The Gang of Eight and Dr. Deming's Principles

How can you make lasting change at your organization? Recruit your friends! In this discussion, Bill Bellows lays out his experience recruiting and working with a small group to make big changes in a large company. 

0:00:02.5 Andrew Stotz: My name is Andrew Stotz and I'll be your host as we continue our journey into the teachings of Dr. W. Edwards Deming. Today I'm continuing my discussion with Bill Bellows, who has spent 30 years helping people apply Dr. Deming's ideas to become aware of how their thinking is holding them back from their biggest opportunity. Today is episode 21, and the topic is Transparency. Bill, take it away.

0:00:27.1 Bill Bellows: Thank you, Andrew, and welcome to our audience. And I wanna thank a handful of people who have reached out to me on LinkedIn and elsewhere to talk about the podcast, what they're getting out of it, and which has been very interesting meeting people from around the world. And that's led me to a couple opening remarks for clarity on some of the things we've discussed in the past. And then we'll get into our feature topic. And so I say, [chuckle] is that in my early years at Rocketdyne, the Rocket Factory, a few of us started to see the synergy of what we were absorbing and integrating from, primarily from Dr. Deming and Taguchi, not just them, there were others. And we're 10 years away from really beginning to see what Russ Ackoff was able to offer us. At one point, there were eight of us. It started off with one, then another, then another. Next thing you know there's eight of us. We were what Barry Bebb and his cloud model would call advocates. Advocates of a change, of a transformation. We've been using that word. And I started to refer to us as the Gang of Eight 'cause this is the early '90's. And I think in China there was a group known as the Gang of Eight. Maybe that was the '80's. And I remember thinking, "Oh, we're like the Gang of Eight."

0:01:54.7 AS: I thought that was a Gang of Four in China, is that the Gang of Four.

0:01:58.9 BB: Well, there was a Gang of Four, then there was a Gang of Eight. There were both.

0:02:02.4 AS: Okay.

0:02:03.1 BB: But anyway, but I remember hearing that word, and then I thought, "Well, so okay, a gang of eight." We started to meet regularly, perhaps every other week, sharing ideas on how to initiate a transformation and how we operated, again, inspired by Deming. So at first we met quietly, we would meet in another building, not wanting to call attention to our efforts, not wanting to be visible for those who might have been adversaries again to borrow from Barry's model. 'Cause Barry's model was, there's, for every advocate there's a few more adversaries. So we were keeping our heads down. And this is before I knew anything about Barry, but I, we were just kind, a little bit paranoid that people would see what we're doing. And so who were the ones that were the adversary? Well, those were promoting rewards and recognition. Those were promoting individual cash incentives for suggestion programs including, as I mentioned a previous podcast, an individual could submit a suggestion award, get up to 10% of the annual savings in a onetime lump sum. They were giving out checks for $10,000, Andrew. And I would kid people, if the company's giving out checks for $10,000, do you think we've got photographs of me receiving a check for 10,000? You betcha.

0:02:03.5 BB: And there it is in the newspaper, me receiving a check, not that me, [chuckle] but somebody receiving a check for $10,000, a big smile with the President. And it's in the newspaper and did that cause issues? Yes. But anyway, it wasn't obvious for some of us that we might have been, sorry, it wasn't obvious for some time that those we might have considered the adversary to our efforts were very likely not meeting to plan how to stall our efforts. [chuckle] Right. And, but it took a while to realize this, so here we are trying to be very discreet, meeting discreetly. And then it, at some time it dawned on me and some of the others that, those of us that were inspired to learn, think, and work together on transformation efforts as we've been exploring these podcasts, we have the benefits of positive synergy. And the adversaries at best operate without synergy as they're not likely to be inclined to do much more than participate in what some at Rocketdyne called, you ready, "Bill Bellows’ Bitch Sessions." [laughter] And they come back from a class with me and they start bitching about me. And then the local people in that area would come by and tell me, and they said, "Anything we can do?" I said, "Yeah," I said, "Ask them what part of Rocketdyne moving in the direction of a Blue Pen Company do they not like." Right? It's just arrrgggggh.

