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Henry NeaveOrganization as a system. Edwards Deming's Principles for Building a Sustainable Business. Henry Neave - Organization as a system. Principles of building a sustainable business by Edwards Deming Organization as a system principles of building a sustainable business

Henry Neave

Organization as a system. Edwards Deming's Principles for Building a Sustainable Business

Translation Y. Rubanik (ch. 1–18), Y. Adler and V. Shper (ch. 19–32)

Scientific editors Y. Adler, Y. Rubanik, V. Shper

Editor M. Burdina

Production editor S. Turco

Technical editor N. Lisitsyna

Corrector I. Golubeva

Computer layout A. Abramov

Cover artist E. Syrokvashina

All rights reserved. No part of the electronic version of this book may be reproduced in any form or by any means, including posting on the Internet or corporate networks, for private or public use without the written permission of the copyright owner.

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Preface to the Russian edition

This book is addressed mainly to the top executives of companies. In a very interesting and accessible form, the fundamentals of the management philosophy of the great American, Dr. William Edwards Deming, who is also called the father of the Japanese economic miracle, are set out here. It was from Deming's lecture to representatives Japanese business in 1950, an unprecedented ascent of a country, previously backward and in ruins after defeat in World War II, began to rise to the heights of a new business system.

Deming’s own books are difficult to read; he expressed his thoughts in a complex manner, and his works have not yet had much luck with translation into Russian. Henry Neave, a talented popularizer, actually made Deming's teachings truly accessible to the mass reader.

Henry Neave's book is a challenge to the first person. The reader will discover a world of management that is fundamentally new for Russia, so unusual for us, for our mentality, that many will want to simply put the book down. Don't do this. Get over yourself. Read to the end. If you do this, then you still have a chance to build a company that can be globally competitive. By putting the book down, you are depriving yourself of this chance.

Today we can rightfully say that almost all thriving corporations and firms, to one degree or another, use elements of the Japanese management model, which is based on Deming’s management philosophy. There are examples of following the principles of alternative management in Russia.

You have a lot of discoveries to make. You may be learning and thinking for the first time about the role of the work system you have created, about the quality of products, services provided, or work performed in your company. You will become familiar with Deming's simple 98/2 formula. It means that 98% of problems in an organization, defects in products, works or services depend not on people, but on the system and are determined by its inherent shortcomings. People, in turn, do what is prescribed by this system. Most likely for the first time, you realize that main question- not “who is to blame and what to do?”, but “what is to blame and who should do?”, and stop looking for the culprits and start improving the system. From Deming’s formula “98/2” the fundamental conclusion inevitably follows that punishing people is not only pointless, but also destructive for the company. It makes no sense, because in this way the manager, at best, will be able to eliminate only 2% of the causes of defects that are in one way or another connected with the employee’s personality, and the main clusters of problems will remain untouched. The destructiveness of punishment for a company lies in the fact that because of fear, information is distorted and hidden, people are afraid to take initiative and take responsibility.

Abandoning the idea of punishment leads to a rapid change in the atmosphere in the company and to a fundamentally different level of relationships. This decision completely changes the content of the activities of managers at all levels. It requires managers to master completely different methods and ways of working. From bosses, supervisors, and mentors, they must become leaders, mentors, and coaches. And this is a new challenge to the first person.

You will learn that improving the system means constantly measuring the parameters of implementations various processes, which are of interest to consumers and the company itself, analysis of collected sales statistics, development of improvement programs and their implementation.

After reading the book, you will understand that processes, including business processes, live according to their own special laws. They cannot be interfered with arbitrarily, even for the purpose of improvement. Much attention is paid to the disclosure of such concepts as “process controllability”, “special causes of defects”.

Here, Deming's famous fourteen principles, which reflect the essence of his teaching on management, are revealed in sufficient detail. Probably, readers will dismiss them at first, saying that this is just another arbitrary set of slogans, and life has already taught us not to trust slogans. Be patient now, think about the meaning of each of Deming’s fourteen points, and you will see what depth of thought, what innovation in approaches to management are hidden in them.

Traditional management creates a rigid organizational structure. Any enterprise, any organization is clearly divided into functional divisions, each of which has its own tasks, functions, and special areas of work that are different from others.

Deming's philosophy leads to an understanding of hierarchy only as a tool for building a horizontal organization of a company and a mechanism for maintaining normal functioning new organizational structure. The manager’s mission here is to help, based on processes, build horizontal relationships in the system, eliminate barriers between departments as much as possible, eliminate all obstacles introduced by the hierarchy, and give authority to those people who can exercise them quite professionally.

The hierarchy in the management system, based on the teachings of Deming, builds a flexible structure that self-adjusts to the needs of the client and changing business conditions, organizes and supports the process structure, including leadership in processes, creates an environment for improvement (authority, status, motivation, time, training ). In other words, it serves to simplify and improve processes, rather than complicate them.

Deming’s philosophy changes the meaning of the organization’s activities as a whole, changes the content of the activities of each employee: how clients expect new and more quality goods or services, the company expects people to innovate and constantly improve their activities.

The status of each employee changes. He truly becomes a collaborator, that is, a person who, together with others, does a common cause.

The book emphasizes the importance of teamwork. After all, each business process has its own team, which is called upon to jointly solve the problem of its continuous improvement. At teamwork a synergy effect arises, multiplying the intellectual potential of people, leading to amazingly powerful solutions that could never have appeared outside of a joint brainstorming session.

