A Comparison of Japanese Total Quality Control and Deming's Theory of Management

Author(s): Howard S. Gitlow

Source: The American Statistician, Vol. 48, No. 3 (Aug., 1994), pp. 197-203
Published by: Taylor & Francis, Ltd. on behalf of the American Statistical Association
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A Comparison of Japanese Total Quality Control

and Deming's Theory of Management
Howard S. GITLOW

This article critically contrasts two schools of thought on

quality management: Japanese total quality control and
Deming's theory of management. An overview of each
school of thought is presented in respect to definition of
quality, purpose, structure,and intrinsic value. The differences between the two schools of thought are discussed in
respect to five issues: purpose and structure,role of competition as a motivational tool to achieve customer satisfaction, use of fear as a managerial tool, use of numeric
targets as tools of management, and use of performance
appraisal as a tool of management.

3. OVERVIEWOF JAPANESETOTAL
QUALITYCONTROL
3.1 Definitionof Quality
JapaneseTQC defines quality in accordance to Japanese
national standardJISZ8101-1981 as the following:
a system of means to economicallyproducegoods or services
which satisfy customers'requirements. Implementingquality
controleffectivelynecessitatesthecooperationof all peoplein the
company,involvingtopmanagement,managers,supervisors,and
workersin all areasof corporateactivitiessuchasmarketresearch,
researchanddevelopment,productplanning,design,preparation
for production,purchasing,vendormanagement,manufacturing,
inspection,sales and after-service,as well as financialcontrol,
and trainingand education. Quality
personneladministration,
controlcarriedoutin thismanneris calledcompany-widequality
controlor totalqualitycontrol.

KEY WORDS: Differences; Schools of thought.

1. HISTORY
W. E. Deming, J. Juran, and others went to Japan after
World War II and taught the Japanese much about quality,
statistics, and management. Deming taught the Japanese
the Shewhart cycle, the concept of special and common
causes of variation, the realization that statistics could be
used on the shop floor, and an appreciation of a system.
Juran taught the Japanese management principles and
practices, such as the Pareto principle. From these teachings, and more, the Japanese developed their own schools
of thought on quality.
2. BACKGROUND
There are several schools of thought on quality management in the United States, for example, those of Deming,
Juran,and Feigenbaum. This article focuses on Deming's
theory of quality management. Likewise, there are several
schools of thought on quality management in Japan. In
the author's opinion, the dominant school of thought in
Japan is espoused by the Union of Japanese Scientists and
Engineers (JUSE). The JUSE awardsthe prestigious Deming Prizes each year. Some leaders of the JUSE school of
thought include K. Ishikawa (deceased), S. Mizuno (deceased), and T. Asaka. In this article, the JUSE school of
thought is called Japanese Total Quality Control (TQC). It
is this author's contention that Japanese TQC is different
from Deming's theory of management.
HowardS. Gitlow is ExecutiveDirector,Institutefor the Study
of Quality,Universityof Miami, CoralGables, FL 33124. The authorwouldlike to acknowledgethe supportof theUniversityof Miami
Institutefor the Study of Qualityin Manufacturing
and Service, the
New YorkUniversityQuality ControlFund, the Science University
of Tokyo,FloridaPower andLight Company,JukiCompany,Kansai
ElectricCompany,AiphoneCompany,NissanMotorCompany,Limited
(OppamaPlant),IsuzuMotorsLimited(KawasakiPlant),andNoriaki
Kano(ScienceUniversityof Tokyo).The authortakessole responsibility for the ideas expressedin this article.

1994 AmericanStatisticalAssociation

3.2 Purpose
Kano (1993) stated that the purpose of Japanese TQC
is to increase "customer satisfaction/quality assurance"
(p. 13).

