Welcome to the Lead Generation Community: December 2007

Fundamental, structural changes take place slowly.

The effects of those changes can take even longer to materialize.

I reminded of something Zhou-Enlai said on a visit to Paris in the 1950s.

When asked what he thought of the effects of the French Revolution, the Chinese Prime Minister paused, reflected, and then said, "It's too early to say".

Many Americans went to Japan in the seventies to investigate the reasons for the astounding economic success. Since they did not have a theory, they did neither know what to look for nor what questions to ask. They saw the quality circles and thought this to be the root cause. What else should they do but copy not knowing and understanding the system the quality circles operated in.

On 24 June 1980, 21.30 o'clock, NBC aired the television documentary „If Japan Can..... Why Can't We?" "Quality and productivity do not improve just by working harder but by doing the right thing! We expect wonders from Japanese working methods but we do not understand what we copy!" The film acted like a bomb. All of a sudden America woke up from a long sleep of lethargic complacency. Deming became a legend literally over night and the management consultant most sought after.

At an age, when most of his contemporaries lingered along in homes for elderly people, Deming carried his message into the management suites of worlds most renown corporations and government institutions. He conducted around 35 four day seminars a year, known as "Deming Four Days", with an audience of 500 and more. Close personal relations with President Ronald Reagan and Congressman Newt Gingrich opened the way for the message to enter American government and politics. When looking at the enviable state of the American economy, one might be tempted to attribute this to the growing awareness for the importance of quality in American products and services.

„In the years to come Dr. Deming will be recognized as being the one individual which had the biggest influence on world economy during the twentieth century."

This statement was made by John Witney, Professor at the Columbia University Graduate School of Business und the Harvard Business School during the fall conference 1998 of the W. Edwards Deming Institute in Arlington VA.

This opinion is shared by many leading historians and economists. Daniel J. Boorstin, historian, winner of the Pulitzer Prize and director of the Library of Congress from 1975 to 1987 sees Deming as the initiator of the last in a series of nine turning points (History's Hidden Turning Points) during the past two millenniums. The series begins with Apostle Paul who carried the gospel of Jesus Christ into the Roman Empire during the middle of the first century. The series ends with Deming, whose philosophy for the quality of products and services revolutionized world economy during the twentieth century.

In "The Toyota Way: 14 Management Principles from the World's Greatest Manufacturer" Jeffrey K. Liker mentions William Edwards Deming's 14 management principles that are transforming business effectiveness.

Create constancy of purpose toward improvement of a product and service with a plan to become competitive and stay in business. Decide to whom top management is responsible.
Adopt the new philosophy. We are in a new economic age. We can no longer live with commonly accepted levels of delays, mistakes, defective materials, and defective workmanship.
Cease dependence on mass inspection. Require, instead, statistical evidence that quality is built in. (prevent defects instead of detect defects.)
End of the practice of awarding business on the basis of price tag. Instead, depend on meaningful measures of quality along with price. Eliminate suppliers that cannot qualify with statistical evidence of quality.
Find Problems. It is a management's job to work continually on the system (design, incoming materials, composition of material, maintenance, improvement of machine, training, supervision, retraining)
Institute modern methods of training on the job
The responsibility of the foreman must be to change from sheer numbers to quality… [which] will automatically improve productivity. Management must prepare to take immediate action on reports from the foremen concerning barriers such as inherent defects, machines not maintained, poor tools, and fuzzy operational definitions.
Drive out fear, so that everyone may work effectively for the company.
Break down barriers between departments. People in research, design, sales and production must work as a team to foresee problems of production that may be encountered with various materials and specifications.
Eliminate numerical goals, posters, slogans for the workforce, asking for new levels of productivity without providing methods.
Eliminate work standards that prescribe numerical quotas.
Remove barriers that stand between the hourly worker and his right of pride of workmanship.
Institute a vigorous program of education and retraining.
Create a structure in top management that will push every day on the above 13pts.

What are the results of these 14 management principles?