0:02:04.2 BB: And I say, anyway. But once we had more and more results from our efforts, results from applying these ideas with very visible improvements in quality and costs leading to improved profits, it was all the harder for the adversaries to slow our efforts. Again, we were most fortunate to be working on challenges, we had challenges in fighting fires, but we also had challenges in designing hardware that achieved "Snap Fit" status, which translates to dramatically easier to integrate higher performing as well, as we shifted from parts to systems, challenges that required, guess what? A different lens inspired by Dr. Deming. That's, [chuckle] again, listening to the previous podcast, 'cause I thought, "Well, I wanna clarify a few things." Did we have ups and downs, Andrew? Yes, we did. We had days when we're excited, we had days when we were down. But what really worked out well, [chuckle] and the running joke was, there was variation in our excitement.

0:02:04.7 BB: So I may have been down, you'd be up, so you'd lift me up and then when you're down, I lift you up. And so the running joke we had amongst us was, thank God for variation in our moods. Because if we were all depressed at the same time, we'd go off the cliff. [chuckle] But we just took turns as to the ups and the downs. And we're very fortunate to have weekends 'cause that gave us time to not wanna choke some people. So, [chuckle] but come Monday we're relaxed. And then, but another thing that I wanted to point out from things we talked about previous podcasts, years ago, 30, nearly 30 years ago, I met a senior structural analyst from Boeing, Al Viswanathan, who was on the Boeing Commercial side. And he somehow got involved in the commercial side.

0:06:52.1 BB: Well, I don't know if it was the commercial side or military side. Anyway, Boeing had, there were both sides and one side was pro-Deming and the other side was anti-Deming. So he must have been on the defense side. And why would the defense side be pro-Deming? Because the Pentagon was pro-Deming. And so the defense side people would have been watching that. Anyway, Al somehow got involved in studying Deming's work and being a mentor within the organization. And I met him, I know when he worked there, when he retired. Anyway, Al, coming from Al, what I want to share is something he would say relative to Dr. Deming's funnel experiment. There's rule one of the funnel, rule two, rule three, and rule four. So rule one is you have a funnel and you drop marbles from the funnel onto the floor, and you get a pattern of where the marbles lay.

0:07:49.1 BB: And that's called variation. You're holding the funnel, you drop the marble, it lands in a different spot each time. And then rule two is you, if the marble is off a little bit to the right of the target that you're trying to hit, then you move the funnel the other direction. So two and three have to do with compensating. If it doesn't go where you want, then you shift it accordingly. Rule four, remember rule four of the funnel?

0:08:17.4 AS: I don't remember that.

0:08:18.9 BB: And this is... I think it's chapter eight. I know it's in The New Economics. Chapter 8, I'm sorry, rule four of the funnel is wherever the marble lands, position the funnel for the next drop. So in rule one, you keep it where it is and you get a pattern. Rules two and three, you compensate for where it lands. You either go left if it goes right and you compensate. And in compensating, it becomes worse. But what becomes really bad is when you put the funnel in rule four over where the last marble landed, and you end up getting farther and farther from the target leading to, remember the expression Dr. Deming used for that?

0:09:00.9 AS: Well, I remember the word tampering. But it meant when you get way off the target. What was that?

0:09:06.6 BB: He called it going off to the Milky Way. [laughter] And there are computer simulations where if, some people have done, you know, created.

0:09:16.0 AS: You do it in California and you end up in New York.

