Making Data Work for You

What is your data trying to tell you? In this episode, John Dues talks to Andrew Stotz about why most leaders misread data, overreact to single results, and miss the real story. Discover how Deming thinking exposes when change is truly happening and how to use a process behavior chart to listen to the real story. Plus, find out why nine years of ‘stable’ results may still demand transformation. Tune in and rethink data-driven leadership!    0:00:02.2 Andrew Stotz: My name is Andrew Stotz, and I'll be your host as we dive deeper into the teachings of Dr. W. Edwards Deming. Today, I'm continuing my discussion with John Dues, who is part of the new generation of educators striving to apply Dr. Deming's principles to unleash student joy in learning. The topic for today is understanding variation is the key to data analysis. John, take it away.   0:00:27.8 John Dues: Andrew, it's good to be back. Yeah. So, we've just started the school year in Ohio, so I thought doing a session on goal setting would be a good place to kick off the year. And I was thinking a lot of leaders, school leaders and leaders in general, are setting goals around this time period. And I was really thinking about having this Deming lens. I was thinking, how did I set goals before I sort of started understanding this approach? And it's, you know, this is one of those things where if you really stop and think about it, goal setting is a lot harder than it seems at first glance. Things like, how do you set a reasonable goal? And then once you've gotten to that place, how do you know if things are improving? How do you know if things are getting worse? And I was thinking how powerful this understanding variation method is for folks that may be struggling with those questions.   0:01:32.9 Andrew Stotz: Yeah. In fact, that's a great question for the listener and the viewer. Like, how do you set goals? How did you set goals in the past? How have you improved that? And I was thinking when you were speaking, I didn't set goals. I gave proclamations. You know, 20% of I want to see this and that. And they were just stretch targets without any means or methods. So yeah, interesting.   0:01:55.2 John Dues: Yeah. How do you set the target? Was it arbitrary? Is it based on some standard that you heard somewhere? A lot of times you have no idea sort of what's behind that target or you've sort of associated it to something that's familiar. Like in my case, we often sort of set goals that sort of mimic the grade scale. So, you know, 80% is a common goal for something like test scores, you know.   0:02:23.7 Andrew Stotz: But they don't even call them goals anymore. They call them, let me remember, I think it's called KPIs.   0:02:30.0 John Dues: KPIs, targets, you know, lots of different things for sure. And I think what I've seen is that a lot of the reason that goal setting is so hard is because you, well, one, you misinterpret your data in the first place. And a lot of that misinterpretation, at least in the education sector, is because leaders don't have the knowledge. They don't know about natural variation. They're typically making comparisons between some current performance level, some previous value. But those two things, those two data points don't show you, don't convey the behavior of that data across time. So, what we do and what I did before I sort of discovered this method is you overreact to a single data point. Probably less frequently, you underreact to the data because you don't have this understanding of, you know, how much is the data moving up and down sort of naturally almost no matter what you're doing. Now, that's not always the case, but that's the case that I've found in a lot of situations. And so until you start to take that into account, those natural ups and downs, then you just misinterpret the data over and over again, usually by overreacting is what I've seen.   0:03:54.9 Andrew Stotz: Yeah.   0:03:56.0 John Dues: So there's, you know, I think as a starting point, people in the Deming community will be familiar with, a lot of people. But others listening to this probably have never heard of this idea of dividing variation into, I've heard it described as like two flavors. There's the routine variation, what I call natural variation, things vary naturally no matter what you're doing. And then there's exceptional variation where things are so different that there is reason to pay attention to this. And what I found through studying this is, the key is knowing how to tell the difference between those two types of variation. And don't do that, lots of confusion, lots of wasted effort. And so that's really where the power of this methodology comes into play. And for anybody that's studied this, you sort of realize that you have to have a tool to make that differentiation. It's not arbitrary. And so that's where what I call the process behavior chart, some people call the control chart, where that comes into play because that tool allows us to tell what type of variation is present. And it also allows us to tell if the system is predictable or unpredictable. And once we have that understanding, then we can chart an improvement sort of roadmap that makes sense.   0:05:21.8 Andrew Stotz: Yeah. In fact, I've applied two of the things, you know, one of the things to my pass rates and admission rates, I applied the process chart, the control chart, based upon your recommendation a long time ago. And it did help me to kind of think if, you know, in my case, I wanted to break out of that standard outcome that I was getting. And so I realized, something has to change substantially in the system in order to get a different result than this variation that I was getting. That was the first thing. And then the second one, a couple of nights ago, I was giving a lecture and I was using your work that you and I have talked about, as well as Mike Rother's stuff on goal setting and having the target. And then there's that obstacle. And what I realized when I gave a little talk on it and I used the diagram and I showed the obstacle, it became kind of apparent to everybody like, oh, yeah, there's an obstacle there that we don't know how to solve.   0:06:27.6 John Dues: Yeah.   0:06:28.3 Andrew Stotz: And that's where PDSA came in. And we started talking about that, as you have taught previously. So, yeah, I'm excited to hear what you have to say today.   0:06:38.2 John Dues: Yeah. And the Mike Rother model, I mean, he does have this target that's this long term target that's pretty hard to hit. And you don't really know what you're going to do. But the difference there then in the situation I'm describing is that that in Mike's model, that target is knowingly outside of the current sort of capability of the system. And they're coming together as a team and saying, how do we get to that target six months from now or a year from now? And we're working towards that rather than someone has just arbitrarily set some target, without a realization that the system isn't capable of hitting that currently. Those are two completely different scenarios. Yeah. So, I think I'll share my screen. Well, actually, before I do that, I would just say, too, because I know sometimes when I introduce these things, a lot of times people get scared away because they think the math is hard. And what I would say there is that there's the creation of a process behavior chart probably takes about fourth grade level math skills. You really only need to do addition, subtraction, multiplication, and division.   0:07:49.3 John Dues: That's it. But the thinking, I think, actually can be taught all the way down to the kindergarten level. And I've actually seen kindergartners explain the data on a process behavior chart. So, if anybody gets scared away at this part, the math is simple and the thinking is also pretty simple and powerful once you sort of have the basics. So, I'll go ahead and share my screen so the folks that are watching have a visual to follow along on. And for those that don't, I'll do my best to describe it. When we're talking about a process behavior chart, and this one's sort of an annotated version so that things are clear. But basically a process behavior chart is just a time sequence chart. It has upper and lower natural process limits, and we plot data for some measure that we're interested in. And the chart typically has a central line so that we can detect a trend of those plotted values toward perhaps either limit. So, this particular chart, the data is the percent of students who scored proficient or higher on the Ohio third grade reading state tests from spring 2004 through 2015.    0:09:06.8 John Dues: So, I've labeled sort of some of those key parts of the chart. So, just kind of call those out. Again, the red lines are the lower and upper natural process limits, sort of bound where you'd expect the data to be in a stable system.   0:09:21.1 Andrew Stotz: And those are 1, 2, 3 standard deviations or what?   0:09:28.1 John Dues: Well, this particular chart, it's what I call a process behavior chart. So it's actually, it's not standard deviation. It's based on a measure of dispersion called the moving range. And then there's a formula that smarter people than me figured out sort of how to use that moving range to set the red lines. But the important thing to know about the limits is that they're set empirically. And that just means that they're based on the data. And so they are where they are, not where I want them to be necessarily. I don't get to choose where they are, how wide they are, where they're placed numerically is based on the data itself. And then that green center line for this particular chart is the average of all the blue dots. And then the blue dots is each year of, again, testing data.   0:10:19.4 Andrew Stotz: 2004 to 2015 as the x-axis, yep.   0:10:27.0 John Dues: Yeah. So, you have a decade and a half or so, or sorry, a decade plus of data here. So, a good amount of data. So, you can kind of see how things are performing over time on this third grade reading test. And so the purpose of the chart, like we talked about, is to separate those two flavors of variation, the routine and the exceptional. And this chart is a really great example of just natural or routine variation. So, I'm looking for patterns in the data, like a single data point that would be outside the end of those red process limits. And you don't see that. The results for these years instead are just bouncing around an average of about 78.5%. Now there's some years where it's a little higher than that and some years where it's a little lower. But the point is none of those increases and decreases are meaningful. There's only that natural variation present. But the problem is, in the typical data analysis method, what I call the old way, the simple sort of limited comparison, is that a leader will rely on comparisons between the current figure and some previous value.   0:11:48.9 John Dues: And probably the most common and why I chose this data, at least in my world, is a leader will compare last year's test scores and this year's test scores. That's very, very common. But the problem is, again, that what I'm calling a limited comparison, the comparison between two years of data, it doesn't take natural variation into account. So, what happens is we try to ascribe meaning to those increases or decreases between data points when in reality there's often no difference to be found. And I have a really great example of this. Let me switch my screen here. So, there's a lot of information here, but it's pretty simple to understand. So, this is a snapshot from 2017/2018 state test results. And so this is a document that was published by our Department of Education here in Ohio back during those school years. And the thing is, it may be eight or so years old, but it's as relevant today as when it was published eight years ago. We're still making the same sort of mistakes. So, we're basically, when we look at the data in this chart, we're basically being led to believe that there's been this meaningful decline in performance in third grade ELA.   0:13:16.4 John Dues: That's what's signified by that red arrow in the first row of the table. So, you have the ELA data says that in '16/'17, 63.8% of our third graders were proficient. And in the following year, 61.2% were proficient. And there's this red down arrow to say, oh, things got worse this school year, at least when it was published. But then if you look at the blue box, the text for those that have video, in the text it says we're not supposed to worry because, "third grade saw decreases this year, but has maintained higher proficiency than two years ago." So. Then you start to think, well, which is it? Should I be worried about my third grade ELA state test scores because of the most recent decrease, you know, as of when this was published? Or should I not worry because the scores are better than they were two years prior to that?   0:14:21.7 Andrew Stotz: And that depends what side of the argument you're on.   0:14:24.4 John Dues: Depends what side of the argument you're on. What story do you want to tell with this data, right?   0:14:30.3 Andrew Stotz: So, it's bad enough to be potentially misled by this probably common variation, but then to have both sides of an argument be misled at the same time.   0:14:41.0 John Dues: Right, yeah. Ultimately it seems like what they're trying to do is show improvement because you have this big headline up here that says, Ohio students continue to show improved achievement in academic content area.   0:14:55.2 Andrew Stotz: Yay!   0:14:58.5 John Dues: But there's a way to actually answer these questions definitively using this method, right? And so what I did was I took the data from the three years of the state testing for third grade ELA from this state education department publication, and I just plotted it on a process behavior chart. And then I continued plotting it for the more recent data that's happened since this, because three data points isn't a lot, so I kept plotting it. And so now we have, going all the way back to the first year of data in this state testing document, we have 2015/2016 data, and of course now we have data all the way up through the end of the last school year, 2024/2025. So, we have nine data points. So I plotted it, right? It looks like this. So, here's those same data as the first three data points, spring 2016, spring 2017, spring 2018.   0:15:58.3 John Dues: That's from the table from the previous slide. And then I've continued plotting things for, you know, spring of 2018, '19, '21, '22, '23, '24, and '25. So, now we have nine years of data. And what we can see is, just like what I would have predicted, even if I had only had those three years to work with that were from the state testing document and not the more recent data, but there's no evidence of improvement. It's definitive. And so you see these nine data points. They're just simply bouncing around this average of 61%. That's what the green line shows. It's almost perfectly balanced, in fact. So, three of the points are actually below the average. One point is almost right on the line, the average line. And then there's five points above. And if you follow it from point to point, it increases, then decreases, then increases, then decreases, then increases very slightly for a couple or three or four years in a row. Right? But there's no signals or patterns in this data to indicate any changes of significance. Right? So claims like, you know, yeah, we've declined in this most recent year from that testing document or, oh, we shouldn't worry too much because it's better than two years ago. All of that is nonsense.   0:17:24.6 Andrew Stotz: So, the title should have been nine years of no improvement.    0:17:29.7 John Dues: Nine years of no improvement. Nine years of stable data. And the thing is, a lot of data looks just like the state testing data over time. Not only in education, but in other things. And how I've heard this described by people that use this methodology is that, claims of improvement are often nothing more than writing fiction. And I think that's a very good description for what we see here. And the thing is, is like, I'm not trying to throw the person that wrote that document under the bus. All I'm saying is that there's a better way to be looking at data like this, a way that makes more sense.    0:18:24.9 Andrew Stotz: It made me think of the Mark Twain quote, rumors of my demise are greatly exaggerated.   0:18:39.9 John Dues: Give me one second here. My screen switched on me. There we go. Okay. So, when I think about this data, there's no real decline in performance, there's no real increase in performance. It's just stable performance. I think the key for leaders, systems leaders especially, is that this system, the way we would describe it is it's producing predictable results, and it's performing as consistently as it is capable. And so it's a waste of time to explain the natural variation in a stable system. Because what people would say is that there's no simple single root cause for this noise.   0:19:24.5 Andrew Stotz: And I think it's even better way of saying it. It's not a waste of time, it's a waste of your career.   0:19:32.6 John Dues: That'd be a very apt way of describing this.   0:19:36.0 Andrew Stotz: It kind of goes back to the point that Dr. Deming said, which was that, a manager could spend his life putting out fires and never improve the system. And every little thing above and below was a little, little mini emergency or a response was made every year because of the under or over, you'd just spend, you know, it would just be whack-a-mole.   0:20:01.9 John Dues: Yeah. But I think the thing for people to understand is I'm saying this system is performing as capable as it is, or as the performances is what this particular system is capable of. But that doesn't mean just because it's stable and predictable, like this one is, you know, it's up above 61% one year, and then it's down below it a little bit or right on the line. That doesn't mean that stable means acceptable. It doesn't mean stable is satisfactory.   0:20:37.1 Andrew Stotz: I'm thinking that this is neutral, you know, it's an observation rather than a judgment.   0:20:42.5 John Dues: Yeah. It's just what is. It's the process is producing what you would expect it to produce because it's stable and predictable.   0:20:49.8 Andrew Stotz: I want to just mention that my mind's wandering because I know that you help people with these types of charts. And when I was working with a hospital here in Thailand, they had a great room that they set up that was all blacked out and it was full of these great computer screens and guys in their technicians, like 10 of them in this room. But the room was dead silent, blacked out 100%. And they were radiologists and all the x-rays, MRIs, and everything that were being done on the machines outside were coming into them and then they were making their judgments on it. And then they would submit that and then the doctors would very quickly get a read on that. And I was just thinking, imagine being a person that just all day long looking at these types of charts. Like just any system can be described by the... And then what's your judgment on this? Yep, common cause. That's it.    0:21:50.9 John Dues: Yeah. And I think it obviously doesn't mean that there isn't work to be done. Like in this case, even though it's stable and predictable, so if I was putting a bet down on what the results are for spring 2026, at the end of this school year, I'd put my money somewhere between, let's call it 55% and 65%. And I'd be right almost every single time, I think, as long as nothing changes. But that doesn't mean, like I said, it doesn't mean there's not work to be done because when you look at this, this means that about 60% of third graders are proficient in any given school year on this Ohio third grade state test, which means that two in five students are not reading proficiently. So, the improvement roadmap, there has to be some fundamental changes to how we do third grade reading instruction, curriculum, assessment. Something fundamental has to change if we want to get a different set of results.   0:22:54.8 Andrew Stotz: And one of the things that I've kind of come to believe in my life, right or wrong, I'm not exactly sure, but it's like having traveled to so many countries and seen so many places, I kind of feel like people get what they demand. Like the population of a country, if they don't demand certain behavior from politicians, they don't get it. And so on the one hand, this is a neutral thing, but I think you can also make a judgment that the population of Ohio is not in a continuous uproar to see this change.   0:23:39.0 John Dues: Yeah. Well, I would say very few people even have this picture in their head, whether it's educators or the general public, because every time we get one of these state testing reports, it usually has only two or three years of data. So no one even remembers what happened.   0:24:01.9 Andrew Stotz: I agree that they don't have clarity, real good clarity like you're bringing us here. They have an understanding of what's happening generally. And this is what, so the reason why I'm mentioning that is because part of the benefit of trying to understand the state of a system is to understand that the level of change or work or new thinking that has to go into saying, modifying, let's just say that the population was in an uproar and they decided that they wanted to get to 90% proficiency from 60%. The level of rethinking is such a huge thing. And I think what this chart tells me is like, that's kind of what's set in stone. And in order to move beyond what's set in stone, there is a whole lot of work and a whole lot of new thinking that has to go into that. And it must be continuous. And that's part of the constancy of purpose. And you do it for three years and then a new guy comes in and he changes it. And then next thing you know, it's not sustained.   0:25:17.4 John Dues: Yeah. I mean, yes, you'd have to do something significant and then you'd have to stick with it. That constancy of purpose phrase is right on because you'd have to, first you'd have to develop the right plan and then you'd want to test it. But then once you started seeing some evidence of improvement, you'd have to stick with that plan for a decade or more to see those types of results. And that's really hard when the political will shifts, the focus shifts, you have a pandemic, whatever the thing is, you have less money for school, whatever that thing is or any combination of that, it makes it very challenging to sustain.   0:25:57.8 Andrew Stotz: And the reason why I'm raising this point is because it just kind of really hits me that take away Ohio, take away education, take away all of those things and just produce a control chart on any process in any business, in any school, and you're gonna see the current state.   0:26:17.3 John Dues: Yep, absolutely. Yeah. You can use this in any setting, any data that occurs over time, you could use this methodology.   0:26:24.8 Andrew Stotz: And one of the questions I have in my mind as I was thinking is like, why change it? The level of effort required to sustainably change that is just incredible. And you could argue that, okay, there's companies that build a competitive advantage by saying, that's not the status quo that we want to exist in and therefore we're gonna create a whole new business built around something different that produces a result that's considerably better than that. But it happens for sure, but we're much more likely in our lives if we were to see that to just let it be.   0:27:03.6 John Dues: Yeah. Yeah. And when you get it down, when you sort of zero in and get down to the sort of local level, there are schools that sort of performed in this sort of general fashion that made changes at the building level and then got significantly different results. So, it becomes a little easier. It's not easy, but it becomes easier when you're talking about a single school building and coordinating the efforts there versus trying to do that across all the school buildings.   0:27:32.9 Andrew Stotz: And I think this is what, when Dr. Deming talks about leadership, this is what he's talking about.   0:27:39.1 John Dues: Yep. Yep. And I think, you know, the good thing is here, if this is resonating with you, whether you're a school leader or the leader of some other type of organization, you know, you've probably struggled to interpret your most important data. So, before I discovered this method, I didn't really have a method per se. I'd put numbers in a table and then try to look at them and try to sort of ascertain what was happening on. And so I think it's, you know, if you've never heard of this, it's totally fine. Most of us were never taught how to understand variation in our data. But I think there's two sort of big ideas I would take from this as we've talked about this. The first is just taking natural variation into account. Just meaning plot your data over time, plot your dots, and look at how it's moving up and down over time. So, that's the first big idea, this idea of natural variation. Things are going to move up and down just naturally, no matter what's happening, even if nothing of significance has occurred.   0:28:47.6 John Dues: And then big idea two is that you can use this chart, this process behavior chart methodology to differentiate between those two types of variation that I talked about, the routine or natural variation, and then the exceptional variation. And then once you do that, you're gonna get some very powerful insights into what your data looks like, because people are gonna say, oh, I know why that happened. I know why that looks like that. Now that I see it like this, I have an understanding for why the patterns look like they do. And then you can start to turn that sort of type of analysis into better outcomes. And that's really the point of doing this is that you, you know when to react, when not to react, you are making sound decisions based on a logic, a logical model, a logical data model. And the best part is it's very simple. Like I said, a fourth grader can do the math required to create the chart. And I've seen kids as young as five or six interpreting the data in a chart. So, that means that we can all do it for sure. It's not actually that difficult.   0:30:00.6 Andrew Stotz: Yeah. And I was just thinking of Newton's law of inertia, meaning an object stays at rest until acted on by an outside force.   0:30:12.7 John Dues: Yeah.   0:30:13.8 Andrew Stotz: And I think what you're showing is the state of inertia.   0:30:18.5 John Dues: Yeah. Yeah. Yeah. The state of inertia. And I think it's just, you know, you don't know what you don't know. But once you see this and, I did some of the figuring this out on my own reading about it, listening to other people talk about it, but I talk to a lot of people and got a lot of guidance. So if this has piqued your interest, my suggestion is reach out to somebody that has done this before, at least at the start. Because there are a lot of, you know, while I am saying you can create a chart with fourth grade math and I've seen kindergartners analyze the charts, there is some learning, there is some technicality to it. And so I think if you have a coach, even better because you're gonna learn it so much faster and be able to sort of turn that learning into results so much faster.   0:31:07.0 Andrew Stotz: And maybe the starting point is trying to figure out of all the different measures that I've got in my business, in my school, in my life, what's one that I get regularly? And I like data that comes out more than annual because then it's just such a long process. So if I have daily data, weekly, monthly, you know, those types of data points, then from that, you know, and what's one thing in your life that would be a data point that you'd like to look at? And I would even argue the first step is just to start collecting it into, let's say, an Excel file and just collect that raw data. And you can make a chart of that raw data. And the benefit of the process, you know, control chart and the process chart is that what you're seeing is, you know, tools within that chart to help you interpret. But even if you just start by figuring out what data point you wanna look at, start collecting it, do a month or two of getting that data, and then you can start saying, okay, now I'm gonna apply these tools, nothing wrong with that.   0:32:21.2 John Dues: Yeah. And you wanna show it to people, like whether that's teachers or students, you wanna show them the data that you're collecting because they're gonna be a part of that improvement process, no matter what type of data that you're looking at, at least in schools, you're always gonna want the front line people to be a part of that process.   0:32:39.4 Andrew Stotz: And the way I did that in my area of research when I was an analyst and I had a research, was I wanted to see the data of the output of our research operation. How much did we produce? I didn't have a strong opinion as to whether we should produce more or less or whatever. I just wanted to understand them. And so I started plotting that data on a weekly basis, and I labeled it pretty well. And then I just put it up on the wall, and I didn't talk about it. And I put it up, and people looked at it, and I didn't go and explain it, and I didn't put control limits or anything like that. I just put the data up. And I remember a Thai lady that worked for me came to me, and she said, I figured you out. And I was like, what are you talking about? And she said, I was out to lunch with a friend of mine, and she asked me, how many reports do you publish a month? And she said, my employee said, I publish six reports in a month. And my friend said, what?   0:33:45.4 Andrew Stotz: And she said, how many do you do? She said, I only do two in a month. And she said, what are Andrew's targets for you? My God, to get six reports. And then my employee said to her, he doesn't have any target for me. And then that employee of mine came back to see me after that lunch, and she said, I get it. You just put it up on the wall, and it raised the awareness for all of us, and we all looked at it, and then it influenced the way we thought about our job without you telling me, get four or six or two. And so sometimes, and I did that exact same thing when I worked at Pepsi when I was in 1989 when I joined Pepsi in the factory in Buena Park in particular, where I would put up on the wall, here's everybody's error rates from last night. And I would post that, and then the employees would just look at it and go, that's wrong. Okay. Fine, great, tell me. Let's look at the data.   0:34:44.8 Andrew Stotz: And I kept all the underlying data that was manual in my hands in stacks, and then they would go, oh, okay, so I did get that wrong. Let me fix that. And then I fixed it and put it back up, but it didn't look much prettier after I fixed it. And then all of a sudden, people started looking at it, and then they started having new information they never had. And I hadn't studied with Dr. Deming by that time, so I didn't even understand anything to do with the chart, but just putting up the chart without any major commentary is fascinating.   0:35:12.9 John Dues: Yeah. It starts those conversations, starts getting people sort of more involved, more engaged with the work. Yeah, I think those are all really smart moves that we often don't do.   0:35:25.2 Andrew Stotz: And I think that was why my boss suggested I go to a Deming seminar, because he saw me starting to do that, and then he had heard about Deming and knew a little bit, and then he was like, yeah, this guy could be suited for that.   0:35:36.6 John Dues: Yeah. It sounds like it was fate or something like that.   0:35:41.6 Andrew Stotz: Yeah. Definitely. So, I'm going to wrap up just by saying that, for the listeners and the viewers out there, I think a big takeaway is figure out that one data point, just one. You don't need five, just one that comes out consistently, daily, weekly, monthly, you know, something that's relatively regular, and then start collecting that data. Write it down on a, you know, I do have times that I just write it down on a manual chart, in my notebook. Write it down there. You don't even need Excel. Just start collecting that data and thinking about the collection of the data, what time of the day you get it or what time of the week or what time of the month, and then start collecting it. Then the second stage is start to, you know, obviously, if you can go to an expert, someone like John or others, reach out to them, LinkedIn or other place, you know, and say, hey, I've got this data. Can you help me? And then they can easily do the calculations and then send you back the Excel file and say, here it is with all the calculations, which you did to me on one of mine, and that was great. And then get that help, and then start to move yourself slowly into the process because I think one of the things that I take away from it is that this really is the present, and it is an accurate representation of what the system is capable of.   0:37:10.2 John Dues: That's right. Yeah.   0:37:10.8 Andrew Stotz: And if you don't understand that, then you're just going to be beating your head against the wall. So, anything you would add?   0:37:18.9 John Dues: No, just beat your head against the wall and you make stuff up about what is happening. That's often what happens. Yeah.   0:37:27.0 Andrew Stotz: Then you become AI. You're hallucinating.   0:37:30.1 John Dues: Yes.   0:37:31.0 Andrew Stotz: Well, John, 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. And you can find John's book, Win-Win: W. Edwards Deming, The System of Profound Knowledge, and the Science of Improving Schools, on amazon.com. This is your host, Andrew Stotz, and I'll leave you with one of my favorite quotes from Dr. Deming, and that is that people are entitled to joy in work.