3.3 Structure
Kano (1993, pp. 13-14) described the structure of
Japanese TQC through an analogy to the structure of a
building (see Fig. 1).
3.3.1 Intrinsic Technology. Kano explained that
Japanese TQC assumes the existence of intrinsic technology. Intrinsic technology is the basic theory and practice
base specific to a particularindustry. "For example, electrical engineering is the technology intrinsic to the electric
industry; chemical engineering is intrinsic to the chemical industry. Intrinsic technology provides the necessary
foundation upon which TQM is built" (Kano 1993, p. 13).

QualityAssurance,etc.

Purpose

Tools

Motivation

Concepts

Techniques

Vehicles

Motivational
Approach

Intrinsic
Technolo0g

Figure1. Structureof Japanese TotalQualityControl.(Copyright

1993 by the Regents of the Universityof California.Reprinted
fromthe CaliforniaManagementReview, Vol. 35, No. 3, p. 14. By
permissionof The Regents.)

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197

3.3.2 Motivational Approach. Given the existence

of intrinsic technology in an industry, top management
must create the energy necessary to promote quality. Kano
(1993, pp. 14-15) suggested thattop management can create this energy by communicating real or potential crises
that face their organization to their interdependentsystem
of stakeholders or by committing themselves to a vision
for their organization. Either way, top management creates a stimulus to motivate the people under them to exert
the energy necessary to create quality.
3.3.3 Tools. Customer satisfaction and quality assurance are promoted through the tools of Japanese TQC.
The tools of Japanese TQC form an interdependentsystem
of concepts, techniques, and promotional vehicles.
Kano (1988), Iizuka and Osada (1988, p. 9), and
Ishikawa (1985) defined four empirically derived principles of Japanese TQC:
(1) have a customer orientation; the next process is
our customer; think from the customer's perspective;
break down barriersto sectionalism;
(2) manage by fact, and use statistical methods;
(3) use the plan-do-check-act (PDCA) cycle to decrease
the difference between process performance (actual
results) and targets; and
(4) have respect for humanity, and use participatorymanagement. Japanese TQC has a humanistic view of the
worker, namely that workers can contribute to customer satisfaction and quality assurance if they are
given suitable education and training.
Pascal said that a human being is a thinking reed. This
means that if you eliminate thinking from a human being, all that remains is a reed (a thing with no soul or
consciousness or an ability to think). Consequently, according to Pascal, a human being is defined by thinking;
according to Japanese TQC one must help human beings
think to respect their humanity.
The techniques of Japanese TQC include the seven basic quality-control tools, the seven management tools, advanced tools, and quality-control stories. The seven basic
quality-control tools include flow charts, brainstorming
and cause-and-effect diagrams, check sheets and Pareto
diagrams,histograms, runchartsand control charts, scatter
diagrams, and stratification. The seven management tools
include affinity diagrams, interrelationshipdiagraphs,systematic diagrams, matrix diagrams, matrix data analysis,
process decision program chart (PDPC) analysis, and arrow diagrams. The advanced tools include design of experiments, Taguchi experiments, quality function deployment, flag diagrams, and foolproof engineering, to name
a few.
The vehicles of Japanese TQC are called promotional
activities or administrative systems. They were largely
developed in the 1970s and 1980s and include daily management, cross-functional management, policy management, quality-control circle, and education and training.
The vehicles of Japanese TQC assume expertise in several
support mechanisms, such as control items (indicators),
quality-control audit and quality-control diagnosis, variance analysis, and the Deming Prize. See the Appendix
for a discussion of support mechanisms.
198

