The Strategy of the 14 Points
No One in Management Need Ask Again, "What Must We Do?"
Theory of management now exists. There is now a theory of management for improvement of quality, productivity, and competitive position. No one can ever again claim that there is nothing in management to teach. Students in a school of business now have a yardstick by which to judge the curriculum that is open to them. Does the school show some attempt to present a curriculum for today’s problems, or does it show obsolescence? Obsolescence need not be planned: it can just move in.
- Deming. Dr. W.E. Out of the Crisis. (p. 19)
Origin of the 14 points. The 14 points are the basis for transformation of American industry. It will not suffice merely to solve problems, big or little. Adoption and action on the 14 points are a signal that the management intend to stay in business and aim to protect investors and jobs. Such a system formed the basis for lessons for top management in Japan in 1950 and in subsequent years (see pp. 1–6 and the Appendix). The 14 points apply anywhere, to small organizations as well as to large ones, to the service industry as well as to manufacturing. They apply to a division within a company.
Ibid. (p. 23)
THE AIM for today’s newsletter entry is to consider Dr. Deming’s 14 Points through the lens of management strategy, or rather to make the case that they are in fact a strategy any management team in any industry may undertake to become more effective and competitive. We will do this with the aid of Richard Rumelt’s guidance in his 2011 book, Good Strategy, Bad Strategy: The Difference and Why It Matters to answer the question of whether the 14 Points fit the definition of a strategy, and how we can begin to apply them.
14 Points, 7 Deadly Diseases, 16 Obstacles
In the early to mid 1980s, Deming articulated his philosophy for transforming management theory in America with his 14 Points or Obligations that first appeared in his 1982 book, Quality, Productivity, and Competitive Position which would later be revised and retitled Out of the Crisis. They comprise a summation of what management should be doing rather than what is preoccupying their attention and leading the nation into decline.
Confusingly, while presented as an enumerated list, the points or obligations aren’t a checklist or à la carte menu, but a set of self-reinforcing principles to guide management activity. In his book, The Deming Dimension, Dr. Henry Neave frames them as “vehicles for opening up the mind to new thinking, to the possibility that there are radically different and better ways of organising our businesses and working with people.”
In Out of the Crisis, Deming warns that adopting the principles isn’t a one-and-done proposition, but an ongoing effort that will take the best management teams five years or more to get on top of, lessers ten or more. What holds up progress, he explains, is the need to cure 7 Deadly Diseases (which we first reviewed here) and remove 16 Obstacles (see our discussions here, here, here, and here). Progress depends on understanding all three components, Points, Diseases, and Obstacles together. Taken as a whole, they represent a cohesive strategy for transforming leadership, and subsequently the business or organization. But is it a good strategy?
Good Strategy, Bad Strategy
What separates or defines good strategy from bad? We need an operational definition, and for this we can turn to Richard Rumelt’s 2011 book, Good Strategy, Bad Strategy: The Difference and Why It Matters. It’s certainly not the only definition, of course, but I think it the easiest for most people to appreciate.
Rumelt condenses the elements of a good strategy into a “kernel” consisting of three parts:
A diagnosis of the challenge at-hand, born of a deep understanding of critical aspects and issues.
A guiding policy that details the decision-making process to address or navigate the diagnosed challenges. This is less about setting a generic goal and more about charting a clear direction based on the diagnosis.
A set of coherent actions to resolve the diagnosed challenge, consistent with the guiding policy.
Rumelt adds to this the requirement that a good strategy be simple and clear, devoid of jargon or complexity, that can cut through “noise” and identify sources of advantage, and enable tough decision-making. With this in mind, how well do the 14 Points, along with the 7 Deadly Diseases and 16 Obstacles, align with Rumelt’s definition? Would he concur they represent a “good strategy” ? Let’s run them through the three parts of the “kernel”:
Diagnosis: 7 Deadly Diseases and 16 Obstacles
Before any action on the 14 Points can begin, the challenges need to be diagnosed, which Deming provides in the Diseases and Obstacles, which lay out system and operational “ailments” that organizations face when under the prevailing theory of management. Examples would include a lack of constancy of purpose in operations, emphasis on short-term profits at the expense of long-term planning, hope for instant solutions with no effort, and unfounded belief in the uniqueness of the problems in the organization.