0:09:17.8 BB: Yep. And you, and you, and you keep getting further and further. Well, so in conversations with Al, and it could have been me and him and Dave Nave, Dick Steele and others, and at some point, Al would say, "How do we know we're not going off to the Milky Way?" Which translates to, how do we know that what we're interpreting from Deming is not getting further and further and further and further away from what he was trying to say? How do we know that we aren't wacky? How do we know? Because we think, "Oh, we're getting, we're understanding this better and better." And what I would say is, how do we know we're not going off to the Milky Way? “Actually,” I say, "We don't know." But part of having a community of people that work closely with Deming, people that know more than me about Dr. Deming's work is you can tap into that community and maybe lessen the chance that we go off to the Milky Way. Now, again, is that a guarantee? No, it's not a guarantee.

0:10:25.9 BB: But I would say, what I appreciate about Al saying that is, it's just a reminder that how do we know that what we're interpreting is true? So we're here, you and I are having these conversations, we're sharing interpretations, lessons learned, are we, is what Dr. Deming would say, "Is this worker training worker?" So, each of us are ignorant, and we think we understand Deming, and we're sharing it with others "well, I know, I know." Now, we can all be right, we can all be going off to the Milky Way. So I just wanted to say that, when I'm talking about diffusion from a point source and getting smarter and smarter and having these conversations within our organization. How do we know we aren't fooling each other? We don't know.

0:11:18.7 AS: I have a couple follow ups here. First of all, the 1991 Washington Post called it the Gang of Eight, as opposed to the Gang of Four, which was before that time, during the Cultural Revolution. And the Gang of Eight included seven men and one woman. And the Gang of Four, of course, included Mao's wife. So there's a little clarification.

0:11:44.6 BB: I wasn't sure if she was part of the four or part of the eight. I knew her name was in there somewhere.

0:11:49.0 AS: And the second thing you talked about the volatility of your feelings, your moods, right. And I just wanted to introduce the concept of volatility in finance, which is that volatility in itself is not bad. What's bad is correlation of volatility. So if all of you are upset on the same day, then it's just an absolute crash. But if one's upset on Monday and another one's happy and productive on Monday, then it starts to balance. And that's what we do in the world of finance is we combine correlation with volatility. And Harry Markowitz got a Nobel Prize in economics for coming up with the concept that risk can be reduced by understanding the correlation between assets and adding a highly risky asset to a Portfolio could, in fact, reduce the risk of the Portfolio overall, if the correlation between that asset and the Portfolio was, let's say negative or very low.

0:12:55.5 BB: Wow what you're talking about is the benefit of not being synchronous, being asynchronous.

0:13:04.2 AS: Correct.

0:13:05.1 BB: So you're up, I'm down, and I'm up, you're down, and then we can get through these periods. And yeah, and that's exactly what we're talking about. But you're right, I'm glad you brought that up because I've heard people talk about that as well. But that's exactly the point we're trying to make is, so for all those who think we ought to shrink variation to zero, I'd say, well, maybe there's value in variation, value in diversity of opinions. And also I have had people in the past say, "Well, so a Blue Pen Company is a bunch of people that go along to go along." I said, "No, it's a bunch of people that have strong disagreements on things and they share those disagreements."

0:13:49.5 BB: Now, at the end of the day by Friday, we've got to make a decision as to releasing this album whatever it is, because we've gotta ship. And we may arm wrestle, we may vote however we're gonna do it. So there can be disagreement. We have the ability to articulate where we're coming from. Borrowed from Edward de Bono, we can use a black hat and I can give you reasons why you don't think it'll work. You can call me on it and say, "Bill, how do I know it's your black hat and not what de Bono would call your red hat, which is my intuition."

0:14:26.4 AS: So if I say it doesn't work, you could say, "Bill, is that you don't feel it'll work or you know it won't work?" And I say, "Andrew, you're right. I have a bad feeling about it." I say, "Well, let's just be honest about it." But again, at the end of the day, we may vote. But we're gonna move forward. And what's not gonna happen is if you decide to take however we decide to make that decision, what there won't be a lot of room for is a bunch of "I told you so."

0:14:58.8 AS: Right.