TheAmerican Statistician,August 1994, Vol.48, No. 3

Daily management involves developing and improving

best-practice methods. The purpose of a best-practice
method is to achieve equal outcomes from different machines, workers, managers, areas, and so forth. This is accomplished by developing the discipline to follow a bestpractice method. At a more advanced stage of quality
management, flexibility in best-practice methods can be
allowed as employees are capable of yielding equal outcomes by using methods tailored to their unique abilities.
The development of best-practice methods is called
housekeeping. Housekeeping is accomplished through
the standardize-do-check-act (SDCA) cycle: standardize (employees study processes and develop best-practice
methods that define departmentalmanagement systemsbest-practice methods can include traditional work standards 'ala Frederick Taylor), do, check, and act (management formalizes best-practice methods through training).
The improvement of best-practice methods is called daily
management. Daily management is performed by using
the PDCA cycle to improve the individual or departmental
management systems that are necessary for an individual
or group (department)to achieve targets.
Cross-functional management includes the corporatelevel activities that are necessary to achieve the corporate
targets concerned with quality, cost, scheduling, quantity,
and safety, which are the parameters of sales and profit.
Cross functional management includes the following activities: (1) deploying strategies for each corporate target
into departmentaltargets, (2) ensuring that each department performs its deployed targets in daily management,
(3) evaluating processes and results from a corporatelevel,
and (4) taking action through PDCA if necessary. Crossfunctional management is performed by using the PDCA
cycle to improve the cross-departmentalmanagement systems (methods) responsible for the difference between
process (actual) performance and targets.
Ishikawa (1985, pp. 59-71), King (1989), and Mizuno
(1988) discussed policy management (hoshin kanri).
Policy management includes the activities necessary to
achieve presidential policy in the long run. There are five
steps to policy management: (1) policy setting by the president, (2) policy deployment, (3) policy implementation,
(4) policy evaluation and feedback, and (5) presidential
review of policy, and back to the first step. Policy management assumes that housekeeping, daily management,
and cross-functional management are operational within
the organization.
Policy is best-practice methods and targets; management is PDCA. Hence, policy management is performed
by using the PDCA cycle either to innovate (create breakthrough) the management systems (best-practice methods) responsible for the difference between process (actual) performance and targets or to change the direction of
a company.
Quality-control circles (QCC's) are small groups of
people from the same workshop who perform voluntary
quality-control functions. The QCC operates continuously with all members participating as part of the organization's TQC activities and as part of the individual
member's self-development plan. The circle members use
statistical quality-control techniques for control and im-

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provement of best-practice methods. Kano (1988) stated

that the basic ideas behind QCC's are to (1) contribute
to the improvement and development of TQC; (2) respect
humanity,build a bright workshop environment, and make
it enjoyable to be alive; and (3) draw out and improve infinite human potential.
Education and training promotes TQC and the development of the individual. Education (to make people think)
is different from training (to facilitate job skills). Training
is critical to formalizing the best-practice methods developed and improved in the "act" stages of the SDCA and
PDCA cycles.

3.4 Intrinsic Value

Japanese TQC is based on the idea that quality comes
from customer satisfaction and quality assurance. Some
Japanese quality experts believe that Japanese TQC has
no intrinsic value beyond the pursuit of customer satisfaction and quality assurance. OtherJapanese quality experts
believe the converse. For example, Gitlow (1990) asked a
senior Japanese quality expert if TQC is a philosophy with
wide application to life. He said yes; it is a combination
of techniques and spirituality. He said jujitsu is only techniques, whereas judo is spirituality and techniques. He
said that Japanese TQC is like judo.

4. OVERVIEWOF DEMING'S THEORYOF

MANAGEMENT
4.1 Definitionof Quality
Deming (1993) defined quality as follows: "A product or service possesses quality if it helps somebody and
enjoys a good and sustainable market"(p. 2). This definition implies (paraphrasedfrom Deming 1982, p. 229)
that the product or service has predictable uniformity and
dependability at low cost and is suited to the market.

4.2 Purpose
The purpose of Deming's theory of management is to
transformWestern leaders to that they will do the following: (1) improve and innovate the system of interdependent stakeholders of an organization over the long term
to allow all people to experience joy in their work and
pride in the outcome; (2) optimize the system of interdependent stakeholders of an organization over the long
term so that everybody wins; do not optimize one stakeholder group's welfare at the expense of another stakeholder group's welfare (stakeholders include employees,
customers, suppliers, stockholders, the community, and
competitors); and (3) improve and innovate the condition
of society. Society includes local, regional, national, and
internationalsystems, for example, the entire educational
system (public and privateschools, primaryand secondary
schools, and universities), the environment, public health,
and the economic and social well being of communities
and countries.
A Western leader is defined by his or her belief in a
mechanistic or Newtonian view of the universe; this is a
reductionistc view. It holds that all things can be reduced
to their component parts. If the component parts are understood, then the thing is understood. An example of this

type of thinking is seen in the current practice of management by objectives; that is, if objectives are met at the
lowest levels of an organization, they will add up to the
global objective(s) of the organization. This view does not
appreciate the synergistic effects that the components of
a system have on each other and on the functioning of the
entire system.
4.3

