A Comparison of Japanese Total Quality Control and Deming's
Theory of Management
This article critically contrasts two schools of thought on
quality management: Japanese total quality control and
Deming's theory of management. An overview of each
school of thought is presented in respect to definition of
quality, purpose, structure, and intrinsic value. The differ-
ences between the two schools of thought are discussed in
respect to five issues: purpose and structure, role of com-
petition as a motivational tool to achieve customer satis-
faction, use of fear as a managerial tool, use of numeric
targets as tools of management, and use of performance
appraisal as a tool of management.
1. HISTORY
Deming taught the Japanese the Shewhart cycle, the
concept of special and common causes of variation, the
realization that statistics could be used on the shop floor,
and an appreciation of a system. Juran taught the Japanese
management principles and practices, such as the Pareto
principle. From these teachings, and more, the Japanese
developed their own schools of thought on quality.
2. BACKGROUND
There are several schools of thought on quality manage-
ment in the United States, for example, those of Deming,
Juran, and Feigenbaum. This article focuses on Deming's
theory of quality management. Likewise, there are several
schools of thought on quality management in Japan. In
the author's opinion, the dominant school of thought in
Japan is espoused by the Union of Japanese Scientists and
Engineers (JUSE). The JUSE awards the prestigious Dem-
ing Prizes each year. Some leaders of the JUSE school of
thought include K. Ishikawa (deceased), S. Mizuno (de-
ceased), and T. Asaka. In this article, the JUSE school of
thought is called Japanese Total Quality Control (TQC). It
is this author's contention that Japanese TQC is different
from Deming's theory of management.
Howard S. Gitlow is Executive Director, Institute for the Study
of Quality, University of Miami, Coral Gables, FL 33124. The au-
thor would like to acknowledge the support of the University of Miami
Institute for the Study of Quality in Manufacturing and Service, the
New York University Quality Control Fund, the Science University
of Tokyo, Florida Power and Light Company, Juki Company, Kansai
Electric Company, Aiphone Company, Nissan Motor Company, Limited
(Oppama Plant), Isuzu Motors Limited (Kawasaki Plant), and Noriaki
Kano (Science University of Tokyo). The author takes sole responsibil-
ity for the ideas expressed in this article.
3. OVERVIEW OF JAPANESE TOTAL
QUALITY CONTROL
3.1 Definition of Quality
Japanese TQC defines quality in accordance to Japanese
national standard JISZ8101-1981 as the following:
a system of means to economically produce goods or services
which satisfy customers' requirements. Implementing quality
control effectively necessitates the cooperation of all people in the
company, involving top management, managers, supervisors, and
workers in all areas of corporate activities such as market research,
research and development, product planning, design, preparation
for production, purchasing, vendor management, manufacturing,
inspection, sales and after-service, as well as financial control,
personnel administration, and training and education. Quality
control carried out in this manner is called company-wide quality
control or total quality control.
3.2 Purpose
Kano (1993) stated that the purpose of Japanese TQC
is to increase "customer satisfaction/quality assurance"
(p. 13).
3.3 Structure
Kano (1993, pp. 13-14) described the structure of
Japanese TQC through an analogy to the structure of a
building (see Fig. 1).
3.3.1 Intrinsic Technology. Kano explained that
Japanese TQC assumes the existence of intrinsic technol-
ogy. Intrinsic technology is the basic theory and practice
base specific to a particular industry. "For example, elec-
trical engineering is the technology intrinsic to the electric
industry; chemical engineering is intrinsic to the chemi-
cal industry. Intrinsic technology provides the necessary
foundation upon which TQM is built" (Kano 1993, p. 13).
purpose Quality Assurance, etc .
Tools Concepts Tech- Vehicles
niques
Motivation
Figure 1. Structure of Japanese Total Quart}, Control. (Copyright
1993 by the Regents of the University of California. Reprinted
from the California Management Review, Vol. 35, No. 3, p. 14
The American Statistician, August 1994, Vol. 48, No. 3 197
 3.3.2 Motivational Approach. Given the existence of
intrinsic technology in an industry, top management must
create the energy necessary to promote quality. Kano (1993,
pp. 14-15) suggested that top management can cre-
ate this energy by communicating real or potential crises
that face their organization to their interdependent system
of stakeholders or by committing themselves to a vision
for their organization. Either way, top management cre-
ates a stimulus to motivate the people under them to exert
the energy necessary to create quality.