Discover how Andy Novins turns business challenges into big wins! Andy shares with host Andrew Stotz how he uses Deming strategies to outsmart competitors, watch for market shifts, and win loyal clients in one of the toughest industries around. TRANSCRIPT 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 here with featured guest Andy Novins. Andy, are you ready to join and share your Deming journey?   Andy Novins: I sure am. Yep.   Andrew Stotz: We've done a lot of prep for this, had some good conversations, and I'm looking forward to it. Let me introduce you to the audience. Andy first got introduced to the teachings of Dr. Deming more than 30 years ago and has been hooked ever since. He attended Dr. Deming's four-day seminar in August of 1993, only four months before the passing of Dr. Deming on December 20th of 1993 at the age of 93. Andy was a co-owner of a women's athletic apparel company, which was eventually purchased by Warren Buffett's Berkshire Hathaway. For the past 23 years, he's been applying Dr. Deming's philosophy to his work in real estate, which traditionally has operated in what could be described as in opposition to the teachings of Dr. Deming. Andy, why don't you tell us a little bit about what you're doing right now and maybe a little bit about how you got into what you're doing now, and then later we're going to talk a little bit about your experience with Dr. Deming and all that. But just let us know, where are you at? What are you doing?   Andy Novins: Okay. Well, I am in Northern Virginia, just outside Washington, D.C., and after my partners and I sold the company that Andrew just referred to, I had to decide what I was going to do. And I had about six months to do that because part of the contract required me to help the purchaser, which originally was Russell Corporation, a big athletic, they made all the Major League Baseball uniforms and everything. We had to transfer my company's systems to their systems, and that was one of the worst six months of my career, watching everything we had done, which was really all Deming-based, being sort of dismantled and worked into another Fortune 500 company at the time. It was, somewhat, actually it was a few years later that Berkshire Hathaway bought it, and it was because Russell was not doing very well. It was a rescue-type purchase by Berkshire Hathaway, which sort of had some satisfaction in mind that their systems weren't all that good. So that's where I got into Deming, and I've taken a lot of what I learned from the apparel company into real estate, which, as Andrew just mentioned, is very volume-centric, volume-focused, and focusing on processes as opposed to systems.   Andrew Stotz: And in the real estate world, for those people that don't know, let's say real estate, what position are you in? For instance, my sister is a mortgage broker in Maine, and that's a different place within the whole sphere of it, but maybe you can explain exactly where you are in the value chain.   Andy Novins: Okay. We focus on residential real estate. What we call in real estate farm, okay? I send out 5,000 newsletters a month that show to eight different areas, really, but they're all within, believe it or not, two miles of my house. And those news, I've been doing that for over 20 years. I've never made a cold call. I will never call anybody and say, are you thinking of selling or anything like that. Yet, using this process, which is all really Deming-based, I've done about 10 times the volume of any other realtor in the 5,000 homes that I service. It's the process... I don't want to use process. The system we used is based on Michael Porter, his concept of competitive advantage. And it's a system that's focused on a value chain, things that we do that other people can't do. For example, there are close to 300 sales a year in my 5,000 home market. I see every one of them. And when you see a house that's on the market, you know a lot more than anybody else does by looking at pictures. If you've ever been to an open house and after seeing it on the internet, it's a lot different than what you saw in the pictures. No other agent can do that because most agents in my area focus on Northern Virginia, which would be about 20,000 transactions a year, not 300. So they can't even try to compete with me in my area. So that's the whole concept of it is doing things. As Michael Porter would say, you have a value proposition. That's my expertise in my local area.   Andrew Stotz: Porter talks about different strategies. One, he says, is the low-cost leader. Another is the differentiation. And the third one he talks about is focus and where you're focused on a niche in the market. And then I guess I always kind of think that really he's talking about two, because with focus, you're picking a niche, but then you're going to either be a low-cost leader or probably a differentiator in that focused area. But when you talk about Porter and what he's teaching, can you explain a little bit more for those people that don't know what he talked about?   Andy Novins: Sure. Yes. Basically, yes. I mean, I'll never forget. My partner and I were at a breakfast, realtor breakfast at one point, and there was an agent sitting across the table from us and he said, I just got this listing. And he said, but I had to go down to 1%. And he's, you know, for commission. And at that time, commissions were pretty much 3%. And he kind of looked at us and said, that's better than nothing, right? And that's the low-cost. Low-cost producers will never win. It'll always be somebody else. And Porter says, you can't be the best either. Okay. There's no such thing as the best realtor. There's always going to be somebody else. So the concept for real estate is picking a niche, that for me, it was farming. I'm a pretty good writer. So I write a newsletter, and people call me when they're ready to sell their house. And it's worked beautifully for... I started that in 2003. Okay. But there's people that focus on luxury, the luxury market or people that focus on first time buyers, or people that focus on... There's all kinds of different niches downsizing or upsizing. And so you can become an expert in anything. And that's how you differentiate yourself in real estate.   Andrew Stotz: And that concept of not competing to be best that Porter talks about is great because it also forces you to think. You're focused on the wrong thing if you're focusing on how to beat the competitor. And I always enjoyed the fact that Deming was so focused on the customer.   Andy Novins: Yes.   Andrew Stotz: And that, I think with Porter, I like that. But with Deming, I just really love the idea that he saw quality in the eyes of the customer. He saw innovation and continuous improvement in relation to the customer as primary over trying to benchmark off of some competitor.   Andy Novins: Exactly. And if I go back to my apparel business, the name of our company was Moving Comfort, and we just made women's apparel. Nobody else ever stuck to just that. We were the only company. Just, everybody broadened out to try to get more. So again, it's the same concept of a niche. Okay. But one of the policies, I guess, we've developed, it was a Deming related policy, which was fun, okay, was when we made a mistake, which we often did, whether we shipped somebody the wrong thing or we did other things, our objective was to make the, delight the customer, as he would say, make them happy we made the mistake. And that didn't matter what that cost to do that, sending them free stuff, doing whatever. And I think that's a Deming concept that we used in the apparel business aside from many, many others. Back to real estate, that's, I don't know anybody else in the Washington area that does what we do, because nobody's willing, that's the so-called trade-offs. Nobody's willing to say, I'm just going to focus on 5,000 houses.   Andrew Stotz: Yeah. It's scary.   Andy Novins: They can pick whatever they get.   Andrew Stotz: Yep. Yep. And maybe why don't we now go back to August of 1993. How did you find yourself in a four-day seminar? And I'm kind of jealous because what... My seminars I went to in '90 and '92 were two-day seminars.   Andy Novins: Really? Okay.   Andrew Stotz: And I had thought that he... I had thought by that time, maybe he was only doing two days, but then I learned that he was still doing four days. But what got you to that seminar? Where was it, and what got you there?   Andy Novins: Okay, I was going on vacation. Okay, this was in 1990. We were going to go to Cancun. And there's this, I guess they're still around, but there was a bookstore in DC on K Street called Reiter's. And it was all business and science. And I used to go there because pre-Amazon or anything like that. I think it was even pre-Borders. But I used to go there and spend an afternoon looking at books. And I found Out of the Crisis. And I brought it home and I said to my wife, by perusing through it, I didn't know anything about Deming at that point. But perusing through it, it just struck me as something I really wanted to read. And I went home and I said, I'm taking this book to Cancun, and I'm going to sit on the beach and read it. Well, I actually didn't read it till got home. But I got completely enthralled with it.   Andy Novins: And being in suburban DC, we're like eight miles from the White House. The Deming Study Group was very active in DC. Dr. Deming lived in DC. And there were just a lot of very well-known, famous speakers that would be part of our group, including Deming at one point, but I wasn't. But I think it was before I joined the group. So I read the book, joined the group, and after about three years, I had heard enough about the seminar that I wanted to go. And I went to that in Chicago. It was the first or second week of August of '93. And one of the things that I never really understood that Dr. Deming would say a lot was talking about being transformed, or the transformation that you get when you're studying his philosophies. And I always kind of said, well, that's not going to happen to me. It just was foreign to me. That third day of the seminar, I was transformed. I don't know how to describe it, but ever since then, I look at the world through his eyes and see things and think in systems and variability. And you get all that when you first get exposed to them, but you're not transformed. Somehow it all comes together. I couldn't describe it, I never thought it was, but that happened during that seminar.   Andrew Stotz: And what Dr. Deming talked about was the idea is that the person who's leading the organization has got to go through a transformation in order to truly implement this.   Andy Novins: Exactly.   Andrew Stotz: What was it like there? How many people were in the room? And what was your... You walked in knowing a bit. I walked in knowing nothing, basically. And it was just like, whoa. But I'm just curious, what were your first impressions? For those people that have never and never will have a chance to go in, give us a feeling about how it went.   Andy Novins: I don't know if I mentioned it was in Chicago.   Andrew Stotz: Yep.   Andy Novins: Okay. Which is a great city, and it was in the summer, which is often hot. But I was amazed because at that point, and I may be wrong, but I think it cost $1,000 to go. Okay. And he had 500, and I'm pretty sure that's about what it cost. And do you remember what yours was?   Andrew Stotz: Mine was about 500 people, for sure. I didn't pay for it, so Pepsi paid for it but I would think it was even more than that. But who knows? But maybe mine was a two-day, so it was less, I don't know.   Andy Novins: But it was 500 people. That's what I remember, because being a numbers person, I translate that to 500,000 for the four days. And so that kind of stuck in my mind. And he did a lot of them. And one of the things, too, that he did a lot of them, and I think, geez, he's making a lot of money doing this. He lived in a little tiny house on a street in Washington, and he worked in the basement. One of the things that happened to me after that, again, with the Deming Study Group, was his son-in-law, Bill Ratcliff, okay? Somewhere shortly after the four-day seminar, he called me and he said, I'm getting a lot of feedback, you guys at Moving Comfort are doing a lot of using Deming's theories and everything. Could I come and visit the company and you show me what you're doing? And I said, sure. I mean, any more exposure to any of the people interested in Deming at that point was fascinating to me. And so he came and he spent a good part of the day at the company. And then I'm not even sure if at the time I knew that he was Deming's son-in-law, but then we went out, his wife was Linda Deming Ratcliff, okay? And so he and Linda and my wife went out to dinner a couple of times after that. And it was fascinating to hear both of their stories about Dr. Deming. What I remember is Bill would say, we used to go over there on Sunday mornings and read the newspaper, and Dr. Deming would be down in the basement working. And he'd come up periodically and say, how are you doing, Bill? In his voice, and then go back down and work. And he constantly was focused on his work. And so those relationships just tied me into Deming forever, especially after the four-day seminar.   Andrew Stotz: Yeah. I think it was a discussion with Bill Scherkenbach when I asked him about what it was like in the basement. And Bill was telling me, I don't think we got this recorded, but Bill was telling me that somebody asked him why you have all of this stuff around you and in your office. And he said, I'm desperate. I'm absolutely desperate. And with the idea that he was on such a mission. And I just feel like when I went to the seminar, the first one was in Washington, and then the second one was in Los Angeles. I didn't know how significant he would be in my life at the time, and I didn't understand the transformation I was going through. But what I did later really come to understand is that he inspired me to have a mission. And like, why am I doing what I'm doing? It's one thing for all of us to be busy, working really hard, doing all kinds of stuff and bringing value to our clients. But for what? What's the mission? And was a huge, that's a much bigger takeaway for me now than it was then. But what I witnessed was this man who is very old, just conveying an incredible message. So, yeah.   Andy Novins: Yeah, it was, and he was... Well, DemingNEXT, if anybody is involved in that and can see a lot of the videos with Dr. Deming, especially during the years that I was interested in watching and everything else, he just had a unique way of presentation, but he did have a sense of humor. And it was a dry sense of humor, I guess, maybe going with his dry martinis.   Andrew Stotz: Yeah, tell us that story about Deming Martini.   Andy Novins: Yes. As one of the sessions at the four-day seminar ended, apparently this Deming Martini is famous or was pretty well-known at that point. So he described how he loved martinis and he acted out the process of making one. And again, he's 93 and just you could tell this is just part of his life he loved. And he, so he kept his vermouth in the freezer, okay? And it was, and so he demonstrated how he poured the gin, and then he acted out like he went into the refrigerator freezer and took out the vermouth. And then he would not open the bottle, but he would wave the bottle around the glass and then he'd put it back in the freezer, and he'd say, this is the best martini you can make. And he had a lot of stories that added a lot of spice to it.   Andrew Stotz: So when you left that seminar, what changed in the way that you were operating? And obviously you had already had awareness of the teachings, but did that inspire you to go to a different level or what did it cause?   Andy Novins: Yes, and I'm not sure at what point the so-called transformation took place in the four-day seminar. You knew that that's how you were going to think for the rest of your life. That wasn't, you were going to think in systems and variation and predicting from the system and all those things. But so I can't really remember what years we did it, but as an apparel, our company basically, we designed, manufactured through separate factories and sold women's athletic apparel to specially sporting goods stores around the country. Nordstrom's was a client, one of the bigger ones, L.L. Bean and those kinds of things. And so one of the things we implemented that was really a Deming concept was improving our shipping, the picking process, which is filling an order. And we automated that with a carousel, which brought the product right to the picker, the warehouse person, and barcodes and scanned the order, and it brought the thing right to them. It incredibly reduced our error rate in shipping. And at the time, this would have been like 19, this was '91 or somewhere early on that. And at the time, we were way ahead of other companies.   Andy Novins: Even Nike, they would get an order, they'd walk around and pick their orders. And so that was a Deming-inspired process or way of improving our system. With apparel and you're designing 100 different styles or sizes and styles and everything else, the design development group, the functional silos that, I don't know if Dr. Deming used that term, but the system that every department has to hand off is working for the next department. In apparel, it's really complicated. And that was the biggest Deming issue we would focus on. It never went away. You really had to always, because our designers would put bells and whistles into a garment. We were very high-end and it either wasn't practical price-wise or it wasn't practical in the factory or we didn't have a good source for where we were going to put it, where, what factory we were going to put it in, that type of thing. So that's where really the Caribbean Basin Trade Initiative at that point came out. That's where we had factory, up until about 1990, all our production was in the United States.   Andy Novins: After that, it got too expensive, labor, sewing labor in the United States. That's when most companies started going offshore. We did a lot in the Caribbean. And when you're manufacturing apparel, back at the beginning, you would ship, we would buy the fabric and we would ship it to the Caribbean factory that we were using and they would sew it, and put it together. And then trade agreements came out where the factories could buy the material. And essentially, instead of they being just a sewer, they would be making a finished product for us. That had huge implications on simplifying the system and transferring responsibility to the people that really needed it. But now maybe I'm getting too much into apparel, but...they haven't been doing it for 23 years.   Andrew Stotz: So let's talk about what you're doing about your application of Dr. Deming's teaching in real estate. And I know you've also brought something along to share and go through, but maybe you can just talk a little bit about how you're applying that in the real estate business.   Andy Novins: Yeah, and that's the control chart concept. And all real estate statistics are lagging indicators, whether we're talking median prices or active listings, or I guess active listings are the only one that's not a lagging indicator, but almost virtually every month's supply of inventory, all those things are lagging indicators. So they tell us as realtors what happened. And in my market here, it bottomed out after the 2008 recession in March of 2009. And until this year, it's gone straight up for 16 years. So most realtors, virtually no realtors... Well, most realtors haven't experienced a shift in the market, which is what we're going through now, where the market goes from being a buyer's or seller's market for all those years. And I'm talking about a strong seller's market. A seller's market is defined by the National Association of Realtors as any market where the months' supply is less than six months. And our supply was hovering around two to three weeks. And it's now almost two months, but the market has shifted and it's incredible how many people don't realize that.   Andy Novins: Everybody knows there's something going on, but the media takes care of that. But all the statistics we get are, again, median prices are still very high, okay? But using control charts, you can plot, for example, a couple of months of live inventory. That started going down in April, okay? I mean, that went out of the control limits in April, okay? That's telling us that something's happened. It tells us directly that the market shifted, okay? The other thing that I watch is price drops, okay? How many price drops? That went out of the control limits in, I think, June, they started out, okay? And we're looking at that weekly, and that's showing us every week, the number of price, it's so far out of the control limit right now, it's amazing. There's no... You can't... You can look at price drops, and you can look at months' supply on a graph, okay? But it doesn't tell you that the system's now out of control. But control charts do tell you that, so...   Andrew Stotz: Should we look at your control chart? Maybe that's a good time to do that.   Andy Novins: Sure, yeah. And before we do that, one of the things in real estate is seasonality, okay? And that hides a lot of problems because prices go up in the spring, down in the summer, down in the fall, up a little bit, then down. But let me bring those up and talk about them. Okay, you can see this?   Andrew Stotz: Yep, and for the listeners out there, I'll just describe. You've got a line chart up here, and a line that's going up and down, and then recently is going up a lot. And it starts in July of 2023, and it goes to June of 2025. And so why don't you take that away and help us understand what you've got here?   Andy Novins: Okay. So the control limits, the upper and lower control limit are the red lines on this. And going back to July of '23, everything was stable. And if we went back long before that, it would also have been stable.   Andrew Stotz: Yeah, and by the way, just to make it clear, it's monthly supply, or month supply, sorry, of housing.   Andy Novins: I'm sorry.   Andrew Stotz: Can you explain what it means, month supply?   Andy Novins: Yeah, month supply is the number of active listings at the end of a month divided by the average monthly sales for 12 months, the 12-month average. So it's basically saying if you've got 10 active listings and the average is two a month, that you've got a five-month supply of listings. Okay?   Andrew Stotz: And the average on this is one month supply.   Andy Novins: The average, right. And you can see where during the pandemic, we've had times where it went down to just a number of weeks, which is pretty incredible, but that's our market. So again, this chart is telling us that... Well, there's another thing, other ways that Dr. Deming would look at this. We've got several months where it's going, the month supply is just going up. So starting in December '24, you can see that the supply keeps going up. And then it went out and broke the upper control limit. So what he would say in this, looking at this chart is that up until really of March 2025, the system was in control, it was predictable, okay? And then starting in March or April 2025, it was out of control, it was not a stable market, and the market is a system.   Andrew Stotz: And it went up above the upper control limit of 1.6 roughly or 1.55. And now the highest it went up in May was about one point, almost, yeah, 1.8.   Andy Novins: 1.8, okay. And so Dr. Deming would say that number one, it's a shift in the market, number two, the market is no longer predictable. Okay? Clients don't like to hear that, but using these charts and explaining it to them, they do understand it. And in real estate, one of the most important things when markets are changing, or always actually for that matter, is managing client expectations, okay? And using Deming's theories and control charts, it makes it... And I'll get into that a little bit more in a minute, but managing their expectations becomes more of a science than scripts, which is what...   