Top 3 EAM System Design and Use Insights from the Chapter in ‘Out of the Crisis’ by W. Edwards Deming
Abstract:
Changing Western style of Management and adopting the 14 Points from Chapter 2 to transform and rebuild an organisation for high quality and productivity will face the deadly diseases and obstacles. Deming identified seven deadly diseases and sixteen obstacles to organizational change inherent in Western management systems. They apply to all radical institutional change, including improving maintenance and EAM systems and processes to be more effective and efficient.
Keywords: organizational change, organizational transformation, management transformation, quality improvement, productivity improvement,
Top 3 EAM system insights this article helps you to appreciate:
- Organizations are stable, living systems, and like all ‘life’ they will fight against a threat. The secret is to give their management and their people a safe way to change.
- Improving a company’s quality and productivity requires senior management to build quality and productivity improvement into an operation’s way of working.
- The 7 diseases and 16 obstacles to organizational transformation also apply to EAM system improvement.
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An organization, an enterprise, a corporation, or a company are living systems. They are intelligent, alive entities that will protect themselves against perceived risk. Once formed, their operational system and enterprise asset management system, will prevent change for the better unless perfecting themselves is a part of their design and functioning. If organizations contain Western management’s deadly diseases and obstacles to transformation that W. Edwards Deming described in Out of the Crisis, Chapter 3, they will “require a total reconstruction of Western management.”
Unfortunately, Deming did not provide a ‘vehicle’ or method to use to transform organisations. In the case of improving an Enterprise Asset Management (EAM) system you can use the Plant Wellness Way EAM asset life cycle management methodology (see the www.plant-wellness-way.com website).
The comments and thoughts in the following lists are my summation and interpretation of the diseases and obstacles. Any errors and misunderstandings are mine alone.
The 7 Deadly Diseases that Kill Management and Organizational Transformation
Deming lists seven deadly diseases, but only elaborates the first five in detail.
1. The crippling disease: lack of consistency of purpose
Western management’s focus on short-term results instead of on providing customer-satisfying quality product and service prevents an organization building for lasting long-term success. Deming wrote, “It is better to protect investment by working continually toward improvement of processes and of product and service that will bring the customer back again.”
2. Emphasis on short-term profits
The need to generate quarterly profits and dividends drives Western management decision making to the detriment of choosing options that would bring a far more profitable future in five- or six-years’ time. Taking long-term choices requires courageous leadership vision and commitment.
3. Evaluation of performance, merit rating, or annual review
Explore the statistical evidence of organizational performance and you will find the true creator and driver of business results is the management system and processes in use. It is nonsensical to rate individuals and have annual performance reviews because it was the system, and not the personal efforts of the people in the system, which caused the results.
4. Mobility of management
Changing an organization’s focus to the improvement of quality and productivity for long-term survival and success requires its senior management to lead and resource the change for as long as it takes to embed the required mindset, processes, and behaviours. The leaders need to stay to manage and support the change from the start until fully entrenched.
5. Running a company on visible figures alone (counting the money)
Management reports showing historical financial results are hindsight-looking instruments. They tell of events in the past, now unchangeable. Deming advises, “This type of rating is management downstream, managing the outcome, too late, so much easier than to provide leadership on improvement.”
6. Excessive medical cost
Provision of occupational health and safety insurance is a cost to business added to product and service pricing and borne by the consumer.
7. Excessive costs of liability, swelled by lawyers that work on contingency fees
The 16 Obstacles that Obstruct Management and Organizational Transformation
1. Hope of instant pudding
This obstacle is the wish that quality and productivity transformation “is accomplished suddenly by affirmation of faith” or “without effort and sufficient education to do the job.”
2. The supposition that solving problems, automation, gadgets, and new machinery will transform industry
It is the holistic operation of the total system that delivers the results an organisation gets. Changing the physical assets in a Western-style business system that uses bad management principles and poor practices, will not improve the results. It is not the physical assets that are the true causes of the organization’s problems.
3. Search for examples
A common obstacle is requiring evidence of sure success in organizations like your own before starting the quality and productivity transformation. As Deming says, “Improvement of quality is a method. Transferable to different problems and circumstances. It does not consist of a cookbook procedure on file ready for specific application to this or that kind of product.”