The implementation of Deming's management model in practice makes the company open to information flows, provides a common information space when all employees know everything. There is no reason for rumors and gossip in the company.

Another amazing discovery will be a completely new look at the plan. Deming viewed the plan-directive as evil. If the organization has a properly constructed budget system that motivates employees to work as efficiently as possible, then plans as directives are not only unnecessary, but also dangerous, since they can provoke a decrease in the quality of goods produced, services provided and work performed.

Deming also takes a new approach to building relationships with suppliers. In the form basic principle it offers a partnership for life. This approach is not only possible, it has no long-term alternative. After all, any company has a lot of suppliers, and they critically influence the quality of the process. Then the question arises: “What is the point of us improving the process from the inside when the input is chaos?” Where suppliers and their services are critical, the first step is to build the right systems for selecting suppliers and relationships with them.

The Moscow Reinsurance Company has been following the path paved by Deming for five years now. This is not easy, because you often have to move through virgin soil, since Deming formulated only general principles and approaches, and their implementation requires individual approach in every company. But it is precisely following Deming’s management philosophy that allows us to maintain high rates of development and compete with leading reinsurance companies world, to achieve the seemingly impossible.

(estimates: 4 , average: 3,50 out of 5)

Title: Organization as a system. Edwards Deming's Principles for Building a Sustainable Business

About the book “Organization as a system. Edwards Deming's Principles for Building a Sustainable Business" Henry Neave

The book by Dr. Henry Neave, a student, close friend and colleague of Dr. Deming, is widely considered to be the best interpretation of Deming's teachings on the new management.

A fundamentally different, humanistic view of management, developed by Dr. Deming in the second half of the last century, harmoniously unites the goals of business owners, managers and other employees. The slogan of the new management, “Everyone Wins,” is reflected in the famous 14 points and the theory of deep knowledge.

Dr. Deming's methods and approaches are universal. They are applicable both for banks and big business, and for small businesses and organizations; successfully work in industry, services, healthcare, education, insurance, trade, public administration etc.

The book is addressed to managers and entrepreneurs, as well as teachers and students of economic specialties.

3rd edition.

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Translation Y. Rubanik (ch. 1–18), Y. Adler and V. Shper (ch. 19–32)

Scientific editors

Editor M. Burdina

Production editor S. Turco

Technical editor N. Lisitsyna

Corrector I. Golubeva

Computer layout A. Abramov

Cover artist E. Syrokvashina

* * *

Preface to the Russian edition

This book is addressed mainly to the top executives of companies. In a very interesting and accessible form, the fundamentals of the management philosophy of the great American, Dr. William Edwards Deming, who is also called the father of the Japanese economic miracle, are set out here. It was with Deming's lecture to representatives of Japanese business in 1950 that the unprecedented ascent of the country, previously backward and in ruins after defeat in World War II, began to the heights of a new business system.

You have a lot of discoveries to make. You may be learning and thinking for the first time about the role of the work system you have created, about the quality of products, services provided, or work performed in your company. You will become familiar with Deming's simple 98/2 formula. It means that 98% of problems in an organization, defects in products, works or services depend not on people, but on the system and are determined by its inherent shortcomings. People, in turn, do what is prescribed by this system. Most likely for the first time, you will realize that the main question is not “who is to blame and what to do?”, but “what is to blame and who should do?”, and stop looking for those to blame and begin to improve the system. From Deming’s formula “98/2” the fundamental conclusion inevitably follows that punishing people is not only pointless, but also destructive for the company. It makes no sense, because in this way the manager, at best, will be able to eliminate only 2% of the causes of defects that are in one way or another connected with the employee’s personality, and the main clusters of problems will remain untouched. The destructiveness of punishment for a company lies in the fact that because of fear, information is distorted and hidden, people are afraid to take initiative and take responsibility.

You will learn that improving the system means constantly measuring the parameters of the implementation of various processes that are of interest to consumers and the company itself, analyzing the collected implementation statistics, developing improvement programs and their implementation.

Deming's philosophy leads to an understanding of hierarchy only as a tool for building a horizontal organization of a company and a mechanism for maintaining the normal functioning of a new organizational structure. The manager’s mission here is to help, based on processes, build horizontal relationships in the system, eliminate barriers between departments as much as possible, eliminate all obstacles introduced by the hierarchy, and give authority to those people who can exercise them quite professionally.

Deming’s philosophy changes the meaning of the organization’s activities as a whole, changes the content of the activities of each employee: just as customers expect new and increasingly high-quality goods or services from the organization, so the company expects innovations and constant improvement of their activities from people.

The status of each employee changes. He truly becomes a collaborator, that is, a person who, together with others, does a common cause.

The book emphasizes the importance of teamwork. After all, each business process has its own team, which is called upon to jointly solve the problem of its continuous improvement. When working as a team, a synergy effect arises, which greatly enhances the intellectual potential of people, leading to amazingly powerful solutions that could never have appeared outside of a joint brainstorming session.

Deming also takes a new approach to building relationships with suppliers. As a basic principle, he proposes a partnership for life. This approach is not only possible, it has no long-term alternative. After all, any company has a lot of suppliers, and they critically influence the quality of the process. Then the question arises: “What is the point of us improving the process from the inside when the input is chaos?” Where suppliers and their services are critical, the first step is to build the right systems for selecting suppliers and relationships with them.