Andrew Stotz: One of the things I learned from Dr. Deming was be skeptical of data,  and I know I've spent my career as a financial analyst manipulating tons of data. And every time I see something out of control like we see here, the first question I ask is, is there an error in the data? And then the next question is, okay, so what's going on out there that the chart is one thing, but can you just talk briefly about what's going on? What do you think is behind this? What's causing it? What is that shift that you're seeing?   Andy Novins: Well, if you were asking me this in 2008, I could have told you. The irresponsible lending and all kinds of other things. Today, the market is in our market more than others is impacted by uncertainty. Okay. Uncertainty surrounding the impact of tariffs. Okay. But especially in our area, the impact on federal workers job security. Okay. In our area, which is an expensive area, almost any couple that is buying a house is buying it on two incomes. And if one of those, one of the members of the couple is, works for the federal government or is a government or works for a government contractor or is affected by any, in any company that may be impacted by government cutbacks, they're not buying a house right now. They're waiting. So they don't want to buy on one income. And so they pulled out of the market. And that's, that's the biggest reason for the increase in the supply. The other is,  people do want to move. People want to downsize and upsize. Well, most people have a 3% interest rate or better or slightly around there. So with the impact of low, you know, of rising interest rates and everything else, there's people that want to downsize. And if they move, they'd be paying more for their smaller house than they were for their house they're staying in. So they stay.   Andrew Stotz: What are, what are mortgage rates right now? Roughly.   Andy Novins: That's  675, 6.75. 30 year. But what's interesting on that, and I haven't done it, but it would be an interesting exercise is when I began my career as a CPA in New York, I moved down here in 1982 to be part of the company that I talked about before, the apparel company. I, when I said to her, when I had that opportunity, I said to my wife, what do you think about moving down to Washington? We lived in Westchester County, New York, and she said, well, sure, but, and at that point, I was treasurer of a bank in the New York metropolitan area, and she was willing to take the risk. It was a risky move, but she said not, but not, we can't sell our house. We have an eight and a half percent mortgage. We'll rent it, and if it doesn't work in Washington, we can always come back to it. So that eight and a half percent mortgage back in '82 was not something you got rid of, and people don't realize that the average mortgage rate in the past 50 years is eight percent. So at 6.75, it's not that bad, but it's relative to the three percent interest rates we had. It's making it tough for people to move.   Andrew Stotz: So just talking now, I just want to wrap up on the chart by saying, so once you use, you're demonstrating using a control chart in the industry of real estate, and you're discussing the fact that right now, you've got three points that have breaking out of the upper control limit, which now tells us, as you said, it's unpredictable at this point. What else, what do you take from that, and how does that drive your actions when you see this chart? How does that impact you, and in other words, how are you applying Deming's teachings once you've now done this?   Andy Novins: Great question. When you price a house to sell it, you use what we call comparable sales. When a market is going up or stable, comparable sales are a good indication of what you're probably going to price it at if it's going to go on the market soon. What realtors do is what we call a comparative market analysis, and that's comparing at least three homes to their home. There's all different ways of doing that, which is part of a Deming system too. But when you go to somebody and say, well, we got these three homes and they sold it at 800, but if you're going to put your house on the market next month, we're probably looking more like at 750. And most people would say, well, I'm not going to use that guy. This other realtor says 800 is the way to go. And using the control chart showing that the market has shifted and that those comps are no longer valid is one of the most valuable uses of control charts in real estate because, again, it's evidence that the comps aren't valid anymore.   Andy Novins: The other thing is comps represent, even if it closed yesterday, it went under contract a month ago. So the comps are just not necessarily good if the market is shifting, and this is pretty powerful evidence to a potential client that pricing is really important and you can't just use past comps. I'll go to the next chart, which is price drops. And this is something, again, our market really just shifted recently, so this is something I'm actually doing actively right now looking at. But you can see that this is weekly price drops. Okay, it started off monthly because I can't go back and get that data. But if I go back to a stable year, last year is the base. You can see that price drops were pretty stable process in the pricing system. They were...   Andrew Stotz: So what does that mean? Just so we understand, let's say the average is 25% projected monthly price drop. What does that actually mean?   Andy Novins: That's saying that every month that of the active listings on the market, 25% of them are reducing their price. That month.   Andrew Stotz: So in other words, 75% are either keeping it the same or raising it.   Andy Novins: Say that. Yes, right.   Andrew Stotz: The opposite of that. Okay.   Andy Novins: Right. And that's each month. That doesn't mean somebody didn't lower their price on that same house the month before. But it's registering the number of drops that homes on the market are doing.   Andrew Stotz: And that would mean it's like a pretty good seller's market again when only a quarter of listings need to drop their price in order to get the sale.   Andy Novins: Yes, exactly. Yep. Exactly. And you can see this...   Andrew Stotz: And let's just talk about the January 2024 to December of 2024. So for the year of 2024, what's your observation of the data?   Andy Novins: It was stable. It's not a change in the market.   Andrew Stotz: Yep. Okay. Normal variation.   Andy Novins: Yeah, normal variation. Okay. But when it starts to go up like it has, and it's even worse because what I'm using is an average for these weeks. The next week starting tomorrow will have the four-week average. They're actually quite a bit higher, the last two, than what they show here because they were averaged down. But when you see rampant price dropping, that's out of control, so to speak.   Andrew Stotz: Right. So it's gone from a mean of 25 up to 60-plus percent of monthly price drop. I'm just curious. It says on your y-axis, it says projected monthly price drop. Does that mean somebody's making some estimate on that, or what does that mean?   Andy Novins: That's because right now I'm doing it by the week.   Andrew Stotz: Okay. Ah, okay.   Andy Novins: Okay. And I'm averaging the week. And then when I get the month, it'll be like the earlier ones.   Andrew Stotz: So the most recent ones are the projected, and the other ones are the actual month.   Andy Novins: Yeah.   Andrew Stotz: Okay.   Andy Novins: And right, I'm using, I'm multiplying them times four the week. So it's right now I'm projecting what July will be, basically, the total, but it'll be up around 60%.   Andrew Stotz: And this chart corroborates the conclusions that you made in the prior chart, or are there any other additional...   Andy Novins: Yeah. And the month supply chart is more of a leading indicator of a market shift, because this is the reaction of sellers and realtors to a market they didn't anticipate properly. And so this is a much more now type of thing. And again, if I go back to a client and say, you know, all the comps are 800, but we're going to recommend 750, this is pretty convincing evidence that basically almost everybody in the market is reducing their prices.   Andrew Stotz: Yeah.   Andy Novins: And in a falling market, the worst thing you can do is chase the prices, chase it down.   Andrew Stotz: Yeah. And what this doesn't show, it shows that 60% are dropping their price. It doesn't show what the remaining 40% are. And that composition of that could just be, there could be no price increases. We don't know from this data whether that's holding the price the same or increasing it.   Andy Novins: Right. But it doesn't mean that there aren't homes in those active listings that didn't reduce their price, that reduced their price. They may have reduced their price last month. Okay. So it's really just showing the panic that's out there.   Andrew Stotz: Okay. Got it.   Andy Novins: But it's a great leading indicator from that standpoint.   Andrew Stotz: Okay. So two charts that show us the application of control charts and Deming's teachings there in real estate and making a note of the fact that these are now out of control. Interesting.   Andy Novins: Yes. And again, the most important thing you can do, I think, in real estate is accurately manage your client's expectations. Yeah. Because, and I'm going to back up for a second, that's another real benefit of having a niche practice. And again, like the competitive advantage Michael Porter concept. And for me, writing a newsletter, which gives them what we hope to be useful information for the 5,000 homes that get it. When they're ready to sell, again, I don't call them, they call me. And they call me because they trust me. They believe I know what I'm doing. And so part of a system that would be outside of what Dr. Deming talked about, but part of the system is your clients, the quality of your system is going to depend on the quality of your clients. And so having a niche, again, what I'm doing in terms of that so-called farming and the newsletter is I'm attracting clients that will trust me. Okay. That's so much a Deming concept in terms of the overall system and how it affects it. We see all the time when buyers that are buying one of our listings and they have all these problems and the other real estate agents, their buyer's agent says, I know they're crazy. I can't wait till this is over because their buyer clients aren't listening to them and they're asking for unreasonable things or whatever. So a critical part of the system in real estate is getting clients that will listen to you because theoretically we know what we're doing.   Andrew Stotz: And if we look at this chart, one of the things that some people may ask is what about forecasts? And I know I spent my career as a financial analyst in the stock market forecasting earnings. And then when I worked on my PhD for my dissertation, I decided to calculate the accuracy of analysts in earnings forecasts. And as I said, the title of my dissertation was analysts were only 25% wrong. And in other words, here is the highest qualified people to forecast the earnings of these companies and they get it wrong by 25% on average. And so for those people that say, well, what about your forecast and all that? I always say, I live on the cutting edge of history. Don't try to go too far out in the future. Just make sure you understand. And that's where this chart shows July 19th to July 25th that you could say that's pretty much, and if you get the data out the next day, that's the cutting edge of history.   Andy Novins: Yeah, yeah, exactly. And in the past, people say, well, should I wait?  At this time of the year, they might say, should I wait and put the house on the market next spring? Or should we do it after Labor Day? And in the past, I would have said, wait till next spring because things were going to be better. You could... Everything was stable and rising. What these charts show, and they do require some explanation, is that the market is out of control right now. You can't predict it. And then if so,  then it becomes a decision that a client makes based on what they really need. Do they want to move yet? Do they want to wait? Do they... But these control charts are showing that you can't predict. Whereas in the past, you could be pretty safe.   Andrew Stotz: Yeah. And the point of that, too, is that a control chart can't solve every problem. It tells you where things are, so you understand things a lot better. But then, how you're going to actually use that information, well, somebody may use it to say, I need to sell my house now. Somebody else may say, I'm going to wait because I think this is bad and it's going to get better later. And somebody's going to say, I'm going to sell now desperately because I think this is going to get much worse, right? That's the hard part.   Andy Novins: Yeah.   Andrew Stotz: But if you don't know what's actually happening, which the control chart gives you that information, then there's none of that.  It's just, there's no basis in fact of what you're doing.   Andy Novins: Exactly. Right. They provide a window into the market that I have never seen anybody use this or talk about it.   Andrew Stotz: And do you have any more charts? Was that it?   Andy Novins: No. Yeah, I got more.   Andy Novins: Okay. Whoops. Oh, but before we get to that, okay, so this is a concept, and if I'm going too long, cut me off.   Andrew Stotz: No, no. Go ahead.   Andy Novins: So in a falling or stable market like we're in, okay, in a rising market, you pick a price, and if you're good, you're going to do well. If you do it right, they're going to bid it up. That's the way it's been for five years since COVID. Okay. Now the market is not rising. It's falling or even in a stable market. So the PDSA cycle that Deming talked about is absolutely so on target for what we're going through right now. So I'll just briefly go through this. The plan part is you price using comps or adjusted comps based on what the control charts are showing where the market is going rather than where it was. Okay. And then you put the listing on the market in the MLS. And then what we do, okay, is we study what's happening, okay? And again, the market is not in control. It's not a stable system. So we monitor and we subscribe to special services that most agents don't get. They cost money, but they give us a lot of information. We can see the number of views all over the internet that a house is getting that's on the market. And we can subscribe to another service that shows all the showings that are comparable houses in our zip code or any way we want to do it are getting. And then we use the control charts and we look at feedback and everything else.   Andrew Stotz: So do you have more charts, Andy?   Andy : I sure do. This isn't actually a chart. It's one of the core tools that Dr. Deming used. And it's what he called the PDSA cycle. And that is the most important tool that we use with the data we get from the control charts. So I'm going through an example here of pricing. And so the PDSA is plan, do, study, act. And the planning section of this process is we price using comps, like I've described. But we also use the control charts to let us adjust the comps for what's happening in the market right up to today, basically. And the do is just in real estate is just simply putting the listing in the real estate market, MLS, and listing it so people can see it. The study, though, is what's really important. And that's where a lot more data comes in. We subscribe to services where we can monitor all the views all over the Internet of our listings. And we can monitor showings that our listings are getting, which we know, but other listings. We can monitor what they're getting in terms of competitive listings, similar prices, and that type of thing.   Andy : And we also monitor what houses, if any, are going under contract since our property went on the market. And that provides what we talk. So we have to act on that data. And that's the A of the PDSA cycle. And so we use feedback loops. So just as an example, I won't necessarily go through all these. If we have a lot of views, high views, and high showings, we know the price is right. We're going to get offers. On the other hand, if we have high views and low showings, we know buyers are interested in it, they like it, but they're not ready to come and look at it. They're waiting for that price to go down, which in this market, it probably will. So we advise our clients based on the data we're getting, and then we either reprice or we don't. There's also some other things we use to monitor, but I won't go into those at this point.   Andrew Stotz: What's interesting about that is it's like every single listing is a test.   Andy : Exactly.   Andrew Stotz: That's cool.   Andy : Yeah. And that data is so important. And when you tell a client, you're getting all kinds of... You're getting... And we compare it to the other listings. We give them charts, which shows the other houses. And we say, look, you're getting twice the views of these other houses, but nobody's coming to your house, or very few are coming. And the other listings are getting less views and more showings. People think you're overpriced. And it's very convincing to a client.   Andrew Stotz: Is there one of these that you're aiming for? And if you are close to that in your listings, you're hitting the right spot? Or what are you aiming for?   Andy : High views and high showings. That's the best. Everybody's looking at it. People are coming. Okay. There's other tests down the road because traditionally if you get 16 to 18 showings and nobody makes an offer, you're still probably overpriced, but that's very unlikely. Okay.   Andrew Stotz: And is price the only factor that you can adjust here, let's say high views, high showings could be just the type of house, the location, but you don't necessarily control those things?   Andy : No, the one down near the bottom. Low views, high showings. It's ikely a niche piece of property. Not many people are looking at it, but the people that want that niche, whatever may be different, it's a unique piece of property, they'll get a lot of showings relative to their views, because most people aren't interested. But there isn't much else we can do because we spend... We pay for staging. We don't pay for it. We do it. We have our own inventory and staging. We have contractors that we've used for years to help get a house ready. So the product itself, the house, and the presentation, there's never much more we can do to make that better.   Andrew Stotz: And quality in the eyes of the customer is the best price sold quickly, I guess.   Andy : Yes. Yeah. That's right. There's a saying which not everybody agrees with in the real estate industry, but you want to make the most amount of money in the least amount of time with the least amount of hassle.   Andrew Stotz: I think that's everywhere.   Andy : That's true.   Andrew Stotz: Yes. I want that. Great.   Andy : That's what everybody wants, but some people say, well, if it's too fast, you didn't... But that's usually not true. Fast is usually good as long as it's priced right. The next chart I have is a whole other way we use control charts, and that's to evaluate our own performance, which is what this is doing. And it's using sales-to-list price ratios. In other words, what percentage of the list price was the sales? And here we're using a long base period, and I'm just going to back up for a second. In some of the two recent, the ones I did on price drops and supply of inventory, we only had a year worth of, for the base line. And normally it's better to use more than that, but those two years I used were stable, and we didn't go back further because the Fed had been raising interest rates, and that created a... That was not a stable market when they did that, so we didn't want to use that as a history.   Andy : So this is showing our performance, and you can see starting with the pandemic, we went way above the control limits a lot of times. But what you do when you're looking at or using a chart like this for your own improvement is you want to narrow the upper and lower control limits, the two red lines. The closer they get together, the less variation you have, the smaller your standard deviation. And for us, it's 0.2. And our range between what... That's normal is between 95% and 107% of the sales price. And just to how we use it and how we get better at it is we focus on pricing. We focus on improving negotiation, which is a big deal, especially in the last few years. We are always looking to improve our client base. We're always looking to improve our preparation and presentation. We think we got that pretty well down pat. And the other thing is to stay within your area of expertise, because when you go out of that, okay, if I was to work on a house out of my market, okay, I wouldn't get this kind of performance. So that's going to lead me to the next and really the final chart. And that's another group, okay? And I'm using this group because... Just to...   Andrew Stotz: Sorry, when you say another group, what do you mean?   Andy : It's not my team, no offense industry...   Andrew Stotz: So it's a competitor or it's...   Andy : This is a well-known group. It's led by two Ivy League graduates. And it's a much bigger team than ours. Their standard... And it's the same base period, 2017 to '19. Their standard deviation is three times what ours is. Their range of what they do within the control limits is 78% to 114%. And that... Why do we do this? Why do we care? It's always nice to benchmark yourself. But most of all, with groups or agents that we compete with, if these guys put a house on the market, okay, and we thought it was overpriced, or let's say we thought it was underpriced, okay, and it was competing with one of ours, we wouldn't tell our client to reduce their price to match their price, okay, because we know they probably are underpricing. In this case, we'd say let it go. Likewise, if we're working with a buyer who's buying one of their houses and we think it's overpriced, what their listing is overpriced, then we will probably make a lower offer knowing that they also know that their pricing can be way off. So understanding your clients and where they fit on these control charts is useful information.   Andrew Stotz: And I can imagine that some people, let's say, at another firm, as an example, may say, oh, I don't care about this variability because one side of the mean is more favorable than the other, so I'm just trying to get to that other side. Whereas what you're saying is I'm trying to reduce variation around the mean.   Andy : Yes, and that'll take me to this last section I have here. If we compare the two groups, what are the major differences? Number one, if it was a million-dollar listing, okay, we would probably get $43,000 more than they would based on these control charts. Most of all, the biggest difference...   Andrew Stotz: The selling price of your customer would be $43,500 more?   Andy : Well, our average selling price is a little over 100%. Their average selling price is 96%. So on average, they're getting $43,000 less on $1 million house than we are. But the most important thing in this is the consistency and the predictability of when you lower those control chart limits, you're making your performance much more predictable, and it's an important part to all of our clients. I mean, Deming had a... One of the things he used to say is quality is in the customer's eyes, not your eyes. So I can say we do all this great stuff and all that. It all boils down to what does the customer think. And when a group's working on volume, which is pretty typical in our industry, that's what we're taught, how to get more volume, how to get more volume, that's... The customer doesn't care. The client doesn't care about what kind of volume they do. What the customer cares about is service. And you can see some of the other things, consistency over time, process control and all that. I'll get out of here now and say that that's really what control charts and Deming's philosophy and the PDSA, it all focuses on quality in the customer's eyes, consistent performance, better service, and not a lot of guesswork. We're using data that other agents don't even know exists. And that's unfortunately not an exaggeration, really. I've never talked to anybody that knew about this.   