Management 101 - Back to Deming

by Don Harkey

"We are living in a prison, under tyranny of the prevailing style of interaction between people, between teams, between divisions. We need to throw overboard our theories and practices of the present, and build afresh. We must throw overboard the idea that competition is a necessary way of life. In place of competition, we need cooperation."

- W. Edwards Deming from "The New Economics" (1994)

Many people have asked me where my central philosophy in management was derived. I often talk (or write) about how I see flaws in what is currently the popular idea of good management. I read articles from management professors, which, forgive me, are not only wrong, but reflect the core of many of the problems faced in organizations today. So if you believe that there is a better way, where do you start?

My answer is simple. Start with W. Edwards Deming.

I will let you look up information on Deming and learn about his long career. There is plenty of information available on the web or in the library about Deming's principles and his life. To me, Deming is to management what Einstein is to physics. In the field of physics, scientists are still working hard to fully understand the theories that Einstein first introduced to the world almost a century ago. Deming's ideas are similar. Few management gurus will dispute Deming outright, but few also truly understand and follow his philosophy.

Summarizing Deming's views is like summarizing Einstein's Theory of Relativity. However, there is simplicity to it. Deming's belief is that our culture has developed to think of a free market as one where competition at all levels leads to success. This is Adam Smith's view of economics. If Deming is Einstein in our analogy, then Smith is Isaac Newton. Like Newton, Smith is almost right.

"People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices."

- Adam Smith from "The Wealth of Nations" (1776)

In essence, Smith says that competition drives prices down and cooperation drives prices up. He has a point. Companies have pulled together to "fix prices" in the market just as Smith describes above (ex: ADM in the early 90's). It is also true that competition can lower prices, especially as consumers are given more choices. Smith's theory can be (and is regularly) applied to individuals as well. Employees who band together can fix their output and demand more wages (ex: auto worker's union). Employees who are put in competition with each other will work harder because they have to.

However, like Newtonian physics, this theory doesn't work all of the time... and the exceptions are extremely important.

There are plenty of examples of "people of the same trade" pulling together to decrease costs and improve quality for the consumer. Professional organizations have developed standards that provide professionals with a collective knowledge. An example is the American Society for Mechanical Engineers (ASME), which provides best practices for use throughout the world, which has lead to decrease costs from manufacturers who don't need to develop their own standards, and improved quality because the collected knowledge is better than any individual organization could have developed. This cooperation has lead to lower costs and improved quality.

What about individuals? Professional athletes are often inspired by competition, but history shows us that the best performances come from teams that consist of individuals who cooperate toward a common goal. The Yankees regularly have the best players in all of the baseball, but they are often defeated by teams consisting of young, start-up players.

This is a complex topic, but I am trying to leave you with 2 key points. First, the more I learn about Deming, the more I see that he right. Second, think about competition and cooperation and how they impact your organization. Challenge yourself and question conventional wisdom. Let's start digging our tunnel out of the "prison" that Deming talks about!