Structure

Deming (1993, pp. 94-118) developed a theory of management that helps individuals learn through the acquisition of process knowledge gained from experience coordinated by theory. He called this theory a system of profound knowledge. The system of profound knowledge is
composed of four components: appreciation of a system,
theory of variation,theory of knowledge, and psychology.
All four components are interdependent and do not stand
alone. Fortunately,it is not necessary to be expert in any
of the components to understand and apply the system of
profound knowledge.
The following brief discussion of the system of profound knowledge is taken from Deming (1993, pp. 94118). This discussion is not meant to be complete; its
purpose is to present some of the highlights of Deming's
theory.
4.3.1 Appreciation of a System. A system is a collection of components that interact and have a common
purpose (aim). It is the job of top management to optimize
the entire system toward its aim. It is the responsibility of
the management of the components of the system to promote the aim of the entire system; this may require that
they suboptimize their component.
4.3.2 Theory of Variation. Variation is inherent in
all processes. There are two causes of variation: special
causes and system causes. Special causes of variation are
external to the system. It is the responsibility of local people and engineers to determine and resolve special causes
of variation. System causes of variation are due to the inherent design and structureof the system; they define the
system. It is the responsibility of management to isolate
and reduce system causes of variation.
A system that does not exhibit special causes of variation is stable; that is, it is a predictable system of variation.
Its output is predictable in the near future.
There are two types of mistakes that can be made in the
management of a system. The first mistake is treating a
system cause of variation as a special cause of variation.
This is by far the more common of the two mistakes; it
is called tampering and will invariably increase the variability of the output of a system. The second mistake is
treating a special cause of variation as a system cause of
variation. Walter Shewhart developed a control chart to
provide an economic rule for minimizing the loss from
both types of mistakes.
Management requiresknowledge about the interactions
between the components of a system and its environment.
Interactionscan be positive or negative; they must be managed.
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199

4.3.3 Theory of Knowledge. Information, no matter

how speedy or complete, is not knowledge. Knowledge
is indicated by the ability to predict future events at the
risk of being wrong and the ability to explain past events
without fail. Knowledge is developed by stating a theory,
using the theory to predict a future outcome, comparing
the observed outcome with the predicted outcome, and
supporting, revising, or even abandoning the theory.
There is no true value of anything. Communication is
possible when people share operational definitions.
Experience is of no value without the aid of theory. Theory allows people to understand and interpretexperience,
and it allows people to ask questions and to learn.
4.3.4 Psychology. Psychology helps one to understand people, the interactions between people, and the interactionsbetween people and the system of which they are
part. Management must understandthe differences among
intrinsic motivation, extrinsic motivation, and overjustification. All people require different amounts of intrinsic
and extrinsic motivation. It is the job of a managerto learn
the proper mix of the two types of motivation for each of
his or her people.