The Moscow Reinsurance Company has been following the path paved by Deming for five years now. This is not easy, because you often have to move through virgin soil, since Deming formulated only general principles and approaches, and their implementation requires an individual approach in each company. But it is precisely following Deming’s management philosophy that allows us to maintain high rates of development, compete with the world’s leading reinsurance companies, and achieve the seemingly impossible.

I am sure that after reading this book you will not be disappointed and will not regret wasting your time. Even if you do not decide to take the path of a radical transformation of your company, you will still enrich yourself with knowledge of a completely new approach to management. And such knowledge is valuable in itself.

President of the Moscow Reinsurance Company
G. N. Fidelman

Where are Henry Neave and Edwards Deming taking us?
Foreword by scientific editors

…And many who heard said in amazement: “Where did He get this from? What kind of wisdom was given to Him, and how are such miracles performed by His hands?”

Gospel of Mark, chapter 6, verse 2

“There are no prophets in their own country!” If this saying had not existed before Deming, it would have had to be invented specifically for him. The fate of this man very precisely corresponds to it. Judge for yourself. The Second is over world war. Edwards Deming, at that time a famous American expert in mathematical statistics, ends up in Japan. During the war, he trained American quality specialists in the effective use of mathematical methods in quality control. This intense work took place in wartime conditions and, undoubtedly, was useful, but did not lead to the expected results, that is, to a sharp increase in the quality of supplies for military orders. Well, not all wartime projects were very successful.

At this time, Deming, together with his older friend and teacher Walter Shewhart, was developing a theory that was destined to form the basis of the Japanese model of quality systems. In recent years, the term “statistical thinking” has increasingly been used to describe this theory. Actually, it was Shewhart who was invited to Japan by the head of the American occupation administration, General MacArthur. But it so happened that just at this time Shewhart fell ill. Then he asked his friend Deming to go instead. We now know what came of it.

Arriving in Japan in 1950, Deming had the opportunity to conduct a seminar at which, thanks to the efforts of Professor Kaoru Ishikawa, who later became the great Japanese guru in the field of quality, and also, no less, his father, the first persons - the owners and managers of the lion's share - were gathered together. Japanese enterprises, most of which are still in ruins. A very important circumstance turned out to be precisely the fact that Deming’s audience this time were top officials. He told them that if they put statistical methods into practice, they would very soon be able to enter world markets with great success. The Japanese listened to him... and actually entered world markets. It is curious that the Japanese thought that Deming was presenting to them practical achievements and American experience. But this experience did not exist at all. It didn't turn out the way I wanted. That's how useful it is to sometimes translate inaccurately from English into Japanese! By the way, relatively recently, the English text of a lecture given by Deming in 1950 in Japan appeared on the Deming network on the Internet. It turned out that this material was not preserved in the Deming archive, but enthusiasts managed to reconstruct the English text recorded by one of those present at this seminar. After it appeared freely available on the Internet, V.L. Shper and Yu.P. Adler now translated it from English into Russian and published it in the journal “Methods of Quality Management” (2000, No. 10). The reader, if he is curious, can evaluate the content of Deming's lectures for himself.

Of course, there is no need to simplify things. Deming is not the only one to blame for the Japanese economic miracle. But there is no doubt that he played a role in this. However, having become the “father of the Japanese miracle,” Deming remained an ordinary professor at New York University in his homeland. None of the industry leaders listened or heard him. Quality control took place, of course, through the quality control department. The top management had their own, much more important tasks. Thus, Deming was not noticed in America for almost thirty years! What a shining example of arrogance and complacency.

But by the late 70s and early 80s, Japan's success in world markets became obvious to everyone. And then one American television journalist made a film about Deming, which was called “If the Japanese can do it, then why can’t we?” On the day the film was shown, Deming became famous in America. He was already almost 80 years old. Now we know that he still had about fourteen years to live. And during this time, Deming accomplished a feat and performed a miracle. He tirelessly traveled around the country and the world, conducting his famous seminars.

Then Deming had numerous followers and students, including among senior executives of large companies such as Ford. One of Deming's most consistent students and assistants was the English statistician Henry Neave, who now continues the work of his mentor, conducting seminars similar to those that Deming had previously conducted. Then Niv often assisted his teacher. The book you now hold in your hands was written during Deming’s lifetime and approved by him. This is an attempt to comprehend Deming’s teachings “hot on the heels”, and, in our opinion, one of the most successful attempts.

There is also a story connected with the translation of this book into Russian.

In Russia, it was previously published in two volumes, one of which was published first in 1994, then in 1998, and the second in 2003. When preparing the first Russian edition, it was divided into two issues for reasons of convenience. But during the preparation of the first volume, it turned out that there was simply no money for the second. Alas, such were the realities of the early 90s. last century in our country. It took several years for the first issue to be published again, this time in Tolyatti. However, even here there was not enough “gunpowder”. Thanks to sponsors, whose preface you can read, the book has become available in Russian in full. But it so happened that the first and second volumes were translated by different people and published by different publishing houses. All this, of course, could not but affect the quality of the Russian publication, not to mention the obvious inconvenience for readers. In addition, over the past time, organizations have appeared in Russia and are gaining strength, for which mastering the management of a new generation is becoming an urgent task. That is why it was decided to publish a new edition of Henry Neave’s book, this time in an authentic form with the original. This allows us to say a few words about the essence of E. Deming’s teachings.

