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Jul 31, 2020

In our 39th "Deming Lens" episode, host Tripp Babbitt shares his interpretation of wide-ranging aspects and implications of Dr. Deming's theory of management. This month he looks at the book, The Reckoning" and some of the implications of it.


Deming Lens - Episode 39

Deming Finds an Audience




Tripp Babbitt: [00:00:15] In the 39 episode of The Deming Lens will discuss the book, The Reckoning and some of the questions that it leads us.


Tripp Babbitt: [00:00:28] Hi, I'm Tripp Babbitt, host of The Deming Lens, and this month I wanted to talk about a book called The Reckoning. Now you can go back to an interview I did with Dick Steele, who is a board of trustees member for the Deming Institute, where he had come across the same book, The Reckoning. It was published in 1986. It was written by David Halberstam. And this book was one that really enthralled me at the age of 26 as explaining kind of what was happening in the 80s and actually prior to that from World War Two up and two up until 1986. And I was captivated by primarily because I worked for an industrial distributor and I was seeing manufacturing begin to disappear. And I wasn't sure what was going on, but I knew something was going on and. When I started reading this book, it's it's Grapes of Wrath long, so it's not a short book, but if you are interested in that kind of understanding, the rise of Nissan, which was originally called Datsun, they didn't take on the family name until they started making quality products. And interesting story in and of itself. But the book would talk about the rise of Nissan and the fall of Ford during this time period and gives a great history of what was happening on a very intimate level with individuals involved and being named. I was going through my MBA program at the time. And this book really hit home with some of the things that I was studying and I thought, you know, I was studying operations and finance.


Tripp Babbitt: [00:02:53] And. As I read it, I got to I believe it's Chapter 19.I'm looking through the book as I look oh, excuse me, it's 17 chapters, 17 of the The Reckoning.And it says Deming finds an audience, and I didn't think much about it at the time until I started to read that the the chapter and it's started to talk about.


Tripp Babbitt: [00:03:25] W. Edwards, Deming and how he was revered in Japan and, you know, he was really famous in Japan and the Japanese were always puzzled when they come over to visit him in Washington, D.C., in the States, and he people in the United States didn't know who he was. And primarily his fame came from his knowledge of statistical quality control. And the Japanese had seen that as the as the reason for losing World War Two is that the U.S. had made quality products. And I thought, wow, why have I not heard of this guy? I'm going through an MBA program and a highly in an area with a lot of engineers that were in my MBA program that worked for a Whirlpool corporation.


Tripp Babbitt: [00:04:23] And I thought.I haven't even read his name once, and actually as I started to go back to some of my books that I was given during the course of my MBA and operations, it was a chapter we didn't cover. But there was a brief mention of Deming in there, but nothing about statistical quality control or any of those things.And.At the time, I was a sales rep for an industrial distributor, so I was going to night school to get get my MBA and one of the products that I sold was a company called MIDA Toyia. And they make measuring products. And they had come out with this thing about statistical, what we would probably know better as a statistical process control or as Dr. Wheeler likes to call it, process behavior charts was something that I saw in its infancy, at least in the U.S. being used that I had ever seen. Of course, now we know that was used during World War Two and it didn't prove that the products that were out there. And I also was listening to a video that's on YouTube about Huma Deming, who was in. Japan, and he was primarily charged with finding ways for General MacArthur to communicate to the masses right after World War Two because he had a problem, he couldn't communicate to everybody. And so Homer Deming went in and helped set up radios and radio stations and receivers so that people could have them in their home and hear what was kind of happening in their in their country. And so Homer Sarasohn was a big part of that. And he was a 29 year old guy who had worked on radars during the course of the war.


Tripp Babbitt: [00:06:31] But I found it very fascinating that I had never heard of this W. Edwards Deming. So I immediately went out to all of my professors and said, who is this guy? And I finally found a professor that had heard of him but didn't really know much about the work that was being done by Dr.Deming. And so that became the thesis for my or the subject of my thesis for my MBA program. And so I wrote about W. Edwards Deming and his focus on quality and that quality need to precede profit. And I have no idea where that paper is anymore. But regardless, it was something that captivated me. And I started to the very initial stages of understanding, statistical process, control and how to use it and how it could be used to benefit in improving the quality of products and services. And so it was became a lifelong obsession with me. And every once in a while, I go back and I read the reckoning and not necessarily all the pages, sometimes I do. The last time I read it, probably cover to cover was in 2000 seven, 2008, when the banking crisis started. And because there you go. There's another reckoning now. The things I'm going to say here are not they're not to be political. They are to be. What I see happening today is going to be something far worse than what we experienced in 2008 in that in the United States. Anyway, we're running up massive amounts of debt in the U.S. and inflation is starting to show, but not in necessarily ways that we're feeling it at the moment.


Tripp Babbitt: [00:08:36] The dollar has dropped. Some people are predicting a precipitous drop in the dollar, just like real estate fell during the banking crisis in 2008. I think we're on the verge, in my opinion, from the things that I've read of another reckoning. And the reckoning that's going to happen this time is going to be very financially devastating. The twenty seven trillion dollars in debt that the United States has, there's going to be a reckoning. And I think that some of the things, because we didn't listen to some of the things Dr. Deming talked about, which would have avoided the 2008 banking crisis, because, Dr. Drew, I mean, we talk about, you know, people are worried about bad service from a teller. He said the thing that's going to could ruin a bank are loans. And guess what ruined the banks in 2008 was the bad loans that they had written. We have a credit crisis here not only as a government in the United States, but even on the individual level. Well, we just recently passed a trillion dollar and consumer debt. So we have an issue that is manifesting itself here in the states. And there there's going to be another reckoning for the same reasons that Dr. Deming recognized back in the 80s as manufacturing started to fall apart. Now, we seem to not learn the same lessons each time we go through these things. So I'm hopeful that with all the things that are going on and the fact, you know, with the pandemic, with foreign relations and everything else, that we come to an understanding, there are certain things that need to be manufactured locally.


Tripp Babbitt: [00:10:34] And by virtue of that, we're going to take a different attitude on how we go about things. Now, I mentioned in a previous episode, I think a couple of episodes ago, I talked about how. You know, even our government is starting to recognize that captains of industry are short term thinkers and can't think to the long term because they're looking to do something for their an individual greater good as opposed to a broader system, greater good. And as I read The Reckoning, there was an excerpt from it that I think kind of hit home with me. And it says nothing of Paul Deming more than the idea of the interchangeable manager, what is the motivation and purpose of men like this? He would say with contempt, do they even know what they do anymore? What do they produce? All they knew about was numbers, not product. All they thought about was maximum profit, not the excellence of profit. Or product, the numbers, of course, he added, always lied, they know all the visible numbers, but the visible numbers tell them so little they know nothing of the invisible numbers. Who can put a price on a satisfied customer and who can figure out the cost of a dissatisfied customer? One of Deming's American disciples, Ron Moen, who has been interviewed on the Deming Institute podcast.


[00:12:14] Said it was as if Deming saw work as a kind of Zen experience, what he is really asking Mon and pointed out is what is the purpose of life and what is the purpose of work? Why are you doing this? Who truly benefits from what you do other than yourself? Those are not questions that many people in American business want to answer anymore. And so here we are. And I think these are the same questions that as we look to the future, no matter what happens, we're in an interesting thing. And I think this is a precursor to a certain reckoning, again, in the United States as these things cycle through. So I thought I would leave you with those questions this month to reflect on and how we might be able to do a greater good other than a greater good for ourselves.


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