Andrew Stotz: When Deming talked about quality, he often referenced the idea that you could have a quality system in place and still go out of business if you weren't looking at quality in the eyes of the customer and being completely connected to the customer. And I have a little story on this from my coffee business. Many years ago, we had a restaurant chain in Thailand that's a global chain come to us and we won the bid. And they said, we chose you over all these other suppliers for coffee and we're going to come to your factory and when we do, we're going to do an audit, we're going to ask 600 questions and if you get below 75% or whatever, you're fired. But, hey, I knew Deming and I knew all of this stuff and we cared about quality and we never had quality problems, so we thought we're in good shape. And they came out and they said, your score was 68, you're fired. You have six weeks to fix it or you won't be our supplier. Well, we learned something very quickly there, which was to them, paperwork was quality.   Andrew Stotz: And that was a quality system to them that meant that we had quality. And so we had a passion for quality, but we didn't have the paperwork system that they wanted. So luckily, when you have passion for quality, it's pretty easy to overlay a paperwork system on it, if that's what the customer required. I would hate to be in the opposite situation where you go and do like many people when they go and get certified or ISO or whatever and they build a paperwork system without that commitment to quality. Now, that's a disaster. But the point is that we had to realize that in order for us to satisfy that customer's needs, we had to appeal to quality as they saw it. And so we've got to always keep the customer in mind as we're working on our quality.   Andy : I got another story. My wife reminded me today that sometimes in probably early '80s, maybe mid '80s at the latest, I looked up in the... I wanted to find a statistician and I looked him up in the yellow pages, which a lot of the listeners may not know what that is. And I wanted to... What I wanted to do was find a way to improve, optimize our inventory and try to approach just-in-time inventory because we had factories all over the place and we were getting stuff in. And we never did it. And I imagine with Dr. Deming, we could have done it, but we never did it because exactly the quality's in the customer's eyes. We were shipping to specialty restock stores primarily, and if we couldn't stock their shelves, okay, they went somewhere else. Didn't matter how much they liked us, they had to have those shelves full. So we decided it wasn't worth the risk of just-in-time and optimizing our inventory at the expense of having maybe too much inventory, but satisfying our customers. And it's just so true.   Andrew Stotz: Yeah. Yeah. In the story that I told, that particular chain never ran out of product and certainly never ran out of coffee. And I know myself, being a customer of that chain, never in my life did I walk in there and they ran out of a particular product. And they made that very clear. That's quality to us is that our supply chains are never broken. And for 16 years, we never broke their supply chains. It was never the case. So in the eyes of the customer, well, on behalf of everyone at the Deming Institute, I want to thank you again for this discussions and for listeners, remember to go to Deming.org to continue your journey. But I thought I would leave the closing comments to you to maybe wrap up and give the audience what you think should be their main takeaway from this discussion.   Andy : I think probably the main takeaway would be that Dr. Deming's philosophy, the Profound Knowledge, everything he taught is as relevant to real estate, okay, pricing, probably most markets as it is to a factory or production or anything like that. I think that it took me a while, after I became a realtor, it took me a while to realize, wow, all these things we can use. And we have more data to play with than anybody. So that's a good takeaway for anybody, especially realtors.   Andrew Stotz: Yeah, I think, and I'll just add on, I enjoyed the conversation because I love Michael Porter's stuff and talking about figuring out where's your niche and trying to bring a differentiated offering to the market. And that differentiated offering could be based on what I like to say from my study and teaching of corporate strategy is there's kind of two main corporate strategies. One I would say is the type that engineers build, which is an operational corporate strategy. And another one is a differentiating strategy that a sales type of person would build, which is about the interaction with sales, with the product and all of that. And so with Dr. Deming, one of the benefits we get is the process part of our business can just be improved forever. And then we can overlay that with whatever we want from what we bring to the market. And I think you've given us an example of how you can apply Deming's principles to the process of your business and do that in a niche area or an area that you've defined and dominate. And so I love that.   Andy : Yeah, and one of the things, just a last thought, is something you and I had talked about, is you don't have to have a PhD in physics or you don't have to get a doctorate in something to understand Deming. And he even says it in his book. You don't have to be an expert in any of it. You just have to understand it. And that's the beauty of it. Anybody can do what I'm doing with just nowhere near the effort you'd have to do if you were going to be a physicist or something else like that. And that's something people can take away.   Andrew Stotz: And on that hopeful note, this is your host, Andrew Stotz, and I'm going to leave you with one of my favorite quotes from Dr. Deming. I always repeat it because it's such a great quote, and that is, "people are entitled to joy in work."      

Step into a treasure trove of rare stories, photos, and audio clips as Bill Scherkenbach shares his decades with Dr. Deming. From boardrooms to sleigh rides, discover the moments, minds, and memories that shaped modern quality thinking, told by someone who lived it. A powerful blend of insight, humor, and history you won’t want to miss. (You can see the slides from the podcast here.) TRANSCRIPT 0:00:02.4 Andrew Stotz: My name is Andrew Stotz, and I'll be your host as we dive deeper into the teachings of Dr. W. Edwards Deming. Today, I'm continuing my discussion with Bill Scherkenbach, a dedicated protégé of Dr. Deming since 1972. Bill met with Dr. Deming more than a thousand times and later led statistical methods and process improvement at Ford and GM at Deming's recommendation. He authored 'The Deming Route to Quality and Productivity' at Deming's behest and at 79 is still championing his mentor's message. Learn, have fun, and make a difference. Bill, take it away.   0:00:41.2 Bill Scherkenbach: Well, thank you. Thank you, Andrew. It's an honor to be asked back. Many places don't.   0:00:48.7 Andrew Stotz: I really enjoyed our first discussion, and particularly towards the end of it, it got a little personal and emotional, and I appreciate that you shared your journey. That was amazing.   0:01:00.9 Bill Scherkenbach: Thank you. Thank you. It is personal.   0:01:05.2 Andrew Stotz: Yeah.   0:01:05.4 Bill Scherkenbach: But today, along that wavelength, I brought some pictures or photos and letters and audios of my association with Dr. Deming. So, if you might bring them up, we can start the commenting.   0:01:27.9 Andrew Stotz: Wonderful. Well, hopefully you see a screen now up.   0:01:34.8 Bill Scherkenbach: Yes. Yep.   0:01:35.8 Andrew Stotz: Okay. And for the audience, just to let you know, for the listeners, we're going to show these and I'll try to explain a little bit about what we're talking about because you're not going to be able to see the pictures. But the first thing is the title is An Insider's View of Deming. Learn, have fun, make a difference. And we see a great picture on the left-hand side, and then I threw in a picture of a Lincoln Continental, which we're going to talk about later, which is kind of fun. But maybe you can take it from there, Bill.   0:02:07.2 Bill Scherkenbach: Yeah. Well, we can talk a little bit later on on that, but this is a picture of me and my wife, Mary Ellen, with Dr. Deming having fun. We were at a restaurant in Northville called Elizabeth's, and it's something that he enjoyed to do just about every evening.   0:02:31.3 Andrew Stotz: Great. Well, what a kickoff. So let's go to the next one. And you guys all look great in that photo.   0:02:38.2 Bill Scherkenbach: Thank you. Thank you. Thank you. Yeah. This is a letter that I received from Dr. Deming back in May of '85, auspicious because the letter dated 13 May, that's my birthday. But for those who cannot read it, should I read the letter for you?   0:03:05.2 Andrew Stotz: Either you or I can read it for you. You tell me.   0:03:08.3 Bill Scherkenbach: Okay. Well, yeah. Why don't you read it?   0:03:10.9 Andrew Stotz: Okay. So, the letter is addressed to a particular person. It says, this is written by Dr. Deming, this acknowledges your kind letter of the 29th April. He that depends solely on statistical process control will be out of a job in three years. The record is clear, the record is clean, no exceptions. A whole program of improvement of quality and productivity is necessary, and it requires that top management learn what their job is. No part of the program will by itself suffice. Your letter does not describe your program, hence comment is difficult. I am happy to learn that Bill Scherkenbach will work with you. His achievements are renowned. He is excelled by nobody. I am sure that you will follow his guidance, not only while he is there with you, but from that then on out. I send best wishes and remain yours sincerely, W. Edwards Deming.   0:04:19.2 Bill Scherkenbach: Yes. I did spend a week with this organization, and as Deming said, and in many, many cases, the local management or local part of the organization get very enthusiastic, but the top management did not buy in. And so very little happened there, unfortunately.   0:04:53.9 Andrew Stotz: Yeah. And I missed that the top right-hand corner in handwritten, it says Portland, 20 May 1985. Dear Bill, I neglected to hand this to you in San Francisco, W. E. D.   0:05:08.1 Bill Scherkenbach: Yeah. We went to, we. Dr. Deming and I were in San Francisco to meet with Shoichiro Toyoda and his wife. It was a social call. Shoichiro was in town. I don't know where his brother Tatsuro was. Tatsuro headed up NUMI, but Shoichiro was head of it all and was in the US. And wanted to just have a dinner with Dr. Deming. I'm embarrassingly cloudy. We met in a hotel and I can't tell you which one, but it was a nice, relaxing dinner. The English was a bit stilted, but Soichiro wanted to have a dinner with Dr. Deming and to express his appreciation.    0:06:31.3 Andrew Stotz: And he was a titan of industry at the time and in 1985 was really making a beachhead and a real expansion into the US market. Why did he want to meet with Dr. Deming? What was the connection there? Maybe for those that don't know.   0:06:55.2 Bill Scherkenbach: He was in town and Deming was nearby in town and just wanted to express his appreciation. I guess, Tatsuro, his brother wasn't there, and Tatsuro headed up NUMI, the partnership between GM and Toyota. But Shoichiro was there and just wanted to express appreciation.   0:07:35.1 Andrew Stotz: Great. Okay. So shall we continue on?   0:07:40.0 Bill Scherkenbach: Yeah. We have a Where is Quality Made? Famous talking from Dr. Deming, and hopefully the audio translates well.   0:07:55.3 Andrew Stotz: Yes, we'll see. Let's go.   0:07:59.5 Dr. Deming: Where's quality made? Answer is in the top management. The quality of the output of a company cannot be better than the quality directed at the top. The people in the plants and in service organizations can only produce, at best the design of product and service prescribed and designed by the management. Job security and jobs are dependent on management's foresight to design product and service [that] will entice customers and build the market.   0:08:31.6 Andrew Stotz: So where did that come from? And tell us more about that.   0:08:36.2 Bill Scherkenbach: Well, I'm not exactly sure which particular seminar or meeting that was, but over the years I have, have, we've made a number of audio recordings and videos of Dr. Deming in his meetings. And so we're looking to get them to the Deming Institute so they can process them and distribute.    0:09:11.8 Andrew Stotz: And why is this so important? He's talking about quality is made at the top where we can see many people think that quality is made by the worker. Do your best. Quality is your responsibility. Tell us more about why you wanted to talk about this.   0:09:32.9 Bill Scherkenbach: Well, it's a common, it's a common, very common mistake. He learned back in 1950, and I think I mentioned it in our first talk, that he gave a number of courses at Stanford during the war and people learned SPC. But when the war was over, over here, because management didn't buy in, nothing really happened. And he learned in his visit in 1950 when he was able, as we said, Mr. Koyanagi was able to get a meeting, a number of seminars done with top management in Japan after the war. And he thought that that, he saw that that actually did make a difference, that management was absolutely key. And in every one of his seminars, he would make, he would make  this point, that quality is made at the top.   0:10:54.0 Andrew Stotz: And what was interesting is that, of course, the Japanese senior management, were very receptive. It's many times the case that Deming may have interacted with some senior management at the top of a company, but they weren't receptive or willing to implement what he's talking about.   0:11:12.6 Bill Scherkenbach: Yeah. I think I mentioned last time that you need maybe a significant physical or logical or emotional event. And Ford lost a few billion dollars and was then looking, is there a better way? Japan lost a war, and the tradition over there is to perhaps listen to the conqueror. But MacArthur was very astute, my understanding, that you're not going to go in and replace the emperor and really mix the place up from what their culture is, which is very, very, very astute, in my opinion.   0:12:11.4 Andrew Stotz: Okay. So let's continue. And we see a document now up on the screen and a diagram. And maybe you can explain this one.   0:12:24.8 Bill Scherkenbach: Yeah. This is one of the foils, as he called them, that he wrote on his lantern, which is the overhead projector for all the young people. And making another very, very important point. And that is, he's quoting John Tukey, "the more you know what's wrong with a figure, the more useful it becomes." And he also, at various times, would, would, would talk about George Gallup. And Gallup was his friend. And George Gallup would say that unless you've gone through the slogging of collecting data, you shouldn't be too quickly using data or analyzing data. Because if you go to collect it, you know that some people just aren't there. And this is primarily survey stuff that Gallup was talking about. But Tukey was talking about anything. And Deming, along the way, with his learnings from Shewhart, what I've developed is based on Deming's questions come from theory, created a theory, question, data, action cycle, similar to a PDSA. And so that you need to know what the question was before you can use the data. And Dr. Deming's example was you can't use manganese dioxide for just anything. If it's really, really critical work, then you need to know what's in it that could contaminate it or interact with the other chemicals that you're trying to mix it with. Hugely important in chemistry, hugely important anywhere. And he talked, yes, we do have some audio from Dr. Deming talking about another analogy, on I can't even wash the table unless you tell me what you're going to use it for.   0:15:24.0 Andrew Stotz: I remember watching a video of this with him, with Robert Reich, I think it was, being interviewed. And it was such an impactful thing because I always thought you just tell people what to do and they go do it. And so let's listen to the audio. I'm going to play it now. One second.   0:15:42.6 Dr. Deming: You could teach me how to wash a table. Teach you how to rub, scrub, use brushes, rags. I'd be pretty good at it. But you know, I could not wash this table, suppose you told me my job is to wash this table. I have no idea what you mean. There's no meaning to that. You must tell me what you're going to use the table for. I want to see a flow diagram, work moving. Here I am. My job is to wash this table. I do not understand what you mean. Wash this table. There's no meaning to that. I must know what you're going to use the table for, the next stage. What will happen to the table, next stage, in the flow diagram? You want to put books on it? Well, it's clean enough for that now. To wash the table, I just go through it from just here, make a look at it. If I work a little, good enough. If I clean enough to eat off of it, well, it's good enough now. Or use it for an operating table? Oh, totally different now. Totally different. Now I scrub it with scalding water, top, bottom, legs, several times. I scrub the floor underneath and for some radius. If I don't know the next stage, I cannot wash the table.   0:17:28.8 Andrew Stotz: Tell us your thoughts on that.   0:17:31.5 Bill Scherkenbach: Yep. Yep. Well, again, my theory, question, data, action cycle, if you're asking a question, you, you, if you can, and there are some confidential considerations, but if you can, you need to tell the people who are trying to answer the question what you're going to do with it. And so if you want the table washed, tell them you're going to just eat off of it or assemble microchips on it. If you, so that's the responsibility of the manager or anyone who is asking the question. So if you want to improve your questions, you got to go back up and think of, well, what's my underlying theory for the question? If this, then that, that prompts a question and the circle continues. And if you, the only reason to collect data is to take action. Both Eastern and Western philosophers absolutely have said that for centuries.   0:18:55.2 Andrew Stotz: Yeah. What's interesting, I didn't hear him say it in any other cases when he was talking about the next stage. I did hear him say before, like, what's it going to be used for? But you could hear when he's talking about the next stage, it's saying to me, that's saying the responsibility of management is looking at the overall system and communicating that and managing that, not trying to, you know, just give some blind instruction to one group, one team, one person without thinking about how it all interacts.   0:19:29.9 Bill Scherkenbach: Absolutely. Absolutely. But in the local aspect of, well, some question answers are not so local, but it's what the question asker's responsibility to let the people know what they're going to use the data for.   0:19:51.9 Andrew Stotz: Yep. Great lesson. All right. So now I've got a interesting picture up on the screen here. We have Dr. Deming and there's John Turkey, Tukey how do you say his last name?   0:20:05.6 Bill Scherkenbach: John Tukey, T-U-K-E-Y, yep. George Box and Sir David Cox. Anyone in the statistics arena knows them. We also had Stu Hunter and I believe John Hunter was there. They're not in the picture. I took the picture. But we were at Meadowbrook, which is, which is, on the old Dodge estate where Oakland University is near Detroit. And had a, we called the meeting to discuss the importance and the various perspectives of enumerative and analytic. Now, each of these men, Box, Tukey, and Cox, and all of them, all of us in the university, quite honestly, were brought up with enumerative methods. And so your standard distributional stuff and T-tests and whatever. And Deming and Tukey realized the importance of being able to not just take action on the sample, but the cause system, the system that caused the sample, or the process term, in process terms. So yeah, John Tukey was strangely enough, well, not strangely enough, but came up with a graphical method to look at data called the box and whiskers plot, with George Box standing next to him, but it's not that George didn't shave. But Tukey, very, very well known for graphical methods.   0:22:24.2 Bill Scherkenbach: George, well known for experimental methods. One of the Box, Hunter and Hunter book on statistical design of experiments is legendary. And Sir David Cox, logistic regression, which is hugely, strangely, well, not strangely enough, but huge nowadays, very important in AI, in how you would be looking to teach or have your model learn what it is that you would like them to learn to look for. So each of these gentlemen, very, very much a pinnacle of the statistical career. We were very, in a large company like Ford, we were very lucky to be able to make big meetings like this, or meetings with very influential people happen.   0:23:38.9 Andrew Stotz: Yeah. That's got to be amazing because I think when most of us listen to Dr. Deming and all that, we get a lot of what he says. But I would say that the statistical aspect and his depth of statistical knowledge is what many people, you know, it's hard for many Deming followers to deeply connect with that. And I think even myself, having, you know, read everything, listened to him, learned as much as I can, the best that I probably come up with is the idea that once I started understanding variation, one of the things I started realizing is that it's everywhere and it's in everything. And I didn't understand...   0:24:27.3 Bill Scherkenbach: Well, I still have the cartoon of a popcorn maker that was very surprised when he said, "They all popped at once." And his popcorn stand has blown up. So yeah, variation is everywhere, a lot or a little. And the thing is that you need to be able to take appropriate action. Sometime, I can remember, I can remember Bob Stemple asking me, "What did I think of the Shainin methods, Dorian Shainin, and technical approach?" And I wrote back to him and I said, "It's no better or worse than any of the other methods we don't use here at GM." The point is, all of these methods are better than Bop-A-Mole. And one of the things, well, one of the things that concerns me is that in these tool areas, and Deming's counsel to me long ago was he remembers the fights that the technical people, the statisticians in the quality profession, would have over which one is a tenth of a percent better or more effective doing this and that. And they would publicly argue, and Deming said, "Stop. It confuses management because they don't have a clue and they're staying away from all forms of quality." So, you, and I don't know the solution in this day and age where everyone is connected. But all of these methods have their strengths and weaknesses, but you have to have the savvy to figure out which one to use to help you improve. All of, each of these four were great teachers, and I have a comment from Dr. Deming on that.   0:27:11.7 Andrew Stotz: And just in wrapping this up, it's like, I think one of the things that you realize when you see this one and what you're talking about, what I realize is what a powerhouse Dr. Deming was in the area of statistics. And in some ways, it's kind of like seeing a rock star that you love to listen to and that rock star is great. And then one day on a Sunday, you go to the church and you see he's a reverend and a very solemn man who is a very, very devout devotee of Christianity and something. In some ways, that's the way I feel when I look at this, like, wow, just the roots of the depth of that is so fascinating.   0:28:03.2 Bill Scherkenbach: As you mentioned that, I'm thinking back, we were in Iowa and one of the professors there, and I forget his name, but you're right. Deming was held in awe and he was riding in the backseat. I'm driving and this professor is beside me and Dr. Deming said something and I said, how do you know? And the guy thought the world was going to come to an end that I dared ask the master, how did he know? Well, it, it, it ended up fine.   0:28:52.9 Andrew Stotz: That was the question he was trying to teach you to ask.   0:28:55.3 Bill Scherkenbach: Absolutely. You don't accept it at face value.   