Out of the Crisis

by W. Edwards Deming

Deming offers a theory of management based on his famous 14 Points for Management. "Long-term commitment to new learning and new philosophy is required of any management that seeks transformation. The timid and the fainthearted, and the people that expect quick results, are doomed to disappointment." According to W. Edwards Deming, American companies require nothing less than a transformation of management style and of governmental relations with industry. In Out of the Crisis, originally published in 1982, Deming offers a theory of management based on his famous 14 Points for Management. Management's failure to plan for the future, he claims, brings about loss of market, which brings about loss of jobs. Management must be judged not only by the quarterly dividend, but by innovative plans to stay in business, protect investment, ensure future dividends, and provide more jobs through improved product and service. In simple, direct language, he explains the principles of management transformation and how to apply them. Previously published by MIT-CAES

Genres: Business, Management, Leadership, Nonfiction, Buisness, Economics, Entrepreneurship

524 pages, Paperback

First published January 1, 1982

Reviews

[David · Rating 5 out of 5]

I read W. Edwards Deming when I had a hiatus from Saudi Aramco and worked for Bechtel in Washington, DC, for 4 years, returning to Aramco in Dhahran in 1991. Reading Deming showed me how to be a better manager without conforming to the American de rigueur process of obtaining the MBA, which I've always detested as a poor learning platform for real leadership. (Leadership can't be taught; rather, it must be learned.) Deming brought crippled Japanese manufacturing back into the modern age. Typical of prophets, he was not heeded much in his home country-- America, When the Japanese heard him lecture as one of General Douglas MacArthur's staff they immediately took to his methods of management which led to processes such as TQM--Total Quality Management, and Japan developed into one of the world's leaders of modern manufacturing.

If one is studying leadership, they must in my opinion, include a good dose of Deming.

[Bob Wallner · Rating 4 out of 5]

First let me start by saying that Dr Deming is an amazing man. I really took my time reading this book to ensure that I understood it everything he talked about.

The big take away I have from this book is not a 14 principles, not the deadly diseases and not the obstacles. The biggest takeaway, for me at least, is how weak I am at applying statistical methods to controlling quality. So much of what he talked about in the second half of the book was over my head.

I know now that I need to incorporate some accelerated statistical learning into my future.

I did enjoy this book and my guess is after furthering my understanding of statistics, this will be come a 5 star book.

[Lamec Mariita · Rating 5 out of 5]

This book is a must read if you want to be a great manager. It's easy to read and the author's style is interesting. Deming's insights into business process is timeless. Deming best summarizes the purpose of the book: "This book teaches the transformation that is required for survival, a transformation that can only be accomplished by man. A company can not buy its way into quality - it must be led into quality by top management. A theory of management now exists. Never again may anyone say that there is nothing new in management to teach.". It was written in 1982 but it's definitely still useful.

[Peter · Rating 1 out of 5]

As with many others... great lifetime of achievement and ideas, and a true hero of mine... brought down by terrible writing. Wikipedia is a better source for learning Deming philosophy. Of all the content of the book, I'd like to highlight that Deming gives much credit to Walter Shewhart for being the true father of statistical analysis of process.

As for the style and writing, the book is such a mess that you could spend 3 years researching a doctoral thesis on its flaws, but in 30 minutes this is what I've got...

Most of the content in the book is repetitive and non-specific, despite the use of language that attempts to make it sound specific.. The chapters are not well organized, and information related to certain topics comes and goes. If you could call it information at all. The ratio of rhetorical questions to statements is extremely high. There is a dizzying amount of section outlining however the method is haphazard and jumps around from numbered lists to bold section headers and inline emphasis and it is easy to lose track of what is being enumerated or delineated. For some reason this really bothered me.

One perfect example, opening to a random page deep in the book is this short paragraph in Ch 11:

"What characteristic or characteristics are important? What figures are important? What figures should one study by use of a control chart or by any other method? The answer lies in the subject matter (engineering, chemistry, psychology, knowledge of the process, knowledge of the materials, etc.), assisted by statistical theory."

