Dr. W. Edwards Deming – The Einstein of Business

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There is no substitute for knowledge. – Dr. W. Edwards Deming

Mirror, mirror, on the wall; give us the theory before the ball… -An employee in a company using the Deming Method of True Quality Management

When Galileo studied a common house fly under a magnifying glass, he counted only six legs. Yet centuries earlier the great Aristotle, whose teachings were akin to gospel, had proclaimed that all insects had eight legs – no more, no less.

When Galileo pointed this out to the church elders of his town, they took a fiercely adamant position.  Clearly, the Devil was playing tricks with their eyesight, since Aristotle simply could not be wrong.  Galileo met with similar resistance with his fellow astronomers when, using the correct theory, he was able to predict that there had to be moons around Jupiter. The same phenomena happened with Sir Isaac Newton, who brilliantly codified the laws of gravity and discovered calculus. However, Newton also pronounced that the speed of light was “instantaneous.” Belief in the theory of “instantaneous light-speed” effectively stopped all major advances in physics for centuries. It was not until it was demonstrated that light did, in fact, have a speed that physics moved forward by leaps and bounds.

Knowing that light had a speed, Albert Einstein was able to postulate his famous E=MC2 theory.  This new, more accurate theory directly led us into the modern atomic age. Trying to create meaningful understanding of life experiences (or any phenomena, for that manner) with the wrong theory leads to incorrect conclusions or “empty knowledge,” which has little if any ability to help us accurately predict. Presently, most American management is being led by incorrect and/or incomplete business theory.

This did not matter as long as everyone believed and followed the incorrect theory – everyone was equally ignorant.  However, when Walter Shewhart of Bell Laboratories first introduced his Quality Control Charts in the 1920’s he introduced a major new distinction to the world of business. The eventual and continuing impact of these charts on business was much like the impact that the truer understanding of the speed of light has had on physics. However, Quality Control Charts, like the speed of light, were just the first part of the breakthrough.


Shewhart was not a trained statistician, and was thus not able to fully grasp the profound implications of his Control Chart approach to business. It took Dr. W. Edwards Deming, a brilliant statistician, systems theorist and colleague of Shewhart’s to put it all together into a powerful, predictable method of breakthrough management.

Deming created a comprehensive business methodology and system – based on new theory – that transformed post-war Japan into the world’s second-largest economy and quality leader, changing forever the way successful businesses are operating. Deming’s theory of business has created a structural (vs. cyclical) shift in the way intelligent businesses must operate – if they wish to survive and prosper in the new economic and information age. Just like the world has operated very differently after the atomic bomb, the world of successful business is operating much differently after Deming.

Companies do not have a choice of whether or not to accept Deming’s methodology; they really only have varying degrees of time, depending on their competition. As soon as a company armed with Deming’s quality business system enters the market, it will inevitably capture that market. That is a predictable certainty, unless others in the same field are also utilizing the Deming business theory.


Dr. Deming clearly shows that all experience is first filtered through a theory before it has meaning. For example, consider any object you can hold in your hand, and then drop it.  Almost everyone will agree that the object will fall “down” to the floor, where it can then be picked “up.”

This, of course, is not reality – not of this world.  We have known for over 500 years that we are living on a sphere, and that any dropped object will fall “in” – and when picked off the floor it will be picked “out.” The incorrect theory that the earth is flat is still affirmed in our everyday language; to be accurate, one should go “outstairs” to a higher floor and “sit-in” and “stand-out” from chairs. The point is this: Our out-of-date, “up-down” theory of a flat earth is confusing to anyone trying to get a truer picture of reality.  Satellites and space travel mixed with the sun going “down” or coming “up” is very confusing. Valuable life experiences filtered through incorrect theories leaves little chance for true perception or correct prediction of future events – and prediction is a vital key to leadership.


Science is also very clear that there are no straight lines in the universe. Nowhere in reality has anyone found a line without some variation, or wave. All of reality is vibrating at various frequencies; in fact, it is these unseen vibrations that create reality – and life – itself.

At the heart of statistics is the bell curve. If you take one bell curve and connect it to another bell curve, and then connect it to a third bell curve, you will create a wavy line or a vibration. This vibration is the true unseen reality. So, what statistics is about is making visible what is usually invisible to humans – making the invisible visible, or the intangible tangible. This is one of the profound aspects of the Deming Method, as you cannot effectively manage, improve or lead what you cannot see.

Deming’s management theory is based on firm statistical principles. This is very important, since what Deming asks management to do is to collect data first  before acting. Once the data is properly collected (another science in itself), then it can be correctly analyzed to form a better predictive picture.

If the data does not create a bell curve, special actions must be taken.  Management must first work with those studying the process to improve it until the properly collected data creates a bell curve. Once this has happened (the process is then said to be “stable”), management can then look at the shape of that bell curve and predict what the next bell-shaped curve (or wave) will look like. This greatly enhanced ability to predict future scenarios is akin to a business “secret weapon.”


