Out Of This Crisis, October 2001

October 2001

To prevent further acts of terrorism, Americans should think systematically and look to a book called “Out Of The Crisis,” written by W. Edwards Deming, an American teacher and statistician widely credited with the revitalization of the Japanese economy after the Second World War. Deming wrote about the crisis mentality that often takes hold of businesses. His ideas are equally applicable to governmental security systems that might prevent future acts of terror, as well as political systems.

The word “system” has many definitions. Deming defined it as “a network of interdependent components interacting to accomplish a specific aim or intended outcome.” A system cannot exist without a specific purpose or aim.

Before analyzing how Deming can help the USA find its way out of the current crisis, it is worth looking at how Deming’s ideas helped revitalize the US auto industry. In the early 1970’s, the US auto industry had been soundly beaten by a Japanese auto industry that had embraced systems. The US auto industry was stagnant, arrogant and, most importantly, the cars it produced had low levels of reliability. Workers and management blamed each other for problems. Relative to the Japanese, both defect rates and costs of manufacture were higher for US automakers. The US industry tried to remedy its quality problems by adding more quality inspectors at the end of the production lines. However, the problems were occurring earlier, in the materials used, in the training or lack of training received by workers and in the methods of manufacturing. The ineffectiveness of America’s auto industry “system” was ultimately validated by the customers’ growing preference for Japanese cars.

The Japanese understood the difference between common causes and special causes: Some problems are the “fault” of an individual (or a totally unique situation). These are called “special cause” problems. However, most problems are caused by poor systems and are called “common cause” problems. Common cause problems will continue to repeat themselves until the system is fixed. For every business, improvement of its systems is the responsibility of management. The Japanese drew detailed process diagrams of each of their systems. They tracked data to understand each system’s performance and then used their knowledge to improve their systems continuously. The best way to improve a result is not to focus on the result but to focus on the system that gives you the result. In time, the US auto industry improved its manufacturing systems, but only after detailed study of the Japanese methods based on Deming’s theory of management.

Currently, the USA has a myriad of terror prevention systems, including the CIA, the FBI, airport security guards and so forth. However, on September 11^th, those terror-prevention systems failed to prevent a catastrophic result. The failures included the following:

The visa system: Many of the terrorists had expired visas, but no system existed to find these individuals, even though some of the terrorists were stopped by police in the months prior to September 11^th.

The FBI and CIA information gathering systems: Some of the terrorist were wanted by the FBI and CIA, but an information system did not exist to cross-check the FBI/CIA “wanted” list against the airlines’ flight reservation database.

The x-ray / security system: Because these systems were manned by machines and personnel proven to be highly fallible, box cutters and knives went undetected.

The cockpit-door-security systems: Clearly inadequate, the doors did not stop access to the cockpits. In addition, the pilots were insufficiently trained for these previously unthinkable situations.

The air traffic control systems: Air traffic controllers did not immediately know that these planes had been hijacked.

The federal crisis management system: Once the air traffic controllers knew about the hi-jackings, the government’s information and decision-making did not move fast enough to shoot these planes down.

 

These are the failures. Now let’s look at the fundamental theories that drove the improvement in the Japanese and American auto industry.

Deming was a statistician and a teacher. He developed “14 Points” that were the “basis for transformation of American industry.” (See end of article for all 14 points.) To prevent acts of terrorism in the future, the USA and the world must begin a process of improvement of terror prevention systems, very much akin to the improvement that the US auto industry made during the 1980’s and 1990’s. Certain of the 14 points are especially relevant to improving our terror prevention systems.

Point 1: “…Create constancy of purpose toward improvement of product and service, with the aim to become competitive and to stay in business, and to provide jobs.” Businesses spend hours on their mission, vision and values. We must, as a country, have a discussion about our purpose. (My personal belief is that we are fighting, to our death if necessary, for the freedom to live by whatever religion or philosophy we choose, as long as our chosen religion does not advocate the extinguishment of other religions. We are fighting for tolerance. We are standing up and being intolerant of the intolerance of terrorists and righteous fundamentalism.)

