"Deming was Right"

[Terry Peterson <terry@gts.demon.co.uk>]

The following appeared in last Sunday's Observer and makes reference
to Dr. Deming;

- quote -
Admin's not sexy -just vital Public and private sectors need people 
passionate about running things being allowed to do just that, says 
Robert Heller

Management failure in nationalised industry never comes as a surprise. 
It has long been an article of cynical faith that public ownership 
attracts lower-calibre managers, and gives them no incentive to rise 
above their miserable selves.  The other side of the coin is that 
private-sector managers, incentivised up to the gills, supposedly use 
their super talent to superior effect.  Substitute these wizards for the 
public-sector weirdos, said Thatcherite-Majorite-Blairite theory, and 
wonders would never cease.

But they did.  The early successes of liberated organisations such as BT 
and BA in large measure reflected their ludicrously cheap sale.  After 
the massive once-for-all benefits were exhausted, the management magic 
vanished.  Ultimately, an underperforming, pressurised BT lost both its 
chairman and chief executive.  So did GEC-Marconi.  Private catastrophes 
have shattered the management myth just as surely as the public 
calamities.  Marks & Spencer and Ford were once highly respected names 
in management.  Both recently lost CEOs who -one through over-ambition, 
the other through a lack of it -led their firms down blind alleys.
What's going on?  Public-sector managers fail partly because they have 
too little freedom.  Private company executives, on the other hand, have 
too much.  The Enron slaughterers murdered the shareholders without let 
or hindrance.  The wreckers of Railtrack, for their sorry part, were 
placed in an impossibly cramped position (which they promptly made even 
worse).
Politicians, civil servants, investors, passengers and regulators all 
had different agendas that the managers in the middle of the track 
couldn't conceivably satisfy.  The backdoor, bungled, Byers return to 
public ownership won't work either, unless the managers are saved from 
outside interference.  They won't be.  Their masters will continue to 
ignore the basically awful economics of a fixed-track transportation 
system.  Try to make it genuinely profitable, and it will spit in your 
eye.
The NHS is an even worse case: it doesn't really exist as a unified, 
manageable organisation.  All the trusts, regional bodies and chief 
executives can't conceal the fact that it is a complex, disparate 
collection of inherently uneconomic, freestanding hospitals with loose 
links to a general practice system that could hardly be more localised. 
Try to impose central controls on this, and two things must follow: you 
fail, exacerbating the very ailments you are trying to cure; and you 
create hugely counterproductive frustration among professionals who need 
not management, but excellent administration.
That distinction strikes to the heart of the public/private debate.  It 
is salutary to recall that MBA stands for Master of Business 
Administration. The great forerunners of modern management, such as 
Frederick Taylor, who died with a stop-watch in his hand, or Alfred 
Sloan, creator of General Motors, were very hot on administration and 
organisation.  But nobody nowadays likes to be called an 
'administrator'.  This is second- grade stuff, far below the heady 
heights of strategic, executive management.

Yet strategies come and go, usually in step with prevailing fashion. 
But admin goes on.  No matter what the strategic blunders at the top, 
somebody has to mind the store, or stores.  One of M&S's mishaps was 
that its once-admired admin systems began visibly to slip.  But good 
administrators can be turned into bad ones by a bad set-up.  Great 
administrators are brilliant at putting the right people in the right 
places to carry out rightly designed tasks.  The American prophet of********* 
statistical quality control, W Edwards Deming, argued that 85 per cent 
of all corporate failure stems not from bad workers, but from bad 
systems.  If you don't believe that, just look at Railtrack.
Great administrators, moreover, don't practise their arts and crafts 
superbly because they are incentivised by stock options and the other 
thrills and spills of private enterprise.  The aces administer 
excellently because that is their pride and their passion.  Thus the 
political faith in private management for public services is absurdly 
misplaced.  True, the profit motive is powerful.  But Swiss and Japanese 
trains run on time because that's what their managers/administrators are 
paid to achieve.

Public services can function perfectly well without entrepreneurs.  But 
both entrepreneurs and administrators will plan more wisely and execute 
more effectively if they involve their people in the design task.  A 
recent survey, alas, showed that, while all managers agreed that 
participation improved strategic performance, none actually practised 
their own preaching. Performance is the issue, not democracy.
In 1993 the now-derided Post Office claimed to be the most efficient in 
Europe, thanks to a programme that led then chief executive Bill 
Cockburn to boast that his 100,000 postal workers were free 
'consultants'.  Then the rot returned, and 40,000 'consultants' face the 
chop.

Deming was right.  It isn't their fault.  'Public managers bad, private 
managers good' was always a nonsensical mantra.  'Profit motive good, 
public service bad' is equal rubbish.  Get the objective right (which 
doesn't mean setting silly targets) and let self-organising 
administrators administer.  Then public service managers can manage as 
well as private ones.  But remember: in too many cases, they could 
hardly do worse.
- end quote -

The message is still getting across
Regards

-- 
Terry Peterson
IQA Registered Consultant