On consideration of the Diseases and Obstacles, I think we can surmise they meet Rumelt’s requirement for a good diagnosis of the challenges at-hand.
Guiding Policy: 14 Points to Directly Address the Diseases and Obstacles
Each of Deming’s 14 Points are countermeasures to the Diseases and Obstacles he identifies, providing a strategic direction on how to overcome them without prescribing specific tactics. For example, everyone’s favourite, #8 Drive out fear, takes aim at the disease of annual merit ratings, while #4 End the practice of awarding business on the basis of price tag confronts the disease of short-term thinking. Similarly, the entire corpus of points deconstruct the obstacle of a hope for instant pudding - it’s a five-to-ten year operation.
Rumelt’s theory stresses that a guiding policy should offer a general approach without getting bogged down in specifics. The broad brushstrokes of the 14 Points align well, here.
Coherent Actions: All Together, Now
By combining the 14 Points with the understanding of the attendant diseases and obstacles, we have a set of coherent actions that are not taken in isolation, but in interlinked steps with an aim to transform leadership’s thinking first toward a philosophy of continual improvement, then the organization.
For Rumelt, a good strategy needs to have coordinated and compatible actions to execute the Guiding Policy. Deming seems to meet the test, here, by deeply rooting his understanding of the challenges in the Diseases and Obstacles with a plan to resolve them in the 14 Points.
Summary: Good Strategy or Bad?
When viewed through Rumelt’s operational definition of what constitutes the kernel of a “good strategy”, the combination of the 7 Deadly Diseases, 16 Obstacles, and 14 Points appear to fit. While Deming himself never used the word “strategy” to describe these components of his management philosophy, it definitely fits with a broad diagnosis of the challenges the prevailing style of management has and how to counteract them, and many more besides. All that is left for the user to do is adapt the strategy to their particular context while maintaining the aim.
It’s also worth noting here that Deming’s later development of the System of Profound Knowledge did not make the “strategy” of the 14 Points obsolete, but gave them a theoretical framework - which is rather a stroke of genius. As he notes in The New Economics, they “follow naturally as an application of this outside knowledge” - which strongly suggests that you could try to improve upon his work with new points, diseases, and obstacles, so long as you keep the aim consistent.
Reflection Questions
What do you think? Does Dr. Deming’s 14 Points, 7 Deadly Diseases, and 16 Obstacles constitute a strategy for transformation and improvement of management and quality of products and/or services? What other definitions of a “good strategy” do you subscribe to? How well would Deming’s philosophy fit those definitions? What points do you disagree with? What would you add or replace? Why? Are the 14 Points as written still applicable today?
Other Reading on the “14” Points…
Some time ago, a commenter to one of my posts on LinkedIn made me aware of an interesting paper written by Jean-Marie Gogue of the French Deming Association that describes Dr. Deming’s presentation of 25 Points (!!) in lectures he delivered in Tokyo in 1978 and Paris in 1980 before audiences of mainly statisticians and engineers, rather than managers. It’s an interesting window into his developing thinking at the time as the threads of his philosophy began to coalesce.
Andrea Gabor provides another rabbit hole worth exploring in her book The Man Who Discovered Quality where she describes the “Nashua Curriculum” Dr. Deming delivered to management and employees at Nashua Corp. circa 1979, comprising just six principles - they feel a little more achievable, but they are just as daunting (p. 114):
Work closely with just a few suppliers
Foster interdepartmental cooperation
Work toward eliminating inspection
Build a relationship of trust with workers
Strive for continuous improvement throughout operations
Work closely with customers (indeed, customers were invited to the seminars given by Deming at Nashua)