3.3.3 Tools. Customer satisfaction and quality as-
surance are promoted through the tools of Japanese TQC.
The tools of Japanese TQC form an interdependent system of
concepts, techniques, and promotional vehicles.
Kano (1988), Iizuka and Osada (1988, p. 9), and
Ishikawa (1985) defined four empirically derived princi-
ples of Japanese TQC:
(1) have a customer orientation; the next process is
our customer; think from the customer's perspective;
break down barriers to sectionalism;
(2) manage by fact, and use statistical methods;
(3) use the plandocheckact (PDCA) cycle to decrease
the difference between process performance (actual
results) and targets; and
(4) have respect for humanity, and use participatory man-
agement. Japanese TQC has a humanistic view of the
worker, namely that workers can contribute to cus-
tomer satisfaction and quality assurance if they are
given suitable education and training.
Pascal said that a human being is a thinking reed. This
means that if you eliminate thinking from a human be-
ing, all that remains is a reed (a thing with no soul or
consciousness or an ability to think). Consequently, ac-
cording to Pascal, a human being is defined by thinking;
according to Japanese TQC one must help human beings
think to respect their humanity.
The techniques of Japanese TQC include the seven ba-
sic quality-control tools, the seven management tools, ad-
vanced tools, and quality-control stories. The seven basic
quality-control tools include flow charts, brainstorming
and cause-and-effect diagrams, check sheets and Pareto
diagrams, histograms, run charts and control charts, scatter
diagrams, and stratification. The seven management tools
include affinity diagrams, interrelationship diagraphs, sys-
tematic diagrams, matrix diagrams, matrix data analysis,
process decision program chart (PDPC) analysis, and ar-
row diagrams. The advanced tools include design of ex-
periments, Taguchi experiments, quality function deploy-
ment, flag diagrams, and foolproof engineering, to name
a few.
The vehicles of Japanese TQC are called promotional
activities or administrative systems. They were largely
developed in the 1970s and 1980s and include daily man-
agement, cross-functional management, policy manage-
ment, quality-control circle, and education and training.
The vehicles of Japanese TQC assume expertise in several
support mechanisms, such as control items (indicators),
quality-control audit and quality-control diagnosis, vari-
ance analysis, and the Deming Prize. See the Appendix
for a discussion of support mechanisms.
Daily management involves developing and improving
best-practice methods. The purpose of a best-practice
method is to achieve equal outcomes from different ma-
chines, workers, managers, areas, and so forth. This is ac-
complished by developing the discipline to follow a best-
practice method. At a more advanced stage of quality
management, flexibility in best-practice methods can be
allowed as employees are capable of yielding equal out-
comes by using methods tailored to their unique abilities.
The development of best-practice methods is called
housekeeping. Housekeeping is accomplished through the
standardizedocheckact (SDCA) cycle: standard-
ize (employees study processes and develop best-practice
methods that define departmental management systems
best-practice methods can include traditional work stan-
dards a la Frederick Taylor), do, check, and act (manage-
ment formalizes best-practice methods through training).
The improvement of best-practice methods is called daily
management. Daily management is performed by using the
PDCA cycle to improve the individual or departmental
management systems that are necessary for an individual or
group (department) to achieve targets.
Cross-functional management includes the corporate-
level activities that are necessary to achieve the corporate
targets concerned with quality, cost, scheduling, quantity,
and safety, which are the parameters of sales and profit.
Cross functional management includes the following ac-
tivities: (1) deploying strategies for each corporate target
into departmental targets, (2) ensuring that each depart-
ment performs its deployed targets in daily management,
(3) evaluating processes and results from a corporate level,
and (4) taking action through PDCA if necessary. Cross-
functional management is performed by using the PDCA
cycle to improve the cross-departmental management sys-
tems (methods) responsible for the difference between
process (actual) performance and targets.
Ishikawa (1985, pp. 59-71), King (1989), and Mizuno
(1988) discussed policy management (hoshin kanri).
