Deming and Systems in Today’s Business World – No Answers Just Questions « I2I

In the last few weeks I've seen a couple of people quote Deming saying "95% of the problems in business are system driven and only 5% are people driven." (Or similar to that.)

Based on that simple statement it would seem that you should spend 95% of your time on improving the process in order to get your biggest bang for your buck no? Seems logical. If that's the case – don't run incentives or reward programs – pour all your money into system design and try to create a system that is fool proof.

But not really…

One of the people that used that Deming quote was @bobcorlett – who runs Staffing Advisors and is a Deming guy. I'm not – I'm familiar but not a scholar.

So Bob and I connected on the phone (gasp! I know – real time, analog) to discuss the quote. My point was that a quote like that would seem to indicate you should worry less about the people themselves and more about the system in which they behave. Bob reminded me that Deming also said a poor system will win every time over a good employee. There is a lot of truth in that as well.

But after a great conversation about people and systems that meandered around a bit, (btw – Bob does not advocate ignoring your human resources in favor of systems) I was left with this thought…

Deming focused on systems because they were the process by which business got done and that's what drove success at that time. A good, predictable, non-variable system produced quality products en masse. Since business was about production of product primarily made by doing the same thing as many times as you could in a quality manner, it made all the sense in the world to focus on the process not the people.

But are we production oriented today?

Today however, our economy changes rapidly, businesses change rapidly, business models change rapidly, technology changes rapidly. Do systems still matter more than the people? Should you worry more about systems or people?

When we were an industrial economy, success was a function of economies of scale, quality and mass production. Controlling variability was a good thing. We wanted to make sure that all the machines contributing to the process behaved within the specifications. The tighter the specifications the better the quality, the lower the costs and the ultimately – the better the product.

But today, it seems to me we are driven more by innovation and new ideas brought to market quicker and incrementally better or through big disruptions. To me that is the antithesis of the Deming formula for managing variability in a system. To me creating variability has more value than limiting it.

Plus – there is no machine in the world with as much variability as a human being. Our specs are off the chart on what is possible.

So, I'm left with this… how much should you spend on systems versus people in today's business world?

Or is it – "You gotta do both, quit carping and move on!"

Is it 50/50 now or does Deming still hold? Inquiring minds like mine want to know.

Bueller, Bueller?

http://www.bretlsimmons.com Bret Simmons

Paul, you know I am a huge fan of yours, but I think you misread Deming. Disclaimer – Deming had a HUGE influence on my thinking.
First you need to realize that incentives and rewards ARE systems themselves, so Deming would say that system has an influence on employee behavior and there is leverage in constantly improving that system and all the other systems it *interacts* with. No systems act in issolation. They all influence each other. The interaction of systems is VERY hard to observe, but we cannot mistake the manifestation of the interaction in the behavior of our employees at work. Systems don’t behave, employees do, but when they behave we often miss the very big impact that systems had on their behavior.
Deming would also scoff at the idea that a system is fool proof. Nonsense, I can hear him say. Any current system is simply satisfactory for accomplishing the work of today, but we must constantly improve our systems to be able to address the problems of tomorrow as well as the problems of today.
By spending money on improving your systems (hiring, training, evaluation, rewards, staffing, supervision, materials, methods, etc), you are spending money on your people. It is where the leverage is, so it is your best invenstment. Deming still holds.
http://thestaffingadvisor.wordpress.com Bob Corlett

Paul,
Ask anyone who knows me, and they will tell you, I do love a good process. I run a service business and having a solid, predictable, repeatable process enables us to deliver the kinds of consistent results that make our clients happy. (We have, literally, 47 checkpoints in our process).
But skilled people deliver our service. Every search is different. Our people use their good judgement, and wisdom and experience to make a thousand decisions every day (“Will I put this candidate forward for an interview?” or “Does this client have realistic salary expectations for this search?” etc.)
The process supports the people, the process frees them from some decisions, so they can focus on other decisions. And our people refine and improve our processes … all the time. I’m astonished how often we are able to update and improve something that we have looked at 10 times before.
I’ve worked in search firms where the sales commissions had a tendency to encourage behavior that was “good for the recruiter” but was not in the best interests of the candidates, clients, or the company brand. All our process would be irrelevant if our incentives did not support it. Similarly all the incentives in the world would not create our predictable results, if there was not a process and performance management system to define what results we wanted.
So mark me down for “both are important”!
http://profile.typepad.com/2of6 Paul Hebert

Great comment Bret. One of the first things we do when engaging with a client is look at the systems that support a behavior – fix that first and then decide if further interventions are necessary. I do believe systems are important.
I as concerned after seeing the 95% quote a few times that there might be some managers saying… “hmmmm… enough of these reward programs – we just need to fix the system and then we’ll be alright.”
If nothing else in today’s world – systems are important but more flexible and dynamic – requiring more attention and intervention from people making the people more critical to creating/maintaining systems (even if they change a lot.
I am hoping that we make a conscious decision to focus more on the people in the system than the system around the people.
http://profile.typepad.com/2of6 Paul Hebert