As S. Yesenin said, “big things are seen from a distance.” It takes time to evaluate the true value of what people have done, to weed out what is temporary and to identify ideas and knowledge that form the basis of the intellectual and spiritual foundation of humanity.

Dr. Deming's ideas are associated with the "quality revolution" for most people. central theme which was the consideration of the consumer as an obligatory component of any organizational system that determines the meaning of the existence of this system. When this concept was first opposed to the view of business as a “money making machine,” it was perceived as quite radical and ideologically charged. But years have passed, and modern managers have become aware of the requirement not only to satisfy, but to anticipate consumer demands, to please them as a natural condition for the long-term survival of organizations. At first glance, it may seem that business has already assimilated the ideas of quality management. In fact, its modern interpretations in the form of TQM (total quality management) or international standards The ISO 9000 series, version 2000, has become a completely respectable commercial product in the consulting and educational market. However, life shows how right Dr. Deming was when he argued that the “quality revolution” is only a prologue to a period of profound changes in the philosophy and methods of management generated by objective trends in socio-economic development and the emergence of a “new economic era.”

At the center of the changes is the problem of humanization economic life society, the perception of business as an activity carried out by people and for people. Business management in this case is seen as a process of systemic optimization aimed at ensuring the interests of social groups and individuals who make a positive contribution to its effective functioning. “Everyone benefits from optimization!” - this is how Dr. Deming defined the essence of the “new management” program.

Approaching this program goal is possible on the basis of the synergy effect, multiple qualitative enhancement of the capabilities of society and its constituent organizations through the harmonious interaction of all social groups. And this is very different from the approaches of numerous “guardians of the people’s interests,” whose thoughts are not aimed at general prosperity, but at the idea of taking away and dividing “fairly.” The higher the level of cooperation, the more effectively society and organizations use the natural and material resources at their disposal, as well as the intellectual and spiritual potential of the human person.

Entering into such collaboration presupposes a deeper level of knowledge used by people in organizing systems and coordinating their actions. Fundamental laws cannot be circumvented: more effective management can be achieved only by increasing the substantive depth of theories and models used to analyze the situation and make decisions. In a dynamically changing environment, in conditions of an uncertain future, an effective organization cannot be built on the basis of copying known decisions, procedures and rules inherited from the glorious but already past past. “There is no substitute for knowledge” - continuous adaptation, constant improvement require reaching a new, deeper level of understanding the nature of the organization. True, in-depth knowledge is required in order to consciously “weave” a strong and at the same time flexible organizational fabric in which technical, material and social, human dimensions are harmoniously intertwined.

But how can we capture the complexity of an organization without becoming oversimplified? How can we identify from the vast amount of knowledge accumulated by humanity those components that are important and necessary for management? modern organization? How to combine these elements into a whole, to see the connections between the patterns identified within the framework of the natural, exact sciences and sciences about man and society? Deming devoted the last years of his life to solving this problem, creating the famous system of deep knowledge. He was in a hurry. He did not manage to publish books or articles in which this system would be presented in any detail. The system of in-depth knowledge was developed and expounded by Deming during the seminars he conducted.

As has happened more than once in history, the orally stated plan of an outstanding person is conveyed and concretized by his students. Henry Neave, as we have already noted, was and remains one of Deming's most devoted and consistent students. His book, according to experts, is undoubtedly one of the best interpretations of Deming's teachings. It consists of five parts. The first four parts examine the leading theoretical concepts that later formed the foundations of the theory of deep knowledge: the foundations of the process approach and systemic vision of the organization, elements of the theory of variability, the foundations of the organizational learning process, the principles of creating a collaborative environment. The fifth part integrates these elements into unified system. Perhaps Russia needed the last few years precisely so that people could grow up in it business organizations, for whom mastering the management of a new generation becomes an urgent task. There are indirect indications that such organizations have indeed already emerged and their number is growing. Is it fast enough? However, Deming said that “survival is voluntary.”

Readers of this book will voluntarily have to overcome several difficulties. In our rather dynamic and productive times, various things were clarified and sometimes rethought. For example, in the first editions we translated the term profound knowledge as “deep knowledge”. Now we think that this does not make sense enough, and we settled on the “deep knowledge” option.

Another problem is related to the fact that G. Neave’s book is inextricably linked with E. Deming’s famous book “Overcoming the Crisis: A New Paradigm for Managing People, Systems and Processes” ( Out of the Crisis) . This book was translated into Russian (Tver: Alba, 1994), but, unfortunately, this translation turned out to be, to put it mildly, inadequate.

In such a complex environment, reading G. Nieve’s book “Dr. Deming’s Space” can turn into a complex research problem. Is it worth spending so much time and effort on this matter? In our opinion, it's worth it. Because G. Nive, following E. Deming, calls us to new world, where there are no familiar landmarks, where new laws apply and where you and I will work to get joy from the work process itself and from communicating with colleagues. In this world we will not be evaluated and ranked, but will be given the opportunity to reveal all our talents and abilities. “Stop, stop! - you say. “We don’t need these fairy tales that are told to the gullible.” This has never happened in life and never will happen. We read these utopian socialists with their cities of the sun and other nonsense!”

