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The Leader’s Handbook


Foreword vii

Preface ix

Acknowledgments xv

1 Train Wrecks and Bad Radios

How We Got Where We Are 1

2 The New Leadership Competencies 16

3 Systems Thinking:The Heart of the Twenty-First Century

Leadership 57

4 Getting the Daily Work Done 94

5 Giving Meaning, Purpose, Direction, and Focus to Work 160

6 Breakthrough Improvement 187

7 Keeping Track:Measurements of Improvement,

Progress, and Success 232

8 Leading by Asking Good Questions 262

9 Performance without Appraisal 293


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10 Leadership into the Next Millennium 369

Index 407


Russell L. Ackoff

Peter Scholtes is an educator, not a guru. A guru is one who develops

a doctrine and seeks disciples who accept and transmit it without

modification. No deviation is acceptable. Any modification is a

sign of disloyalty, in fact, heresy. Its consequence is excommunication.

Educators, on the other hand, encourage and even try to inspire

progressive deviations from what they have said. Their objective is

not to remove the need for further learning, as is the guru’s, but to initiate

it—to provide a springboard from which their students can dive

into their own minds, discover what is there, and develop it.

The number of management gurus is increasing at an alarming

rate. We do not yet have one guru per manager but we are rapidly approaching

that number. The ultimate success of a guru is to produce

the fad of the week, becoming number one on the managerial hit parade.

Successful or not, gurus preach panaceas the validity of which

they pretend to have received directly from the Great Manager in the

Sky, who actually resides in the mind of the gurus.

What educators teach comes from experience, their own and that of

others, not from revelation. This book is a distillation and condensation

of years of rich experience of one who has the gift of learning from it. Unlike

most books that deal with management, this one is relevant to managers

at every level, from bottom to top, top to bottom, and sideways. It

deals with the interactions of managers at different and the same levels

and their interactions with others. It takes a systemic view of management

and focuses on interactions, not actions. It deals with almost every

aspect of management at every level of an organization. As a result, the

book is firm and very tightly packed. Therefore, a complete reading

should not be attempted at one sitting. Time to absorb and reflect on the

material presented is essential.

I suggest a small group of managers or students of management

read each chapter separately but simultaneously, and then gather to

discuss what they have read. They should discuss what they agree

with, what they disagree with, and, most important, how what they

Dr. Ackoff is Chairman of Interact, the Institute for Interactive Management, and

Professor Emeritus of the Wharton School. He has written 19 books.

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have read will affect their behavior. Discussion should also follow up

on previous statements about what will be done differently as a result

of reading the book. The format and the clarity of the presentation

encourage such discussions.

The book is about the need to transform management from the

old style, command and control, to the new style, inspiring leadership.

It identifies the many changes that give rise to this need including

the increasing educational level of the workforce, the increasing

technological content of work, the ability of most subordinates to do

their jobs better than their bosses can (thus obsoleting supervision),

the currently imposed constraints that preclude subordinates from

using all they know that is relevant to their jobs, and the failure of

managers to recognize the need for enabling their subordinates to do

better tomorrow than the best they can do today—that is, to enable

them to develop. The proper objective of a social system is not growth

but the development of all its stakeholders. Growth, at best, is a

means, not an end. (Preoccupation with it is pathological.) Development

means an increase in one’s desire and ability to fulfill one’s

needs and desires and those of others. It is only through simultaneous

contributions to the development of all of an organization’s stakeholders

that the organization itself can develop. A wagon pulled by a

team of horses can move no faster than the slowest horse.


In October 1992, I was in São Paulo, Brazil, presenting a two-day

workshop for a large corporation with a deserved reputation for being

well advanced in the application of the philosophy and methods of

quality. At the end of the second day, I was approached by a vice president

who was regarded as their leading teacher and promoter of Dr.

Deming’s philosophy. The gentleman looked me in the eye and with

great earnestness said, “You shook my brains!”

At first I wasn’t sure whether this was a compliment or a criticism.

Then I saw the smile forming in the corners of his eyes. He was

pleased that I shook his brains.

I will be forever grateful to that gentleman. He provided, in one

short statement, a description of what I think a major part of my purpose

is. I know that what I teach is often unconventional and sometimes

controversial. I cannot realistically expect everyone who reads

this book to accept my message.

In the end, however, I will have done my job if you emerge from

reading this book with at least a troubled mind and shaken brains. At

best, of course, I hope this book provides some useful guidance and

insights into developing a better approach to leadership for all those

organizations—workplace and others—with which you are associated.

These are some of what I propose to be the “brain-shakers,” the

unconventional teachings of this book:

More than 95 percent of your organization’s problems derive

from your systems, processes, and methods, not from your

individual workers. Your people are doing their best, but

their best efforts cannot compensate for your inadequate

and dysfunctional systems.

We look to the heroic efforts of outstanding individuals for

our successful work. Instead we must create systems that routinely

allow excellent work to result from the ordinary efforts

of ordinary people.

Changing the system will change what people do. Changing

what people do will not change the system.

Certain common management approaches—management

by objectives, performance appraisal, merit pay, pay for performance,

and ISO 9000—represent not leadership but the

abdication of leadership.

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Current buzzwords like empowerment, accountability, and

high performance are meaningless, empty babble.

Ninety-five percent of the changes undertaken in organizations

have nothing to do with improvement.

The greatest conceit of managers is that they can motivate

people. Managers’ attempts to motivate people will only

make things worse.

Behind incentive programs lies management’s patronizing

and cynical set of assumptions about workers. Managers implicitly

say to workers, “I’m okay, you need incentives.”

Managers imply that their workers are withholding a certain

amount of effort, waiting for it to be bribed out of them.

The history of the human race is also the history of human leadership.

For thousands of years, leadership has been hierarchical in its

structure. In the Book of Exodus, Moses’ father-in-law, Jethro, advises

Moses to do the following:

Select out of all the people some capable, God-fearing, honest men

with an aversion to improper gain, and set them over the people as captains

of divisions of a thousand, of a hundred, of fifty, and of ten; let

them act as judges for the people on all ordinary occasions; all important

cases they shall bring to you (18:21-22)

This, by the way, makes Jethro the world’s first management

consultant. (Perhaps this explains why soon after, in verse 27, “Moses

saw his father-in-law off” and Jethro was never heard from again.)

This incident also establishes management consulting as the world’s

second oldest profession.

The point is that for millennia we humans have learned to expect

hierarchy. This view was illustrated by the Prussian Army in the

1700s, using what is now the traditional organizational chart (see Figure

1-1, page 3). As we shall see, it wasn’t until the mid-1900s that this

hierarchical view was challenged.

A new approach to leadership began in Japan in 1950. At that

time there occurred a convergence of needs, opportunities, and re-

sources—the right people with the right stuff in the right place at the

right time. People like Dr. Deming, Homer Sarasohn, Charles Protzman,

Frank Polkinghorn, Dr. Juran, Ichiro and Kaoru Ishikawa, and

others then and since are credited with starting a new industrial revolution.

Indeed, because of them, the world of work will never be the

same. This book represents a modest contribution to the continuation

of a leadership philosophy that began with those who preceded Deming

and the Ishikawas (Shewart and others) and has been advanced

many who have succeeded them.

Preface xi

The theme of this book, therefore, is this: There is a new way to

do business, a new philosophy of leadership, a new way to get work

done. This new way is enormously more effective than the old way,

and it is a whole lot more fun.

This new way, however, is profoundly different from what has

existed since before Moses and what we have learned since our childhood.

Our instincts and reflexes as managers are shaped by our experiences

and past associations—our parents and families, the principals,

teachers, coaches, supervisors, and managers of our younger

years. Our instincts as managers are elastic. They have “memory.” We

can stretch memories and reshape them, but there is a great likelihood

that they will revert to their previous form. Change for leaders is usually

hard, even when that change is sincerely desired and earnestly


Sometimes the difference between the new way and the old way

is subtle as well as profound. Here is an analogy:

One Christmas my wife and I received two books of Magic EyeTM

art. When you look at Magic EyeTM art, you see an array of colors and

figures. You can, however, learn to focus your eyes in such a way that

a three-dimensional image will emerge from the array of colors and

figures. (“Look, it’s a giraffe!”) But you must learn to look differently.

Two people can look at the same picture. One will see only the colors

and figures, and the other will see something entirely different. (I have

been told that people with an astigmatism cannot see the hidden

three-dimensional image.)

The same is true of management. Let us take two people, one

firmly entrenched in the old set of premises (behind every problem

there is someone who screwed up) and one who has developed a systems

view (behind every problem there is an inadequacy in the system).

Both will look at the same organization, the same event, and the

same results, and each will see something very different. After the disastrous

oil spill in Alaska’s Prince William sound, one will see Exxon’s

systems working dysfunctionally, while the other will see the designated

culprit, Captain Hazelwood of the Exxon Valdez.



The only other book I have written is The Team Handbook, published

by Joiner Associates in 1988. To be presented in a sensible chronology,

The Leader’s Handbook would have come out before The Team Hand


book. Leaders need to know their roles before they start establishing

teams. But I didn’t know then what to tell the leaders. Finally knowledge

and experience have caught up to me, and I became ready to

write this book.

The two books have much in common: the same basic philosophy

behind them, the same values attached to systems, statistical

thinking, relations with people, and learning to master improvement.

The direction-setting activities described in Chapters 5 and 6 are what

ideally precede the establishment of project teams. Teams will be far

more effective when the larger context and purpose have been carefully


I see the two books, therefore, as companion pieces. The similarities

in title and appearance are intended to convey the compatibility

of the books.

My hope is that those who over the past ten years have learned

from The Team Handbook and who have taken on leadership roles will

find this book equally useful.


Chapter 1 offers a short history of management philosophy. There are

two reasons for beginning with some history. One is that I love history

and find that I can personally learn better by understanding the

historic context in which philosophies were developed. The other is

that I believe history allows us to understand why certain beliefs have

existed and why we may now be able to discard them. Understanding

history becomes a prelude to change. Understanding history well is a

prerequisite to improvement.

I acknowledge that Chapter 1’s history is centered on U.S. management

history. The management history of the United States is

what I understand best, though I am also fascinated by the long history

of management in Europe and Asia. The Industrial Revolution

started in England nearly 100 years before it reached America. Nevertheless

there are many parallels between what is described in Chapter

1 about the United States and what was occurring in all of Europe at

the same time. The central influence of the military and the railroads

and their shaping of approaches to management were factors in European

countries as well as in the United States.

If you don’t share my fondness for history and choose to skip directly

to the following chapters, by all means do so.

Chapters 2 and 3 explain the heart of the new philosophy.

Chapters 4, 5, 6, 7, and 8 describe various practical applications.

Preface xiii

Chapter 9 confronts the most harmful managerial assumptions

and practices (performance appraisal and merit pay, etc.) and offers alternative


Chapter 10 offers a summary of what it means to lead and to be

a leader in today’s world.

At the end of each chapter are questions and activities intended

to stimulate more thinking and help with the applications of these approaches

to your own situation. With regard to these questions and activities,

there are no right answers (though there might be many wrong

answers). The questions are not meant to be tests. Their value should

be in the self-searching they inspire and the discussions they provoke.


My good friend Bill Hunter and I used to talk about such esoteric

things as the relationship between Dr. Deming’s philosophy and the

teachings of Teilhard de Chardin. (Since Bill died Clare Crawford-

Mason is about the only person I know who understands both Deming

and Teilhard de Chardin.) Pierre Teilhard de Chardin was a French

priest, paleontologist/geologist, philosopher/theologian, and mystic.

He worked in China for over 20 years in the early part of the twentieth

century. He was a major contributor to the discovery of the Peking


Teilhard de Chardin wrote eloquently about the future of evolution

until his death in New York City in 1955. He proposed that humankind

is evolving toward greater consciousness and that love will

lead humans to a new unity and an end-state that he calls the “Omega


The day will come when, after harnessing the ether, the winds, the

tides, and gravitation—after all the scientific and technical achievements,

we shall harness for God the energies of love. And then, on that

day, for the second time in the history of the world, man will have discovered


—Pierre Teilhard de Chardin

The End of the World

Intrigued by the optimism of Teilhard de Chardin, Bill Hunter

and I would explore how Deming’s philosophy can help humankind

evolve into systems that create better places to work and learn, better

government, better institutions of health care, and improved organizational

pursuits of every kind. Deming’s philosophy, we concluded,


represents a means by which people can contribute to the evolution

of the human spirit. Therefore, as you engage in improving your

workplace and pleasing your customers, you may consciously be attending

to the immediate benefits of improvement occurring at this

time and in this place. But your efforts may be part of something far


If this is true, then what was begun by Shewhart, Sarasohn, Deming,

the Ishikawas, and Juran, and what is continued by the many of

us who follow in their footsteps—including Bill Hunter and the gentleman

from São Paulo—is more than a new industrial revolution. It

is part of a new renaissance.

Peter R. Scholtes

Madison, Wisconsin


Juran, J. M., Ed. 1995. A history of managing for quality. Milwaukee: ASQC Press.

Teilhard de Chardin, Pierre. 1959. The phenomenon of man. New York: Harper


I welcome your comments, feedback, and inquiries. To get in touch by:

Mail: Scholtes Seminars and Consulting, PO Box 259327, Madison,

WI 53725-9327


Fax: (608) 221-4935

You may also visit my web page:


It was Isaac Newton who said, “If I have seen further than others, it is

by standing on the shoulders of giants.” I give credit to the giants for

my being able to see at all:

Dr. W. Edwards Deming, from whom I learned so much and

whose teachings changed my life.

Dr. Kaoru Ishikawa and his father Ichiro, who were pioneers

in the new approaches of leadership in Japan.

Dr. Malcolm Knowles, the pioneer in the field of adult learn


who was my teacher and friend at Boston University.

Dr. Myron Tribus, from whose writings I first became ac


with Dr. Deming and the new approach to leader


and who has been a source of learning, friendship, and

support for over fifteen years.

There are several others from whom I have learned and whose

wisdom and insights are in my work:

Dr. Brian Joiner, with whom I worked for ten years and from

whom I learned immeasurably. If it were not for Brian, I

would not be doing what I am doing today.

Dr. Bill Hunter, my good friend whom I have missed since

his death in 1986. My first effort to apply the philosophy described

in this book was done with Bill at my side, teaching

me, learning from me, and learning with me.

Dr. Henry Neave, an author, researcher, professor, and one of

the founders of the British Deming Association—and a good


There are many others from whom I have learned who deserve

more than the mere mention of their names. But at least I can do that:

Dr. Russell Ackoff Joop Bokern John Criqui

Tony Alderidge Dr. George Box Lloyd Dobyns

Yukihiro Ando Bill Braswell Lynda Finn

Dr. Nida Backaitis Roland Coates Maurice Fletcher

Dr. Edward Baker Clare Crawford-Liz Freeman

Tim Ball Mason Tim Fuller

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Conrad Fung

Dorothy Gill

Spencer Graves

Heero Hacquebord

Britt Hall

Phil Landesberg

David Langford

Barbara Lawton

Bill Lawton

Kevin Little

Frank Pilecki

Gipsie Ranney

Debbie Ray

Virginia Satir

Bill Scherkenbach

Knapp Hudson

Barbara Hummel

Masaki Imai

Dawna Markova

Kathryn Metzger

Ron Moen

David Schwinn

Carol Schwinn

Ronald Snee

Mary Jenkins

Nye John

Noriaki Kano

Tom Mosgaller

Tom Nolan

Daniel Oestreich

Rob Stiratelli

Mike Tveite

Lonnie Weiss

David Kerridge

Alfie Kohn

Joyce Orsini

Chris Oster

Donald Wheeler

Many people helped in the processes that begot this book.

Jenna Casbarro Hansen acted as the project manager and

contact person in my office.

Bj Dillon-Rauen did the desktop publishing work for each of

the many drafts of this book.

Jack Covert, of Schwartz Book Store in Milwaukee, encour


me and helped at some critical moments.

Dale Mann, a cartoonist philosopher, who illustrated The

Team Handbook, now has shared his talent in this book.

Matthew Scholtes took on several research projects for his

dad. (“Where exactly does the Oliver Wendell Holmes quote

come from?”)

Peter S. Scholtes is one of the best copy editors I have ever

had nudge and tweak my writing.

Others who helped with the manuscript:

Tony Aldridge

Edward Baker

Jim Chandler

Patricia Clark

Maury Cotter

John Criqui

Liane Dolezar

Lynda Finn

Spencer Graves

Barbara Hummel

March Jaques

Phil Landesberg

Madison Public

Library Reference


Dave Nave

Lisa Nave

Kathleen Paris

Judy Schector

Myron Tribus

Al Viswanathan

Bill Warner




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On October 5, 1841, two Western Railroad passenger trains collided

head-on somewhere between Worcester, Massachusetts and Albany,

New York, killing a conductor and a passenger and injuring seventeen

passengers. That disaster marked the beginning of a new management

era (Chandler, 1977).

Prior to the early 1800s in the United States (and the early 1700s

in Europe), business was much the same as it had been since the Middle

Ages: operating as cottage industries, tradespeople made their wares

one item at a time and sold them to their neighbors. There was no

“manager.” The owners of the enterprises did the work themselves or

coached apprentices and assistants who did the work alongside them.

In Europe, quality was assured by guilds and their marks of approval.

Then came the development of coke as a fuel in England and the

discovery of anthracite coal in Western Pennsylvania, both leading to

the possibility of mass production and mass distribution. The owner

of a cottage shop could choose to hire engineers to build machines of

mass production and by 1830 begin to use the burgeoning rail systems

for mass distribution. Or the shop owner could stay in the “cottage,”

continuously worrying about competition from those on the

rail system who had entered the new industrial age.

It was the time of a great paradigm shift in managerial thinking,

the equivalent of letting go of a managerial flat-earth perspective. For

the owners of businesses, these were truly traumatic times, requiring

them to rethink the premises and practices of their work: How, they

asked, will we run a large, geographically dispersed organization?

Other than the army and the church, there were few models for

such a management practice in the 1800s. The railroads were the first

industry to come to grips with how to manage in the new era. In the

United States the Western Railroad was the first to extend itself beyond

ordinary regional boundaries, the first with complex schedules

and multiple trains on the same track. It was also the first with a disastrous

train wreck, a harbinger of worse tragedies to come.

The Massachusetts legislature launched an investigation into the

causes of the train wreck and the directors of the Western Railroad appointed

a committee headed by Major George W. Whistler to find a

remedy. Their recommendations had major immediate impact on the

railroads and, over the next decades, helped shape all of U.S. managerial


Part of the recommendations for the railroads was an organizational

structure that looked like the “train wreck” chart in Figure 1-1.

While the standard organizational chart may seem ageless, it was, in

fact, adapted from the Prussian Army and introduced to American

Train Wrecks and Bad Radios

Figure 1-1. The “train wreck” chart.

business practice as a way to prevent train wrecks! In its time, it was

revolutionary. Its unique features:

¦ Central offices run by people called “managers” (a new term)

¦ Distinct functional divisions

¦ A “chain of command,” clear lines of authority

¦ Clear lines of communication and reporting

¦ Clear descriptions of responsibility for each individual from

top to bottom

Daniel McCallum, President of the Erie Railroad, later elaborated

on the Western Railroad’s chart with his Six Principles of Administration:

1. A proper division of responsibilities.

2. Sufficient power conferred to enable the same to be fully carried out,

that such responsibilities may be real in their character (that is, authority

to be commensurate with responsibility).

3. The means of knowing whether such responsibilities are faithfully


4. Great promptness in the report of all derelictions of duty, that evils

may be at once corrected.

5. Such information, to be obtained through a system of daily reports

and checks, that will not embarrass principal officers nor

lessen their influence with their subordinates.

6. The adoption of a system, as a whole, which will not only enable the

General Superintendent to detect errors immediately, but will also

point out the delinquent. (See Chandler, 1977.)


A fundamental premise of the “train-wreck” approach to management

is that the primary cause of problems is “dereliction of duty.”

The purpose of the organizational chart is to sufficiently specify those

duties so that management can quickly assign blame, should another

accident occur.

That this approach to management took on a militaristic tone is

not surprising. Retired military officers had great influence on the

leadership of early businesses. New businesses relied on the technical

and managerial contributions of engineers. One of the few and certainly

the best source of engineering education in the United States

was the United States Military Academy at West Point.

The era of management that began in the mid-1800s can be characterized

as “management by results” (Joiner and Scholtes, 1985).

Since managers could no longer do the work themselves or direct others

in the doing of the work, managers exercised their authority by

holding people accountable for results. This train-wreck model evolved

in the United States over the years after 1840. In the 1950s, management

by results reached its epitome in MBO (management by objectives)

and performance appraisal, the Harvardization of train-wreck


From the beginning of the Industrial Revolution in England in

1730 up to the present, managers have continually focused on individual

accountability for results. These results are E-mailed or laserprinted

instead of quill-penned, but the whole approach is not much

different from McCallum’s Principles of Administration: “Great promptness

in the report of all derelictions of duty, that evils may be at once

corrected … detect errors immediately but … also point out the delinquent.”

Our operations are fine if people would only do their jobs.

Management would be easy if it weren’t for all the employees.

From today’s vantage point it is possible to see the flaws in trainwreck

management, but our predecessors took what was indeed primitive

and chaotic and gave it order and workability. People like

Whistler, McCallum, Frederick Taylor, or Henry Ford in the United

States or Darby, the Stephensons, or Brunel in England were pioneers,

people of vision and passion who got things done. They did their best

and, by and large, what they did was very good. The reign of industrial

hierarchy as the best theory of management lasted nearly 200 years.

Train Wrecks and Bad Radios


Around the time of the Western Railroad’s train wreck, Japan was experiencing

the end of the Shogun era. In 1853, Commodore Matthew

Perry sailed into Tokyo Harbor on a U.S. Navy gunboat. Commodore

Perry’s message: “Open your ports to American commerce.” The gun-

boat’s message: “Or else!”

The Japanese have historically been an adaptive people, realistic

and flexible while at the same time tenacious and purposeful. Japanese

leaders drew two conclusions from Commodore Perry’s visit:

Japanese ports must indeed be opened to foreigners, and Japan must

undertake a more modern approach to militarization. This latter adaptation

ultimately led to World War II and military defeat. It also led to

yet a new chapter of adaptation—and a new paradigm of leadership.

If the previous era of American management can trace its start to

a Massachusetts train wreck, the origins of the new era of management

can be attributed to General MacArthur’s desperate need for radios.

During his administration of the occupation of Japan after

World War II, MacArthur had to find a method for communicating

with all the Japanese people. The story is reported in Crawford-Mason

and Dobyns (1991).

MacArthur wanted reliable radios, a lot of them, so that the occupation

forces’ orders and propaganda programs could be heard in every

town and village in occupied Japan, and when Japanese manufacturers

in the 1940s couldn’t give the general what he wanted, he sent for

Americans to teach them how.

Think of that: one man wanted a radio that worked, and the world

economic order changed.

The irony of a Japan unable to produce good radios, and relying

on American teachers to learn how, is an amazing and humbling lesson

for us. The Americans who went to Japan were Homer Sarasohn,

a systems and electronics engineer, and later Charles Protzman and

Frank Polkinghorn, engineers from Western Electric.

Sarasohn and Protzman placed the early emphasis on getting the

factories up and running and teaching the importance of viewing production

as a system. They taught a 32-day course to senior executives

who were ordered to attend by the MacArthur administration.

Sarasohn recommended to the MacArthur administration that

W. Edwards Deming be invited to teach quality control. MacArthur’s

administration, in turn, arranged for JUSE to invite Deming to Japan.

JUSE, the Japanese Union of Science and Engineering, had been

founded in 1946 by Ichiro Ishikawa.


Deming was a protégé and colleague of Walter Shewhart, who had

pioneered statistical applications at Western Electric in the 1930s. During

the war, Deming and others had developed a course in quality control

techniques called SQC, or Statistical Quality Control, that they

taught to 35,000 engineers and technicians in U.S. war industries.1

Deming and Shewhart were both well known and highly respected by

Japanese technical and industrial leaders.

The moment had been prepared for by the work of Sarasohn,

Protzman, and Polkinghorn. The audience—now including people

well beyond the communications industry—was ready. Deming was

going to deliver his message to eager and respectful listeners.

Deming arrived in Tokyo on Friday, June 16, 1950. For the next

several weeks he gave almost daily lectures to groups ranging in size

from about 200 to about 600—“some of the best classes I’ve ever had,”

Deming would comment later.

On the evening of Thursday, July 13, 1950, Deming had a historic

dinner with the presidents and top officials of the 21 leading industries.

A few years earlier some of these executives had been required by

the MacArthur administration to attend lectures by Sarasohn and

Protzman. This time they came in response to an invitation by Ichiro

Ishikawa, a leader among his peers and father of the legendary Kaoru

Ishikawa who would become the leader of the quality movement in

Japan for the next four decades.

The group of 21 industries represented most of Japan’s power

and wealth. Deming was later told that 80 percent of Japan’s capital

was in that room at the Industry Club in Tokyo. What he told them

was persuasive because it was clear to them that Deming himself believed

what he was saying. What struck them more was that his

words and manner suggested that this man was not another victor

giving orders to the vanquished: This man was a colleague who genuinely

respected the Japanese and cared about their well-being. The

industrial leaders were intrigued and arranged for another meeting

with Deming a few weeks later. Of this first meeting at the Industry

Club on July 13, 1950 Deming would later say, “That was the birth of

the new Japan, if a date can be put on it” (Kilian, 1992, p. 23).

What Deming taught the Japanese in 1950 and in his subsequent

trips to Japan—some 27 trips in all—have evolved into his philosophy

of management, summarized in his works (1986, 1994). This philosophy,

along with lessons learned from some of Japan’s masters, is a

major part of what is presented in this book. But here, in brief, is a description

of what Deming taught the Japanese in 1950 (Kilian, 1992):

1After the war, the use of SQC virtually disappeared from American industry.

Deming has said that one of his biggest mistakes was to teach quality

only to those who made American products, not to the American managers,

who made policy.

Train Wrecks and Bad Radios

¦ The marketplace is now global. There must be international

standards2 of quality and an international language for describing


¦ The customer is all-important. Seek to cultivate long-term relations

with your customers. Seek to continuously understand

consumer needs when designing and manufacturing products.

¦ Quality is determined by managers. The quality of products and

services must reflect consumer needs. Products must be uniform,

be consistent, and perform dependably. The quality of the

product cannot be better than the intentions and specifications

of management. Quality results from the way managers lead.

¦ Production is a system. The supplier is your partner. Make the supplier

a partner and an integral part of the system. The customer

is also part of the system, the most important part of the system.

Statistical quality control must be applied to all the stages of the


¦ The chain reaction. If you improve your processes and product,

your costs will decrease and you will capture the market with

better quality and lower prices, thus allowing you to stay in

business and provide jobs and more jobs.

¦ Japan must see itself as a system. All of Japan is a system. There

must be trust and cooperation throughout Japan. A common

commitment to quality, trust, and cooperation must sweep

through Japan “like a prairie fire. All Japanese on fire! Everyone

will win!”


Japan took Deming’s message to heart. Within months they began to

notice improvement. Within four years some of Japan’s products

began to make progress in the world market. (Deming had predicted

it would take five years. The Japanese proved him wrong!)

In the United States, we went from discounting Japanese products

(“You’ll never be able to get spare parts!”) to noticing, and becoming

disconcerted by, the shrinking U.S. market share in key industries.

Do you know what these groups of products have in common?

2Dr. Deming was not referring to anything like ISO standards.


automobiles electric motors computer chips

cameras machine tools industrial

stereos food processors robots

medical equipment microwave electron microscopes

color TV sets ovens optical equipment

hand tools athletic equipment

What they have in common is that in the 1970s the United

States lost 50 percent or more of its world market share in each

(Wheelwright, 1984). By the 1980s, Americans were hollering “unlevel

playing field” and looking for trade sanctions against Japan.

While the United States was whining, Japan learned about improving

quality more rapidly. JUSE was promoting the quality philos-

ophy—called TQC for Total Quality Control—and was presenting annual

awards to individuals who contributed to quality and companies

that achieved certain described standards of quality. The award was,

and still is, called the Deming Prize. Since it was first awarded in 1951,

approximately 60 individuals and 160 organizations have won the

Deming Prize.

In 1980, NBC presented a television documentary, produced by

Clare Crawford-Mason with reporter Lloyd Dobyns, titled “If Japan

Can, Why Can’t We?” Using the typical measures of TV success, market

share and ratings, it was not a hit. But in terms of its impact on

American business, it was a thunderbolt. It captured an audience of

business leaders. The United States discovered the existence of this obscure

80-year-old statistician who was revered and respected by Japanese

leaders. The quality era finally arrived in America.



Consumerredesign research

Suppliers of

materials and



Receipt andA

test ofDistribution

materials Production, assembly, inspection



D Tests of processes

machines, methods,


Figure 1-2. Diagram used by Dr. Deming at his lectures in Japan

during the summer of 1950.



still dominates





• Rise of labor unions

• Baldrige prize

• “TQM” becomes a fad in the U.S.