Policy management includes the activities necessary to
achieve presidential policy in the long run. There are five
steps to policy management: (1) policy setting by the pres-
ident, (2) policy deployment, (3) policy implementation,
(4) policy evaluation and feedback, and (5) presidential
review of policy, and back to the first step. Policy man-
agement assumes that housekeeping, daily management,
and cross-functional management are operational within the
organization.
Policy is best-practice methods and targets; manage-
ment is PDCA. Hence, policy management is performed
by using the PDCA cycle either to innovate (create break-
through) the management systems (best-practice meth-
ods) responsible for the difference between process (ac-
tual) performance and targets or to change the direction of
a company.
Quality-control circles (QCC's) are small groups of
people from the same workshop who perform voluntary
quality-control functions. The QCC operates continu-
ously with all members participating as part of the or-
ganization's TQC activities and as part of the individual
member's self-development plan. The circle members use
statistical quality-control techniques for control and im-
provement of best-practice methods. Kano (1988) stated
that the basic ideas behind QCC's are to (1) contribute to
the improvement and development of TQC; (2) respect
humanity, build a bright workshop environment, and make it
enjoyable to be alive; and (3) draw out and improve in-
ifnite human potential.
Education and training promotes TQC and the develop-
ment of the individual. Education (to make people think)
is different from training (to facilitate job skills). Training
is critical to formalizing the best-practice methods devel-
oped and improved in the "act" stages of the SDCA and
PDCA cycles.
3.4 Intrinsic Value
Japanese TQC is based on the idea that quality comes
from customer satisfaction and quality assurance. Some
Japanese quality experts believe that Japanese TQC has no
intrinsic value beyond the pursuit of customer satisfac-
tion and quality assurance. Other Japanese quality experts
believe the converse. For example, Gitlow (1990) asked a
senior Japanese quality expert if TQC is a philosophy with
wide application to life. He said yes; it is a combination of
techniques and spirituality. He said jujitsu is only tech-
niques, whereas judo is spirituality and techniques. He
said that Japanese TQC is like judo.
4. OVERVIEW OF DEMING'S THEORY OF
MANAGEMENT
4.1 Definition of Quality
Deming (1993) defined quality as follows: "A prod-
uct or service possesses quality if it helps somebody and
enjoys a good and sustainable market" (p. 2). This def-
inition implies (paraphrased from Deming 1982, p. 229)
that the product or service has predictable uniformity and
dependability at low cost and is suited to the market.
4.2 Purpose
The purpose of Deming's theory of management is to
transform Western leaders to that they will do the follow-
ing: (1) improve and innovate the system of interdepen-
dent stakeholders of an organization over the long term
to allow all people to experience joy in their work and
pride in the outcome; (2) optimize the system of inter-
dependent stakeholders of an organization over the long
term so that everybody wins; do not optimize one stake-
holder group's welfare at the expense of another stake-
holder group's welfare (stakeholders include employees,
customers, suppliers, stockholders, the community, and
competitors); and (3) improve and innovate the condition
of society. Society includes local, regional, national, and
international systems, for example, the entire educational
system (public and private schools, primary and secondary
schools, and universities), the environment, public health,
and the economic and social well being of communities
and countries.
A Western leader is defined by his or her belief in a
mechanistic or Newtonian view of the universe; this is a
reductionistc view. It holds that all things can be reduced
to their component parts. If the component parts are un-
derstood, then the thing is understood. An example of this
type of thinking is seen in the current practice of man-
agement by objectives; that is, if objectives are met at the
lowest levels of an organization, they will add up to the
global objective(s) of the organization. This view does not
appreciate the synergistic effects that the components of
a system have on each other and on the functioning of the
entire system.
4.3 Structure
Deming (1993, pp. 94-118) developed a theory of man-
agement that helps individuals learn through the acquisi-
tion of process knowledge gained from experience coor-
dinated by theory. He called this theory a system of pro-
found knowledge. The system of profound knowledge is
composed of four components: appreciation of a system,
theory of variation, theory of knowledge, and psychology.
All four components are interdependent and do not stand
alone. Fortunately, it is not necessary to be expert in any
of the components to understand and apply the system of
profound knowledge.
The following brief discussion of the system of pro-
found knowledge is taken from Deming (1993, pp. 94-
118). This discussion is not meant to be complete; its
purpose is to present some of the highlights of Deming's
theory.