Well, maybe it wasn’t, but it will be, it will definitely be. And we will do this with our own hands. All together. Because otherwise we have no hope for the future. And Henry Neave's book is the shortest path to it. It is with these aspirations that we present it to our readers.

Y. Adler, Y. Rubanik, V. Shper

A new translation of E. Deming’s book “Overcoming the Crisis: A New Paradigm for Managing People, Systems and Processes” was published in 2007 by Alpina Business Books.

The book by Dr. Henry Neave, a student, close friend and colleague of Dr. Deming, is widely considered to be the best interpretation of Deming's teachings on the new management. A fundamentally different, humanistic view of management, developed by Dr. Deming in the second half of the last century, harmoniously unites the goals of business owners, managers and other employees. The slogan of the new management, “Everyone Wins,” is reflected in the famous 14 points and the theory of deep knowledge. Dr. Deming's methods and approaches are universal. They are applicable both for banks and large businesses, and for small enterprises and organizations; successfully work in industry, the service sector, healthcare, education, insurance, trade, public administration, etc. The book is addressed to managers and entrepreneurs, as well as teachers and students of economic specialties. 3rd edition.

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by liters company.

Drawing the background

Introduction

This book begins with a short chapter that talks about the need for change almost entirely in Deming's words. His outstanding book, published in 1986, is called Out of the Crisis. What crisis? Are we in crisis? He obviously believes this to be the case, and in Chapter 1 he tells us why.

Before we begin our introduction to Dr. Deming's management philosophy, we will learn something about the man's life in Chapter 2. This is not just for the sake of order, but because it is really interesting! Deming's philosophy is vast, and the more we study it, the more profound it seems. This philosophy has been continuously developed for more than sixty years, and even a small sketch of the history of its development will help us to see it more clearly.

In Chapter 3 we will attempt to solve a very difficult task: to briefly outline the basics of Deming's philosophy - fourteen points of the program for management, "diseases" and sixteen obstacles to change. Naturally, this chapter cannot compare with the second and third chapters of Out of the Crisis, where Deming provides an introduction to these issues. Its purpose is to serve as a temporary replacement, a kind of bridge for those who have not yet read Deming’s book, but for those already familiar with it, this chapter will be useful for reference.

We conclude Part 1 with an introduction to what might be called statistical thinking. The basis of this thinking (as, indeed, of Deming’s entire philosophy) is the pioneering work of Dr. Walter Shewhart in the 20s. about the nature of variations. An essential feature of this thinking, as we will see in this book, is the awareness of the fact that the lack of understanding of the nature of variation often leads, despite the best intentions, not only to an improvement, but to a deterioration in the state of affairs. The chapter also includes a discussion clarifying the difference between the common (and, I would argue, incorrect) use of control charts and how and for what purpose Shewhart, the inventor of this statistical tool, used them.

Deming's view of recent industrial history

What is your opinion about the industrial history of the 20th century, especially its second half? And what are the reasons for such an opinion?

Here is W. Edwards Deming's view. All words given in this chapter are actually his own and are taken from his seminar presentations as well as from his notes. The style of the chapter imitates Deming's oral presentation to audiences in his homeland of America. However, much of what has been said can be applied to Britain and other Western countries.

North America has contributed a lot to the area modern knowledge and the scope of their application. In the 20s The United States contributed to interchangeability and mass production methods that spread throughout the world, putting manufactured products into the hands of millions of people in different countries that they would not otherwise have had. The power of the United States grew.

After World War II, which caused significant devastation, the United States remained the only country in the world that could produce goods at its full capacity. The rest of the industrial world lay in ruins, he was our client and active consumer. The world needed large quantities our goods, and queues lined up wanting to give us their gold and get what we could produce. Gold flowed like a river into Fort Knox (the storage site of the US gold reserves. – Note scientific edit.). But where is this gold now? He is no longer there.

Everyone expected that the good times would continue and that nothing could dampen them. And why could they end? When the market expands, it is not difficult to do business and be optimistic. Lots of people are still living in the 50s. They think that since they have something to eat for breakfast and lunch, everything is going well. But contrary to our expectations, we look back and find that we have been in economic decline for decades.

What happened? It's hard to believe that anything could have happened. The changes were gradual, imperceptible. And while it is not difficult to establish the date of the earthquake, it is much more difficult to determine the beginning of the decline. We can only detect decline by looking back into the past. So, the cat does not realize that twilight has fallen on the earth. To a cat's eye, evening twilight is as good as clear afternoon. But in complete darkness, a cat is as helpless as any of us. Likewise, the duck does not understand that it is raining. How on earth would she know about this?

Our country (America. – Note auto.) was on the rise until about 1958. But then the world began to change. Around 1968, Japanese goods began to penetrate our market. The price was reasonable and the quality was good - in contrast to the low-quality crafts that came from Japan before and immediately after the war - cheap things, by the way, worth the asking price for them. Buyer preferences for a range of imported goods gradually became a threat to North American industry.

Has America dozed off? Is she still dozing? Markets are now global. People have a choice.

Let's think about North America as it is now. What does the trade balance of the United States look like? The answer is clear: things are not only not going well, they are going very badly (see Figure 1).