One of the key advantages to Deming’s system is that it asks everyone within the organization to work on making visible what is usually invisible, by using statistics.  This is done first through a set of rigorous procedures designed to reduce error in the collection of the pertinent data, and second, through the proper creation and monitoring of various graphs and charts. Once the data is correctly collected and analyzed through proper statistical theory, what was once invisible becomes visible. By making the invisible visible, the probability of taking the correct action (or non-action) is vastly improved. This statistical management approach gives the person closest to the process the ability to know when to act and when not to act; thus traditional supervisors and managers are not needed. This results in several major benefits:


First, there is the cost savings received from the removal of supervision that is no longer needed.  In the United States, there is on mean average one supervisor for every ten employees (1:10); in Japan there is one for every hundred (1:100). Honda of Japan, a company known the world over for its outstanding quality, has just one supervisor for every two hundred employees (1:200).

Now, can one person effectively manage a hundred or more people? Not if one views management as a means to command and control those below them (the prevailing top-down, American theory of management). In Deming-consistent companies, the supervisor is more like a facilitator and coach for those working in and studying the work process flow; if the person studying the flow needs any support to improve the process, the supervisor is there to best facilitate such requests.

The results of this management system are dramatic. In Japan, upper management receives – and acts upon – an average of sixty-one point six (61.6) suggestions per employee per year as compared to point-four (0.4) suggestions per year per American worker. This means that for every one suggestion acted upon by an American worker, there are one hundred and thirty-five suggestions acted on in Japan – a huge difference.

Giving the front-line person the responsibility and the authority to act or not act creates a second major benefit of Deming’s management method: it restores self-esteem to the front-line. The “Deming Way” creates and supports a very real sense of self-management for each employee. This in turn engenders a certain pride in the employee’s work, resulting in both improved self-esteem and increased productivity for the front-line employee.

With the Deming management method many layers of management are now unnecessary. Not only does this save a company substantial sums of money and time, it also creates a third very important benefit: With fewer layers of management, a company can now respond to and initiate change much faster. It can also better manage and navigate the chaos of business.

In Japan it typically takes 1,700,000 engineering hours to develop a new car; in the US it takes 3,100,000 engineering hours. This time savings means greater sensitivity to the customer’s needs and wants, faster integration of technological advances, increased innovation and far greater profits. This sensitivity, of course, also results in a product far more in-tune with the customer’s needs and desires. When these desires are filled (and exceeded), both sales and market share – customer loyalty – inevitably increases.


Most American companies are still unaware of the profound distinctions Dr. Deming has brought to modern business management. They are still using (and vehemently defending) the “flat earth theory” of business management. With the wrong theory, business experiences are logically (that is, based on the wrong theory they are logical) leading to incorrect conclusions, high drama, high employee turnover, huge waste and poor long-term results.


Those using the “round earth theory” (the Deming Management System) are making much more accurate distinctions and better predictions, while enjoying healthier and increasing profits. And, just like those who acted on the theory that the earth was round instead of flat, they have a critical strategic advantage – a “secret weapon” – for lasting success. In the long term, the Deming advantage produces such profound results that the flat-earth business thinkers will be forced to change and adapt – or face certain extinction.


Einstein’s Special Theory of Relativity did not receive the attention of the world until the Atomic Bomb in 1945. Similarly, Deming’s theory did not receive the attention of the world until the Japanese embraced and utilized it, starting with his first visit to Japan in the summer of 1950. Deming’s leading role in the resulting Japanese quality and economic post-war miracle that began surfacing in the West in the 1970’s is now legendary. The Japanese directly credit Dr. Deming with saving their country after W.W.II and guiding them to continuing world leadership in quality. In fact, the greatest award and highest honor a Japanese company can receive since 1951 is named after an American: the annual Deming Prize, akin to a Noble Prize in business.

A 1991 US News & World Report cover story declared Deming’s role in the Japanese post-war economic miracle to be one of nine “Hidden Turning Points in World History.” Now, most of the world has felt the impact of Deming’s business theory. Notable US organizations that have enjoyed great success with the Deming Method include Proctor & Gamble, Ford, Harley-Davidson, the US Navy and Intel.

For example, Ford was losing 1.5 billion dollars a year in 1980. They were last in quality among American car makers, and were on their way out of business. Who did they call? Dr. Deming. In fact, the first “Deming-Mobile” that heralded Ford’s comeback was the Ford Taurus, first introduced in 1986. The Taurus literally saved Ford. Ford went on to become the most profitable and highest quality American car maker in the late ‘80’s and 90’s.

Dr. Deming’s System of Profound Knowledge* and quality management method continues to bring the world better and better products and services at ever-decreasing cost – and a restoration of joy, pride and excellence in all manner of work. It is these higher quality products and services that are improving the quality of life for increasing numbers of people worldwide. How many other individuals in history have had such a profoundly positive and continuing impact on the world?

*Briefly, Deming’s System of Profound Knowledge consists of four key, interrelated parts:

1. Appreciation for a System;

2. Theory of Variation;

3. Theory of Knowledge;

4. Theory of Psychology – especially of Change, Cooperation and Leadership.

Combined with Deming’s 14 Points for the Transformation of Management, the system of Profound Knowledge provides the lens and map through which organizations can optimize their people, systems and results in a perpetual cycle of continuous improvement and breakthrough performance.

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