• “TQM” fades as a fad


Style of management Events & philosophies that have influenced American business

1840 – 1890

“Train-wreck” management

1890 – 1920

“Train-wreck” management


“Train-wreck” management


“Train-wreck” management


“Train-wreck” management


“Train-wreck” management

adopts MBO and performance


1960s and 1970s

“Train-wreck”/MBO in the

U.S., TQC in Japan

1980s “Train-wreck”

management/MBO, early

stirrings of Quality

management in the U.S.

Train Wrecks and Bad Radios

• “Train-wreck” management

• Some emergence of Quality

• Some decline of Quality

Discovery of anthracite coal in Western Pennsylvania

End of the era of cottage industries

Mass production (coal-fueled machines)

Mass distribution (railroads)

First factories (1850)

Scientific management

Henry Ford

Production lines

Assembly lines

Waves of immigrant

Walter Shewhart

Statistical process control chart

The Great Depression

Hawthorne experiments

Human relations school of management (Western Electric)

W.E. Deming and others teach SPC to U.S. war industries

SPC and human relations disappear in U.S.

Deming teaches the Japanese industrial leaders

TQC begins in Japan

Deming Prize

Douglas McGregor’s “Theory X” and “Theory Y”

Herzberg on motivation

Japanese economy flourishes

U.S. begins to lose market share

“If Japan Can, Why Can’t We?” NBC White Paper

TQM begins in U.S.

Quality bashing in the U.S.

Quality holds firm, however, in thousands of

Figure 1-3. Our management heritage.






and efficiency


Since the late 1980s, the baby boomers have been becoming the

world’s managers. Through no choice of their own, they have also

been selected by a convergence of events to be the generation that

leads the transition from the 1840s premises of management to 1950s

premises. This generation of managers will have a difficult time with

the transition. There are not many current models. None of the baby

boomers grew up in schools or other organizations where the new

philosophy was even taught, let alone practiced. The boomers will be

making it up as they go along. Their assurance can come from knowing

that this philosophy has been developed, tested, and proven for

decades. They are not guinea pigs, just, perhaps, inelegant learners.

There is a peculiar learning curve

related to the mastery of this new philosophy.

The conventional learning

curve is depicted in Figure 1-4. The

Deming transformation’s learning

curve, however, resembles the curve in

Figure 1-5.




At first I thought this observation

was a product more of my own overactive


cynicism than of objective observation.

But I began to observe it frequently in

A = A slight time loss of productivity while adjusting to the new way many managers in almost every company B = Then a rapid increase in effectiveness and efficiency as the new

method is mastered with which I worked. I concluded that

C = Then a plateau at a higher level this false learning curve was not imagi-

Figure 1-4. The conventional learning curve. nary. It is a predictable pattern. The phenomenon

can be described as shown in

Figure 1-6 (top of facing page).

Dr. Deming emphasized that we

move from unconscious incompetence

(area 1 in Figure 1-6) to conscious incompetence

(2), a sign of great progress.

This allows us to move from conscious

incompetence to conscious competence

(3), and then to unconscious compe-

A. The illusion of learning tence (4).

• Mastering the rhetoric Myron Tribus, an articulate teacher

• Grafting programs onto the old organization

• Knowing enough to be dangerous of Deming’s philosophy who learned

• The same old premises are at work these levels of competence from a speak-

B. Sufficient understanding to see that “we don’t know much” er named Mike Vance and taught them to

• The “A-ha!” experience

• The beginning of the integration of knowledge and know-how Dr. Deming, has commented that this

C. Real learning begins transition from the false learning curve to

Figure 1-5. Transformation’s learning curve. the real learning curve is a transition

Train Wrecks and Bad Radios

Unconscious Conscious

1 2

4 3



Figure 1-6. Competency matrix.

“from knowledge to know-how.” That seems to be a pretty fair description.

What I observed among clients and others seeking to apply the

new philosophy was that they had an abundance of education and

training, were able to sling around new jargon (“rules of the funnel,”

“common cause,” “special cause,” and “PDSA” used as an acronym for

both noun and verb) and talk about “customers”—internal and exter-

nal—like these were some recently discovered subspecies of the human

race. There would be lots of teams and projects, usually too many. The

managers would sit through the obligatory wordsmith-a-mission-state-

ment sessions. There would be lots of hype and activity. But the managers

themselves did nothing much new: no new systems, no new relationships,

no new approaches to planning, problem solving, decision

making, budgeting, etc. I kept wondering when I would begin to see

them transform. Instead I saw the continuation of the old ways of managing,

what one of my client-partners described as “common-cause stupidity.”

Then, almost magically, after about a year I began to notice some

signs of something new: managers asking smarter questions, applying

principles learned a year earlier to current circumstances, and saying

to me, “You know that systems stuff you were teaching last year? I

think I finally get what you meant.”

I tried to figure out what caused the lifting of the veil, but there

were no common patterns or themes. The only thing these managers

had in common was this yearlong period of dormancy, and then a

gradual awakening.

What can we learn from this notion of the false learning curve?


In September of 1989, I had an opportunity to lecture to the students

of Dr. Noriake Kano at Tokyo Science University. Dr. Kano is one of the

leading teachers of TQC in Japan and one of the consultants and reviewers

for the Deming Prize sponsored by the Japanese Union of Science and Engineering

(JUSE). In his class I presented my observation about the false

learning curve attributable to those seeking to learn the quality philosophy.

When I finished, Dr. Kano raised his hand and asked:

“Mr. Scholtes, you say the false learning curve lasts for about a year?”

“Yes, Dr. Kano.”

“Mmmmmm… You must be very good!”

(“What the hell does he mean by that?” I thought to myself.)

Dr. Kano continued, “I think it takes three years!”

For me, this was one of those wonderful epiphanies, a sudden revelation:

What I had been observing, but was suspicious of as being a product

of my cynicism, Dr. Kano had also been observing. I felt a great sense

of reassurance and affirmation from this. Furthermore, I had been observing

this in American managers; Dr. Kano had been observing it in Japanese

managers (whom we all know have a gland that secretes quality).

Dr. Kano’s remarks extended the period of the false learning two

years beyond what I had estimated, but his comments gave me hope. This

phenomenon of the false learning curve seems to be a real and predictable

occurrence, and it is temporary. It will pass if you give it time and patience,

and you must persist. I fear a lot of CEOs will conclude, after a year or two,

“We tried it, but it doesn’t work here.”

¦ Be patient. Most often we will notice progress only by looking

back at how we were two or three years ago.

¦ Be persistent. Don’t ever give up! Don’t get restless and look for

a new management philosophy du jour.

¦ Be humble. The arrogant organization will find it difficult to

learn anything. Acknowledge our inadequacies. Instead of assured

pronouncements, offer hypotheses that need data for


¦ Be inelegant. Give yourself permission to be inept and ask

dumb questions. Don’t try to fake it. Rather seek to learn it.


Some factors and features of our organization have been with us so

long, we tend to see them as having been around forever. We are so

used to them that we never think to question whether they are

useful or necessary.

In the United States, managers didn’t exist until 1840. Factories

didn’t start operating until 1860. The typical organization chart was

not brought down from Mount Sinai by Moses. Each of these things

has a history and there are reasons why they made sense. Managers,

factories, and organization charts continue to make sense, but a very

different sense from when they started being used.

In 1950 Deming “reengineered” the way we think about work

and leadership, about organizations, indeed about the world and life

itself. In effect, Dr. Deming taught us that everything is a system,

and we are part of it. We function at our peril when we are unaware

of systems. We have discovered a new way to think, and we need

this new way to understand what is happening and to know how to

function in the world.

In the next chapter we begin to look at some new

competencies that leaders must have. Many of these “new”

competencies are old competencies that must be pulled out, dusted

off, and relearned.


Discuss the following questions with others with whom you work:

1. What is quality?

2. What are the basic principles of quality?

3. Contrast your response to Question 2 with what Dr. Deming taught the

Japanese in 1950.


Chandler, A.D. 1977. The visible hand. Cambridge, MA: Belknap-Harvard.

Crawford-Mason, C., and Dobyns, L. 1991. Quality or else. Boston: Houghton


Deming, W. Edwards. 1994. The new economics. Cambridge, MA: MIT.

Deming, W. Edwards. 1986. Out of the crisis. Cambridge, MA: MIT.

Joiner, B., and Scholtes, P. 1985. Total quality leadership versus management by

results. Madison, WI: Joiner Associates Incorporated. Included in a collection

of Joiner Associates articles titled A practical approach to quality,

published by Joiner Associates.

Kilian, C. 1992. The world of W. Edwards Deming. 2nd ed. Knoxville, TN: SPC


Kolesar, P.J. 1994. What Deming told the Japanese in 1950. Quality Management

Journal, Fall, 9–24.

Koyanagi, K. 1952. Statistical quality control in Japanese industry. Tokyo: Nippon

Kagaku Gijutsu Remmei (JUSE).

Mann, N. 1985. The keys of excellence. Los Angeles: Prestwick Books.

McGregor, D. 1960. The human side of enterprise. New York: McGraw-Hill (25th

Anniversary Edition, 1985).

Tribus, M. Quality first. Alexandria, VA: AQPI. This is a collection of articles

written by Dr. Tribus from 1981 through 1987.

Wheelwright, Steven C. 1984. Strategic management of manufacturing. Advances

in Applied Business Strategy, 1, 1, 1–15.

Ordering information

Joiner Associates Incorporated, 3800 Regent Street, P.O. Box 5005, Madison,

WI 53705-5445. Fax: (608) 238-2908

Quality Management Journal, ASQC, 611 East Wisconsin Avenue, P.O. Box

3005, Milwaukee, WI 53201-3005. (800) 248-1946





Copyright 1998 The McGraw-Hill Companies, Inc. Click Here for Terms of Use.


In America and Europe we have an almost insatiable appetite for fads.

We seem more interested in what is new than in what is good. Consequently

we have a disposable mentality: If what we have doesn’t seem

to work, we throw it out and find something new. This obviously applies

to fashion and music. Unfortunately, it seems also to apply to relationships

such as spouses and employees. We live in a time of the

management philosophy du jour.

To some, the approach to management described in this book

may seem vaguely familiar enough that a manager may conclude,

“Been there, done that.” The quality movement, from about 1982

through about 1992, used some of these notions. But, by and large,

the teachers of TQM didn’t understand the philosophy in the first

place and trivialized it in the second place. TQM, I repeat, is the trivialization

of an important new way of thinking. In this chapter I will

describe the new approach to leadership as it has been developed by

its pioneers over the last 50 years, without the barnacles and affectations

that have attached themselves to this profoundly important and

revolutionary way of thinking.

Here are some of the current fads and their accretions:

 We must empower our people.

 We must put them into teams.

 We must put them into self-directed groups.

 We must motivate them.

 We must offer them incentives.

 We must hold them accountable.

 We must reengineer and reinvent them.

All this fails to appreciate systems and the importance of mastering

systems in order to get the important daily work done. To understand

systems is to understand this:

All of the empowered, motivated, teamed-up, self-directed, incentivized,

accountable, reengineered, and reinvented people you can

muster cannot compensate for a dysfunctional system. When the system

is functioning well, these other things are all just foofaraw. When

the system is not functioning well, these things are still only empty,

meaningless twaddle.

A well-run organization with well-functioning systems allows

people from top to bottom to do work of which they can be proud.


When we can work well together doing worthwhile work we can create

a joyful workplace as well. The approaches described in this book

will create pride and joy in the workplace. The current foofaraw and

twaddle that pass for management philosophy won’t bring pride and

joy, only cynicism and resentment.

This chapter is loaded with concepts that some readers may need

time to assimilate, especially those who are new to these ideas. The

ideas aren’t particularly difficult to understand. They are, however,

tightly packed. The reader is encouraged to stay with this chapter and

take it in one mental morsel at a time.

In this chapter we will examine the new leadership competencies.

These are areas of understanding and proficiency needed by managers

in the new paradigm. Walking down a street, I noticed someone

wearing a T-shirt showing the word “paradigm” with a red diagonal

slash mark through it. I acknowledge this word has been overused and

misused. In this case, however, it is exactly the right word. The leadership

philosophy begun by Deming in Tokyo in 1950 is the first fundamentally

new management philosophy since 1840, the equivalent of

the transition from Newton to Einstein. In fact, Deming may represent

an even greater departure from past ways of thinking. U.S. News and

World Report (1991) included Deming in a list of revolutionary thinkers

that includes, among many others, St. Paul (Christianity is not just for

Jews), Copernicus (the earth is not the center of the universe), Darwin

(we are not specially created, only the most advanced of the life

forms), and Freud (there is much about ourselves that we don’t understand

and can’t control or predict). Deming’s contribution to the discontinuity

of human thought is this: Everything is a system and we are

part of it.

Let us first briefly examine the old competencies: aptitudes needed

to survive and excel in the old organization.

1. Forcefulness. Part of a manager’s responsibility was to control

the workforce, making people do what they may be otherwise

inclined to ignore. Good managers could look their people

square in the eye and get them to respond.

2. Motivator. The “softer” side of forcefulness was the ability to

inspire your people to do great work. The judicious combination

of carrots and sticks, of inspiration and exhortation,

was the manager’s stock-in-trade.

3. Decisiveness. To make quick decisions in the absence of information

was routinely expected of the old-style manager.

4. Willfulness. Good bosses knew what they wanted and were

dogged in their pursuit of it.

The New Leadership Competencies

5. Assertiveness. A good boss was outspoken. Old-style leaders

could not show weakness or ignorance lest their people run

all over them.

6. Result- and bottom-line-oriented. Bosses held people accountable

for meeting quotas and standards and achieving measurable

goals. Maximizing ever-increasing profits every quarter

and minimizing ever-diminishing costs: These were the


7. Task-oriented. Managers kept everyone busy and occupied.

No slacking off, no socializing. People don’t really want to

work and, left to themselves, will screw off. Therefore, be

their conscience and taskmaster.

8. Integrity and diplomacy. Good bosses covered toughness with

tact and amiability. Be honest, fair, and respectful while letting

your people know that you know what to do when

things get out of hand.

You get the idea. We have all worked in such environments and

know managers who excel in this set of behaviors. These are still the

prevailing expectations of managers. These old competencies aren’t

wrong. Rather, they are simply inadequate or, in some cases, irrelevant.


The new competencies are different in nature. They are based on very

different premises, assumptions, and beliefs about people and organizations.

Anyone familiar with Deming’s System of Profound Knowledge will

recognize these approaches. What I present as “the new competencies”

is an interpretation of and elaboration on his work, the great

legacy for which I have the deepest respect and gratitude (see also

Deming, 1994).

Competency 1: The Ability to Think in Terms of

Systems and Knowing How to Lead Systems

We are used to thinking of organizations in terms of their structure,

the chain of command, who reports to whom. (See Figure 1-1.)


Cherokee Wisdom and Leadership Competencies

According to Cherokee tribal lore, there is an ancient formula for


¦ Clear intention: You must know what your purpose is and persist in

its pursuit.

¦ Skillful means: You must have good methods and be skilled in their


¦ Affirmation: Your task must have integrity, it must not clash with

fundamental values, it needs support from the tribe and from your

own heart.

Clear intention

AffirmationSkillful means



Figure 2-1. Cherokee wisdom (adapted from: Dhyani Ywahoo. Voices of

Our Ancestors: Cherokee Teachings from the Wisdom Fire. Boston: Shambhala,


Eons ago these were the new leadership competencies. They still are.

Our “new” insights help us to rediscover and deepen our understanding of

these fundamentals for success.

Deming has taught us to see systems, as represented in Figure 2-2.


A DesignConsumer












Figure 2-2. Deming’s systems view.

The New Leadership Competencies

The New Leadership Competencies

1. The ability to think in terms of systems and knowing how to lead


2. The ability to understand the variability of work in planning and

problem solving.

3. Understanding how we learn, develop, and improve, and leading

true learning and improvement.

4. Understanding people and why they behave as they do.

5. Understanding the interdependence and interaction between systems,

variation, learning, and human behavior. Knowing how each

affects the others.

6. Giving vision, meaning, direction, and focus to the organization.

What Is a System?

The following are some characteristics of a system:1

1. A system is a whole composed of many parts (e.g., a car).

2. The systemic unit has a definable purpose (e.g., a car’s purpose

is to provide personal transportation).

3. Each part of the system contributes to the system’s purpose

but no part by itself can achieve that purpose (e.g., an automobile

engine cannot provide personal transportation all by


4. Each part has its own purpose. But when it affects the whole

system it is dependent on other parts. The parts of the system

are interdependent.

5. We can understand a part by seeing how it fits into the system.

We cannot understand a system by identifying each

part or the entire unassembled collection of parts.

6. Looking at the interactions among the parts might help us

understand how this system works. But to understand why

this system exists, we must look outside the system, usually

at human events and larger systems. (Why is the steering

wheel on the left in some countries and on the right in others?)

7. To understand a system we must understand its purpose, its

interactions, and its interdependencies. When you take a

system apart, it loses its essential characteristics. Analysis

1I am indebted to Russell Ackoff for most of what is in this list.


involves looking at the parts. Synthesis involves looking at

the whole.

8. When we look at an organization, we are looking at a complex

social system as well as a technical system.

¦ The organization has its interests, purpose, and interacting,

interdependent parts.

¦ The organization is but one interacting, interdependent

part within even larger systems (e.g., the business, the industry,

the economic community, the nation, the world).

¦ Within the organization are interacting, interdependent

parts (e.g., departments, divisions, teams, individuals),

each of which has its interests and purpose that may affect,

in a positive or negative way, the organization’s ability to

achieve its purpose (Figure 2-3).

The group

The department

The division

The organization

The community, nation or world



interest or




interest or




interest or




interest or






interest or




nation or


interest or


Figure 2-3. Systems in systems in systems.

¦ To technical and mechanical interactions, organizations

add the complexity of social interactions—relationships,

teamwork, collaboration, cooperation, community, etc.

Any current situation is the net result of the interaction and interdependence

of various factors, forces, and events, as shown in Figure 2-4.

As we have said, the system consists of the dynamic interaction

of various forces and factors that result in some complex situation. If

you wish to understand your current situation—whether it is what

you want or don’t want—you need to understand your system.

The purpose of the system is inextricably linked to the notion of

systems. Without a defined purpose you cannot determine whether

your system is functioning well, poorly, or not at all. Without a clear

purpose you won’t know how to improve or redesign the system.

The New Leadership Competencies







outputand results




Current methods

Past experience






Facilities materials

and equipment

Current situation

• Costs

• Sales

• Productivity

• Errors, defects,



• Morale, turnover

• Customer






Figure 2-4. The system as an interacting whole.

An inconstant purpose results in a chronically dysfunctional system.

For systems to respond flexibly to necessary shifts in focus, there

must be subsystems that plan those shifts and assure flexibility of response.

The system is the method by which you achieve results. The failure

to achieve desired results is caused by the inadequacy of the

method or system.

Without conscious attention to systems, we will focus on people.

That is what we have been trained to do. Rather than understanding

and improving our systems, we seek better results by exhorting and

seeking to motivate our people. When we don’t understand systems,

we equate improving our people with improving our systems.

People are not the same as organizational systems. They work in

systems, but the systems existed before most of the people were hired

and will continue after the current employees are gone. Improving systems

takes a concerted, well-planned, usually cross-functional effort led

from the top of the organization. When a system is changed, people

need to change what they do. However, changing what people do will

not necessarily change the system.

Applying Systems Thinking

When thinking about systems in the abstract, it is easy to get lost

in esoterica. The practical value of systems thinking, however, is powerful.

Consider these statements:


Costs are out of control! I want you all to find ways to reduce costs!

Start by buying less expensive supplies and materials and cut down on

travel expenses!

Reshaping this piece will cost us money! I don’t care if it would make

it easier and cause less breakage for the people in assembly! We won’t

do it!

To improve sales during these last four weeks of the quarter, I am offering

a free 36-inch television to anyone who sells 25 percent above his

or her quota!

Systems thinking will help us avoid overly simplistic interpretations

and solutions to complex problems. In an age of sound bites

and bumper stickers, we are encouraged to look for slogans and

scapegoats, not the deep, system-based explanations of what is happening

and why. If we want to run a business and improve our daily

work, we must understand systems. More than understanding systems,

we must develop systems reflexes and systems instincts.

“Costs are out of control.” Are they? How do you know? Competency

2 addresses the issue of how indicators (such as costs) vary.

But while we are exploring the first competency, “systems thinking,”

we will consider costs as a system.

The I-am-not-making-this-up Department

The market for a particular type of paper had gone soft because of

the recession. The paper company headquarters sent word to the plant

manager that inventories for this product were too high; therefore, the

machines making this product should be slowed down. The plant manager

tried to protest, but in the autocratic style of this company he was told to

just “follow instructions.”

What the plant manager knew was that when this machine ran too

fast, it produced many defects in the paper, and the product had to be

scrapped (or “broke” as they say in the paper industry). This machine was

running too fast.

In better times when demand was high, the orders to the plant manager

were to “speed up the machine,” which the plant manager also tried

unsuccessfully to protest. So, obeying orders, the plant manager slowed the

machine. This, in turn, resulted in fewer defects and greater productivity,

more paper that couldn’t be sold, bigger inventories, and even fuller warehouses.

The plant manager? He was fired for disobeying orders.

This is an example of the tragic consequence of the ignorance of systems

on the part of headquarters’ managers.

The New Leadership Competencies

Costs are the net output of a series of factors and interacting, interdependent

events. If the costs are truly “out of control,” then one

or more factors or events or interactions in the series are “out of control.”

The statement about costs quoted earlier asserts that costs are

“out of control,” a determination that will require data to support it.

The speaker, however, leaps to a solution (“Start by buying less expensive

materials and cut down on travel expenses!”), without an indication

of what the cause of the problem is, if indeed there is a problem.

It could be that the cause of the problem is that the inferior,

inexpensive materials already in use cause breakdowns, defects, rework,

and delays. Buying cheaper goods might only make matters


The second quotation (“Reshaping this piece will cost us

money!…”) illustrates, again, the absence of systems thinking. Because

“reshaping will cost us money,” the idea is rejected. Reshaping

the piece will make assembly easier and result in less breakage. However,

the manager quoted is concerned about the budget for which he

or she is accountable, and gets no credit for ease of assembly or reduced

breakage. The remuneration policy rewards managers only for

optimizing their part of the system. So this manager does well but the

larger system suffers.

In the third quotation, the sales manager offers an incentive (a

free 36-inch television) to encourage the sales force to increase sales

and help make the quarterly quota. What is wrong with this way of

thinking? It assumes that:

¦ Quarterly quotas are an effective way to increase sales.

¦ The quarterly quotas are achievable.

¦ The salespeople have the information, knowledge, and resources

needed to increase sales.

¦ The sales force is functioning at a diminished capacity, consciously

or unconsciously withholding a certain amount of effort.

¦ A full effort must be coaxed or coerced out of them.

¦ In order to give their full effort, sales personnel need some

kind of material incentive.

¦ These material incentives (36-inch TVs) are effective.

¦ Forcing sales this month won’t have a detrimental effect on

next month’s sales.

¦ The product targeted by the quota is what customers need.

¦ Pushing quotas will do no long-term harm to your relationships

with your customers.



This sales manager looks at sales and sales representatives and

sees not a system with a built-in capability, but people who need to be

manipulated and co-opted. If managers learned to see a system of

sales, they could seek ways to improve the system to get better sales results,

rather than resorting to carrots and sticks aimed at “motivating”

people. We will explore systems thinking in more depth in Chapter 3.

Competency 2: The Ability to Understand the

Variability of Work in Planning and Problem Solving

A psychologist attached to the Israeli air force had heard reports that

the flight instructors were being abusive toward the student pilots: offering

few compliments, giving public reprimands, screaming, and

using abusive language. The psychologist took on as a project an effort

to develop “kinder, gentler” flight instructors (Kahneman and

Tverski, 1973, McKean, 1985).

In his first encounter with a flight instructor,

the psychologist was told by the instructor that

“kinder-gentler” didn’t work: His compliments to

the student pilots generally led to deteriorated performance.

Reprimands, however, usually led to improvement.

The psychologist was troubled—but uncon-

vinced—when he heard essentially the same story

from the other flight instructors. He decided to observe

what happened, to see for himself what effect

compliments and reprimands had on the performance

of the student pilots.

The results were a shock to the psychologist. The performance of

the student pilots generally improved after they were reprimanded

and, indeed, got worse after they were complimented. What the flight

instructors claimed seemed to be true. Based on student pilot performance,

he could no longer advocate using more “positive reinforcement”

or urge the flight instructors to avoid the harsher responses.

The psychologist gave up this project and moved on to other

work. However, the results of this study troubled him. He couldn’t let

go of this problem, even though he gave up the project. During the

following year, he studied other things. In the midst of his other activities,

he learned something that led him to reexamine the abusive

flight instructor problem.

The psychologist had been studying the concept of variation. Recall

Figure 2-4, the system as an interacting whole. Learning to fly an

airplane is the result of a variety of interacting conditions, factors, and

events. These factors are not stable. Each varies from day to day. The

weather varies, the planes—each with its own system of interacting

parts—vary, the flight instructor varies, the student pilot varies. There

The New Leadership Competencies

are innumerable factors that go into the performance of a student pilot

and no one will ever know all of them. The net results will be variation.

With his new learning and perspectives in mind, the psychologist

reexamined the performance of the student pilots and how performance

related to the interventions of the flight instructors. The new results, interpreted

with a different perspective, yielded a dramatically different

conclusion: Flight instructor reprimands did not result in improved performance

nor did compliments result in worsened performance. What

was going on was common cause variation.

Dr. Deming taught us that there are two types of variation. Common

cause variation is built into the system and is the net result of

multiple influences, many of which will never be known. Most varia-

tion—the problems, defects, errors, accidents, mistakes, waste, scrap,

and rework that we suffer on a daily basis—is common cause variation,

built right into the system. Deming calls the other type of variation

special cause variation, a unique event that is attributable to some

knowable influence.

Most variation in our organizations is common cause variation

built right into the system. But it is a common, though misguided,

managerial reflex to regard anything that goes wrong as a special

cause attributable to some person. This is what the flight instructors

did. They attributed “good days” and “bad days” to the pilots, not to

the built-in varying capabilities of the system.

Look at Figure 2-5 and ask, “When is a flight instructor most likely

to pay a compliment?” Probably on days 2, 4, 8, or 12. And when

will the flight instructor reprimand the student pilot? Probably on days

6, 9, 13, and 15. In a system of common cause variation, when performance

is high, it is far more likely to go down than up. When performance

is low, it is unlikely to stay low. That is the nature of variation

and the intervention of the authority figure has nothing to do with it.


flying day


flying day


flying day

1 2 3 4 5 6 7 8 9 10111213141516 etc.

Flight number

Figure 2-5. Variation in a student pilot’s performance.


Common Cause and Special Cause

As you read this text there are innumerable minor distractions that

affect how well you can concentrate: background noise or activity, your

own state of mind or health, the condition of the material you are reading,

etc. The net effect of all of these is variation in your ability to concentrate,

all built into the “system” with a predictable range and average of perfor-

mance—if indeed your ability to concentrate could be measured. Now

suppose lightning strikes a tree next to your house, accompanied by a deafening

clap of thunder, or a child runs to you crying, or someone rings the

doorbell. Or suppose all of these things happened at once. These distractions

are extraneous to the system. They are peculiar and identifiable. The

former set of factors affecting your ability to concentrate are common

cause and the latter are special cause factors.

When they are unaware of the existence of variation built into

the system and have only an illusion of knowledge, managers develop

the equivalent of superstition. Suppose that at the end of a “bad” day,

the flight instructors had the student pilots kiss the fuselage. What is

likely to happen to the student pilot’s performance the next day? It

will improve, not because of kissing the fuselage but because of variation.

Now, no flight instructor would have student pilots kiss the fuselage

after a bad day. That would be superstitious! Instead they reprimand

them. That is not considered superstitious.

How should managers respond to problems? It depends whether

the problem comes from common cause variation or special cause

variation. Without carefully gathered and skillfully analyzed data the

manager won’t know what kind of variation he or she is dealing with.

If the problem results from common cause variation—and most do—

then getting rid of the problem will involve changing the system,

process, or method of work. If the problem derives from a special

cause of variation, then the manager must use data to seek out the

cause of the problem and eliminate that problem at its point of origin.

When a manager fails to understand variation or, worse yet,

doesn’t even acknowledge its existence, serious and chronic problems


¦ The manager sees trends where there are no trends. (“Costs are

out of control!”)

¦ The manager misses trends where there are trends. (“We have

had a few problems with deliveries but nothing unusual.”)

¦ The manager attributes the cause of problems to any individual

nearby at the time the problems took place, even if that individual

had no control over the event. (“Because of recent

flash floods, we have fired our weatherman!”)

The New Leadership Competencies

¦ The manager gives credit to individuals for making improvements

and performing well when, still, they had no control.

They were just lucky. (“This award goes to our school nurse

because of whom, during this past school year, there were no

reported cases of measles. Congratulations, Miss Bliss!”)

¦ The manager does not understand past performance and is not

able to predict future performance.

¦ The manager does not understand the current systems,

their vulnerabilities, their capabilities, or whether the systems

need to be improved or replaced.


























The expected correlationX























An outright




objective truth

Extent to which

a given statement is

objective and accurate

The degree

of the


passion and


In a World Without Data, Opinion Prevails

If the world were a logical place, we would expect to see a correlation

between assertiveness and objective truth.