4. “Our problems are different”
Deming agrees that organizations are different, “but the principles that will help to improve quality of product and of service are universal in nature.”
5. Obsolescence in schools (of business)
Students taught Western management methods in MBA courses and business classes learn to cause and sustain the failings of the system. What they ought to be doing is getting practical experience of the processes they manage and learning the right ways to transform company systems to continually get ever greater successes.
6. Poor teaching of statistical methods in industry
Deming says it best, “Awakening to the need for quality, with no idea what quality means or how to achieve it. Mass assemblies for crash courses in statistical methods, employing hacks for teachers, being unable to discriminate between competence and ignorance. The result is that hundreds of people are learning what is wrong.”
7. Use of Military Standard 105D and other tables of acceptance
Any acceptance testing that requires taking a lot from the production run and then do an acceptance test on a sample amount from the lot will “guarantee that some customers will get defective product.”
8. “Our quality control department takes care of all our problems of quality.”
In organizations with quality control departments, they usually become collectors and filers of charts while quality remains poor. Quality is a senior management responsibility, as it directly impacts customers and thus corporate survival and success. That responsibility cannot pass to others since only senior management can make the system changes needed to improve quality.
9. “Our troubles lie entirely in the work force.”
About this obstacle Deming writes, “The supposition is prevalent the world over that there would be no problems in production or in service if only our production workers would do their job in the way that they were taught. Pleasant dreams. The workers are handicapped by the system, and the system belongs to management.”
10. False starts
It is mistaken thinking that providing training courses in statistical methods to enough people will bring the desired change. As is introducing QC-Circles into production. Or training in root cause analysis of problems. These are false starts making it look as if beneficial change is underway. Yet, the underlying management philosophies and system remain the same and will thus corrupt the efforts to improve quality and productivity.
11. “We installed quality control.”
Quality and productivity improvement is not a thing that comes out of a box that you assemble and use. Deming writes, “Improvement of quality and productivity, to be successful in any company, must be a learning process, year by year, top management leading the whole company.”
12. The unmanned computer
One must fully understand the information contained in a computer output and not trust its content because it came from a computer. Without sure evidence of its correctness, it is a gross mistake to accept that the output of a computer is the proper statistical data analysis to apply, and it is a trustworthy result on which to make quality and productivity decisions.
13. The supposition that it is only necessary to meet specifications
A specification is a description of a requirement that produces an intended performance. But so many factors and events occur in engineering, manufacturing, and delivery of a product or service, that Deming wrote, “Specifications cannot tell the whole story. The supplier must know what the material (or service) is to be used for.” It is vital to collaborate with the supplier, so they learn and understand what the specification does not tell them.
14. The fallacy of zero defects
This is the presumption that once a product’s quality parameters are inside their specification limits an item is good for use in service. Deming points out, “There is something obviously wrong when a measured characteristic barely inside a specification is declared to be conforming; outside it is declared to be nonconforming.” The Taguchi loss function, as in the image below, is a better description of the situation—minimum loss at the quality target value and increasing loss the further from the target in either direction.
15. Inadequate testing of prototypes
A prototype is a one-off assembly containing parts made close enough to the required quality characteristics. It may work well in trials and tests. But when mass manufactured, the natural variation in the parts production processes can result in the finished assembly not working properly. Considering distributions of parts’ size is necessary in product design.
16. “Anyone that comes to try to help us must understand all about our business.”
A company cannot improve itself without using new knowledge correctly applied. The knowledge may exist within the organization but not used, or it exists outside. It is not necessary that the outside help knows all about the business. They only need to cooperate with persons in the organization who can transfer the new learnings into valid solutions.
The seven diseases and sixteen obstacles to organizational management transformation exist in most Western management style operations. Recognising that a stable system, like a company or corporation, will fight against change to preserve itself, the Plant Wellness Way EAM methodology for improving enterprise asset management systems takes a different tact to doing change management. As shown in the image below, it establishes a separate EAM system, call it a prototype, and gets is working brilliantly. Everyone sees it deliver successful change for their organization and fear evaporates. Then transform the rest of the old EAM system to the new PWWEAM system.
Mike Sondalini
PWWEAM System-of-Reliability
16 June 2022