The quality revolution led by the late W. Edwards Deming demonstrated, on a broad scale, how the attitudes of individuals and institutions toward the status quo can either pave the way for change, or hold it at arm’s length. Deming was a protégé of Walter Shewhart, who developed the theory and practice of statistical process control (SPC) in the 1930s at AT&T’s Western Electric division. Deming Diffused SPC principles to the wider world of U.S. manufacturing during the war years, but to his disappointment, those principles were abandoned and largely forgotten in the post-war era, when U.S.business found itself essentially unchallenged in the world. American manufacturing was satisfied, complacent, and comfortable, and didn’t have much interest in Deming’s quality principles.
Halfway around the world, however, America’s competitors were extremely change-ready. Japan’s industrial base had been flattened by the Allied bombings. Its resources were few, and its products were viewed as shoddy and poorly designed. Worse, millions of people were unemployed. Everyone in Japan knew that industrial revitalization was the only way out of this desperate situation. And Deming, a prophet ignored in his own land, offered a blueprint for success. As described by Richard Luecke in his book of history lessons for modern managers: Deming told the Japanese leaders that following [the SPC] approach would result in a “chain reaction” of good things for their companies.
Improved quality would result in decreased cost (less rework, fewer delays, less scrappage), which would result in improved productivity, which would lead to the capture of markets, business survival, and more jobs.2 Eager and ready for change, Japan’s industrial leaders embraced Deming’s gospel on manufacturing quality and got workers and managers at all levels involved. Between 1950 and 1970, almost 15,000 engineers and many more thousands of factory supervisors were educated by Deming and others in the principles of statistical process control. Quality became something of an industrial religion in Japan, and Deming was its high priest.
The quality movement changed Japanese industry in fundamental ways, and those changes stuck. Before long, Japanese manufacturers managed to take over the motorcycle market, the small car market, the market for inexpensive wristwatches, and the consumer electronics market. From those beachheads, they began moving upstream in computers, high-end timepieces, and luxury automobiles. They were also taking most of the awards for excellence in design and reliability.And consumers were discovering that Japanese-made products, paradoxically, offered higher quality and lower cost.
It’s simple. The company was in a death spiral; it was losing money hand over fist, and the Ford name had become an acronym for “Fix or Repair Daily.” Both management and rank-and-file employees knew in their bones that something had to change. Unlike Ford, cross-town rival General Motors remained complacent, continuing to bask in the delusion that everything was just fine for another five years. In fact, when GM’s own Quality & Reliability staff confronted top management with the depth of the company’s quality problems, their study was dismissed. The CEO and his circle remained solid in their conviction that GM was the world’s finest automaker, and the company against which all others had to be measured.3 Only a harsh awakening would launch GM into the change it required.
Eventually, SPC principles were widely embraced by U.S. manufacturers, but not until managers and employees at many levels had lost their complacency and were ready to receive them.
Many successful change programs grow out of crisis. Ford’s “change or- die” story was repeated at Continental Airlines, Harley-Davidson, the Martin guitar company, IBM, and many others. This raises an important question: Does an organization have to wait for a crisis before change is possible? According to Harvard Business School professor Mike Beer, the answer is no. He believes that change leaders can raise concerns about a current, problematic situation, and urge management to challenge the complacency that fosters it—without resorting to “crisis mode” tactics. He offers the following four approaches for accomplishing this goal:
1. Use information about the organization’s competitive situation to generate discussion with employees about current and prospective problems.–Top management, he says, often fails to understand why employees are not concerned about productivity, customer service, or costs.
Too often this is because management has failed to put employees in touch with the relevant data. In the absence of that data, everything appears to be fine.
2. Create opportunities for employees to educate management about the dissatisfaction and problems they experience.–In some cases, top management is out of touch with weaknesses of the business or emerging threats—things that frontline employees understand through daily experience on the factory floor or in face-to-face dealings with customers. If this is your company’s problem, find ways to improve communications between top management and frontline people.
3. Create dialogue on the data.–Providing data is one thing. Creating dialogue on the data is something entirely different and more productive. Dialogue should aim for a joint understanding
of company problems. Dialogue is a means by which both managers and employees can inform each other of their assumptions and their diagnoses.
4. Set high standards and expect people to meet them.–The act of setting high standards creates dissatisfaction with the current level of performance. Complacency is a barrier to change. When people are comfortable with the way things are, they are oblivious to things that need changing.
How complacent is your organization? Table 2-1 details some signs of complacency to be on the lookout for. Challenge every one you see!
By HARVARD BUSINESS SCHOOL