0:15:00.4 BB: And we just we just dispense with that and just say this time, maybe the idea I had, we'll just have to wait till later and we're just gonna move on. So it's not to say it's a bunch of happiness and we're always in agreement. No, very strong relationships can have very strong disagreements. They just don't result in a civil war. Years ago, when my wife and I got married, she said I was just, it was lucky for me that she liked cats. I said that was non-starters. I said liking cats was a requirement. [laughter]

0:15:44.3 BB: So there's a few things that were non-starters. And if she didn't like cats, I'd have had a hard time with that. But on everything else, there's things we can disagree with. That's okay. All right. So given that I wanna talk about tonight is something that's come up in some other conversations recently. And it's about transparency. And then I have a quote that I've used in the past. I've once in a while attributed to Peter Senge, because I can't remember is actually Robert Fritz, a close associate of Peter Senge. And Fritz's comment is, “It's not what the vision is that is important. It's what the vision does.” And what I like about that is if you have a shared mental model of a Blue Pen Company. And I just began to appreciate how powerful it is that we have a shared vision. And relative to transparency, what I was sharing with some people is the transparency that exists in a Blue Pen Company, a Deming organization, a WE organization, an All-Straw organization and the transparency that which is as simple as me saying to you.

0:17:05.5 BB: Well, I say let's talk about the lack of transparency. I can meet a requirement, as we've talked about, an infinite number of ways to meet any set of requirements. And the letter grade is not A plus. It is not 100. It could be a D minus. I could leave for you the bowling ball on the doorway. And in a non-Deming Organization. I could meet any requirement you give me, Andrew, with the minimal amount of effort. Because all that we're measuring is that it met requirements. And so I give it to you and, and all you do is you look at the measurement and it says, "Yep, the car has gas." You're like, "Hey, I'm excited."

0:17:45.2 BB: Well, the black and white thinking allows me to hide a whole bunch of things. So if I said the car has gas. And you complain because it only has a quarter of a tank, I said, "Andrew. It has gas." But I thought in a Deming organization, I don't think we're gonna play those games. I think we're gonna have a lot more transparency relative to when I meet a set of requirements. Am I gonna leave the bowling ball on the doorway for you unilaterally? I don't think so. Maybe once I learn my lesson because I'm a new hire. I'm bringing something from where I used to work. But I think in a Deming environment, I think the transparency is gonna bring out the best in us.

0:18:33.8 BB: So I just want to throw that, that's part of where I'm coming from with transparency. You know, we don't have this murkiness as to, you know, where are they coming from? And. also we're going to be, you know, as Ackoff was, we're going to go to great lengths to be precise with language, and understand that efficiency is not effectiveness, that management is not leadership. And I think the better we have that clarity, I think that's a trademark of what that environment is about.

0:19:02.2 AS: It's interesting because, you know, the ultimate clarity is doing a run chart or a control chart on a process and seeing the outcome. And that's transparent and clear. And I've done a lot in my own management career by just getting data into a format that people can, you know, go back to and look at and think about. And just the transparency of that data can make a huge difference to the way people interpret what's going on in that unit.

0:19:38.9 BB: You're right. As opposed to the transparency of two data points, quality, I'm sorry, I think I've used this example. You can remind me of, you know, when I was at Rocketdyne once upon a time, and there was a meeting where the safety metrics, number of accidents, per employee in the first quarter was a certain level. Then in the second quarter, it went down. And I mean, the number of accidents per employee went down. Safety got better. And as you know, in this meeting with a bunch of directors and the VP and somebody says to the VP, why is safety improved? And their response was, because “We've let them know safety is important.” Well, who's the we? Who's the they? So, and, but imagine the transparency for somebody hearing that we've let them know. That's a way of saying, so you're, you're believing that because it went down, it's because of things we said, and they're not interested in safety.

0:20:45.3 BB: And then if it goes the other way, we're going to claim what? That they're not listening? So you're right. I mean, the ability, the transparency of looking at a set of data on a control chart and the realization that the process is in control. Then we look at the ups and downs and say, no reason for alarm here.

