Small Business Guidebook

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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.


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


4/66

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


5/66

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


6/66

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.


7/66

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.


8/66

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.


9/66

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.


10/66

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.


11/66

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.


12/66

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.


13/66

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 "


14/66

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


15/66

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


16/66

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


17/66

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

12


18/66

SMALL

BUSINESS

GUIDEBOOK

TO

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

.

13


19/66

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.

14


20/66

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

15


21/66

SMALL

BUSINESS

GUIDEBOOK

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.

17


22/66

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.

18


23/66


24/66

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.

20


25/66

SMALLBUSINESS

GUIDEBOOKTO

QUALITYMANAGEMENT

p|

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21


26/66

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


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

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