The shaded area represents what would be an ideal and logical correlation.

The Xs represent what we commonly observe in everyday life.

Discourse is usually cloaked in the rhetoric of rationality. However,

data is a necessary ingredient to rationality, particularly data showing variation.

Without data, opinion prevails. Where opinion prevails, whoever has

power is king. The ultimate correlation, therefore, is more likely between

assertiveness and clout, not assertiveness and objective truth. It is possible

that managers who wish to hold on to the illusion of power may resist

a statistical view of work.

Figure 2-6. Assertiveness and truth.


Why Are People So Resistant to Using Data in Planning and

Problem Solving?

This will be addressed further in Chapter 6. Here are my theories

about this dilemma:

¦ Math and statistics have traditionally been taught in such a

way that the only point of interest is whether students will be

bored to death or scared to death. By the time people become

managers, they have taken a vow of statistical abstinence.

¦ The conventional use of statistics in business is related to financial

measures (unless, of course, you are in the business of

sports broadcasting, where statistics are often the only things

to talk about).

¦ Statistics other than financial data are not seen as relevant data

for executives and leaders. Data showing variation in the systems,

processes, and other key indicators are given a lesser status

and left for people of lesser status to attend to. Executives ignore

these data.

¦ As a way of avoiding any statistical work, we resort to defensive

strategies such as ridicule. The most common ex-

cuse—“There are lies, damned lies, and statistics”—is a cliché.

(No one ever says “lies, damned lies, and the annual budget,”

which would probably be more true.)

¦ Data are not asked for. When executives and top-level managers

expect data and ask questions that can only be answered with

data, data will start becoming the language of the realm. This, of

course, would require that executives understand data and

apply them.

¦ Too often there are plenty of data that are useless and ignored

or useful and still ignored. Many companies, such as Ford and

GM, have gone through a measurement overhaul, purging the

unuseful data and reducing reports by as much as 90 percent.

Only the significant few remain. To do this, however, requires

a knowledge of systems and statistical thinking.

Competency 3. Understanding How We Learn,

Develop, and Improve; Leading True Learning

and Improvement

Lifelong learning and improvement for individuals, organizations,

and communities are no longer optional. Consider the following (I

am grateful to Malcolm Knowles for this concept).

The New Leadership Competencies

80 years


life span


of major


1800 1850 19501900 2000

Constant40 years


Figure 2-7. change in anyTwo concurrent given field Once continuous

every 2-3phenomena. generations

Over the course of history, as illustrated in Figure 2-7, there

have been two trends related to learning. One is the increasing life

span. The other is the frequency of technological, economic, social,

and political change. As life span has increased so has the frequency

of change. The implications:

¦ Education is no longer an undertaking of our younger years

that is applied in our adult years. Learning must be lifelong.

¦ Education no longer consists of a single set of lessons that endure

over several generations. The lessons change continuously

within our individual lifetimes.

¦ Our schools must lead students. The root of the word educate

is the Latin word for lead. Schools must lead students into

learning how to learn. This is not at all the same as teaching.

¦ Our organizations and communities must be centers of lifelong

learning. We must radically rethink the notion of on-the-

job learning.

¦ Organizations without systems of continuous learning are

probably doomed to obsolescence.

How Learning Takes Place: Theory and Application

Here are two quotations, each from renowned

statistical thinkers. These quotations appear to contradict

each other, but they say the same thing:

“All theories are wrong, but some are useful.”—Dr.

George Box

“All theories are right, in some world.”—Dr. W.

Edwards Deming


Theory? Hypothesis? Hunch? Guess?

These are statements or opinions that are in need of proof or at least

improvement. A recipe is a theory that suggests that if you follow these directions

you will have the dish you desire. The only way to learn if the

recipe theory is valid is to use it. Then you can improve on the recipe and

test that theory as well. A checklist is also a theory. The theory is that if

you complete every item on the checklist, things will go well. When things

don’t go well, we have learned that our checklist needs improvement. In

the same way, an annual plan or an annual budget is also a theory.

What each is saying is that the proof of a theory is in its successful

application. Theories by themselves prove nothing. “Costs are out

of control!” is a theory. It means nothing until tested against an application,

in this case data that will verify whether or not costs are out of


Theory by itself teaches nothing. Application by itself teaches

nothing. Learning is the result of dynamic interplay between the two.

Figure 2-8 illustrates the basic dynamic of learning.



guesses Theory


Experience, Data


real life

True learning

and improvement

Figure 2-8. Theory and application.

We have something in mind that we believe to be true:

¦ Costs are out of control!

¦ Complimenting student pilots is detrimental to their performance.

¦ People will work harder if we offer incentives.

The New Leadership Competencies

¦ Our television commercials will result in increased sales if we

feature hyperactive people talking at a manic pace.

¦ We must hold our teachers accountable!

These are hypotheses. Most managerial dictums are hypotheses. A

hypothesis by nature is useless unless proven by data. To apply data or

any other observable test, we must define what it is we are looking for.

The ability to operationally define our hunches allows us to look for data

that confirm or contradict our assertion. For example, what exactly does

“out of control” mean? For that matter, what is a “cost”?

Asserting an opinion as a fact is a lot easier. Pretending that our

assuredness reflects objective truth is certainly convenient. However,

if we want to understand what is truly going on and learn what is

necessary to improve the situation at its source, we need to test our

beliefs against data. If we don’t do this we will not identify and eliminate

the chronic causes of problems. At best we will only provide

ourselves with “temporary symptomatic relief.” Managers must see

themselves as experimenters who lead learning, not dictators who

impose control. Something that Dr. Deming taught the Japanese

serves to underscore the manager’s role as an experimenter and the

leader of the learning cycle. It is the PDSA cycle.

The PDSA cycle is a never-ending cycle of learning and improvement

that Deming developed, based on what he learned from

his mentor, Walter Shewhart. Deming taught it to the Japanese in

1950. He called it “the Shewhart cycle” and the Japanese call it “the

Deming wheel.”






Deming preferred the word “study” to the word “check,” which he

believed implied “constrain.”The Japanese have called it PDCA for decades.

The application of PDCA and the spirit and intent of PDSA are nowhere

more pervasive than in Japan. I have chosen, however, to defer to Dr. Dem-

ing’s terminology.


Figures 2-9 and 2-10 make more explicit the connection between

PDSA and the nature of true learning.

Do-Study Do-Study Do-Study

Plan Act-Plan Act-Plan



Figure 2-9. Learning and PDSA.

We integrate the

lessons learned from

our check or study. We

reformulate our theory.

We adjust our methods.

We identify what more

we need to learn.

We identify our

purpose and goals.

We formulate our

theory. We define

how we will measure

success. We plan our


We monitor the outcomes,

testing the validity of our

theory and plan. We study

the results for signs of

progress or success or

unexpected outcomes. We

look for new lessons to

learn and problems

to solve.

We execute our plan,

undertaking the

activities, introducing

the interventions,

applying our best

knowledge to the

pursuit of our desired

purpose and goals.





Figure 2-10. The ongoing cycle of learning and improvement.

The PDSA cycle may be used to test changes associated with

long-term goals (our five-year plan, our vision and values) or with

shorter-term cycles (our weekly staff meeting). PDSA can be applied to

any recurring activity, such as our annual planning process or everyday

work in regularly recurring processes—billing, order taking, materials

handling. We cannot promise that nothing will go wrong, but

PDSA builds forgiveness into our work and a promise that we will

learn from things gone wrong.

The New Leadership Competencies

Not All Learners Learn Alike

Much has been written in recent years on the different ways in

which people learn. Our traditional classrooms seem based on the unspoken

premise that all students learn in exactly the same manner.

This may have been sufficient 200 years ago when there wasn’t much

to learn and education was finished in a few y


The highest use of capital is not to make more money but to make

money more for the betterment of life.

Henry Ford, 1931

action with you. If buggy-whip manufacturers saw their purpose as providing

the capability for vehicular acceleration, they would more likely

have survived the transition from the horse and buggy to the era of the

horseless carriage. A purpose based on customer capability can provide

a beacon of stable focus and direction during times of turbulent change

in technology or the market.

It is my firm belief that the purpose of an organization, if it is to

survive, should be altruistic, not self-aggrandizing. By altruistic I

mean focused on doing good for society. By self-aggrandizing I mean

a purpose focused primarily on profitability and return on investment.

If my primary purpose were to maximize shareholder gain, I

could justify buying underpriced stock, gaining control of a company,

closing its factories, laying off its employees, selling off its assets, and

maximizing my profits. This has been acknowledged by Wall Street as

smart business, or at least the unfortunate by-product of the free enterprise


I think it should be a felony.

I am not against profits or return on investments. They are necessary

means to an end. When they become an end in themselves,

however, a business is likely to begin hurting its customers, its employees,

the quality of its goods and services, the community, the environment,

and its own long-term survival. The business can begin to

lose its soul. (See Chappell, 1993.)

When a business is altruistic, when it is committed to serving

(rather than exploiting) customers and society, such an elevating purpose

can create and sustain excitement and commitment among leaders,

managers, employees, stockholders, and—most importantly—cus-

tomers. (See Customer-In Thinking in the next section.) The purpose

of the organization must, in my belief, describe, in Herzberg’s words,

“work worth doing.” Such a business, if it is well-led, is also likely to



Moving from right to left in the SIPOC model (Figure 3-2), we next

look at customers. The customers are those who benefit from the

Systems Thinking: The Heart of Twenty-First-Century Leadership




• Successful

acquiring and

applying of


• Achievement

of quality


• Fulfillment of

needs of the


Figure 3-2. SIPOC, moving right to left.

goods and services you supply. Customers are those who acquire the

new capabilities you offer. Conversely, customers are those who are

disappointed or angry over the inadequacy of your goods or services,

because it is the customers who fail to gain a new or improved capability

from your goods or services.

Customer-In Thinking

The perspective of a system creates a different attitude and approach

to customers: customer-in thinking.

We conventionally think in terms of “product-out,” as pictured

in Figure 3-3.

Our organization

Products and services

designed to our

requirements with features

and characteristics that

satisfy us. We know what

is best for the customer.




The customer

Figure 3-3. A product-out mentality.

The product-out mentality is at best tactful arrogance. (And

often it is not done at its best.) Whenever you as a consumer are made

to feel stupid or manipulated, you are on the receiving end of prod-

uct-out mentality. In the product-out organization, the marketing department

is focused on sales: What can we do in the naming, de



Customers are the “C” of SIPOC. This chapter will devote quite a bit

of attention to customers. They are an organization’s reason for being.

Without customers’ feedback, you cannot know if you are doing a good

job. In Chapter 2 and again in Chapter 9, we discuss motivation. When an

organization and its people lose sight of customers they have lost a sense of

altruism about work. Without the motivation inherent in doing good for

the customers, managers are more likely to resort to artificial motivation

such as contests, incentives, etc. This is ultimately destructive to the company,

its employees and, worst of all, its customers (see Chapter 9). Attention

to customers is pivotal. Therefore, considerable attention is given to

customers in these pages.

scribing, packaging, positioning, and advertising of this product or

service to take advantage of the buying habits of potential customers?

The dark underside of a product-out mentality is organizational selfabsorption,

isolation, and haughtiness. (If an idea is any good, we

have already thought of it. If we didn’t think of it, it isn’t any good!)

We have all had to deal with such organizations.

A Customer-In Mentality

When internalized in our everyday routines and reflexes, systems

thinking will lead us to customer-in thinking (Figure 3-4.) The cus-

Our organization

Merging the customers’

needs with our expertise

to develop products and

services to accommodate

and delight them.

The customer


The customers


Their needs, wants, experience,

definition of a “good job”

Figure 3-4. A customer-in mentality.

Systems Thinking: The Heart of Twenty-First-Century Leadership

tomer-in mentality is outward-focused rather than narcissistic, othercentered

and not self-centered. Customer-in is characterized by

thoughtfulness (What else can we do for them?), responsiveness, empathy,

and altruism. It is the best way to create new products and services.

If you understand the day-to-day experiences of your customers,

you can imagine products and services that they might not

even think of. Customer-in thinking increases the likelihood that customers

get what they need and need what they get.

In a customer-in organization, marketing becomes focused on

real customer research: research not just on sales strategies, but research

on customers and their needs and experiences.

Some Important Notions about Customers

A. Purchasers are not necessarily customers. The fact that some

person or group pays for a product or service does not make

them customers. By paying my cable TV bill, I am a purchaser

of MTV and Beavis and Butthead. I am, however, most certainly

not a customer of MTV, Beavis, or Butthead, a fact to

which, I suspect, MTV is spectacularly indifferent.

B. You don’t have a be a customer to be important. Stockholders,

insurance companies, elected officials, and contributors

to United Way are all extremely important in different aspects

of this nation’s everyday life. But, from a systemic

point of view, each is a supplier, not a customer. The systems

do not exist to serve their needs. Their role is to help systems

serve the needs of the customers. When suppliers start seeing

themselves as customers, the needs of the true customers

are likely to be displaced and subordinated.

Hospitals to Moms: Give Birth and Go

New goal considered: six hours and then out

A mother in a Chicago suburb gave birth to her third child and underwent

tubal ligation. Twenty-four hours after she entered the hospital,

she was released. Maternity stays in the hospital may be further cut to 12

or even 6 hours if insurers and managed care providers get their way.

—Based on a story from the Chicago Sun-Times, June 18, 1995

Are the needs of the customers being displaced by the needs of the



“Fresh” Feedback

Honda dealers in the Cleveland area provided free cellular phones in

new cars, with the customer service number programmed into the phone.

They wanted customers to tell them what was going wrong or what suggestions

they had as the need was occurring. They didn’t want to require

customers to remember the problem until the next survey was mailed to


C. When suppliers and customers disagree, or when customers

disagree with each other, it is likely that the organization’s

purpose isn’t clear. The purpose of the organization should

describe why it exists, what business it is in, and what business

it is not in. Suppliers must consent to the purpose and

agree on who the customers are and what needs the customers

have … consistent with the organization’s purpose.

D. When we “listen to the customer,” we must commit ourselves

to listening to—even seeking out—dissatisfied customers.

This might include:

¦ Contacting customers who stopped being our customers.

¦ Contacting customers who chose not to be our customers

in the first place.

¦ Contacting customers who choose neither us nor our

competition, but deal with their situation in some other

way (or let their needs remain unsatisfied).

¦ Seeking out immediate feedback: making it easy for customers

to complain when the dissatisfaction is fresh in

their minds.

E. Customer complaints are “gifts from God,” in the words of

one company manager. A complaint provides an opportunity

to learn. Positive feedback feels better, provides a boost to

your spirits, and reminds you that the customer cares; but

compliments don’t offer an opportunity to learn.

Models for Listening to the Voice of the Customer

There are multiple ways by which we can listen to the customer.

Sometimes the customer contacts us. For example:

¦ Complaints

¦ Questions

Systems Thinking: The Heart of Twenty-First-Century Leadership

 Warranty calls

 Service requests

Sometimes we initiate contact with the customer:

 Focus groups



Described below are two ways to sort out what you hear from

your customers. (Although we are looking here at customers outside

the organization, these might be useful for feedback from internal customers

as well.)

The Needs/Gets Matrix

Customer Customer Doesn’t

Needs Need




Doesn’t Get

The customer

gets what the

customer needs

The customer

doesn’t get what

the customer


The customer

gets what the


doesn’t need

The customer

doesn’t get what

the customer

doesn’t need

Figure 3-5. The needs/gets matrix.

This suggests two questions to use when exploring the customers’

experiences with your products or services or your competitors’

products or services:

 What are you getting that you don’t need?

 What do you need that you are not getting?

The Kano Model

Dr. Noriaki Kano of Tokyo Science University, adapting some

early work of Frederick Herzberg, has developed a framework for identifying,

from a customer’s viewpoint, those characteristics that describe

your products or services. This is adapted from an article by Dr.

Kano and others (Kano et al., 1996), in which they suggest three kinds

of characteristics:


¦ The basics: These are the “must be” attributes of your products

or services that create no delight when they are present but

cause anger when they are not. Customers have every right to

expect their cars will start when they turn the ignition key.

When a car starts, customers don’t celebrate (at least they

shouldn’t have to). When it fails to start, however, they will

be angry. Most customer complaints are related to the basics.

Ask your customers what the basics are for your products or

services. They will be more than happy to tell you.

¦ Performance-related: The more present these characteristics are,

the less angry, and eventually the more satisfied your customers

will be. When miles per gallon are terribly low, a customer

will likely be angry. When they are very high, customers

become boastful. Often these characteristics have to

do with size, speed, capacity, user-friendliness, value for price,

accessibility of service, etc.

¦ Delight characteristics: The very minimal presence of these

characteristics creates satisfaction among customers. These

are, from a customer’s point of view, unexpected, thoughtful,

and delightful surprises. Cars now feature equipment that

monitors the nearness of objects in front of you as well as

your alertness as a driver. This technology will automatically

warn you when you are too near an object or too drowsy and

even slow down your car. Delighters often become basics be-





Degree of







Absent Fulfilled


Presence of the


Figure 3-6. The Kano model.

Systems Thinking: The Heart of Twenty-First-Century Leadership

fore too long. Television remote controls and electronic ignitions

in automobiles were delighters when they were first introduced.

Now they are basics.

A good rule of thumb: If you haven’t taken care of the basics,

don’t work on the delighters. It does no good to have all the automatic

sensors on a car that doesn’t start. Figure 3-6 illustrates the

Kano model.


When we look at customers systemically, we see a less simplistic picture

of the customer. Who is our customer? The answer to that is usually

a complex sequence and network of people, organizations, and

systems that depend on our good work. Who is the customer of the

fourth grade?

¦ The children in the class  Colleges

¦ The parents and families of the  Universities

children  Future employers of these

¦ The fifth grade fourth graders

¦ Middle school  The communities in which

¦ High school they are living and in which

they will live

¦ Trade schools

All of these have expectations and needs for the fourth-grade students.

All of them, in one way or another, are customers.

The customer chain is a systemic concept that describes customers

in a way depicted in Figure 3-7.

Figure 3-8 shows a chain of customers related to a manufacturing

business: coffee-maker production. Who is the customer of the

coffee-maker manufacturer? The entire chain. To which “voice of the

customer” should the coffee-maker manufacturer listen? All of them!

Can the maker of the equipment rely on the national wholesaler to

represent the rest of the chain? No! This manufacturer will go belly up

if it responds only to the needs of the organization that pays its invoices,

the wholesalers.

The output

of your


A series of

intermediate customers

The end users;

the ultimate


Figure 3-7. The customer chain.



“coffee maker”








purchaser of

the coffee


The maker

of the


The output

of your


A series of

intermediate customers

The end users;

the ultimate


The drinker

of the coffee

Figure 3-8. The coffee-maker producer’s chain of customers.

In the early stages of struggling with the new management philosophy,

organizations frequently try to make themselves a subspecies.

“That may work for coffee-maker manufacturers or for fourth

grades, but we are different! We have a very complicated set of customers,

and they have conflicting expectations!” To this I say, “We all

have complex chains of customers. That’s just the way life is.” It always

seems easier to see someone else’s systems and chain of customers

than to see your own. Bring someone in to help you see your

systems, if you don’t see them.

When Customers Are Hard to Define

It is especially hard to identify the customer when the customer seems

to be an abstraction (“all the citizens of the state” or “future generations”).

Here are some guidelines for identifying hard-to-identify customers.

Systems Thinking: The Heart of Twenty-First-Century Leadership

1. Break down the organization’s work into discrete services,

functions, or products. For example, a city police department

might be viewed in terms of such services as patrolling a particular

neighborhood, responding to a 911 call, and arresting

an intoxicated driver. These are separate services, each with

its own chain or network of customers.

2. For each separate product or service, ask: What is its purpose?

Why would anyone want this product or service to be available?

As Konica Camera concluded, people want a product for

the capability it provides. Therefore, what capability is provided

to whom as a result of people receiving the services that you


3. For each separate service, ask:

¦ What is next in the flow of work? Who gets it after this

part of the organization is finished? Those who handle the

911 calls, for instance, pass information on to the patrol

officer, one of their customers.

¦ Who ultimately receives the product or service (the last

stop in the chain)?

¦ Who benefits from this particular service?

¦ Who is the user or consumer of this product?

¦ How do those who benefit from this product or service use

or consume what we supply? Sometimes it is only in the

application that we can gain clarity about who the customers

are or what they want. With regard to police service,

who in the neighborhood (a generic customer) is

more interested in auto safety or vandalism or gang fights?

These priorities might indicate different specific customers.

¦ What capabilities are acquired and how or when are those

capabilities applied? We may find different customers at

the point where capabilities are applied. For example, students

in school acquire capabilities that are applied elsewhere

and later. If we look at the time and place where

these capabilities are applied, we might identify others, in

addition to the student, who have expectations about the

content and effectiveness of that student’s education. Another

example: I buy life insurance. The capability I acquire

is a form of security. The point of application, however, occurs

when I am dead and gone. Therefore, who is the customer

of my life insurance? Whose needs should it serve?

Look at the point of application.


We have been looking at the SIPOC model and have dwelt on

the notion of customers. Without customer feedback there will be no

sustainable definition of a “good job.” Without customers who are delighted,

there will be no sustainable organization. Customers must be

the focal point of everything a system does.


We have been working backwards—right to left—in the SIPOC model

(see Figure 3-9). We have discussed the importance of a clear, constant,

and altruistic purpose. The purpose will help us identify who

our customers are. We have explored who the customer is and have

seen that in reality the notion of customer is more complex than is

commonly believed.



• Successful

acquiring and

applying of


• Achievement

of quality


• Fulfillment of

needs of the



Figure 3-9. SIPOC, from right to left.

If we are to delight our customers with ideal products and services,

we must identify our complex chain of customers and learn to

understand them continually. Understanding our customers’ needs

will allow us to define the output needed to make our customers

boastful. Here we explore the notion of output.

The output of our organization is the net result of our systems,

processes, and methods. For better or worse, we get—and, more importantly,

our customers get—what the system is capable of giving us.

From our customers’ point of view, the output, the goods and services,

either delights them, angers them, or, more often, leaves them somewhere

in between those two extremes. From the organization’s point

of view the net output is seen as sales, services delivered, revenue,

costs, expenses, net profits, cash flow, return on investment, market

Systems Thinking: The Heart of Twenty-First-Century Leadership

share, etc. The organization ends up proud of or embarrassed by its


The point here is twofold:

¦ Customers have the final say as to the quality of your output.

If you want to know if you are doing a good job, ask the customers.

They alone know.

¦ Whether your output is good or bad, it is, nonetheless, the

only output of which your systems, processes, and methods

are currently capable. If you want better output, you must improve

the systems, processes, and methods.

An expansion on the second point regarding output is that the system

must be appropriate to the scale of effort. The process and methods

appropriate to your kid’s streetside lemonade stand, with an output, let

us say, of 50 six-ounce cups of lemonade, will not work when he or she

is expected to provide 5,000 six-ounce cups of yellow and pink lemonade

each in regular or sugar-free varieties. You cannot accomplish this

greater scale of output by simply making 100 times more effort. This, of

course, is obvious. But if it is so obvious, why do managers so often seek

to increase the output of factories or the service workload by simply exhorting

people to do more and work harder? If you want more or better

output, you must create systems, processes, and methods that generate

more and better output.


In the SIPOC model, process refers to the interacting systems, processes,

and methods: conditions and factors that convert, for better or

worse, inputs into outputs.

Processes Output


• Successful

acquiring and

applying of


• Achievement

of quality


• Fulfillment of

needs of the



Figure 3-10. SIPOC from right to left.


The Internal Chain

Just as outside customers can be described in terms of a chain of customers,

there is also an internal chain in the organization that has

its internal supplier-customer interdependencies.

A company making printing paper has these basic operations in

its internal chain:




Wood chips

Wood chip




















Figure 3-11. The internal chain: paper manufacturing.

Some basic guidelines for the internal chain:

¦ Don’t pass errors, defects, or unfinished work on to the next

phases of the operation: your internal customers.

¦ Set up “feedback loops” by which you and your internal customer

routinely monitor data on those attributes that are important

to both the internal customer and other customers in

the internal and external chains. Begin with having your internal

customer describe the attributes of your work that are

most important to him, her, or them (key quality characteristics).

¦ Your purpose is not simply to please your internal customers,

but for you and your internal customers to please the outside

customers, that is, the outside chain of customers.

¦ The challenge for each link in the chain is to learn to convert

the internal and external customers’ definition of a good job

(key quality characteristics) into those attributes of your system

or process (key process indicators) that, when in control,

will dependably produce the output desired by both internal

and external customers.

For instance, in our paper company example (as described in

Figure 3-12), there will be a need for feedback loops both from

the outside customer chain and between internal operations.

Your external and internal customers tell you how they define

a “good job” and you design and maintain a process that routinely

delivers what they want. Sometimes you will find that

you can’t do that. Therefore, you work with customers, internal

and external, to find ways for them to accomplish their purpose

and get what they need through some alternative design or


Systems Thinking: The Heart of Twenty-First-Century Leadership





Key quality


The attributes

the paper makers

need and want in

the pulp they use






chain of


Key quality


Key process


Key process


The conditions

and factors of the

process that must

be maintained

Key quality


The attributes the

customers need

and want in the

paper they use

Pulp Paper

Process Output Customers

Figure 3-12. The need to convert your customers’ Key Quality Characteristics—the

customers’ definition of a “good job”—to the Key Process Indicators of your work, those

attributes, factors, and conditions that, when in control, will routinely deliver to the internal

(and external) customers what is important to them when and how they need it.

¦ In this view of work, managers must attend to the spaces between

the operations, the arrows that indicate either transitions

or feedback loops. In this view, the role of leadership is to

create an environment and routines for transitions and feedback,

to maintain the heartbeat, inhalation, and exhalation of

the system. (See Chapter 4 for more on feedback.)




As we examine the notion of process within the SIPOC model, we now

look more closely at process and a companion concept called Gemba.

Gemba creates a clearer context and perspective for the notion of

process. Many find that the concept of Gemba haunts them when

they think of work and the workplace.

The word Gemba, used by the Japanese, is derived from two Chinese

words. There is no English equivalent.

“GEM” specific work

“BA” the place

Figure 3-13. Gemba. (LCDR K.C. Moon of the U.S. Navy provided the drawing

of the Chinese characters. My thanks to him.)

Gemba is the assembly of critical resources and the flow of work that contribute

to those efforts that directly add value to the customer. This is illustrated

in Figure 3-14.

Suppliers Input Gemba Output Customers

Those who support

the Gemba

The critical resources

and sequence of


activities that add

value to the customer

Figure 3-14. The Gemba.

Systems Thinking: The Heart of Twenty-First-Century Leadership

Your organization consists of many systems and processes, numerous

work flows. Not all of them are Gemba. Only those systems and

processes directly related to a flow of work that adds value to the customer

is Gemba.

Some Comments on Gemba

The Gemba’s measure of success is customer delight. The success of

the rest of the organization is how well it serves the Gemba.

The purpose of this distinction between Gemba and non-Gemba

is not to establish yet a new hierarchy of importance among people,

a new internal pecking order. The purpose is to define the organiza-

tion’s systems and identify which functions should systemically serve


¦ Gemba takes the general concepts of system and processes and

extracts the system or processes directly involved in producing

value on behalf of a customer.

These are the Gemba

These are not Gemba but

provide services to the Gemba

Product or service design

Product development activities

Service development activities

Potential customer contact and


Delivering products or services

Instructional and other afterdelivery

services for the


Routine customer maintenance


Most management services

Customer research

System or process design

Human Resources

Plant or facilities repair and

internal maintenance

Payroll and other financial

services: accounts payable

and accounts receivable


Administrative services



Management information


Production planning

Service delivery planning


¦ Relatively few of your people are doing Gemba work. Everyone

else is engaged in work that supports the Gemba. Almost

all non-Gemba people work with information.

¦ “Everything is felt in the Gemba” is a Japanese expression that

describes the interactive and interdependent nature of an or-

ganization’s systems, processes, policies, plans, and decisions.

Implied in the Gemba perspective is that the Gemba deserves

some priority of attention: Whatever else you do, take good care of

the Gemba. In Chapter 4 we look more closely at the care and feeding

of the Gemba.

The Poetry, Music, Spirit, and Rhythm of the Gemba

Musicians, actors, dancers, and athletes will talk about those times

when their work just flows, when it has a life and spirit of its own, and

the artist or athlete just tries to stay with it and not interfere. At these

times people work together as though reading each others’ minds,

each knowing the next move the other will make. They describe how

they and their partners, building off each other, accomplish things

they never could before in ways they never did them before.

This smooth, almost intuitive flow of great work is a form of poetry

in motion. Call it a true experience of teamwork. This kind of

teamwork does exist in the Gemba. “Sometimes we’re really rolling;

we’re really in a groove,” says Bill Warner, a manufacturing engineer

at a large equipment production facility. This experience of teamwork

takes time. It needs people who like their work and know how to do

their jobs very well. It requires a true relationship among members of

the team, people knowing each other and caring about each other.

