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7/25/2019 Small Business Guidebook
1/66
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7/25/2019 Small Business Guidebook
2/66
D I S C L I M
N O T I E
THIS
OCUMENT
S
EST
QUALITY
AVAILABLE.
HECOPY
FURNISHEDTODTICCONTAINED
A
IGNIFICANT
UMBER
F
COLOR
AGES
HICH
O
OT
REPRODUCE
LEGIBLY
ONBLACK
AND WHITE
MICROFICHE.
7/25/2019 Small Business Guidebook
3/66
S M A L L
BUSINESS
G U I D E B O O K
TO
QUALITY
M A N A G E M E N T
Office
of
theSecretaryof Defense
Quality
Management
Office
Washington,D.C.20301-3016
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SMALLBUSINESS
GUIDEBOOK
TO
QUALITY
MANAGEMENT
TABLEO F
C O N T E N T S
LIST
O F
FIGURES
A N D
TABLES
FOREWORD
CHAPTER
1 INTRODUCTION
Smal l
Business
and
Qual i ty
Background
IS O
9000
Current
Reality
CHAPTER
2 THE
DEMINGPHILOSOPHY
T he
M anand
His
Legacy
T he
Fourteen
Points
0
T he
Deadly
Diseases 1
T heObstacles 2
ProfoundKnowledge 3
CHAPTER3PLANNING7
PDSA
Cycle 7
Aim
8
Values
and
GuidingPrinciples8
Mission 9
Objectives 9
Transformation
0
Recharging
th e
Infrastructure
0
Leadership's
Rolesand Responsibilities0
CHAPTER4TEAMWORK
3
Competitionor Cooperation?3
Empowerment 4
CHAPTER5TEAMSAND
MEETINGS
7
Frameworkfo rAct ion
7
Meet ingManagement 8
T he
Group
Mind
9
MembershipCriteria 0
CHAPTER
6
CONTINUALPROCESS
IMPROVEMENT
1
Constant
Change 1
Customers
an d
Suppliers1
Voiceof the
Customer/Voice
of the
Process
3
T he
LossFunction 4
Problem
Solving
and
CPI5
Variation 6
Three
Immediately
Useful
Tools
8
Flowcharts 8
Ru nCharts 0
Control
Charts
5
Othe rTools 7
Cause
an d
EffectDiagrams
7
Brainstorming 9
Checksheets 9
Histograms 0
ParetoCharts 0
Measurement
1
CHAPTER
7
STRATEGIES
3
Beginth eTransformation3
A
Last
Word 4
ENDNOTES
5
APPENDIX
A .Glossary 7
B .SuggestedFurtherReading9
C.
Some
DetailedPDSASteps1
D .ControlChartTests 3
E .Bibliography 5
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SMALL
BUSINESS
GUIDEBOOK
TO
QUALITY
MANAGEMENT
LISTO F
FIGURES
A N D
T A B L E S
FIGURES
1 .Meet ing
th e
Challengeby
Company
Size
2.
T he
ChangingFocus
3.Producer/CustomerRelationships
4.Deming'sChainReaction
5.
Deming's
SystemsView
3
6.
Forces
of
Destruction
5
7.
T he
PD SACycle 7
8.
T he
StrategicPlanning
Cycle
8
9.TypicalQuality-Oriented
Infrastructure
1
10 .
IncreasingYourSlice
of
th e
Pi e
by
Making
th e
PieBigger
4
11 .
PDSA Cycle
and
Process
Improvement7
12 .
T heGroupMind 9
13 .CustomerReactionsAvoidingThin
Ic e2
14.
T heT woVoicesA
B ig
G ap
4
15.
T heT woVoicesA
Small
G ap
4
16 .T he
GoalpostsandT heLoss
Function
5
17.
Good
an d
B ad
Effects
of
ProcessChanges
7
18.
FlowchartSymbols 8
19.ASampleFlowchart 9
20 .
Ru n
ChartwithMedianLine0
21 .T oo
Fe w
Runs 1
22 .
T oo
M a ny
Runs
2
23 .
Runs
T oo
Long 2
24 .
Trends
3
25 .T heSaw-ToothPattern3
26 .T oo
M a ny
Identical
Values
in
Success ion
4
27 .Control
Char t
with
Limits
6
28 .
A
SampleCause
an d
EffectOutl ine
7
29 .ASampleFishbone
Diagram8
30 .ASample
Checksheet
9
31 .
A
SampleHistogram 0
32 .ASamplePareto
Char t0
TABLES
1 .Stateswith
Qual i ty
Awards
in
993
2.
Number
of
Runs
Above
an d
Below
th e
Median
.41
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SMALL
BUSINESS
GUIDEBOOK
TO
QUALITY
MANAGEMENT
FOREWORD
T heaim of this
guidebook
is
to helpsmall
businesses
make
th e
transitionto
a
quality
culture.
T he
Federal
Govern-
ment ,andth e
Department
of
Defense(DoD)
in
particu-
lar,
re
nown
he
middleofthisransition.teems
importantfo rthose
smal l
businesseswhono wdobusi-
ness
with
th e
Do D,
andfo r
those
who
would
like
to
do
businesswith DoD ,
to
get onlinewith therapidlyspread-
in g
qualitymovement .
It
isthis
focus
thatprompted
th e
D oD
to
producethis
publication.
Deming
experts,
William
Scherkenbach
andHeero
Hacquebord,helpedassureth eaccuracy
of
th econtent.
Their
patience
nd
creative
uggestions,
n
particular,
have
hopefully
madethis
both
auseful
an d
user-friendly
guidebook.
Inquiriesrelatedto
this
handbookshouldbedirectedto
WilliamBloom,ProgramManager ,O SDQualityM a n -
agement
Office,
Room
3
A345,
Pentagon,
Washington,D C
20301-1155.
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SMALL
BUSINESS
GUIDEBOOK
TO
QUALITY
MANAGEMENT
C H A P T E R1
INTRODUCTION
i
MALL
BUSINESS
A N D
QUALITY
Therear emorethan20million
mall
businessesinth e
UnitedStates.
Small
businesses
are
a
major
force
behind
ou reconomy.
Theymploymorehanhalfth eprivate
sectorworkforce
in
thiscountry.Between1980and1986,
64percent
of
th e
0. 5million
jobs
created
in
th e
U.S .
wereproduced
by
mall
businesses.
1
Smallcompanies
are
now
operating
in
on e
of
th e
most
dynamic
economic
periodsin American
history.
T helistof currentconcerns
fo rall businessmanagersincludes
th e
usualfactors:sales,
profits,
osts,chedules,deadlines,
abor-management
agreements ,suppliers,
and
competition.T helastdecade
has
added
other
concerns
ike
ncreased
government
reporting,increasedglobalcompetition,increasedcom-
plexity
o
government
procurement,
isinghealthare
costs,and new government-mandatedprograms.Perhaps
th eoverridingchallenge
of
th epastseveral
years,
how-
ever,hasbeenth eprolongedrecession
and
th e
gradual,
sluggishnatureof
th e
economic recovery.For
many
smal l
businessowners,theseincreasingbusinessconcernshave
become
critical
issues
in
th e
fight
fo r
survival.
How
does
on emeetal lthesechallenges?
According
o
99 2Gallup
urvey
of
63 4mall
busi-
nesses,
2
heecessionaryenvironment
s
hebiggest
survivalchallengethesecompaniesace.T heurveyed
businessesindicatedthattheyhaveattempted
to
mee t
this
challenge
byon e
of
four
differentstrategies:
mproving
quality,mprovingproductivity,ddingnewproducts/
services,orpurchasingnewequipment.Of
the
our
options,
th e
new
initiativemostoften
taken
by
responding
companieswasqualityimprovement .However,a
strik-
in gesultcanbeobservedbyookingtcompanyize
an d
th e
choicetaken(SeeFigure.).Twenty-eight
per-
cent
of
th e
survey'srespondentswith
to
20
employees
worked
to
improvequalityoverchoosingth eotherthree
options.
T he
percentages
of
firmseporting
ommit-
ment
to
quality
improvement
were
progressively
higher
fo rlargerbusinesses:43percent
of firms
with
21
to
10 0
employeesand57percent
of
companies
with
10 1
to
50 0
employees .
3
T he
trategy
of
improvingqualitytomee t
th esurvivalchallengewas
more
prevalentinlarger
com-
panies.Thisshould
send
amessagetosmaller
firms.