The results are obvious, Toyota has won the game, 57 years after they have implemented William Edwards Deming's 14 management principles: Please feel free to read the headlines of all the media in the coming days! Toyota Aims to Be No. 1 in 2008 Vehicle Sales

Toyota said Tuesday that it planned to sell 9.85 million vehicles worldwide in 2008, setting an ambitious target despite worries about a slowing car market in the United States. Toyota, which is trying to beat General Motors to become the world's biggest automaker by sales, also said it would produce 9.95 million vehicles worldwide next year, up 5 percent from this year. The company projects a corresponding jump in global sales. Toyota's recent growth has put it on track to outsell General Motors in 2008. General Motors has placed this year's sales estimate at 9.3 million vehicles, compared with Toyota's estimate of 9.36 million. Soaring gas prices have sharply bolstered the appeal of smaller fuel-efficient models that are Toyota's main strength. Toyota's sales have been lifted by the popularity of models like the Camry sedan, Corolla subcompact and the Prius gas-electric hybrid. General Motors has been fiercely fighting back — largely by strengthening its business overseas — and could still keep the top industry spot, which it has held for 76 years. G.M. has not given a forecast for the number of vehicles it expects to produce or sell in 2008. Back in 1978, the Detroit automaker set the industry record for annual global vehicle sales, 9.55 million. Toyota executives acknowledged Tuesday that they worried about the market in the United States, where the subprime mortgage crisis and rising oil prices have hit consumers hard. But they nonetheless projected a 1 percent sales increase in the United States, to 2.64 million vehicles in 2008. The executives were bullish about prospects for emerging markets like China, Russia and South America, but set conservative expectations for Europe, where they projected a 2 percent increase, to 1.27 million vehicles sold. In Japan, Toyota expects sales to remain flat, at 1.6 million vehicles next year. Koji Endo, an auto analyst with Credit Suisse in Tokyo, said that next year would most likely prove a challenge even for Toyota, as American economic woes weigh on sales and profits. But he said the overall optimism for sales growth made sense, given Toyota's recent performance. "These are targets Toyota is giving, not forecasts, and so they are reasonable," he said. During the first nine months of this year, Toyota sold 7.05 million vehicles sold worldwide, just shy of G.M.'s figure of 7.06 million. The final tally for 2007 will be available in January. A G.M. spokesman in Tokyo, Michihiro Yamamori, declined to comment, citing a company policy against commenting on its rivals' goals. Toyota also said it was preparing to start mass-producing lithium-ion batteries for low-emission vehicles. Lithium-ion batteries, which are already in wide use in laptops and other gadgets, are smaller yet more powerful than the nickel-metal hydride batteries now used in gas-electric hybrids like the Prius. But lithium-ion batteries will not be used in the Prius, which has been on sale for a decade and is the most popular hybrid on the market, according to Toyota. The lithium-ion battery will be used in a plug-in hybrid, which would recharge from a regular home power socket and travel longer as an electric vehicle than the Prius. Toyota has started tests on its plug-in hybrid, but has not shown a model using the new battery. Masatami Takimoto, an executive vice president who oversees technology, said that Toyota's lithium-ion battery was almost ready for mass production, but would not start up until after 2008. Katsuaki Watanabe, the president of Toyota, said that hybrids would be a pillar of Toyota's growth in the years ahead, and reiterated the company's plan to offer hybrid versions of all its models after 2020. In keeping with its aim to conserve energy and be efficient in both its manufacturing and its products, Toyota will use solar energy and wind power to reduce global warming emissions at what it called five "sustainable plants." A plant being built in Mississippi, set to be in use in 2010, will be one such plant, Toyota said.

The West hasn't learned anything from William Edwards Deming and most Western managers continue to lead in the wrong direction

William Edwards Deming quoted The Seven Deadly Diseases:

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.

For William Edwards Deming, forces of destruction are: grades in school, merit system, incentive pay, business plans, quotas.

Western industry is governed by the philosophy described by Frederick Winslow Taylor in "Scientific Management". It is a philosophy focused on quantity and productivity asked for by the growing economies of the late nineteenth century. The production system shaped by the Taylor philosophy led to a standard of living in industrialized nations never experienced before. When after the Second World War the hunger for industrial goods gradually leveled off, customers became more and more interested in quality instead of quantity. Western industry devoted to the Taylor philosophy was not able to cope with this change in attitude. Deming, however, initiated a revolution of thought, which led to the revival of the shattered Japanese economy. The various aspects of this paradigm change are described in the table below.

Aspect	Taylor Philosophy	Deming Philosophy
customer needs	quantity	quality
quality improvement	is expensive and reduces productivity	saves money and increases productivity
competition	motivates outstanding performance	produces conflicts with a few winners and many losers
cooperation	endangers competitive position	leads to improvements by which everybody wins
principals	command and control	provide for the environment for the employee to work in
employees	want to satisfy the boss	team up with the boss to satisfy the customer
annual appraisals and bonuses	motivate employees to learn and improve	cause competition, rivalry, frustration, winners, losers
purchasing	always from the cheapest supplier	look for a few lasting supplier relations based on mutual trust