W. Edwards Deming's Analysis of American Industry Weaknesses

W. Edwards Deming struck at the heart of whether management can make a difference in organizational effectiveness (Gibson, Ivancevich and Donnelly, 1994). Deming’s basic point was that in many instances organizational failure is the result of improper management. However, instead of admitting failure and implementing necessary changes, management typically attributes the problems to symptoms such cost overruns or stiff competition. This denial of responsibility by management has created a disease-like atmosphere in American industry that can be significantly improved.

Deming describes seven major weaknesses (i.e., diseases) which hinder management from effectively managing their organizations:

1. Lack of organizational planning in producing products and technology that will be successful in the future.
2. Emphasis on short term profits at the expense of long term capabilities for the primary benefit of stockholders and financiers.
3. Performance of management is not assessed by merit rating or annual review.
4. Management is far too mobile to be good stewards of their organizations.
5. Management makes too many decisions on limited quantitative data while ignoring the limitations of the data.
6. Medical costs associated with employing workers are far too expensive.
7. The liability associated with running a business is excessive and legal reform is needed.

We cannot know whether Deming's list of diseases was complete, but the list has a certain intuitive appeal that qualifies it for careful consideration.

To combat the seven diseases described above, Deming also suggested areas where management can become deeply involved in organizational processes to improve effectiveness:

1. Develop specific knowledge about the processes and outputs of the organization.
2. Apply analytical problem solving techniques.
3. Commit to serve customers as they define acceptable service.
4. Encourage an organizational culture where employees participate in decision making.

Through consideration of these suggestions, Deming pointed out that management can embrace the organization as a complex system, instead of a series of loosely connected pieces. Managers who avoid the temptation to treat the organizational issues in a short term, piecemeal fashion, but as a whole, stand the best chance of leading their organization to peak effectiveness.

Reference

Gibson, J.L., Ivancevich, J.M., & Donnelly, J.H., Jr. (1994). Organizations: Behavior, structure, processes (8th ed.). Boston, MA: Irwin.