T hepressure
to
improvequalitydoes
notcomejustfrom
necessity
fo r
smal l
businesses.
Customers
redemand-
ing
more
quality-consciousness
and
cost-efficiency
fromtheirsuppliers.T omKlobucher ,ownerof Thomas
Interior
Systems
nc.,
putth isway:A ny
company
that
s
notnvolved
n
om e
or tofqualityprocesss
alreadyout-classed.f
hey
don'tbeginoearnhe
quality
anguage
and
quality
ife,
heywillbeout
of
business."
4
T he
ederalgovernment
nd,
n
particular,
he
Depart -
mentof
Defense
(DoD)
havebeenevolvingmore and more
into
quality-consciousness,
notonlywith
heactivities
of
agenciesandtheirinternalorganizationsbutincreas-
ingly
with
regards
to
their
suppliers:
large
and
smal l
busi-
nesses.
A s
shownabove,smallerbusinessesar e
lagging
behind
in th e
movementtoward
quality.
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CHAPTER
-
NTRODUCT ION
60
a
u
e
>
o
1-1
C 3
3
o
60
a
00
c
a.
1-20
Employees
21-100
Employees
Company
Size
101-500
Employees
Figure1.MeetingtheChallenge byCompanySize.
T he
D oD
began
productivityimprovement
programs
in
the
970's.A nExecutive
Orderigned
by
President
Reagan
in
February
1986
mandated
th e
improvement
of
productivity,quality,and timeliness
of
governmentprod-
uctsandervicesacrossheederalgovernment.T he
Malcolm
Baldrige
NationalQuality
Award
wa s
established
by
th efederalgovernmentin
1987
to
honorprivate
com-
panieshatexcel
n
qualityachievements.
T he
Federal
Qualitynstitutewasestablishedn
98 8
orain
nd
advise
ederalmanagers
n
TotalQuality
Management
( T Q M )
matters.T he
President's
Award
for
Qual i tywas
initiated
in
1989
to
honorthosefederalagenciesthatbest
exemplifiedquality
nd
productivitycultures.T he
fed-
eralgovernmentisbecomingmorean dmoreconscious
ofqualityin what
it
does
and
in whatitbuys .
Thosefirmsdoingbusiness
or
attempting
to
achieve
busi-
nessrelations
with
th e
Departmentof
Defensear e
find-
in gabuyermoreandmoreconcernedwithquality.T he
D oDsinceth emid-1980's
has
become
committed
to
th e
TotalQualityphilosophy.M a nypartsofth e
D oD
have
begun
o
ocus
on
upplier
quality
over
supplierost.
Whether
or
notsmal lbusinesses
are
interestedinpursu-
in gsales
of
productsor services
to
the DoD,
quality
aware-
ness
an d
th e
pursuitofqualityshouldproveof
benefit
to
anycompany.
A
more
compelling
reason
fo r
considering
th e
transition
to
aquality
cultureinan y
small
business
might
li ein
th e
exorbitantcost
of
reworkingshoddyproducts.T hecost
is
not
just
in
th e
directdollars
pent
fo rth e
reworking
process,but
it
s
eflected
n
additionalim eexpended
an dth e
stress
on
al l
th einvolved
employees
and
manag-
ers.Qualityimprovementwill
reduceth ecostof
produc-
in gaproductor service.
It willreduceth ecostof rework
an dthe cost
of
fighting crises.Management's
time in many
companiestoday
is
dominatedbyefforts
to
fight
crises
brought
on
by
nferior
ornadequateprocesses
nd
outputs.Figure
llustrates
hechangedocus
hat
s
possible
hrough
ransformationo quality-driven
ManagementTime
Current
Reality
ManagementTime
Vision
of
Future
Fire
Fiahtin
Improvement
Figure
2 .
heChanging
Focus.
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SMALLBUSINESS
GUIDEBOOK
TO
QUALITY
MANAGEMENT
organization.Notethe changeof
emphasisfrom constantly
dealing
with
riseso
ncreasedim e
or
mprovement
and
innovation.
What,hen,
s
quality?tanbehepeed
n
which
aervicesdelivered.tanbeconsistency.tanbe
innovation.
It
can
bereflected
in
low
maintenance
or
fa -
vorablerepairhistory.Qual i ty
can
be
many
things.
D r.
W .
EdwardsDemingtellsus
"a
product
orservice
pos-
sessesqualityif
it
helpssomebodyan denjoys
a
goodand
sustainablemarket."
5
Webster'sdictionarydefines
qual-
ityas"adegreeof excellence
and
"superiority
in
kind."
Firstand foremostwith
quality,however,th e
productor
service
meets
or
exceeds
th e
expectations
of
th e
customer .
T hechallengeofquality,herefore,soupply
ome-
thing
yourcustomerswant
or
need,
or youthink
they
will
purchase ,
that
not
only
meets
or
exceeds
their
expecta-
t ionsbut
that
ca n
be
produced
orprovidedatan
accept-
ableost.T heupplierneeds
o
decidewhat
to
upply
and
what
th e
right
levelof
quality
fo r
that
product
or
ser-
viceshouldbe .
Oncedesigned
nd
created
tth e
qualitylevel
desired,
th eke y
o
maintainingorimprovinghequality
of
th e
product
orservicelies
inth e
continual
improvement
of
th e
processes.
Each
process
takes
input,
addsvalue
to
it,
an d
thenproducesaproduct.
This
is
th e
value-added
im -
perative.
T he
means
by
whichthat
process
dd svalue
and th eextent
to
whichvalue
is
addedar emajordetermi-
nants
of
th e
quality
of
th e
output.
A
process
that
addsno
valueshouldeitherbe deletedor corrected
to
ensurethat
valuesdded.Figure howshe
producer/customer
relationships
related
to
value-addedoutputs.
D r.
Demingestimatedthat
95 %
or
more
of th e
causesfo r
shoddyproductsandservicesca nbetraced
to
th eman-
agementof
processes
or
subsystems
thatcreate
th e
out-
put.
T he
need,
then,
is
clearly
fo r
management
to
improve
those processesand subsystemsand to monitor
them
con-
tinually
fo r
improvementopportunities.T he
responsibil-
it yfo rensuring
he
mprovement
of
th e
processesnd
subsystems
in
an
organization
lies
with
topmanagement .
In
th e
private
sector
as
well
as
in
th e
federal
government ,
thiscommitment
to
qualityisreferred
to
asT Q M or
T Q L
(TotalQualityLeadership).T hehealthcarendustry
refers
o
tas
Cont inuousQual i ty
mprovement
CQI) .
While
th e
namesdiffer,
th e
corephilosophy,
methodolo-
gies,
tools,andtechniques
are much
th e
same.
T he
basic
concepts
of
th e
quality
philosophy
include:
arefulshort-range
an dlong-rangeplanning;
he
ontinualmprovement
of
productsnder-
vices
an d
th e
processes
that
produce
them;
op managementcommitment ,understanding,and
participation;
ocus
on
customer/supplier
relationships;
mployeenvolvement
n
hedecision-making
process;
eam
approach
to
productor
service
improvement;
and
se
of statisticaltools
and
structuredtechniques.
A
uccessfulqualityculturebalancesarelianceonci -
ence
nd
philosophy
o
mprove
nd
nnovate
ll
work
processes
with
anunderstanding
of
andappreciationfo r
th e
special
knowledge,
skills,
an d
attitudesworkers
con-
tribute.T he
basicmethodfo r
achievinga
quality
trans-
formation
will
probably
not
changedrastically,bu t
th e
means
to
achieve
itwilldifferdependingonth eindividual
needs
of
each
company.
^
(Raw
Materials)
Small
Business
| (Producer)
^
(Process/Change)
^
r
Output
(Product/Service)
i
r
D oD
) (Customer)
Figure
3 .
Producer/Customer Relationships.
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CHAPTER
-NTRODUCT ION
T he
purposeofthis
book
s
o
present
mallbusiness
managementwith
th e
basicphilosophyofmanagement
asenvisionedby D r.W .
EdwardsDeming ,
apioneeran d
leading
management
visionary.
It
also
includes
some
of
th e
methods,ools,
nd
techniqueshathaveproven
to
be
effectivein helpingtorealizeth etransformationtoa
qualityculture.Amajor
step
forsmal lbusinessmanag-
er s
is
to
gain
an understanding
of
whatD r.