Managers can help this kind of teamwork develop and sustain itself

by seeing the importance of such teamwork, creating an environment

where such teamwork can flourish. Managers can then help

most by staying out of the way of teamwork. When managers don’t

understand systems, Gemba, and the importance of teamwork and relationships

in the workplace, they are liable to do things—usually un-

Poetry in the Gemba

… There is in manufacturing a creative job that only poets are supposed

to know. Someday I’d like to show a poet how it feels to design and

build a railroad locomotive.

—Walter Chrysler

Systems Thinking: The Heart of Twenty-First-Century Leadership

aware and often with good intentions—that disrupt the teamwork

and the rhythm of the Gemba.

We trained hard—but it seemed that every time we were beginning to

form up into teams, we would be reorganized.

I was to learn later in life we tend to meet any new situation by reorganizing,

and a wonderful method it can be for creating the illusion of

progress while producing confusion, inefficiency, and demoralization.

—Petronius Arbiter

65 A.D.

In his book, Flow, Mihali Czikszentmihalyi (1990) offers this perceptive

insight into conditions that create and sustain flow.



(high challenge

inadequate skills)




Degree of


Levels of capability

and skill


(lots of skill,

little challenge)





with skills




with skills


Figure 3-15. Conditions affecting flow.

Flow, suggests Czikszentmihalyi, occurs when there is neither

anxiety nor boredom. Anxiety occurs when the challenge of the moment

exceeds our capabilities. Boredom occurs when we are capable

of doing considerably more than the challenge presented to us.

The implications for leaders are these:

¦ How to maintain the level of challenge in order to avoid boredom.

¦ How to increase the level of skill in order to avoid anxiety.

¦ How to know when there is a need to restore congruence between

challenge and capability.

¦ How to involve people in the increasing of skills and the increasing

of challenge.


There is, I believe, a direct correlation between what Czikszentmihalyi

describes here and what Herzberg says about motivation and

demotivation. Anxiety and boredom are demotivating. Flow is motivating.


Suppliers Input

Processes Output Customers



acquiring and

applying of



of quality


Fulfillment of

needs of the


SIPOC, from right to left.

Just as there are external customers and internal customers, each of

which can be seen in terms of chains of customers, there are also external

and internal suppliers, each part of their own chains. And just

as you cannot afford to deal only with the first customer in the chain

of customers, it is wise to deal with more than simply the last supplier.

This is especially true of the major suppliers of the core resources. We

will look more closely at core resources in Chapter 4.

Elective and Nonelective Suppliers

The difference between internal and external suppliers is probably

obvious. One is inside your organization, the other is not. What has

more impact on you, however, is whether or not you have a choice of

suppliers. For example, in my paper company example (see Figure 311),

there is an internal supplier of pulp to the paper makers. For the

paper makers the important question is, “Must we acquire pulp only

from this internal supplier?” If they must, then the paper makers are

dealing with a nonelective supplier. In a perfect world this should not

make a difference. But a common experience is that it is much harder

to deal with nonelective suppliers, whether they are internal or external.

Figure 3-16.

Systems Thinking: The Heart of Twenty-First-Century Leadership

Win–Win Regulators

The Department of Revenue of the State of Wisconsin is responsible

for regulating the state’s breweries, distilleries, and producers of wine. (Yes,

there is Wisconsin wine!) The licensing agency, applying Deming’s philosophy,

started pursuing a nonadversarial approach to their regulatory function.

The result: better relationships, better problem solving, better cooperation,

and win–win collaboration with the producers of alcoholic


Russell Ackoff (1994, pp. 142–167) makes this point and argues

that corporations would do better if internal suppliers were forced to

survive in an open market, without corporate protection regarding

their internal customers. (This is a step that I am not ready to advocate.

I fear it will subvert the larger systems.)

There are also outside nonelective suppliers. Regulatory agencies,

for example, are usually outside, and they supply regulations and constraints.

They are also nonelective. If you don’t like their regulations,

you cannot shop around for another regulatory agency.

Part of understanding how to lead a system is taking on the responsibility

to sit down with suppliers and work out win–win strategies

to serve the interests of both the supplier and you who are supplied. This

applies as well to working with regulatory agencies. Sometimes to help

regulators be better regulators, you may have to approach them, as you

would with any other supplier, to help them learn how to become sys-

tems-focused suppliers. You may want to band together with other organizations

that labor under the restrictions of the same regulators, to

work out a new arrangement with this supplier of dysfunctional regulations.

Whether the suppliers are internal or external, your systems and

ultimately your customers require a smooth, well-functioning flow

between the suppliers and you. This is the job of managers: to assure

the smooth flow of work from the suppliers to the process, through

the process, and from the process to the customers.

Managers are the ultimate internal suppliers to the organization.

Managers supply definition, meaning, direction, focus, plans, priorities,

communication, equipment, material, methods of work, smooth

flow, continuity, moral support, and a good working environment to

the organization’s employees. Managers, in other words, are suppliers

of the system. As Myron Tribus says, “Managers work on the system.

Workers work in the system.”

There are two questions that I suggest suppliers ask their customers,

whether these suppliers be external or internal, elective or


nonelective. I also recommend that supplier-managers ask these questions

of their employee-customers (see Figure 3-5):

1. What are you getting that you don’t need?

2. What do you need that you’re not getting?


Leading such dynamic concepts as systems, SIPOC, and Gemba represents

a fundamentally different approach to leadership, requiring new

leadership competencies (see Chapter 2). The sense of organization is

fundamentally different as well. Let us take a look at an organization.

I think there is no simpler view of an organization than that pictured

in Figure 3-17. An organization is:

 An aggregate of people ...

 Working within systems and processes ...

 To accomplish some purpose.

This describes all kinds of organizations: work, church, social, civic,

and political organizations.

Traditionally we have sought success by inducing our people to

work smarter or work harder. We have tried to motivate them, reorganize

them, given them measurable objectives, empower them, and

hold them accountable. We have taken for granted that to improve

our chances for success, we must improve our people.

Systems and

processesPe o p l e

Pur p o s e

Figure 3-17. The basics of an organization.

Systems Thinking: The Heart of Twenty-First-Century Leadership

Beginning in 1950 we began to think differently. We began to

understand systems. We began to realize that to improve the chances

for success, we must improve our systems and processes. If we improve

our systems and processes, the work of our people will necessarily


Our people work within a large system containing many interdependent,

interactive “givens” over which they have little or no control.

Even individual managers have limited ability to change the system.

Some of the givens that compose the system are:

¦ Product or service design  The budgets

¦ The work facility  Staffing levels

¦ Process design  Priorities

¦ Machines  Long- and short-term goals

¦ Materials and plans

¦ The methods of work  Training

¦ The equipment  The work environment

¦ The policies  Communication systems

At least 95 percent of your quality problems can be attributed to

these givens of your organization. Less than 5 percent result from

people committing errors. Human error is a negligible source of our

problems. Yet because we don’t understand systems, we act as though

human error were the primary cause of our problems.

Obstacles to Systems Thinking

There are conditions and practices in the organization that make systems

thinking difficult for the organization’s leaders:

¦ Isolation from the customer: product-out thinking creates a

more inward, narcissistic focus.

¦ Divisional and functional managers have little awareness of,

and no sense of responsibility for, the entire system, only for

their individual functional units.

¦ Divisional and functional managers, and the people who

work in their units, are often remunerated based on how well

they help their own functional units succeed.

¦ Plans don’t cut across units, nor is planning done cross-func-


¦ Success is measured not by measures important to the customer,

but by measures important only to managers.


Yet Another Person Lacking Profound Knowledge

In an interview on C-span on May 19, 1996, Jerry Jasinowski, the

president of the National Association of Manufacturers, made this comment

regarding the Value-Jet crash in the Florida Everglades:

“I believe that we will learn that—as in most of these incidents—it

will be pilot error.”

Mr. Jasinowski, of course, was wrong in his prediction. Will it do any

good to hold him accountable or try to motivate him to make more accurate


¦ Short-term thinking: looking ahead only to this month, this

quarter, or this year.

¦ Fostering and sustaining an environment of blame.

¦ Scrambling to be important and look good as an individual or

a unit.

¦ Actions are not well planned, nor are they monitored or studied

to see if they accomplish what was intended. We simply

do things, and often do not see the system behind the problems

we seek to solve. As a result, today’s solutions become to-

morrow’s problems.

Approaches to Systems Thinking

We can develop systems-minded organizations first by backing away

from everyday work and asking some basic questions, as suggested by

the SIPOC model. Then we can zoom in closer and closer and ask

other SIPOC-related questions regarding daily work.

Some basic, large-scale, long-term questions suggested by the

SIPOC model are:

¦ What is our purpose?

¦ What capabilities do we provide our customers?

¦ Who are, or should be, our customers?

¦ What do they want? What do they need?

¦ How do we know?

¦ How can we maintain awareness of customer needs and market

shifts on a daily basis?

Systems Thinking: The Heart of Twenty-First-Century Leadership

¦ Given what we know about our customers, what output

(goods and services) with which features and attributes must

we provide?

¦ Given these outputs, what systems, processes, and methods

must be in place?

¦ How do we know?

¦ How do we monitor these systems, processes, and methods to

assure ourselves that they are in control and will reliably, consistently,

and flawlessly deliver the output needed by our customers?

¦ Given these systems, processes, methods, and output, what

input do we need?

¦ Which suppliers can best provide us with the needed input?

¦ How do we know?

¦ How will we monitor the input from our suppliers?

Chapter 8 looks at systems of questions as well as systemic questions

that leaders must ask. Chapter 7 looks at setting up and maintaining

the indicators we must monitor, tracking both the key quality

characteristics important to the customers and the key process indicators

that tell us how well our systems are working. Chapter 5 looks at how

to identify meaning and priorities for the organization and how to

communicate direction and focus throughout the enterprise. In Chapter

6 we look at how to plan and implement large-scale systemic

change: the systems needed for systemic change. At the beginning of

this chapter you read, “Ironically, without a system it is impossible to

change.” This will be explained in Chapter 6. In Chapter 4 we zoom in

on everyday work, looking at it systemically.

We develop a systems-minded organization, therefore, by

pulling back and asking systemic questions about the whole enterprise

and the larger systems—for example, the market—in which it

operates. We zoom in on the everyday work and ask systemic questions

about daily work. We organize ourselves around those questions

and the pursuit of those answers.

The massive scale and rapid rate of change in our world demand

a wholly new approach to leadership. Leaders can no longer be experts

and autocrats. Leaders must understand systems, lead systems,

and think systemically. To lead your systems systemically is to lead

your organization into the new century.


All work can be characterized by the simple yet useful SIPOC model.

Work has a specific purpose—to serve customers. Work is achieved

through processes performed at the Gemba. These processes require

inputs provided by suppliers. Looking at work this way and

understanding and integrating these components is a fundamental

responsibility of a twenty-first century leader.

In this chapter we have provided some practical examples of

work as a system and shown some helpful ways to use systems

thinking to understand and improve workplaces.

In Chapter 4 we take a closer look at the processes by which

the daily work is done.


1. What is the purpose of your organization?

¦ Don’t refer to financial goals.

¦ Describe who you are and what you do. (Can your purpose be inferred from

your activities?)

¦ No “motherhood” statements (statements that would describe just about any


2. What capabilities do your customers acquire (or improve) as a result of

interacting with you? (Don’t describe your products or services but what your

customers can do as a result of receiving your products or services. How are

they better off for having interacted with you?)

3. Who are your competitors? (Either organizations that provide products or

services similar to yours, or alternative ways people satisfy the needs or gain

the capabilities that you provide.)

4. A. Who are your current customers?

B. Who should/could be your customers, but currently are not?

C. Who, by your choice, are not your customers?


5. Identify the major products and services that benefit your customers and

serve your purpose.

Benefit/Capability Acquired by the Customer

Product or Service

from This Product/Service

Choose a specific product or

service and enter it here:

6. Examine the chain of customers for that product or service.

Who Is the End User or

Who Receives It from You? List the Intermediate Customers: Beneficiary?

Example: A manufacturer of coffee makers.

Systems Thinking: The Heart of Twenty-First-Century Leadership

Who Is the End User or

The wholesaler  The regional distributor The drinker of the coffee

 The retailer

 The maker of the coffee

Who Receives It from You? List the Intermediate Customers: Beneficiary?

The purchaser

7. Applying the Kano Model.

What Are the

What Are the Basics to


What Are, or Could

These Customers?


Be, the Delights?

The receiving


The intermediate


The end consumer


¦ Don’t speculate about these. Go out and ask customers.

¦ Use the data you already have. For example, customers usually complain when a

basic has been neglected.


8. Identify customer feedback loops. These are routine methods or systems

with which you elicit information from your customers and record the data in

ways useful for improvement.

Reactive Customer Feedback—Initiated

Proactive Customer Feedback—

by the Customer (e.g., Customer

Initiated by You (e.g., Surveys, Focus

Complaints, Inquiries, Service Requests)

Groups, Service Visits)

Describe the


routine for

capturing and


customer data

Describe a


routine that

might be


Systems Thinking: The Heart of Twenty-First-Century Leadership

Enter a specific product or service

9. Gemba I: Mapping the process. Describe the general flow that develops and

delivers this product or service.

How Do You Know

Identify the Flow of Work How Do You Know

When the Process

Is Completed

and Successful?

When the Process

Has Started? Early Stages Middle Stages Late Stages


10. Tracing a basic key quality characteristic back through the process.

A. Select a basic characteristic for the end user or beneficiary of this product

or service (see Figure 3-6).

B. Where does this basic get assured or violated? Identify where in the process

things can go wrong so that the basic is violated.

Start Early Stages Middle Stages Late Stages End

Some guidelines:

¦ If necessary, use a more complex form of flowchart such as a deployment

flowchart (see Figure 4-5).

¦ Your purpose is to identify where in the process things go wrong, not who messed

up. Look for systemic causes, not culprits.

¦ Start at the end of the process, asking, “What goes on here that contributes

positively or negatively to this basic customer characteristic?” Then work

backward into the process.


Ackoff, R. 1994. The democratic organization. New York: Oxford University


Arbiter, P. The quotation can be found in The Macmillan book of business and

economic quotations. 1984. Michael Jackman, editor. New York: Macmillan.

Chappell, T. 1993. The soul of a business. New York: Bantam Books.

Czikszentmihalyi, M. 1990. Flow: The psychology of optimal experience. New

York: Harper & Row.

Ford, H. The quotation from Henry Ford can be found in The Macmillan book

of business and economic quotations. 1984. Michael Jackman, editor. New

York: MacMillan.

Gale, B.T. 1994. Managing customer value: Creating quality and service that customers

can see. New York: Macmillan.

Gitlow, H., and Gitlow, S. 1994. Total quality management in action. Englewood

Cliffs, NJ: Prentice Hall.

Hagy, M., and Hagy, M. 1994. Under new management: Organized common sense.

Philadelphia: Atlantic Alliance Publishing.

Kano, N. 1996. “Business strategies for the twenty-first century and attractive

quality creation.” A paper delivered at The International Conference on

Quality, October 15–18, in Yokohama.

Kano, N., Seraku, N., Takahashi, F., and Tsuji, S. 1996. Attractive quality and

must-be quality. In The best of quality, vol. 7, pp. 165ff. Milwaukee:


Mowery, N., Reavis, P., and Poling, S. 1994. Customer focused quality. Knoxville,

TN: SPC Press.

Vandermerwe, S. 1993. From tin soldiers to Russian dolls. Oxford, UK: Butter-




Copyright 1998 The McGraw-Hill Companies, Inc. Click Here for Terms of Use.


If visitors from another planet were to hover over our workplaces,

viewing us with some kind of barrier-penetrating vision, they would

observe earthlings, individually or in groups, engaged in various activities.

In some workplaces they may see an observable flow of work

that produces a product: Wood enters one end of the factory and furniture

comes out the other end while in between, people do various

things to convert wood into furniture. Sometimes earthlings in obvious

pain enter a building and later emerge with less pain while in between,

these earthlings received services that appear to relieve their

discomfort. In other workplaces, however, the entry points and departure

points are not so observable, nor is what takes place in between.

The alien visitors would need some other means to discover

what is going on.


The Gemba.

Those who support

the Gemba

Suppliers CustomersOutputInput Gemba

The critical resources

and sequence of


activities that add

value to the customer

A Reminder of What the Gemba Is

In Chapter 3 we introduced the notion of Gemba. In this chapter we

explore the Gemba more deeply.

The Gemba consists of those systems, processes, and work flows

about which your customers care the most. These are the processes that

develop, add value to, and deliver goods and services to your customers.

Customers are those who use, apply, and benefit directly from the Gembaproducts and services.

Figure 4-1.


The process of examining everyday work involves adopting an

almost alien-visitor perspective. We observe and analyze the workplace

to see who is doing what and why. The alien-visitor perspective

allows us to ask naive or dumb questions.

With a reestablished perspective on what is the important flow

of everyday work, we can identify some guidelines for everyday work,

learn to standardize everyday work, and remove waste from the workplace.

We will explore these issues in this chapter.

Everyday improvement of daily work requires some monitoring

and feedback processes, which we will look at in this chapter as well

as in Chapter 7. The workers monitor their own work and get feedback

from the system within which they work. This, we will see, is not

at all like traditional evaluation of the worker’s performance. Feedback

is systems-based data useful for improvement. Traditional performance

evaluation, on the other hand, is the personal judgment of one individual

by another, higher-ranking individual, serving the purpose of

establishing a relationship of control by the one judging over the one

judged. More about this in Chapter 9.

All of Chapter 4 is focused on the smooth flow of work, particularly

that part of work that we identified in Chapter 3 as the Gemba.

Most of what we say here will also apply to the non-Gemba activities.

However, as we emphasized in Chapter 3, the purpose and value of

other work must be viewed in terms of its contribution to the present

Gembas and future Gembas. We end Chapter 4 with a look at practical

ways to create an environment of teamwork and processes for internal

collaboration between the various parts of an operation that

must work together in a smooth, continuous flow.

Figure 4-2 shows the flow of initiatives you might undertake in

working to improve daily work. It also describes the flow of this


Examining the Gemba and getting daily work done

1. Identify the flow

of work

4. Identify the best

methods and

standardize them

2. Identify the

critical functions

and key players

5. Eliminate waste

3. Identify the

core resources

6. Establish

feedback loops

Figure 4-2. Six initiatives for getting the important daily work done.

Pick each item

placed in the bin


staging area

For out-of-stock items:


order notice

Enter status of

order on the

order log

Take order from

the order basket

on the order

from inventory

Check off each

item when

Place purchasing

notices in

purchasing in-box

Place the bin with

ordered items and

incomplete order

notices in shipments

* Fill out notice for

* Fill out incomplete

Figure 4-3. The

simple flowchart.

Getting the Daily Work Done


The Uncluttered Flow of Work

Work, on a large scale (a system) or on a small scale (a process or

method), can usually be pictured as a flow of events or activities. The

flowchart is a graphic representation of the interdependent sequence

or flow of phases, activities, events, or steps involved in some undertaking.

There are at least six variations on the flowchart. (See Figures

4-3 through 4-8.)

Six Types of Flowcharts

1. The Simple Flowchart (Figure 4-3)

A simple flowchart describes the steps in order, moving either left

to right or sometimes top to bottom, as shown in Figure 4-3. The simple

flowchart can include as much or as little detail as your purpose


2. The Top-Down Flowchart (Figure 4-4)

A top-down flowchart describes the basic five or six steps in sequence

from left to right across the page and up to five or six substeps

in sequence vertically below each step. The top-down flowchart thus

displays the simple flow and adds another level of detail, all contained

on one page.

I first learned about this type of flowchart from Brian Joiner, to

whom I am grateful.

3. The Deployment Flowchart Figure 4-5)

A deployment flowchart shows time in the vertical sequence of the

steps. But the deployment flowchart also shows the interactions between

different individuals or groups. Each active participant in the

process is listed at the top of an individual column and the action,

while flowing downward on the page corresponding to time, moves

laterally under the column corresponding to the group or individual

involved in that step.

I am grateful to Myron Tribus, from whom I first learned about

the deployment flowchart.

4. The Opportunity Flowchart (Figure 4-6)

The opportunity flowchart, which I learned about from Heero Hacquebord,

shows the simple flowchart of the value-adding steps of a

task running downward in time sequence on the left side of the page.

Whenever a step in the process adds no value but only cost, it is dis









j“” of


needed books




• Subsequent


Alerted to



flags order

Schedules a








shipment is

on its ways


the delivery


t arrive



Check with Wrong




Forward to

correct facility



receivable of




Shipper Receiving dock Accts Rec




order in



stuff or


Right stuff,



Send signed

packing slip

to accts rec

Return to

shipper and


Notify accts.

rec. of




return overage




packing slip,



Alerted to



flags order



incorrect or


1. Identify

the purpose

of the


2. Identify




3. Research on


methods and


4. Select



5. Assemble

into a training

curriculum and


6. Conduct a

pilot training

1.1 Identify those

who want or

need this


1.2 Identify their

wants and

1.3 Identify any

other ideas or


1.4 Identify their





the learners

should acquire

2.1 Consult with

subect matter


2.2 Benchmark

other similar


2.3 Elicit ideas

from potential


and other


2.4 Review


against the

purpose and



3.1 For each likely



Methods of



length of

time needed

Types of

materials and

other modes

of training

Who is able

and available

to teach

4.1 Select the


4.2 Identify the

4.3 Design each


4.4 Identify the

and other



4.5 Send the




to participants

and other

customers for

their review

5.1 Identify the



5.2 Set up the

systems and

5.3 Arrange for a

training site

5.4 Schedule:


Pilot review


6.1 Design a feedback


with participants

as part

of the

6.2 Revise


methods and

logistics in

response to


Figure 4-4. The top-down flowchart.

Figure 4-5. The deployment flowchart.

Getting the Daily Work Done






toEnter data into

Value added

steps Steps which add no value, only cost



and trace,

reorder if





of problem





flags the





at wrong



to correct





and return

to shipper




of problem



flags the


Right stuff,





Rent space

or store in

aisle until

space is



materials and

store properly

when space is


Wrong stuff

or damaged





Store the




receivable of

receipt of


inventory files

Figure 4-6. The opportunity flowchart.

played to the right. Inspection steps or rework, for example, are not

part of the left-side downward flow, but are on the right, cost added

only, side. Figure 4-6 shows the same flow of work described in Figure

4-5, but displays the data using the opportunity flowchart’s format.

5. The PERT Chart (Figure 4-7)

The PERT chart is a flowchart displayed with great detail, showing

perhaps many concurrent flows of work, called paths. Elapsed time is estimated

between steps in each path. By adding up the cumulative estimated

time for each individual work flow, one can identify the critical

path, that work flow that will consume the most time. The critical path

is the flow of work that determines how long a task will take, the path

in which you can least accommodate delays or in which you may need

more resources. (PERT is an acronym for Planning Evaluation Review





























9 4 7


1 8 2 2







2 7




The number with the arrow

represents the estimated number

of days between completed activities





In this PERT chart, the critical path is the shaded boxes (40 days).

Figure 4-7. The PERT chart.

6. The Decision Tree (Figure 4-8)

A decision tree is not so much a flow of activities as a sequence of

decisions in which the next decision to make depends on which decisions

were made before it. Sometimes, other types of flowcharts include

decision-tree choices in the flow of activities.


occurrences versus nonoccurrence

c-chart u-chart



p-chart NP








What kind of data?

Attribute data

(count it)

Variables data

(measure it)

Count occurrences

Figure 4-8. The decision tree: a summary map for selecting a control chart.

Getting the Daily Work Done

Some Tips for Doing Flowcharts

1. Decide the end point and starting point.

2. Decide the level of detail, reflecting the purpose of your flowchart

and its audience.

3. It often helps to start at the end and work backward toward the

start. (This is called backward chaining.)

4. Use Post-its™ or another type of sticky notes. Putting each step

on its own Post-it™ will save time and aggravation.

Flowchart Your Gemba Processes

Involve people doing the work in constructing a flowchart of their

Gemba process. It might help to have an outsider take part—the visitor

from another planet—who can ask naive questions.

The activity by itself is liable to bring improvement. Making a

flowchart will help people become aware of what was previously done

unconsciously. It will bring out undiscovered variations in methods,

provoke discussions, and possibly encourage studies to determine

which method works best.

Creating deployment flowcharts of the Gemba processes will describe

the internal supplier–customer relationships. This can lead to discussions

between interdependent participants in the Gemba regarding, “What are

you getting that you don’t need and what do you need that you are not getting?”

(See “Breaking Down Barriers” later in this chapter.)

While it is useful to develop flowcharts for all your important recurring

processes, the important perspective to maintain is that the

non-Gemba processes must be subordinate to the Gemba processes. It

may be important to look at those points where non-Gemba processes

have contact with the Gemba and ask:

¦ What is the purpose of this contact with the Gemba?

¦ Are these points of interface necessary?

¦ How do they help the Gemba?

If they are necessary, ask:

¦ How can they become a greater opportunity to provide useful

service to the Gemba?

¦ How can they be made minimally intrusive and disruptive?

As we will see, moving through this chapter, we are trying to

maintain a smooth, uncluttered flow of work in the Gemba, to avoid

disrupting its momentum and rhythm, to keep it humming efficiently

and undisruptedly. After all, the Gemba is “the customer’s work.”


Critical Functions and Key Players

As you review the work flows, you will note two obvious types of important

factors: human resources and nonhuman resources. In the

section titled “Core Resources,” we will discuss the equipment, machinery,

and other important nonhuman resources. Here we discuss

the human skills and capabilities needed to keep the Gemba (or other

non-Gemba functions) running.

There are people doing things throughout the workplace. Each

person is important. It is easy to lose sight of this when examining the

workplace through this lens we call Gemba. Gemba creates a perspective

regarding the subordination of processes and functions, not of

people. People who use their superordinate function to patronize

those in subordinate functions are indulging their own egos. They are

not creating teamwork, not building and sustaining systems to serve


Here we are not looking at all roles and functions, not even all of

those at work in the Gemba. We are examining the Gemba to find the

critical factors (what Tim Fuller calls the key leverage points), those specialized

and pivotal roles and functions: the doctor in the clinic, the

press operator in a printing company, the purchasers and salespeople

in a wholesale distributor, and others. Some Gembas are so peopledominated

that it is relatively easy to identify the key players, the pivotal

roles and functions. Some Gembas are machine-dominated and

some may have relatively few highly skilled people involved, as discussed

later in Chapter 4.

Identifying Critical Functions and Key Players

Once again we will talk about the Gemba, although what we

say will also apply to non-Gemba work. Our purpose here is to provide

one focus for our efforts to maintain an uncluttered flow of


1. Which participants in the work flow are directly serving the customer

or directly adding value to goods and services that are working

their way through the process on their way to the customers?

2. Which of these participants are difficult to replace because of the

breadth or depth of knowledge and mastery of skills necessary to

perform the function?

¦ Some obvious examples: doctors, lawyers, skilled programmers,

master chefs, and architects.

¦ There are gradations of necessary skill and knowledge. Cab

drivers in London take three years to acquire what is called

“the knowledge.” In some sales organizations the training

of a new salesperson may require only three hours. In oth

Getting the Daily Work Done

ers it may take three years. We are trying to identify those

positions or functions that require a more demanding level

of skill.

3. Which of these value-adding, highly skilled participants directly

affect the capacity of your organization to serve the customer?

(“Customer demand is so strong that if we could find more

skilled machinists we could increase our business by 40 percent.”)

Elsewhere (Chapter 9) we will discuss related issues such as how to

pay those with such indispensable and hard-to-find levels of skill. Here

we are simply examining the workplace to identify the critical factors

and leverage points. So far in our examination of the Gemba, we have

looked at the flow of work, the sequence of interdependent steps that

can be described using one or another form of flowchart. Then we have

looked at the critical functions and key players: participants in the

Gemba who perform indispensable functions requiring a high degree of


Next we look at the core resources, the nonhuman leverage

points in the Gemba. As we mentioned above, some Gembas are peo-

ple-dominant, some are equipment-dominant, and some are both. In

the following section we look at the nonhuman critical resources that

we call the core resources.

Figure 4-9 pictures the concept of critical functions, key players,

and core resources.





to the



Gemba Process





going to













Critical functions

key players



Figure 4-9. Critical functions, key players, and core resources.


Core Resources

As we examine the Gemba, we must also look at those core resources

other than people. Here we look at the equipment and machinery, the

facility or workplace where the Gemba work is performed, the layout

of the work space, the materials, supplies, ingredients, environment,

and procedures of the Gemba.

We don’t consider every single item under these types of resources.

Similar to our examination of the critical functions and key

players, we look for those core resources that are critical factors, the

indispensable factors that contribute to successful outcomes in the


Our purpose in examining these core resources is to provide another

point of view when we seek to create an uncluttered flow of


These approaches are also applicable to non-Gemba workplaces.

Again, however, we are trying to maintain a Gemba-as-priority perspective

on work. Some questions to ask when examining the core resources:

1. Which core resources directly add value to the customers or

to products and services on their way to the customers? For


¦ A printing press in a printing company

¦ A kiln in a pottery factory

¦ An MRI in a hospital

¦ The floor of a dance hall

2. Among those core resources that are value-adding, which are

expensive to purchase, install, and maintain? For example:

¦ A $15 million paper machine

¦ A pizza oven

¦ A printing press

¦ Ski lifts and snow machines on a ski hill

3. Which core resources can create delays or bottlenecks or otherwise

limit your capacity to serve the customer?