0:29:02.2 Andrew Stotz: So we got this other slide now. It says, what do you mean by a good teacher? Maybe you want to set this up and then I'll play the audio.   0:29:10.7 Bill Scherkenbach: Yeah. This was one of his favorite stories when he studied under Ronald Fisher, who is the big godfather of statistics, well, relatively modern stuff. So, Fisher was there at University College, as Deming will describe, and Deming wanted to know, and this is where a number of you will have recognized, he wanted to know what great minds were thinking about.   0:29:56.7 Andrew Stotz: All right. I'm going to play the clip right now.   0:30:00.2 Dr. Deming: What do you mean by a good teacher? I taught with a man, head of the department. The whole 150 students spellbound, teaching him what is wrong. And they loved it. What do you mean by a good teacher? Holding students spellbound around him. What do you mean teaching them something? I've had a number of great teachers. One was Professor Ronald Picker, University of London, University College I should say, part of the University of London. In London, 1936, no teaching could be worse. A lovable man, if you tried to work with him, could not read his writing, could stand in the way of it, room was dark and cold, he couldn't help the cold, maybe he could have put some light in the room, make mistakes, Professor Paul Ryder in the front row always helped him out. He'd come in with a piece of paper in his hand the ink not yet dry, talk about it. Wonder why the room was full of people from all over the world. I was one of them. Made a long trip, at my own expense, to learn, and we learned. We learned what that great mind was thinking about, what to him were great or important problems today.   0:31:45.9 Dr. Deming: And we saw the methods that he used for solutions. We saw what this great mind was thinking about. His influence will be known the world over for a long, long time. He would rated zero by most people that rate teachers. Another teacher that I had was Ernest Crown at Yale, very poor teacher. We'd get together afterwards, some of us, and try to figure out what he was teaching us. He was not even charismatic the way Ronald Fisher was, but we learned. We learned what that great mind was thinking about, what he thought was the problem. We learned about perturbation. His work on lunar theory will be a classic for generations. We learned. Worst teacher there could be, but we learned.   0:32:49.0 Andrew Stotz: Wow. Tell us more about that.   0:32:53.6 Bill Scherkenbach: Well, he also had a similar story because, from great teachers at NYU, and that's where I first met him and learned from him. He was my teacher, but NYU had a, they had nominations for great teachers. And Deming was able to convince, and I forget who was the, Ernest Kurnow was the dean, and he convinced the dean to wait 10 years before you survey any of the students. And the question was, did any teacher you have really make a difference in your life? And he was able to get that done or get that process agreed to, and it was for the better because in, and I don't want to... I mean, every generation has said this new generation is going to hell in a handbasket, I mean, that for forever. That's nothing new. But what's popular, it's great to be entertained, and as he said, teaching what is wrong. And so did someone make a difference in your life? And not surprisingly, Deming was one of the people selected as a great teacher from NYU Graduate Business School.   0:35:15.4 Andrew Stotz: So that's your review after 50 years after the course, huh?   0:35:21.6 Bill Scherkenbach: Yeah.   0:35:24.5 Andrew Stotz: Yeah. And so the point is that, let's separate popularity from original thinking. And also he highlighted the idea that some teachers may not come across very organized, very polished. They may need assistance to help them clarify what they're trying to get across. But just because they're kind of a mess in that way, doesn't mean they're not thinking very deeply. In fact, it may be a sign that they're thinking very deeply about it.   0:36:01.9 Bill Scherkenbach: Yeah. Now, again, remember, and I know it's a broad brush, but Deming was eminently logical. Crosby would have loved it. Wine and cheese parties showed Juran more physical. And so I think Deming's preferences there, the key to his statement is teaching what was wrong. Some people get excited in class for a variety of reasons, but the key is what are you teaching? The method depends on the ability of the teacher to connect to the students and actually teach. So it gets you back to physical, logical, and emotional. But for Deming, Fisher struck a chord with him.   0:37:09.9 Andrew Stotz: Yeah. And I think for the listener, the viewer, think about some teacher that really made an impact on you. And it could be that there was a teacher that was able to connect with you emotionally.   0:37:25.2 Bill Scherkenbach: Absolutely.   0:37:26.7 Andrew Stotz: So there's different ways. But I think of Dr. Deming wasn't a teacher of mine in university, but at the age of 24 to learn from him was definitely a teacher that left me with the most to think about. And I would say there was one other teacher, a guy named Greg Florence that was at Long Beach City College who taught me argumentation and debate. And he also really encouraged me to join the debate team, which I really couldn't because I didn't have time because I didn't have money and I had to work. But he really saw something in me, and now I love to teach debate and helping young people construct arguments. And so for all of us, I think this idea of what do you mean by a good teacher is a great discussion. So, love it. Love it. Well, we got another picture now. Speaking of teaching, the City University of New York is in the backdrop. Maybe you can set this one up.   0:38:27.0 Bill Scherkenbach: Yeah. This was a one-day, maybe one and a half with some pre-work, but essentially a one-day meeting in New York that was able to gather some of the top educators in the US, the head of the schools in California. There were some folks from Chicago. We had, as I mentioned, Albert Shanker, who was head of the American Federation of Teachers, was sitting right beside me. Other teacher organizations and education organizations. And we got together for a very meaningful thing. We got together to try and determine what is the aim of education in America. And it turned out that everyone was looking for their mic time, and we couldn't even agree on an aim for education in America. And if you can't agree on an aim, your system is everyone doing their best, and it's all, there's not too much progress, except locally or suboptimally.   0:40:02.3 Andrew Stotz: Yeah. That's a good illustration of the concept of best efforts. Dr. Deming often talked about best efforts. And here you're saying, without an aim, everybody's going to just go in their own direction. And it reminds me of a story I tell people in relation to management, which was that I had a really great boss many years ago in the field of finance research in the stock market. He was very brilliant, and he hired really good analysts. I was surrounded by the best. But he never once really brought us together to say, this is our aim. And so what ended up happening was that each person did their best, which was very good as an individual, but as a group, we never were able to really make an impact. And I explain that to my students nowadays, that I believe it's because he didn't set an aim and bring us together for that.   0:41:09.1 Bill Scherkenbach: Now, one of the, I mean, one of the things Deming very predictably talked about, as I recall, is the grades and gold stars, which were part of his forces of destruction. And the education is the way we approach education here was part of that, even before people get to get beat further down by corporate and other organizational stuff. And the grading and gold stars, I don't know how much that was, that criticism was appreciated. But everyone had a chance to talk. And in my opinion, not too many people listened.   0:42:09.3 Andrew Stotz: Now, the next one is titled Mongolian Rat. What the heck, Bill?   0:42:17.1 Bill Scherkenbach: Well, this is part of teaching what good teaching would be. You've got to listen. It's one of my favorite stories of his.   0:42:30.3 Andrew Stotz: Well, let's roll the tape.   0:42:33.3 Speaker 3: I met a professor in New York. I had a dinner one time in New York with a surgeon, professor of surgery, he gave out some marbles. Had 21 students in the class. He told them describe the surgical procedure on the jaw, in which a certain breed of Mongolian rat was very helpful. The rat would eat the flesh right down the bone, cleaner than a surgeon could do it. Very important rat. Described it in detail. Students listened intently. On examination, one of the questions was to describe the surgical procedure by use of the Mongolian rat. Twenty of the students gave him back the same marbles that he doled out. Described it as exactly the same word that he had described it. He flunked them all. All the 20. One of them said, my dear professor, I've searched the literature, I've inquired around in hospitals and other teachers. I could find no trace of any such procedure. I think that you were loading us. He passed. The others had to take a new examination. They gave him back the same marbles he doled out to them. He wanted to think.   0:43:55.0 Andrew Stotz: Marbles. I haven't heard that expression. Tell us a little bit more about what you want us to take from this.   0:44:02.6 Bill Scherkenbach: Well, I think it's pretty self-explanatory. His comment on education that teachers are handing out marbles and pieces of information, not necessarily knowledge, and the testing, you're expected to give them back what the teacher said instead of how can you process it and put it in the context of other things, as well as, I mean, maybe not in the early grades, but in the later ones, you need to be able to look at various perspectives to see who has this opinion and that opinion. And unfortunately, today, that discourse is nicely shut down.   0:45:07.3 Andrew Stotz: At first, when I heard him saying marbles, I thought he was kind of using marbles as a way of kind of saying pulling their legs, but now I understand that he was trying to say that he's giving something and then the students give it back.   0:45:24.1 Bill Scherkenbach: Yeah. Yeah. Yeah.   0:45:26.0 Andrew Stotz: Okay. Mongolian rats.   0:45:31.0 Bill Scherkenbach: Yep. Yep. So we go from learning to having fun, and here's a picture of our statistical methods office at Ford.   0:45:48.1 Andrew Stotz: And you're sitting in a sleigh? Is that what's happening there?   0:45:50.0 Bill Scherkenbach: We're sitting in a sleigh, yes, at Greenfield Village, which is where the Henry Ford Museum is, and it happened to snow, so we've got the, we've got the horse-drawn sleigh, and I was listening to your first interview of me, and I want to deeply apologize. It's Harry Artinian, and so from the left, you've got Ed Baker and Bill Craft and Pete Jessup, Harry Artinian, Narendra Sheth, Dr. Deming, Debbie Rawlings, Ann Evans, my secretary, uh ooooh, and the gentleman who worked with Jim Bakken, and then me. So, we were working and decided to have a good lunch.   0:46:58.5 Andrew Stotz: And it's a horse-drawn sleigh. And I wasn't sure if you were pulling our leg here because you said, I'm second from the far right. First from the far right, to me, looks like the horse.   0:47:09.0 Bill Scherkenbach: Yes. That's the horse's ass. Yep.   0:47:14.6 Andrew Stotz: That's a big one.   0:47:16.1 Bill Scherkenbach: It is what it is.   0:47:18.7 Andrew Stotz: Yep. Okay. Next one. Who's Sylvester?   0:47:22.3 Bill Scherkenbach: Sylvester is my son's cat. And this is one of the times Dr. Deming was in my home. And he sat down in my office at my home. And Sylvester saw a good lap and he jumped up on it and took it. And as I said, I couldn't tell who was purring louder. They both were content.   0:47:52.7 Andrew Stotz: Yeah. That looks beautiful.   0:47:55.4 Bill Scherkenbach: Yeah. It was very, very peaceful. Another fun thing, after a long day of work at Ford, we would go to Luigi's restaurant in Dearborn. I think there was a Dearborn Marriott, a big hotel. I don't know if it's there now. But that's Larry Moore, director of quality, next to Dr. Deming and me. I had a mustache back then.   0:48:30.4 Andrew Stotz: Yes. And we all loved soft serve ice cream.   0:48:34.0 Bill Scherkenbach: Soft serve ice cream. Yep.   0:48:38.0 Andrew Stotz: Yep. All right. Star-Spangled Banner.   0:48:40.9 Bill Scherkenbach: Yep. Now we're at one of my earlier houses in Northville. And Dr. Deming had written a new tune for the Star-Spangled Banner because it was an old English drinking song, Anna, the what? The Anacrocronistic Society. And he thought it was just too bawdy. I mean, you're an unsingable, except if you're drinking. So he rewrote the music for the Star-Spangled Banner. I have a copy of it here. But he, my son Matthew, my oldest son Matthew, we had just gotten one of those first Macs from Apple, Macintosh. And it had a very elementary music thing. So he put the notes that Deming had handwritten. And we put it in there and it played the tune. And so Deming was playing on our piano the Star-Spangled Banner.   0:50:04.7 Andrew Stotz: So he had a musical talent.   0:50:10.8 Bill Scherkenbach: Oh, yeah. He was a very serious study of, a student of music. Very much so. He wrote a complete Mass. He was a high church Episcopalian. And he wrote a complete Mass of the Holy Spirit with all parts. So, very much a student of music.   0:50:41.8 Andrew Stotz: And how did his religious beliefs, like Episcopalian, as you mentioned, how did that come across? Was he a person who talked about that? Was he a person that didn't talk about that? Like, how did that come across?   0:50:59.2 Bill Scherkenbach: It was more of a private thing. But then again, on every one of his books, he would begin a chapter with some quotation from different books. And many of them were from the Bible. I can remember one time in London, I'm Catholic, and so we were celebrating the St. Peter and Paul that Sunday. But he was in London and he was at St. Paul's and they weren't giving Peter any traction. But he looked up and he said, yep, you're right. It was both of those saint days.   0:51:58.3 Andrew Stotz: All right. Next one, Drive Out Fear.   0:52:01.8 Bill Scherkenbach: Oh, yeah. This was Professor Arnold. And we were having lunch in the Ford dining room, one of the Ford dining rooms. And Dr. Deming wasn't too happy of what Professor Arnold was talking about. And Professor Arnold didn't look too happy either. So, I framed the picture and put Drive Out Fear underneath it and hung it in my office. And Deming came and looked at it and smiled.   0:52:46.5 Andrew Stotz: And what was the background on Professor Arnold? And in this case, did they have opposing views or was it a particular thing or what was it that was...   0:52:58.4 Bill Scherkenbach: I don't remember the particular conversation, but Professor Arnold was head of the statistics department at Oakland University. And Ford had an agreement with Oakland University that we established a master's degree in statistics, according to Dr. Deming's viewpoint on enumerative and analytic. And no, he was very, very capable gentleman. I mean, one of the things Dr. Deming mentioned to me is if the two of us agreed all the time, one of us is redundant. So there were always discussions. This is just a snapshot in time.   0:53:52.3 Andrew Stotz: I love that quote, that one of us is redundant. That's powerful, powerful.   0:53:59.4 Bill Scherkenbach: Absolutely. Yep. This is another having fun after learning in... There were a number of restaurants we went to. He particularly liked Elizabeth's,   0:54:16.1 Andrew Stotz: And how was their relationship? How did he treat your lovely wife?   0:54:22.5 Bill Scherkenbach: Oh, I mean, very lovingly. I mean, I don't know how to describe it, but one of the family.   0:54:36.2 Andrew Stotz: Yeah. He seemed from my observation, like a true gentleman.   0:54:42.5 Bill Scherkenbach: Absolutely. Absolutely.   0:54:46.0 Andrew Stotz: Well, here we come to the Lincoln that we started off with. This is a great picture too.   0:54:51.4 Bill Scherkenbach: Yeah. That's a picture I had. It wasn't a Hasselblad, but it was a two and a quarter frame. And I had black and white film in it, but this is one of a number of pictures I took of him at the Cosmos Club. I think it was a very good picture. And in any event, it was blending learning and having fun.   0:55:19.7 Andrew Stotz: Yeah. And the Cosmos Club was near his house?   0:55:22.5 Bill Scherkenbach: Yeah. Well, it was depending on who drove. I mean, it was just, it was down a few blocks and then a number of blocks on Massachusetts Avenue. I enjoyed the drive from his house because you'd pass the Naval Observatory, which for years was the home of the chief of naval operations here. But a few decades, a few, I don't know how long ago, the vice president pulled rank on him. And so the Naval Observatory, beautiful, beautiful old house. So, the vice president lives there now. And a lot of people think Massachusetts Avenue in that area is Embassy Row. So you're passing a number of embassies on the way. And the Cosmos Club, anyone can look up. I mean, it's by invitation, members only, and Nobel laureates and Pulitzer Prize winners and a very distinguished membership, let's say.   0:56:39.3 Andrew Stotz: Here was another one, Making a Difference with Don Peterson.   0:56:43.0 Bill Scherkenbach: Yep. Yep. We're, we're, this is one of the meetings we had with Don. And it wasn't this meeting, but we were in one of them. Okay. You have it on the right there. That we periodically would have, Dr. Deming and I would have breakfast with Jim Bakken in what was known as the Penthouse at Ford. There are 12 floors, and then there was the 13th and 14th, which were private quarters, essentially. And so we were having breakfast one morning and finishing breakfast, and I'm walking a little bit ahead, and I run ahead and press the elevator button to go down one floor, and the door opens, and there's Henry Ford II in cowboy belt buckle and boots, no hat. He's going to a board meeting, he says, and Jim shied away, said, "Oh, I'm sorry, Mr. Ford." He said, "Shut up, Jim, get in here." And so we got in the elevator, and it was the small elevator. And so we're back to back, belly to belly, and Jim introduces Dr. Deming to Mr. Ford, and Ford said, "I've heard of you, Dr. Deming. God, we really need your help." And Deming had the presence of saying, "I heard of you too, Mr. Ford." It was the longest one-floor elevator ride I've ever had in my life.   0:58:49.1 Andrew Stotz: That's fascinating. All right. Next one, talking with workers.   0:58:54.1 Bill Scherkenbach: Yep. Yep. He made it a point. And this is a fine line, because you want to be able to have workers say, how, how, are they able to take pride in their work? And are there any problems and all of that? But you don't want to be in a position of then going to management and telling them because of fear in the organization. So, Dr. Deming was very good at listening and getting people to talk about their jobs and their ability to take joy and, well, pride in their work. So we had many, many meetings, different places. And this next one is with the Ford Batavia plant, I think.   1:00:01.2 Andrew Stotz: Yep.   1:00:02.4 Bill Scherkenbach: Yeah. We're riding on the tractors and having a good time.   1:00:11.3 Andrew Stotz: Who's driving?   1:00:14.2 Bill Scherkenbach: The plant manager, Ron Kaseya, was driving.   1:00:16.9 Andrew Stotz: Okay.   1:00:17.9 Bill Scherkenbach: And so I absolutely do not recall what we were laughing at, but we were having a good time. And the Batavia transaxle plant, a number of people will recognize as where Ford, it really made the point that doing better than spec is really what the job is. And it's a very powerful video that's been out there and people would recognize it as well, because we were producing the exact same transaxle in Mazda. And Mazda was influenced a lot of by Genichi Taguchi and looked to reduce variation around the nominal and not just be happy that we made spec. And John Betty, who was head up of powertrain operations and then went to the Department of Defense as assistant secretary of defense for procurement, I think, because of the quality expertise. Betty is in the front of the video saying he's absolutely convinced that this is a superior way to look at manufacturing, to look at the management of any process. You want to get your customers to brag, not just not complain.   1:02:10.3 Andrew Stotz: Yeah. Courage.   1:02:11.8 Bill Scherkenbach: And all of this takes courage. And especially in his seminars in London say, the Brits had the advantage. You guys can take courage every day. We can't get that in the US anymore. Or it's very rare to be able to buy it here.   1:02:36.3 Andrew Stotz: For the listeners, there's a logo of the John Courage beer, premium beer.   1:02:45.7 Bill Scherkenbach: Yes. Yes. It's an amber pills.   1:02:49.8 Andrew Stotz: Okay.   1:02:52.4 Bill Scherkenbach: And last but not least, well, not last, but we're looking for, and I ran across this quote from Yogi Berra, and it's very applicable right now. And Yogi Berra said, I never said... Well, what did he say?   1:03:19.2 Andrew Stotz: Never said most of the things I said.   1:03:21.4 Bill Scherkenbach: Most of the things I could have said. I never said most of the things I said. Yeah. And every day online, I see people saying Dr. Deming said this, and he said that. And if he did, I've never heard him say it. And not that I've heard him say everything. But if he did say something like, if it's not measurable, you can't manage it. He would have followed it with, that's not right. The unknown and unknowable. And so you've got a lot of people misunderstanding what Dr. Deming said. And you've got to go with, I never said most of the things that I said.   1:04:24.0 Andrew Stotz: Well, that's the great thing about this discussion is that we're getting it from the horse's mouth, someone that was there listening and being a part of it.   1:04:32.1 Bill Scherkenbach: Well, I'm glad you saw the other end of the horse.   1:04:37.5 Andrew Stotz: Yeah. So, I'm going to close out this by just sharing a little personal connection. And that is, I'm showing a picture of me in my 1963 suicide door Lincoln Continental, which I owned for 10 years in beautiful Bangkok, Thailand. And much like being kind of wild taking a ride to the Cosmos Club with Dr. Deming driving his Lincoln Continental, you could imagine how odd it looked seeing this American guy driving this 1963 Lincoln Continental on the streets of Bangkok. But I just thought I would share that just to have some fun. So, yeah.   1:05:14.3 Bill Scherkenbach: That's beautiful. Absolutely. Yeah. I didn't think the streets were that wide.   1:05:22.1 Andrew Stotz: It gets stuck in traffic, that's for sure. But wow, there's so many things that we covered. I mean, I just really, really enjoyed that trip down memory lane. Is there anything you want to share to wrap it up?   1:05:36.1 Bill Scherkenbach: No. As I said, our last conversation, we've just scratched the surface. There's so much, so much more to talk about and preserve, I think.   1:05:48.9 Andrew Stotz: Yeah. Well, I really enjoyed it.   1:05:52.1 Bill Scherkenbach: I have done my best.   1:05:53.6 Andrew Stotz: Yes, you have. You have. I've enjoyed it, and I'm sure the listeners and the viewers will enjoy it too. So, on behalf of everyone at the Deming Institute, I just want to thank you for taking the time to pull that together and to walk us through it. And for listeners out there, remember to go to Deming.org to continue your journey. And of course, go to LinkedIn to find Bill and reach out and share your interpretations of what we went through. And maybe you have a story that you'd like to share also. So, this is your host, Andrew Stotz, and I'm going to leave you with one of my favorite quotes from Dr. Deming. And that is, “people are entitled to joy in work."

