Dr. W. Edwards Deming and Quality Management Implementing Dr.

Dr. W. Edwards Deming and Quality Management Implementing Dr. Deming’s Quality Management Philosophy within an IT Department Presented by Mark Troncone, MBA, PMP

What this presentation will cover Dr. Deming’s Biography Deming Philosophy Synopsis The Deming System of Profound Knowledge Dr. Deming’s 14 Key principles The Seven Deadly Diseases Dr. Deming Quotations Executing Dr. Deming’s Philosophy to achieving Quality with an IT Department

About Me – Mark Troncone PMP Certified – Project Management Institute Certified IT Business Analyst Active career transition mentor MBA – Management BS – Marketing AS – Accounting Previous Employment: * Starwood Hotels (Present) * Affinion Group * Hewitt Associates * Wachovia Bank * Bayer Pharmaceuticals * Reader’s Digest * James River Corporation

Dr. Deming Biography American Statistician, Professor, Author, Lecturer, and Consultant Born October 14, 1900 in Sioux City Iowa Died December 20, 1993 BS in electrical engineering from the University of Wyoming 1921 MS in Mathematics & Mathematical Physics from the University of Colorado 1925 PHD in in Mathematics & Mathematical Physics from Yale 1928 Mathematical physicist at the United States Department of Agriculture (1927–39) Statistical Advisor US Census Bureau 1935-1945 Professor of Statistics at NY University 1946-1993 As a census consultant under general Douglas MacArthur taught statistical control methods to Japanese business leaders 1947 – taught Japanese engineers and managers statistical process controls – the message: improving quality will reduce expenses while increasing productivity and market share. Credited with enabling Japan to become a world business power by the 1980’s due to image of quality 1979-1982 – worked for Ford Motor Co. credited for making Ford the most profitable US Auto manufacturer by 1986

Deming Philosophy Synopsis The philosophy of W. Edwards Deming has been summarized as follows: "Dr. W. Edwards Deming taught that by adopting appropriate principles of management, organizations can increase quality and simultaneously reduce costs (by reducing waste, rework, staff attrition and litigation while increasing customer loyalty). The key is to practice continual improvement and think of manufacturing as a system, not as bits and pieces."

Deming Philosophy Synopsis – con’t. In the 1970s, Dr. Deming's philosophy was summarized by some of his Japanese proponents with the following 'a'versus-'b' comparison: (a) When people and organizations focus primarily on quality, defined by the following ratio: QUALITY Results of Work Efforts Total Costs quality tends to increase and costs fall over time. (b) However, when people and organizations focus primarily on costs, costs tend to rise and quality declines over time.

The Deming System of Profound Knowledge "The prevailing style of management must undergo transformation. A system cannot understand itself. The transformation requires a view from outside”. "The first step is transformation of the individual. This transformation is discontinuous. It comes from understanding of the system of profound knowledge. The individual, transformed, will perceive new meaning to his life, to events, to numbers, to interactions between people”. "Once the individual understands the system of profound knowledge, he will apply its principles in every kind of relationship with other people. He will have a basis for judgment of his own decisions and for transformation of the organizations that he belongs to”.

The Deming System of Profound Knowledge The individual, once transformed, will: Set an example; Be a good listener, but will not compromise; Continually teach other people; and Help people to pull away from their current practices and beliefs and move into the new philosophy without a feeling of guilt about the past."

The Deming System of Profound Knowledge Deming advocated that all managers need to have what he called a System of Profound Knowledge, consisting of four parts: 1. Appreciation of a system: understanding the overall processes involving suppliers, producers, and customers (or recipients) of goods and services (explained below); 2. Knowledge of variation: the range and causes of variation in quality, and use of statistical sampling in measurements; 3. Theory of knowledge: the concepts explaining knowledge and the limits of what can be known; 4. Knowledge of psychology: concepts of human nature.