So... a bunch of redundant questions, followed by an answer which was already given in the first few pages of the book, and repeated here for no particular reason at all. Oh, well you think, probably the next paragraph gets into the meat of it? Nope. The previous and next paragraphs are on a different topic. And what is this answer really? Deming has mentioned that when gathering statistics, figuring out which numbers that have been gathered are important is important, and then tautologically tells us that knowledge and statistics will help us analyze numbers. And finally, you could argue that the entire books is about this topic, so why does he put this random paragraph summarizing his book in the middle of some random chapter? ARGGGGGHHHH.

[JB · Rating 5 out of 5]

This book is to management what The Republic is to philosophy.

[TarasProkopyuk · Rating 5 out of 5]

Еще одна мощная книга по менеджменту и еще один автор, книги и статьи которого хотелось бы многие еще прочесть!

Если по степени качества разделить теорию менеджмента на три категории, то "Выход из кризиса. Новая парадигма управления людьми, системами и процессами" Деминга несомненно принадлежит к лучшей из них - к третьей. Я для себя называю эти категории так:

1. Легкий, поверхностный менеджмент, который наиболее часто встречается и в книгах и на практике, то есть в жизни;
2. Продвинутый менеджмент, встречается не так часто не только в деловой литературе, но и даже в корпоративном мире;
3. Глубоководный, менеджмент для избранных и для тех, кого не удовлетворяет даже продвинутый уровень, кто стремится не только на тактической, но и на стратегической плоскости достичь самых высоких результатов и лидировать на своем рынке постоянно и неизменно.

Побольше бы таких книг, таких авторов, и еще больше последователей тех знаний, которые бы не только несли их в деловой мир, но и повсеместно реализовывали в компаниях и государствах и организациях по всему миру.

[Henrik Berglund Berglund · Rating 2 out of 5]

Of coure a classic with groundbreaking ideas! So I guess I could have given it five stars also. I decided to not rate the book in a historical perspective though, but just estimate the value I got from it today

The ideas herein have been picked up by others, and become part of what lean/agile people know already. So, I did not really change my mind on anything after reading this.

Also all the examples are from production and focused on getting processes under statistical control. The work I'm doing is with knowledge creating companies. Quite a different problem. All the same 13 principles can be applied to that also, but other books offer more up to date thinking of businesses operating in more and more complex environments.

Also, I percepive it mostly as a collection of notes, not really a coherent book.

[Aimee · Rating 4 out of 5]

Deming's claim to fame was teaching the Japanese about quality improvement principles in manufacturing, which Japanese companies then applied and consequently became world leaders in excellence. Most of what Deming puts forth is intuitive: management must have an understanding of what each job entails (best if they actually have done the work), the ability to focus on the "long run" for their organizations (not just making quarterly profits), and instill a committment to excellence. Unfortunately, common sense is not a common commodity regardless of ones rank, which is why Deming is seen as a quality revolutionary. Deming can be dry at times, and some things are more challenging to translate to the service industry, but it's a worthy read.

[Jenny Truong · Rating 5 out of 5]

One of the most helpful perspectives/books I've read on using data to improve execution and business performance. While it may be a bit long and seem repetitive, the book can be digested in chapters as one does a textbook. Highly recommend to those who work in operations roles or anyone seeking a perspective on the barriers that get in the way of excellence in execution.

[Chet Brandon · Rating 4 out of 5]

This is obviously a classic. I picked up a used copy for pennies and have been re-reading his work. I am particularly interested in the origins of his Plan, Do, Check, Act theory. Just a great work that never ages.

[Jurgen Appelo · Rating 3 out of 5]

Great ideas, terrible writing.

[John · Rating 5 out of 5]

It has taken me many years to be at a point that I could understand this book.

This is a superior management text.

[Taylor Pearson · Rating 4 out of 5]

Out of Crisis is a classic of the quality movement that the Toyota Production System was borne out of. Deming was really one of the founders of that movement and one of the first people to somewhat intuitively grasp the complexity of modern businesses and what that required from management to adapt.