¦ The organization and layout of the warehouse in a mail

order operation

Getting the Daily Work Done

¦ Appointment scheduling and the speed of records access

in a doctor’s office

¦ The adequacy of the supply of food and various ingredients

as well as clean dishes, glasses, and utensils in a


4. Which core resources are characterized by safety and workerfriendliness?

The Gemba and other workplaces must be safe

and ergonomically sound. We owe this to our workers, our

customers, and the communities within which we work. In

our examination of the workplace, we should ask questions

such as the following:

¦ What environmental dangers do we create with our

processes? What are the systemic causes?

¦ What frequency and patterns of injuries and accidents (or

near injuries and accidents) do we experience in our workplace?

What are the systemic causes?

¦ To what work-habit or ergonomically related syndromes are

our workers subjected? For example:

— Carpal tunnel syndrome for typists

— Back problems for factory and warehouse workers

¦ What can we learn from industry research on the safety

and ergonomic issues to which the people doing our types

of work and work processes are vulnerable?

We want to identify those core resources that have impact on the

precision, accuracy, completeness, timeliness, customer-friendliness,

and overall quality of our goods and services as well as the safety and

worker-friendliness of our processes. In all of these except for the safety

and ergonomic issues, which must predominate everywhere, we should

give priority to the Gemba. We should have a reasonably clear picture of

the flow of work, the critical functions and key players and the core resources

of the Gemba. For the entire workplace, not just for the Gemba,

we need a keen awareness of the safety and ergonomic needs and issues.

Figure 4-10 displays some of what we have described thus far,

showing examples from a variety of Gembas. This is not intended to

be a complete listing of all the important factors. Rather, it shows

some examples to stir up your own thinking for your own workplace.

Types of work

Critical functionsand key players Core resources




Making a pizza in arestaurant kitchenTreating cardiacarrest in an hospitalemergency roomArresting anintoxicated driverMaking facialtissues (e.g.,


Making acommercial loan

The chef• E.R. doctors• E.R. nurses

• Police officer• Breathalizeroperator

• Paper machineoperators

• Box machineoperators

• Loan officer

• The oven

• The recipe

• The ingredients• The work space(counter-tops,


• Etc.

• Defibrillators• Medications• Miscellaneousequipment

• Syringes

• Etc.

• Police car

• Breathalizer• Etc.

• Paper machine• Box machine• Pulp and otheringredients• Box material• Etc.

• Computer

• Policies

• Forms

• Etc.

• Chef’s uniform

• Music

• Waiting area forrelatives

• Holding cell

• Posters andslogans

• Lunchroom• Inspectionprocesses

• Gift calendar forthe customer

• The wait staffprocess

• Purchasing• Utensil-washing

• Emergencyservices(ambulance,


• Lab services(X-ray, etc.)

• 911 and dispatch• Patrol officerprocesses

• The pulp makingprocess

• The woodsupplier process

• Credit checkprocess

• Credit infoprocess

• The wait staffprocess

• The homedelivery process

• Operating room• Intensive care• Rehab center• Etc.

• The countyprosecutor orcity attorney• Detox centers

• Cartoningprocess

• Warehouse andshippingprocesses

• Loan clerk

• Monitoringprocesses

Figure 4-10. Examples of Gembas and some of their critical factors or key leverage points.

Getting the Daily Work Done



Gemba Guidelines

Here is a list of the 20 guidelines for the Gemba.

1. Give priority to the Gemba.

2. Focus on clearing out and cleaning up the Gemba.

3. Make sure the core resources, especially those with key functions

and roles, are almost always busy doing Gemba work.

4. Study the Gemba processes and core resources.

5. Make changes to reduce costs in the Gemba (without compromising


6. Streamline the Gemba and organize the work.

7. Identify and eliminate waste in the Gemba.

8. Don’t keep the Gemba waiting.

9. Don’t interrupt or disrupt the Gemba.

10. Error-proof the Gemba; make it more robust.

11. Standardize recurring Gemba tasks when the important factors

are controllable.

12. Address the out-of-control factors in the Gemba.

13. Make changes in the Gemba to increase throughput.

14. Identify the key process indicators and routinely monitor them.

15. Maintain continual education and training for the Gemba.

16. Make the Gemba “hum” with communication.

17. Develop in the Gemba the reflexes, habits, and processes for

continual PDSA.

18. Attend to the human needs of the Gemba people (and everyone

else as well).

19. Make the Gemba a fun place to work.

20. Assume that “everything is felt in the Gemba.”

1. Give priority to the Gemba. As I have emphasized already, the

Gemba is the heart of your organization and it must take

precedence over everything else. While these principles and

guidelines apply and will be helpful all over your organization,

apply them first in the Gemba and work outward from there.


2. Focus on clearing out and cleaning up the Gemba. There are

two categories of work that apply here.

¦ Systemic cleaning up and clearing out: Look at the actual

work flow and make changes that will eliminate unnecessary

and non-value-adding steps. The opportunity flowchart

may be a useful tool for this.

¦ Physical cleaning up and clearing out: When the Gemba is

neat, tidy, and well-organized it will be harder to lose

things and easier to find things, and generally more pleasing

to the eye.

3. Make sure the core resources and especially those with key functions

or roles are always busy doing their Gemba work.

¦ In a medical clinic or law office, you don’t want everyone

else occupied while the doctor or lawyer sits idle. Make

sure the core resources are occupied with Gemba work.

¦ You don’t want a $15 million paper machine sitting there

doing nothing.

¦ If there is excessive variability in the earlier steps, resulting

in core resources standing idle, work to reduce this

variability, making a more predictable flow.

¦ Schedule the work of the core resources carefully, so that

it is occupied with the most important work in the most

efficient way.

4. Study the Gemba processes and core resources.

¦ Your Gemba people must be students, experts, and masters

of the Gemba work.

¦ Your Gemba people should know the factors necessary to

make the process function well even under unstable conditions.

They should know more about your equipment and

machinery than the designers and manufacturers of it.

¦ Your Gemba people should be masters of the sciences and

methods that result in the best output for your customers.

5. Make changes to reduce costs in the Gemba.

¦ Reduce waste, scrap, and rework.

¦ Reduce, reuse, and recycle materials (without compromising


¦ Study ways to use less (materials, time, space, personnel,

etc.) with equal or better results for the customer.

¦ Let the customers share in the savings.

Getting the Daily Work Done

Aisin Seiki and the Ozashiki

Aisin Seiki is part of the Toyota family, partly owned by the auto giant

and a supplier of various parts.

Aisin Seiki challenged the Deming prize, winning it in 1972.

In their Nagoya water-pump plant, one of their 1980 improvement

themes was to clean up the plant, making it like the Ozashiki, the parlor in

the typical Japanese home that was kept spotless (in case visitors should stop

by). Aisin Seiki spent five years pursuing this goal.

I had an opportunity to visit this plant in 1985, along with several

other American visitors. In spite of its manufacturing operations (drilling,

grinding, stamping, etc.), the plant was spotless, no grease, no dust, no filings.

Almost every worker had his or her work station decorated homelike

with flowers, trees, pictures, clocks, and other amenities. Throughout

the plant were islands used by the workers for eating lunch, taking breaks,

and having meetings. These were built and are maintained by the workers

themselves. Some are quite spectacular with trees, tables, goldfish ponds

and fountains.

Each work station had formfit storage for tools, warning systems

telling when drills should be changed and systems to assure the reorder of

parts when the supply was low. Their just-in-time system applied not only

to the component on which they were working, but to the drills, etc. which

they used in their work.

How did they keep the place so clean? Their three minute clean-up

period for each shift, with each worker cleaning up his or her own area,

seemed inadequate to explain a degree of cleanliness that would make even

my mother envious. They constructed some dust and filing collecting apparatus

around their machinery. The workers have learned how to prevent

dirt and litter in their ordinary work equipment and methods.

The effect of such cleanliness is increased quality and productivity. In

a preventive mode, the absence of dirt and disarray can help avoid missing

parts and lost tools or distraction from a worker’s concentration. A side

effect of Aisin’s cleanliness, pointed out by the plant manager, has been increased

pride and self-confidence of the workers and supervisors. A series

of signs erected Burma Shave-style by workers on the plant floor reads,

“We are proud/Of our TQC corner/To the world.” The English wasn’t elegant,

but the message was eloquent. They have every right to be proud.

Photographs taken five years before show that this was a typical grungy

plant. Now it’s an Ozashiki. (From Scholtes, 1986.)


6. Streamline the Gemba and organize the work.

¦ Draw a floor map of the Gemba and trace the patterns of

movement (fast-motion video might be useful for this

study). Look for opportunities to reduce movement by

redesigning the layout.

¦ Have a place for everything and have everything in its

place. Use signs, labels, and outline drawings to make

things easy to find and easy to return to their places.

¦ Locate the frequently used equipment and supplies for

easy access.

¦ Have ready access to what is needed for the current cycle

or task, for example, all the parts needed for assembling

one unit. Create a means for just-in-time availability of

what will be needed for the next task or cycle.

Specs or Drop Test: Studying the Process

A European-based electronics corporation had subcontracted with a

Japanese television manufacturer. Months of protracted meetings and negotiations

had resulted in numerous standards and specifications that the

Japanese company was expected to meet under the terms of the contract.

Several weeks after the specifications were completed, a representative

of the Japanese manufacturer (JM) contacted the project manager for

the European corporation (EC).

JM: In one section of the standards you describe the exact specification

of the packing material that must surround the television set in the


EC: Yes?

JM:You also describe as a standard that the carton must withstand a certain

drop test without damage to the television set in the carton.

EC: Yes?

JM: If we can meet the drop-test standard, must we still conform to

the packing specifications?

EC: No. The drop test is the more important measure.

JM: Very good! We have designed a packaging method that will withstand

the drop test and reduce the size of the carton.

EC: Oh?

JM: And with a smaller carton we can put more units on each skid and

increase the units per shipment with no increased shipping cost.

EC: Oh?

JM: And we will, of course, pass the savings on to your company.

This true story demonstrates a commitment to improvement and

customer delight.

Getting the Daily Work Done

7. Identify and eliminate waste in the Gemba.

¦ Know the different types of waste and how to reduce or

eliminate them.

¦ See “The Different Kinds of Waste” later in this chapter.

8. Don’t keep the Gemba waiting.

¦ Don’t keep the key people waiting.

¦ Eliminate bottlenecks.

¦ Maintain the smooth, uncluttered flow of Gemba work.

9. Don’t interrupt or disrupt the Gemba.

¦ Study the types and patterns of interruption and devise

methods to reduce or eliminate them, or handle the issue

without interrupting the flow of work.

10. Error-proof the Gemba; make it more robust.

¦ Find methods to make the Gemba more:

— Mistake-proof — Flexible

— Omission-proof — Adaptable

— Inadvertence-proof — Simple

— Tamper-proof — Endurable

— Easily taught — User-friendly

— Easily learned — Versatile

— Tolerant of variation — Durable

— Forgiving — Rugged

— Resilient — Sustainable

¦ Accomplish these through systemic changes, not through

exhortations and slogans.

11. Standardize recurring Gemba tasks when the important factors

are controllable.

¦ See the next section, ”Standardization.”

12. Address out-of-control factors in the Gemba.

¦ Give priority to the negative effects of these uncontrollable


¦ Study the patterns of out-of-control-ness: When? Where?

Under what circumstances?

¦ Determine the systemic causes of the factor that is out of


¦ Redesign the system or process to eliminate the cause,

avoid its impact, or at least reduce the likelihood of its occurrence.


Eliminating Waste in the Gemba

This case is based on real improvement efforts that took place at a mid-sized manufacturing


Before the streamlining

¦ A fairly typical manufacturing and assembly layout. The entire operation was housed in

two buildings.

¦ The main assembly area was long (150 ft.) with several long stretches when the product

was moving from one station to another while no work was being done on it during

the transition.

¦ Large stacks of inventory

— Parts waiting to be supplied to assemblers

— Parts standing near the assemblers

— Parts waiting to be supplied to manufacturers

— Parts standing near the manufacturers

— Finished products waiting for orders and shipment

After the streamlining

¦ All operations were moved into one facility. This was done by reducing movement distances,

compacting operations, and dramatically reducing inventory and the space needed

to store it.

¦ Main assembly line was reduced in length to one-fifth its previous span. Empty transitional

space was eliminated (on the first day of the effort). Inventory was removed from

the line area. Subassembly loops were created in compact work areas adjacent to the

main assembly line.

The flow of work

This took several months, but manufacturing, subassembly, and main assembly became so

synchronized that there were no accumulations of parts or subassemblies waiting to move forward.

Everything was a smooth flow—just-in-time.


The smooth flow allowed a dramatic reduction of inventory. The smooth flow extended

backward to the suppliers who provided a slower, steadier flow of materials and parts on an asneeded,

just-in-time basis.

Time cycles and product inventory

The time cycles and pace of work were adjusted to reflect orders from the customers.

The time cycles for manufacturing and assembly were reduced so that production could be

more immediately responsive to requests from the customers. Instead of “pushing” the product

through to the warehouse where it sat and waited for orders, the operations managers

could reduce the finished-product inventory and extend the notion of smooth flow directly to

the customers. Now, customer demand “pulls” products through the system with less waiting

and need for storage. “We make our products just-in-time, not just-in-case,” said one manager.

(Continued on page 114.)

Getting the Daily Work Done

Before the streamlining





Sub-assembly areas

EndStartMain assembly line: Approximately 150 feet in length











Parts inventory

Warehouse and shipping areaShipping


Transit passage

#1 #2 #3

#4 #5 #6

Manufacturing facility

Materials and parts inventory Receiving


Building A

Building B











Stacked 3 pallets high (approximately 18 feet)

Stretched out to approximately 150 feet in length

Stacked 2 deep (approximately 10 feet)


(Continued from page 112.)

Staging areas

The Gemba operators don’t fetch parts. Each operator in the main assembly area, subassembly

areas, and manufacturing areas have staging tables. These tables are designed with silhouette

outlines of each part needed for that assembly operation. The operator has ready access

to one complete set of parts. When that set of parts is used—when a cycle has been complet-

ed—a new set of parts replaces it on a just-in-time basis. This replacement task is done by a highly

mobile parts coordinator. (The Japanese name for this role is “water spider.”) The role of parts

coordinator is filled only by very experienced and knowledgeable former operators. The work of

the operators and assemblers, therefore, is not disrupted. The flow is unbroken.


The replacement of materials and tools reflects efficient, safe movement. Before, for instance,

an assembler needed to walk back and forth to a bench to pick up a drill when needed.

After streamlining, the drill and other such tools were hung in holsters or slings attached to the

line platform, inches from the operator’s hand. One of the operators said to me, “I do less work

now and get more done!”

This example is a composite of three improvement efforts I have either been part of or

witnessed. Such streamlining took several months of intense effort, though some streamlining

was accomplished in the first day. The methods used are based on the approaches of the Kaizen


You will note that in the example described above, the following types of waste were addressed:

¦ Overproduction

¦ Excess inventory

¦ Waiting

 Unnecessary motion

(See Bohman, 1992.)

13. Make changes in the Gemba to increase throughput.

¦ Study ways to improve the capacity of the Gemba and increase

its capability to do Gemba work.

¦ Increase the capacity of the core resources and key participants.

¦ Eliminate pauses and bottlenecks.

¦ Off-load non-Gemba tasks to non-Gemba personnel, freeing

up the time of the Gemba’s key players to do the critical


¦ A word of caution: If the Gemba work is flowing efficiently,

you must work to avoid a bottleneck in the steps

immediately following.

Getting the Daily Work Done

After the streamlining

#2#1 #3 #4 #5 #6




Building B



Main assembly 35 feet

Q R S T U VSub-assembly




Start of main

assembly Finish




Shipment warehouseParts inventory

50 feet x 10 feet x 5 feet


table =

Vacated and rented

Building A


Quick Response

Some comments from Rajan Suri, Director of the Center for Quick

Response Manufacturing at the University of Wisconsin–Madison.

One of the biggest competitive edges a company can have is speed in

the delivery of their products. Companies that are not able to do this

will lose market share.

If you want to be efficient, you should have 10 to 15 percent idle capacity

so you don’t have a big backlog and can serve (your customers)


Reported in the Wisconsin State Journal, December 1, 1996.

14. Identify the key process indicators of the Gemba and routinely

monitor them.

¦ Learn what the Gemba’s “vital signs” are. Record the data

in an appropriate manner and analyze and interpret the

data appropriately.

¦ Get help from someone well versed in statistical applications.

¦ Create systems for collecting, recording, and analyzing

the data. (Chapter 7 examines some of these issues.)

15. Maintain continual education and training for the Gemba.

¦ Use multiple modes and means to assure that people

learn what needs to be learned.

¦ If you must err, err on the side of too much education,

training, and communication.

¦ Devise ways to educate, train, and communicate that are

both effective and minimally disruptive of the Gemba

and its work.

16. Make the Gemba “hum” with communication.

¦ Successful projects and teams have continual communication

within the group and between the group and its

surrounding systems.

¦ Communication must be through varied modes and

media. Ask, “What must be communicated to whom and

how do they best learn?”

¦ Let the Gemba “hum” with communication and “blossom”

with visual displays of work and progress.

Getting the Daily Work Done

17. Develop in the Gemba the reflexes, habits, and processes for continual


¦ PDSA is a continual cycle of planning, doing, studying, and

acting (see Chapter 2). It builds forgiveness and learning

into things gone wrong. We cannot guarantee that we

will never make a mistake. We can, however, guarantee

that we will learn from our mistakes.

¦ With PDSA there is no failure. Mistakes are an opportunity

to learn. Mistakes are what we discover when we study.

Then we react, and adjust the process in response to what

we have learned. We can then act, provided we have sufficient

data to know what response is appropriate. The

data we gather, the studying we do, and the adjustments

we make allow us to prepare more effectively for planning

the next cycle.

¦ In the Gemba, we learn to continually study the key indicators

of the process (KPIs) and the key quality characteristics

(KQCs), attributes of the products and services

important to our customers. We use this data to learn

how to adjust the process without tampering with it

(Deming 1994, Chapter 9).

Komatsu: Foolproofization

One of the Deming award companies we visited in 1985 was Komatsu,

a heavy-equipment manufacturer. In their Awazu plant we saw examples

of error-proofing. For instance, a unit moving through an assembly

area has a credit-card-size mag card attached to it. Programmed into the

mag card are instructions to the various tools and equipment on the assembly


At one station the worker tightens bolts with an impact wrench. Before

doing the task the worker inserts the mag card into the machine that

controls the equipment. This programs the equipment so that the bolts are

automatically tightened to the proper torque—neither too tight nor too

loose. The equipment also counts the bolts as they are tightened, notifying

an operator who tries to forward the assembly with a missing bolt.

Komatsu identified the most common mistakes in their process and

built error-proofing into their methods when possible.


Pete Gillespie’s Barber Chair

One of my manager heroes was Pete Gillespie. Pete

was president and CEO of a Chicago paper merchan


Process Capability

By using data, particularly control charts, you can see the current

performance of the system and whether the variation is common

cause or special cause. You can discover some of the patterns

that affect cycle time. From this you can devise strategies to deal

with the problems at their source and look forward to reducing the

cycle time.


A forecast is a prediction based on an understanding of two factors:

¦ Theory. The data on cycle time can help lead to theories on

why the cycle takes as long as it does. This will lead to theories

on how to improve it.

¦ Data. In this case the data can prove or disprove your theories.

The combination of legitimate data and confirmed theories may

allow you to make realistic forecasts—not guesses, not hunches, but

data-based and theory-based projections of future performance.

In the case of our cycle time project, we may be able to forecast

that by getting rid of the special causes, we can bring our aver

Giving Meaning, Purpose, Direction, and Focus to Work

age down to 4.94 days. To make a more optimistic forecast would

require a knowledge of specific methods of improvement that

would allow us to realistically calculate a better turnaround time.

Management is prediction. Prediction requires, among other

things, an understanding of your current capabilities and a theory on

how to improve.

Daily Work versus Breakthrough Improvement

Customer service

The difference between daily work and breakthrough improvement


can be seen in Figures 5-2 and 5-3. In Figure 5-2 we see the 12-month

history of output for an organization. This is described here in terms

of only one indicator, customer service visits, shown in their cumulative

amount. This same kind of graph could be used to picture products

manufactured, sales, caseloads, or any other key indicator of an

organization’s work.

Figure 5-2 describes the current capability of the system regarding

this particular indicator. If various factors inside and outside the

organization remain stable—an unlikely occurrence—then the capability

of the system will stay the same. Figure 5-3 takes that data and

adds to it.














Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

31 28 31 30 31 30 31 31 3031 30 31

Yearly total: 595

Average per month: 49.6

Figure 5-2. Cumulative number of customer service visits.

Depicted in Figure 5-3 is a projected improvement, a level of

output beyond the capability of the current system. Figure 5-3

highlights the need for two distinct management systems, not nec




Year total: 850Average per month: 70The current system:

Managing daily work

The desired



Managing70 breakthrough






Customer service












Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

31 28 31 30 31 30 31 31 3031 30 31

Figure 5-3. The desired capacity of our system of customer service visits.

essarily different management personnel but two different sets of

functions, roles, processes, and methods needed by the managers.

One is managing daily work. This was addressed in Chapter 4. The

second management system is managing breakthrough improvement,

the focus of this chapter and Chapter 6.

Breakthrough improvement involves a system of interventions.

Earlier we stated that without a system, it is impossible to change.

This chapter and the following chapter focus on the systems needed

for breakthrough improvement.


Directionlessness and purposelessness start at the top. If your people

have no sense of mission, purpose, values, or focus it is because the

leaders either lack these or inadequately communicate them. Another

reason that the workforce has no sense of direction and purpose is

the inconstancy of management: too many directions, the program

du jour, the latest BOHICA.

I know a company that one year focused on high-performance

management. The results were disappointing, so two years later the

push was high-performance organization. In neither case was the purpose

clear. It was a buzzword, fluff on the outside with no content on the

inside. This is what happens when marketing infiltrates management.

Giving Meaning, Purpose, Direction, and Focus to Work

what I ended up with:

Why Arent Our Middle Managers Leading?

I was part of a team of consultants working with a Fortune 500 company. We had worked with

them for over a year: lots of training, lots of planning sessions. The managers seemed to know and

understand everything they needed to know and understand. But not much change was occurring.

Why? While we were discussing this, I was doodling. The doodle almost began to draw itself. This is

We were working with division vice presidents, mostly one or two levels down from the CEO,

COO, and the Chairman of the Board. The ambivalence was in this top group. Until they made up

their minds and chose which path to take, the rest of the organization would wait.

Change versus Improvement

Leaders are faced with complex challenges when they look at change.

Some of the issues related to change are:

1. Is this change a fact of life?

Is this change part of the inexorable sweep of nature, economics,

science, technology, or political forces over which

no one has control? Is this a change that, for better or worse,

will happen with us or without us? Some examples:

¦ Trying to keep up with the changes in communications

and computer technology.

¦ Adjusting to the demographic impact of the baby boomer

bulge that works through the population.

¦ The challenge of dealing with a deteriorating environment

and diminishing natural resources.


Rapid Technology

Figure 5-4 pictures an example of technological change shaping the

lives of people and businesses. For most of human history, from the time

when humans learned to tame animals until about 1830, the speed of

human transportation was limited by the speed of a horse, a little over 40

mph. Then, beginning in the mid-1980s, technological advances allowed us

to travel at ever-increasing speeds.

Figure 5-4 shows not only the rate of travel but also the rate of

change. The implications that this explosion of rapid change has for learning

have been discussed in Chapter 2. The speed of change is given an insightful

review by Stafford Beer in Brain of the Firm. I have adapted some of

his ideas here.

The exponential curve of the speed of human transportation













2000Miles per hour2500























Speed of a galloping horse: 43 MPH

Speed of sound: 758 MPH

Fastest prop

plane: 600 MPH

Wright Bros.

airplane: 34 MPH

Steam powered

trains: 126


First autos

39 MPH

Fastest jet airplane:

2193 MPH

Fastest rocket

powered airplane:

4534 MPH

Nuclear powered

space craft:

32,000 MPH

“Bullet trains”:

300 MPH

Fastest jet-powered

automobile: 740 MPH

October 1947

Chuck Yaeger

This graphic describes only what has happened to the speed of transportation.

Add to that all the other rapid transformationin communications

technology, medical practice, etc.and we can quickly see why the

scope, scale, and speed of change are beyond the current capabilities of our

contemporary organizations and conventional approaches to leadership.

Figure 5-4. The speed of human transportation.

Giving Meaning, Purpose, Direction, and Focus to Work

2. Is this a change over which we have any control?

¦ Are there optional responses?

¦ Is one alternative to simply opt out?

3. Is this a mere change or is it an improvement?

¦ My observation is that 95 percent of most organizational

changes initiated by managers have nothing to do with


¦ How do we know the difference between a mere change

and an improvement?

¦ Who is better off because of this change? Why? How will

we measure “better off”?

4. What is the purpose of the change?

¦ If the change is a solution, what is the problem? What are

the causes of the problem? Is there a connection between

our proposed change (solution) and the discernible causes

of the problem?

5. What scale and scope of change are necessary, sufficient, desirable,

or inevitable?

¦ Changing the entire organization: its purpose, outputs,

systems, processes, functions, roles, and structure?

¦ What parts of the organization will be directly affected,

and how will this have indirect impact on the rest of the


From Purpose to Structure: What Gets

Changed and Why?

Let’s look more closely at the scale and scope of an organization and,

therefore, the possible changes that might take place in an organization.

Figure 5-5 displays a sequence of organizational concepts and

dynamics that shape and are shaped by each other. It is a blank-slate

organizational model, indicating the likely sequence in which one

might design an organization from scratch.

Some comments on this model:

1. Purpose: Without a clear and constant purpose, nothing else

will fall into place. (See Chapter 3.)

2. Systems: The notion of systems includes all the elements of

the SIPOC model: supplier, input, process, output, and customer.

(See Chapter 3.)


3. Functions: Functions is not synonymous with jobs. Some jobs

consist of several functions and some functions require several

jobs. Function is a discrete category of tasks: invoicing,

order entry, assembly, quality control, etc. Here we try to describe

the system by identifying the sequences of interdependent


4. Capabilities: In order to perform the functions, you need certain

capabilities, some of which are equipment driven (e.g.,

a computer or construction equipment), others that are personnel

driven (e.g., cooking, programming, sales, etc.), and

some that may be either one or both (e.g., welding, mailing,

etc.). These are still not yet jobs, but the capabilities around

which jobs must be formed.

5. Roles/jobs: Here we describe the positions, roles, or jobs we

create in order to distribute the needed capabilities in a way

suitable for performing the functions. Some jobs require several

capabilities and some require only one. Some roles are

involved in many functions, some in only one.

6. Structure: The purpose, systems, functions, capabilities, and

jobs must now be integrated and supported. The structure

does not precede these but rather is designed specifically to

make them work: Form follows function. Structure involves:

 Reporting relationships

 Pathways for formal communication

 Divisions, departments, groups


 Ongoing teams

 Modes of management and leadership

7. Personnel: Whom will you select to work with you?

 Whom will you recruit?

 Whom will you hire?

 Whom will you promote?

 Whom will you fire?

What Gets Changed and Why

When someone proposes a change in the organization, use Figure 5-5

to locate where in this scheme the proposed change will take place

and ask, “Why?” and “Why there?”

Giving Meaning, Purpose, Direction, and Focus to Work





7. Personnel

Who gets recruited, hired or


Who gets fired, yed off or



1. Purpose

Should be elevating and


Should be altruistic; focused on

serving others on the outside.

6. Structure

Policies, rules, communications

and reporting relationships.

The form of collaboration,

leadership, subordination, types

of assemblies, groups and teams.


5. Roles/ob

Functions and needed personal

capabilities aggregated intoor positions.


4. Capabilities

Equipment, machines and the

attendant skills, knowledge,

experience insights and know-how

needed to lead and maintain each



3. Functions

Discrete categories of tasks (e.g.,

budgeting, training, welding,

packaging, etc.) which are needed

to make the system function.


2. Systems

The organization of the work. The

interdependent sequence of

activities, events, processes, other

factors and conditions that will

result in the achievement of the

desired purpose.







Figure 5-5. From purpose to personnel: A model for organizational development.


¦ If the purpose changes, then everything else must necessarily


¦ Nothing will improve by changing the structure or the personnel

(for instance, setting up new teams, firing a manager,

or altering who reports to whom) if the problem lies elsewhere.

A new organizational structure will not ordinarily improve

a dysfunctional system or an ineffective purpose.

¦ America’s knee-jerk reaction to organizational problems is to

change the personnel or change the structure. George Steinbrenner

fired Billy Martin as manager of the Yankees. Then he

fired Billy’s replacement and rehired Billy. Then fired Billy.

Then rehired Billy. Were these changes or improvements? And

why did Mr. Steinbrenner believe that working at the level of

personnel was what was needed to improve the team?