What was it like to learn from Dr. Deming himself -- a decade before his name became legend in U.S. business circles? In this deeply personal episode, William Scherkenbach shares with host Andrew Stotz what it was like to sit in Deming’s classroom in 1972, join him for late-night chats at the Cosmos Club, and help ignite transformational change at Ford and GM. Learn how Deming’s teachings shaped a lifetime of purpose, and why Scherkenbach, now in his 80th year, is stepping back into the arena with lessons still burning bright. TRANSCRIPT 0:00:02.3 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 here with featured guest William Scherkenbach, and he is known as one of the men who has spent a huge amount of time with Dr. Deming, as he mentioned to me previously, starting from 1972, over a thousand meetings and many other activities that he's been involved in. So, Bill, welcome to the show. Why don't you give us a little background about you?   0:00:39.5 William Scherkenbach: Oh, okay. Good to be here, Andrew. Well, I'm going to start with, since it's about Deming, in '72, I was newly married in April, but had been accepted to NYU Graduate School of Business, and I don't know, I never found out who wrote the course syllabus, but whoever did wrote something that it sounded like a darn interesting course, sampling, manufacturing. I was a protocol officer at the United Nations at the time and was going to night school at the New York University Graduate School of Business. So, I said, this sounds like a good course, interesting course. Had no idea who Dr. Deming was, and I walked into the first class, and there was an old, I'm 26, so he was 72 in 1972, and he was one of the first, one of the only old person who didn't say, I used to be, and I don't want to stereotype all of my peers now that I'm 79, but hopefully I don't fall into the, well, I used to be and what happened. But he did tell, I mean, statistics can be a very technical subject, and the way he taught it, I had courses in some theory of sampling, which was one of his books.   0:02:52.2 William Scherkenbach: He had three, I said three courses. The other course that I took was based on his lectures in Japan in 1950, and in fact, two of them. The third course was an extension of that. So, he was, he would teach the statistics, but he was able to tell the history of the people behind all of the thoughts and the formulas and approaches, and I found that extremely, extremely interesting. And he handed out tons of papers and material, and it was just a very, very good experience. I know he had, and he had, in my opinion, a great sense of humor, but then statisticians, what's our status? Yeah, we're like accountants, in any event. .   0:04:12.2 Andrew Stotz: Why was he teaching? I mean, at 72, most men, you know, maybe women also, but most of us are like, it's the twilight of our years, and we now know he had 30 more years to go, but why was he teaching? And also, what's interesting is when I think about Deming, I think about his overall system of what he's teaching, whereas it's interesting to think about how he taught one relatively narrow subject.   0:04:43.7 William Scherkenbach: I'll get to that as to why I think he was teaching. But yeah, back then there were no 14 Points, no glimmer of Profound Knowledge. It was, not theoretical statistics, but applied statistics with a theory behind it. And he still was really expanding on Shewhart 's work with the difference between enumerative and analytic. He used his own. Now, why he was teaching, years later, probably 1987, so yeah, a bunch of years later, when I was at Ford and I had attended at the time, I attended a senior executive week-long get-together in order to get constancy of purpose or more continuity in the senior executive group. One of the people we brought in was Dr. Peter Kastenbaum. And I found as I attended his lecture in that week-long meeting, he was a student of CI Lewis. And CI Lewis, Deming learned about from Walter Shewhart and his work in the epistemology theory of knowledge. And in any event, Deming, when he was asked, and at the time it was still in the '30s, I think, when he was at the School of Agriculture, or the agriculture department, and bringing in Shewhart, he had tried to get CI Lewis to come talk. And CI said, I would love to, but I have a commitment to my students. And so I can't adjust my schedule.   0:07:33.9 William Scherkenbach: And the students, the people who wanted to learn were sacred. And I think that had a huge impact on Dr. Deming. I mean, he spoke about it a lot. And the way, you know, in a lot of the videos that Clare Crawford-Mason did, lovingly called the old curmudgeon. But for students, he had the greatest empathy and charity for, he just didn't suffer fools gladly. If you showed him that you weren't willing to learn, he took great joy in letting them know where they, where they stood.   0:08:43.1 Andrew Stotz: And one of the things when I went into my first Deming seminar in 1990, so now we're fast forwarding 30 years from when you first met him. It was almost like there was a safe harbor for workers, for young people, for people with open minds. I mean, I didn't, I watched as he didn't suffer fools, but I'm just curious, when you go back to 1972 in those classes, I'm assuming that he was pretty gentle with the students, encouraging them and all that was...   0:09:19.0 William Scherkenbach: Oh, absolutely. In my experience, I mean, if you were by, you know, in a student in graduate school, even though the graduate school of business in New York, down on 90 Church Street, Wall Street area, there were very few people going directly from your bachelor's to the master's program. And so these were people that had probably 10 years experience in business doing stuff. And yet by going to the class, absolutely were willing to learn, listen to different points of view, which is absolutely crucial. As you progress with theory of knowledge to be able to get different perspectives on whatever it is you're trying to look at.   0:10:23.2 Andrew Stotz: I would like to continue on this period of time just because it's a snapshot we don't get that often or that easily. You mentioned CI Lewis, a man who lived from about 1880 to about the year I was born, around 1964-65, and he was known for his understanding and discussion about logic and things like that. But why was CI Lewis someone that was interesting to Dr. Deming? What was the connection from your perspective?   0:10:59.6 William Scherkenbach: Well, my understanding is Shewhart referred to him, and Lewis was a professor at Harvard, and he was in the Peirce, I believe it's called. It looks like Peirce, but it's Peirce School of, or Chair of Philosophy, and Charles Sanders Peirce was a huge, huge influence in epistemology. And so that whole chain of thought or train of thought interested Deming, but it really was, he was introduced to it by Walter Shewhart.    0:11:48.3 Andrew Stotz: There's a famous quote, I believe, by Deming about CI Lewis and his book Mind and the World Order.   0:11:56.0 William Scherkenbach: Mind and the World Order, yeah.   0:11:59.9 Andrew Stotz: Deming said he had to read it six times before he fully understood and could apply its insights. And sometimes I think maybe Dr. Deming was truly inspired by that because when I think about his work, I'm still reading it and rereading it. And just listening to the video that you did many years ago with Tim talking about reduced variation, reduced variation, what he was talking about. Sometimes when we see the big picture, there's many different components of Deming's teachings. But if you had to bring it down to kind of its core, you know, he mentioned on that video that I just watched this morning, he mentioned reduced variation, and that will get you lower costs, happier customers, more jobs. How would you say, after you've looked at it from so many different angles over so many different years, how would you say you would sum up Dr. Deming's message to the world?   0:13:01.5 William Scherkenbach: Well, that's a difficult thing to sum up. Back then, when we did the video, which was in the early '80s, maybe '84, again, he had his 14 Points by then, but he hadn't, it hadn't really, the Profound Knowledge part of that wasn't there. Now, he had used what Shewhart said, and he had read, tried to read CI Lewis, and when he spoke about the connection between theory and questions, that's what he got from Shewhart and, well, and from Lewis, and a bunch of other pragmatist philosophers. So, he, you know, he was influenced by it, and, well, that's all I can say.   0:14:27.5 Andrew Stotz: So, let's go back in time. So, you're sitting in this classroom, you're intrigued, inspired. How did the relationship go at, towards the end of the class, and then as you finished that class, how did you guys keep in touch, and how did the relationship develop?   0:14:51.0 William Scherkenbach: Well, that is an interesting story. I usually am, well, I am introverted. So I had, after I moved from New York, I got a job at Booz Allen and Hamilton in Washington, DC. So in '74, when I got the degree from NYU, we moved to Silver Spring. And obviously, he's lived on Butterworth Place since there was a Butterworth Place. So we were able to, one of the things, and this is, well, I will say it, one of his advice to me, although he gave everyone an A, I later kidded him, he didn't remember that he gave me a B. No, he gave me an A. In any event, but one of his piece of advice was, you really don't need to join ASQC. You know more about quality than any of those inspectors. And so he had learned from the '50s in the past 20 years from the 50s that inspection wasn't going to do it. Well, I didn't take his advice, and I joined ASQC, and I was reading...   0:16:36.1 Andrew Stotz:Which for those who don't know is the American Society for...   0:16:41.6 William Scherkenbach: Quality Control, back then, now it's just the American Society for Quality. I had recommended when we did a big recommendations and forecasts for the year 2000 that quality, it should be the Society for Quality worldwide, but it's ASQ now. Let's see.   0:17:07.7 Andrew Stotz: So he recommended you don't join and you didn't follow his recommendation.    0:17:12.1 William Scherkenbach: I don't join, and I read an article, and it was by a professor in Virginia Tech, and he was showing a c-chart and the data were in control, and his recommendations were to penalize the people that were high and reward the people that were low, which is even back then, Dr. Deming was absolutely on track with that. If your process is in control, it doesn't make any sense to rank order or think that any of them are sufficiently different to reward or penalize. And I had never done this, but it was, I wrote a letter to quality progress. I sent a copy to Dr. Deming, and he said, "By golly, you're right on, that's great." And so I think it probably was '75, yeah, 1975. So I had been a year or so out, and he started inviting me over to his place at Butterworth, and we would go to the Cosmos Club. And that was a logistical challenge because at the time he had, well, his garage was a separate, not attached, it was in the backyard and emptied onto an alley. And he had a huge Lincoln Continental, the ones with the doors that opened from the center.   0:19:29.0 William Scherkenbach: And he would get in and drive and then park it in back of the club and someone would watch over it. But those were some good memories. So that was my introduction to keep contact with him. As I said, I had never done that. I don't think I've written a letter to an editor ever again.   0:20:04.8 Andrew Stotz: And you're mentioning about Butterworth, which is in DC.   0:20:12.6 William Scherkenbach: Butterworth Place, yeah.   0:20:14.7 Andrew Stotz: And Butterworth Place where he had his consulting business, which he ran, I believe, out of his basement.   0:20:18.3 William Scherkenbach: Out of the basement, yep, yep, yep.   0:20:21.2 Andrew Stotz: And just out of curiosity, what was it like when you first went to his home? Here, you had met him as your teacher, you respected him, you'd been away for a little bit, he invited you over. What was that like on your first walk into his home?   0:20:38.5 William Scherkenbach: Well, went down the side, the entrance to the basement was on the side of the house, and Seal had her desk set up right by the door. And then, I don't know if you can see, this is neat compared to his desk. It was filled with books and papers, but he knew where everything was. But it was a very cordial atmosphere.   0:21:25.2 Andrew Stotz: So when you mentioned Cecelia Kilian, is that her name, who was his assistant at the time?   0:21:36.3 William Scherkenbach: Yes, yes.   0:21:38.0 Andrew Stotz: Okay, so you...   0:21:38.8 William Scherkenbach: Yeah. For Jeepers. I don't know how long, but it had to be 50 years or so. So I don't, I mean, back in the '70s, I don't know of any other. He might have had, well, okay. He, yeah.   0:22:01.1 Andrew Stotz: I think it's about 40 or 50 years. So that's an incredible relationship he had with her. And I believe she wrote something. I think I have one of her, a book that she wrote that described his life. I can't remember that one right now but...   0:22:14.2 William Scherkenbach: Yeah. A lot of, yeah, it contained a lot of...   0:22:16.6 Andrew Stotz: The World of Dr. W. Edwards Deming, I think was the name of it, yeah.   0:22:20.6 William Scherkenbach: Okay. It contained a lot of his diaries on a number of his visits to Japan and elsewhere.   0:22:32.1 Andrew Stotz: So for some of us, when we go into our professor's offices, we see it stacked full of papers, but they've been sitting there for years. And we know that the professor just doesn't really do much with it. It's just all sitting there. Why did he have so much stuff on it? Was it incoming stuff that was coming to him? Was it something he was writing? Something he was reading? What was it that was coming in and out of his desk?   0:22:55.7 William Scherkenbach: A combination of stuff. I don't know. I mean, he was constantly writing, dictating to seal, but writing and reading. He got a, I mean, as the decades proceeded out of into the '80s, after '82, the NBC white or the '80, the NBC white paper calls were coming in from all over, all over the world. So yeah, a lot of people sending him stuff.   0:23:35.8 Andrew Stotz: I remember seeing him pulling out little scraps of paper at the seminar where he was taking notes and things like that at '90. So I could imagine he was just prolific at jotting things down. And when you read what he wrote, he really is assembling a lot of the notes and things that he's heard from different people. You can really capture that.   0:23:59.0 William Scherkenbach: Yeah. He didn't have an identic memory, but he took notes and quite, you know, and what he would do at the end of the day before retiring, he'd review the notes and commit them to memory as best he could. So he, yeah, very definitely. I mean, we would, you know, and well, okay. We're still in the early days before Ford and GM, but.   0:24:37.6 Andrew Stotz: Yeah. And I want to, if I shoot forward to '90, '92, when I studied with him, I was impressed with his energy at his age and he was just on a mission. And when I hear about your discussion about the class and at that time, it's like he was forming his, you know, System of Profound Knowledge, his 14 Points. When do you think it really became a mission for him to help, let's say American industry?   0:25:09.0 William Scherkenbach: Oh, well, I think it was a mission when Ford began its relationship with him. The ability of a large corporation, as well, and Ford at the same time Pontiac, the Pontiac division, not the whole GM, but Pontiac, was learning as well. But the attachment to Ford was that you had Don Peterson at the time was president of Ford, and he was intellectually curious, and he and Deming were on the same frequency. Now, I don't want to jump ahead, but if anyone has, well, you've read my second book there, you'll know that I have mentioned that the way to change is physical, logical, and emotional. And when you look at the gurus back then, there was Deming, who was the logical guru. You had Phil Crosby, who was the emotional guru. You go to the flag and the wine and cheese party, and Deming would say, "No," and Joe Juran, who was interested in focusing on the physical organization, you report to me kind of a thing. And so each of these behemoths were passing each other in the night with the greatest respect. But, but, and so they had their constituents. The challenge is to be able to broaden the appeal.    0:27:33.8 Andrew Stotz: So we've gone through '72, and then now '75, you've written your piece, and he's brought you into the fold. You're starting to spend some time with him. I believe it was about 1981 or so when he started working with Ford. And at that time, the quality director, I think, was Larry Moore at the time. And of course, you mentioned Donald Peterson. Maybe you can help us now understand from your own perspective of what you were doing between that time and how you saw that happening.   0:28:13.4 William Scherkenbach: Well, I had, my career was, after Booz Allen, mostly in the quality reliability area. I went from Booz Allen and Hamilton to, I moved to Columbia, Maryland, because I can fondly remember my grandfather in Ironwood, Michigan, worked at the Oliver Mine. There's a lot of iron ore mines up in the UP. ANd he would, and his work, once he got out of the mines later on, was he would cut across the backyard, and his office was right there. And so he would walk home for lunch and take a nap and walk back. And I thought that really was a good style of life. So Columbia, Maryland, was designed by Rouse to be a live-in, work-in community. And so we were gonna, we moved to Columbia, and there was a consulting firm called Hitman Associates, and their specialty was energy and environmental consulting. So did a bunch of that, worked my way up to a vice president. And so, but in '81, Deming said, you know, Ford really is interested. He was convinced, and again, it's déjà vu, he spoke about, when he spoke fondly about his lectures in Japan in 1950 and onward, that he was, he was very concerned that top management needed to be there, because he had seen all the excitement at Stanford during the war, and it died out afterwards, because management wasn't involved.   0:30:42.8 Andrew Stotz: What do you mean by that? What do you mean by the excitement at Stanford? You mean people working together for the efforts of the war, or was there a particular thing that was happening at Stanford?   0:30:51.7 William Scherkenbach: Well, they were, he attributed it to the lack of management support. I mean, they learned SPC. We were able to improve quality of war material or whatever, whoever attended the Stanford courses. But he saw the same thing in Japan and was lucky to, and I'm not sure if it was Ishikawa. I'm just not sure, but he was able to get someone to make the call after a few of the seminars for the engineers to make the call to the top management to attend the next batch. And he was able, he was able to do that. And that he thought was very helpful. I, I, gave them a leg up on whatever steps were next. I'm reminded of a quote from, I think it was Lao Tzu. And he said that someone asked him, "Well, you talk to the king, why or the emperor, why are things so screwed up?" And he said, "Well, I get to talk to him an hour a week and the rest of the time his ears are filled with a bunch of crap." Or whatever the Chinese equivalent of that is. And he said, "Of course the king isn't going to be able to act correctly." Yeah, there are a lot of things that impacted any company that he helped.   0:33:07.6 Andrew Stotz: It's interesting because I believe that, I think it was Kenichi Koyanagi.   0:33:15.8 William Scherkenbach: Koyanagi, yes, it was.   0:33:17.8 Andrew Stotz: And it was in 1950 and he had a series of lectures that he did a series of times. But it's interesting that, you know, that seemed like it should have catapulted him, but then to go to where you met him in 1972 and all that, he still hadn't really made his impact in America. And that's, to me, that's a little bit interesting.   0:33:44.4 William Scherkenbach: Yeah, and quite, my take, I mean, you could tell even in '72 and '3 in classes, he was very frustrated that he wasn't being listened to. I mean, he had, his business was expert testimony in statistical design of surveys. He did road truck, truck transport studies to be able to help the interstate commerce commission. And made periodic trips back to Japan, well known in Japan, but frustrated that no one really knew about him or wasn't listening to him in the US. And that was, I mean, for years, that was my, my aim. And that is to help him be known for turning America around, not just Japan. But it's usually difficult. I mean, we did a great job at Ford and GM and a bunch of companies, but it's all dissipated.   0:35:25.9 Andrew Stotz: It's interesting because it's not like he just went as a guest and gave a couple of guest lectures. He did about 35 lectures in 1950. About 28 or almost 30 of them were to engineers and technical staff. And then about seven of them were to top level executives. And, you know, one of the quotes he said at the time from those lectures was, "the problem is at the top, quality is made in the boardroom." So just going back, that's 1950, then you meet him in 1970, then in '72, then you start to build this relationship. You've talked about Booz Allen Hamilton. Tell us more about how it progressed into working more with him, in particular Ford and that thing that started in, let's say, 1981 with Ford.   0:36:22.0 William Scherkenbach: Well, again, he was very enthusiastic about Ford because Peterson was very receptive to this, his approach. And again, it's, I think the British philosopher Johnson said, "there's nothing like the prospect of being hung in the morning to heighten a man's senses." So he, Ford had lost a couple billion bucks. They hadn't cashed in like Chrysler. GM lost a bunch too, but that, and Japan had lost a war. So does it take a significant emotional, logical, or physical event? For some folks it does. So he was very encouraged about what he was seeing at Ford. And he had recommended that Ford hire someone to be there full time to coordinate, manage, if you will. And I was one of the people he recommended and I was the one that Ford hired. So I came in as Director of Statistical Methods and Process Improvement. And they set it up outside, as Deming said, they set it up outside the quality. Larry Moore was the Director of Quality and I was Director of Statistical Methods. And that's the way it was set up.   0:38:08.0 Andrew Stotz: Were you surprised when you received that call? How did you feel when you got that call to say, "Why don't you go over there and do this job at Ford?"   0:38:18.6 William Scherkenbach: Oh, extremely, extremely happy. Yeah. Yeah.   0:38:23.1 Andrew Stotz: And so did you, did you move to Michigan or what did you do?   0:38:27.7 Andrew Stotz: I'm sorry?   0:38:29.4 Andrew Stotz: Did you move or what happened next as you took that job?   0:38:32.0 William Scherkenbach: Oh yeah, we were living in Columbia. We moved the family to the Detroit area and ended up getting a house in Northville, which is a Northwest suburb of Detroit.   0:38:49.9 Andrew Stotz: And how long were you at Ford?   0:38:53.8 William Scherkenbach: About five and a half years. And I left Ford because Deming thought that GM needed my help. Things were going well. I mean, had a great, great bunch of associates, Pete Chessa, Ed Baker, Narendra Sheth, and a bunch of, a bunch of other folks. Ed Baker took the directorship when I left. That was my, well, I recommended a number of them, but yeah, he followed on. Deming thought that there was a good organization set up. And me being a glutton for punishment went to, well, not really. A bunch of great, great people in GM, but it's, they were, each of the general managers managed a billion dollar business and a lot of, difficult to get the silos to communicate. And it really, there was not much cooperation, a lot of backstabbing.   