Point 3: “…Cease dependence on inspection to achieve quality.” The leverage in fixing any system is in the first 15% of that system. You don’t improve an assembly line by putting more inspectors on the end of the line. You fix it by fixing the problems at the beginning of the line. Likewise, terrorism will not be solved by finding the terrorists already within the USA. We must prevent terrorists from entering our country. Furthermore, we must insure that other governments do not harbor or condone terrorists.

Point 4 is to “…End the practice of awarding business on the basis of price tag. Instead, minimize total cost.” What was the total cost of September 11^th? How much more would we have paid for higher quality guards at x-ray machines to be absolutely certain of our security? When building terror prevention systems, we must think about the total cost of terrorism.

Point 5 is to “…Improve constantly and forever the system of production and service, to improve quality and productivity, and thus constantly decrease costs.” Eradicating terrorism is a long-term effort and we must be mentally prepared. Every successful business understands that it is engaged in a continuous and forever effort at improvement. No matter how good the business becomes, it can always expect a competitor to attempt to beat it. Some noteworthy examples:

1. 1. It took the Japanese two decades, the 50’s and 60’s, before they became dominant in the automotive industry;
   2. It took the American auto industry at least one decade to adopt the ideas of Deming and successfully respond to the Japanese;
   3. American schools have only slowly been adopting systematic improvement efforts over the past two decades and their results have been minimal;
   4. Our voting system is only now being seriously addressed for improvement. The 2000 election, particularly in Florida, highlighted the flaws of the system, especially the infamous “butterfly ballot,” a horrible system.

Point 9 is to “…break down barriers between departments.” This means that the various organizations fighting terrorism must cooperate. Our intelligence system did not know that a plan was underway, even though some of the terrorists were on the FBI’s watch list. The airlines booked these same individuals on their plains, but this “match” never was recognized. In the same way that the engineering and sales departments of a particular company must cooperate to successfully manufacture and sell a car, the CIA and the FBI and the airlines must all cooperate to prevent terrorism.

Management consultant Marshall Thurber, who studied with Dr. Deming, has said that in order to foster true cooperation, three key ingredients are necessary: a) Darkness of future; b) Frequency of interaction; c) Brightness of future. Each of these ingredients are now present for battling terrorism. We’ve seen the darkness that will happen if we don’t cooperate. The brightness of America has never been more apparent than since September 11^th, as so many people recognize what a wonderful country it is in which we live. The key to cooperation is facilitating more interaction between various organizations. In business, reorganizations happen with regularity, and this is not a bad thing. We should be asking ourselves like, “why we do have both a CIA and an FBI?” Perhaps we will find that both are not necessary and, in creating a single organization, our terror prevention will become more effective.

Another key aspect of Deming’s philosophy regarded waste. Deming contended that there were as many as eight different kinds of waste and that by reducing waste, it was virtually guaranteed that a system could be improved. Businesspeople spend hours thinking about waste of time, waste of material, waste of inventory, waste of movement and even waste of human talent. As terror prevention systems are analyzed, waste should be uncovered and eliminated. A good place to start would be those two questions, “have your bags been with you at all times?” and “has anyone asked you to carry anything?”

 

As a statistician, Deming believed in analyzing a situation by looking at data. A stable system is one where the results are predictable, within certain parameters, which usually meant a mean and a standard deviation. A stable system might look like the information below:

An improving system might look like the information below:

 

Since September 11^th, I read an incredible book about the Crusades called The Dream And The Tomb. The savagery committed in the name of religion and righteousness by both Muslims and Christians was appalling. But then I thought about September 11^th and wondered whether man has really progressed. Do we solve our differences more peacefully today than we did in the 12^th century? Death from conflict is largely the result of the particular governments in place in particular countries and their ability to maintain peace within and outside of their borders. I would contend that when governments are based upon sound moral principles they are more likely to maintain internal peace than governments without those principles. More specifically, I would say that governments that promote tolerance, especially tolerance of religious views, are more likely to maintain peace. There have been many governments that promoted tolerance and are able to maintain internal peace, but when confronted with another opposing country that has strength, those tolerant governments have been overpowered. The important balance for a government to maintain is between the promotion of tolerance and being ready to use force against those other countries that are both intolerant and ready to dominate other countries.