4.3.1 Appreciation of a System. A system is a col-
lection of components that interact and have a common
purpose (aim). It is the job of top management to optimize the
entire system toward its aim. It is the responsibility of the
management of the components of the system to pro-
mote the aim of the entire system; this may require that
they suboptimize their component.
4.3.2 Theory of Variation. Variation is inherent in all
processes. There are two causes of variation: special causes
and system causes. Special causes of variation are external to
the system. It is the responsibility of local peo-
ple and engineers to determine and resolve special causes of
variation. System causes of variation are due to the in-
herent design and structure of the system; they define the
system. It is the responsibility of management to isolate
and reduce system causes of variation.
A system that does not exhibit special causes of varia-
tion is stable; that is, it is a predictable system of variation. Its
output is predictable in the near future.
There are two types of mistakes that can be made in the
management of a system. The first mistake is treating a
system cause of variation as a special cause of variation.
This is by far the more common of the two mistakes; it
is called tampering and will invariably increase the vari-
ability of the output of a system. The second mistake is
treating a special cause of variation as a system cause of
variation. Walter Shewhart developed a control chart to
provide an economic rule for minimizing the loss from
both types of mistakes.
Management requires knowledge about the interactions
between the components of a system and its environment.
Interactions can be positive or negative; they must be man-
aged.
 4.3.3 Theory of Knowledge. Information, no matter
how speedy or complete, is not knowledge. Knowledge
is indicated by the ability to predict future events at the
risk of being wrong and the ability to explain past events
without fail. Knowledge is developed by stating a theory,
using the theory to predict a future outcome, comparing
the observed outcome with the predicted outcome, and
supporting, revising, or even abandoning the theory.
There is no true value of anything. Communication is
possible when people share operational definitions.
Experience is of no value without the aid of theory. The-
ory allows people to understand and interpret experience,
and it allows people to ask questions and to learn.
4.3.4 Psychology. Psychology helps one to under-
stand people, the interactions between people, and the in-
teractions between people and the system of which they are
part. Management must understand the differences among
intrinsic motivation, extrinsic motivation, and overjustifi-
cation. All people require different amounts of intrinsic
and extrinsic motivation. It is the job of a manager to learn
the proper mix of the two types of motivation for each of
his or her people.
4.4 Paradigms
The system of profound knowledge requires that West-
ern leaders accept several paradigms which are discussed as
follows.
Paradigm 1. Manage to create a winwin environ-
ment, not a winlose environment. The focus of a win
win environment is the optimization of all stakeholders in
the organization's system of interdependent stakeholders.
This system includes employees, customers, stockholders,
suppliers, subcontractors, regulators, and the community,
to name a few.
Paradigm 2. Manage to create a balance of intrin-
sic motivation and extrinsic motivation, not just extrinsic
motivation. Intrinsic motivation releases both human and
process energy that can be focused on the improvement
and innovation of the system of interdependent stakehold-
ers. Extrinsic motivation restricts the release of energy
from intrinsic motivation by judging, policing, and de-
stroying the process and the individual.
Paradigm 3. Manage with a long-term process and
results orientation (called analytic management), not with a
short-term results-only orientation (called enumerative
management). Analytic management promotes the im-
provement and innovation of organizational processes.
Highly capable processes facilitate prediction of the near
future and consequently a higher likelihood of achieving
the organizational purpose.
Paradigm 4. Manage to promote cooperation, not
competition. In a cooperative environment, everybody
wins. The customer wins products and services that he or
she can brag about and rejects commonly accepted levels
of defects, rework, shoddy workmanship, and poor ser-
vice. The firm wins returns for investors and secure jobs
for employees. Suppliers win long-term customers for
their products. The community wins an excellent corpo-
rate citizen.
In a competitive environment, most people lose. The
costs resulting from competition are unknown and un-
knowable, but they are huge. Competition causes indi-
viduals, or departments, to optimize their own efforts at the
expense of other stakeholders. This form of optimiza-
tion seriously erodes the performance of the system of
interdependent stakeholders.
Commentary. Each leader's conception of the new
practice of management should be based on the system of
profound knowledge; however, even with the common the-
oretical base of the system of profound knowledge, leaders
in an organization will have different understandings of
how they should practice management. Top management
must endeavor to reduce individual-to-individual varia-
tion in respect to understanding the system of profound
knowledge. This will lead to consistency in the practice
of management.