Demingcalls
Profound
Knowledge,a necessary
awareness
fo r
enabling
atransformation
to
aquality-centered
organization.
Chapter
,
"The
Deming
Philosophy,"
describes
he
basic
heories
hat
upportis
eachings.
This
ection
includes discussionofth eFourteenPoints,Deadly
Diseases,Obstaclesndheheories
f
Systems,
Variation,Knowledge,
and
Psychology.
Chapter
3istitled"Planning."It s
purpose
is
to
describe
howtogeta
rapidtartonth equality
transformation
by
ystematicplanning.T heackofplanningsoften
th emajor
weakness
in th eoperationof
small
businesses.
Included
in
thissectionisadescriptionof
th e
Plan,D o,
Study,
A ct(PDSA)cycledeveloped
by
Deming .
Chapter
4,"Teamwork,"explores
this
mostvitalelement
for
expanding
he
effectiveness
of
your
organization.
W h a tkindsofpeoplehoulderveonnactionteam?
How
shouldthey interact?W h a tpower
should
they
have?
How
can
theybe mosteffective?
Chapter
5,
Te a m s
nd
Meetings,"
provides
advice
on
conductingeffectivemeetingsandincludesadescription
ofth estructuredapproach
to
problemsolving
an d
con-
tinualimprovement.
How
doyouconductyourselves
in
meetings?H owon ghouldmeetingsast?Howmany
should
serve
on th eteam?
Chapter
6,
Continual
Process
Improvement, includes
adiscussiononvariation
ndth e
mportanceofunder-
standing
hedifference
between
andom,orcommon
cause,
variationndspecial
ause
variation.Thi sec-
tion
describes
some
of
th e
statistical
tools
that
ca n
be
used
to
reducecostand increasequality.
Chapter
7,
"Strategies,"
contains
uggested
eries
of
steps
o
take
to
assistyour
company
in
movingtoward
a
quality-centered
ulture.W h e r e
do
youbegin?W ho
should
be
responsible?
How
long
will
it
take?
What
are
th epitfalls?
T he
appendicesinclude:A-aglossary
of
selectedte rms
(note:
all
terms
listedin th eglossary
ar eprinted
in
bold
inheext);
B-suggested
urthereadingonquality
management;
C-detailed
PD SA stepsthatcan
be
used
in
problem
solving
or process
improvement;D-control
char t
tests
other
than
l imits,
and
fs-the
bibliography.
Endnote
citations
ar e
listedjust
after
th e
end
ofth e
maintext.
B A C K G R O U N D
M o s t
businesspeopletoday
in
th e
UnitedStatesar e
aware
of
the enormous
turnaround
of
the
Japanese
economy
from
th e
1950's
o
he
1970's
nd
beyond.
Onceconsidered
producersof
cheapjunk,Japaneseproductshave become
synonymous
with quality.
This
incredible
reversal
of
prod-
uctcharacteristicswasnotaccomplished
by
miracle
or
gimmick.
t
was
based
n
th e
undamentals
of
th e
phi-
losophyof
qualitymanagementhatwasaught
o
he
business
eaders
ofJapan
by
D r.W .Edwards
Deming .
T hemethodshetaughtth eJapanese
le d
theirindustry
to
emphasize
quality
an dth e
continual
pursuitof
improve-
ment.Industryleaders
in
Japantodayhonorth ephiloso-
pher
by
conferring
annualDemingAwards
on
hose
companiesbestexemplifyinghisqualityprinciples.
ImmediatelyfollowingWorldWar
II ,
th e
onlyeconomy
capable
ofproducing
goods
wasth e
American
economy.
AsianndEuropeaneconomieshad,orth emostpart,
been
brought
to
a
halt
by
th e
destructionof
war.
Without
competition,
he
United
Statesquicklybecame
he
producer
ofgoodsfo r
th e
free
world.
Moving
from
war
machineryproduction
to
goodsproducerfo rworld-wide
consumers
wa s
a
relatively
easy
conversion
fo r
ou r
fac-
tories.T heemphasis
was
on massproduction
in
order
to
satisfy
th e
demand.Qual i ty
was
econd,ifthat
high,
in
th epecking
order.
T hefocuswas on high-volumeoutput
thatm et minimal
standards.
Quickly
getting
ou tth e
product
and
selling
it
with
th e
highest
immediate
return
wa s
th e
method
of
business
operationin
thiscountry.
Then
cameth e
1970's
an d
th e
rapid
riseof
th eJapanese
economy.Japan'selectronicsindustryhadmadestrong
inroadson
th e
Americanmarket
place
in th e1960's and,
withth efuelcrisis
in
thiscountryearlyin
th e
1970's,
th e
fuel
efficient,
reliable Japaneseautomobilesfollowed suit.
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SMALL
BUSINESS
GUIDEBOOK
TO
QUALITY
MANAGEMENT
W e
ll
know
heresultsndth e
dversempact
on
he
balanceoftrade
and
onou rdomesticeconomy.T heJapa-
nese
manufacturers
with
heir
focus
on
customer
satis-
factionndong-termeliabilityapidlygainedmarket
sharethroughoutth eworldnd ,atherdramatically,n
America .T heresultingmbalance
is
trikingly
detailed
in
on e
of
th eFederalQual i ty
Institute's
T Q M
booklets:
ince
960,
heUnitedStateshaslost40percent
of
it s
market
share
to
foreign
competitors;
during
th e
am eperiod,apanasncreased
he
iz eof
it s
foreign
marketby50 0percent.
he
nine
argest
banks
nhe
world
arenow
Japanese.
heUnited
States
used
to
make
90percentof
th e
colorTV'sin
th e
world.
N ow
we
make5percent.
here
are
no
American-madeVCRs,compact
disc
players,orsingle-lensreflexcameras .
6
Japan's
economic
revitalization
isclearly
a
modernda y
successstorythat
is
unparalleledinhistory.Factorsother
thanDeming'sphilosophyofqualitymanagementmight
alsohavecontributedto
this
astonishingturnaround,
bu t
th e
basefo r
this
ransformationwasclearlyfoundedin
hi sphilosophy.
O ur
country,likeothers,wa sasittingduck
withou remphasisonshort-termresults.T heuniqueness
of
th e
Japanese
society
an d
their
ability
to
band
together
to
carry
ou t
th e
long-term
aims
of
th e
quality
philosophy
had
no
smal l
handintheirsuccess.
Deming
reachedhi s93rd
birthdayinOctober
1993
till
practicinghisqualitymanagementconsultingbusiness.
He
died
tw o
months
laterin December1993.Priortohis
roughly40yearsworkingas
a
consultant,heworkedat
th eU.S .Department
of
Agricultureand at Western
Elec-
tric.From
his
experience
nd
hisassociationwith
D r.
Walter
Shewhart ,Deminglearned
th e
importance
of
th e
controlchart
in
determiningspecialcausevariation.He
alsobegantodevelophis
concepts
onstructured
process
improvement
romShewhart,which
ater
becamehe
PD SA cycle.His
yearsas
a
civil
servant
with
th eCensus
Bureau
in
Washington,
D C
provided
an
impetus
that even-
tually
foundhim
beingcalled
to
postwarJapan
to
assist
with
heensus
nhat
ountry.twas
duringheat e
1940's
and
early1950'
s
thatDemingbegan
to
teachJapa-
nesebusinessleadershisphilosophyof qualitymanage-
ment.
n
meet ingswithhe
Union
ofJapaneseScience
and
Engineering
(JUSE),
Deming
taught
th e
theory
that
higherquality
and
loweroperatingcostswere
notneces-
sarilyeparateursuitsa
ereticaloncept
n
thosedays.T heJapanesel istened.
Theyal lhadon eclear
aim
inmind,
rebuildingth e
shatteredeconomyof Japan.
T heresult
is
history.Inrecognition
of
Deming'scontri-
butions,USE
nstituted
heDeming
Prize nnnual
award
or
product
quality
nddependability.n
960,
Demingwasawardedth eSecondOrderMedal
ofth e
Sa-
credTreasure
by
th e
emperor
ofJapan.
Deming'sworkan dhissuccessinJapan were largelyover-
looked
in
th e
United
States
fo r30years.Then,in
980,
anN B CWhite
Paper,
"If
Japan
Can,
W hy
Can'tWe?"
introducedqualitymanagementtheoriesandtechniques
an dD r.
Demingto
America .
In
987,
President
Reagan
awarded
Demingth e
National
Meda l
of
Technology.