0:21:12.2 AS: The other thing that I thought relates to transparency is fear. In the sense that what is fear? Fear is, you know, a concern that something is going to happen is about to happen is in the process of happening, or, you know, something's happening to you and you're not being able to see, you know, what's going on. So I was just thinking, you know, another angle on transparency is, you know, reducing fear in an organization by being, you know, let more transparent.

0:21:41.5 BB: Yes. And, and I can even imagine, what's funny is that, a co-worker in my office, once upon a time. And. And she was upset with a decision made by the president at that time was my boss. And so she, so for about two years or so, she reported to me, lovely lady, lovely friend, great friend. So anyway, she was upset. She comes in. Did you hear the decision made? And I said, no, I didn't know. And she says, and she was really upset. And I don't know what it was that she was upset. And at some point she said something like, “I don't know what I'm going to do. I just don't know what I'm going to do.”  I turned to her and I said, if I were you, I would take this personally. Which caused her to laugh. And when I told her, again I get back to transparency, I said, "I may not agree with a decision, but I may never know the choices he had." And so in that situation, Andrew, there may be situations in a Deming company where for whatever reason, there is no transparency, we don't know the options, we don't know what was on the table, all we know is the outcome, and it could be because of, you know, Security and Exchange issues relative to, you know, stock prices, there's, there's all kinds of reasons we may not know.

0:23:03.4 BB: But in that environment, we may, we have to live with it. We just have to say, well, and when I look at it as, and I'm glad you brought that up. Because when I look at it as, there may be decisions, we don't know the choices, we don't know the criteria, we may never know. Instead of agonizing over it, I'd like to think that if we were in the room and knew what they knew and the options they had, we might well make the same decision. And that's something that I became excited about at Rocketdyne was, I didn't have to be in the room for a bunch of decisions, a whole bunch of decisions, I didn't have to be in the room. And what I thought was, if I can help people develop a better and better sense of what a Deming organization, how that operates. And then, and then practice, perhaps, you know, how might they handle a given scenario, and in fact, Kevin's mom, Diana Deming Cahill reached out to me in the late '90s, you know, late '90s, and asked if I would resurrect a Deming Study group for Los Angeles, which existed when Deming was alive, they used to meet at the LA Times.

0:24:51.4 BB: They had invited speakers. And after Deming died it dissolved, and she saw what we're doing within the Boeing sites and asked if I would, you know, work with her to resurrect that. I said sure, I said but here's the deal. When she explained to me how it used to work, invited speakers every month and I thought, that's a lot of work finding a speaker every month. And I said, and it's so easy to be, you know, sit in the back of the room and watch somebody talk I thought. I'm not, I'm not, I don't like that format. And so, a few of us spent a good deal of time coming up with a format. And we went from three hours to two hours and, and then came down to a really neat format that we held for a couple years. We met in two different sites. We met in Canoga Park. We met in the other group met in Huntington Beach where Diana would show up we first we looked at a location there LAX, that wasn't going to work. So we spent the first hour talking about reflections how we're seeing the world through a Deming lens, things that had happened since the last month that we're seeing, that we're seeing differently.

0:26:08.6 BB: That's the first hour. And then the second hour someone would introduce a topic and the topic would be, "How would a Deming organization do X." And what was neat was just to brainstorm. How would a Deming organization go about doing something, that may be way beyond our, our personal responsibility and it just allowed us to play in this space. And, and just, you know, wonder what is, what is going on there. And I throw that out in the spirit of transparency is, it was just to me it was just fun to just practice. How would you deal with, how would you deal with, how would you deal with. And that's what got me thinking that, now going back to, I think that if you get a diverse enough group of people with different experiences and perspectives I think the better they understand, yeah, where Deming and the others are coming from.

