Followers of ‘Modern’ (?) management find themselves in essentially the same position: Trying to increase value¹ to their investors. But, if this is their outlook, where to start?

Introducing the Triangle

Perhaps the place where ‘the triangle’ is seen most visibly is within many a traditional project management book – you will likely see a lovely little diagram within its first few foundational pages, with the words ‘quality’, ‘cost’ and ‘time’ at its points.

It will go on to suggest that the Project Manager’s job is to juggle these three variables so as to deliver ‘on time, within budget and to an acceptable quality’.

The key thing to notice is the assumption that there is an equation in which these variable are somehow related….and received wisdom goes on to suggest that there is a trade off and ‘we can’t have it all’ e.g. if we want higher quality then this would sacrifice time and/or cost.

…and the thinking behind that triangle isn’t limited to projects…it goes right across the organisation, in everything it does – basically that faster and cheaper are the opposite of higher quality.

All makes sense doesn’t it – nothing to see here. Blog post over?

Well no, as you’ve probably guessed, I’m just revving up!

And so to Dr Deming:

In his book ‘Out of the Crisis’ (1982), Dr W. Edwards Deming wrote about the “folklore…that quality and productivity are incompatible: that you can’t have both. A manager will usually tell you that it is either or. In his experience, if he pushes quality, he falls behind in production. If he pushes production, his quality suffers. This will be his experience when he knows not what quality is nor how to achieve it.”

Deming’s last line suggests that there could be value in exploring:

• What ‘quality’ means; and
• His thinking on how to achieve it.

What is quality?

It’s obvious isn’t it? Surely, it’s simply “how good something is!” Well, yes…but that doesn’t get us very far. It poses the rather obvious question “good for who?”

There are two levels to drill into:

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Level 1 (and perhaps you’ll all be yawning reading this much-stated point) is that quality is, and can only be, defined by ‘the customer’ (or citizen or patient or….).

It follows that you can’t tell your customers what quality is, or quietly determine this for them. Instead, if you really want to deliver ‘quality’, you’d better spend time constantly understanding² your customers and what they want/ need from your product/ service/process.

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Level 2 is that there is no such thing as the average customer – no two customers are the same – and, as such, quality is defined by each unique customer…and this point has profound implications (particularly for service organisations).

For example, it would be a mistake to create a ‘customer specification’ and think that you have solved the quality conundrum. We need to understand the particular customer before us and design a system that can effectively, and efficiently, absorb their variety. This would be the opposite of trying to force them into a straight jacket.

“You’ve ‘dissed’ the triangle…but what’s your ‘Chain’ got to do with it?”

And so to Deming’s thinking on how to achieve quality. I’ll start by introducing his ‘quality chain reaction’:

Deming wrote that, in the post World War 2 period, some Japanese companies observed that “improvement of quality begets naturally and inevitably improvement of productivity.” i.e. that when quality goes up, costs actually come down. This would seem to be the opposite of our triangle!

How can this be so? Well, when the quality goes up, costs decrease due to fewer mistakes, less rework, fewer delays…reduced failure demand…and on and on. This leads to a continually improving flow.

Deming went on to write that the following “chain reaction was on the blackboard of every meeting within top management in Japan from July 1950 onwards:”

Improve quality – costs decrease – productivity improves – capture market (better quality, lower prices) – stay in business – provide jobs…and more jobs.

Notice where it ends – jobs. Contrast this with where most cost-cutting ‘initiatives’ start – jobs…but not to create them!

Deming calls out a difference in thinking³:

“Western Industry is satisfied to improve quality to a level where visible figures may shed doubt about the economic benefit of further improvement. As someone enquired, ‘how low may we go in quality without losing customers?’ This question packs a mountain of misunderstanding into a few choice words. It is typical of management’s misunderstanding in America.

In contrast, the Japanese go right ahead and improve the process without regard to figures. They thus improve productivity, decrease costs, and capture the market.” (Deming)

‘Triangle’ thinking requires a detailed business case, showing a healthy (yet imaginary) ‘return on investment’ (ROI) before anything can gain authorisation to proceed. This is, unhelpfully, labelled as ‘governance’.

‘Chain reaction’ thinking uses a clear vision, for the customer, and gets on with constantly experimenting towards it, whilst checking the results. This generates a purpose-seeking learning organisation.

Updating the Quality chain

Dan Jones, in one of his YouTube videos, expands Deming’s quality chain reaction to show its wider effect on the full organisational system⁴. I really liked what he had done on his slide…but I wanted to make it clearer still…and so I ‘tweaked it’ (see below⁵)…showing that, if you start at quality, the chain reaction is kicked off and then continues to flow around and around the system:

Now, many a command-and-control organisation would look at the above and shout out “that’s exactly what we are doing!”…and so, to counter this riposte, I thought I’d re-do the diagram but this time start at cost.

i.e. if your starting point is to reduce costs (usually by interrogating line items on the P&L, and focusing on activities) then you are NOT on the quality chain reaction. You would be on quite a different journey:

In a sentence:

Customer Purpose (which, by definition, means quality) comes first…which then delivers growth and profitability, and NOT the other way around!

…and, for all you executives/ senior managers out there, many (most!) of your people already know this⁶.

Footnotes

1. The definition of Value: I reflect on a rather nice quote from Jeffrey Liker: “The first question…is always: ‘What does the customer want from this process?’ This defines value.”

Unfortunately, the modern corporate world has somewhat twisted this definition, and has come to believe that value is defined by the providers of ‘dead money’.

2. Understanding your customer: This requires much more than simply asking them what they want/ need. They often don’t know or, even if they do, can’t (or won’t) clearly articulate this. We need to listen to, and observe, the demands that they place on the system…and then we can truly understand how they behave.

3. Deming’s ‘Western/ American vs. Japanese’ comparison reflects the age, and focus, that he was operating within. Times have changed – not all Western/ American organisations can be tarred with the same brush…and not all Japanese organisations have stayed true to this thinking.

I suggest a modern interpretation would be to compare how organisations are run, by:

• Command-and-Control ‘financial engineers’, attempting to use remote-control management; with
• ‘Systems thinking’ value stream managers

4. Dan Jones presentation: See his slide with the heading ‘defining value’

5. Value for investors: I’ve added employees to the ‘value to investors’ column label within the diagram, to reiterate my recommendation that the system needs ’live money’ to enable this way of thinking.

6. A common aim: “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 customers 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.

With no lenders nor stockbrokers to press for dividends, this effort became an undivided bond between management and production workers.” (Deming)

I know that it’s a broken record but…this last sentence returns back to “Your Money or your Life!”