A brief look at A3 management – Toyota Process, vs the “Lets Talk” program at the Sharonville Transmission Plant sheds light on why Toyota is now the world’s top auto company and Ford is hanging on by its fingernails. First lets look at the Deming cycle, or Deming Wheel.
Dr. W. Edwards Deming , considered to be the father of modern quality control, advised the Japanese on how to build quality products, and did so very successfully. After the war Japan was known for making and selling cheap junk ashtrays. Dr. Deming went to Japan and taught them to manufacture the finest quality products in the world. Dr. Deming also consulted with major American companies, including Xerox, IBM, Westinghouse, and many others. He also consulted with Ford Motor Company.
Dr. Deming’s experience consulting with Ford is covered in a book entitled “The Man Who Discovered Quality” by Andrea Gabor. Deming found the upper management of Ford to be the most incompetent he had ever encountered, and so states in the book. He felt that they were like warring street gangs, with each executive having a personal empire, which he jealously guarded, and viewed any change as a threat to his power within the organization. After weeks of frustration Dr. Deming gathered up his stuff and walked out of Dearborn headquarters because Ford was run in an autocratic style, much like Henry Ford had run the organization. Deming was able to work with defeated Japanese executives, many of which hated and distrusted him. But he could not work with Ford Motor Company.
Demings model for quality improvement involves PDCA (Plan-Do-Check-Act) known as the Deming Cycle, or Deming Wheel. The concept of PDCA comes out of the “Scientific Method” which was developed from the work of Francis Bacon, and can be summarized as “hypothesis” – “experiment” – “evaluation” or Plan, Do, and Check. It is a rather simple, logical concept, and is widely used at Toyota, IBM, Procter and Gamble, and other progressive corporations.
When I worked at Ford in the 70s, and quality was so bad that Toyota, Honda, and VW were taking sales at an alarming rate, Ford devised the “Let’s Talk” program. When 33 states passed legislation to protect car buyers from the products coming out of Detroit, Ford knew that something had to be done to improve quality. A letter was sent to the home of every Ford employee. It stated that Ford wanted the participation of everyone, and invited every employee to submit written suggestions. If a suggestion had merit, and Ford adopted the suggestion, the employee would would be financially compensated.
At first the program received wide support and enthusiasm. Employees clustered in groups, debating how to improve this process and that process, and how to improve quality and productivity. The suggestions piled up on the desks of General Foremen, who made the first evaluation of whether the idea was a good one or a bad one. Unfortunately, few suggestions got beyond the General Foreman.
If he did not like an employee, he would reject the suggestion, whether it was a good one or a bad one. The UAW put pressure on people not to submit suggestions that would eliminate jobs, or eliminate overtime, which most UAW people counted on and budgeted into their household financial plans. The only suggestions that got beyond the General Foremen’s desks were non threatening ones that did not eliminate jobs, or meaningfully change the ingrained procedures that Ford had enforced for 75 years.
A handful of such suggestions actually made it up the chain of command, and a few employees were paid $50 for each suggestion. But nothing significant changed, quality continued to go down hill, and each of the Big Three had massive layoffs and plant shutdowns. In the meantime, Toyota, Honda, Nissan, and VW continued to improve quality and take away the American car market. Ford Motor Company received the largest recall in automotive history because of defective transmissions, and only the intervention of the Reagan Administration in the early 80s prevented a bankruptcy filing from Ford.