The Deming System of Profound Knowledge Deming explained: "One need not be eminent in any part nor in all four parts in order to understand it and to apply it. “ "The various segments of the system of profound knowledge proposed here cannot be separated. They interact with each other. Thus, knowledge of psychology is incomplete without knowledge of variation.” "A manager of people needs to understand that all people are different. This is not ranking people. He needs to understand that the performance of anyone is governed largely by the system that he works in, the responsibility of management. "

The Deming System of Profound Knowledge The Appreciation of a system: Involves understanding how interactions (i.e., feedback) between the elements of a system can result in internal restrictions that force the system to behave as a single organism that automatically seeks a steady state. It is this steady state that determines the output of the system rather than the individual elements. Thus it is the structure of the organization rather than the employees, alone, which holds the key to improving the quality of output.

The Deming System of Profound Knowledge The Knowledge of variation: Involves understanding that everything measured consists of both "normal" variation due to the flexibility of the system and of "special causes" that create defects. Quality involves recognizing the difference to eliminate "special causes" while controlling normal variation. Deming taught that making changes in response to "normal" variation would only make the system perform worse. Understanding variation includes the mathematical certainty that variation will normally occur within six standard deviations of the mean.

Deming’s 14 Key principles The System of Profound Knowledge is the basis for application of Deming's famous 14 Points for Management. Deming offered fourteen key principles for management for transforming business effectiveness. The points were first presented in his book Out of the Crisis. Although Deming does not use the term in his book, it is credited with launching the Total Quality Management movement.

Deming’s 14 Key principles – 1 Constancy of Purpose Create constancy of purpose for continual improvement of products and service to society, allocating resources to provide for long range needs rather than only short Term profitability, with a plan to become competitive, to stay in business, and to provide jobs. Developing the organizations goals and philosophy Long term view Stating the Organization’s goals and philosophy Self examination – where are we Developing a Mission Statement Making the Mission Statement a “Living” document

Deming’s 14 Key principles – 2 Adopt the new philosophy We are in a new economic age, created in Japan. We can no longer live with commonly accepted levels of delays, mistakes, defective materials, and defective workmanship. Transformation of Western management style is necessary to halt the continued decline of business and industry. Understanding the Philosophy of never-Ending Improvement Customer satisfaction Managing for success instead of failure Identify and remove barriers to achieving quality Get everyone involved in the quality journey

Deming’s 14 Key principles – 3 Cease the need for mass inspection Eliminate the need for mass inspection as the way of life to achieve quality by building quality into the product in the first place. Require statistical evidence of built in quality in both manufacturing and purchasing functions. Replacing mass inspection with Never-Ending improvement Develop a plan that minimizes the total cost of incoming materials and final product Inspect all or none rule Commit to examining the process over time

Deming’s 14 Key principles – 4 End lowest tender contracts End the practice of awarding business solely on the basis of price tag. Instead require meaningful measures of quality along with price. Reduce the number of suppliers for the same item by eliminating those that do not qualify with statistical and other evidence of quality. The aim is to minimize total cost, not merely initial cost, by minimizing variation. This may be achieved by moving toward a single supplier for any one item, on a long term relationship of loyalty and trust. Changing the philosophy of purchasing Price has no meaning without a measure of quality being purchased – do not make cost the sole decision factor Move from multiple to single source relationships Long term relationship between the vendor and buyer The lowest price or bidder means poorer quality

Deming’s 14 Key principles – 5 Improve every process Improve constantly and forever the system of production and service, to improve quality and productivity, and thus constantly decrease costs. Improving the system Management has responsibility for the “system” Continual reduction of waste Continual improvement in quality in every activity Management to define operational definitions/communication Use of Control Charts, flow Charts, Check Sheets, Pareto Diagrams, Brainstorming, Fishbone (cause and Effect), Histograms, Scatter Diagrams for managing quality Shewhart Cycle – “Plan/Do/Check/Act”

Deming’s 14 Key principles – 6 Institute training on the job Institute modern methods of training on the job for all, including management, to make better use of every employee. New skills are required to keep up with changes in materials, methods, product and service design, machinery, techniques, and service. Instituting Modern Training Methods Training in the organizational philosophy On-going integrated approach to an employees growth Learn how to perform the job All employees should learn Dr. Deming’s 14 points Realize that training is part of everyone’s job Use statistical methods to determine workers capability Training that offers employees a share in the overall philosophy and goals for the organization

