When Deming proclaimed costs are not causes he was trying to make quite obvious and clear (to those willing to listen) that focusing on outcomes is no way to manage and improve a system. Focusing on results will not cause better results; only focusing on and understanding the system of causes will lead to lasting improvement. However, in spite of the hundreds of thousands of business minded people attending his seminars, to this day management of and by outcomes (aka metrics, analytics) remains the go-to practice. I suppose Yogi Berra was right, if people don’t want to come out to the ballpark nobody is going to stop them!
Why Attend to the System When You Can Incite & Inspect
I recall Deming telling the story of how dogs were most effective in detecting (i.e. sniffing out) drugs at border crossings. His satirical answer to the question what should we do about the flow of illicit drugs, hire more dogs! At every seminar the audience—again mostly business minded people—would laugh at such a preposterous solution to the problem. Deming was laughing as well but I suspect not so much at the ridiculousness of his answer but more likely at the stupidity of common management practice. What most didn’t realize as they were laughing was that he was talking about them, about their practice. They themselves were doing precisely the very same thing in their management practice—trying to inspect quality in to what they produce. And the practice continues.
Instead of learning systems thinking and the theory of variation in order to employ statistics to understand the system of causes, popular management practice uses results to command improved results: Seemingly for the unenlightened it’s all a matter of results and accountability. Management is all about inciting action—by enacting fear—and then inspecting and judging others on their results. Why attend to the system when you can do this!
If You Really Care About Costs
It may be easier to incite and inspect but it sure isn’t effective in the long run! If you care about the sustainability and viability of the enterprise then you ought to care about the system of causes. Why? Because costs are outcomes not causes; or more simply costs are caused!
Furthermore, incurring cost is a necessary outcome in the conduct of business. We can’t produce anything without incurring costs—expending any and all forms of energy produces costs. So an all out war against costs is in effect an all out war against the production of the product/service the enterprise was initially created to provide. In essence, a war against cost is tantamount to a war against the sustainability and viability of the enterprise.
So, if you have a bottleneck in your organization then don’t focus on the (negative) effects of the bottleneck in an effort to realize symptomatic relief, seek first to understand the (whole) system of causes—look up stream using statistical process control, flow, Pareto and cause-&-effect diagrams. If you have inconsistent quality of product/service, don’t focus on sorting out the good from the bad to allow the good to move out the door, seek first to understand the (whole) system of causes of producing the product/service—again look up stream. Remember the act of producing (a product or service) unavoidably incurs costs irrespective of whether what is produced is good or bad. Increasing inspection just adds more (unnecessary) cost.
The way of the wise is to work on the system. Doing otherwise is just tampering which in the long run is detrimental to the enterprise. That is, doing anything in or to the system without an understanding of the system will not only make things worse, it will also increase costs while allowing the causes of the unwanted effects to continue to exist as part of the system—symptomatic relief is no cure. Clearly doing so is just plain stupid!
But then again if you only care about profit in short-term then by all means proceed as you have. Yep, Stupid is as stupid does.