Though this book (written in 1982) is clearly directed at physical manufacturing businesses, it's pretty easy to see how they apply to pretty much any business.

A simple but profoundly true example:

Defects are not free. Somebody makes them, and gets paid for making them.

Low quality means high cost because consumer expectations don’t change, they want the same quality. If you mess it up, then you pay for rework. What was expensive about our onboarding process is how much rework had to be done.

This seems obvious in manufacturing but consider this example from a retail business:

I ordered from a bookstore one case of twenty-four count inch ring notebooks. Instead, twelve came.

On complaint, the bookstore sent the other twelve. I inspected every notebook and found one where the rings were stationary in the open position, useless to me. Twenty-four notebooks qualified me for a discount. The store charged me the full price, with the explanation, when I mentioned this, that the girl that took the order was new.

This is an all too common experience that I bet everyone has had. The business owner and or employees gives the gold ole “we were trying our best and it’s not our fault.” However, the customer doesn’t care. They overpaid for poor service.

But the fact remains that the correction of the error in the bill, and replacement of the defective notebook, must have wiped out the profit on the sale and left the customer with a resolution to try some other stationer on future orders.

This is a good example because it seems like such a little thing, the kind of thing that would go unnoticed by most people. But, these issues tend to be systematic in my experience. The business that has the issue is likely to have many other similar ones. As the saying goes, there is never just one cockroach in the kitchen.

To restore quality, Deming lays out his 14 points that companies must follow. One of my favorite is 5:

Improve constantly and forever the system of production and service

…
Putting out fires is not an improvement of the process. Neither is discovery and removal of a special cause detected by a point out of control. This only puts the process back to where it should have been in the first place.

This was known in the Toyota Production System as kaizen, continuous improvement. It is an essential operating principle, every time something goes wrong you need to identify it and do a root cause analysis until everyone in the business understands that this will be how things always work.

Another personal favorite, point 9:

Break down barriers between staff areas ... Servicemen learn from customers a great deal about their products. There may unfortunately be in some companies no routine procedure for use of this information. In one instance, the service department, in response to frantic calls from customers, had routinely cut off a tube that conveys abrasive material to a downward outlet, and reversed the auger beyond the outlet.

The problem was that the auger jammed the material into the end of the tube. The manufacturing department kept right on making the auger as always before, while the service department, on a call from a customer, routinely made the correction. The management were unaware of the lack of teamwork between manufacturing and service, and of the loss.

This is, in a sense, a continuation of the same point. It is essential as a company scales that they have processes and a culture for any time something goes wrong that it gets communicated to someone that can solve the root cause. Putting out fires gets you zero points, a well operating company requires that you must be a fire prevention specialist.

Deming, and the quality movement more generally, was in some way a reaction to the authoritarian high modernism of Taylorism which tried to reduce all business down into spreadsheets.

The notion of quality, the things that cannot be measured, is an essential counterpoint.

The most important figures that one needs for management are unknown or unknowable … but successful management must nevertheless take account of them.

Examples:

1. The multiplying effect on sales that comes from a happy customer, and the opposite effect from an unhappy customer. ...

2. The boost in quality and productivity all along the line that comes from success in improvement of quality at any station upstream

The first five chapters of this are excellent and broadly applicable to all businesses. I found the later parts of the book didn’t age quite so well and were more directed at more traditional businesses.

[Omar Halabieh · Rating 4 out of 5]

Dr. Deming best summarizes the purpose of the book: "This book teaches the transformation that is required for survival, a transformation that can only be accomplished by man. A company can not buy its way into quality - it must be led into quality by top management. A theory of management now exists. Never again may anyone say that there is nothing new in management to teach."

He then proceeds with outlining and subsequently detailing his "14 points for management". These fourteen points, he argues, form the basis of the required transformation of the American industry:

"

1. Create constancy of purpose toward improvement of product and service, with the aim to become competitive and to stay in business, and to provide jobs.

2. Adopt the new philosophy. We are in a new economic age. Western management must awaken to the challenge, must learn their responsibilities, and take on leadership for change.