¦ Sometimes bringing in a new manager does bring in new capabilities

and provides an occasion for the reexamination of

purpose, systems, functions, capabilities, roles, and struc-

tures—a more systemic view of the organization. If those who

fired and hired managers themselves had a more systemic

view of the organization, they could better decide when and

why to replace management personnel and what to look for

in new leadership. Unfortunately, all too often there is no systems

view. A changeover in management occurs, but the same

old problems continue under the new regime.


A shared vision is the glue that holds people together and keeps

them moving forward despite adversities. An elevating purpose gives

a greater meaning to work and turns menial tasks into a tedious but

necessary part of important work. “The assembly worker on the line

in this plant is not just finessing a door, he’s building a car,” one

plant manager said to me. “And we make sure our people know and

see and meet and talk to our customers, the people out there who

will own this car, use it, and depend on it. So he’s not just finessing

a door, not even just building a car. He’s serving the transportation

needs of people.” This plant had routine programs whereby the

plant personnel went out to dealers and met customers on the showroom

floor and back in the service area, learning to look at their

products through the customers’ eyes. This plant also had customers

receive delivery of their cars there in the plant at a ceremony attended

by the plant personnel.

Giving Meaning, Purpose, Direction, and Focus to Work

Peter Senge said (1990, p. 206), “A shared vision is not an idea….

It is rather a force in people’s hearts, a force of impressive power.” It

fills, in Senge’s words, “… their desire to be connected in an important


Purpose, Vision, Mission

I know of people who vigorously insist on the differences between purpose,

vision, and mission, and how statements presenting each must

be approached in distinctly different ways. Maybe so. However, in my

experience, organizations have used these interchangeably with no

harmful effects.

What is important, I think, is that companies find ways to say to

themselves and to the world around them, “This is who we are, this

is what we do, and this is where we are headed.” The short statements

are easier to remember. The longer statements can elaborate on the

slogan. What is important is the impact on those who hear it; it

should ideally create excitement, learning, focus, boundaries, challenge,

and commitment.

Rallying Cries

Many companies have short phrases that serve to tell the employees

about themselves and their work:

¦ “Komatsu of the world” expands the workers’ vision of the company

and their work.

¦ Toyota: “Cars for the world to love.”

¦ Marshall Fields, the retailer: “Give the lady what she wants.”

¦ Ford: “Quality is job one.”

¦ Herman Miller does not just make fine furniture; it seeks “to be a

gift to the human spirit.”

¦ My own small company, Scholtes Seminars and Consulting, has as

its elevating purpose, “creating pride and joy at work.”

Of course, slogans such as these become hollow if you are not good

at what you do. Sears Roebuck boasted, “Satisfaction guaranteed or your

money cheerfully refunded,” even when customers in its auto service centers

were getting ripped off.

Visions without a method aren’t visions; they are hallucinations.

For some useful insights on this topic, see Collins and Porras (1996).


Unfortunately, most direction-setting statements stir up little

excitement. They are exercises in wordsmithing the obvious: “We

will provide maximum value to our customers!” This is the mission

statement of a major high-tech manufacturer; not exactly a bold,

defining statement.

A Process for Developing


For the developing of a shared vision, there must be a shared process.

But I believe that the initial draft must start at the top of the organization

and then be circulated throughout.

The organization leaders prepare to develop the first draft. In

a retreat setting with a facilitator on hand, the leaders share with

each other their thoughts on the following:

1. What do you like about what you do here?

2. What do you like about our industry or profession?

3. What do like about our company when it’s at its best?

4. What legacy do you want to leave behind—your personal

contribution to this organization?

5. What legacy do you think we, collectively, should leave behind?

Some guidelines for discussing these questions are:

¦ Each leader should speak from the heart.

¦ Take one question at a time, each individual speaking to that

question in round robin fashion.

What Makes a Good Purpose, Mission, Vision,

Values Statement?

¦ It is from the heart.

¦ It is ennobling, appealing to our best instincts.

¦ It says something that applies uniquely to you and is not a generic,

usable-by-anyone statement.

¦ It gives sufficiently clear direction that a year from now you can

discuss, in specific terms, what progress you have made.

¦ It has staying power. It will be an appropriate statement for years

to come.

Giving Meaning, Purpose, Direction, and Focus to Work

¦ No disagreement is allowed, just words of support and understanding

and questions for clarification.

¦ When you have completed going around the group addressing

one question, look for common themes and record them.

Then move on to the next question.

When you have completed the discussion on all the questions,

review what you have said, especially on the common themes. Formulate

a series of statements describing “things that are important to

us.” Circulate this list among your people with a description of where

the list comes from and what you intend to do with it. Ask people in

their work groups to read it, discuss it, ask for clarification, and add

anything that they agree, by consensus, is important to say.

When the group of leaders receives these responses, they use

them to refine their original list of statements. The leaders then discuss

the content of statements of purpose, mission, vision, and values.

The leaders should probably not compose the statements. The writing

would be better off done by one individual given the task of expressing

the thoughts of the leaders. The leaders should then approve the

draft of their direction-setting statements. The draft is then circulated

throughout the organization for feedback and input.

The leaders review the responses from the organization and create

the final version, again through a group process.


There is a difference between teams and teamwork. Teams refers to small

groups of people working together toward some common purpose.

Teamwork refers to an environment in the larger organization that creates

and sustains relationships of trust, support, respect, interdependence,

and collaboration. It is a mistake to confuse the two. It is relatively

easy for a leader to set up teams. But creating and sustaining an

environment of teamwork is vastly more important and enormously

more difficult. A contrary environment will ruin teams (see the quotation

from Petronius Arbiter, p. 79).

Teams aren’t new. Some managers may see the forming of teams as

a major step forward in their organization, but they probably feel the

same way about indoor plumbing. What is new about teams is this:

Teams are systems and are part of a system. Without an understanding of

the systemic contexts within teams and surrounding teams, the potential

of teams will never be realized and they will probably fail.


In Chapter 3 we discussed the interdependence of purpose and

systems. Without a purpose there is no system. There is a similar interdependence

between purpose and teamwork. Without purpose

there is no team, only an aggregate of individuals with no reason to

be together. There is another interdependency between teamwork and

systems. A team with a purpose but no method will end up well-in-

tentioned but unsuccessful, an effective way to undermine teamwork.

This three-way interdependence can be pictured as in Figure 5-6.


That which defines:

Why the work is done

Whether the work is

worth doing

How the work is done

When will we know that

work is successful


The human relationship between

interdependent individuals and

groups who share a common

purpose. Human support and

integrity at a:

Personal level

Group level


Interdependent activities

and events leading

toward specific outcomes

characterized by:






• Inter-group level

• Organizational level

Figure 5-6. The interdependence between purpose, systems, and teamwork.

We depicted in Figure 2-3 how each group is but one system

within larger systems. In Figure 5-7, a different diagram makes a similar

point. The team pictured in Figure 5-7 is probably just one of several

teams in the organization. Each team may have its own purpose

and each purpose may be worthwhile. A common problem I observe

in organizations, however, is a multitude of teams or groups, each

serving its own, presumably worthwhile, purpose, but with nothing

to align them. They may be okay individually but collectively they go

nowhere. (See Figure 5-8.)

Purpose and vision can help align teams, giving a common set of

guiding points of focus. This is pictured in Figure 5-9.

Giving Meaning, Purpose, Direction, and Focus to Work

2. The organization



1. The group






of teamwork



Figure 5-7. Teams and systems.

Figure 5-8. Groups or teams going their separate ways within the organization.



Figure 5-9. Aligning teams using purpose and vision.


This is useful but not enough. Beyond a common purpose and

vision, the various groups and teams within the organization need to

participate in common priorities and an integrated plan of action.

There must be a network of activities linked together to accomplish

something of major importance to the organization and its customers.

This is pictured in Figure 5-10.




and plan

1Figure 5-10. Teams that are aligned and integrated into a common system of improvement.

We refer to this source of integration and alignment of effort that

directs and focuses the whole organization as breakthrough improvement.

We describe it in Chapter 6. First we will examine another factor

commonly associated with change: culture.

Organizational Culture: Perhaps an Oxymoron

Culture is an anthropological word. Culture is what Margaret Mead

learned when studying the mating habits of island tribes. What,

therefore, does someone mean when referring to an organization’s


It is my observation that using the word “culture” often takes

ordinary dysfunctional behavior and elevates it to something ethereal.

“We don’t work in teams. It’s not part of our culture.” When some

behavior is described as culture it is rendered inaccessible and, therefore,

those who are characterized by this behavior need not take responsibility

for it. It is the organizational equivalent of the word


Aside from organizational culture being an excuse for obnoxious

behavior, what might it mean?

What Is Organizational Culture?

If it means anything, culture should describe the day-to-day experience

of the ordinary worker. Culture is what makes the experience

of working at one company different from doing the same work at another

company offering similar services or products.

The organization has often been depicted as an iceberg. In Figure

5-11 we use the iceberg to describe the components of culture.

Giving Meaning, Purpose, Direction, and Focus to Work

Arrested Adolescence and Organizational Culture

I was invited to visit a major production facility of a well-known hightech

manufacturer. One of my first appointments was with the director of

this facility. He was also a senior vice president of the company.

After introductions, I could tell by his silence that he expected me to

initiate the conversation. So I asked him: “You are just beginning to lead this

part of the company into applying the philosophy of quality to its approaches.

How do you expect your job to change as a result of this?”

His response: “I’m not interested in discussing that Western intellectual

bullshit!”Then silence. My question may not have been brilliant, but

it deserved a better response than I got. I honestly cannot recall the rest

of the conversation. Somehow we got through it. I later visited with

friends who worked in this facility and described this incident, commenting

on how rude this facility director was.

“Oh,” my friend responded, “you don’t understand our culture.

That’s how managers treat people here. It’s called ‘constructive confrontation.’”

I would call it arrested dysfunctional adolescent social skills, sometimes

called being a brat! This company calls it culture and declares it something


I later learned that in their catalogue of corporate training programs,

they offered a course in constructive confrontation. “Okay class, now imagine

yourselves to be precocious, spoiled, antisocial, 12-year-old brats….”




The “below-the-

surface” organization

Figure 5-11. The organizational iceberg.


The Apparent Organization

There is the visible, formal, obvious, and officially reported version

of the organization. It consists of the products, services, customer

segments, and markets; the hierarchical structure and chain of command;

the official roles, functions, job descriptions, and accountabilities;

the facilities, equipment, machinery, materials, and supplies; the

official systems, processes, and methods of work; the official policies,

goals, plans, objectives, and standards.

The Below-the-Surface Organization

The informal organization has its unofficial leaders and unwritten

rules. The informal organization is shaped by the styles and values

of its founder and leaders, and by its history—the residual impacts

of past victories and setbacks, old feuds and rivalries. The informal organization

has its own communication channels, its grapevine; it

consists of unofficial networks and cliques. The informal organization

often determines how well-included and respected an employee feels.

Inside the official organization and on its perimeter are various unofficial

yet influential groups, each with its own unofficial, sometimes

unspoken rules of membership. The informal organization makes decisions

that can affect whether or not or how well the official decisions

are implemented.

The hidden, below-the-surface organization is what determines

the average employee’s workplace experience. The hidden organization

creates and, for all practical purposes, constitutes the organization’s culture.

The higher in the organization someone is, the less likely he or she

is to know or understand what the everyday workplace experience is for

the ordinary employee. Even bosses who rose up through the ranks are

unlikely to get it. Therefore, the managers are the least likely to understand

the culture of their organization though they are the ones most

likely to talk about it. Managers may also not appreciate what it takes

to change an organization’s culture. From an employee’s point of view,

culture may be pictured as in Figure 5-12.

As an employee:

¦ I can like my coworkers and the company but dislike my job.

¦ I can like my job and coworkers but dislike the company.

¦ I can like my job and the company but dislike my coworkers.

¦ When I like all three, I am more likely to be energetic, committed,

and motivated to do good work.

There is a connection between culture and change.

¦ Culture often becomes an excuse for not changing.

Giving Meaning, Purpose, Direction, and Focus to Work

How do I feel about my job?

About the work I do?


Competent at it?

Proud of it?

Is it worthwhile?

How do I feel

Do I take joy in it?

about my company?

Valued? Included?

Proud? Loyalty?




How do I feel about my work

group? Teamwork? Loyalty?



Trust? Collaboration?

Figure 5-12. Organizational culture from an employee’s point of view.

¦ Culture takes what is ordinary and explainable and elevates it

to the ethereal and unattainable.

¦ Any time you are tempted to use the word “culture,” substitute

“current behavior” and reflect on how this changes the nature

of what had been seen as culture.



Giving meaning, purpose, direction, and focus to work is the

quintessential leadership role. This responsibility of a leader is

betrayed by fad-dabbling and ego-dancing.

There is a certain noble poetry to work that can be captured in

our statements of vision and purpose. And there can be true esprit

de corps when people rally around a compelling common goal.

These are what leaders must help us achieve and maintain.

There are three levels of direction setting:

¦ First, giving clarity and focus to everyday work. This was

discussed in Chapter 4.

¦ Second, the galvanizing force of a shared vision and

common purpose; the larger, longer view that shapes us and

our future that has been the subject of this chapter.

¦ Third, the hard work of carefully selecting priorities and

planning for their successful accomplishment, which we will

discuss in Chapter 6.


Direction and focus

1. What are your organization’s statements of mission, purpose, vision, or values?

2. Are these unique, or are they generic statements that could fit almost any

organization of your type?

 What is unique?

 What is generic?

3. Are these statements helpful to anyone? If so, to whom and how?

Teamwork and teams

Select one team and answer the following questions with that team in mind.

1. Enter the name of the team.

2. Who established this team?

3. What is the purpose of this team?

4. Who defined its purpose?

5. Describe the problem, need, or opportunity this team was established to


6. Why is this problem, need, or opportunity more important to address than

other possible targets of your team’s effort?


7. What, in general, are you trying to accomplish?

8. Is your team part of a larger effort? If so, describe the larger context and how

your team fits into it.

9. How does your team differentiate between those issues that are appropriate for

your team to address and those that are not?

10. What are the ultimate measures of success for your team?

11. How will you know if you are making progress?

12. How will you know whether you are making a beneficial difference?

13. How will you know that your current project is completed?

14. Where would you place your team on this continuum?

The extent to which your team is autonomous,

having control of its work, authority to

make decisions and control over the

implementation of its decisions.

The extent to which your team is

with some other individual or group having the

ultimate decision and control over its implementation


0 1 2 3 4 5 6 7 8 910

Giving Meaning, Purpose, Direction, and Focus to Work

15. Where on this continuum would the next layer-up of hierarchical

management place your team?

16. Characterize your team:

An aggregate (circle one) A synchronized,

of discoordinated, 12345678 synergistic,

inharmonious collaborative unit


17. Describe what might help move your team farther to the right on the

continuum in Question 16.

Questions on culture

1. What is your organization’s culture:

A. As described by the executives?

B. As described by managers?

C. As described by the hourly workforce?


Ackoff, R. 1996. Report of a presentation October, 1995. Quality Matters, the

newsletter of the Madison Area Quality Improvement Network, IX, 1,


Ackoff, R., and Pourdehnad, J. 1997. The irresponsibility and ineffectiveness

of downsizing. Systems Practice, 10, 1.

Barker, J. 1996. Address to the Association for Quality and Participation’s Annual

Conference in Portland, Oregon.

Cognetics Research Group. 1996. Annual corporate report on job demographics.

Wisconsin State Journal, December 26.

Collins, J., and Porras, J. 1996. Building your company’s vision. Harvard Business

Review, September–October.

Juran, J.M. 1995. Managerial breakthrough. New York: McGraw-Hill.

Juran, J.M. 1988. On planning for quality. New York: The Free Press.

Likert, R. 1967. The human organization. New York: McGraw-Hill.

Lippit, G.L. 1973. Visualizing change. Fairfax, VA: NTL.

Schein, E. 1985. Organizational culture and leadership. San Francisco: Jossey-


Scholtes, P. 1995. Teams in the age of systems. Quality Progress, December.

Senge, P. 1990. The fifth discipline. New York: Doubleday Currency.




Copyright 1998 The McGraw-Hill Companies, Inc. Click Here for Terms of Use.


In Chapter 5 we provided some guidance for getting ready for change:

developing statements of vision, meaning, purpose, direction, and

focus. We also mentioned teams and teamwork as prerequisites for

change and touched upon the notion of an organization’s culture as

perhaps an obstacle or perhaps a useful perspective regarding change.

In Chapter 6 we will talk about change and improvement. The

leader’s job is to know the difference between change and improvement

and to know how to lead improvement.

First we will discuss the seven phases of breakthrough improvement,

then some principles regarding change and resistance to


Effectiveness versus Efficiency

Effectiveness is doing the right thing. Efficiency is doing things right.

Peter Drucker, the great student of management, is credited with this

insightful distinction. Russell Ackoff claims that it is better to do the

right things poorly (inefficient effectiveness) than to do the wrong

things well (efficient ineffectiveness). For example, we are becoming

more and more efficient at building automobiles in a world that is less

and less able to tolerate their existence.

The difference between managing daily work and managing breakthroughs

illustrated in Figures 5-2 and 5-3 is relevant here. Daily work is

focused on achieving greater efficiencies in the production and delivery

of our current products and services. Breakthrough planning may also,

indeed, contribute to more efficient production. But the starting point of

breakthrough management needs to address the question, “Is this the

right thing to do?” This is the point where the issue of effectiveness must

be raised and resolved.

The purpose of this chapter is to help leaders step away from the

day-to-day and ask questions related to broader systems and longer

terms. This is, quintessentially, the leader’s job.


What follows is a model for planning breakthrough improvement. As

George Box has said, “All models are wrong but some are useful.” This

model may not be right for you. It may not be right for anyone! But

if you adapt it to your own situation, it will probably be useful.

Breakthrough Improvement

A Systems Look at Effectiveness:

A New Spin on an Old Cliché

For the lack of a nail, the horseshoe was lost. For the lack of a shoe,

the horse was lost. For the lack of a horse, the rider was lost. For the lack

of a rider, the battle was lost. With the loss of the battle, the war was lost.

By losing the war the tyrant was exiled. And the people found freedom


The moral: Sometimes inefficiency is better than efficiency.

We saw in Figure 5-3 the difference between breakthrough improvement

and improvement in daily work. Breakthrough improvement


¦ Doing what we have never done before (new products, new


¦ Producing at a scale we never imagined achieving (more,

faster, better).

¦ Working well beyond the capabilities and capacities of our

current systems, processes, and methods.

¦ Achieving well beyond what could be accomplished by merely

trying harder or working faster using our current approaches.

¦ Designing a new system.

Here are the seven phases of planning for breakthrough improvement:

1. Step back and see what is going on.

2. Step closer and look at your organization’s current systems

and capabilities.

3. Describe the future, define the ideal.

4. Identify the actions, plan for successful accomplishment,

and select the priorities.

5. Mobilize the resources and begin.

6. Leaders shift from planners to reviewers, from decision makers

to researchers.

7. The organization learns to improve and integrates what has

been learned into future cycles.


Perhaps They Need a Breakthrough Improvement!

Opening a discussion group on the Internet requires approval from

the Internet participants. While anyone with an E-mail address can vote,

generally there are only 200–300 votes whenever someone asks for approval.

Recently, however, someone asked for approval to open a white supremacists’

discussion group. Instead of 300 voters, there were 40,000 voters.

(The proposal lost by a 66 to 1 ratio.)

The volunteer who had offered to count the votes needed several

months to do what ordinarily would take a few hours. His computer, the

address for voting, was at his job. The company’s computer crashed three

times from the volume of traffic. His boss was very accommodating, allowing

the continued use of the office computer after hours.

Someone commenting on the Internet discussion group voting

process admitted, “I think we have to come up with a better way!”

We will explore the phases one at a time. For each phase it is important

to get a sense of the whole, rather than getting caught up

right away in the details.

Phase 1. Step Back and See What Is Going On.

Here we describe not a single event, but ongoing information systems

that continually provide data. These data are brought together for various

reasons at various times. We describe the convergence of data at the

onset of the breakthrough planning process. When the planning process

is completed, however, the data-gathering systems continue. Some of the

types of converging data are shown in Figure 6-1.





Our purpose,


vision, and






Data on



Social and



Emerging and

converging trends

(longer term, wider


Public safety, health

& environmental data

Figure 6-1. Types of converging data.

Breakthrough Improvement

Each area of data gathering represents a system

put in place to routinely monitor the trends important

to the organization. Each organization selects what

types of data are important for it to monitor. This will

obviously vary depending on the purpose, mission, vision,

and values of the organization. One of the important

leadership roles is to be the visionary: to step

away from the everyday urgencies and take the longer,

broader view, using data in that search.

Our Purpose, Mission, Vision, and Values

¦ What progress have we made on these?

¦ Are events and trends emerging in other areas suggesting

any reconsideration of these direction-setting statements?

Market Data

¦ The market is the entire world in which your products, services,

and capabilities are offered. Some of the market consists

of those who are currently your customers. Most of the

market does not consist of your customers.

¦ What do you know about:

— Those in the market who are not your customers? Those

who are:

-Working with your competitors

-Finding a way to get along without what you or your

competitors provide

-Unaware of what you or your competitors can provide

— Former customers? Why they left, where they went?

— Our could-be-but-never-were customers?

Shifts in Mission

In 1995, The Association for Quality and Participation changed its

mission to include communities as a target for AQP’s services.

In 1997, The board of The American Society for Quality Control announced

the change of the name of the organization to The American Society

for Quality, thus recognizing the broader focus already occurring in



Baby Boomers

In 1945, World War II ended, and nine months after the troops returned

home, we began to experience a huge bulge in the population (so

to speak).

At the beginning of 1996, baby boomers began turning 50 at the rate

of one every seven seconds. All sorts of agencies and businesses have had

to consider this demographic phenomenon when planning to serve the

boomer population.

In New Zealand, morticians have been planning for the onslaught of

what they call the “body boomers.”

— Benchmark data: What can your competitors provide that

you can’t (more, better, faster, smaller, cheaper, more userfriendly,


¦ Without understanding both your customers and the market,

you will have difficulty identifying breakthroughs and priorities.

¦ An innovation (what Kano would call “delight characteristics”)

is almost never suggested by customers. But awareness

of customers and their experiences can suggest these types of

breakthroughs to the creative leader.

Current Customers

¦ Any discernible shifts in numbers? Type or segment? Demographic


¦ See also the more immediate customer data listed in Phase 2.

Data on Emerging Technology

¦ What new technology is already out there?

¦ What characteristics could be designed into not-yet-developed

technology that would give you an advantage (or disadvantage

if your competitors had it)?

Social and Demographic Data

¦ How are society and the population changing?

¦ What can be reasonably projected for 5, 10, or 20 years from


Breakthrough Improvement

Public Safety, Health, and Environmental Data

¦ What is the predictable availability of natural resources that

are necessary for your products or services?

¦ What safety, health, and environmental damage do you, or

could you, cause?

¦ What are the current and reasonably predictable safety,

health, or environmental regulations that affect, or could affect,


¦ What must you do to take care of safety, health, and the environment

responsibly and in a timely way, preventing damage

rather than doing crisis intervention?

Political Data

¦ What is happening in local, state, national, or international

politics that will have an impact on your suppliers, processes,

economics, and markets?

¦ How can you best monitor those national or international

problems and trouble spots that will affect your work?

¦ Where are problems being resolved and stability restored?

Where can you look for new opportunities?

Economic Data

¦ What are the patterns and trends of economic distribution on

a local, national, and international level?

¦ How will these patterns and trends affect your business?

¦ What values and responsibilities will you take on regarding

fair salaries and wages?

¦ How will you differentiate between common cause variation

and special cause variation in observing and analyzing events

in the stock market? In corporate financial performance? In

supply, demand, and price fluctuations?

This, of course, is a sample list. Not all will apply to you and

other indicators will apply that are not listed here. The important

points are these:

¦ Select the data to monitor and the indicators to watch that are

most important to your needs as an organization.

¦ Treat your list of indicators not as an agenda of discussion topics,

but as a list of ongoing data-gathering and analyzing systems.


Phase 2. Step Closer and Look at Your Organization’s

Current Systems and Capabilities.

Figure 6-2 shows some of the types of internal data to monitor and analyze.

These, too, should be seen as ongoing systems for gathering data,

not simply discussion topics.





Data on



system data

Other stakeholder


Last year’s

plan and




Emerging and

converging trends

(closer to daily


Figure 6-2. Types of internal, daily-work data to analyze.

In Chapter 7 we will explore the issue of measurement in greater

detail. Here we look briefly at each type of data.

Customer Data

Some of this data will dovetail with customer data described in

Phase 1. The difference is this: Phase 1 customer data looks at longerterm

trends. Here we look at more immediate trends. Phase 1 looks at

the longer-term future of the market. Here we look at what is happening

now with our current customers.

¦ Using the Kano Model (Figure 3-6), explore the following with

your current customers.

— What are the basics, and how well are you doing on them?

— What are the performance-related characteristics, and how

are you doing on them?

— What more can you do?

— What are or could be the delight characteristics? How are

you doing? What more can you do?

¦ What is the frequency of customer complaints, and what are

the patterns? (See the sidebar “What to Do with Customer

Complaints” in Chapter 7.)

Breakthrough Improvement

¦ What have you learned from focus groups and customer surveys?

¦ How successfully did you predict and anticipate customerrelated

trends in past years?

Process/Systems Data

¦ Which major processes are in statistical control; which are


¦ Which processes are in control with a range and average acceptable

to your customers? (See Chapter 2.)

¦ How well have you done at bringing into control those

processes that were out of control last year?

¦ Which major processes are standardized, and which are not?

(See Chapter 4.)

¦ What data do you have on conformance to the key quality

characteristics identified by your customers? (See Chapters 3

and 4.)


What data do we have on any of the following? (See Chapter 4.)

¦ Waste  Cycle times

¦ Scrap  Output capacity

¦ Rework  Inventory

¦ Remedial activities  Work in process

¦ Breakdowns  Bottlenecks

¦ Administrative mistakes, omissions, and errors

¦ Key financial data (profit and loss, cash flow, budgeted or

forecast costs or revenue versus actual, etc.)

Employee Data

¦ What do your people tell you regarding the workability of

your systems and process?

¦ What gets in the way of people doing work they can be proud


¦ What gets in the way of joy in their work?

¦ What data do you have on employee turnover? Why do people


¦ What data do you have on the frequency and patterns of



¦ On a day-to-day basis, how are you doing with regard to employee

safety and health?

¦ What data do you have on hiring and promotion? How many

applications? How many candidates with ideal capabilities?

What are the patterns regarding insufficient capabilities?

Supplier Data

¦ How well are suppliers meeting your key quality characteristics?

¦ What trends are likely to affect their service to you?

¦ What data do you have showing which of the suppliers’ systems

or processes are in control and which are not?

Data on Other Stakeholders

This is a miscellaneous category that includes data from such

sources of input as:

¦ Unions

¦ Stockholders, stock analysts

¦ Regulatory or licensing agencies

¦ Bankers

¦ Neighbors of your facilities, the communities in which you

are located

Last Year’s Plan and Breakthrough Priorities

¦ What did you learn from last year’s planning process that you

can incorporate in this year’s planning process?

¦ How well did you do on last year’s priorities? Are any waiting

to be completed?

Sorting Out the Data

The data reviewed in Phases 1 and 2 of breakthrough improvement

will provide many clues and signals of possible directions. But it will

be somewhat chaotic. The data will need to be sifted and winnowed.

There are various tools and approaches for this sorting-out process.

Many of these are described in The Memory Jogger Plus (Brassard, 1989). In

particular, the affinity diagram (p. 17 ff.) and the interrelationship diagraph,

also called the relations diagram (p. 39 ff.), are useful. These approaches

will help create some order out of the chaos.

Breakthrough Improvement

In their classic work, The New Rational Manager, Charles Kepner

and Benjamin Tregoe (1981) explore various ways to analyze problems

(Chapters 1 and 2) and analyze decisions (Chapters 3 and 4). Kepner

and Tregoe’s work represents a synthesis of problem-solving and deci-

sion-making methodology as it existed prior to the approaches taught

us by Deming, Ishikawa, and others. Kepner and Tregoe’s work can be

judiciously combined with the work of those engaged in the Quality

Movement and become a powerful way to plan, make decisions, and

solve problems.

Some Guidelines for Sifting and Winnowing

Look for Confirmation of Your Strengths.

¦ What you are good at?

¦ What you are known for?

¦ Where and with whom do you have the greatest acceptance?

¦ What capabilities have you mastered?

Look for Indications of Your Vulnerabilities.

¦ Where are you losing your competitive edge?

¦ Which trends and technological developments may overtake


¦ Which financial truths and economic trends may leave you


Look for Opportunities.

¦ Look for the likely unfolding of events that will put you in a

unique position to capture the market and the technology.

¦ Look for new directions and new capabilities you can offer the

market that take advantage of your expertise and unique resources.

Look for Urgencies.

¦ Problems that may well develop into crises.

¦ Problems that could spread, affecting other parts of the organization.