Our trade deficit in both goods and services increases every year. Agricultural products have always brought money into the country; wheat, cotton, soybeans and perhaps a number of other products still produce them. Just a few years ago we had a positive trade balance in trade in agricultural products, but now the situation has changed. In 1986, imports of agricultural products exceeded exports, and if we take into account the illegal import of narcotic substances of plant origin into the country, then our deficit in agricultural products is significantly higher than published official data indicate.

Moreover, the problem is not limited only to agricultural products or industrial goods. Some services also make a (negative) contribution to the trade balance (see “Recovery from the crisis”). For example, the United States pays four times more to transport passengers than any other country in the world.

What can we do? We can try to introduce trade restrictions. Which country has greatest restrictions in trade? This dubious honor belongs to the United States. A few years ago, France ranked first in terms of restrictions, and the United States was only number two. Now we are number one. Some of the restrictions imposed by the United States are quite subtle. For example, only two thousand books of the same title in English can be imported into the country. Although no one can say that books are prohibited from import, but with practical point from a perspective it is so.

Who is our best buyer on the world market? Answer: Canadian province of Ontario. I recently studied the question of who in the United States makes the most money from exports. In first place was General Motors, on the second – Ford, on the third – the aircraft industry. It was not entirely clear why this was so. As I continued my search, I discovered that the exports included subassemblies, parts for assembly, many of which were then shipped to Ontario. They later return to the US, but are still considered an export.

Our problem remains quality. Can't we provide high quality? Of course we can. And some American products are excellent: paper clips, for example, are quite good. We are grateful for them. Unfortunately, many other quite good American products are in little demand abroad.

Some industries are now performing better than before. There are more cars in the United States than ever before, and many more people fly. What does this data mean - decline or progress? When answering this question, we must take into account that in 1958 we had intercity rail service. Therefore, we had a choice: plane, train or car? Now we have very few railway lines left. Therefore, we must either fly by plane or drive a car.

One of our best exports that brings us money is military products. We could greatly expand this source of income if not for moral considerations. Another source of currency is scrap metal. We can't use it, so we sell it. The source material in this microphone costs maybe 15 cents. We sell it for that price and then buy it as a finished product at the seller's price, paying something like $2,000. A similar situation is observed with paper and cardboard waste paper. Timber also brings us currency. It is an important renewable resource. Share American aircraft accounts for about 70% of the world market, and this brings us huge amount dollars. As I understand it, various equipment for construction work also constitutes a significant export item.

American movies (a type of service) bring us currency. Banking, insurance and other types of services are also significant from a revenue perspective, but not nearly to the extent they once were. In this sense, British banks have always been the best. But currently eight of the world's largest banks are Japanese, the ninth is French, and only the tenth is American. The next American bank is already in 36th place. American banks stand out only for their losses from unsuccessful loans. In Washington, 23% of all real estate is owned by the Japanese. The same figure for Los Angeles is 44%. There was one time when I woke up in Los Angeles, looked out the window and thought I was in Tokyo. One participant in my seminar in London called this situation a sale of the family silver.

Our country has been blessed with natural resources, but most of them are non-renewable. What will we eat when they run out? We send iron ore (enriched), aluminum, nickel, copper, coal - all non-renewable products - somewhere for dollars. We also do not renew scrap metal.

Have we prospered with everything ready? We were wasting our natural resources and, as we will see, spoiling our people. And we need them all.

What is the definition of colonies? The colony exports raw material and buys expensive industrial goods and services. Have we become a colony?

“Which country today can be considered the least developed? Despite the treasures of skills and knowledge of millions of unemployed; on the underutilized, unused or abused skills and knowledge of working people at all levels of production and in all industries, the United States today can be considered the most underdeveloped country in the world.”

What to do? I am sure that we must start all over again and repent, but not of sins, but of stupidity. What we have been doing hour after hour is wrong. We did everything we could to destroy profits, and did so for three decades. And if someone is concerned about this, then we can say with confidence that this someone does not know very much about how and what to do. There is simply no opportunity to successfully improve our position in the future with the current management system.

Brief biography

William Edwards Deming was born on October 14, 1900. Therefore, it is not surprising that the story about him is quite long. However, to understand Deming's teachings, it is important to know about some phases of his life. The impatient reader may feel that he is drowning in the endless stream of advice and demands contained in Deming's teachings. And frankly, I would not be surprised if some of Deming's new followers began to view some parts of his teaching as reasonable, others as very unusual, and still others as downright funny.

However, a too hasty and superficial acquaintance with Deming's works without appropriate preparation is like studying the tip of an iceberg. Therefore, we must realize the following: what we are reading now is the result of more than sixty years of active reflection, research and practice of Deming - this bright personality, looking far ahead, relying on the creativity of countless specialists in industry, education, statistics, physics, psychology etc., which he constantly studies, sifts and perceives extremely selectively. Deming advises focusing not on the output (resulting) characteristics of processes, but on their inputs - in the same way, we must first study the origins and basic building blocks from which Deming’s philosophy emerged in its current form. Moreover, since Deming himself did not accept a style of thinking that focused only on the end result, many people might find it useful to learn something from the distinguished record of this nearly century-old “statistical research consultant.”

Let's, bypassing the very origins, turn to the history of about fifteen years ago. At that time, Deming's name was not so widely known, at least in our (western) part of the world. But most who heard of Deming perceived him more as a scientist and statistical consultant than as a specialist with a strong say in the field of management. Even in those circles of the statistical community where he was well known, his fame (as he recently wrote to me) was not at all the result of his “excursions into new worlds.” While the statistician community was slow to accept the promise, importance, and potential of Deming's work, the industrial community (of course, this applies to Western industry) was undoubtedly even less receptive.