3. Cease dependence on inspection to achieve quality. Eliminate the need for inspection on a mass basis by building quality into the product in the first place.

4. End the practice of awarding business on the basis of price tag. Instead, minimize total cost. Move toward a single supplier for any one item, on a long-term relationship of loyalty and trust.

5. Improve constantly and forever the system of production and service, to improve quality and productivity, and thus constantly decrease costs.

6. Institute training on the job.

7. Institute leadership. The aim of supervision should be to help people and machines and gadgets to do a better job. Supervision of management is in need of overhaul, as well as supervision of production workers.

8. Drive out fear, so that everyone may work effectively for the company.

9. Break down barriers between departments. People in research, design, sales, and production must work as a team, to foresee problems of production and in use that may be encountered with the product or service.

10. Eliminate slogans, exhortations, and targets for the work force asking for zero defects and new levels of productivity. Such exhortations only create adversarial relationships, as the bulk of the causes of low quality and low productivity belong to the system and thus lie beyond the power of the work force.

11a. Eliminate work standards (quotas) on the factory floor. Substitute leadership.

11b. Eliminate management by objective. Eliminate management by numbers, numerical goals. Substitute leadership.

12a. Remove barriers that rob the hourly worker of his right to pride of workmanship. The responsibility of supervisors must be changed from sheer numbers to quality.

12b. Remove barriers that rob people in management and in engineering of their right to pride of workmanship. This means, inter alia, abolishment of the annual or merit rating of management by objective.

13. Institute a vigorous program of education and self-improvement.

14. Put everybody in the company to work to accomplish the transformation. The transformation is everybody's job.

"

While the book may seem dry at points, particularly if being read from cover to cover, it encompasses numerous gems in management. Particularly as it relates to the overall management of and leadership in quality and its importance to re-gain competitive edge.

Below are key excerpts from the book, that I found particularly insightful:

1- "This increase in production led to a new goal. The new goal will create questions and resentment among production workers. Their first thought is that the management is never satisfied. Whatever we do, they ask for more. Here are the fruits of exhortations: 1) Failure to accomplish the goal 2) Increase in variability 3) Increase in proportion defective 4) Increase in costs 5) Demoralization of the work force 6) Disrespect for the management"

2- "The job of management is to replace work standards by knowledgeable and intelligent leadership...Wherever work standards have been thrown out and replaced by leadership, quality and productivity have gone up substantially, and people are happier on the job."

3- "Incidentally, computation of savings from use of a gadget (automation or robotic machinery) ought to take account of total cost, as an economist would define it. In my experience, people are seldom able to come through with figures on total cost."

4- "Quality must be measured by the interaction between three participants: (1) the product itself; (2) the user and how he uses the product, how he installs it, how he takes care of it, what he was led to expect; 3) instructions for use, training of customer and training of repairman, service provided for repairs, availability of parts. The top vertex of the triangle does not by itself determine quality."

5- "There are two types of quality in any system, whether it be banking or manufacturing. The first is quality of design. These are the specific programs and procedures that promise to produce a saleable service or product: in other words, what the customer requires. The second type is quality of production, achievement of results with the quality promised. Quality control works both with the product and with the design of the product. And it is at this point that quality control begins to differ from the traditional system. To find the mistake is not enough. It is necessary to find the cause behind the mistake, and to build a system that minimizes future mistakes."

6- "...Good agreement between independent results of two men would only mean they have a system. It would not mean they are both right. There is no right answer except by methods agreed upon by experts."

7- "Figures on accidents do nothing to reduce the frequency of accidents. The first step in reduction of the frequency of accidents is to determine whether the cause of an accident belongs to the system or to some specific person or set of conditions. Statistical methods provide the only of analysis to serve as a guide to the understanding of accidents and to their reduction."

[Maksim Korolev · Rating 5 out of 5]

Очень сложная по стилю, но блестящая по содержанию.
Особенно про общие и особые причины и про про диаграммы шухарта , это одни из самых практичных идей, что я вообще встречал, очень хорошо переносятся на любую сферу: найм людей, контроль метрик, мотивация, достижение личных целей.