¦ Opportunities that may soon disappear and never pass this

way again.



of “”










Employee Participation in Breakthrough Improvement

When the priorities are announced at the end of Phase 3, and the

plan is shared at the end of Phase 4, they should come as a surprise to no


As the process unfolds, there should be continual sharing with employees,

input and feedback from them, and involvement by them in the





training, etc.,


(data, tentative


priorities and

plans, etc.)









directed input,

feedback, data,


of details and

local specifics

to what was

general and



Figure 6-3. Rensis Likerts linchpin model may be a useful approach to

developing pathways of participation.

Look for Antecedents That Lead to Consequences.

¦ What are the causes of the problems? What are the causes of

the causes?

¦ What are the barriers to progress?

¦ What are the systemic conditions or factors that allow this

problem to exist?

¦ What unmet needs stand in the way of resolving other problems?

In All of This, Use Data: Not Opinions, Not Guesswork, Not

Bombast or Passionate Rhetoric … Data!

Breakthrough Improvement

Phase 3. Describe the Future, Define the Ideal.

By the end of Phase 2 you should have an initial sense of the emerging

themes. With this awareness as a framework and background, leaders can

begin a process of reconceiving reality. Breakthrough planning requires us

to let go of our old assumptions, easier said than done.

In Creating the Corporate Future, Russell Ackoff (1981) offers some

help with what he calls idealized design (pp. 104–125). The following

is an adaptation of his work.

Define the Future Using Idealized Design

1. Assume that your products, services, systems, and processes have

just been destroyed. They no longer exist. You cannot re-create

them. You have left only your organization’s purpose and

your people’s knowledge, experience, and imagination.

2. Your challenge is to replace what was destroyed with new products,

services, systems, and processes; not to rebuild the old but

to start from scratch and begin anew. What was there is gone


3. As part of idealized design, ask the following questions about

the products, services, systems, or processes that were just


¦ What was their purpose?

¦ What capabilities did our customers acquire as a result of

these products or services?

¦ Is this purpose and are these capabilities worth preserving

in the new design?

¦ What new purpose or capabilities would be important to


4. You are completely free to redesign the product, service, systems,

or processes within the following restraints:

¦ What you do must be technologically feasible. You may

need to use known technology to invent new things, but

no science fiction.

For example: Sony used technology that Texas Instruments

had developed for use in hearing aids and applied

it to radios—the dawning of the age of transistor radios.

¦ It must be operationally workable in the present environment.

Once developed, the new technology must be able

to function as intended and survive.

¦ Assume there are no regulations to prevent you from going

forward. However, consider alternative ways to fulfill the

legitimate intent and spirit of the regulations.


Define the Ideal

If we can pull it off, here is what we want:

1. The following new network of products: __________________

 Providing these capabilities ____________________________

 With these characteristics and attributes ________________

2. The following new network of services: ___________________

 Providing these capabilities ____________________________

 With these characteristics and attributes ________________

3. The following new systems and processes: ________________

 Providing these capabilities ____________________________

 With these characteristics and attributes ________________

4. Our ideal is responsive to the following data that we obtained

and reviewed in Phases 1 and 2: ___________________

5. Here is how our customers will benefit from these new products,

services, systems, or processes: ______________________

Phase 4. Identify the Actions, Plan for Successful

Accomplishment, and Select the Priorities.

At this point we have looked at the current situation (Phases 1 and 2)

and defined an idealized future (Phase 3). Now we ask what we must

do to achieve our idealized future. We also need to identify the priorities

for implementing those activities. The most important question

to ask at the start of Phase 4—and to ask repeatedly—is, “What will be

necessary to successfully accomplish our goal, our idealized future?”

Breakthrough Improvement

Breakthrough Improvement versus

Management by Objectives

A goal without a method is cruel!—W. Edwards Deming

It is in Phase 4 that breakthrough improvement parts company with

MBO. MBO is more or less a wish list, not much different from what we

did as kids getting ready for Christmas or a birthday. “Here are my wishes,”

the boss says. “Now you are accountable for making them come true.”

This takes no brains. It is not leadership. This represents the avoidance

of thinking and the abdication of leadership.

Figure 6-4 shows a tool and a way of thinking. The tool is called a tree

diagram. (See Brassard, 1989, p. 71 ff.) It is a way of thinking through

the conversion of goals into actions.


A carefully


• Actions

• Initiatives

• Interventions

• Projects

• New systems

• New processes

• New methods

Each of which is

necessary and all of

which are sufficient

to achieve the


Sub-Sub-sub Etc.

goals goals until:

Figure 6-4. A tree diagram describing the conversion of a goal to activities.

When we first ask, “What will it take to successfully accomplish

this?” we will undoubtedly end up with a list of subordinate goals. For

each subgoal, we repeat the “What will it take” question, perhaps continuing

through further sequences of subordinate goals and “What

will it take …” questions. Eventually the answer to “What will it take

…” will be lists of actions.


The Systems Side of Change

Usually whatever we propose to change is part of a larger system. It

is important, therefore, to look at the systemic implications of any proposed

change. Here are some questions to explore:

¦ What purpose is currently served or desirable benefit acquired by

the process or method we propose to change?

¦ How does whatever it is we propose to change fit in? What larger

systems or processes does it support or feed into? What smaller

processes or methods fit into it?

¦ How can the desirable output and benefits of this process continue

without the continued existence of this process?

¦ What should we monitor to assure that we are sustaining the benefits

of the old process without suffering its shortcomings?

There are two tests for the items in the tree diagram:

1. Is each item necessary? Don’t pursue a subgoal or undertake

an activity that isn’t necessary in order to accomplish the

larger, carefully selected goal.

2. Are all the items sufficient? Should subgoals or activities be

added to make the network of goals and activities sufficient

to accomplish the larger goal?

Some of the items on the list of actions may require a team to accomplish,

some a natural work group, some a cross-functional team, some

an ongoing team, some an ad hoc team especially formed for this project.

Other items on the action list won’t require a team at all, but can

be undertaken by one person acting alone, sometimes with a single

stroke of a pen. The nature of the task on the list of actions will indicate

the structure appropriate for the effort: team or no team? Who

should be involved? The old architectural adage, form follows function,

applies here also.

Select the Priorities

Having defined the idealized future and translated these ambitious

goals into actions, we must decide where to start: What gets

done first and which parts get put off until later? What makes one set

of actions more important than another? Here are some criteria. Pre

Breakthrough Improvement

viously we used these criteria to sift and winnow the data and indicators

of possible goals or themes for breakthrough improvement. Here

we use the same criteria to organize our action steps into an appropriate


1. Builds on our strengths.

2. Protects us from our vulnerabilities.

3. Provides us with a compelling opportunity.

4. There is an urgent need to respond.

5. Antecedents and consequences: One action is necessary before

others can begin.

One tool to help sort out priorities is the matrix diagram shown

in Figure 6-5. For more on this tool, see Brassard (1989, p. 97 ff.).

Criteria for selection

Builds on








antecedent CommentsSub-goals

and actions

List the

items from

the tree


Use both the



of goals and

the action

list items



Figure 6-5. Matrix diagram.

Two other tools useful for displaying chronological interdependence

are the PERT chart and the GANTT chart, shown in Figures 6-6

and 6-7.


















R Completion










9 4 7


1 8 2 2







2 7


The number with the arrow represents

the estimated number of days elapsed

between completed activities






Figure 6-6. In this PERT chart, the critical path is the shaded boxes (40 days).





for a pilot test


















1 2 34 56 78Week

1. Educate the top

2. Obtain their approval

3. Select the pilot area

4. Develop a training

5. Identify the trainers

6. Train the trainers

7. Schedule the training

8. Identify

9 10 11 12 13 14 15 16

Figure 6-7. A Gantt chart on the introduction of a new measurement system in the


Breakthrough Improvement

The PERT Chart (or Critical Path)

This planning tool became famous when it was used to plan the

construction of the first nuclear-powered submarine (which came in

under budget and ahead of schedule). PERT is an acronym for Planning

Evaluation Review Technique. Critical path—its currently popular

name—refers to the longest anticipated single line of activity from start

to finish. The Japanese quality teachers consider this one of the seven

management tools and call it the Arrow Diagram. This chart was described

in Chapter 4 (see Figure 4-7).

For more information on the PERT chart, see Brassard (1989, pp.

97 ff.). Brassard chooses to call this the activity network diagram.

The Gantt Chart

The developer of this chart, Henry Gantt, was a consulting engineer

and protégé of Frederick Taylor at the turn of the century. The chart developed

by him is a wonderfully visual planning tool that describes the

temporal relationships of events that unfold over time. The Gantt chart

can be used to describe a macro plan (the construction of a new city) or

a micro plan (the construction of one chair that will be placed in one

room of one building of that city). The Gantt chart can show projected

schedules and actual schedules.

Some guidelines for the use of PERT and Gantt charts:

¦ In general the PERT chart accommodates complex projects

better than the Gantt chart.

¦ Either chart may, and probably should, be done showing different

scales of action: one chart for more generic categories of

activity, other charts for the more minutely detailed actions.

¦ When developing the chart, it is usually easier to start at

the end and work backward toward the beginning.

¦ It is common to discover how unrealistic your anticipated

timeline is when constructing a PERT chart or Gantt chart. If

you have found that you haven’t allowed enough time to get

things done, it is generally better to postpone your target date

than to arbitrarily shorten the time allowed for each stage in

the development effort. Better yet, don’t set a target date, at

least not until this planning is completed.

¦ It is also common to discover missing steps when constructing

these charts, steps you had not originally anticipated. This

is one of the reasons the next guideline is important.

¦ When doing these plans in their early draft form, use Post-its™ or

some other brand of st


-Wrong procedure

-Errors in recording administration of drug on

the patient’s record

— Number and patterns of toxic reactions to drugs

¦ Medical records

— Percentage of completeness

— Types of omissions

— Types of inaccuracies

— Patterns by type of patient, floor, shift

¦ Number of surgical procedures, by type

¦ Percentage of surgical procedures with complications

¦ Correlation between pre-op diagnosis and post-op diagnosis

¦ Number of transfusions

¦ Percentage of reaction to transfusion, by type

This should be a sufficient sampling of indicators to give some sense

of how to select what is important and create a system of measurements

around these indicators. Remember, you must select and design your own

measures. Don’t simply copy from another organization.


I want to conclude this chapter with a plug for data. We have all been

exposed to data that are, for the most part, stagnant and boring. I

hated math in school, hated statistics in grad school, and find most

columns of numbers to be a sure cure for consciousness.

I found out later in life that the problem was not so much my

inadequacy with things numeric. The problem was that the math and

statistics taught to me were boring and the method by which they

were taught was even more boring. Data and statistics are too important

to be handed over to mathematicians and statisticians. I would

rather be taught by someone who loves data but hates the conventional

uses of data.

Four Examples of the Imaginative Use of Data

In his book, The Visual Display of Quantitative Information, Edward

Tufte (1983) gives several examples of how to display data. One of the

most moving diagrams is shown in Figure 7-9. It was drawn in 1861

by a French engineer, Charles Joseph Minard.

Figure 7-9. Losses to Napoleon’s army during the 1812–1813 Russian Campaign.



Figure 7-9 takes a map running from the Nieman River on the

west to Moscow on the east. The forces of Napoleon are shown with

an ever-diminishing line, shaded for their eastward movement, black

for their retreat back to France.

The width of the line shows the size of the force. They started

with an army of about 422,000 troops and ended with only 10,000

survivors. Also displayed across the bottom are the temperatures

(from 0° to -30° Centigrade) and the months. (The retreat started in

October and ended in December.) When this diagram was shown to

the Court of France, they wept.

Two Concentration Diagrams

When taking data, there is a certain type of checklist called a concentration

diagram. In a concentration diagram you draw a picture of

the item you are inspecting (for example, a carton when you are looking

for damage, a latex glove when you are looking for punctures, an

article of clothing when you are looking for defects, etc.). While inspecting,

the data-gatherer simply looks for where the flaw is on the

real item and makes a mark on the picture showing where the flaw

was located, sometimes including a code to indicate what kind of flaw

it is. The cumulative concentration of marks on the drawing will provide

useful information regarding frequency and patterns.

The first example is from Ian Hau, who coached a boys’ high

school soccer team. It is shown in Figure 7-10. (Permission to reprint

it has been generously granted by Mr. Hau.)

Figure 7-10. From what position

on the field does the opposition

score its goals?

Keeping Track: Measurements of Improvement, Progress, and Success

This diagram allows for a data-based discussion regarding the

vulnerabilities of the team’s defense and what adjustments to the defense

may be considered. According to this diagram, the team seems

somewhat more vulnerable to kicks attempted from their goalie’s

right side and kicked from relatively farther away from the goal.

The third example, also a concentration diagram, comes from

the eminent statistician George Box and his colleague Søren Bisgaard

(1995), who have graciously given us permission to reprint. This diagram

was used to study the patterns of antiaircraft damage to World

War II bombers returning to England after their sorties over Germany.

It is shown in Figure 7-11.

Figure 7-11. Antiaircraft damage to World War II bombers.

The challenge facing those studying this damage: On what parts

of the plane should added armor be located? For purposes of minimizing

the weight of the plane, added armor must be kept to a minimum.

Based on the data shown in Figure 7-11, where would you place

the armor? The conclusion of those conducting the study: Reinforce

the areas without damage. The planes they were studying were, after

all, the bombers that returned to base.

Finally, an example of a workflow diagram describing the paths

of movement in a screen manufacturing operation in an east coast

high-tech company is shown in Figure 7-12 (permission to use this diagram

has been given by Fred Cox and John Criqui). It shows a diagram

of the space and workflow before the redesign and after the redesign.

(Baby Huey is their nickname for a piece of equipment.) As a

result of these and other changes, the time required to perform this

process was reduced dramatically. No workers were laid off. The company

wanted them to stay and make even more improvements.










Large thickness guageShelvesDeskTable

Light table







5 kw


unit Drying












Light table




Chase storage






Epoxy scale

Light scope

Baby Huey










Large thickness guageDeskDrying







5 kw



Baby Huey





oven Coated










Large chase







1-1-1 Chase
































Figure 7-12. A before and after workflow diagram.


Leaders and managers need to understand systems and must learn to

think systemically (Chapters 2 and 3). In order to understand

systems we must also understand variation and its causes (Chapter

2). Data are the language of the system: the voice of the system,

telling us how it is doing, what it is capable of, and what we can

expect from it. It is data that show the variation and the causes of

variation. Without systems, data, and a knowledge of variation we

cannot lead, manage, or understand the chaos around us.

In this chapter we have explored some approaches to the use of

data. If the entirety of what is presented here seems overwhelming,

you might keep in mind four notions:

¦ You are already measuring those things you have considered

important to measure.

¦ What you have seen in this chapter is only a small part of

what you might learn to do.

¦ Start now, start small, and gradually build your capacity to


¦ Get help from those who are knowledgeable and skilled at

what to measure, how to measure, and how to analyze and

interpret the data.


Discuss the following questions:

1. What are the key indicators (the vital signs) of your organization’s work?

¦ For now, do not consider financial indicators.

¦ Some indicators should be directly related to your organization’s purpose and

your customers’ needs.

2. With what frequency do you monitor each indicator (daily, weekly, monthly)?

3. How do you know that this frequency is sufficient to give you an adequate

representation of the organization’s performance relative to this indicator? (Ask

this for each indicator.)

4. How do you record the data for each indicator?

5. If you do not already do so, begin recording the data for each indicator in time

order, using the appropriate control chart. (Get someone to help you learn how.)


Box, G., and Bisgaard, S. 1995. The efficient generation of knowledge. A presentation

for the Hunter Conference of Quality, sponsored by MAQIN,

Madison, WI.

Craighead, F. 1979. Track of the grizzly. San Francisco, CA: Sierra Club Books.

Deming, W.E. 1982. Out of the crisis. Cambridge, MA: MIT-CAES.

Hau, I. 1991. Quality improvement for a high school soccer team. Presented at the

Hunter Conference on Quality sponsored by MAQIN, Madison, WI. Mr.

Hau is currently the Director of Process Improvement Research and Development

for SmithKline and Beecham Pharmaceuticals. Permission

obtained from the author.

Hoerl, R.W. 1995. Enhancing the bottom-line impact of statistical methods.

Quality Management Journal, Summer. In the same issue is a discussion of

Hoerl’s article by Harry Roberts and George Easton and a rejoinder by

Mr. Hoerl.

Kaplan, R.S., and Horton, D.P. 1992. The balanced scorecard—measures that

drive performance. Harvard Business Review, January–February. (Reprint


Orsini, J. 1995. So you want to survey customers. Ohio Quality Productivity

Newsletter, November.

Provost, L., and Leddick, S. 1993. How to take multiple measures to get a complete

picture of organizational performance. National Productivity Review,


Tufte, E.R. 1983. The visual display of quantitative information. Cheshire, CT:

Graphics Press.

Wheeler, D.J. 1995. Advanced topics in statistical process control: The power of

Shewhart’s charts. Knoxville, TN: SPC Press, Inc.

Wheeler, D.J. 1993. Understanding variation: The key to managing chaos.

Knoxville, TN: SPC Press, Inc.

Wheeler, D.J., and Chambers, D.S. 1992. Understanding statistical process control,

2nd ed. Knoxville, TN: SPC Press, Inc.



Copyright 1998 The McGraw-Hill Companies, Inc. Click Here for Terms of Use.


The new approach to organizations requires a new approach to leadership.

In Chapter 2 we explored some new competencies needed by

twenty-first-century leaders. Here we explore a specific skill: asking

good questions.

The reason for emphasizing the asking of questions is directly related

to the shift in managerial paradigms presented throughout this

book and displayed in Figure 8-1.








Figure 8-1. The shift in paradigms for leaders, managers, and organizations.

In the old organization we asked “who” questions: “Who is accountable?

Who screwed this up?” In the new organization we ask

“why” or “how” questions: “Why has this problem occurred? How

can we improve the system and eliminate the cause of this problem?”

The old managers gave orders or advice and exercised control. The

new managers ask questions and promote communication, knowledge,

and understanding.

Asking good questions involves more than simply asking good

questions. The questions need to be surrounded by collaborative relationships.

And the questions should be based on systems thinking and

sound strategies for good work. The same question, “What are you

doing?” asked by someone I trust will elicit very different responses

from the same question asked by someone I fear (see Figure 2-15).

Figure 8-2 shows an example of questions based on a sound organizational

strategy. My experience has been that people are more

inclined to talk about activities (methods) than about purposes or measures

of success. We so easily get wrapped up in what we do that we

often ignore why we are doing it and whether we are succeeding.

In this chapter we will examine other such frameworks or systems

of questions. These are systems of questions because they lead us

to look at an interdependent whole. Purpose, methods, and measures


What is the purpose of:

• Your organization?

• Your group?

• Your project?

• Your job?

• Your task?

How do you know:

• That you are making a


• That your methods are


• That you are successful?

What methods are

you using to achieve

that purpose?

Figure 8-2. A framework of questions based on some fundamental organizational


of success are factors that interact with each other in our everyday

lives whether we are raising a family or running a business. Purpose,

methods, and measures of success form an interdependent whole and

a system of knowledge.

We begin this chapter by exploring some concepts about leadership

that are relevant to the challenge of asking good questions. Then

we will explore questions and the frameworks within which they fit.

We next explore listening and listening skills. Finally, we will step

back and review the larger inquiry process, looking at it as a whole.


In a conversation with Russell Ackoff, I heard him make the following


¦ Leaders decide what needs to be done.

¦ Managers decide how to do those things that leaders have decided

must be done.

¦ Administrators apply the methods designed by managers in

pursuit of the purposes selected by leaders.

In real life, things seem to be sloppier than this. But Ackoff’s distinction

is useful enough. The sloppiness probably occurs when the

same person must act sometimes as a leader, sometimes as a manager,

and sometimes as an administrator.

It is true to say that Moses did not manage the exodus, he led it.

Aaron and Jethro were more like the managers of it. The administra

Leading by Asking Good Questions

tors were undoubtedly there, but administrators generally tend not to

be mentioned, at least not in the Bible … or in The Wall Street Journal.

Ackoff (1994, p. 50) has also made a distinction between efficiency

and effectiveness. Effectiveness involves doing the right

things. This, it would seem, is the purview of leaders. Efficiency involves

doing things right, the job of managers and administrators. At

some point someone should ask the organization’s leaders, “How do

you know you are doing the right thing? What indicators tell you so?”

But in most organizations, few are courageous enough to ask those


In the old paradigm the answer would most likely have been,

“Because I said so!” The new paradigm might require reference to such

things as purpose, mission, vision, values, and data on the key indicators

(see Chapters 5 and 6). Here, for a moment, we will look at

some roles of the new leaders that result in the leaders’ needing to ask

good questions.

The Leader as Coach Rather Than Director

Not all coaches coach alike. There are autocratic coaches and consultative

participative coaches. Here we mean the latter variety, those

who seek collaborative relationships with coworkers rather than a

command-and-control relationship. Director types will have a harder

time learning to ask good questions. They will try to smuggle advice

or reprimands into the interchange, still using the grammatical form

of a question: “Have you considered doing…?” or “What in the world

made you think that was the best way to do…?”

The Leader as Experimenter versus Controller

In Chapter 2, we explored the difference between opinion and fact

(Figure 2-6) and theories and application (Figure 2-8). Leaders who

understand the differences between hunches, guesses, beliefs, and hypotheses

on the one hand and demonstrable truth on the other are

more likely to draw their people into inquiry and dialogue. When

leaders approach situations as experimenters, they are more likely to

say, “What seems to be going on here?” or “How can we find out for

sure?” Otherwise the controller in them will make a statement: “This

is what is going on here….”

The Leader as Educator versus Advice-Giver

According to Yukihiro Ando, one of Dr. Noriaki Kano’s protégés, some

of the Japanese teachers of quality believe that when they resort to


giving advice they have failed as teachers. They would suggest that

the greatest teacher needs only to ask the right questions. The student

learns by pursuing the answers. Leaders can develop and educate their

employees in a similar way. Directives and advice teach dependence.

Questions can lead to independence and greater self-sufficiency.

The Leader as Inquirer or Reviewer versus Inspector

The inspector looks for flaws in someone’s work. The inquirer or reviewer,

instead, asks questions that help people discover the flaws

themselves, as well as the methods and processes of learning and improvement.

The inspector says, “This is a mistake!” The inquirer asks,

“How will you prevent this problem from occurring?” or “Where in

the process did this problem originate? What might you do to track

down and eliminate the cause?”

Asking, Listening, Learning, Leading

In an address in Cincinnati in 1994, Congressman Newt Gingrich described

what he thought to be a good process for effective leadership: Ask

and listen so that you can learn and lead. Mr. Gingrich has summarized an

important dynamic that is central to the new leadership concept.


Now we look at some strategies for improvement and the questions

that flow from them. We also look at some systems of questions similar

to the one shown in Figure 8-2. But first we propose some questions

that are almost universally useful.

Seven Basic, All-Purpose Questions

Here I am giving away the trade secrets of the consulting profession. If

you can master these seven questions and the questions presented in Figure

8-2, you can charge enormous fees. If you ask the questions with a

sincere and innocent look, you can charge even more. As a manager,

however, you can master these questions and ask them for free.

1. Why?

When a problem occurs, ask why it occurred. Ask the question,

“Why?” as many times as it takes until you get at the systemic cause

of the problem. (The Japanese teachers of quality would have you ask

“Why?” five times.)

Leading by Asking Good Questions

Ask the Question “Why?” Five Times.

This technique, taught us by the Japanese, allows us to pursue the

deeper, systemic causes of a problem and correspondingly deeper solutions.

Level of a problem

There is a puddle of oil on the shop



Because the machine is leaking oil.


Because the gasket is deteriorating.


Because we bought gaskets made

of inferior material.


Because we got a good deal on



Because the purchasing agent gets

evaluated on the basis of savings

over normal price tags.

Corresponding level of


Clean up the oil.

Replace the gasket.

Buy better gaskets.

Change the policy.

I am grateful to Joop Bokern for this example.

There is no magic in the number five, but if you repeatedly ask “why”

you can get past the superficial problem and its immediate cause and look

deeper into the systemic causes. The policy that results in leaky gaskets and

puddles of oil is undoubtedly contributing to other problems. By solving

the deeper systemic cause of the puddle of oil, you can eliminate the causes

of multiple problems. Dr. Kano calls this “going an inch wide and a mile


Diagram 8-1.


The person of whom you ask, “Why?” may respond with a

“who.” “Why? Because George screwed up, that’s why!” As a leader,

you must disregard the culprit response and look for the systemic

“why”: “What is there in our system that made it easy for that mistake

to occur?”

2. What Is the Purpose?

When someone proposes some new project or doohickey, ask

what its purpose is.

“We are setting up a new team to study a high-performance work culture!”

“Cool! What is its purpose?”

Related to this are the “What will it take …” questions and “How will

you know when it is successful?”

3. What Will It Take to Accomplish This?

This question too should be asked repeatedly when someone describes

something he or she would like to accomplish. After asking first

about the purpose, help the person or group convert wishes to activities.

Dr. Deming’s often-used version of this question was, “By what


4. Will the Customers Give a Rat’s Tush about This?

Will the outside customer notice or care? How will this proposed

effort affect the outside customer? How do you know?

5. What Is Your Premise?

If you are going to impose a new policy on the employees, for

example, what is your theory about the policy and the employees? For

example, if someone said, “We are going to put all our managers on a

three-year contract with measurable performance standards,” you

might respond, “What, then, are your beliefs about your managers?

And what are your assumptions about contracts and measurable standards

of performance? On what basis do you hold onto these beliefs

and assumptions?”

6. What Data Do You Have?

If you know they have no data, don’t rub their noses in it. Instead,

ask, “What data might you get?” Dr. Deming’s favorite version of this

was, “How do you know?” This question is intended to move the answerer

from assertions (theory or hunches) to research (see Chapter 2).

Leading by Asking Good Questions

7. Where Do Your Data Come from?

A lot of bad data is available out there. How were these data

gathered, analyzed, and interpreted? (Just because there are numbers

doesn’t mean there are data.) How do you assure yourself that the

data are valid?

Four Improvement Strategies behind the Questions

Following are four approaches to solving problems. The reason for

presenting them here is to provide some frameworks for asking good

questions. These will provide a perspective that will help avoid the

common management mistakes: asking the wrong question or asking

the right question too soon.

Strategy 1. Plan-Do-Study-Act

We have explored the PDSA cycle throughout this book, beginning

in Chapter 2. PDSA applies both to large-scale, longer-term,

slower turning cycles (e.g., feeding the world) and to small-scale,

shorter-term, rapidly turning cycles (e.g., feeding the dog).

When you are seeking to improve a system that is already in

place, we recommend beginning with study. In the questions suggested

below, we start with study.

Here we introduce an improvement strategy that is an elaboration

on the PDSA cycle. It is adapted from an improvement model

first developed by Tom Nolan and Ron Moen and published in 1992

by a talented group of consultants, Associates in Process Improvement

(API). Their book (Langley, 1996) is a landmark contribution to

the philosophy and methodology of improvement. API has given

permission for its model to be presented here.

In Diagrams 8.1–8.4 are questions to ask during P, D, S, and A

(starting with study). These are questions added to the three contained

in the API model.


What are we

trying to


How will we

know when a

change is an


What change can

we make that will

result in an





Figure 8-3. The API improvement model.


• ’

• ’

A. During studyQuestions to ask

1. Why have you selected this process to examine?

2. How well is this process working?

3. What do we hear from customers?

What do they need that they arent getting?

What are they getting that they dont need?

4. What data can you show me about this process?





Cycle times?

Average and range of variation. Is it in

control or not?

Diagram 8-2a.





B. During plan1. What problems are you seeking to solve? What

gaps? What improvements?

2. How will you measure progress?

3. How will you measure success?

4. What solutions or new functions do you expect

to begin?

5. How are they related to the problems, needs or


6. Why are these interventions seen to be better

than other possible interventions?

7. What could go wrong with the introduction and

use of this new approach? How can these

potential problems be avoided, minimized, or

responded to if they occur?

1. What is your plan for:

Testing or piloting this innovation?

Introducing it on a large scale?

Monitoring its progress and success?

2. How easy to follow is your plan for


1. What are you monitoring?

2. Why are you monitoring those indicators?

3. How are you using the data?

4. How are you monitoring the use of your plan?

5. What revisions have you needed to make in your


1. What adjustments have you made to your

original intervention?

2. What have you done to standardize the new


See the questions regarding standardization.

C. During

D. During studyE. During

Questions to ask

Diagram 8-2b.


Strategy 2. Standardization

In Chapter 4 we explored standardization, including questions

for leaders to ask when something goes wrong. Here we look at four

basic stages of standardization and appropriate questions to ask at

each stage.

Diagram 8-3.

Leading by Asking Good Questions

Strategy 3. Do It!

“Do it!” is included as an improvement strategy for two reasons.

First, people are likely to go ahead and use it anyway. After all, it is

probably the most common approach to change. Second, it is not

necessarily the worst way to proceed. Since people are likely to go

ahead and “Do it!” managers need to be prepared to ask good questions.

The major steps of “Do it!” are quite simple, as are the corresponding


Identify realistic

potential problems

Monitor the

resultsDo it!




A. Before doing it

B. During do itC. After do it1. What could realistically go wrong?

2. How might that be prevented?

3. What should we monitor to see if the problem

is occurring?

