The Importance of Operating with a Gas Gauge Mindset in Organizations

What is quality? Does it mean always meeting specifications? What if the calculus for specifications means little and tells managers almost nothing about the process or its potential for improvement? Dr. Bill Bellows discusses the negative consequences of this kind of black-and-white thinking and what to do about it.

0:00:03.0 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 am 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 opportunities. The topic for today is: What is quality? Bill, take it away.

0:00:27.5 Bill Bellows: Thank you Andrew. That question brings me back literally 30 plus years. I was at home studying on leave from work. I got a bunch of books on quality. I bought every book on quality I could find at the Yale Bookstore. I started reading them. And I'm reading Phil Crosby, I'm reading Six Sigma Quality, I'm reading Genichi Taguchi, I'm reading Deming. And I, naively, am thinking that quality means the same to all of them. As a heat transfer engineer, in the world of engineering, heat transfer engineers have a common language, they use common terms, so I naively thought everyone in the world of quality has the same explanation of quality. And I'm looking through these books. I had met some seasoned experts in the field. I started calling them and saying... I remember talking one guy and I said, "I don't think these books are the same." And he laughed. He said, "Bill, you're onto something."

0:01:24.0 BB: Well, the traditional way of looking at quality in most organizations gets me to what I now refer to as question number one and that is, Does something meet requirements? Does the task meet requirements? Does the dimensions meet requirements? Does the product meet requirements? And, Andrew, there's only two answers to that question, yes or no. That's how most organizations look at quality. Boeing's advanced quality system... How do I know? I worked for a company that was owned by Boeing for nine years. Boeing's advanced quality system, which is no different than anyone else's quality system, is question one, Does is meet requirements? Yes or no.

0:02:08.5 AS: Is that like go/no-go?

0:02:11.4 BB: That's go/no-go. It's black and white thinking, Andrew. It meets requirements or it doesn't. Question two is, How many ways are there for this thing to meet requirements? And there when I tell people if you take into account decimal places, an infinite number of answers, I have somebody laugh and say, "Infinite?" And I say, "Okay, 463." But the idea is there's variation in how you meet requirements. And so going back to the question "What about quality?" what I began to see is that most quality thinkers are thinking question one. I had been exposed in that same timeframe to Dr. Taguchi and his thinking is more about question two. And what got me really excited by Dr. Deming's work when I saw The New Economics is that I realized that his quality focus was also question two and that's what got me really, really curious. But the big thing was, holy cow, we've got different explanations of quality.

0:03:15.0 AS: And can I ask you a question about this? When you talk about how many ways are there for this to meet the requirements, are you saying how many methods are there to get there or how many outcomes are in the range of what is quality?

0:03:31.6 BB: What I'm saying is question one is, Does your car have gas? Yes or no.

0:03:38.2 AS: Yep. Yes it does.

0:03:39.3 BB: Question two is, How much gas is in the car? Is it a quarter of a tank, an eighth of a tank, a sixteenth of a tank, a full tank? So there's a lot of different answers. And that's what I mean the infinity is, there's a lot of degradations from empty to full and that's a much different question than, "Does the car have gas?" Now, why is that important? What I began to realize when I started my first job as a quality professional after leaving engineering and joining Rocketdyne as a quality professional, people were coming to me because things were broken, which was like out of gas. And the exciting thing was I got to work and help them solve it but the pattern I started to notice is that most often when people came to me, it was because the process, the product was out of gas.

0:04:42.5 BB: And I began to realize that if we operated with a gas gauge mindset and not a black and white mindset, we could have seen these just as you would driving a car. You see you're on E. Yes, I have gas but being on E and being full. But the people in the organization weren't equipped to think that way and that's when I began to get very excited by Dr. Deming's work and after learning about Taguchi's work 'cause they both helped me realize that most organizations view quality from question one. Is this good or bad? And then what we do is we leave ourselves open to running out of gas 'cause we can't see the trouble coming.

0:05:24.7 AS: I was just thinking about when I worked at Pepsi in our factory in Torrance, California, many years ago. There was a group of maintenance engineers that worked on the production line and all that. But there was one guy, he could solve any problem and he would come in and solve every problem. And he took great pride in that and everybody saw him as the problem solver. But when you think about it, it just perpetuated the system.

0:05:49.0 BB: Yes.

0:05:50.9 AS: And so who was the hero was the guy that can come in and fix it. "I'm the fixer."