M a ny
theoristsandmethodologistsin
this
countryan din
Japanhave
made
theirmarkon
th e
risingtide
of
quality
management
oncepts.
Like
Deming ,
D r.
osephuran
emphasized
the need fo r
management
involvementinqual-
it y
improvement.
D r.ArmandFeigenbaumbelievedth e
questfo rqualityshouldbe pursuedinal ldepartmentsof
th e
organization,not
just
th e
manufacturing
division.
He
talkedbouthe"hiddenplant,"hatpercentage
of
an
organization'sproductioncapacity
devoted
trictly
o
waste
an d
rework.
D r.
Kaoru
Ishikawa
has
written
exten-
sivelyaboutqualitycontrol,andhe
le d
th e
highlypopu-
la r"QualityCircle"
movement
napan.
D r.
Genichi
Taguch i
is
bestknown
fo r
his"TaguchiLoss
Function,"
which
puts
orth
he
heoryhat
conomicos soccurs
wheneverthere
is
any variationfrom th eoptimalpoint
of
a
process
or
product.Thus ,justbeingable
to
control
processorit soutput
within
range
of
specified
imits
does
not
avoid
economic
loss.
M a ny
excellent
lecturers
currently
conduct
eminarsround
he
ountry
helping
define
and
explain
th e
variouspartsofDeming's philoso-
phy.
WilliamScherkenbach,
who
worked
both
t
Ford
an datGeneral
Motors,
hasassistedDemingfo rmorethan
20
years.
E d
Baker ,
John
Dowd,
Heero
Hacquebord,
Brian
Joiner,
Gipsey
Ranney,and
PeterScholtes
are justafe w
of
th e
manyassisting
in
th e
effort
to
ge t
American
com-
paniesmoving
toward
aquality-centered
culture.
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CHAPTER
-
NTRODUCT ION
Thirty-twotates
have
quality
ward
programs.
7
States
withquality
awards
in
1993
are
listed
in
Table1 .
Alabama
Missouri
Arizona
Nevada
California
N ewHampshire
Connecticut
N ewJersey
Delaware
N ew
Mexico
Florida
N ewYork
Georgia
North
Carolina
Idaho
Ohio
Indiana
Pennsylvania
Iowa
RhodeIsland
Kansas
SouthCarolina
Maine
Tennessee
Maryland
Texas
Massachusetts
Utah
Minnesota
Virginia
Mississippi
Wyoming
Colorado,
Illinois,
Michigan,
andMontana
are
consideringth e
establishmentofstate
qualityawards.
Table
1.
StateswithQualityAwardsin1993 .
SO 9000
Internationalattention
has
beendrawn
to
quality improve-
ment.
T he
IS O9000
is
aseries
of
qualitystandardsthat
outline
th erequirements
fo rquality
management
systems.
It
is
becomingthequalitystandardinEuropeand
is
gain-
in g
acceptance
inCanadaandth e
UnitedStates.Estab-
lishedstandardsfo rmeasuringqualityhavebeenaround
since
th e
industrial
revolution
began.Today,there
are
over
76,000
U.S .
militarytandards,morehan2,000
U.S .
federal
tandards,nd
more
han
35,000
U.S .
ndustry
standardsdevelopedby43 2privatesectororganizations.
8
CURRENT
REALITY
T heSmallBusinessAdministration
(S B A )
estimatesthat
75
percent
ofal l
ne w
businesses
inth eU.S .
ai lwithin
th e
first
fe wyearsofexistence.Legislative
effortsover
th epast
fe wdecades
to
assistsmal l
businesses
havehad
mixed
results.
O ne
of
th e
primary
reasons
orth e
nti-
trustlawspassedbycongresswas
to
protect
smal l
busi-
nesses
ro m
he
perceived
competitiveadvantageheld
by
arge
businesses.
W h e n
th e
S B A
was
established
in
1953,
it
was
a
majoreffortby
th e
federalgovernment
to
assistsmal lbusinesses.Yet,smal lbusinesses
ar eclearly
high-risk,
high-failure
ventures.
In
poor
to
weak
economic
t imes,
uch
shearly1990'sre ,
he
mallbusiness
venture
is
even
more
high-risk.
But,as we
have
seenear-
lier,he
percentageof
small
businesses
embracing
he
qualitymanagementphilosophy
s
elativelyowwhen
compared
tolarger
businesses.
In
manyways,he
mall
businesss moredealunit
than
th e
large
organization
fo rth e
qualitymanagement
philosophy
ounctioneffectively.
Thererenormally
fewer
internal
cliques
insmal l
companies ,and,
therefore,
there
is
lessfightingandbickeringbetweenworkunits.
T he
potentialfo r
effective
teamwork
is
better
in
a
small
organization.
There
re
fewer
layers
of
management
in
most
small
businesses,
so
thatth e
potential
existsfo r
good
communicationsanddynamicworkhabits.T henormally
overworked
mallbusiness
owner
and
manager
an
oftenbenefithemostby
elying
moreonhekills,
knowledge
and
ttitudesof
th e
employees
who
operate
th e
processes.
O nth eotherhand,th esmallbusinessusuallylacksth e
funds
andth et imeto
make
th einvestmentnecessaryto
transform
to
aquality-centeredcompany.Yet,thatinvest-
ment
s
very
mportantndvery
worthwhile.
T he
os t
incurred
byeworkingor
eplacing
heproductsof
unpredictable,
unreliable
processes,he
ostbusiness
causedby
he
production
ofpoorproducts
or
ervices,
th e
costof
hiring
new
employees
caused
by
constant
turnover
ar e
justsomeof
th e
goodreasonsvery
mall
business
houldpursue
he
establishment
of
aquality
culture
in
th eworkplace.
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SMALL
BUSINESS
GUIDEBOOK
TO
QUALITY
MANAGEMENT
It
is
good
to
assessyourreasonsfo rchanging
to
aquality
culture.List
below
th ereasons
you
an dyour
senior
staff
can
think
of
fo r
making
this
transformation.
YourList
of
Reasons
to
PursueaQual i tyCulture
1 .
2.
3.
4.
5.
6.
7.
9.
10 .
The need
fo r
this
transformation
in
most
small
businesses
today
s
probably
urgent.
But,t
isvery
important
that
the
approach
aken
be
ound,
comprehensive,
well-
plannedinitiative.
Thereare
manyqualitymethodologiesand
formulasfo r
successavailable.M o s tof
thesewillshowsomepositive
results
in
application.But,
it
is
important
to
understand
that
th e
ransitionto realqualityculturesusually
long-term
commitment.twill
not
ucceedf
there
s
theorywithoutactionor actionwithouttheory.
In
other
words,
itwill
notdo
just
totalkabout
quality
while
not
activelypursuing
it.Norwill
itbe
sufficient
to
establish
quality
action
groups
without
a
se t
of
concepts
to
guide
th e
activity.
It
is
not aprogram.
It
is
achange
in
th eway
you
do
business,
change
n
he
way
youook
t
processes,
an dachangeinth ewayyouthinkabout
th e
"company."
It
is
ou r recommendation thata proven philosophy,theory,
and
methodology
be
ollowedconsistently
and
per-
sistently.
T he
Demingphilosophyhas
clearrecord
of
successoverhepast
40
years,notonly
n
apan
but
alsohere
in
thiscountry.It is ,therefore,th ethesis
of
this
guidebook
to
followDeming'sconcepts
in
th e
pursuitof
th e
quality
transformation.
A s
you
begin
to
understand
th e
Demingphilosophy,ead
th e
worksofsomeof
th e
other
quality
expertsik e
hose
istednAppendix
B.
Obtaintrainingand
facilitation
servicesthatareattuned
to
he
Deming
philosophy.
Then
proceedby
ollowing
D r.
Deming'sadvice,"Justdoit "
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SMALL
BUSINESS
GUIDEBOOK
TO
QUALITY
MANAGEMENT
CHAPTER
2
T H E D E M I N G PHILOSOPHY
HE
MANA N D
HIS
LEGACY
Dr.
Deming's
70
years
of
developing
and
eaching
conceptsndechniques
o
mproveheorganizational
system havehadanenormousimpact
on
qualitymanage-
menttheory.
T hepractice
of
h istheories
an dphilosophy
havedramaticallyimproved
th e
qualityan dperformance
ofcompaniesin Japan
and
othercountries.