4. How might we be prepared to react if it goes


1. What are you doing?

2. Why are you doing it?

3. How do you know this is the right thing to do?

4. What precautions are you taking?

1. Are we getting what we wanted?

2. Are we avoiding what we didnt want?

3. Do we need to make any adjustments?

Questions to ask of someone involved in do it!

Diagram 8-4.

Strategy 4. The 7-Step Method

The 7-Step Method came to my attention in the late 1980s when

I started hearing from people at Hewlett-Packard (especially Tim

Fuller) and Florida Power and Light about this very powerful approach

to problem solving. I first saw it published in Statistical Methods for

Quality Improvement by Hitoshi Kume (1985), who describes what he

calls the QC Story. Subsequently, Brian Joiner and I put together a

rephrasing of the seven steps (Joiner Associates, 1990).




do next




“” and “do” of


“” and



A. During Step 1:

define the


B. During Step 2:

look at patterns

C. During Step 3:

identify the

D. During Step 4:

plan and

implement the


E. During Step 5:

study the


F. During Step 6:

standardize the

new way

G. During Step 7:

decide what to

1. What is the problem or

2. Why is it important that this be addressed?

3. How does the problem affect customers?

4. How will progress be measured?

1. What graphics do you have to illustrate the

problem (e.g., a flowchart of the process)?

2. How was the problem localized to show whatwas, where it occurred, when it occurred and who

it involved?

3. How was the focus of the project narrowed?

1. What potential causes were identified?

2. How were these causes verified(Also, see plan1. What solutions were considered?

2. How were solutions evaluated?

3. How did solutions address the causes of the


4. How carefully were the solutions planned?

5. How was the solution piloted?

(Also, see study of PDSA.)

1. What before/after data were compared?

In the pilot

In the full implementation plan

2. How completely was the implementation plan


1. How were improvements institutionalized throughout

the system?

2. Are there graphic displays and documentation of

the new method? (Also, see standardization

of PDSA.)

1. What will be worked on next?

2. What was learned as a result of working on this

improvement project?

3. How will these lessons be integrated into future

improvement efforts?

Questions to ask during the 7 Steps

Diagram 8-5.

Leading by Asking Good Questions






illi1 2 3 4 5 6 7



of success are





deeper causes

causes and


• ’

“” no






causes of

a bang

Define the


Look at the


Identify the


Plan and


the remedy


the new way

Decide what

to do next

As described

by Kume, the

QC Story

As described

by Joiner, the

Joiner 7 Step













SoutThe Steps Monitor the









Make sure:

That the

purpose of

this proect is


You are ready

to do this


That it is an



It is of


The measures



understand the

problem or

gap from the

customerpoint of view

Narrow the

focus of this

effort by


Where, when,

how and with

whom it does

or doesnWhat patterns

of variation

Which factors

have the


impact of

frequency, re:



defect delay,


errors, etc.

Identify the

that come

from within

the system



confirm them

with data

Ask the


why 5 times

Dont look for







to remedy the

Make sure the

cure is not

worse than the


Select the best

remedy or


Plan how to


and what to


Take action

Monitor the

use of the plan

Monitor the

use of the



Monitor the


Monitor for

and other

signals of


Make any


Document the

new process

Train the


Include in

training for



the new


Use visual

reminders of

the new


Decide what to

do about:



problems or


Assuring the

continued use

of the new


Sharing the

learnings with


Ending the

project, not

with a

whimper, but

Diagram 8-6.

The 7-Step Method.

Many companies have their official standardized problem-solv-

ing method, often described in seven steps. I haven’t seen any that are

as thorough as Kume’s. Most are short on the use of data and often

omit Step 2 in part or entirely. Diagram 8-6 shows the seven steps. The

headings at the tops of columns are what I call each step. Below is

Kume’s phrasing and, below that, Joiner’s. The shades of difference are

subtle and probably say more about the three of us than about the

method itself.

Note: We have already seen the 7-Step Method in Figure 4-24,

where it is used to sort out proposed improvements.

When to Use Which Strategy

Each strategy suggests its own questions and its own sequence of

questions. Prior to the selection of a strategy we ask a series of questions

(a decision tree, Diagram 8-6). These questions will help the project

leader select which of the four strategies is most appropriate for

the specific effort. These are questions managers may ask when someone

proposes a project or an improvement effort.


A project is presented

for consideration

Is the

Clarify the purpose purpose

No clear?



Are there

Will the outside Under a dark extenuating

reasons that

customer notice No cloud of No justify this or care? suspicion project?


Is this

project a priority

when compared

to other possible



Has the

problem or gap

No been identified?


Is there Use the API

a current system Improvement Methodprocess or method

No to design a process

to do this

work? to do this work



Strategy 1. P-D-S-A

(the API Improvement


Diagram 8-7.

Leading by Asking Good Questions

Danger sign:

means that at

this step there

Strategy 2. Is the process

Standardize the standardized? is a risk of self





Does everyone

use the Use the

standardized No standardized

methods? methods


Does the

problem or

No gap still exist?


Do you know

what the

remedy is? No


Is the known

solution simple

and low risk? No


Have realistic

Prepare for potential problems


No been identified and

problems prepared for?


Strategy 3.

Strategy 4.

Do it and Strategy 1. The 7 Step

monitor results PDSA Method

Document the new process and bring the project to closure

Diagram 8-7. (Continued)


Some Frameworks of Questions

By a framework of questions I mean a system or network of interdependent

and interactive questions. You can start with any part of the

framework and lead to any other part. Often the person with whom

you are speaking will begin the conversation with a statement that

will lead directly into one or another of these frameworks of questions.

You, then, can “dance around” the framework letting the other

person’s response or your curiosity lead the way. At some point you

might move into another framework or bring the session to a close

(see “The Inquiry Process,” later in this chapter).

We have already looked at one framework of questions in Figure

8-2. What follows will be like that with different frames of reference.

Framework 2: A Basic System of Questions to Use When

Meeting with a New Group or Someone Working on a New


B. What system, process

or method are you using to

accomplish your purpose?

D. Who is your customer?

What are their needs?

How do you know?

A. What is your purpose?

C. How will you measure

progress or success?

¦ “Customer” here can possibly refer to an internal customer.

But any effort should be able to be seen in reference to the outside


¦ Parts of the framework can be combined into sets of two or

three or all four. Thus this system creates 15 possible frames of

questions. For example, combining A and C: “Explain the

connection between your purpose and how you will measure

progress or success.” Or you may combine A, C, and D: “In

what way are the measures used to track the achievement of

your purposes consistent with the needs of your customers?”

Leading by Asking Good Questions

Framework 3: When Someone or Some Group Is Proposing a

Change in a Service

What best cuts costs? What best serves the

needs of the customers?

What best serves the

purpose of this

organization or of this

particular service?

What best serves the

needs or convenience

of our managers and


What should

have priority?

¦ The questions reflect the reasons usually offered for a proposed

change in service.

¦ Each should be able to be supported by data.

¦ The question in the center, “What should have priority?” is

pivotal. It goes to the organization’s basic values.

Framework 4: When Someone Is Proposing a Team or Project

How will this team pursue

its purpose (system,

process, or method)?

Who is on the team and

why were they selected?

What is the purpose

of the team?

How will this team know

when it is successful?


It may be useful to explore the composition of the team and its

purpose or its methodology: “Explain the relationship between your

team’s purpose and the selection of the team’s members.” Or, “What

is the relationship between your team’s methods and the selection of

members?” See also the discussion questions at the end of Chapter 5.

Framework 5: Questions to Ask of Those Engaged in Problem


What program, solution,

intervention or remedy is

currently being proposed?

What is the cause of the

problem? What is there

about our system that

allows this problem to


What is the problem?

What do you know about

it? For whom is it a


What results or output

are you currently getting?

What results will indicate

a successful solution?

¦ People tend to jump into solutions without first thinking

through the problem or the causes of the problem.

¦ People sometimes neglect to identify what results their efforts

produced or whether their results are related to the original

problem, the cause of the problem, or the applied remedy. The

connections should be clear.



Listening is not something you do while you await your turn to talk.

It is not a passive experience. Listening is an exploration involving

both the speaker and the listener. Asking good questions and following

them with poor listening is worse than asking no questions at all.

There are many books and courses on listening skills. This technology

has been around for 40 years. Dr. Thomas Gordon, the

Leading by Asking Good Questions


founder and leader of the effectiveness training movement, has been

one of the hallmark authors in the field. This section is a summary of

what we have learned from the masters of good listening.

The Right Attitude for Good Listening

Good questioning and good listening can be done in a manner that

turns them sinister. The words may be neutral and nonjudgmental,

but the tone of voice, body language, and other mannerisms send a

different message. Don’t ask questions when:

¦ You are angry and want to punish rather than be helpful.

¦ You are not willing to suspend your judgment or your need to

give direct advice.

¦ You are in a hurry and don’t have time to listen to and explore

the other’s answers.

Good questions have no hint of judgment:

¦ Judgmental: “The data on your chart don’t confirm your conclusions.

What made you think you could get your answer

from these data?”

¦ Nonjudgmental: “Help me understand the connection between

the data in the chart on page 4 and the conclusions you

draw on page 5.”

Someone who has been listened to well experiences the following:

¦ The speaker should feel a deepened understanding of what he

or she has been trying to communicate.

¦ The person should not feel embarrassed or tested. (“Did I give

them the answer they wanted?”) He or she should feel supported

and challenged to continue to study, to dig deeper, to

appreciate what is already known and

seek to learn more.

A Summary of Good Listening Skills

1. Attend and be silent.

¦ Maintain eye contact.

¦ Use semiverbals (“uh-huh”) to let

the speaker know that you are

there and paying attention.



Virginia Satir’


• ’

s Four Dysfunctional Communication Styles

Virginia Satir (1988) was a pioneer in family systems and family communications.

In her book Peoplemaking, she identifies four styles of communication,

learned in our earliest years, that are not useful when dealing with others: blaming,

placating, being superrational, and being irrelevant.

We learn these styles in our families and carry them with us through school

and our jobs. Eventually, we teach them to our own children.

Some comments on the four dysfunctional modes:

None of them is abnormal, nor is using any of them necessarily a sign of

deeper personal problems. They just get in the way of helpful interacMost

of us have one or two of these modes that we revert to, especially

in times of stress.

These behaviors serve to keep others at a distance, which may be needed

in some circumstances. However, there are more straightforward

and less confusing ways to keep distance.

At the root of each of these self-protective modes of communication is

low self-esteem.

1. The blamer




Under the




Looks for a culprit.

Seeks to absolve self

of fault.

Who screwed up!

You never do

anything right!

Dont blame me for

your problems.

Nobody cares about


I am afraid of being

found out.

Tight body.

Ready to spring.

Leading by Asking Good Questions

• ’

• “”


happy, happy.

• ’

2. The placater

3. The super-reasoner




Under the




Mostly head, very little

heart. Apply rationality and

analysis to everything even

when such are not what is

needed or appropriate.

Emotionalism gets in the

way. I dont care what

people feel.

Lets look at this


People can be so irrational!

Give me a computer and I

am content.

People will respect me for

my intellect.

I feel out of control in the

presence of emotions.

Rigid and dried-up.




Under the




Tries, first of all, to

accommodate every-

s demands. Failing

that, the placater


My job is to keep

everyone happy. If they

areI amI keep letting other

people down.

I cant seem to do

anything right.

If I keep everyone

happy, maybe they

will love me.

Tense stomach.



• ’



• Off balance, unsteady

The irrelevant person




Under the




Deflects attention or diverts

attention to something

unrelated to the issue at hand.

Doesnt notice what is going

on, notices but doesnunderstand, or understands but

gets distracted.

The computer crashed? Did

you get the other guylicense?

Speaking of travel delays, was

the space shuttle able to take

off on schedule?

I want attention, but I am

uncomfortable about people

getting to know me.

2. Practice neutral observation.

Neutral observation is not so much a technique as it is a

frame of mind. Every statement of the neutral observer embodies

this set of values:

¦ I will not judge or control.

¦ I will not suggest or correct.

¦ I will not praise or criticize.

 I will simply report what I observe.

Examples from the workplace:

Nonneutral— Neutral

Nonobservational Observation

 “Why in blazes are  “I see you’re turning

you doing that?” that dial to 36.4.”

¦ “This report is two  “I noticed your redays

late!” port is on my desk.”

¦ “Haven’t you

finished that test


¦ “I read in your

memo that a test

was to take place this


Leading by Asking Good Questions

3. Use reflective statements.

Use a phrase or fragment of the speaker’s story and repeat


Speaker: “…and then the machine broke down and

everyone went zonkers!”

Listener: “Zonkers.”

4. Summarize and check.

¦ Find a break in the speaker’s narrative to take what he or

she has said and repeat it back in a summary form.

¦ Follow the summary with a check question. (“Is this a fair

summary of what you said?”)

5. Sort out the speaker’s issues.

Either along with the summary or as a separate intervention,

help the speaker to distinguish between:

—Problems versus symptoms

—Problems versus solutions

—Important few versus trivial many

—What can be remedied or changed versus what is beyond

his or her ability to influence

6. Find patterns.

Find what this issue, described by the speaker, has in

common with other experiences in his or her life.

—“Has something like this ever happened to you before?”

—“Have you had other issues with this same person?”

7. Point out obvious gaps.

After a while you may notice the conspicuous absence of

some element of the narrative that you would have expected.

“I find it interesting that you have not mentioned your

boss so far.”

8. Point out interruptions.

Sometimes the speaker will interrupt the continuity of

his or her narrative. You might comment on this.

“I notice that when you started talking about that meeting

you quickly changed the subject.”


Listening to Abusiveness

I once had a boss who was extremely abusive and ill-tempered, a

smart man who was difficult to work with. As a result we did our best to

avoid him. It wasn’t easy.

Late one afternoon I was in my office trying to finish a project. The

boss and I were the only ones still at work, a vulnerable time.

Suddenly the boss stormed into my office, slammed something down

on my desk and growled, “What’s this?”

A quick scan of the item thrown on my desk convinced me that it had

nothing to do with me or my work. So I decided to use a good listening response

that I have used before and taught to others.

I said, “You sound like you’re angry about that.”

To which he responded, “Don’t use that workshop s——on me!”

The textbook example of the listening skill did not elicit a textbook


The boss, however, did calm down.

9. Attend to feelings.

¦ Sometimes asking how the speaker feels about the story is

useful. Often, however, people will not respond with a

feeling (some variation on joy, sadness, anger, or fear),

but with a thought. (“I feel I should never have gotten

into this mess!”)

¦ It may be helpful to provide the words to describe the

speaker’s feelings.

“I bet you were disappointed when that happened,” or

“You look angry when you talk about that.”

10. Test for responsibility and follow up.

¦ “What do you plan to do next?”

¦ “How will you go about deciding what to do next?”

¦ “Do you have a plan? What does it suggest should be the

next steps?”

Some final comments on listening skills:

¦ Keep the focus on what the other person is saying.

¦ Let the other feel the conversation is his or hers to take in

whatever direction he or she wants.

¦ Don’t give advice. It probably won’t help. Giving advice more

likely meets the needs of your ego than the speaker’s needs.

Leading by Asking Good Questions

Don’t let the speaker draw you into giving advice. Deflect any

request for advice back to the speaker: “What advice were you

hoping I’d give you?”

¦ Don’t judge. If you can’t avoid judgment or you can’t suspend

judgment, at least avoid the rhetoric of judgment: should,

should not, good, bad, right, wrong, etc.

¦ Don’t replace the speaker’s story with yours. While a brief reference

to a similar experience of yours might help the speaker

feel less alone, don’t shift the focus of the conversation from

the speaker to you.

¦ Don’t try to talk the speaker into or out of feelings. Don’t discount

the speaker’s experience by saying, “Don’t feel bad,”

“It’s not so serious,” “Things will get better,” or, “C’mon, give

me a smile.” Those interventions are more to help you, the listener,

rather than the speaker.

¦ Don’t sympathize. Support the speaker but don’t support an

inclination toward “poor me.” Sympathy tends to reinforce

victimhood and inaction. Sometimes people may need a little

mothering. Just don’t let the speaker indulge in it for long.


The inquiry process is described in Figure 8-5. Some comments on the

inquiry process:

¦ Allow yourself to be inelegant when you begin to lead by asking

good questions. Let the other person know that you are

working at learning a new skill.

¦ When the session has ended, get feedback from the other person

on how you might improve your inquiry skills.

¦ The other person has likely been conditioned to expect advice

and judgment. Make sure the feedback is on your abilities as

an inquirer, not on whether the other person would rather

have you resume the role of judge and advice giver.


Before the inquiry


The inquiry itself After the inquiry

• Exchange greetings Speaker Inquirer • Inquirer asks for

and socializing.

• Describe the context

and purpose.

• Explain generally

what you will be

doing and how you

will be doing it.



Etc. until



some issue





Asks a






Asks a


feedback from


– What did I do

that was


– What got in the


– Is any followup


• What is needed for


• What are the next


• Statements of

support and


Figure 8-5. The inquiry process.

What to Ask during the Inquiry

Figure 8-6 illustrates most of the directions the inquiry may take. The

answer to one question may lead into any of the other areas.

Leading by Asking Good Questions


• Why are you working on

this effort?

• What larger purpose is it

part of?

• Why is it important?


• How does this or how

will this affect the

outside customer?

• What are their needs

with regard to this?


• What is the history of

this issue?

• What followed its early


• What impact is this issue

likely to have in the


What preceded it?

The Speaker The Inquirer


• What data do you have?

• What key indicators need


• What assumptions or

theories need to be tested?


• How can this issue be

subdivided into smaller


• What data can help you

decide the internal

priorities of this issue

(Pareto thinking)?


• What have you learned?

• How can these lessons

be taught to others?

• How can learnings be

integrated into the



• Who else cares?

• Who else should be


• Who can help you?

• Whose expertise is

useful in this issue?

• Regarding this effort,

where are the:

– Managers

– Movers and shakers

– Coworkers

– Staff

– Other important


Applying the



• Standardization

• Do it!


• 7 Steps

Figure 8-6. What to ask about during inquiry.


The new approach to leadership requires new concepts, roles, values,

and relationships, as well as new methods and skills. Leading by

asking good questions is a direct challenge to our old paradigm

reflexes and approaches. Asking good questions represents a major

new attitude and skill for the leaders of the new century. Asking

good questions is something that will take a long time to master.

But it is something you can begin practicing right now.


1. Select two partners, people whom

you trust. Observer/ Listener/

Speaker timekeeper inquirer

2. Agree to meet once a week for

one hour.

3. During this hour, practice:

¦ Good listening skills

¦ Inquiry skills

4. Each 20-minute round consists of the following:

¦ Speaker gives a brief (2–3 minutes) description of some current issue.

¦ Listener/inquirer practices listening skills and progresses into inquiry skills.

¦ This discussion goes on for 15 minutes.

¦ The third person is the observer/timekeeper. When he or she stops the

discussion after 15 minutes, he or she begins a 5-minute discussion focusing

on the listener/inquirer, giving feedback to the listener/inquirer and

commenting on what he or she did that helped or that may have gotten in

the way. Both the speaker and listener/inquirer participate in this feedback

discussion initiated by the observer/timekeeper.

¦ When the 5-minute feedback discussion is over, switch roles and do another

20-minute round.

¦ It may take a year of weekly practice sessions before you are adept at these



Bateman, W.L. 1990. Open to question: The art of reaching and learning by inquiry.

San Francisco: Jossey-Bass.

Gingrich, N. 1994. Deming’s profound knowledge and the renewal of American civilization.

Cincinnati, OH: The Eighth Annual Deming Conference, August

15. Sponsored by OQPF, Piqua, Ohio.

Gordon, T. 1977. Leader effectiveness training: L.E.T. New York: Bantam Books.

Joiner Associates. 1990. The Joiner 7-step method. Madison, WI: Joiner Associates.

Kerridge, D., and Kerridge, S. 1996. The zero stage. Self-published, Old Aberdeen,

Scotland. E-mail: .

Kume, H. 1985. Statistical methods for quality improvement. Tokyo: The Association

for Overseas Technical Scholarship. (Available through: UNIPUB,

One Water Street, White Plains, NY 10601, [800] 247-8519.)

Langley, G., Nolan, K., Nolan, T., Norman, C., and Provost, L. 1996. The improvement

guide. San Francisco: Jossey-Bass.

Nolan, T., and Moen, R. 1987. Process improvement. Quality Progress, September.

Satir, V. 1988. The new peoplemaking. Palo Alto, CA: Science and Behavior

Books, Inc.

Satir, V. 1976. Making contact. Millbrae, CA: Celestial Arts.



Copyright 1998 The McGraw-Hill Companies, Inc. Click Here for Terms of Use.


We are living in a less than humanistic managerial era. Companies

use the rhetoric of humanism, but their policies and practices are

often based on distrust, paternalism, and a none-too-subtle cynical

disregard for their employees.

In the entrance area of the management training center for a big-3

auto manufacturer I saw a large mural that declared: “Our employees are

the most important factor in our success.”

Two minutes before I saw this mural, my host informed me that

“morale might be down today because yesterday the company announced

the elimination of 1200 employees from this area.”

When I visit companies I witness many examples of such disparity

between the rhetoric and the practice:

¦ A manufacturer in South Carolina emphasizes teams and

teamwork. But it has team members rate and rank each other

and discipline their members. It rewards teams for how successfully

they compete with other teams in the company. This

is an example of the rhetoric of teamwork confounded by the

policies and practices of counter-teamwork.

¦ A bank in Wisconsin has a series of incentives that are meant to

urge their loan officers to increase business.

¦ State legislators all over the country are introducing legislation

to hold teachers, principals, and school superintendents accountable

for the achievement of students. Student achievement

is measured by their scores on standardized tests. If the

scores are poor, the teachers’ and administrators’ jobs are in


Odds and Ends

Continental Airlines came in dead last in on-time performance for

June even though it had offered employees everything from cash to pizza

to finish first in the Department of Transportation monthly rankings.

—The Wall Street Journal

13 August 1995

This is an example of a failure to understand systems and an abysmal

lack of profound knowledge (see Chapter 2).

Performance without Appraisal

What is behind this patronizing approach to management, this

less-than-humanistic era? Behind these managerial practices are some

false assumptions and cynical beliefs.

The Assumptions Behind Performance Appraisal

¦ Evaluation will improve an employee’s performance.

¦ The employee being evaluated has control over the results.

¦ The employee’s individual contribution can be discerned from

the contributions of the system and other managers and

workers in the system.

¦ All processes with seemingly identical equipment, materials,

training, job descriptions, etc., are, in fact, identical.

¦ The standards of evaluation are related to factors demonstrably

important to the business and its customers.

¦ The standards are reasonable and achievable.

¦ Each system in which an employee works is stable and capable

of delivering the expected results.

¦ The evaluation covers performance over the entire cycle of

evaluation, not just the period recallable by recent memory.

¦ All evaluators are consistent with each other.

¦ Each evaluator is consistent from one employee to the next.

These assumptions are seldom true, though they are


The Cynical Beliefs of Conventional Management:

Skinner in the Workplace

Current traditional management practice reflects some

long-held beliefs about people that have been incorporated

into a theory of psychology articulated by B. F. Skinner.

Companies and their managers may have never heard of Skinner

or his teachings, but their approaches to people still reflect Skinnerian

practices. Skinner’s teachings have been pervasive in schools

and workplaces for most of the last half of the twentieth century.

Essentially, Skinner regards human behavior as a set of responses

that can be conditioned. Just as owners of pets train their animals to behave

in certain ways with combinations of rewards and punishments, so

too must human behavior be formed through such conditioned responses.

People are not much different from Pavlov’s dogs or the proverbial

jackass whose movement is governed by the carrot and the stick. As

noted in Chapter 2, the carrot and stick approach is used to move a jackass

and, as far as we know, its effectiveness is limited to that species. It

is less than flattering when managers try to use on their employees an

approach intended for jackasses. (See Levinson, 1973.)


Comments from Dr. W. Edwards Deming

In 1988 Dr. Deming had graciously agreed to write a foreword to The Team Handbook. Time

got short and I had to remind him.

Meanwhile I had asked him to review my first article on performance appraisal (Scholtes,

1987). The tasks got confused and Dr. Deming wrote a foreword for the article. Below is his foreword

as he wrote it.

The fundamental aim of Deming’s teachings is to develop a system of management

that will ensure pride of workmanship to everybody. In technical terms, the

teaching of this aim requires some knowledge of psychology, and some knowledge

of variation, with the aim to reduce variation of processes, and to understand something

of the interaction of forces, and of operational definitions.

The same aim and theory leads to better understanding of the evils of the so-called

merit system or annual appraisal of people. Actually, such ratings are not ratings of people,

but are mostly ratings of the system that they work in, and of the interaction of the

system with the people that work in it. The fact is that the system that people work in

and the interaction with people may account for 90 or 95 percent of performance.

Understanding of common causes of variation and understanding of special causes

discloses the fallacy of studies of examples of success. Examples of successful

companies repeat the mistake of attributing their success to special causes, outside

the system, when actually, success on the one tail of the distribution and failure in

the other tail, both come from the same common cause-system. Understanding of

variation, common causes, special causes, interaction of forces, and operational definitions

should be ingredients of a liberal education.

People that follow the teachings of the underlying theory find that their own lives

have changed; likewise their relationships with members of the family and with companions

and with associates in business.

Many people are concerned about how to influence others, in particular how to

bring about changes in the management of their companies. It is pleasing to note

that Mr. Scholtes addresses himself in this book to this important problem on how

to accomplish change.

About four years later at a seminar in Washington, D.C., someone in the audience asked Dr.


“If we eliminate performance appraisals, as you suggest, what do we do instead?”

Dr. Deming’s reply: “Whatever Peter Scholtes says.”

Dr. Deming both paid me an honor and gave me a challenge.

Performance without Appraisal

At the root of conventional management practice are some

premises and beliefs. For the most part, these premises are unquestioned.

It is taken for granted that they are true.

The Unquestioned Premises of

Conventional Management

People cannot be trusted.

At least there are a sufficient proportion of untrustworthy people

that policies and procedures should be developed on a presumption

of distrust. (See the Falk Corporation story later in this chapter.)

People don’t want to work or accept responsibility or carry their

share of the load.

If you turn your back, they will cease to maintain the illusion of

being busy.

People don’t want to learn or improve. They want to be left alone.

Any attempt to intervene or help will be rejected or ignored.

People are withholding their best effort and can be induced to do

better only through incentives (carrots and sticks) imposed from

the outside.

The job of a manager is to motivate his or her people. The way

to motivate is to use carrots and sticks.

These unquestioned premises of conventional management

(Theory X) would do less harm if they were questioned. The act of

identifying these beliefs as assumptions—as premises or theories—and

questioning their validity could spark a healthy dialogue. It is the unspoken

and assumed nature of these implied tenets that creates a toxic

and perverse environment, a spirit of disrespect that permeates the organization.

The message to people is that they are inferior and untrustworthy,

even when the official rhetoric speaks of respect for people

who are “our most important assets.”

Alfie Kohn on B. F. Skinner

In his book Punished by Rewards, Alfie Kohn (1993) argues the case

against carrots and sticks. Kohn makes several references to Skinner, including

an appendix describing a conversation he had with the famous behaviorist.

Kohn’s comment on Skinner: “B. F. Skinner could be described as

a man who conducted most of his experiments on rodents and pigeons and

wrote most of his books about people” (p. 6).


Douglas McGregor on Carrots and Sticks

Douglas McGregor’s father and grandfather were ministers. They both worked in a homeless

shelter, founded by the grandfather, in Detroit during the 1930s depression era. Young Douglas

worked in the shelter with his father and grandfather.

As he grew older, Douglas became more and more disturbed by the negative attributions his

father ascribed to the unemployed and homeless (that they’re shiftless and lazy, etc., much the same

as what some say today). The younger McGregor would argue with his father that the poor were

no different from others, they were simply down on their luck and the victims of a dismal economy.

Eventually his dispute with his father evolved into McGregor’s famous articulation of Theory X

and Theory Y (1960, Chapters 3 and 4).

Theory X assumptions about workers:

The traditional view of direction and control

1. The average human being has an inherent dislike of work and will avoid it if he or she can.

2. Because of this characteristic of dislike of work, most people must be coerced, controlled,

directed, or threatened with punishment to get them to put forth adequate effort

toward the achievement of organizational objectives.

3. The average human being prefers to be directed, wishes to avoid responsibilities, has relatively

little ambition, and wants security above all.

Those who believe the assumptions of Theory X, McGregor teaches, will see carrots and

sticks as the only effective way to get things done. Those who use carrots and sticks are implicitly

subscribing to Theory X assumptions. Otherwise carrots and sticks would make no sense.

Theory Y assumptions:

The integration of individual and organizational goals

1. The expenditure of physical and mental effort in work is as natural as play or rest.

2. External control and the threat of punishment are not the only means for bringing about

effort toward organizational objectives. People will exercise self-direction and self-control

in the service of objectives to which they are committed.

3. Commitment to objectives is a function of the rewards associated with their achievement.

The most significant of such reward

Hi my name is macdonald obi. I find this work to be very rich and educative. I would like to seek your permission to use it to teach my mba students on project management and implementation. Please oblige a downloadable copy either in word or pdf.
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