4.4 Paradigms
The system of profound knowledge requires that Western leaders accept several paradigms which are discussed
as follows.
Paradigm 1. Manage to create a win-win environment, not a win-lose environment. The focus of a winwin environment is the optimization of all stakeholders in
the organization's system of interdependentstakeholders.
This system includes employees, customers, stockholders,
suppliers, subcontractors,regulators, and the community,
to name a few.
Paradigm 2. Manage to create a balance of intrinsic motivation and extrinsic motivation, not just extrinsic
motivation. Intrinsic motivation releases both human and
process energy that can be focused on the improvement
and innovation of the system of interdependentstakeholders. Extrinsic motivation restricts the release of energy
from intrinsic motivation by judging, policing, and destroying the process and the individual.
Paradigm 3. Manage with a long-term process and
results orientation (called analytic management), not with
a short-term results-only orientation (called enumerative
management). Analytic management promotes the improvement and innovation of organizational processes.
Highly capable processes facilitate prediction of the near
future and consequently a higher likelihood of achieving
the organizational purpose.
Paradigm 4. Manage to promote cooperation, not
competition. In a cooperative environment, everybody
wins. The customer wins products and services that he or
she can brag about and rejects commonly accepted levels
of defects, rework, shoddy workmanship, and poor service. The firm wins returns for investors and secure jobs
for employees. Suppliers win long-term customers for
their products. The community wins an excellent corporate citizen.
200

In a competitive environment, most people lose. The

costs resulting from competition are unknown and unknowable, but they are huge. Competition causes individuals, or departments, to optimize their own efforts at
the expense of other stakeholders. This form of optimization seriously erodes the performance of the system of
interdependentstakeholders.
Commentary. Each leader's conception of the new
practice of management should be based on the system of
profoundknowledge; however, even with the common theoretical base of the system of profound knowledge, leaders
in an organization will have different understandings of
how they should practice management. Top management
must endeavor to reduce individual-to-individual variation in respect to understanding the system of profound
knowledge. This will lead to consistency in the practice
of management.

4.5 Intrinsic Value

Deming's theory of management has intrinsic value beyond the managementof organizations. It can also be used
to improve the lives of people.

5. DIFFERENCESBETWEENJAPANESETQC
AND DEMING'S THEORYOF
MANAGEMENT
5.1 Background
Japanese TQC and Deming's theory of management
have several common elements; however, they also have
several different elements. The different elements make
a combination of the two schools of thought hazardous,
although possible. Deming (1982, 1986, 1993), Gitlow
and Gitlow (1987), Ishikawa (1985, p. 17), Imaii (1987),
Juran (1988, chap. 35F, pp. 35F.1-35F.30), Iizuka and
Osada (1988), Kano (1988, 1993), Scherkenbach (1986,
1991), and many privateconversations between the author
and quality experts were used as the source references for
this section. The differing elements are discussed in the
following sections (see Fig. 2).

5.2 DifferencesCaused by Purpose and Structure

5.2.1 Purpose. The purpose of Japanese TQC is to
increase customer satisfaction. The purpose of Deming's
theory of management is to transformWestern leaders so
that they will allow all people to experience joy in their
work and pride in the outcome, optimize the system of
interdependent stakeholders so that everybody wins, and
improve and innovate the condition of society.
5.2.2 Structure in Respect to Theory and Practice.
Japanese TQC is an empirically based paradigm that is
structuredfunctionally for practical usefulness to increase
customer satisfaction and quality assurance. Deming's
theory of management is a theoretically based paradigm
that is structuredphilosophically for soundness in pursuing the aims of the system of profound knowledge and the
14 points.
One possible explanation for the structural difference
between Japanese TQC and Deming's theory of management may be found in culture. One of the importantroots

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of Western culture is Christianity. Christianity is metaphysical in that it is concerned with developing theory to
understandthe real world. Three of the importantroots of
Japanese culture are Buddhism, Confucianism, and Shintoism. Buddhism is composed of two streams, one old and
one relatively new. The old stream is Therevada, which
is nonmetaphysical, nontheoretical, and practical, and is
concerned with developing empirical rules to understand
the real world. The newer stream is Mahayana, which
is metaphysical. Mahayana, however, has developed into
two smaller streams, Chan and Zen. Zen, unlike meta-

Differences
Purpose

Structure
in
to
respect
theory
and
practice

Japanese
Increase
customer
satisfaction
quality
assurance
Empirically
based and
structured
functionally
practical
usefulness

TQC

Deming's

and

for

Assumptions

of

Win-Win
Win-Lose

Principles
of
Japanese

TQC__

Next
process
customer

v.

Dr.

