This famous diagram appears on page 3 of W.E. Deming’s classic 1982 book “Out of The Crisis.” Here is what Deming had to say about this:
…the following chain reaction became engraved in Japan as a way of life. This chain reaction was on the blackboard of every meeting with top management in Japan from July 1950 onward. The production worker in Japan, as anywhere else in the world, always knew about this chain reaction; also that defects and faults that get into the hands of the customer lose the market and cost him his job. Once management in Japan adopted the chain reaction, everyone there from 1950 onward had one common aim, namely, quality.(p.3)
Japan Inc. used these concepts to kick the snot out of American companies for three decades. The pinnacle of their success was when Toyota recently dethroned GM as the largest automotive company in the world. Anyone that was paying attention saw it coming years ago.
I’ve never owned a Toyota, so I for one never saw the quality malaise coming.
Even if the logic of this diagram is still engraved as a way of life in Japan, you can bet it is not engraved as a way of life in the numerous countries where Toyota now manufactures or assembles their legions of cars. Regardless, you can be sure it has not been on the blackboard of Toyota meetings of top management for a long time.
There will be no shortage of speculation about what caused the quality crisis at Toyota, and much of it will center on the cultural characteristics of the Japanese. No doubt that offers a partial explanation, but I just don’t think culture alone is sufficient.
There is a reason why poor designs were allowed to go into production, and a reason why front line workers did not speak up to point out the flaws they had to have noticed. The reason is systemic, not cultural. Remember, the Japanese designed the systems that kicked the butts of American companies for so many years. There has to be another reason why the systems are now failing.
The logic behind this diagram is the reason why I fell in love with the Deming philosophy when I first saw it in the early 1980’s. Deming cared about the worker, and I have always been a worker. His purpose was to transform American management so that companies and their employees could prosper and be responsible and productive members of their communities.
It is no longer socially acceptable to dump employees on to the heap of unemployed. Loss of market, and the resulting unemployment, are not foreordained. They are not inevitable. They are man-made. The basic sickness in American industry and resulting unemployment is failure of top management to manage. He that sells not can buy not (p.1).
Here we are, 28 years later, and we still have not learned this simple yet profound knowledge. Will we ever learn?
You should follow me on twitter here.
Bret,
I recently read a short business article on the Toyota crisis (yes, it’s not a short-term problem)that was drawing a link between lean manufacturing and the company’s quality downfall. This is intriguing, and has not yet been adequately picked up in the media.
Lean manufacturing, as you probably know, is focused on getting waste out of production processes, and supports as a consequence efforts to reduce the impact on the environment. The most prominent example of this is Ray Anderson’s 15 year journey at Interface (a flooring company). However, in Anderson’s never-ending work towards a zero footprint as far as I know he’s maintained quality.
So I’m at a bit of a loss about Toyota. I’m sure that lean proponents will vigorously fight any criticisms of lean principles, pointing to other reasons for Toyota’s slide.
On a personal note, I stopped buying Toyotas several years ago due to quality issues. I’ve owned Japanese-built Mitsubishis for five years and never had a problem.
[Reply]
Bret L. Simmons Reply:
February 11th, 2010 at 8:57 am
Interesting point about lean manufacturing, Jim, one I have not heard before. From what I know about lean, it should actually improve quality. I own a Ford and Jeep, both of which are over 10 years old. When I buy a new car this year or next, it will be a Ford or a Jeep. Thanks! Bret
[Reply]
Bret,
I know it’s never as simple as it appears, but it seems like Toyota could use a Deming refresher course.
I would like to hear more of your thoughts on Deming and his philosophies as part of your blog when you can fit them in.
Thanks
Alex
[Reply]
Bret L. Simmons Reply:
February 11th, 2010 at 10:19 am
Never simple, Alex. My first reaction is a system as large as Toyota is very, very complex, and therefore very hard to conceptualize and manage. Thanks! Bret
[Reply]
An aside about ‘lean’ — ‘lean’ in an American context, esp with our addiction to layoffs as a cost control measure, often means wringing out every last bit of energy from exhausted workers. This is not what Deming would ever have advocated.
More central is the concern that Toyota really has strayed from its core orientation towards Quality w/ a capital Q.
The distance has been created in two ways– from within the company as they have forgotten about continuous renewal of their Q philosophy, and from ‘outside’ as the Q philosophy was imperfectly fitted into other cultural contexts as Toyota expanded.