Deming’s 14 Key principles – 7 Institute leadership Institute leadership - the aim of supervision should be to help people and machines and gadgets to do a better job. Supervision of management is in need of overhaul, as well as supervision of production workers. Supervising Never-Ending improvement People are penalized for things beyond their control Management should remove causes for system variation Create a positive supportive atmosphere Eliminate fear and mistrust Encourage coaching Extract feedback Workers have to give new systems a chance

Deming’s 14 Key principles – 8 Drive out fear Encourage effective two way communication and other means to drive out fear throughout the organization so that everybody may work effectively and more productively for the company. Driving out fear: Fear causes stress, emotional problems, and absenteeism Caused by feeling powerless and having no control Do not use as a motivator get people to work in teams Elimination of fear starts at the top Open channels of communication Interaction with the organization - Training in company goals Organize and structure teams What is the job, is acceptable, what is not acceptable Reward teamwork, quality, and creativity

Deming’s 14 Key principles – 9 Break down barriers Break down barriers between departments. People in research, design, sales, and production must work as a team, to foresee problems of production and in use that may be encountered with the product or service. Breaking down organizational barriers: Employees roles become functional Problems in competition, communication and fear arise Staff areas have to work as an integrated whole Customer and employee surveys should be done Improve communication upwards and downwards Eliminate performance appraisals Training to reduce barriers

Deming’s 14 Key principles – 10 Eliminate exhortations Eliminate slogans, exhortations, and targets for the work force asking for zero defects and new levels of productivity. Such exhortations only create adversarial relationships, as the bulk of the causes of low quality and low productivity belong to the system and thus lie beyond the power of the work force. Replacing numerical goals, posters and slogans with NeverEnding improvement Change to system to help employees achieve goals Identify problems/barriers that are causing goals not to be met and eliminate them – get rid of management by objectives Goals must be focused on the company’s mission in the future Goals must have an organizational purpose and aligned with the job

Deming’s 14 Key principles – 11 Eliminate arbitrary numerical targets Eliminate work standards (quotas) on the factory floor. Substitute leadership. Eliminate management by objective. Eliminate management by numbers, Numerical goals. Substitute aids and helpful leadership in order to achieve continual improvement of quality and productivity. Replace management by numbers with Never-Ending Improvement Quotas and standards focus on quantity not quality Replace with statistical methods, leadership and training Identify process improvements By focusing on quality through the use of statistical methods, management provides a roadmap for never-ending improvement

Deming’s 14 Key principles – 12 Permit pride in workmanship Remove barriers that rob the hourly worker of his right to pride of workmanship. Promoting pride of workmanship: The responsibility of supervisors must be changed from sheer numbers to quality. This means, inter alia," abolishment of the annual or merit rating and of management by objectives Involve employees at all levels of process improvement Operationally define job descriptions Meet basic work-related needs of employees Supply employees with the proper tools, materials, & methods

Deming’s 14 Key principles -13 Encourage education Institute a vigorous program of education and selfimprovement,. What an organization needs is not just good people; it needs people that are improving with education. Educating and retraining everyone: Should develop employees for changes in their current jobs In the organization’s mission and goals Statistical training View training as long term for the individual In fields related to the employees current job The employees personal improvement Failure to do this creates loss of resources in the future

Deming’s 14 Key principles – 14 Top management commitment to action Put everybody in the company to work to accomplish the transformation. The transformation is everybody's job. Clearly define top management's permanent commitment to ever improving quality and productivity, and their obligation to implement all of these principles. Indeed, it is not enough that top management commit themselves for life to quality and productivity. They must know what it is that they are committed to—that is, what they must do. Create a structure in top management that will push every day on the preceding 13 Points, and take action in order to accomplish the transformation. Support is not enough: action is required!