Intrinsic
v.
Extrinsic

Respect

Theory
Analytic
V.
Enumerative

of

Management
Cooperation
V.
Competition

Weak

Moderate

PDCA
Manage
fact

Deming's

Strong
Moderate

by
Weak

for
humanity

Figure 3. A Comparison of the Principles and Assumptions of

Japanese TotalQuality Controland Deming's Theory of Management.

Theory

Create joy in
work and pride
in the outcome;
the
Optimize
entire
system;
Improve society
Theoretically
based and
structured
philosophically
to create
joy
work

in

Structure
in
to
respect
and
principles
assumptions

Next process
is
customer;
PDCA;
Manage by fact;
Respect
humanity

Win-win;
Cooperation;
Intrinsic
motivation;
Analytic
management

in
Structure
to
respect
vehicles

Highly
structured
vehicles
which
were developed
from
empirically
successes
in
Japanese
organizations

Each
organization
must develop
its
own situation
specific
vehicles
from
the system of
profound
knowledge

Differences
caused by views
of competition
as a
motivational
tool to achieve
customer
satisfaction

Customer
is
satisfaction
relative
defined
to competition

Customer
is
satisfaction
pursued for the
sheer joy of the
experience

Differences
caused by views
of fear as a
tools
managerial

No statement
about fear as a
tool
managerial

Fear has a
profoundly
negative
impact
on employees
and
on the
of
functioning
an organization

Differences
caused
by views
of numeric
targets

No problem
all
setting
manner of
even
targets,
which
targets
serve a
motivational
function.
Targets
may not
(directly)
reflect
customer's
needs.
Targets
may precede
methods.

Many numeric
targets
(goals)
are viewed as
and
arbitrary
The
destructive.
aim, methods,
and numeric
of a
targets
system can not
be broken into
separate
parts,
they are
interrelated.
Methods must
precede
targets.

Differences
caused by views
of performance
appraisal

No vehicle
for
performance
Use
appraisal.
whatever
structure
exists
in the
organization

Performance
appraisal
which
systems
promote ranking
are not anI
acceptable
tool|
of management.
They must be
replaced
by a|
practice
called
"unbundl ing"

Figure2. A Comparisonof the DifferentElements of Japanese

ThialQualityControl(TQC)and Deming'sTheoryof Management.

physical Chan, is a return toward nonmetaphysical, nontheoretical, and practical Therevada. Eber (1986, p. 63)
stated that Confucianism and Shintoism, like Therevada
or Zen Buddhism, are both nonmetaphysical, nontheoretical, and practical religions that are concerned with developing empirical rules to understand the real world. Consequently, it is possible that the structural difference between the two schools of thought emanate in part from the
cultural differences among Ishikawa, Mizuno, Asaka, and
other leading Japanese quality professionals, and Deming.
5.2.3 Structure in Respect to Principles and Assumptions. A comparison of Deming's theory of management
and Japanese TQC reveals differences between their respective principles and assumptions (see Fig. 3).
Deming's assumption about a win-win environment is
moderately related to TQC's principle of "next process
is customer." The recognition that customers are both
internal and external to an organization is common to
both schools of thought, hence, the moderate relationship. Deming's win-win assumption, however, also encompasses the notion of optimization of an organization's
system of interdependentstakeholders;this includes competition in many circumstances.
Deming's assumption about intrinsic versus extrinsic
motivation is weakly related to TQC's respect for humanity principle. The relationship is weak in that TQC's definition of respect for humanity only includes improving
an individual's ability to think and thereby improving the
individual's ability to increase customer satisfaction and
quality assurance. Deming's concept of respect for humanity is fundamental to the entire purpose of his theory
of management, that being to create joy in work and pride
in the outcome. Deming's concern for the individual is
far more complete and holistic than TQC's concern. The
Japanese, however, are earnestly studying this point in a
program called New WorkVWay.
Deming's assumption about analytic management is
strongly related to TQC's PDCA principle. Analytic management is concerned with control and improvement of
processes and so is the PDCA cycle, hence, the strong