Businessmen
th e
world
over
use
his
theories
nd
techniques
nd
re
livingproof
ofth euccesshat
is
possiblethroughth e
effective
use
of
his
system
and
hisphilosophy.A searly
as950,Demingpromotedheevolutionaryconcept
thatuality
nd
roductivity
wereotmutually
exclusivegoals.Hischainreaction,hown
in
Figure4,
demonstrates
how
higherqualityctuallymeans
ower
costs
and
continuedsurvival.
T he
bulk
of
th eDemingphilosophy
is
contained
in
his
FourteenPoints,heDeadlyDiseases,heObstacles,
andProfound
Knowledge. he
latterelementcontains
theheoriesofSystems,Variation,Knowledge,and
Psychology.
These
ubjects
re
covered
n
wo
of
his
books:OutoftheCrisis
10
ndTh eNewEconomics.
1
'
In
hischapter,
e
will
describe
hehighlights
of
Deming'steachings.
Improve
Quali ty
I
m
I
I
Stayin
business
I
Provide
jobs
and
more
jobs
Figure4.Deming sChain
Reaction
9
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CHAPTER
-THE
DEMING
PHILOSOPHY
HE
F O U R T E E N
POINTS
1
2
M a nyof
th efourteenpointsar einterrelated.Thesepoints
can be
viewedasth e
guidelinesfo rbeginning
to
change
th e
way
you
conductbusiness
andth e
way
yo u
thinkabout
yourcompany.T hemajortransitionneededtoobtaina
good
understanding
of
thesepointsisth echange
of
focus
fromthinking
solelyprofit
to
thinkingmainlyquality.
1 .Create
constancy
of
purposetowardimprovement
of
productan dservice,with
th e
ai m
to become
com-
petitive
and
to
stay
in
businessan d
to
providejobs.
2.
Adopt
th e
new
philosophy.
W e
re
n
ne w
co -
nomicge .Westernmanagementmustwaken
o
th e
challenge,mustlearn
their
responsibilities,
and
take
on
leadership
fo r
change.
3.
Ceasedependenceon inspection
to
achievequality.
Eliminateth eneedfo rinspectionon amassbasisby
buildingqualityintoth eproductin
th e
firstplace.
4.E nd
th e
practiceofawardingbusiness
on
th ebasis
of
price tagalone.Instead,minimize totalcost.
Move
towardasinglesupplierfo rany on ei tem,
on
along-
termrelationship
of
loyalty
an d
trust.
5.
Improve
constantly
and
orever
he
ystem
of
productionandservice,
to
improvequalityand pro-
ductivity,
and
thusconstantly
decreasecosts.
6.Institutetraining
on
th e
job.
7.Instituteleadership
(see
point12).T heai moflead-
ership
hould
be
to
helppeople
and
machines
nd
gadgets
to
do
better
job.Leadershipofmanage-
mentisin needof
overhaul,aswellas
leadership
of
productionworkers.
8.Driveout fearso thateveryone
m ay
workeffectively
for
th e
organization.
9.Breakdownbarriersbetweendepartments.People
in
esearch,design,ales,
and
production
must
work
as
a
team,
to
foresee
problems
of
production
an d
in use thatm ay be encounteredwith th eproduct
orservice.
10 .Eliminatelogans,
exhortations,and
argetsor
the
work
orce
asking
or
zerodefectsndnew
levels
of
productivity.
11a.Eliminatenumericalgoalsor
th e
workforce
nd
numericalgoalsfo rmanagement.
lib.Eliminatemanagement
by
objective.Eliminate
management
bynumbers ,numericalgoals.
Substi-
tute
leadership.
12a.
Remove
barriers
that
ro b
th e
hourly
worker
of
his
right
topride
of
workmanship.T he
esponsibility
of
supervisorsmustbechangedfrom sheernumbers
to
quality.
12b.
Remove
barriershat
ob
people
n
management
and
in
engineeringoftheir
rightto
prideof
work-
manship.This
means,
interalia,abolishmentof th e
annual
or
meritrating
an d
ofmanagementby objec-
tive,management
by
th enumbers .
13 .Institute
a
vigorous
program
of
educationandself-
improvementfo reveryone.
14.
Pu t
everybody
in
th e
ompany
to
work
to
ccom-
plish
he
ransformation.
he
ransformation
s
everybody's
job.
10
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SMALL
BUSINESS
GUIDEBOOK
TO
QUALITY
MANAGEMENT
IT H E
D E A D L Y
D I S E A S E S '
D r.Deming describedwhathe called the DeadlyD iseases.
Theyepresentom eperceivedhortcomingshatan
erodeny
quality
movement .
Likeny
eriousdisease
they
aredifficulttocure,
nd,f
you
are
not
alert,they
m ay
seriously
affectth ehealth
of
yourorganization.
1 .Lackofconstancy
of
purpose
to
planproduct
an d
service
that
will
have
a
marketand
keep
th e
com-
pany
in
businessand provide
jobs.
2.Emphasison short-termprofits:short-termthinking
(just
th e
opposite
from
constancy
of
purpose
to
stay
inbusiness),ed
by
fear
of
friendlytakeover,nd
by
push
by
bankers
an downers
fo r
dividends.
3.Evaluationofperformance,meritrating,
or
annual
review.
4.
Mobilityof management;jobhopping.
5.Managementby useonlyof
visiblefigures,with little
or
noconsiderationoffiguresthat
are
unknownor
unknowable .
6.
Excessivemedicalcosts.
7.
Excessive
costs
of
liability,
swelled
by
lawyers
that
workoncontingency
fees.
1 1
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CHAPTER
2-THE
DEMING
PHILOSOPHY
THE
O B S T A C L E S
(TheObstaclesreth epitfalls
orroadblocks
hatoften
interferewith
n
organization'smovementtowardnd
realization
of
aqualityculture.Notallorganizationsor
leaders
havetheseobstacles
to
surmount ,
butthey
are
th e
common
roadblocks.)
1 ."Hopefo rinstant
pudding"
14
The
transformation
takes
t ime
and
takes
effort.
Thereisno
quick
path
to
quality.
2."The
supposition
hat
olving
problems,
uto-
mation,
gadgets,
an d
new
machinery
will
transform
industry."
15
3."Search
fo rexamples"
16
Attempting
to
transform
to
aqualityculturebycopyingother
company's
pro-
cedures
is
likelytofail.Improvementof
quality
is
a
theorythatca nbetransferred
to
anycompany,
but
only
th etheory
canbe
transferred.
4.
"Ourroblemsre
ifferent."
1
7
Everyone's
problems
redifferent,
ut
heprinciples
or
improvementar e
universal.
5."Obsolescencenschools"
1
8
Businesschools
teach
how
to
make
hort-term
profit
rather
than
how toproducequality.
6."Poorteaching
ofstatisticalmethods
in
industry"
19
Don'tusepoorlyrainedpeopletoteachtatis-
ticalmethods
o
youremployees.
Hirecompetent
statisticianshore
eaders
f
rofound
Knowledge.
7."Use
of
Military
Standard
05 D
ndother
ables
fo racceptance"
20
Usingsuchstandards
to
accept
or
reject
products
or
ervicesguarantees
defects.
Continual
Process
mprovement
willhelpo
ensure
quality.
8."Our
quality
control
departmenttakes
care
ofal l
ou r
problems
of
quality"
21
In thiskind
of
company
th e
wrong
people
re
esponsible
or
quality.Quality
isheesponsibility
of
he
processoperators
and
especially
f
managementand
he
board
of directors.
9.
"Ourroubles
ie
entirely
n
he
work
orce"
22
T heworkers
are
handicapped
by
th e
system,
and
th e
system
is
th e
responsibility
of
management .
10 ."Falsestarts"
23
Theuse
of
"pieces"
of
th e
quality
philosophy,
methodology,ools,and
echniques
can
providedeceivingresults.Remember,here
is
noinstantpudding.
T hetransformationtakest ime
an deffort.
11 ."Wenstalledquality
control."
24
It
cannot
be
installed.
Themprovementofqualityequires
learningprocess,overt ime,
ledby management.
12 ."Theunmannedcomputer"
25
Thecomputerisjust
amachine .
tca n
collect
an d
ummarizedata,but
it
cannot
discern
whatkind
of
variation
exists
in
a
process.A n
understandingofvariations
vital
o
improvingquality.
13 ."Theuppositionthatitisonlynecessary
to
meet
specifications"
26
Specifications
donotdetermine
quality.
