Deming lamented American management's failure to understand the transformation that made their Japanese counterparts successful. American leaders are quick to adopt the tools and solutions - the technology and methodologies - but they missed the point that the change starts with them; the transformation is up and down the management hierarchy.
"A transformation must take place in American industry or it will continue on the decline until the style of American management changes...and they don't know what to do. 98% don't know there is a problem or there is anything they can do."Deming was right.
Managers must first understand the problem, which Deming described as the Five Deadly Diseases of American management:
- Lack of constancy of purpose – "People haven’t decided what they’re in business for." It leads to short-term thinking; a lack of long-term definition and goals.
- Emphasis on short-term profits – a focus on the quarterly dividend and the price of the company stock over plans to stay in or grow the business through improvement in quality of product or service.
- System of annual rating of performance - Performance appraisals, management by objectives, etc, a focus on short-term performance demoralizes employees, undermines team-work, and "annihilates long-term plans."
- Mobility of management – People need roots in the company to have knowledge of its problems, of production, of sales, of service. “People in management today know nothing about the problems of anybody else; and don’t even know their own.”
- Use of visible figures only for management – Little consideration is given to measures that are unknown and unknowable, e.g. the multiplying effect of unhappy customers.
“People are misused, abused and underused by management that worships a sacred cow style of management that was never right.” - W. Edwards Deming