relationship. One difference between the two schools of

thought is how they handle the analysis of data. Deming's
theory of managementdenies the relevance of a population
and a sampling frame and consequently a standard error
in studies of processes. The TQC school believes that
the notions of population, sampling frame, and standard
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20]

error can be applied in studies of processes. They both,

however, believe in the techniques of quality management,
for example, the seven basic quality-control tools. Hence,
the moderaterelationshipbetween "analyticmanagement"
and "manage by fact."
Deming's assumption about cooperation is weakly related to TQC's "next process is customer" principle. The
weak relationship is expressed in the cooperation shown
between suppliers and customers in an organization's system of interdependent stakeholders. Deming's theory of
management and Japanese TQC, however, have fundamentally different views on the role of competition to an
organization; see the section on competition later in this
article.
5.2.4 Structure in Respect to Vehicles. Japanese
TQC has a highly structured set of vehicles developed
empirically from successes in Japanese organizations.
Deming's theory of management promotes the idea that
each leader's paradigm for the new practice of management should be based on the system of profound knowledge. It presents no set of universally accepted vehicles.
Each leader must develop his or her own situation-specific
set of vehicles.
5.3

Differences Caused by Views of Competition as

a Motivational Tool to Achieve Customer
Satisfaction

Japanese TQC holds that customer satisfaction is defined in relation to competition; that is, the organization
that satisfies customers better than its competition wins
the race for customer satisfaction. Competition is the
motivating force behind the desire to increase customer
satisfaction.
Deming's theory of management believes that customer
satisfaction is defined in respect to optimization of the
interdependent system of stakeholders. Improvement of
customer satisfaction is an aim thatis pursuedfor the sheer
joy of the experience; competition is not the motivating
force behind the effort. The pursuit of customer satisfaction is internally motivated, not externally motivated.
This does not mean that leaders operating underDeming's
theory of management ignore facts about competitors.
5.4

Differences Caused by Views of Fear as

Managerial Tools

Deming's theory of management states that fear has

a profoundly negative impact on employees and on the
functioning of an organization. The losses to the individual and the company that are caused by fear are unknown,
unknowable, and huge.
Japanese TQC has no statement about the use of fear
as a managerial tool; however, an underlying principle
of Japanese TQC is respect for humanity, which means
that employees can contribute to customer satisfaction and
quality assurance if they are given suitable education and
training. This interpretation of respect for humanity, in
conjunction with an emphasis on process improvement,
creates an environment in which it may not be necessary
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TheAmericanStatistician,August 1994, Vol.48, No. 3

to state explicitly thatfear must not be used as a managerial

tool.
5.5

Differences Caused by Views of Numeric Targets

In Deming's theory of management, many numeric targets areviewed as arbitraryand destructiveto the improvement of quality. Some examples of destructive numeric
targets are (1) numeric targets set on managerial desire
only, (2) work standardsand piece rates, (3) zero variances
in cost accounting, and (4) return on investment calculations that do not consider unknown and unknowable costs.
Numeric targets that are acceptable in Deming's theory of
management include facts of business such as, (1) breakeven values, (2) nominal values and specification limits
that are based on customer needs and process capabilities,
(3) budgets, plans, and forecasts that are based on process
capabilities, and (4) customer deadlines.
In Deming's view, a group of components come together
to form a system with an aim. The aim requires that the
components organize in such a way that they create subsystems. The subsystems arecomplex combinations of the
components. The subsystems require certain methods to
accomplish the aim. Resources are allocated between the
methods by setting goals, which may be numeric, which
optimize the overall system and not the subsystems, in respect to the aim. For example, a group of individuals form
a team with an aim. The individuals must combine their
efforts to form subsystems. These combinations may require complex interactions between the individuals. The
subsystems require methods, and the methods require resources. Resources are allocated between the methods,
and ultimately the subsystems and individuals, by setting
goals that optimize the aim of the team. The aim, methods,
and goals are all part of the same system; they cannot be
broken into three separate entities. Separation of the aim,
methods, and goals destroys them because they are defined
by their interactions. In Deming's theory of management,
the aim of a system defines its methods, and its methods
defines its targets; hence, methods precede targets.
In Japanese TQC, managers have no problem setting
all manner of targets; for example, targets that serve a
motivational function only. Furthermore, the targets established by management in a Japanese TQC organization
may not (directly) reflect customers' needs; for example,
if reducing down time to zero minutes per year is the ultimate goal of management, and the current stable process
average down time is 100 minutes per year, a manager in
a Japanese TQC organization might set a numeric target
of reaching an average of 50 minutes down time per year
in two years; this could come from a survey of down time
in similar companies in the same industry or similar industries, or from a "spirited"challenge. The 50-minute
target does not reflect customers' needs and is viewed as
arbitraryby proponents of the Deming school.
In JapaneseTQC, it is believed that methods and targets
go hand in hand; they define policy. It is not necessary,
however, for a method to precede a target. A method can
be used to define a target, or a target can be used to define
a method. This is in contrast with the Deming view that a
method must precede a target.