0:05:55.9 BB: Well, and to that point, I came into a new organization, very excited to move across the country with the family, a lot of excitement moving into this new career, and I could not have been happier working on problems. That's the good news. But then I began to see that the customer was getting frustrated with this pattern and that was leading us to lose business. And now I'm thinking, yeah, I'm excited being called in to be the hero but I'm thinking this is a lousy way to run the company. We ought to be preventing these problems. And I just thought, here I am using sophisticated techniques from Dr. Taguchi when all we needed was a simple gas gauge to see trouble coming. And so, yeah, I was happy being the hero for a while but the more I understood where Deming was coming from, the more I realized it would be nothing but selfish to maintain that system.

0:07:02.0 AS: Yeah, because when you say selfish it's because you're kind of the hero saving the day, fixing.

0:07:06.1 BB: I'm loving it.

0:07:07.4 AS: Yeah.

0:07:08.2 BB: I'm receiving awards. I'm going to NASA headquarters, presenting solutions. You get priority. People get out of your way. You're working on very high-visibility issues. But what I was thinking was, "Holy cow. We could prevent these problems from happening in the first place." Not all problems, Andrew, 'cause I can't know everywhere to put a gas gauge. But now you have to start to think about where is that an issue. So if the light bulb in the kitchen burns out, okay, I can deal with that. But there's other situations where I don't wanna deal. I don't want the car to run out of gas. So then you start to think about, Where does the variation in good, which is question two, cause me heartache? And when is it just go get another light bulb? And this led me to become aware, to start to think about our thinking patterns. Are we thinking black and white, good and bad? Or are we understanding, which is question one, two answers?

0:08:12.6 BB: Question two is viewing things on a continuum, shades of gray. And, holy cow, how about we start asking how much gas is in the car, not, "Do we have gas?" And so I would go in to audiences, big audiences within Rocketdyne, within Boeing and suppliers and what not. And again, I mention Boeing. Rocketdyne was owned by Boeing. Most companies around the world that I've interfaced with think the same way. It's the same pattern. A standard question I have asked at lunch time presentations, "How much time do you spend every day discussing parts that are good, that arrive on time?" I've had 110 people in the room laugh, just emerge in laughter. That's what they do. And so that's when I became aware this is not just a Boeing thing, not just a Rocketdyne thing. This is a very elementary way of operating, even in our personal lives at home.

0:09:09.6 AS: Describe that again. Describe that. You talked about talking to the people in the factory and asking them. Tell us an example of that or kind of help us understand more about what you're saying there.

0:09:21.3 BB: Well, when I would ask audiences, "How much time do you spend discussing parts that are good, that arrive on time?" And they'll say, "Very little." And I say, "Why is that?" And the standard answer is, "If it ain't broken, don't fix it." But then I say to them, "Hold that thought. What if you use that thinking to drive your car, what would happen?" "We'd run out of gas." "What if you use that thinking relative... " I said, "If you use that mode of thinking, when would you put gas in the car?" "When it runs out." "When would you call the plumber? When would you go to the doctor?" And the idea is I think we are unnecessarily in a mode, we're putting ourselves in a mode of being reactive without realizing we have a choice to be proactive. The gas gauge gives us a choice.

0:10:11.3 BB: Lacking the gas gauge, we slip back to, "Well, it's working, it's working, it's working." And then we get into the rut of spending precious time focusing on the past to find out why we had the problem and simultaneously what we're gonna do is blame the driver of the car, which creates a mess within the organization. And next thing you know, people become reticent. When I look at the System of Profound Knowledge, I look at the variation piece. Lacking this awareness, Andrew, we don't see variation in good. We wait for bad to happen. We then blame whoever is close to it because we don't understand the system. And then you tie those together, we create this rut that I think many organizations are stuck in.

0:11:01.8 AS: So it sounds like, if I was to think about what you're saying, a lot of this is about the idea of becoming proactive? But I know that that's a tiny part of the puzzle but that sounds like that's one part of it. Tell me more about that.

0:11:18.9 BB: Well, I'm not suggesting that being proactive is better than being reactive. What I'm suggesting is that being reactive is a choice and being proactive is a choice. I don't think there's anything wrong with being reactive if we've planned it that way. So the light bulb in our kitchen when it goes out, we'll replace it.

0:11:42.5 AS: It's just not worth putting an inventory together and having to deal with all of that.

0:11:46.2 BB: All of that, and in that regard...

0:11:47.2 AS: It's just down the street.