One of the first American industrialists to hear Deming's name was in 1974, William E. Conway, then president of the Nashua Corporation and later its chief executive (and was somewhat intrigued by the circumstances under which this happened). Nashua Corporation, a Fortune 500 company, is located in Nashua, New Hampshire. Its main activities include the production of computer magnetic disks, copying machines, photographic processing equipment and various paper products.

In the early 70s. Nashua Corporation was part of a consortium that included five American companies, a German chemical firm, and Japanese manufacturing firm Ricoh. The consortium was developing a new copier system that could potentially become a leader in the global market. Work began in 1969, and the system was scheduled to hit the market in 1974. Since the system was to be produced in Japan, most of the major technical meetings were held in Tokyo.

Upon returning from one of his trips, the director of research and development at Nashua Corporation told Conway a very unusual story. American guests, previously received with traditional Japanese politeness, were virtually ignored this time. Two meetings were held, but at extremely unusual hours, not accepted in business practice. Naturally, Conway, having heard about this, wanted to find out what was the matter. Here are his own words about what the department director told him:

“Everyone here is crazy. They collect data on every occasion, draw it on these little cards, and then go around tweaking everything.”

Conway asked, "Who's doing all this?" The answer was:

“Everyone is busy with this. The President, the VP of Sales, the manager, the chemists in the development department, the workers, the foremen, the accountants, everyone's doing it, Bill, they're all doing it!”

But why do they “do it”? In 1969, Ricoh began a five-year program in an attempt to win the prestigious enterprise award known as the Deming Award. And the Nashua Corporation delegation was somewhat unlucky: it arrived in Tokyo just before the date of Ricoh's nomination for the coveted award.

Conway saw a significant difference in the prices that the Japanese could offer. Of course, it was not unusual for the Japanese to undercut their prices compared to Western companies. But here’s what turned out to be new: instead of the cheap junk Japanese goods that were familiar and remembered by many from childhood, the Japanese now offered not only goods at a low price, but also excellent quality, uniformity and reliability. How could this happen?

After Conway heard about the Deming Prize in 1974, he took notice of the name and began to notice more and more references to it during his subsequent visits to Japan. He felt the respect and even admiration that the Japanese felt for Dr. Deming. Conway discovered that the Deming Prize ceremonies were televised in best time So what Japanese companies those who won this prize proudly placed huge bronze copies of it at their main entrances.

Despite all this, Conway did not take any concrete action for almost five years. Then, in early 1979, one of Conway's colleagues at Nashua Corporation recalled that in the 50s. his former supervisor turned to Deming as a statistical consultant. Conway instructed him to find out whether Deming was still alive, and if so, to find out where he was now. On Tuesday, March 6, 1979, Conway called Deming's home in Washington and asked him to visit the company. Deming arrived that same week on Friday.

Seventy-eight-year-old Deming had a lot to tell Conway about the work he had done in America, especially before and during World War II. That in the years of economic boom that followed the war, most Americans turned deaf to his calls. That as a result of their “deafness” he decided to speak to the leaders of Japanese industry. And finally, what has happened in Japan since then.

Conway, much against the advice of his senior colleagues, invited Deming to consult for Nashua Corporation. But Deming refused! As a minimum proof of his interest, Deming said, he needed Conway to make a special commitment. This commitment was that Conway, as general manager must become the leader of the process and the conductor of the changes required by Deming, since these responsibilities cannot be delegated to anyone. Deming had suffered many disappointments working with American managers in previous years and was determined not to repeat past mistakes. Conway agreed. Thus began the Renaissance in the West for Deming.

As Conway progressed in studying and understanding Deming's philosophy, instilling it in his company; as he observed (despite Deming's request not to expect too much in a short time) the exciting and beneficial changes that soon emerged, he became increasingly convinced of the importance of disseminating Deming's work as widely as possible on a national scale.

Conway himself did much to popularize Deming's teachings and spoke to fellow directors and managers throughout the country at every opportunity. One such opportunity came on October 11, 1980, during an open discussion on productivity issues at a board meeting at the National Association of Manufacturers in Phoenix, Arizona. Here are excerpts from Conway's speech that characterize his enthusiasm and belief in what Deming had done and what he could do:

“Thanks to the teachings of Edwards Deming, our company has come to realize that increased productivity can be achieved every day through greater attention to quality at all stages of our operations. For thirty years Dr. Deming worked with Japanese industry; he is considered one of those who contributed greatly to its giant strides in quality and productivity. There is a direct relationship between these two quantities: productivity increases as quality improves. Deming's approach - the father of the third wave in industrial revolution– based on statistical control quality and creates new ways of business management. Japanese manufacturers, using statistical quality control, triumphantly conquered the world in the second half of the twentieth century, just as American industrialists conquered the world in the first half using the principles of mass production.”

