In Order to Compete, You Need to Learn to Cooperate

Bill Scherkenbach's Primer on What It Take to Improve Productivity and Quality

THE AIM for today’s newsletter is to share a rare video of Bill Scherkenbach, a colleague of Dr. Deming’s, delivering the opening address to the Department of Defense Quality and Productivity Conference in October 1988. Mr. Scherkenbach has been sharing gems like this from his storied career on his LinkedIn account and YouTube channel, both of which I highly recommend following.

In this speech, Scherkenbach challenges his audience’s beliefs with a paradox: In order to compete, you first have to learn to cooperate. He follows this up with several examples of how, in America, the drive to compete adversarially has overtaken the ability to work cooperatively, putting them at a disadvantage in the new global economy. This happens because culture follows structure, which then feeds back into structure in a reinforcing feedback loop that incentivizes a view of parts separate from their interactions.

We have an almost identical challenge here in Canada, as I outlined in the appeal I made in my March 3/25 newsletter calling for the establishment of a National Strategy for the Improvement of Quality and Productivity as a remedy for our economy, with a key part being the encouragement of cooperation, first between the provinces, then to industry, government agencies, schools, hospitals and more. We, too need to learn to cooperate to compete well in the new economic age that’s dawning, 37 years after Scherkenbach’s speech.

So, let’s take a stroll down memory lane at some select points in his speech to understand how he saw competition through a cooperation lens and what lessons we could draw from them today.

Who is Bill Scherkenbach?

Firs, who is Bill Scherkenbach and why does he figure prominently in the Deming Diaspora? Mr. Scherkenbach is a well-known figure in the Deming community having worked closely with Dr. Deming while a statistician at Ford Motor Co., helping to implement his teachings. He also has the distinction of having earned a graduate degree from NYU’s Graduate School of Business under the direction of Deming himself. He would go on to make significant contributions to the improvement of a number of big-name firms by applying Deming and Lean concepts, and is a recipient of the prestigious Deming Medal that is awarded by the American Society for Quality to individuals who have significantly advanced the theory, application, or dissemination of quality principles.

He is also a published author with two excellent books that draw upon what he learned from his time with Dr. Deming, Deming’s Road to Continual Improvement and The Deming Route to Quality and Productivity.

So, he hasn’t just understood Deming’s theory and philosophy, he’s applied and taught it, making his insights really valuable.

Cooperating to Compete

In the speech, Scherkenbach repeats his paradox multiple times to reinforce his point that competing separately is getting in the way of cooperating together, and the competition in Japan has no such constraints: the time to re-learn this skill from childhood is now if the aim is to compete in the new economic age, and Japan had a 38 year head-start, and wasn’t about to wait for them to catch up.

So, let’s review a few of the examples Scherkenbach shares about learning to cooperate in order to compete:

Lesson 1: The Power of Industry-Wide Cooperation

Scherkenbach opens his talk with William Ouchi’s powerful tale of two industry trade conferences from his book, The M-Form Society, that Dr. Deming also relates in Chapter 3 of The New Economics.

The first was a US trade conference held over three days at a Miami country club in the winter for industry peers featuring 4-hour technical sessions each morning (just enough to meet IRS tax-deduction requirements) followed by golf, deep-sea fishing, and tennis in the afternoon.

The second was a trade association meeting in Japan that met from 7 AM to 6 PM five days a week for three months straight, with the aim of resolving technical problems along with differences between them and aligning their strategies so they could approach government as a unified industry, because they realized no one company was big enough to bring to bear the resources necessary to truly compete.

As Ouchi asks of his readers in his book, “Who do you think will be ahead five years from now, you or your Japanese competitors?” His point wasn’t that there was no value in the camraderie of the US conference, but that its aim wasn’t aligned to meeting the challenge of their competition.

Lesson: Cooperation helps to dissolve differences in service to a greater aim or purpose, ie. helping the nation succeed in its goals, and allows them to speak with a more powerful single voice than a cacophony of competing interests. We do this more today in Canada with a variety of industrial trade associations, but often with narrow views. This could be enhanced with an alignment to the National Strategy I proposed.

