Incentive is to service company well in the long term.

09/19/13 135
Manufacturer, assembly production
and steel supplier
• Car company wants manufacturer and dist to
share ideas on production cost savings
– Manufacturer asks why car co wants 30+ diff types of
steel for the door
• Maker explains safety standards
– Manufacturer explains that producing diff types of
steel costs more because they cant use economies of
scales. Solution was to buy thicker steel to meet
standards and help cut cost my large margins.
– Production team asks why edge of door is at existing
angle because lesser angle helps production team fit
door in better so as to ease with the install of the door
and help reduce the amount of leaks in the car
• Maker explains

09/19/13 136
Deming’s 14 points
• Metaphor
– Long strand of spaghetti on a plate
– Twirl fork and find out that you have the whole
thing
– That’s the 14 points – or nothing.

2003 Deming Institute PowerPoint Slides

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