Quality
is
evidenced
by
something
that
meets
orexceeds
th e
customers'
expectations.
14."The
allacy
of
zero
defects"
27
No
process
s
withoutvariation.T hepointis
to
continuallyreduce
variation,
butt
s
not
to
eek
he
mpossible.
T o
seek
results within specification l imits expectingzero
defects
is
an illusion.There
is
still
loss,
because
there
is
always
variation.
15."Inadequatetestingof
prototypes"
28
Aprototype
is
just
on einstanceofaproduct
or
service.
It
takes
many
nstancesndcontinual
mprovement
of
th e
process
to
approachquality.
16 .
"Anyonethatcomes
o
try
to
help
us
mustunder-
standll
bout
ou r
business"
29
Thosewhoom e
to
help
you
mustunderstandhow
omprove
systems.Together
with
hose
whounderstand
th e
systems,
hey
canenablecontinual
process
improvementofthe
systems.
30
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GUIDEBOOK
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QUALITYMANAGEMENT
i d
ROFOUND
KNOWLEDGE
Profound
Knowledgeto
Deming
s
comprised
of
four
theories:Systems,Variation,Knowledge,
nd
Psychol-
ogy.Demingsaysmanagersdonot
need
to
becomeex-
pertsnthese
reas
o
be
bl e
o
understandandapply
them.
But,hedoescalluponmanagers
to
developadeep
appreciation
fo rthe
overall
organizational
System,
to
un -
derstandsomethingaboutVariation,
to
graspatheoryof
Knowledge,an dto
appreciate
human
Psychology.Basi-
cally,
Deming's
theories
ca nbe
describedasfollows:
1 .T heTheory
ofSystems
requiresthatmanagement
understand
th e
organization
s
whole
ystem,
complete
picture;
andhey
must
emphasizehe
optimization
of thatsystem.
It
is
essential
thatth e
aim
of
th eystemiscommunicated
to
ndunder-
stoodby
all membersof
th e
organization.Moreover ,
th e
bestchancesofachievingthat
aimcomewhen
all
th eparts
of th e
system
areworkingcollectively
towardth eaim.nthisregard
t
iswrongfo ron e
unitof
anorganizationtoexcel
to
th e
pointwhere
it
adverselyaffects
th e
contributions
of
otherunits
to
the
aim
of the
company.
Teamwork
is
requiredacross
th e
organization.Managementmustconcentrateon
seeingth eforestas wellas seeing the individual trees.
T he
nourishing
of
oneor
tw o
ofth etrees
to
th edet-
rimentofth eothers,however ,
is
a
majormistake
by
management.Leadershipmustead
he
optimiza-
tion
of
th e
system.
Thisisbestaccomplishedby fo -
cusingon
th e
aim
of
th e
company.
This
theoryrequires
a
sharply
different
focus
on
your
organization.Figure5illustrates
th e
systemsview
as
envisionedby
Deming .
This
is
in
stark
contrast
to
thestandard hierarchicalview depicted in the usual
organization
harts.
T he
ystemsie w
ocuses
on
pleasingth ecustomers ,while
th e
organizationchart
focuses
on
pleasing
he
managers.
T he
ystems
view
onlyimplies
that
management
is
involved,
th e
organizationchartonlymplies
thatcustomersre
involved.Quality
in
th e
systems
viewisth e
result
of
th e
interactions
of
al l
parts
of
th e
system,
while
quality
n
heorganizationchart
s
heesultof
individualor
team
efforts.
In the
systems
view
when
fault
occurs,
th e
cause
is
soughtwithinth esystem.
Incompanies
governedby
he
organization
chart
when
fault
occurs,th e
cause
issought
in
th e
people.
2.The
Theory
of
Variation
nvolves
understanding
variation
andknowing
how
to
deal
withit .There
is
variation
in
everything.Variationcauseseconomic
loss.
T he
normalvariationinall
processes
is
called
common
causeariation.
Special
ausevariation
alsocan
adversely
affect
aprocess.
It
is
important
Design
and
Redesign
Consumer
Research
Consumers
Figure
5 .
Deming s
SystemsView
31
.
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CHAPTER
-
THE
DEMING
PHILOSOPHY
todetect
special
ause
variation
becauseyour
approach
to
dealingwithitshouldbe
differentthan
th e
wayyou
deal
with
commoncause
variation.
It
is
oftenpossible
o
detectth epresenceof
special
causevariationbyobservingdatapatterns.There
are
om e
imple
tatisticaltests
o
help
determine
whetherspecialcausesexist.Specialcausevaria-
tion
canoccur
when
a
cause
outside
th e
processaf -
fects
th e
process.It
ca nalsooccurwithin
th e
process
an d
is
usuallyspecific
to
apersonor group.
Deming
identifiestw o
kinds
of
mistakes
arisingfrom confu-
sionofspecialausesndcommonauses:
mis-
taketh e
cause
of
avariation
in
aprocessas
special
when
it
is
actually
commoncause;
mistake
th e
cause
of
avariation
n
process
sommon
when
it
is
actually
special
cause.
3.
T heTheory
of
Knowledgeisth emostabstract,an d
in
manyways
th e
mostimportant,of
th e
four
tenets
of ProfoundKnowledge.
In
itDemingassertsthat
managementisprediction.Everything
you
doas
a
manager
involves predictionsof
on e
kind
or
another.
In order
to
predict,
you
musttestatheoryover
t ime.
A syouobserveheorybeingested
by
everyday
occurrences,
you
obtain
knowledgeabout
what
works
and
what
does
not
work.
With thesedata
you
canmodifyyour
theory.O neexception
to
a
theory
calls
ntoquestion
he
usefulness
of
thatheory.
T he
PDSA
ycleshemethod
o
use
o
analyze
your
system.
T heresultant predictionsallow
yo u
to
plan.
Planning
is
th efirst
step
in
continual
process
improvement.
4.
T he
Theory
of
Psychologyrequiresunderstanding
th evariation
in
everyone:leaders,
employees ,sup-
pliersndcustomers.Y ou
must
earn
hekills,
knowledge,and
attitudes
of
othersin order
to
beable
tooptimize
th e
system.Y ou
need
to
understand
that
almosteveryonehas
an
innatedesire
to
do
a
good
job.T he
manager'sesponsibility
soencourage
and
enablethatattributeothatallemployees
can
improve.People
re
different
romone
another.
Yet,
some
managers
treatemployeesasthoughthey
should al lbe th esameby ranking each of
them against
on e
nother.Ranking
s
destructive.Leaders
need
to
understand
and
nurturehentrinsic
innate)
motivationalforcesthat
people
have.
Theyalsoneed
to
applyextrinsic(external)motivationalforcesthat
produce
positive
results
in
people.
Examples
are
fair
pay,goodworkenvironment,goodequipment ,etc.
Rankingand
fearcandestroyth epositiveintrinsic
attributes
in
aperson.Demingdescribedth elifelong
impact
of
what
h e called the"Forces
of
Destruction,"
depictedin
Figure
6,
to
indicateth eneedfo r
man-
agementoestorehentrinsicmotivation,
self-esteem,
dignity,
cooperation,
curiosity,and
joy
of learning
to
al lindividualsworkingfo r
them.
Thiss
ynopsisof
th e
Deming
philosophy
nd
ts
theories.
Some
mightsa ythisis
al ljust
commonsense.
Ifthisso,
hen
whyst
not
n
commonpractice?
Commonsense,in
fact,
is
whath as
taughtus
to
rate,
rank,
andgradepeopletherebydestroyinghemashown
n
Figure
6.Common
sense,on e
might
contend,is
probably
th e
sourceofth edeadlydiseases.
Moreover,
here
s
considerable
depth,
particularly
n
th e
ProfoundKnowledgeoncepts,
o
warrantcareful
study
an d
consideration
of Deming's
teachings.
It
ishis
thesisthatyouneednotbenexpert
in
histheories
o
make the
system
work.B uty oumus t
be
continuallyseek-
in gmprovement,continuallyearningmoreaboutth e
usefulness
of
his
heories.t
snotbychance
hat
he
first
of
th e
4
Points
is
constancyof
purpose.