Слышал, что эти же идеи изложены более понятно в "пространство доктора Деминга" (книгу написал его прямой ученик).

[Melsene G · Rating 3 out of 5]

This is a highly technical book, with lots of graphs, charts, and statistical computations. If you're in the statistics field this is a seminal work. If you're in a large business organization and are looking for ways to improve things, you will find valuable material here. If you're familiar with Lean and Toyota Production Systems, and eliminating waste, this is good foundational reading.

The key takeaway are Deming's 14 points: 1. Create constancy of purpose for improvement of product and service; 2. Adopt a new philosophy; 3. Cease dependence on inspection to achieve quality; 4. End the practice of awarding business on the basis of price tag alone-use a single supplier; 5. Improve constantly and forever every process for planning, production, and service; 6. Institute on the job training; 7. Adopt and institute leadership; 8. Drive out fear; 9. Break down barriers between staff areas; 10. Eliminate slogans, exhortations, and targets for the work force; 11. Eliminate numerical quotas for the work force and numerical goals for management; 12. Remove barriers that rob people of pride of workmanship. Eliminate annual rating or merit system; 13. Institute a vigorous program of education and self-improvement for all; and 14. Put everybody in the company to work to accomplish the transformation.

[Aaron · Rating 5 out of 5]

The book outlines Deming's fundamental ideas of effective, responsible management and organization. He goes to length to illustrate how irresponsible, misguided management has put the United States in economic trouble in recent decades; he offers sound advice makes clear cases for improvements in management and how changes will translate to betterment for the entire agency, and from there to the nation.

In my book Deming sets the standard for clear, efficient non-fiction writing. He draws heavily on personal experience and makes heavy use of examples to illustrate good and poor organization and management systems. The format feels somewhat like a personal notebook, using almost "bullet point" writing for efficiency instead of stylistic narrative. While he does not read "like a book," it makes for easy excerpts.

Furthermore, he starts each chapter by explicitly stating the purpose and goal of the chapter, illustrating his direct and to-the-point style.

This book should be standard reading for all management. I would not recommend it for the general public only because of its style/format.

[Brigt Nersveen · Rating 5 out of 5]

I've read a fair share of books of Lean and I attended the IHI improvement conference. They have Deming as their "godfather". This book really put things in perspective. How we manage our business and how we should.

The statistical approach is prominent in this book, more than any other I've read. Already I'm experimenting with his thoughts in worksettings.

For me this book will be a foundation for further development and thinking.

[Steve Coscia · Rating 4 out of 5]

Old time manufacturing people (like me) live and die by this book. The statistical process control (SPC) methodology still holds true. The 14 Points remain valid. Deming taught SPC to war torn Japan back in the mid 1940s. Their manufacturing quality excelled. I attended Deming's four-day workshop when he was alive. He was the master.

[Susan Janke · Rating 5 out of 5]

I am the COO at a service corporation and found this book extremely helpful. Some aspects don't really apply (like inventory control, for example), however, the majority of this book focuses on sound management practices that are relevant across the board.

[Chris Cox · Rating 5 out of 5]

An American classic. This book is packed with information about using statistics to solve quality problems in manufacturing, medicine, and almost all fields of endeavor. I highly recommend this book to engineers, doctors, scientists, and manufacturing workers.

[Todd · Rating 5 out of 5]

This book was included in my book: The 100 Best Business Books of All Time. www.100bestbiz.com

[Daniel · Rating 4 out of 5]

Deming was definitely ahead of his time and this book is a true gem in some way. It is heavily focused on manufacturing so many examples are dated. There are a few key concepts though which are crucial for managers to understand even today.

First, how much a system or environment determines what an individual contributor can actually produce. By using statistical methods, Management is responsible to improve the system so great work can happen, instead of punishing or rewarding workers based on individual performance that is caused by variation in the system instead of actual ability. The red beads experiment and the funnel experiment are worth revisiting, there are also simple YouTube videos illustrating these.

Second, and much less prominent in the book, how defining work and quality standards and simple words (eg "clean", "safe", "defect", "pollution") is essential to bring clarity to people in an organization.