0:11:49.0 BB: Well, good point, Andrew. Depending on how far the store is, I'll carry a few bulbs, right? But the idea is that if I'm going to be reactive then I need that spare. If I'm going to be proactive, then I get out of that rut of waiting for the crisis and I get to save that time, whether it's waiting for the heart attack, being on top of my health. Paying attention to the plumbing system and hearing that it's beginning to slow down and, well, keep using it, keep using it. Next thing you know, Sunday night at midnight, your spouse says, "The toilet's backed up." You're thinking, "Well, there goes Monday." That's at home, and I see the same thing at work.

0:12:32.0 AS: Yep. What I was thinking about was some experience that I... When I teach finance and I teach people about the balance sheet, the accounts receivable and the accounts payable and, specifically, give credit terms to companies and you have inventory in your factory, what I like to tell them is that giving credit terms is a choice.

0:12:52.3 BB: That's right.

0:12:53.2 AS: And they say, "No, it's not a choice. I have to do it. The customer demands it and my competitors do it." And I always say, "That doesn't mean it's not a choice. You're now making the choice to just follow what your competitor is doing."

0:13:07.3 BB: That's right.

0:13:08.7 AS: And what Dr. Deming talked about too is the idea of focusing on your customer, not your competitor. And then I started to talk to them and then I show them some companies that have no inventory or some companies that have no accounts receivable. And then they start thinking, "How do they do that?" And then we start discussing it and I show there is some interesting ways to do this, or thinking about accounts receivable from a strategic perspective. So I have a company that I show my students that has massive inventory. This is bad in the world of finance, for sure, in the world of business. But they have a 50% gross profit margin versus 25% for their nearest competitor. What do they do? They hold the inventory of their customers on the site of their customer. The customer only receives the inventory when the guy takes it out of the bin and then puts it into the production process. So on the one hand, their inventory's super high but on the other hand, they're making a huge profit from it. And I'm telling people that you gotta think differently about these things and not just think that it has to be done this way. What are your thoughts on that?

0:14:30.9 BB: Andrew, what you're saying fits in very well. We get stuck in these ruts of thinking "always". Inventory is always bad. It's always better to be... Why would I be proactive? I think that's a brilliant example of the value proposition of choosing. Choosing. A big thing I've seen in the industry going back 30 some years is what people call a single piece flow. We don't want a batch. Batching is bad. And so I went through a couple of days of training and the big theme of this training was a single piece flow. We're gonna make one at a time. One at a time. We're gonna process one at a time. One at a time. So then I thought, well, wait a minute. So we have this cleaning tank that can handle thousands of parts in this tray that go into the solution. So now that I've taken this training, Andrew, now I'm being told, no, I'm gonna clean one bolt at a time, one bolt at a time, without understanding there's a place for lots of bolts and there's a place for one. And so what you're getting is we get stuck in these solutions that don't quite make sense when you begin to look at things as a system, which is what you're talking about.

0:15:50.6 AS: Yeah. And this is where, when I went through the intro, it's how you help people become aware of how their thinking is holding them back from the biggest opportunities and I think that this really is what we're talking about.

0:16:07.7 BB: Absolutely. And it's understanding choices; the choice to be proactive, the choice to be reactive. And I also use the analogy of I say it's like, Andrew, you got to the end of the road, you made a right hand turn. You're like, "Yeah, I made it right-hand turn." Well, the right hand turn is being reactive. You made a right-hand turn, Andrew. Why didn't you turn left? "There's no left-hand turn." I say, "No, Andrew. There is a left-hand turn but it's in your blind spot." And so we have these ruts, as you're describing, these ruts of "inventory is bad" and all these other things. And as, I forget, Deming quotes... I think it's Will Rogers who used this quote and Deming has a quote similar to it in the beginning of chapter one, "I'd rather know less than so much that ain't so."

[laughter]

0:17:03.9 AS: Yes. And that's where I would say what's interesting about this discussion is it kinda reminds me that so much of my behavior in this life was shaped from when I was a young guy learning and studying Deming's teaching. And then you start to see it come into your thinking like this idea of teaching finance in a way that helps people open up their mind to a different way of thinking about it. And then I show them a company that's massively profitable because they made a choice to hold all the inventory of all their customers.

0:17:39.3 BB: With an appreciation of a greater system.