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SMALL
BUSINESS
GUIDEBOOK
TO
QUALITY
MANAGEMENT
Forcesof
Destruction
r \
L i f e
J
f ^4/ L i f e
begins
f
tf
V
t
f
ends
These
forces
cause
humiliation,
fear,
self-defense,
competition
fo r
gold
star,
highgrade,
high
rating
on
th e
job.Theyleadanyonetoplaytowin,notfo rfun.They
crush
ou t
joy
in
learning,
joyonthe job,innovation.
Extrinsicmotivation
(complete
resignation
to
externalpressures)gradually
replaces
intrinsic
motivation,self-esteem,
dignity.
One is
born
with
intrinsicmotivation,
self-esteem,
dignity,
cooperation,curiosity,
joy
in
learning.These
attributesare
highat
th ebeginningof
life,
bu t
ar e
graduallycrushed
byth e
forcesof
destruction.
T i m e
Figure
.
Forcesof
Destruction.
The
forces
along
heopob
people,and
th e
ation,
of
innovation....Wemustreplacethese
forces
withmanagementthatwillrestoreth e
power
of theindividual.
32
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TO QUALITYMANAGEMENT
CHAPTER
3
PLANNING
D S A
CYCLE
Yourtransition
to
a
qualityculturebegins
with
th e
PDSA
cycle:Plan,Do,
tudy,ActS eeFigure
7) .
Thisycle
should
be
everpresent
nyour
company's
activities.
N o
more
shooting
from
th e
hip
or
reacting
to
criseswith-
ou tworkingthroughth ePD SA cycle.Planbeforedoing;
and,
whenyoudo
something,
do
itona
smal l
scaleover
t ime
with
customers.
Then
study
the
results
ofthat
experi-
mentbeforemakingafinalcommitment .M a k eahabitof
using
th ePD SAcycle
as
yourway
of
doing
business.
O ne
major
use
of
th e
PD SA
cycle
is
withstrategicplan-
ning.A carefullyprepared 5-year or
10-year
strategic
plan
is
th e
mosttypical.
This
planshouldbecenteredaround
an
aim,
or
vision,
statement.T he
planincludes
th e
values,
or guidingprinciples,
of
th eorganization;th emission,or
reason
fo r
existence,of
th ecompany;
an d
th eobjectives,
or
short-termsteps,needed
to
begin
th e
realizationofth e
aim.
Nothing
will
be more
important
than
your
clarifica-
tion
of
theaim,orvision,
of
yourorganization.
Figure
7
Th e
PDSA
Cycle.
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CHAPTER
-
PLANN ING
T he
aim
statementshould
be
aconstantbywordthrough-
ou tyourcompany.
T he
strategic
planningcycle
aligned
withth e
PDSA
cycle
is
illustrated
in
Figure8.
A im
andmissionstatements
renot justslogans.
They
are
th evitaltatementsthatidentifyyourorganization.
Their
mportance
o
your
company
nd
ts
employees
is
no
less
than
th e
BillofRightsand
th e
Constitution
are
to
th eAmericanpeople.
It
takest ime
to
createaimand
mission
statements.
T he
t imewill
bewell
spent.
visionof
yourcompany.
t
mightnswer
th e
question:
W h a t
do
youwantyourcompany
tobe
in
5or10
years?
J
A L U E S
A N D
GUIDING
PRINCIPLES
AIM
Agood
aim
tatement
syour
dreamor
your
organi-
zation.T heaimreflectsyour
constancy
of
purpose.
t
must
standth e
test
of
t ime
an dshould
be value-oriented.
D r.
Demingtatedthat"...theaim
neverbedefined
n
terms
of
activity
or methods.It mustalways
relate
directly
to
howlifeis
better
fo reveryone."
33
It
is
th e
overriding
These
ar e
vital
elements
in
developingan dmaintaininga
quality-drivenorganization.Agoodsourcefo rguidance
is
th e
4
pointspresentedby
D r.
Deming(see
page
0) .
Understandingand
adapting
these
principlestoyour
or -
ganization
will
be
of
greatbenefit
n
guiding
your
company
to
aqualitycultureandmaintainingthese
gains
onceachieved.However,manyotherprinciplescan
betailoredtoyour
organizationtosupportyourway
of
doing
business.Other
values
hatmightbeusedre
concerned
with
thics,
esponsiveness,nd
imeliness.
Eachcompanymustdeterminewhatit sow nvaluesan d
guiding
principles
are
in
accord
with
it s
value
system
and
vitalconcerns .
Strategic
Planning
Cycle
InformationI
Gathering
1M.AN
Establish
Changes
I
AL
-
X
I
Evaluate
Progress
WsMncn.LJ
v
Aim
-
I
Vision) I
Guiding
Principles
Mission
Take
Action
STUDY
DO
Gap
Assessment
Strategic
Goals
T
Tactical
Objectives
Supporting
Action
Plans
Figure
8.
Th eStrategicPlanning
Cycle.
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CHAPTER
-PLANN ING
RA N S FO RM A TIO N
T opleadershipmustworkatchangingth eorganization
to
quality
culture.
This
ransformation
equires
n
emphasisonfulfillingth epotential
of
th eorganization
an d
continuallyimprovingit s
processes.
T he
focus
is
on
whatyourcompanycanbecomeratherthan
on
where
it
has
been;
th e
ke y
is
on continualimprovement.T heaim
of
th ecompany,it smission,th e values
and
principlesthat
willguideitthese
are
th e
elements
to
be considered
to
buildabridge
to
th efuture.Transformationbeginswith
top
eadership.T op
eadershipencourages
nd
nables
al l
to
follow.
This
is
a
different
view
of
th e
world.
T op
management
must
transform
to
th enewstyle
of
leader-
ship.M a n y
of
th eol dways
of
doing
business
must
be
castasidein orderto
achieve
an effectivechangeover.It
takes
t ime,
it
takes
courage,
it
takes
financial
investment,
and,
as
Demingnoted,ittakesknowledge.
Recharging
th eInfrastructure
T he
transformation
to
aqualityculturerequiresmany
significantchanges
n
norganization.
T he
roadsideis
litteredwith
organizations
thathaveattempted
to
trans-
form
o
quality
culture
without
otal
commitment
from
th e
enior
leadership.
T op
management
must
not
only
be
committedto
quality,
but
they
must
obtain
th e
knowledgeandshowth ewayfo rth erest
of
th ecompany
to
achieveaqualityculture.O neofth efirststepsis
to
establishqualityasth edrivingfactorin
all
th ecompany
does.Senior
staff
meetingsshould
become
to pmanage-
mentqualitymeetings.
The i rmeetings
shouldbe quality-
driven,concentrating
on
customerneedsandsatisfaction,
systems
review,
continual
improvementinitiatives,
nd
other
quality-centered
concerns .
In
firms
with manyemployees,middlemanagementqual-
it y
teamsshouldbe
established.Cross-functionalteams
made
up
of
middlemanagers
hould
be
established
o
providecontinualeview
of
cross-functional
activities.
Insmallercompanieswhere
there
are
fe wifan y
middle
managers,cross-functionaleamsanbecomposedof
representativesfromth evariousfunctionswho
interact
with others
in
agivenprocess.
A dhoc,
or
processaction
teams,can
beestablished
to
reviewagiven
process
fo r
continualimprovement
or
for
problemsolving.Thesead
hoc teamsar eoften
dissolved
afterthey have accomplished
their
mission.
Figure
9
shows
on e
scheme
for
a
quality-
drivenorganizationncludinghemainesponsibilities
of
each
type
team.Keep
in
mind
th e
need
fo r
a
systems
view
as
depictedin Figure
5.
Noteth e
useofth e
linking
pin
fromto p
management
to
middlemanagementteams
and
from middlemanagement
teams
to
action
teams.
T he
purpose
of
th elinkingpin
is
to
provide
upportrom
management
ndoacilitate
communicationsdownand up th e chain
of
command.
T he
linking
pin
s
not controlactorbut ea mmember
withstatusequal
to
allother
teammembers .This
in
no
way
diminishes
th elinkingpin'srole
as
a
leader,
buthe
shouldnotautomaticallybeconsidered
th e
leaderofth e
team.
Notealsohechanging
emphasis
s
opmanagement
is
responsible
fo r
th e
overview
of
th e
organizational
sys-
tem
ndachofit s
ubsystems,
middle
management
teamsareresponsiblefo rsubsystems
andtheircompo-
nent
processes,
and
th e
actionteams
are
responsible
fo r
individual
processes.