Lesson 2: Dismantling Silos

Scherkenbach’s next point is the direct effect departmental silos have on incentivizing competition over cooperation. Speaking directly to his audience as a Navy veteran, he notes that the barriers between the branches of the DoD such as the Army, Navy, and Air Force have to learn to cooperate if they want to achieve higher standards of success: all three combine to fulfill the mandate of defending the country and its interests.

Lesson: When we organize departments and divisions into silos with limited cross-communication and access to “scarce” resources, we encourage selfish competition where cooperation is required. Break down the barriers to see how each can help the other in service of the greater aim or purpose. This directly relates back to the point I’ve made in my Open Letter about encouraging the Opposition Leader’s proposal to break down inter-provincial trade barriers to unlock up to $200B in lost GDP.

Lesson 3: Balance Individual Recognition with Teamwork

In his third reference to competing through cooperating, Scherkenbach recognizes how American culture emphasizes the invidual “superstar” (rock-star in our modern era) as a hero to follow, which limits the performance of the organization. By contrast, Japan went in another direction by blending individual pride with coperative success to boost their competitiveness. Individuals take pride contributing to something that gives their work purpose and knowing that it not only helps their own people, but their nation.

Lesson: Blending individual recognition with collective success can create a culture of improvement in a virtuous cycle. My outstanding question is whether Canada can ever reach this level of cooperation as the seeds of division between us have long been sown and there is a fair degree of mistrust, especially regionally. While any step toward cooperation is better than none, I think our culture, which borrows some antediluvean concepts from the U.S., will struggle to get to 25% of the required competition.

Lesson 3: No Instant Pudding

In his third reinforcement, Scherkenbach echoes one of Dr. Deming’s well-known dictums in the third theme I noticed in his address: There is no such thing as instant pudding. Deming said this in response to demands he’d get for his time to explain what he taught the Japanese over a two hour meeting. Similarly, Scherkenbach warns not to chase after the fads of the day like SixSigma and Total Quality Management because true change comes about from understanding specific ways to make it happen, and this means participating in learning how to improve, not just pushing it down to employees.

In support, he shares this little-known speech that Ford CEO Don Peterson gave to his top-100 staff who about to attend their first Deming seminar:

As I was thinking about this meeting, it struck me strongly that you are the ones who are going to decide whether we really are successful in making a dramatic change in how we do business: you are the ones. It can be very difficult to make significant changes, especially when you have been in the habit of doing things differently for decades and especially when the very success that brought you to the positions you now hold was rooted in doing some things the wrong way, it's going to be very hard for you to accept that that you were promoted a time or two for the wrong reasons.

I seriously suggest that you give some heartfelt thought as to whether you really understand what we are talking about. I had the experience in January at our management review that most of the people in the room thought that I was talking about something so elementary that we and Ford Motor Company of course were already doing that they couldn't understand why I was talking about it; it left me with a sense that many of us still do not understand what we are really trying to change.

In these words, Peterson conveys a truth that has echoed ever since: the conviction that there’s no room for improvement because we’re already doing what’s recommended. This is a false, reactive impression of the thinking required to move from a world sophisticated in the properties and applications of ice, to one of water.

Lesson: Leadership must lead the effort to re-learn how to cooperate together because they hold the most responsibility for how their systems are structured. As Scherkenbach points out, specifically in reference to the military mindset, “Leadership means ‘follow me’, not ‘I’m behind you all the way.’”

Concluding Thoughts

Thirty-seven years on, I find Scherkenbach’s dictum that we need to learn to cooperate in order to compete as compelling now as it must have been then. There is a lot more packed into this speech that makes it an excellent introduction and primer to the chief problem we have in North America and what we need to do differently to improve our competitive standing in the world. It is, as I wrote in my Open Letter, table-stakes to make all the other parts of a National Strategy for the Improvement of Quality and Productivity work: without it, we’re merely calling for people to do better work without a method for how this can be done.

Have a listen to the video and contemplate the message Scherkenbach is sending across the decades. Does it still resonate in today’s economic climate? Have we learned to cooperate as he suggests, or are we still a work in progress? What does cooperation look like in your organization? Does it meet the bar that he sets? Why or why not?