0:17:42.0 AS: Yeah. And Bill, I'd like to tell you a funny story of my uncle, Uncle Ham. He was in the military, he was logistics, retired as a Lieutenant Colonel. He was in Germany and he ran this huge base and logistics on it. And he said the Commanding General was coming the next week so they got everything ready and they really spit shine the whole place. The Commanding General comes through the whole place and they reach, finally, the parking lot were all the trucks and tanks and everything are out there. And then they were standing there in front of this row of trucks that was really long. And he said, "Well, sir, how was it? What did you think?" And he says, "Ham, it was excellent except for one thing." And he says, "What's that?" And he looked down the front of the vehicles, as he could see all the vehicles lined up, and he said, "Next time I come, could you line them up in a row so that the front of each of them lines up." And then Ham said... He got the General, he said, "Well, can you walk with me over here." And he walked up to the back of him and he saw that they were lined up in the back but they were of different lengths. So Ham said, "Sir, would you like them lined up in the back or in the front? But you can't have both."

[laughter]

0:19:05.8 BB: No, it's a choice.

0:19:09.3 AS: Yeah. I just love that and I think I'm gonna summarize what we've just talked about because I think there's a lot to that. So let me go through a few points and then maybe you can add any final bits to it. What you were talking about was the idea that when you first got into the quality movement, you started realizing that people had different ideas of what quality was but ultimately you came down to this, the idea that most people had was, Does this meet requirements? This is kind of a yes or no answer. It's a black or white. No shades of gray. And then the second part you talked about another question, which is, How many ways are there to meet requirements?

0:19:50.3 AS: And you also talked a bit about how people kept coming to you with things that were broken and how you can be a hero putting out fires all day long but you didn't really advance the business as opposed to starting to prevent problems and see how we can fix things rather than saying if it ain't broke, don't fix it. And then finally, we've wrapped this session up by what I think is the most powerful point of the session, which is that being reactive or proactive is a choice. And you're trying to help people see that just doing it the standard way, they're making a choice and there are consequences to that choice and it may be the right choice. But once you become aware of your thinking, that you have choices on every single thing, then it starts to open up people's minds. What would you add to that summary?

0:20:43.7 BB: A couple of things. One, what I didn't mention that I think is worthwhile pointing out is what did Dr. Deming mean by quality. So I mentioned the traditional quality, Bill Crosby, most others, is quality is conformance. It meets requirements, yes or no. So what I didn't mention is how did Dr. Deming define quality. In The New Economics, Dr. Deming says, "A product or a service possesses quality if it helps someone and enjoys a sustainable market." So what I think is really neat about that is, and that's more about question two which I'll get back to, question one is I define quality. When I hand off to you, Andrew, I say, "This meets requirements." I didn't ask you for your input. I'm just saying, "This met requirements. Boom!" And then I hand it to you. If you don't like it, you say, "Bill, it's not done." But if I give it to you and it meets requirements, I have let go of it physically and mentally.

0:21:48.7 BB: You call me up later and tell me the car had a quarter of a tank of gas, I said, "Andrew, the car has gas." Because we're focusing on question one. Question two. What Dr. Deming is defining is quality, a product or service possesses quality if it helps someone, now I'm saying, "Andrew, what do you think about... How does my work affect you?" Whether I'm giving you a report or a part or something to put together, now I'm judging quality by how well were you able to catch the pass that I gave you, the information that I gave you. That makes quality a relationship issue. And question two, for reasons we'll get into in future sessions, question two is about relationship quality because the infinite number of answers to the question of number two is how well can Andrew catch the ball depends upon how well I throw it to him. And I could throw it a little bit to his right, a little bit to his left. I can still meet the requirements of throwing it within two or three feet of him but I'm not thinking about how easy it is for him to catch it if I'm more direct about that.

0:23:04.3 BB: So question one is traditional quality. Dr. Deming is more about question two. And the other thing I'd say is relative to the choices, I think in terms of organizations as unusual, unusual as adopting Deming's work or business as unusual. And I couch it with shift from big problems, which is focusing all of our time unknowingly fire fighting, to great opportunities in the subtitle. And the caveat there is opportunities for investment, where can I be spending time to save time, and we're missing that category. The more time we spend on black and white thinking, question one, the less time we have to think about how can we improve the system which, again, in our future sessions involves looking at things in context, not in isolation.

0:23:57.9 AS: Fantastic. All right. Well, that I think is a great start. And Bill, on behalf of everyone at the Deming Institute, I wanna thank you again for this discussion. For listeners, remember to go to deming.org to continue your journey. 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.