It isnotadvisable,withth eexception
of
cross-functional
teams,
to
establishto p
managementor
middle
manage-
ment
quality
teamsseparate
fromth e
restof
th eorgani-
zation.T heneed
is
to
ensure
thatth e
focusofstanding
teams
is
on qualityan dcontinualimprovement.Ifcross-
functional
teamsdonot
now
exist,
they
should
be
estab-
lishedwhere
processes
crossfunctionall ines
an d
should
be
charteredto
ocus
onth e
continualmprovement
of
th e
processes
fo rwhichthey
are
responsible.T hequality
focus
of
al l
these
teams
conveys
th e
important
message
to
al lemployeesthatmanagement
is
committed
to
qual-
it ynotonlyin what
it
says
butwhatitdoes.
Leadership'sRoles
and
Responsibilities
A smentionedearlier
it
is
leadership's
responsibility
to
takepartin
and
enableth e
transformation
to
aquality
culture.
This
is
a
double-edgedsword.O nth e
on e
hand,
it
requiresthatth eleaderknow
why
th e
transformation
is
necessary.
Hemustbe firmlycommitted
to
thatneces-
sity
an d
mus tleadth eorganizationthroughthatchange.
O n
th eother
hand,th eleader
must
transform
himself
to
th e
newstyle
of
leadership.
Theransformationo newtyleofeaderships
perhapsth emost
difficult
of
al lth echangesneeded
to
attainaqualityculture.
It
isanindividual,ego-centered
changeover
from,
what
fo rsomemight
be
adictator
role
to
coachingole;ro m close-mindedorder-barking
role
to
an
open-minded,counselorrole.
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SMALLBUSINESS
GUIDEBOOKTO
QUALITYMANAGEMENT
p|
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CHAPTER
-
PLANN ING
It
requires
that
th eleader
trust
th e
employee,
have
faith
in
the
employee's
ability,and believeth eemployee
wants
to
do
a
good
job.
t
is
mportant
that
leaders
trust
their
employeesndthattheyencouragehem
o
akerisks.
T he
standardstatement,"Ifyo u
wantthe
job
done
right,
youhave
to
do
it
yourself,"
mus tbe
discarded.
Without
trustthere isno realteamworka ndthereisno atmosphere
fo rinnovation.In thattype
of
suboptimized
workplace,
there
is
noopportunityfo rrealgrowth.
T hetransformationrequires
thatth e
leaderprovideth e
employeewith
th e
propertraining,education,
tools,
an d
facilities
to
accomplish
th e
job.
It
requiresthat
th e
leader
bewilling
o
delegatetoheemployeeswhooperate
process
the powertomakedecisions
fo r
it simprovement.
Itrequires
hatth eleader
not
hold
backinformationto
solidifyhis
or
herpower
base.
In
short,fo rsomethiswill
be
a
massivetransformation
Thereremany
advantages
awaiting
he
eaders
who
succeed
with
heransformation.
he
pool
ofexperi-
ence,brainpower,
andenthusiasmunderth eleader'stu -
telage
is
amassiveassetfo raccomplishing
th e
day-in
an d
day-out
activitiesof
anybusiness.T herusted,happy
employeeisfarlesslikely
to
causeheadaches
an d
ulcers
for
h is
eaders
ndor
himselfthan
she
distrusted,
unhappy
employee.
T he
employee
who
finds
joyin
his
workisasilyjoinedwithothercommittedemployees
into
effective
workingeams.
Everybodywins
n
h is
type
organization:
he
employee,
th e
leader,
th e
organi-
zation,hecustomer.
T he
esult
s
noptimizationof
th eorganization.
Thisisnot
to
sa y
that
th eleadersinanorganizationare
preventedfrom makingdecisions.Leadership
m ay
choose
to
approveordisapprove
th e
recommendedchangesfo r
improvement
provided
by
he
employees,
or
they
m ay
empowertheiremployeestomakethosechangeswhere
they
se e
fit.
Managementmustunderstandthatamajorpartoftheir
job
is
to
predict .Theymus t
develop
theories
in
order
to
predict,
so
they
ca n
make
decisions
based
on
those
pre-
dictions.T hebottoml ineisthatth eleadership,having
the
overview
of
th e
whole
ystem,s
esponsible
or
decisions
on
matterselatedohewell-beingofth e
organization
andth e
pursuit
of
i tsaim.
T he
ransformation
esponsibilities
hatal l
on
your
shoulders,
then,
are
asfollows:
now
and
believein
th e
need
to
transformleader-
ship
and
th e
organization.
hange
yourself
to
th e
ne wstyle
of
leadership.
econstant
n
yourcommitment
o
continual
improvement.
evelopadetailedplan
fo r
th etransformation.
eunflaggingin
your
supportfo rothersinvolved
in
th etransformation.
T opmanagementmust
understandhat
heir
ol es
o
oversee
th e
whole
organization,
th e
entire
system.They
need
to
be
in
accordwithth eaim
of
thatsystem.
They
need
to
communicatethataim
to
al lleaders
and
process
operatorsofheorganization.Theiresponsibilitys
tooptimize
th e
system(company)
in
order
tosteer
that
organizationowardtsaim.Topmanagementsnot
responsible
or
managing
he
parts.
That
s
he
job
of
middlemanagersandheprocessoperatorsdirectly
involvedwithth esubsystems
andprocesses.In th e
opti-
mized
system,
management
and
process
operators
throughoutth eorganizationmustfunction
as
ateam.T he
teamunderstands
th e
aim
and
strives
to
reach
it
through
individual
effortan d
cooperative
teamwork.
22
7/25/2019 Small Business Guidebook
27/66
SMALL
BUSINESS
GUIDEBOOK
TO
QUALITY
MANAGEMENT
C H A P T E R
4
T E A M W O R K
COMPETITION
O R
COOPERATION?
Demingurges
eaderso
abandon
competition
nd
o
seekcooperation.Hepromotesthischangewithinyour
organization
and
externallywithyour
"competitors."
t
shouldbeclearthatnternalcompetitionsharmful
o
th e
company
nd
almost
always
harmful
o
efforts
o
achieveth ecompany'saim.W h e nuni tAof an organiza-
tion
competesagainst
unit
B
of
that
organization,
on e
of
th eunitsloses.
T he
losingunit's
contributiontowardth e
aim
of
th eompany
s
herebyessened,ndth eom -
pany
oses.Deming's
pproachso
create
win-win
situation whereby the company'saim
is
achieved and none
ofit sunits"loses."Thisineofreasoninggoesight
to
heheart
of
the
systems pproachn
Profound
Knowledge.
T he
optimization
of
th e
system
is
th e
over-
riding
matter
of
importance,
not
he
trengtheningof
on e
of
th e
partsatth eexpenseofan yof th eotherparts
in
th e
organization.
T he
switchfromcompetition
to
cooperationwithregard
to
external
organizations
s
harder
fo r
om e
o
ccept.
Nonetheless,
t
to osnmportantpartof
th e
systems
approach
envisioned
in
Profound
Knowledge.
Deming's
pointisthat ,ratherthanee kou tabiggerpiece
of
th e
pi e
by
competing
fo r
it ,
make
th epi e
bigger,in
part,
by
cooperatingwithother
companies.
Thisesultsnn
increased
pi e
slice
fo ryo uas
well
asfo rth eother
com-
panies.
N o
on e
loses,anotherwin-win
situation.Deming
uses
a
personal
exampleof
tw o
service
stations,
eachof
whichownedato wtruck.Oncewhenhecalledfo ratow
truck,th estation
he
calledsentoverth etruck
ownedby
th e
other
station,
presumably
because
the
original
station's
truck
was
not
available.
The
pooling
of resources
increased
th emarketfo reachservicestationwithoutdecreasingth e
market
share
of
th e
other.T he
result
wa s
an
increase
in
their
marketanda
win-win
fo r
both.
34
Thiscomparison
isvisualized
in
Figure
0
below.
Teamwork
s
ntegral
o
quality
culture.
Teamwork
dependsonmanyactors.Teammembersneed
o
ee l
equal,
tofeelfree
of
fear,to experience
joy
in
their
work,
toempathizewith teammates,
to
havecommonobjectives,
to
have
th e
necessary
knowledge,
ndto
havea
frame-
work
oraction.Goodeadershipensureshat
hese
needs
ar e
met,
not
only
inactionteamsbut
in
al l
facets
of
th e
company's
operation.
Above
all,
employees
need
to
feel
empowered
to
improve
th e
processes
on whichthey
workin otherwords,tohave