4.5 Intrinsic Value
Deming's theory of management has intrinsic value be-
yond the management of organizations. It can also be used to
improve the lives of people.
5. DIFFERENCES BETWEEN JAPANESE TQC
AND DEMING'S THEORY OF
MANAGEMENT
5.1 Background
Japanese TQC and Deming's theory of management
have several common elements; however, they also have
several different elements. The different elements make
a combination of the two schools of thought hazardous,
although possible. Deming (1982, 1986, 1993), Gitlow
and Gitlow (1987), Ishikawa (1985, p. 17), Imaii (1987),
Juran (1988, chap. 35F, pp. 35F.1-35F.30), Iizuka and
Osada (1988), Kano (1988, 1993), Scherkenbach (1986,
1991), and many private conversations between the author
and quality experts were used as the source references for
this section. The differing elements are discussed in the
following sections (see Fig. 2).
5.2 Differences Caused by Purpose and Structure
5.2.1 Purpose. The purpose of Japanese TQC is to
increase customer satisfaction. The purpose of Deming's
theory of management is to transform Western leaders so
that they will allow all people to experience joy in their
work and pride in the outcome, optimize the system of
interdependent stakeholders so that everybody wins, and
improve and innovate the condition of society.
5.2.2 Structure in Respect to Theory and Practice.
Japanese TQC is an empirically based paradigm that is
structured functionally for practical usefulness to increase
customer satisfaction and quality assurance. Deming's
theory of management is a theoretically based paradigm
that is structured philosophically for soundness in pursu-
ing the aims of the system of profound knowledge and the
14 points.
One possible explanation for the structural difference
between Japanese TQC and Deming's theory of manage-
ment may be found in culture. One of the important roots
 Assumptions of Dr. Deming's Theory of Management
of Western culture is Christianity. Christianity is meta-
Principles Win-Win v. Intrinsic Analytic Cooperation
physical in that it is concerned with developing theory to of Win-Lose v. v. v.
understand the real world. Three of the important roots of Japanese
TQC
Extrinsic Enumerative Competition

Japanese culture are Buddhism, Confucianism, and Shin- Next Moderate Weak
toism. Buddhism is composed of two streams, one old and process
customer
one relatively new. The old stream is Therevada, which PDCA Strong
is nonmetaphysical, nontheoretical, and practical, and is Manage by Moderate
fact
concerned with developing empirical rules to understand
Respect Weak
the real world. The newer stream is Mahayana, which for
humanity
is metaphysical. Mahayana, however, has developed into
two smaller streams, Chan and Zen. Zen, unlike meta-
Figure 3. A Comparison of the Principles and Assumptions of
Japanese Total Quality Control and Deming's Theory of Management.

Differences Japanese TQC Deming's Theory

Purpose Increase Create joy in

customer work and pride physical Chan, is a return toward nonmetaphysical, non-
satisfaction and in the outcome;
qual it y Optimize the
theoretical, and practical Therevada. Eber (1986, p. 63)
assurance entire system; stated that Confucianism and Shintoism, like Therevada
Improve society
or Zen Buddhism, are both nonmetaphysical, nontheoret-
Structure in Empirically T heoret icall y
respect to based and based and ical, and practical religions that are concerned with devel-
theory and structured structured
pract i ce functionally for phil osophi call y
oping empirical rules to understand the real world. Con-
pr a ct i c al to create joy in sequently, it is possible that the structural difference be-
usefulness work
tween the two schools of thought emanate in part from the
Structure in Next process is Win-win;
respect to customer; PDCA; Cooperation; cultural differences among Ishikawa, Mizuno, Asaka, and
principles and Manage by fact; Intri nsic other leading Japanese quality professionals, and Deming.
assumptions Respect humanity motivation;
Analytic
management 5.2.3 Structure in Respect to Principles and Assump-
Structure in Highly Each tions. A comparison of Deming's theory of management
respect to structured organization
vehicles vehicles which must develop its and Japanese TQC reveals differences between their re-
were developed
empirically from
own situation
speci fi c
spective principles and assumptions (see Fig. 3).
