W. Edward Deming was an American statistician, management consultant, and professor credited with influencing the Toyota Production System (TPS) and lean manufacturing (subjects which will be explored on this blog at some point). Along with the Plan-Do-Check-Act cycle and advocacy for statistical quality control (e.g. control charts), Deming developed his 14 key management principles. In this post we will explore #8, “Drive out Fear”.
“Drive out fear, so that everyone may work effectively for the company”
– W.Edward Deming
I found myself pondering this concept most recently while reading “A Random Walk Down Wall Street” by B.G. Malkiel. A book first published ~40 years ago which explores the efficient market hypothesis, wisdom or lack thereof of investment gurus, and the madness of crowds in great detail. In his book, Malkiel discussed the work of Kahnemann & Tversky (critics of the efficient market hypothesis) whose behavioral experiments discovered that people are extremely loss averse and in situations where loss was assured, individuals exhibit risk-seeking behavior. One such example is provided below:
Consider the below options for yourself:
Option 1: Guaranteed loss of $750
Option 2: 75% chance of a $1000 loss & 25% change of no loss
When faced with the two options provided above, Kahnemann & Tversky found that 90% of subjects selected option #2, despite the fact that the expected value of both decisions is the same. How could this concept apply to organizations?
In organizations where individuals are held “accountable”, often a euphemism for a perform or “you’re fired” management philosophy, individuals are put in situations where loss may be assured. Based on the work of Kahnemann & Tversky it is the tendency of the vast majority of people to exhibit risk seeking behavior. In the world of business this may result in shipment of nonconforming product, hiding injuries, violation of environmental laws & policies, etc.
In my own experience I’ve witnessed individuals “manipulating” on-time delivery numbers, supervisors aborting lengthy processes early to meet delivery commitments, and overriding safety features to reduce cycle times. One organization had a philosophy uttered jokingly by employees on the production floor, “Ship it! We’ll worry about it when it comes back”. As a young engineer I found myself chastising the individuals while seemingly oblivious to the fact that the behavior was human nature and a response to the management system.
For years, quality professionals have been focused on developing detailed “processes” to the point of annoying everyone within the organization. The switch of ISO 9001(Quality Management System used across many countries & industries as the minimum requirements of a
quality management system) from process thinking to risk based thinking has quality professionals around the world preparing SIPOC’s (Supplier-Input-Process-Output-Customer) diagrams and performing FMEA (failure modes and effects analysis) activities throughout their organizations in an attempt to map out organizational risk. I find myself wondering how we eliminate the greatest risk, FEAR in our organizations?
“Well, 99% of things done in the world good or bad is to pay a mortgage”
-Nick Naylor, Thank You for Smoking
W. Edward Deming: https://asq.org/about-asq/honorary-members/deming
14 Points for Total Quality Management: http://asq.org/learn-about-quality/total-quality-management/overview/deming-points.html
“A Random Walk Down Wall Street”: https://www.amazon.com/Random-Walk-Down-Wall-Street/dp/0393330338
ISO 9000: https://en.wikipedia.org/wiki/ISO_9000