I think the book is quite poorly written though, as it basically reads like a collection of notes, thoughts and stories. Many concepts are repeated at least a dozen times. A few, significant key insights are buried in 400+ pages of this "mess". I somehow still enjoyed reading it and skimmed a lot of the stuff that's completely irrelevant to building digital products today.

[Christopher Combs · Rating 5 out of 5]

Probably the best book I've read on leadership. Deming's writing is primarily focused on improving management in the field of manufacturing but his insights are applicable to so many areas of life. Planning on writing a lot more in the near future about the points he makes in this book, really cannot recommend it enough.

Read if you are interested in understanding the responsibilities inherent in taking on a position of leadership as well as how complex organizations can coherently pursue their goals.

[Dave Neary · Rating 4 out of 5]

A legend in management techniques using statistical methods. Famous for the 14 principles of management. You can feel the confidence and experience in his reports to clients and his conditions for taking new clients. Nevertheless, the book is repetitive, and at a certain point I didn't feel the return on investment in reading additional chapters was high. Still four stars, a very valuable reference!

[John Stepper · Rating 5 out of 5]

It took me more than 30 years to read this book. Really. I devoured the first half in the early 1990s. But certain sections, like a list of “Suggestion for Additional Continual Studies in a Bank” that ran for ten(!!!) pages, caused me to give up before the end.

I tried at least 3 or 4 more times, and finally I persisted. And I’m glad I did. Deming was a genius, and his philosophy of management and respect for the worker is something sorely lacking even now, seventy years after he started implementing his methods in Japan.

[Michael Czapla · Rating 4 out of 5]

I couldn't finish it. Its rather dated now

[Bartosz Pranczke · Rating 4 out of 5]

Very good ideas but delivered in such a way that I've struggled to read the book. It's more like a textbook combined with personal notes than a coherent message from start to finish.

If there is an easier to grasp book about the same ideas, it's a must-read.

[Evan Leybourn · Rating 5 out of 5]

Deming, and his book Out of the Crisis, is part of what has driven my passion for Agile Business Management. While this book is over 30 years old and predates the "Agile" movement, many of the concepts and recommendations that Deming makes align to the values & principles of the agile manifesto.

A call to action
Although written in the context of American manufacturing, Out of the Crisis was a call to action for companies to address systemic problems in the way that western management operated. Where the emphasis on short-term profits, lack of forward planning, use of performance evaluation, inconsistency of management and management by numbers reduced the capability of companies to adapt, innovate and remain successful in the long-term.

Do these seem familiar? 30 years on, and these "diseases", as Deming called them, are still prevalent in many of the organisations I work with. To be successful, Deming says, managers must "learn how to change", "innovate ... products and services for the future" and "have an unshakable commitment to quality and productivity". By treating an organisation as a system, sustainable business growth can be driven through the successful management of interactions between business functions, investment in innovation and strong staff engagement.

My final thoughts; this is a great book and has remained relevant throughout the last 3 decades. Sadly I believe it will remain relevant for decades to come. If you're after an interesting read, I'd highly recommend it.

[Joanne Rolston · Rating 3 out of 5]

This book is written for big business, not small business, and the author devotes entire chapters to statistics - but the first chapters were helpful. Deming is scathing of performance reviews, which is interesting because it's the accepted way of doing things in companies, and that's what we were taught to do while doing human resources paper at college.
Quote, "The effect is devastating: It nourishes short-term performance, annihilates long-term planning, builds fear, demolishes team-work, nourishes rivalry and politics. It leaves people bitter, crushes, bruised, battered, desolate, despondent, feeling inferior, some even depressed, unfit for work for weeks after receipt of rating, unable to comprehend why they are inferior. It is unfair, as it ascribes to the people in a group differences that may be caused totally by the system that they work in. Basically, what is wrong is that the performance appraisal or merit rating focuses on the end product, at the end of the stream, not on leadership to help people."
He stated the job of management is not supervision, but leadership. I recommend the book for anyone studying business.