My own manufacturing mgmt experience showed me, in painful vision-busting ways, how hard it is to put Quality and high commitment into American work systems and orgs. Not impossible, but really really hard. And so easy to get distracted from this kind of hard work.
WOuld love to hear more from other Deming, Q, and 6S experts on what went awry, and what should be fixed first.
cvh
[Reply]
Bret L. Simmons Reply:
February 11th, 2010 at 10:21 am
I too would love to hear more from Deming disciples about what they think went wrong, CV. Great observation about big Q and little q. Better go check my Joe Juran source material again
Thanks! Bret
[Reply]
Bret- I heard a radio sound bite of Toyota’s CEO apologizing and accepting responsibility for the situation. I don’t remember the exact words he used, but he acknowledged the major issue at hand and claimed the company was working on a solution to the system failure. It will be interesting to see if the management is able to follow through.
The Toyota CEO’s remarks seemed much more appropriate, with regards to the situation, compared to automakers that blamed economic issues and consumer trends on their management shortcomings during the auto bailout extravaganza.
Thanks,
Kevin
[Reply]
Bret L. Simmons Reply:
February 11th, 2010 at 12:59 pm
Great point about accepting responsibility vs. placing blame, Kevin. It puts Toyota in a better position to actually fix their problems and possibly even come out stronger. Thanks! Bret
[Reply]
Ajo Cherian Reply:
February 11th, 2010 at 3:13 pm
Kevin, Akio Toyoda (President of Toyota) recently wrote a piece in the Washington Post where he apologized for the quality lapse and outlined the steps the company will take to prevent this from happening again – http://www.washingtonpost.com/wp-dyn/content/article/2010/02/08/AR2010020803078.html
I thought it was a very well-written piece (though I’m sure it’s gone through many internal editors). As the head of the company, I’m glad he’s admitting that Toyota’s current system failed instead of passing the buck. I like the fact that he is promising to put in new processes and systems instead of just apologizing without doing anything to prevent future problems. Bret, I’d be glad to hear your thoughts on whether he did the right thing or is not doing enough.
[Reply]
Kevin J Porter Reply:
February 11th, 2010 at 3:25 pm
Ajo- Thanks for adding some actual content to my general remarks! It appears Toyota’s management is attempting to DO THE RIGHT thing. The situation has already negatively affected the organization, yet Toyota can learn and grow from the system failure if the management follows through with their recent rhetoric. Hope your semester is going well!
Thanks,
Kevin
[Reply]
Bret L. Simmons Reply:
February 11th, 2010 at 4:31 pm
I agree, Kevin, and I think they will. Thanks! Bret
[Reply]
Bret L. Simmons Reply:
February 11th, 2010 at 4:31 pm
Good questions, Ajo. I think they are going to take a VERY hard hit. But my prediction is that in three years they will be a VERY tough act to beat. I think they are doing to bounce back from this and be stronger and better than ever before. Thanks! Bret
[Reply]
Bret
Isn’t Deming’s philosophy and espicially his 14 points about values and leadership? I understand his vision to be “people with sound values have the capacity to produce quality goods or services at a competitive price.” His teachings are more about who a company is, or at least strives to be, than about what they do. I spent thirty years in manufacturing implementing and re-implementing ERP systems, quality systems, etc. These efforts rarely continued past the point where the company had to change their fundamental values. It would be refreshing if “Toyata’s rise from the fall” were a catalyst for a discussion on developing leaders and effective values instead of our current discussion about management and process.
[Reply]
Bret L. Simmons Reply:
February 24th, 2010 at 10:24 pm
Welcome, Mike! I think you are right. Deming was all about leadership, without which his system of profound knowledge could not be applied to transform a company. Thanks for sharing your insight! Bret
[Reply]
Bret, my feeling is that Toyota probably started to embrace Western Management (or Management by Objectives). Mr. Toyoda said yesterday the his company grew too quickly and lost their fundamentals. I think they worked too hastily to get things to market and picked on their suppliers to make better price points. I believe this is the system that Toyota needs to back away from.
[Reply]
Bret L. Simmons Reply:
February 25th, 2010 at 10:02 pm
Welcome, Lito! I think that is an honest reply on the part of Mr. Toyoda. I saw the same thing happen with Dell computers. They were once a really good computer, but then they grew WAY too fast and had big quality problems. Consumers never knew until their Dell’s turned out to be junk. I personally will never buy another Dell in my life – had several of them fail on me. But I do predict that Toyota will come back even stronger eventually. Thanks! Bret
[Reply]