Dr Deming has always stood out in the crowd for me personally, as he continued to teach in what he had always believed in, even when he was doubted on his own home soil. This has always been a trait of most great leaders and in the true spirit of leadership, the knowledge and conviction he had developed for management was not held back but was applied with tremendous success in Japan. This was enough to create the ripple effect/tipping point for his teachings to be given credence back home in the US and Europe. A testimony to his success is the fact that at Toyota’s headquarters, his framed photograph has an even larger frame than the founder of Toyota, Kiichiro Toyoda.
Dr Deming originally developed, what he considered the five deadly diseases of western management (Two more were subsequently added, excessive medical care costs and excessive legal damage awards, not discussed in this post).
I agree with one of my readers, Thomas Keplar, who posted a comment a few days ago, “Lot of good idea’s in TQM, also a lot of areas that still must be understood that TQM will not provide answers other than as Ishakawa said “unless you have senior
management buy in, do not implement TQM”. It is a well known fact, comprehended by the recent credit crunch, management of the banks and the finance sector, that, businesses do not fail, management fail. As I go through this post, hold these two thoughts, as the importance of these two thoughts will become clarified.
“Unemployment is not inevitable but of bad management”- Dr Edward W Deming.
The five deadly diseases that cause IT management failure
- Lack of constancy of purpose
This happens for three reasons. Firstly it happens, where the most senior IT position is a functional Head reporting into a board Director, for example, Head of IT reporting into a Finance Director. In this scenario, senior management, i.e. the CEO and the board, have not been able to communicate well enough to the Finance Director and hence the Head of IT, the business vision and the direction and/or there is a lack of planning for the future. In this situation, firstly, the information provided to the Head of IT, is second hand and secondly, as the information has been forwarded, the Head of IT, cannot understand the perceptions, background and discussion that may have led to that business vision and direction. This is management failure, in the making, as the board have failed to understand that IT should be represented directly at board level.
Secondly, it can happen where IT is represented directly at board level, the IT Director/CIO does understand the business vision and the direction but the board as a collective have no planning for the future and while they are looking after their, “cash cows”, they do not have the product of tomorrow.
The recent banking crisis is evidence of this happening. Although, explaining it is quite complicated and the way banking in general works reflects that as well, in a nutshell, the banks had, inadvertently, started to finance an expansion of lending by borrowing. IT Management, were not, in my opinion, privy to this information and as evidenced in the 90’s, rogue trader, Nick Leeson’s case (the achievements of these traders and their ability to circumvent systems and procedures).
As future products and innovation is stifled (Both by the business and within IT – Lack of innovation), the roadmap is unclear; processes and IT controls become inadequate and subsequently cause the failure of the business. If on the other hand, the future was planned effectively, for example, it would have been quite clear to the bank that this sort of lending was high risk. As such, it should have been reflected within banking IT systems and as a consequence would have been caught or captured by the intelligence built into the authorisation processes.
- Emphasis on short-term profits
Again, there are two ways of looking at this. I will not go into the business aspects now but will start to deal with only how the second disease impacts IT departments.
This happens when IT departments either become quite insular or are lead to become insular as despite their attempts to, for example, attract additional funding for programmes of work that work towards longer term planning, they are stifled and are forced to think short term and are constantly, “fire fighting”. Innovation is frowned upon and newer innovative ways of using IT for competitive advantage cannot happen in this kind of environment.
This results in sacrificing the long term growth of the company for short term gains. The emphasis is on short term profits/dividends, no matter what. IT is contributing to anything it can do to raise the value of company stock, in the short term only.
- Annual rating of performance
This is an area of Dr Deming’s theories that I do not have to adjust for IT. The annual rating of performance is an arbitrary and unjust system that demoralises employees and nourishes short term performance. It has an added side effect as it annihilates team work and encourages fear.
This annual rating of salaried people is also called the Merit system, annual appraisal and management by objective – management by fear is a better term. This system works by rewarding employees for what they have done in the past year, i.e. performance pay. The effect is devastating as the employee must have something to show and this in turn nourishes short term performance and annihilates long term planning and team work. As each employee is encouraged, to show and prove their individual contribution to qualify for the performance pay, it stifles team working. Even if individuals are working productively as a team, inadvertently, they are identifying ways in which to use the team work to justify that all important, performance pay!
Dr Deming’s theory encourages teamwork in its true sense. Actively listen to other team members’ views and ideas and counter members’ weaknesses while using the strengths of the team. This is impossible under a merit rating.
Even more damaging is the fact that when ratings are given out they cannot be understand well enough by employees and as to why they were not rated high enough.
It would be better if this system was a lottery where at least there is a good reason not to understand better, as employees would not feel superior or inferior.
- Mobility of management
The annual rating of performance encourages mobility of management. As employees are not getting a raise, they are not loyal anymore. This has a devastating effect on the business as people have no roots in the company and are not there long enough to understand the business well enough. Management requires good knowledge of the company, its problems, production and service capabilities and that takes a long time.
For example, if a project manager has just arrived at the business and does not understand its culture, overview of its IT systems, IT and business strategy and is made to work on an individual project, how can he/she understand the overall impact of what it is they are delivering?
- Use of visible figures only –
Finally, we arrive at disease number 5! Most IT departments will use figures that are known, for example, service desk figures. This is because most business schools and graduate degrees encourage us to use these figures. The power is in knowing known, unknown and the unknowable.
Now, the question some of you may ask is that, if it is unknown, how could it be important? Well, we need to understand the multiplying effect of a happy customer and also the unhappy one. Understanding these figures is absolutely crucial for IT departments, as just with the given example, if we can understand the multiplying effect, we can harness the effect and turn the unhappy customers into IT ambassadors within the business.
Final thoughts
As always, I look forward to your feedback, and encourage all my readers to post their opinions, both here and within the forums that I am a member of.
Do you have any areas of IT that you would like me to discuss? Please feel free to suggest any future posts by leaving your comments. I am currently compiling a list for future blogs.
For further information:
The W Edwards Deming Institute
Dr. Deming – The 5 Deadly Diseases 1984