Thanks Bob – as you know – since you were on the call – you were the inspiration for the post. I do agree also that process and people are important.
I thought it might be a good reminder though that people are critical to the process – now more than ever. In the “old” days – you could create a process that lasted years and the people simply checked buttons and watched lights to make sure things didn’t go wrong. Today it’s more about adapting the system – not just monitoring it.
Thanks for weighing in!
http://www.bretlsimmons.com Bret Simmons

Anyone that says “enough of these reward programs lets just fix the system” is very confused. Again, reward programs ARE a BIG systemic driver of behavior. And people have ALWAYS been critical to creating and maintaining systems, alas, hard headed managers have never gotten that point. You can’t create any effective system without involving the people that will use the system in the process (did I just describe a process?).
I am a scientist by training, and I study micro employee behavior (performance, attitudes, personality, etc.). I am more convinced than ever that the leverage is in the system. The key is getting folks to partner with you to identify and continually improve the processes that matter the most.
This might help, if anyone is interested http://www.bretlsimmons.com/2009-05/my-bottom-line/
http://thestaffingadvisor.wordpress.com Bob Corlett

Agreed my friend. As you astutely pointed out, in today’s environment of rapid innovation and constant change, the job description no longer describes the job. (Hmm, come to think of it, I think I blogged about that soon afer our conversation …. http://thestaffingadvisor.wordpress.com/2009/10/27/job-descriptions-no-longer-describe-jobs/)
I like what Bret said “Systems don’t behave, employees do, but when they behave we often miss the very big impact that systems had on their behavior.”
Clearly, designing incentive and reward systems is made even more complex in today’s rapid innovation environment.
http://profile.typepad.com/2of6 Paul Hebert

Thanks for the link… everything is a system – the key is the leverage points in the system (as you said) – people are more likely to be the leverage point in today’s systems – and more important to guide and reinforce IMHO.
Thanks for continuing the conversation.
http://profile.typepad.com/2of6 Paul Hebert

Thanks Bob for saying what I really meant to say in 1/10th the words in in much gooder English.
http://www.bretlsimmons.com Bret Simmons

Paul, my friend, we need to have a beer. You actually might need a few of them People are the leverage only because they hold the key to how we can improve our systems. Thanks for the lively discussion! Bret
http://profile.typepad.com/2of6 Paul Hebert

Would love it – just need to find a way to get to Reno!
http://johnhunter.com/ John Hunter

What Deming said definitely still holds. You don’t find ways to improve by blaming people. Fix the system to fix future results. Respect for people is critical. Some of my posts on this topic
http://management.curiouscatblog.net/2006/05/03/find-the-root-cause-instead-of-the-person-to-blame/
http://management.curiouscatblog.net/2006/11/18/european-blackout-human-error-not/
http://management.curiouscatblog.net/2006/04/01/people-team-members-or-costs/
Systems in the organizational context are human systems. They are not isolated from people. People are in the system. You can’t think of investing 95% of your time on systems and 5% on people. A big part of the 95% is people. Just looking at people as part of the system not as isolated components to blame. You likely will determine systemic failures to say provide adequate training, or to provide incentives that will create poor performance… Systems are also not static. They should be constantly improving. In order for them to constantly improve you need people making improvements. You need to engage the minds of those people to improve.
http://profile.typepad.com/2of6 Paul Hebert

Thanks John for the links. I’ll check them out.
http://thestaffingadvisor.wordpress.com/ Bob Corlett

Paul,
I was discussing Deming again, this time with John Sumser over at The HR Examiner, and thought of you. Have you read “Switch” yet? This quote leapt off the page – “What looks like a person problem, is often a situation problem.”
http://profile.typepad.com/2of6 Paul Hebert

Love that book. One of the few that addresses the whole issue of environment. Would love to have been a fly on the wall during the call with Sumser! Great writeup on you on the site BTW.
An Aussie

Sure, in the 21st century organisations do need innovation and ideas in their workforces. But it is not logical to assume that the manufacturing systems that Deming may have focussed on are the same sorts of systems our innovative workers operate within nowadays. One company may have a system (perhaps an organic system) that promotes innovation while a second company may implement another that is outdated, repressive. If the second goes out of business, the employees are not at all important in that company. They are unemployed. Surely it is important to ensure your business is operating in the right “jungle” as Steven Covey put it, to enable those employees to be in any way effective/productive. In that sense, maybe the 95% figure isn’t so wrong nowadays. Getting the system right is crucial. Maybe Deming just needs to be considered differently. Maybe I haven’t expressed this well. Hopefully someone out there in the ether can pick up on my line of argument and improve on it….

Deming and Systems in Today’s Business World – No Answers Just Questions

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