0:27:02.5 BB: I think we're going to see a lot of common decision making. And that was for me was very relaxing, that I didn't have to worry about "now they're going to make the right decision." I just thought, if they understand the process, and they use, you know, Edward de Bono's ideas to go through ideas. I thought, the best I can do is say, how did you reach this conclusion, what options did you consider who was involved in the decision making? I can ask those types of questions. I can ask, you know, did you include the supplier did you include... I can ask that. And once I understand that I'd say, if I trust the process. Then I have to trust the result, which goes back to transparency. So I no longer. I mean, that's what parents do - you trust. You raise your kids in a way that you help them develop a sense of a process. And then you just have to live with the results.

0:28:00.8 BB: And same thing as sports. You, I've seen coaches. When I was a youth referee, they're trying to micromanage every minute of the game and I thought it's too late for that you've got to do that at practice. And then once they're playing you just let them go. And that's a demonstration of how well you've prepared them.

0:28:21.6 AS: That's a great, you know, a great one. It's so, it's so amazing to see a team in action and a coach being able to kind of sit back and say now it's up to you. And, you know, I've trained you and everything I can. How would you, how would you wrap this up and provide people with how a Deming organization would apply transparency and maybe give, you know, some one or two ideas about how someone can leave this conversation and bring more transparency back to their organization.

0:29:00.8 BB: I think it's, goes back, to me it goes back to, as a point source within your respective organizations, listening to our podcast, you know, reading articles on, I mean, watching things on DemingNEXT and learning more. And, and yeah. Reaching out and finding people that are, you know, perhaps more knowledgeable than you about Deming's work or Ackoff work. And then Deming once said something about everyone's entitled to a master or mentor or someone, and I was very fortunate to be associated with some brilliant people that worked closely with Deming and Ackoff, and Ackoff himself and Taguchi. I would say, one is, what can you, what can you be doing to improve your understanding, with the appreciation of going off to the Milky Way.

0:29:51.6 BB: And then how can you then practice sharing that with others? Like we did going back to this Gang of Eight and what can be done within your respective organizations to create this group of one, group of two, group of three, group of four. And how might you work together to better appreciate what you think Dr. Deming and Ackoff and others are saying, how you might apply them? How can you support one another? And then, and at least, again, you're gonna have ups and downs, but I don't think there's any substitute for that. And many people I've mentored are solo people within their respective organizations. And what I keep telling them is you've got to find someone else to help you. You can't be the only one in that meeting lobbying for working on things that are good when everybody else is working on things that are bad.

0:30:46.4 BB: It's just gonna sound foolish but imagine being in a situation where you're lobbying for working on something which is good because you want to prevent it from going bad or improve integration. And then someone hears that remark and says, Bill, with all these challenges we have, I can't believe you're going off and doing that. Then imagine you're there in the meeting. And then after that person tries to sidetrack it, you say, "Bill, is that what you were trying to say?" And I say, "no, Andrew, that's not at all what I was trying to say." So you can come to my rescue. And when I'm being shoved aside, I've been in those sessions where I get shoved aside and it takes someone like you to be able to step in and say, Bill, did you say you wanted to do that? I don't think that's what you said.

0:31:10.5 BB: And that's what I would say is, increase the transparency amongst a small group, and then try to increase that transparency. And what becomes a lot of fun is, there are a handful of people at Rocketdyne, we can go into an office of any number of people and take turns exchanging things and reading. And we could see where things are going. And two of us, two or three of us can have a room of 10 and change the course of that conversation because we were incredibly transparent amongst each other. So I just leave it with that, Andrew.

0:32:21.8 AS: Well, Bill, on behalf of everyone at The Deming Institute, I want to thank you again for this discussion. And for listeners, remember to go to deming.org to continue your journey. If you want to keep in touch with Bill, just find him on LinkedIn. As you can see, he responds. This is your host, Andrew Stotz. And I'll leave you with one of my favorite quotes from Dr. Deming. People are entitled to joy in work. And, are you enjoying work?