The Seven Deadly Diseases The "Seven Deadly Diseases" include: Lack of constancy of purpose Emphasis on short-term profits Evaluation by performance, merit rating, or annual review of performance Mobility of management Running a company on visible figures alone Excessive medical costs Excessive costs of warranty, fueled by lawyers who work for contingency fees

"A Lesser Category of Obstacles" includes Neglecting long-range planning Relying on technology to solve problems Seeking examples to follow rather than developing solutions Excuses, such as "our problems are different" Obsolescence in school that management skill can be taught in classes Reliance on quality control departments rather than management, supervisors, managers of purchasing, and production workers Placing blame on workforces who are only responsible for 15% of mistakes where the system desired by management is responsible for 85% of the unintended consequences Relying on quality inspection rather than improving product quality

Dr. Deming Quotations “There is no substitute for knowledge." “In God we trust; all others must bring data.” “The most important things cannot be measured." "The most important things are unknown or unknowable." "Experience by itself teaches nothing.” "You can expect what you inspect." The problem is at the top; management is the problem." "A system must be managed. It will not manage itself. Left to themselves in the Western world, components become selfish, competitive. We can not afford the destructive effect of competition."

Executing Dr. Deming’s Philosophy to achieving Quality with an IT Department Principle – 1 Constancy of Purpose The commitment to make continuous improvement a priority must come from the top. Implement a Project Management Office to ensure continuous improvement activities are undertaken and practiced. The PMO should implement systems to ensure best practices and lessons learned are gathered and implemented while actively incorporating them into the methodology. Build a separate portfolio project management group emphasizing a strategic approach over a tactical one in order to ensure continuous improvement from the perspective of the whole system. For larger companies various groups should have their own versions of a PMO. It allows for groups with a specific subject area focus to tailor their approaches. The PMO must work with management to ensure projects are in alignment with organizational goals. The leader of the project group must have the ability to not let fire fighting overpower the improvement strategy.

Executing Dr. Deming’s Philosophy to achieving Quality with an IT Department Principle – 2 Adopt the new philosophy Create a project environment conducive to a win-win approach and eliminates fear. In Project Planning and Initiation, clearly define the WIIFM (What’s in it for me) for everyone on the project. Functional managers need to understand the benefit of the project to their area. In Execution, a win-win philosophy will help keep individual issues from turning into project-killing conflicts. Enable people to be creative and take educated risks. If someone makes a mistake, they should not fear retribution from other parties, and they should not want to cover it up. Everyone should think about issues and conflicts in terms of what is the best method of dealing with it for the whole project and everyone involved. During execution, a project manager should not hold so tightly to the original requirements and throw up artificial barriers to positive changes. If more money or time is required to increase the scope, the net effect should still be win-win for the organization. When the project is finished, everyone should be involved in the celebration together.

Executing Dr. Deming’s Philosophy to achieving Quality with an IT Department Principle – 3 Cease the need for mass inspection Deming’s third point when applied to project management eliminates much of the uncertainty in projects by using an invariant framework which can be continually improved so projects do not need continual review. Create and continually improving a consistent system from which project managers plan and execute projects. Inspect project performance through the lens of continuous improvement. Develop a universal method for making estimates and a consistent system of managing projects. Apply lessons learned to a consistent and ever-improving methodology. Various components of the methodology should be a guideline, whereas critical planning processes should be standardized as much as possible to facilitate the formation of sound theories and best practices. A performance report indicating a significant discrepancy in the planned time, cost, or quality should be viewed as an opportunity to go back to the planning process to view inaccuracies. Appraise performance of project managers by (1) ongoing contributions to improving the methodology and (2) compliance and success of execution. MBO must be eliminated so a project manager may not be enticed to add so many schedules and cost to come in under budget and ahead of schedule to only meet most of the customer needs, not all of them. Where is the incentive for continuous improvement? Reward project managers who embrace and improve the methodology to provide quality to the customer. Statistical measures across multiple projects such as standard deviation from plan and EVM metrics can provide useful insights into opportunities for improvement.