0:40:25.0 Andrew Stotz: And how did Dr. Deming take this project on? And what was the relationship between him and, you know, let's say Donald Peterson, who was the running the company and all the people that he had involved, like yourself, and you mentioned about Ed Baker and other people, I guess, Sandy Munro and others that were there. And just curious, and Larry Moore, how did he approach that? That's a huge organization and he's coming in right at the top. What was his approach to handling that?   0:41:02.1 S2  Well, my approach was based on his recommendation that the Director of Statistical Methods should report directly to the president or the chairman, the president typically. And so based on that, I figured that what I would, how we would organize the office, my associates would each be assigned to a key vice president to be their alter ego. So we did it in a, on a divisional level. And that worked, I think, very well. The difficulty was trying to match personalities and expertise to the particular vice president. Ed Baker had very good relations with the Latin American organization, and, and he and Harry Hannett, Harold Hannett helped a lot in developing administrative applications as well. And so we sort of came up with a matrix of organization and discipline. We needed someone for finance and engineering and manufacturing, supply chain, and was able to matrix the office associates in to be able to be on site with those people to get stuff, to get stuff done.   0:43:09.5 Andrew Stotz: And what was your message at that time, and what was Dr. Deming's message? Because as we know, his message has come together very strongly after that. But at that point, it's not like he had the 14 Points that he could give them Out of the Crisis or you could give them your books that you had done. So what was like the guiding philosophy or the main things that you guys were trying to get across?   0:43:35.9 William Scherkenbach: Well, I mean, he had given in, I think, Quality, Productivity, Competitive Position back in the late '70s, and he was doing it through George Washington University, even though Myron Tribus at MIT published it. But it was a series of lectures, and he didn't really, even in the later 70s, didn't have the, the, the 14 Points. And so those came a couple years later, his thinking through, and Profound Knowledge didn't come until much later over a number of discussions of folks. But the, I mean, the key, I mean, my opinion of why it all dropped out is we dropped the ball in not working with the board. And at Ford, we didn't, weren't able to influence the Ford family. And so Peterson retires and Red Poling, a finance guy, steps in and, and everything slowly disintegrates. At least not disintegrates, well, yes. I mean, what was important under Peterson was different. But that happens in any company. A new CEO comes on board or is elected, and they've got their priorities based, as Deming would say, on their evaluation system. What's their, how are they compensated?   0:45:46.8 William Scherkenbach: And so we just didn't spend the time there nor at GM with how do you elect or select your next CEO? And so smaller companies have a better, I would think, well, I don't know. I would imagine smaller companies have a better time of that, especially closely held and family held companies. You could, if you can reach the family, you should be able to get some continuity there.   0:46:23.5 Andrew Stotz: So Donald Peterson stepped down early 1995. And when did you guys make or when did you make your transition from Ford to GM?   0:46:38.5 William Scherkenbach: '88.   0:46:39.6 Andrew Stotz: Okay, so you continued at Ford.   0:46:42.1 William Scherkenbach: The end of '88, yeah, and I left GM in '93, the year Dr. Deming died later. But I had left in, in, well, in order to help him better.   0:47:07.8 Andrew Stotz: And let's now talk about the transition over to General Motors that you made. And where did that come from? Was it Dr. Deming that was recommending it or someone from General Motors? Or what...   0:47:21.4 William Scherkenbach: Yeah, Deming spoke with them and spoke with me. And I was a willing worker to be able to go where he thought I could be most helpful.   0:47:41.9 Andrew Stotz: And was he exasperated or frustrated that for the changes that happened in '95 when Peterson stepped down, he started to see the writing on the wall? Or was he still hopeful?   0:47:55.4 William Scherkenbach: No, Deming died in '93, so he didn't see any of that.   0:47:58.9 Andrew Stotz: No, no, what I mean is when Peterson stepped down, it was about '85. And then you remain at Ford until '88.   0:48:08.0 William Scherkenbach: No, Peterson didn't step down in '85. I mean, he was still there when I left.   0:48:14.0 Andrew Stotz: So he was still chairman at the time.   0:48:17.3 William Scherkenbach: Yeah.   0:48:17.6 Andrew Stotz: Maybe I'm meaning he stepped down from president. So my mistake on that.   0:48:20.3 William Scherkenbach: Oh, but he was there.   0:48:24.3 Andrew Stotz: So when did it start...   0:48:25.9 William Scherkenbach: True. I mean, true, he was still there when Deming had died.   0:48:31.3 Andrew Stotz: Yeah, okay. So did the whole team leave Ford and go to GM or was it just you that went?   0:48:39.1 William Scherkenbach: Oh, just me. Just me.   0:48:42.8 Andrew Stotz: Okay. And then.   0:48:44.0 William Scherkenbach: Yeah, because we had set up something that Deming was very pleased with. And so they were, everyone was working together and helping one another.   0:48:59.5 Andrew Stotz: Okay. So then you went to General Motors. What did you do different? What was different in your role? What did you learn from Ford that you now brought to GM? What went right? What went wrong? What was your experience with GM at that time?   0:49:16.5 William Scherkenbach: Well, I've got a, let's see. Remember Bill Hoagland was the person, Hoagland managed Pontiac when Deming helped Pontiac and Ron Moen was involved in the Pontiac. But Bill Hoagland was in one of the reorganizations at GM was head of, he was group, group vice president for Buick, Oldsmobile, Cadillac. And so I went over and directly reported to him and each of the, I mean, Wendy Coles was in, Gypsy Rainey, although Gypsy was temporary, worked for powertrain and Pontiac and still, but powertrain was where a lot of the expertise was and emphasis was, and then Buick and Cadillac and so, and Oldsmobile. So we, and in addition to that, General Motors had a corporate-wide effort in cooperation with the UAW called the Quality Network. And I was appointed a member of that, of that and, and helped them a lot and as well as the corporate quality office, but focused on Buick, Oldsmobile, Cadillac.   0:51:18.6 Andrew Stotz: And then tell us about what was your next step in your own personal journey? And then let's now get into how you got more involved with Deming and his teachings and the like.   0:51:32.8 William Scherkenbach: Well, I mean, he would be at GM two and three days a month, and then every quarter he'd be here for, just like Ford, for a four-day seminar. And while at Ford and at GM, I took uh vacation to help him as he gave seminars and met people throughout the world. Even when he was probably 84, 85, I can remember, well, one of the, he always, not always, but he would schedule seminars in England over the Fourth of July because the English don't celebrate that, although he said perhaps they should, but right after the Ascot races. And so he would do four-day seminars. And on one case, we had one series of weeks, the week before Fourth of July, we did a four-day seminar in the US and then went to London to do another four-day seminar. And he went to South Africa for the next four-day seminar with Heero Hacquebord. I didn't go, but I went down to Brazil and I was dragging with that, with that schedule. So he was able to relish and enjoy the helping others. I mean, enjoy triggers a memory. We were at helping powertrain and Gypsy was there, Dr. Gypsy Rainey.    0:53:59.2 William Scherkenbach: And she, we were talking and goofing around and he started being cross at us. And Gypsy said, "Well, aren't we supposed to be having fun?" And Deming said, "I'm having fun." "You guys straighten out." Enjoy, enjoy, enjoy, yeah.   0:54:40.6 Andrew Stotz: And for the typical person to imagine a man at the age of 80, 85, traveling around the world. And it's not like you're traveling on vacation in London, you're walking into a room full of people, your energy is up, you're going and it's not like he's giving a keynote speech for an hour, give us a picture of his energy.   0:55:09.5 William Scherkenbach: And over in London, it was brutal because the hotel, I forget what hotel we're in. When he started there, I think it was Dr. Bernard that he wanted to help. And Bernard wasn't available. So he recommended Henry Neave. And so Henry was a good student, a quick learner. So he helped on a few of them. And I can still remember, I mean, the air, it was 4th of July in London and the humidity was there. There's no air conditioning in the hotel. I could remember Henry, please forgive me, but Henry is sitting in his doorway, sitting on a trash can, doing some notes in his skivvies. And it was hot and humid and awful. But so it reminded Deming a lot of the lectures in Japan in 1950, where he was sweating by 8 AM in the morning. So, yeah.   0:56:30.6 Andrew Stotz: What was it that kept him going? Why was he doing this?   0:56:39.5 William Scherkenbach: I think he, again, I don't know. I never asked him that. He was very, to me, he was on a mission. He wanted to be able to help people live better, okay, and take joy in what they do. And so he was, and I think that was the driving thing. And as long as he had the stamina, he was, he was in, in, in heaven.   0:57:21.1 Andrew Stotz: So let's keep progressing now, and let's move forward towards the latter part of Dr. Deming's life, where we're talking about 1990, 1988, 1990, 1992. What changed in your relationship and your involvement with what he was doing, and what changes did you see in the way he was talking about? You had observed him back in 1972, so here he is in 1990, a very, very different man in some ways, but very similar. How did you observe that?   0:57:56.6 William Scherkenbach: Well, toward the end, it was, I mean, it was, it was not, not pleasant to see him up there with oxygen up his nose, and it just, there had to have been a better way. But Nancy Mann was running those seminars, and they did their best to make life comfortable, but there had to have been a better way to, but I don't know what it was. He obviously wanted to continue to do it, and he had help doing it, but I don't know how effective the last year of seminars were.   0:59:01.1 Andrew Stotz: Well, I mean, I would say in some ways they were very effective, because I attended in 1990 and 1992, and I even took a picture, and I had a picture, and in the background of the picture of him is a nurse, and for me, I just was blown away and knocked out. And I think that one of the things for the listeners and the viewers is to ask yourself, we're all busy doing our work, and we're doing a lot of activities, and we're accomplishing things, but for what purpose, for what mission? And I think that that's what I gained from him is that because he had a mission to help, as you said, make the world a better place, make people have a better life in their job, and help people wake up, that mission really drove him.   0:59:57.8 William Scherkenbach: Yeah, and it, it really did. But for me personally, it was just not pleasant to see him suffering.    1:00:09.6 Andrew Stotz: And was he in pain? Was he just exhausted? What was it like behind the scenes when he'd come off stage and take a break?   1:00:18.7 William Scherkenbach: Yeah, yeah.   1:00:20.8 Andrew Stotz: And would he take naps or?   1:00:23.2 William Scherkenbach: In the early days, we'd go to, well, at Ford and GM, we would go out to dinner just about every night and talk and enjoy the conversation. We'd, my wife Mary Ellen, went many, many times. He enjoyed Northville, some of the restaurants there, and enjoyed the Deming martinis after the meetings at the Cosmos Club. So very, very much he enjoyed that, that time off the podium. So, but he couldn't do that in the, in the later years.   1:01:28.7 Andrew Stotz: And let's now try to understand the progression as you progress away from General Motors and did other things. How did your career progress in those years until when you retired or to where you are now? Maybe give us a picture of that.   1:01:51.4 William Scherkenbach: I tried to help. I've developed my view on how to operationalize change, worked for, was vice president of a company in Taiwan, spent a couple of, and before that had helped Dell, and would spend probably ending up a couple of years in PRC and Taiwan, and growing and learning to learn, in my opinion, there's too much generalization of, well, Asians or Chinese or whatever. There are many, many subgroups, and so change has to be bespoke. What will work for one person won't work for another. For instance, trying to talk to a number of Chinese executives saying, drive out fear, and they will, oh, there's no fear here. It's respect. And so, yeah. But that was their sincere belief that what they were doing wasn't instilling fear. But it broadened my perspective on what to do. And then probably 10 years ago, my wife started to come down with Alzheimer's, and while we lived in Austin, Texas, and that I've spent, she died three years ago, but that was pretty much all-consuming. That's where I focused. And now it's been three years. I'm looking, and I'm a year younger than Deming when he started, although he was 79 when he was interviewed for the 1980 White Paper.   1:04:36.3 William Scherkenbach: So I'm in my 80th year. So, and I'm feeling good, and I also would like to help people.   1:04:46.6 Andrew Stotz: And I've noticed on your LinkedIn, you've started bringing out interesting papers and transcripts and so many different things that you've been coming out. What is your goal? What is your mission?   1:05:02.3 William Scherkenbach: Well, I also would like to take the next step and contribute to help the improvement, not just the US, but any organization that shows they're serious for wanting to, wanting to improve. On the hope, and again, it's hope, as Deming said, that to be able to light a few bonfires that would turn into prairie fires that might consume more and more companies. And so you've got to light the match somewhere. And I just don't know. Again, I've been out of it for a number of years, but I just don't know. I know there is no big company besides, well, but even Toyota. I can remember Deming and I were in California and had dinner. Toyoda-san and his wife invited Deming and me to a dinner. And just, I was blown away with what he understood responsibilities were. I don't know, although I do have a Toyota Prius plug-in, which is perfect because I'm getting 99 miles a gallon because during my, doing shopping and whatever here in Pensacola, I never use gas. It goes 50 miles without needing to plug in.   1:07:00.6 William Scherkenbach: And so I do my stuff. But when I drive to Texas or Michigan, Michigan mostly to see the family, it's there. But all over, it's a wonderful vehicle. So maybe they're the only company in the world that, but I don't know. I haven't sat down with their executive.   1:07:26.4 Andrew Stotz: And behind me, I have two of your books, and I just want to talk briefly about them and give some advice for people. The first one is The Deming Route to Quality and Productivity: Roadmaps and Roadblocks, and the second one is Deming's Road to Continual Improvement. Maybe you could just give some context of someone who's not read these books and they're new to the philosophy and all that. How do these books, how can they help them?   1:07:58.8 William Scherkenbach: Well, the first book, Deming asked me to write in, I think it was '84. And I don't remember the first edition, but it might be '85, we got it out. But he asked me to write it, and because he thought I would, I could reach a different audience, and he liked it so much, they handed it out in a number of his seminars for a number of years. So.   1:08:40.7 Andrew Stotz: And there's my original version of it. I'm holding up my...    1:08:47.0 William Scherkenbach: Yeah, that's a later version.   1:08:49.7 Andrew Stotz: And it says the first printing was '86, I think it said, and then I got a 1991 version, which maybe I got it at one of the, I'm sure I got it at one of the seminars, and I've had it, and I've got marks on it and all that. And Deming on the back of it said, "this book will supplement and enhance my own works in teaching. Mr. Scherkenbach's masterful understanding of a system, of a process, of a stable system, and of an unstable system are obvious and effective in his work as well as in his teaching." And I know that on Deming's Road to Continual Improvement, you do a good amount of discussion at the beginning about the difference between a process and a system to try to help people understand those types of things. How should a reader, where should they start?   1:09:42.8 William Scherkenbach: Well, not with chapter six, as in CI Lewis, but well, I don't know what... I don't remember what chapter six is. As I said, the first book, and a lot of people after that did it, is essentially not regurgitating, but saying in a little bit different words about Deming's 14 Points. What I did on the first book is arrange them in the order that I think, and groupings that I think the 14 Points could be understood better. The second book was, the first half was reviewing the Deming philosophy, and the second half is how you would go about and get it done. And that's where the physiological, emotional, and all of my studies on operationalizing anything.   1:10:55.4 Andrew Stotz: And in chapter three on page 98, you talk about physical barriers, and you talk about physical, logical, emotional. You mentioned a little bit of that when you talked about the different gurus out there in quality, but this was a good quote. It says, Dr. Deming writes about the golfer who cannot improve his game because he's already in the state of statistical control. He points out that you have only one chance to train a person. Someone whose skill level is in statistical control will find great difficulty improving his skills.   1:11:32.1 William Scherkenbach: Yeah. Well, yeah, I mean, well, you're old enough to know the Fosbury Flop. I mean, for all high jumpers did the straddle in jumping and made some great records, but many of them had difficulty converting their straddle to the Fosbury Flop to go over backwards head first. And that's what got you better performance. So anything, whether it's golf or any skill, if you've got to change somehow, you've got to be able to change the system, which is whether you're in production or whether it's a skill. If you're in control, that's your opportunity to impact the system to get better.   1:12:40.3 Andrew Stotz: Yeah, and this was Dick Fosbury in 1968, Mexico City Olympics, where he basically went in and blew everybody away by going in and flipping over backwards when everybody else was straddling or scissors or something like that. And this is a great story.   1:12:57.0 William Scherkenbach: You can't do that.   [laughter]   1:12:58.8 Andrew Stotz: Yeah, and it's a great story of something on the outside. An outsider came in and changed the system rather than an existing person within it. And that made me think about when you talked about Ford and having an outsider helping in the different departments. You know, what extent does that reflect the way that we learn? You know, can we learn internally, or do we need outside advice and influence to make the big changes?   1:13:29.7 William Scherkenbach: Yeah. I mean, we had a swim coach, Higgins, at the Naval Academy, and he was known for, again, following in Olympic swimming. And I'm probably going to get the strokes wrong, but there was no such thing as a butterfly stroke. And he used it in swimming the breaststroke, and supposedly the only criteria was recovery had to be underwater with two hands. But I'm screwing up the story, I'm sure, but Higgins rewrote, rewrote the book by doing something a little bit different or drastically different.   1:14:25.4 Andrew Stotz: I'd like to wrap up this fascinating discovery, or journey of discovery of you and your relationship also with Dr. Deming. Let's wrap it up by talking about kind of your final memories of the last days of Dr. Deming and how you kind of put that all in context for your own life. And having this man come in your life and bring you into your life, I'm curious, towards the end of his life, how did you process his passing as well as his contribution to your life?   1:15:08.1 William Scherkenbach: That's, that's difficult and personal. I, he was a great mentor, a great friend, a great teacher, a great person, and with, on a mission with a name and impacted me. I was very, very lucky to be able to, when I look back on it, to recognize, to sign up for his courses, and then the next thing was writing that letter to the editor and fostering that relationship. Very, very, very difficult. But, I mean, he outlived a bunch of folks that he was greatly influenced by, and the mission continues.   1:16:34.1 Andrew Stotz: And if Dr. Deming was looking down from heaven and he saw that you're kind of reentering the fray after, you know, your struggles as you've described with your wife and the loss of your wife, what would he say to you now? What would he say as your teacher over all those years?   1:16:56.3 William Scherkenbach: Do your best.   1:16:59.0 Andrew Stotz: Yeah, wonderful.   1:17:01.4 William Scherkenbach: He knows, but he knows I know what to do. So, you need to know what to do and then to do the best. But I was, I mean, he was very, he received, and I forget the year, but he was at Ford and he got a call from Cel that his wife was not doing well. And so we, I immediately canceled everything and got him to the airport and he got to spend that last night with his wife. And he was very, very appreciative. So I'm sure he was helping, helping me deal with my wife.   1:17:56.4 Andrew Stotz: Yeah. Well, Bill, on behalf of everyone at the Deming Institute and myself personally, I want to thank you for this discussion and opening up you know, your journey with Dr. Deming. I feel like I understand Dr. Deming more, but I also understand you more. And I really appreciate that. And for the listeners out there, remember to go to Deming.org to continue your journey. And also let me give you, the listeners and viewers, the resources. First, we have Bill's book, which you can get online, The Deming Route to Quality and Productivity. We have Deming's Road to Continual Improvement, which Bill wrote. But I think even more importantly is go to his LinkedIn. He's on LinkedIn as William Scherkenbach and his tagline is helping individuals and organizations learn, have fun, and make a difference. So if you want to learn, have fun, and make a difference, send him a message. And I think you'll find that it's incredibly engaging. Are there any final words that you want to share with the listeners and the viewers?   1:19:08.9 William Scherkenbach: I appreciate your questions. In thinking about this interview, we barely scratched the surface. There are a ton of other stories, but we can save that for another time.   1:19:26.1 Andrew Stotz: Something tells me we're going to have some fun and continue to have fun in these discussions. So I really appreciate it and it's great to get to know you. Ladies and gentlemen.   1:19:36.7 William Scherkenbach: Thank you, Andrew.   1:19:37.7 Andrew Stotz: You're welcome. This is your host, Andrew Stotz, and I'm going to leave you with one of my favorite quotes from Dr. Deming, and that is that "people are entitled to joy in work."    