It is worth noting that before meeting Deming, Conway knew almost nothing about the subject of statistics. He admitted that he only vaguely remembered something about the bell curve from some course he had taken in college. Conway continues:

“For a number of years, the Japanese have been using statistics and control charts to measure, evaluate and improve their performance. They use statistical information—facts, graphs, maps—to drive a process of continuous improvement that they have proven results in higher productivity and lower costs while maintaining quality that meets market demands. This is the kind of competition we are dealing with today. It represents an alarming level of quality and performance for us. And don't try to dismiss the success of the Japanese by thinking that it stems from a unique cultural heritage or inferiority. wages and therefore impossible in America. The success of the Japanese is based on statistical quality control, which was introduced by the American».

It would be a mistake for me to give the impression that all of Conway's actions were correct. I believe he still failed to grasp some of the deeper principles that Deming spoke to him about, and as a result he often made mistakes. But who wouldn't do them in his place? The important thing is that Conway really understood the significance and great promise of Deming's work, and also that he tried to talk with this man.

Conway worked hard to get his senior managers to study Deming's ideas. However, awareness of their importance was initially achieved on a much larger scale on June 24, 1980, following the airing of an NBC television documentary If Japan Can, Why Can't We(“If Japan can do it, why can't we?”) The film's director, Clara Crawford-Mason, had great difficulty finding suitable material. What happened next is well described in Mary Walton's book The Deming Method of Management ( The Deming Management Method):

“Crawford-Mason contacted Deming and he invited her to talk. He told her about his work in Japan and showed her yellowed clippings of stories that the Japanese wrote about. Crawford-Mason didn't know what to think. Deming was very nice, perhaps eccentric, and in some ways even reminded her of her father. But what he said was too surprising if it turned out to be true. “He kept talking about how no one wanted to listen to him.” Their initial conversation led to the creation of five interview programs totaling 25 hours. The more they talked, the more impressed Crawford-Mason was by Deming's words and the more suspicious she became. It was simply incredible! “Here is the man who found the answer! He lives five miles from the White House - but no one wants to talk to him." Crawford-Mason contacted a senior economics figure in the Carter administration and asked if he knew Dr. William Edwards Deming. He didn’t know.”

By this point, Deming was able to tell Crawford-Mason about his collaboration with Nashua. She visited the company, and this visit became the final frame in her television newsreel about Deming and Conway. Many of those whose work is now based on Deming's work first heard about him on this television program. Mary Walton continues:

“The next day, June 25, 1980, in the basement where Deming’s office was located, the telephone was ringing incessantly. “We were literally bombarded with calls,” recalls Deming’s secretary, Cecilia Kilayen. It was a nightmare. Many of the callers were in despair. They certainly wanted to see Deming tomorrow (or better yet, yesterday), otherwise their company would collapse!”

Now that the course of our narrative has reached relatively recent times, it is no longer possible, and hardly worth it, to describe literally everything that happened. After all, the reader most likely knows much more about recent events than about distant ones. But for the sake of completeness, we will still give a brief overview of some of the moments that occurred after the first meeting between Conway and Deming in March 1979.

Later that year, with Conway's encouragement, Deming began his now famous four-day management seminars. Initially, his audience numbered no more than one or two dozen listeners. Two years later the audience exceeded a hundred people. To this day, Deming conducts his seminars about two dozen times a year, often in front of fairly large audiences. Mrs. Kilayen told me about one such seminar in which more than a thousand people took part. Since then, Deming has preferred to keep the number of listeners to no more than five hundred.

Through his seminars, Deming meets with several thousand American managers each year, and it is difficult to estimate the number of those who have benefited from his experience over the course of this decade, especially considering the seminars held directly at firms. Moreover, unlike the early 1980s, Deming's seminars now attract many senior managers. For example, in 1987, 52 of the highest-ranking managers from one company attended one of the seminars!

Of the most large corporations In America, Ford Motors is best known for its adherence to Deming's philosophy. Thus, Don Peterson, who recently resigned as president of the board of directors of Ford Motors Company, became famous for the famous phrase “I am proud to be called a student of Deming.” In addition to Ford Motors, Mary Walton's book includes descriptions of the experiences of Honeywell, AT&T, Campbell Soups, Malden Mills (a yarn manufacturer in Massachusetts), Jangbridge, Inc (printed circuit boards), and MEC (electronics). Other companies that soon became interested in Deming's approach included Kimberly Clark, Procter & Gamble, Velcro, and the Florida Power and Light Company. Also took part in this activity public services, and much of the work now known was carried out in the city government of Madison and in the government of the State of Wisconsin.

Numerous groups of Deming's followers - organizations founded to disseminate and improve understanding of his teachings and to assist interested organizations in putting ideas into practice - sprang up throughout America. At the beginning of 1980, the MANS Association in Holland and the W. E. Deming Institute in New Zealand were founded with the same goals. In November 1987, with the help of many of my friends, I initiated the founding of the British Deming Association (BDA). And two years later, Jean-Marie Gogh made us incredibly happy, having founded the French Deming Association at the beginning of 1989.

During the 1980s, Deming received numerous awards, honorary degrees, and medals, including the National Medal of Technology from President Reagan in 1987. Nomination for this award recognized Deming's persistent efforts to introduce statistical methodology, his contributions to sampling theory, and his appearances in support for the overall management philosophy, which led to increased product quality with subsequent improvements in the quality of goods available to consumers, as well as increased corporate performance.

End of introductory fragment.

* * *

The given introductory fragment of the book Organization as a system. Edwards Deming's Principles for Building a Sustainable Business (Henry Neave, 1990) provided by our book partner -

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