Executing Dr. Deming’s Philosophy to achieving Quality with an IT Department Principle – 4 Don’t make decisions based solely on cost Be sure to consider costs and benefits of a project in terms of the entire system, not just the project alone, or even the specific department or customer who pays or it. Weigh the costs and benefits on a project for the complete expected lifetime of the final deliverables, not just the duration of the project that creates them. Projects must be in alignment with the entire system in which they are carried out. Recognize the possible costs to other departments that your project might create - Projects should be carried out in light of what is best for the entire organization as a whole. Do not discourage project team members for suggesting improvements even if they will increase scope – think long term.

Executing Dr. Deming’s Philosophy to achieving Quality with an IT Department Principle – 5 Improve every process To create a common, shared project management methodology: 1. Establish a formal process by which lessons learned are documented regularly while executing projects, and put in a format and location where they are visible to all and can be later analyzed. 2. After each project is finished, analyze the project in terms of performance in the triple constraints, stakeholder satisfaction, and other metrics important to your organization. 3. For negative points identified in #2, use the 5 Why technique to document root causes. Do some statistical analysis on these root causes to determine their frequency, correlation to the negative points identified, and the estimated cost/time involved with potential solutions. 4. Implement selected solutions on a beta test with one or a few projects, clearly defining the points at which the test process diverges from the firm’s common methodology. 5. Analyze the results in the beta projects of these specific changes. 6. Based on the successes or failures of the beta testing, implement changes in the common methodology. 7. Rise and repeat.

Executing Dr. Deming’s Philosophy to achieving Quality with an IT Department Principle – 6 Institute training on the job Training project managers, analysts, and everyone else who regularly works on projects in the company methodology, soft skills, etc. can bring significant rewards. A project resource center with books, periodicals, and other materials Time specifically scheduled for training and learning each month Presenters, either from the team or externally, giving a talk monthly to the whole group A significant amount of funds in the budget earmarked for training Sending a few people each year to seminars and events like the PMI Global Congress, etc. –And then those people present what they learned to the whole group when they get back A formal mentor program whereby new employees are paired with a veteran Company methodology and process training

Executing Dr. Deming’s Philosophy to achieving Quality with an IT Department Principle – 8 Drive out fear Deming that fear is so unproductive and harmful that it should be driven out as much as possible. Problems to be understood and addressed as soon as possible Project managers who have a fear of failure because of the environment they are working in will never try anything new. How can progress be made unless you try something new, and take some educated risks? It can’t. Fear of the unknown can paralyze project managers, sponsors, and stakeholders alike. Good project management in itself can alleviate much fear associated with unknowns. Relinquish control. Get away from micro-managing projects give guidance and direction, then get out of the way. Fear of change – make the WIIFM (what’s in it for me) painfully obvious, and involve experts from the stakeholders as much as possible when working the project. Do not just include the managers of these people in your project .that is a sure fire way to ensure the end-users are fearful of the change when it comes.

Executing Dr. Deming’s Philosophy to achieving Quality with an IT Department Principle – 9 Break down barriers Projects can be cross functional. This point is about dissolving the “us versus them” scenario that so often exists in one form or another within organizations. The “us versus them” attitude comes about when project managers and project team members look at their own interests at the exclusion of others, and instead of working towards a common goal, work towards their own separate and distinct goals. The Project goal should be to help the stakeholders and sponsor flesh out their true requirements fully, and then meet those needs. The objective of any project is to add value to the organization Using SCRUM is a way for the stakeholders to actually use incremental versions of a working prototype software to flesh out true requirements Project Managers and Business Analysts to not take the CYA route of “well, if they don’t put it in the requirements, it’s their fault” and instead be proactive and engage the stakeholders. If any doubts exist, do not throw responsibility over the fence, take it on yourself. A truly great project manager holds themselves accountable for stakeholder satisfaction.

Executing Dr. Deming’s Philosophy to achieving Quality with an IT Department Principle – 10 Eliminate exhortations and slogans Walk the Talk In a project management organization, it is much better to have published guidelines and a vision that defines your philosophy and practice. Train your project managers and teams on the methodology. Let them execute within that framework, and put a system in place so that the practitioners can revise the process and make it better. If you say you are going to deliver the product by a specified date, budget, and quality, then do it - Consistently. It’s your job to fully understand the requirements early on Hold Systems Accountable If you do not have a common and well-defined company methodology for project management, you must be expecting every project manager to be perfect. A better approach might be to have a set of guidelines, tools, and techniques within well defined processes so that a project manager does not have to also be a mind reader. If projects are constantly failing at your organization, it is not because you have a set of lousy project managers (more than likely), it’s because you have no system in place to manage projects.