What if you could tackle a persistent problem without guesswork? In Part 10 of the Path to Improvement series, John Dues and Andrew Stotz discuss how John's team uses Plan-Do-Study-Act (PDSA) cycles to calm a chaotic process with precision. Discover how to shift from blame to solutions by leveraging data and Deming thinking. You'll also find out where the team stands on their path to reducing chronic absenteeism in their schools. Listen now! #EducationLeadership #ContinuousImprovement #SystemsThinking #DemingInEducation   TRANSCRIPT 0:00:02.2 Andrew Stotz: My name is Andrew Stotz, and I'll be your host as we dive deeper into the teachings of Dr. W. Edwards Deming. Today I'm continuing my discussion with John Dues, who is part of the new generation of educators striving to apply Dr. Deming's principles to unleash student joy in learning. The topic for today is mapping the process, part two. John, take it away.   0:00:23.5 John Dues: Hey, Andrew. It's good to be back. Yeah, we've now been talking about our efforts to improve chronic absenteeism for several episodes. And we've talked about two Plan-Do-Study-Act or PDSA cycles focused on where we were working with specific students and their families regarding obstacles to getting to school. And then we shifted gears, and we started running this PDSA cycle three that we talked about last time. And just as a refresher for listeners, the objective of PDSA three is to create a process map, basically. And the goal for the process map is to standardize our attendance intervention system. And I think one of the things that comes to mind when you sort of work on process maps or on important processes is this quote from Dr. Deming. He said, If you can't describe what you're doing as a process, you don't know what you're doing, which is pretty convicting when you really think about it. I think a lot of people initially will say, No, no, no, I know exactly what our process is. And then you say, Well, write it down, map it. And then it becomes much more apparent that most people most of the time have a very rough version in their head that they can't translate into an actual written process.   0:01:44.8 Andrew Stotz: And I'm curious why that is, because on the one hand, when I've done mapping a process, you end up with, Okay, but then there's this exception, and then there's this. And oh, yeah, but don't forget that. So there's like all these intricacies. That's one reason. And then there's another reason is why is that someone's tunnel vision on I know the process because I know the three parts of the process that I'm working with. Why do you think it's hard for people to understand the whole process?   0:02:11.9 John Dues: Well, I think that first reason is probably the biggest reason where there's when they actually start mapping it, there's all these things that they initially left out. And I think as soon as an organization gets to a certain number of employees and has a certain amount of complexity, or you have to add a person that's now going to do part of what you previously did because your role changed or something shifted, needs change, or whatever in the environment. And you have to bring them in. You realize pretty quickly that you can't rely on that stuff that lived in your head anymore. So I think it's a combination of all those things for why this becomes so important. And the other reason I mean, the reason you want to do this is so that there's a starting place, a standard place where people are working from so that whatever it is that the focus is that it can be improved. It's hard to do that when there's no set process to start with.   0:03:08.5 John Dues: Let me. I'll share my screen and just kind of as a refresher, take a look at some of that data that we've talked about so far on this chronic absenteeism front. So, you'll remember that we have this long range goal to improve chronic absenteeism. We've kind of talked about where we are now, where we want to be. So where we are now is in that sort of 40 to 50 % range in terms of chronic absenteeism. We want to be down in under 5%. We have eight years of data going back to the 16-17 school year. And the other thing we've talked about on the data front is that really we have this pre-pandemic world and this post-pandemic world when it comes to chronic absenteeism. For anybody that's watching, you can clearly see this on the process behavior chart or control chart that's on the screen where prior to COVID, we're sort of humming along around 25% chronic absenteeism, which is still high. But now, since COVID, we've since the pandemic, we've skyrocketed. So there's this clear, sort of, new reality, new system for schools like ours that...   0:04:23.7 Andrew Stotz: And can you, just for someone that may be just popping in and hearing this, can you just describe what is chronic absenteeism rate?   0:04:31.9 John Dues: Yes, chronic absenteeism is a standard federally defined level of absenteeism where kids are called chronically absent once they've missed 10% or more of the school year. So the percent of kids that are chronically absent is what's being displayed.   0:04:50.5 Andrew Stotz: So if a school has 100 kids, this chart is saying that 50% of them are chronically absent?   0:04:58.9 John Dues: Yes. Yep.   0:05:00.5 Andrew Stotz: Okay. Yep.   0:05:01.1 John Dues: And that's not since the pandemic happened. That's not atypical, especially for schools that serve a high population of students that are economically disadvantaged, basically, unfortunately. So that's the goal, sort of cut it by a significant amount, 40 to 50% down to less than 5%. So that's the goal. And we've looked at the... Last time we looked at sort of the processes that are currently in place. So just as a quick refresher, United Schools, where I work, is a small urban public charter school system. We have four campuses, and there's people from each of the campuses on this attendance improvement team. And what we've been doing lately is sort of mapping out the process that each campus is using. Each campus has their own little process for intervening with kids that are chronically absent. They have different people that are doing different parts of that process. And so we started with just saying, what is it that your process looks like?   0:06:09.3 John Dues: And we looked at a couple of those maps. So this first map is from one of the campuses. It's pretty simple. There's just one or two people involved. The way they represented it initially is just maybe 10 or 15 steps that they're going through to sort of identify who's having attendance issues, sending letters to families, contacting families, that type of thing. But you can see, initially, at least as they mapped it, it's a pretty simple process. And then when we looked at one of our other campuses and they mapped theirs out, it was a slightly more in-depth process. There's sort of more detail. There are more people involved in the process. I'd say there's probably a little more sophistication to sort of when and how they were intervening with parents. And a lot of the intervening is just sort of the compliance requirements. When a kid reaches a certain number of missed hours, we're required to send them a letter to their parents, for example. So a lot of the process currently focuses on sort of the legal requirements when it comes to absenteeism in Ohio's law. But these are two campuses that are about three miles apart, and you can see, even though they're following the same legal sort of requirements from the state, they have very different processes for how that work is being done.   0:07:38.9 Andrew Stotz: Or could you also say that this particular campus, the people involved may have a much deeper understanding of it or a desire to map it out with more detail? Or do you think it's significantly different?   0:07:52.3 John Dues: I think that this second one that looks like it has more steps, I think they have a person that's more of their sort of 1.0 FTEs, like more of their 1.0 FTE is focused on just attendance, whereas it's sort of like a divided responsibility.   0:08:09.7 Andrew Stotz: Wait, what's a 1.0 FTE?   0:08:12.1 John Dues: Like one full-time equivalent person. So a big part of the person's job is this attendance process. So they know this process pretty deeply. So they were able to map it in more detail, basically. So that was interesting. So part of this PDSA cycle three was, so the plan was really had sort of two steps. One, create a standardized process map for the system as a whole that everybody's going to work from. And then, once that's drafted, gather some feedback, both quantitative and qualitative feedback from our network leadership team. So that was the Plan. The Do was just make the map and then gather the input. So that's what's been happening of late with this team. But we can see pretty quickly what they did. And it certainly does help to have an improvement advisor, someone with a deep knowledge of the Deming philosophy and mapping processes, because he's the one at the meetings. He's the one sort of taking everything that the team is telling him, the process maps that the campus teams have done. And then he's putting it all together based at their input. And their input is certainly super important, but he's also very talented at building processes that are coherent and can be understood by many across our system.   0:09:40.3 John Dues: And so what he ended up doing using their input is he's now got a process map that includes not just the nuts and bolts like, okay, the kid has an attendance problem, and we have to send letters and do things like that. He's going back and created a process map that includes four different stages. So this first stage that if you're viewing this part of the process map is just for onboarding, which was completely missing from all of the campus maps. It wasn't on the... So the idea here is the very first thing, the beginning of this process is a new student enrolls. And as soon as they enroll, a family enrolls, there's going to be a number of things that happen, mostly on the educational side, like what is good attendance? So right from the get-go, one of the things they're going to do is they have this welcome folder that a family gets when they come for their tour or their orientation. And right in that welcome folder is going to be our attendance framework that defines what good attendance is and when, where it really starts to become an issue and impacts a kid's education. So this whole first process map, this whole first stage is about onboarding and educating the family and the student about what good attendance is, which was, again, completely missing from the process before.   0:11:10.2 John Dues: The second stage is attendance monitoring. So, the kid's been onboarded, school has started, and now there's a process to monitor every student's attendance, whether they have a problem or not. And this monitoring system is going to be standardized so that different notifications are being sent home to families, different sort of letters, letting them know when things are becoming a problem. So again, this whole process is about monitoring attendance after providing some of that education. And then, if through that monitoring, it becomes apparent that the student needs additional intervention, the next stage is sort of that attendance intervention plan. So this is where the full map before for each campus just focused on this part. And this is obviously, if you look at this compared to the campus maps, this is much more in detail about what's happening. I'd say, the other thing that's happening here is there's problem-solving with the family. So instead of just saying, warning, your kid has gotten to this number of missed hours, and you send that home in a letter, once that happens, you can see that there's actually Plan-Do-Study-Act cycles being run with the family and the student that are off track from attendance perspective and some individual problem solving is happening.   0:12:52.3 John Dues: See, we run three PDSA cycles to try to get them back on track. So that's a brand new component to this attendance system. And then from there, for some kids, if we get them back on track, then we don't have to take any further action. But for other students, there are some, again, some legal requirements. And so the last stage of that process is if we do have to file official truancy charges, sort of like what, or let the state know that the student is now truant, there's some steps that we take to make that filing. But that's far after many, many steps have been taken to educate, to run PDSA cycles with individual kids that are off track, to try to get the family and sort of the knowledge they need to understand, like how to keep their student on track when they're in school. So, there's a good chance that this will change pretty quickly, this process map, it's a good one, I think, having gone through it, it's a solid process, but it'll, as soon as it like gets battle tested, there's going to be updates. Now, that's not say you're going to change things willy nilly, but what you are going to do is you're going to learn what's working, what's not, you sort of have this hypothesis, but at least now, since everybody's working from the standard process, we can make improvements that then can go out to the entire system.   0:14:32.9 Andrew Stotz: Great. I'm curious, what is the definition of truancy these days? When I was in school, there was trouble in River City and it was trouble with a capital T and that rhyme with P and that stands for pool. So you had the trouble of all the kids hanging out at the pool place, but I'm just curious what's going on. What is the definition of truancy these days?   0:15:01.3 John Dues: Yeah, it's when they, I mean, students have to have missed a certain number of hours of instruction. And now instead of attendance being measured in days, there's basically a threshold that you hit in terms of numbers of hours missed that then you legally have to file truancy.   0:15:24.4 Andrew Stotz: But what does truancy mean?   0:15:27.3 John Dues: Truancy just means that you've missed a lot of school, basically.   0:15:31.1 Andrew Stotz: Okay.   0:15:31.4 John Dues: Yeah. Yeah. And in terms of reasons, when we did those first PDSAs, not all those kids were necessarily truant, but they all had serious absenteeism issues. I think what we talked about was that we found that there were many different issues that were sort of at the root of that, which is part of the challenge here is we have high numbers of chronic absenteeism and then lots of different reasons for that. And so how do you problem solve with all those different folks to help get them back on track? That's part of the challenge. For sure, part of the challenge. But so where the team is at now, so they've completed this third PDSA cycle. So the Do was to make the process map and then get the input from the leadership team. And now they're doing the Study and the Act. So the Study, one of the things I talked about was that the initial feedback from folks that aren't a part of the team was more education needed to happen during that onboarding process.   0:16:39.9 John Dues: So that was sort of like a blind spot before. Not that people didn't talk about it, but now it's systematized. Here's the piece of paper, the attendance framework you're going to give them. There's an orientation session on attendance. There's a session with students during their orientation about what's good attendance and how many days does that equate to in terms of missing school throughout the year, that types of things. Another big thing in the study was more personal touches throughout the process and not just sort of those notifications that I talked about, like the attendance warning letters. The group sort of talked about, while some of these letters are required, whether they're that effective or not is definitely in question.   0:17:25.1 John Dues: Another thing is we have a role at each campus that's called Dean of Family and Community Engagement. And so something like attendance is the responsibility of everybody in the school. But if there's a point person at each campus, it's that Dean of Family and Community Engagement. And so there's some worry about, like when I go back to this process, it's the Dean of Family and Community Engagement or DFCE, they're sort of the point person running these PDSAs and the PDSAs can be time intensive. So one of the concerns is, will they be able to sort of handle the workload that sort of comes with this new process? And I think that's definitely an open question, but at least it's on the radar. It's not like no one is saying, here's the process, go figure out how to make this work. That would be a bad way to do it. There's a recognition that we think we need to do some of this problem solving with individual cases, but there's also this recognition that there's going to be a time constraint for the DFCEs. And then another big X factor that was a part of this study write-up was transportation. Because we've talked about how bad transportation, yellow school buses have been in Columbus this year. We've had a lot of problems. And so what's that look like next year, and how does this factor in? When we did those interviews with students and families, it wasn't the primary reason for all families, but I think in about 50% of the families, transportation had some role in the attendance issues. So these are things that are on folks' minds as they're working through this.   0:19:06.5 Andrew Stotz: That's a lot of progress on this.   0:19:09.3 John Dues: Yeah, a lot of progress, I think. And you get questions like, is it worth all the time to do this? And it's like, is this improving anything? And if you're looking at the outcome, probably not yet. But now that there's this standardized process, I think we can actually make some inroads on this chronic absenteeism process. It would be very hard to do in the absence of this standardization that we're going through and this input from the group to put more sort of resources towards this to get some expertise in terms of putting together a process instead of leaving it up to individual people that maybe don't have this skill set.   0:19:53.9 Andrew Stotz: You also recently posted on your LinkedIn about the idea of a system and results. If you don't even understand the system, how are you going to get the results that you want from the system?   0:20:05.8 John Dues: Exactly. If you don't understand what's causing the problem, if you don't have a whole systems view, you could put a process in place that actually makes things worse, may make things better in one area, but make them worse in another area. So yeah, this is complicated stuff when you're trying to make change in a complex system like a school system.   0:20:25.7 Andrew Stotz: Interesting.   0:20:26.2 John Dues: Yeah, the last step is just the Act. So they're deciding what to do. Are they going to adopt this? Are they going to adapt it or abandon the idea? So I think we're not going to abandon it because obviously we're moving forward with this new process map. And it's, I would call this adapt though. So we're going to adapt this process map into the system, but very high likelihood that there are going to be many adjustments to it as it gets put into action. As I was just saying, it's not adopt because if it was adopt, this thing, this process map would be sort of run through a number of cycles where it had been tested, the kinks had been worked out, and it's sort of going to be, this is the way. So what we're doing now is adapt. So we're going to make some improvements based on this initial feedback we got from the leadership team. Now we'll make some additional adjustments, especially next school year because the school year is over during the initial implementation.   0:21:29.8 John Dues: And the other sort of part of the Act was if you read the steps in this process map from start to finish. There are a lot of artifacts that go along with this that don't exist. So for example, this attendance slide deck for new student orientation. That's a part of the process. We probably don't want to leave that up to each individual group to create on their own because what is the content of that? And so that has to be created. So there are a number of things like that, that the improvement advisor for the project is going to take on either creating himself or he's going to strongly support the creation. So those are also standardized across the network. So you see, it's a lot of work.   0:22:20.4 Andrew Stotz: Yeah.   0:22:22.2 John Dues: So that would be where we pick up with, once students come back in August, and that's kind of leaving things off at the end of this school year.   0:22:31.6 Andrew Stotz: That's great. I was mentioning about this little jingle that I was talking about, and it comes from a 1957 movie called The Music Man. And he says, his line is, there's trouble in River City, and it starts with T, and that rhymes with P, and that stands for pool. And it's this guy, he's a con man, a hustler, who's gone to the citizens of a town in River City, Iowa, telling them that the corrupting influence is the pool table in the town that's going to keep the kids from going to school. And he wants to start like a marching band. But for those old-timers that seen that movie, they'll love that reference. And if you haven't seen it, go see The Music Man on... I don't know. It's hard to find things on Netflix these days like that, but maybe it's on YouTube.   0:23:27.9 John Dues: Very classic, just like that.   0:23:30.2 Andrew Stotz: But I remember listening to that when I was young, because my parents always had musicals. My sisters actually played musicals on the record player. So you always was hearing the songs of musicals.   0:23:43.8 John Dues: Well, it seems like the truancy thing is, that's not a new problem necessarily.   0:23:48.1 Andrew Stotz: Oh, yeah, that's for sure. That's for sure. Well, why don't we wrap it up there? And 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. And you can find John's book, "Win-Win: W. Edwards Deming, the System of Profound Knowledge, and the Science of Improving Schools" on Amazon. 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."