What I don’t know is the data. Have mankind’s political systems improved over time? Have deaths from conflict, whether internal or external, been reduced over time? And what about disease? Has mankind reduced the number of deaths from disease over time? I don’t know the answers, but I do know what the data would look like to answer the question.

 

Or have we made no progress? Even though our population has grown, do we still kill each other in equal proportions. Have we made no progress in our ability to resolve conflict peacefully?

 

Finally, I believe that improving our terror prevention systems also means that we must accept certain ideas (and systems) that go beyond the experience of the American auto industry.

1. We must allow our personal freedom and personal privacy to be limited
   • Each American’s personal background (as well as visa holders) must be quickly available to our government. This means we must have one national database that is quickly accessible and that classifies every individual on our soil or on our “radar” with a security rating. The rating might be between 1 and 10, with 10 being most dangerous and 1 being completely benign. This also means that we need some sort of national ID card system so that the security risk of each person can be easily analyzed. We should consider also using a fingerprint, face scan or eye-scan verify the link between the person and their personal background information. Britain has installed a vast network of cameras to watch those on their soil and we should consider such a system which would be matched against our national database.
   • Each American must be prepared to be monitored at the places where our country is vulnerable. This includes:
     1. Large gatherings, where a terrorist could kill multiple people at once, including sporting events, religious services, schools, office buildings and malls.
     2. Places or vehicles where a terrorist could commandeer a vehicle that could do damage, including airports for commercial or private aviation, buses, trains and any vehicle transporting hazardous materials.
     3. National borders
     4. Purchasing a fire-arm
     5. Purchasing of large quantities of drugs or chemicals
     6. Anyone stopped by a law-enforcement agency
     7. Large monetary transactions. As we have learned, terror cannot occur without funding. We must force any individuals conducting a large monetary transaction to be cross-checked against our national database.

• We must trust and support our government. Yes, some people may be unnecessarily detained, but in the end, we trust that it is the role of our government to provide for our security. This is a balancing act because we also look to our government to protect our freedoms of movement, of expression, of congregation. In the end, however, these freedoms should only be available to those who are without justifiable suspicion.
• We must make maximum use technology. Our country possesses the world’s greatest information technology sector. We should use our incredible capability to build an information SYSTEM which is capable of tracking people, because people, unfortunately, are the ultimate source of terror.
  1. Create constancy of purpose toward improvement of product and service, with the aim to become competitive and to stay in business, and to provide jobs.
  2. Adopt the new philosophy.
  3. Cease dependence on inspection to achieve quality. Eliminate the need for inspection on a mass basis by building quality into the product in the first place.
  4. End the practice of awarding business on the basis of price tag. Instead, minimize total cost.
  5. Improve constantly and forever the system of production and service, to improve quality and productivity, and thus constantly decrease costs.
  6. Institute training on the job.
  7. Institute leadership. The aim of supervision should be to help people and machines and gadgets do a better job.
  8. Drive out fear, so that everyone may work effectively for the company.
  9. Break down barriers between departments. People in research, design, sales, and production must work as a team, to foresee problems of production and in use that may be encountered with the product or service.
  10. Eliminate slogans, exhortations, and targets for the work force asking for zero defects and new levels of productivity. Such exhortations only create adversarial relationships, as the bulk of the causes of low quality and low productivity belong to the system and thus lie beyond the power of the work force.
  11. 1. Eliminate work standards (quotas) on the factory floor. Substitute leadership.
      2. Eliminate management by objective. Eliminate management by numbers, numerical goals. Substitute leadership.
  12. 1. Remove barriers that rob the hourly worker of his right to pride of workmanship. The responsibility of supervisors must be changed from sheer numbers to quality.
      2. Remove barriers that rob people in management and in engineering of their right to pride of workmanship. This means, inter alia, abolishment of the annual or merit rating and of management by objective.
  13. Institute a vigorous program of education and self-improvement.
  14. Put everybody to work to accomplish the transformation. The transformation is everybody’s job.

 

Deming’s 14 Points For Management*

* From Out of the Crisis, Copyright, 1982, 1986 by The W. Edwards Deming Institute.