Executing Dr. Deming’s Philosophy to achieving Quality with an IT Department Principle – 11 Eliminate arbitrary numerical targets Put a process in place to help guide estimates, evaluate performance to planned estimates, and go back to figure out why estimates were wrong. Change the resource load so that a team member can devote all or most of their time to a project for a limited period of time, thereby reducing the cycle time on their deliverables (for your and other projects) and allowing them to more easily estimate in terms of effort required. Part of the process may be to train and guide them in doing a lower level of WBS to break things down into 4-16 hour chunks. It is going to be important in a Deming approach to evaluate tasks that took longer or shorter than anticipated. Not to place blame on the individual who did the estimate, but to find ways to enhance the process of estimating to make it more accurate in the future.

Executing Dr. Deming’s Philosophy to achieving Quality with an IT Department Principle – 12 Permit pride in workmanship Deming claimed that the sense of having helped other people is the most significant motivator and source of job satisfaction. It is one of the biggest enablers for pride of workmanship. Project managers should be looking for the great things their teams are doing. People on their projects should know that when they go above and beyond, they will be recognized. The PM must be unselfish and is there to serve their people. Servant leadership is what is required. The PM should start with the viewpoint that the multitude of talent on their team is going to come up with better ideas than the PM can alone, and not be afraid to embrace those ideas. Another key point is the avoidance of micromanaging projects. Tasks should be broken down to a certain level where the individual contributor can apply their expertise, and no further. Let them execute how they wish based on their talent and expertise. Be there to guide and serve, yes, but not to micromanage. Micromanaging is one of the quickest ways to kill the soul of a project team.

Executing Dr. Deming’s Philosophy to achieving Quality with an IT Department Principles -13 Encourage education In order for continuous improvement to become organizational culture, it must also become a personal goal for every employee. Employees are the most important assets of an organization, and therefore require effort to retain and enhance them. On project teams, the most important assets are the individual contributors that make the project happen Make all relevant project documentation available to the whole team, including planning exercises and other resources. Explaining your approach as a project manager is key to helping everyone understand the method to your madness, and by example you can help develop organizational and project skills in them. Other skills will come through such as time management, documentation/configuration management, leadership, communication, planning techniques, estimating, and scheduling/workflow management. A project manager of a permanent group of project team members can have an even better opportunity to help their team grow personally and professionally. On a permanent team the PM even may have the power to set aside training time for everyone where they can plan to educate themselves on any topic they wish.

Executing Dr. Deming’s Philosophy to achieving Quality with an IT Department Principle – 14 Top management commitment to action This point speaks to the need for (1) commitment from top management and (2) commitment from everyone else in the organization. Quality is everyone’s job, and if any implementation is not total, it will not fulfill its full potential. Form and support a company-wide Project Management Office. That PMO must be the central source of all project management knowledge, under continuous development by the practitioners of project management. Lessons learned and any potential improvements to the project management methodology used by all PM’s in the company should be evaluated, tested, and implemented as a positive change. Communication channels and documentation management must be in place so that everyone is completely and totally aware of any changes and how it impacts the way they are to run projects. Feedback mechanisms must be in place to allow those same project managers to make suggestions to initiate their own changes to the methodology. This also speaks to the necessity for everyone who works on projects to have some knowledge of the methodology. They should at least be familiar with the methodology from an executive summary point of view. They should understand how to use some of the tools and techniques that may be applicable to their contributions on projects.

References The Deming Guide to Quality and Competitive Position Howard S. Gitlow, Shelly J. Gitlow Wikipedia W. Edwards Deming The Leadership Institute Inc. Deming’s 14 points in Project Management Josh Nankivel

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