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5.6

Differences Caused by Views of Performance

Appraisal

In Japanese TQC, there is no administrative system

for performance appraisal. Japanese TQC uses whatever mechanism exists in an organization for performance
appraisal; this includes systems that rank individuals.
Consequently, it is reasonable to ask the proponents of
Japanese TQC the following question: What happens to
an individual who does not receive a good rankingbecause
of poor results? The answer is that attention is focused on
the process that produced the undesirable results, not on
the individual. This reward system nurtures a focus that
is oriented on the process.
In Deming's theory of management, performance appraisal systems that promote ranking of individuals or
areas are not an acceptable tool of management. Gitlow and Gitlow (1987, pp. 120-122) state that ranking
is considered a dysfunctional practice in Deming's theory
of management. Scholtes (1987, 1992) stated that traditional performance appraisal systems must be replaced by
a practice called unbundling. Unbundling calls for developing separate systems for giving feedback to employees, providing an alternativebasis for salary and bonuses,
giving direction to employees, providing an occasion for
communication, identifying candidatesfor promotion, and
assessing training needs of employees.
6.

SUMMARY

Deming's theory of management and JapaneseTQC are

viewed as similar by many people; for example, they both
use the same the seven basic quality-control tools. They
both promote different types of organizations, however.
In my opinion, the futureof quality managementrests in
the integration of both schools of thought into one school
of thought. Scherkenbach (1991) stated that quality has
emotional, logical, and physical foundations. I propose
thatthe logical and emotional foundationof the new school
of thought be Deming's system of profound knowledge
and 14 points, and the physical foundation of the new
school of thought be modified versions of the vehicles of
Japanese TQC.
APPENDIX
The vehicles of Japanese TQC assume expertise in the
theory and practice of the following supportmechanisms.
Development of Control Items (Indicators). Control
items are developed for a machine, a piece of equipment,
a facility, a process, a system, and so forth, to evaluate
its actual performance and to determine the best practice
methods necessary to accomplish its primary purpose or
objective.

Quality-ControlAudit and Quality-Control Diagnosis.

A quality-controlaudit involves comparing a best-practice
method, as monitored through a control item, against a
target. A quality-control diagnosis involves finding problems with a best-practice method and making appropriate improvements or innovations; this involves the PDCA
cycle. The results from a quality-control audit and a
quality-control diagnosis should be incorporated into the
best-practice method that was audited. The focus of the
quality-controldiagnosis is on hidden chronic problems in
the best-practice method as opposed to obvious occasional
problems.
VarianceAnalysis. The managerial reactions to differences between actual results and targets are the subject
of variance analysis. Managerial reactions consider both
special and common causes of variation.
Deining Prize. The Deming Prize is a quality-control
audit and quality-controldiagnosis process through which
an organization increases customer satisfaction and quality assurance. The Deming Prize is a journey, not a
destination.
[Received December 1993.]

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Statistician,August 1994, Vol.48, No. 3
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