successes in vehicles from Deming's assumption about a winwin environment is
Japanese the system of
organizations profound moderately related to TQC's principle of "next process is
knowledge customer." The recognition that customers are both
Differences
caused by views
Customer
satisfaction is
Customer
satisfaction is
internal and external to an organization is common to
of competition defined relative pursued for the both schools of thought, hence, the moderate relation-
as a to competition sheer joy of the
motivational experience ship. Deming's winwin assumption, however, also en-
tool to achieve compasses the notion of optimization of an organization's
customer
sati sfacti on system of interdependent stakeholders; this includes com-
Differences No statement Fear has a petition in many circumstances.
caused by views about fear as a profoundly
of fear as a managerial tool negative impact Deming's assumption about intrinsic versus extrinsic
managerial tools on employees and
on the
motivation is weakly related to TQC's respect for human-
functioning of ity principle. The relationship is weak in that TQC's def-
an organization
inition of respect for humanity only includes improving
Differences No problem Many numeric
caused by views setting all t ar g et s (goals) an individual's ability to think and thereby improving the
of numeric manner of are viewed as individual's ability to increase customer satisfaction and
target s targets, even arbitrary and
targets which destructive. The quality assurance. Deming's concept of respect for hu-
serve a aim, methods,
motivational and numeric manity is fundamental to the entire purpose of his theory
function. targets of a of management, that being to create joy in work and pride
Targets may not system can not
(directly) be broken into in the outcome. Deming's concern for the individual is
reflect separate parts,
customer's they are far more complete and holistic than TQC's concern. The
needs. Targets i nt er r el a t e d. Japanese, however, are earnestly studying this point in a
may precede Methods must
methods. precede targets. program called New Work Way.
Differences No vehicle for Performance Deming's assumption about analytic management is
caused by views performance apprai sal
of performance appraisal. Use systems which
strongly related to TQC's PDCA principle. Analytic man-
apprai sal whatever promote ranking agement is concerned with control and improvement of
st ruct ure exists are not an
in the acceptable tool processes and so is the PDCA cycle, hence, the strong
organization of management.
They must be
relationship. One difference between the two schools of
replaced by a thought is how they handle the analysis of data. Deming's
practice called
"unbundling" theory of management denies the relevance of a population
and a sampling frame and consequently a standard error
Figure 2. A Comparison of the Different Elements of Japanese in studies of processes. The TQC school believes that
Total Quality Control (TQC) and Deming's Theory of Management. the notions of population, sampling frame, and standard
error can be applied in studies of processes. They both,
however, believe in the techniques of quality management,
for example, the seven basic quality-control tools. Hence,
the moderate relationship between "analytic management"
and "manage by fact."
Deming's assumption about cooperation is weakly re-
lated to TQC's "next process is customer" principle. The
weak relationship is expressed in the cooperation shown
between suppliers and customers in an organization's sys-
tem of interdependent stakeholders. Deming's theory of
management and Japanese TQC, however, have funda-
mentally different views on the role of competition to an
organization; see the section on competition later in this
article.
5.2.4 Structure in Respect to Vehicles. Japanese
TQC has a highly structured set of vehicles developed
empirically from successes in Japanese organizations.
Deming's theory of management promotes the idea that
each leader's paradigm for the new practice of manage-
ment should be based on the system of profound knowl-
edge. It presents no set of universally accepted vehicles.
Each leader must develop his or her own situation-specific
set of vehicles.
5.3 Differences Caused by Views of Competition as
a Motivational Tool to Achieve Customer
Satisfaction
Japanese TQC holds that customer satisfaction is de-
ifned in relation to competition; that is, the organization
that satisfies customers better than its competition wins
the race for customer satisfaction. Competition is the
motivating force behind the desire to increase customer
satisfaction.
Deming's theory of management believes that customer
satisfaction is defined in respect to optimization of the
interdependent system of stakeholders. Improvement of
customer satisfaction is an aim that is pursued for the sheer
joy of the experience; competition is not the motivating
force behind the effort. The pursuit of customer satis-
faction is internally motivated, not externally motivated.
This does not mean that leaders operating under Deming's
theory of management ignore facts about competitors.
5.4 Differences Caused by Views of Fear as
Managerial Tools
Deming's theory of management states that fear has a
profoundly negative impact on employees and on the
functioning of an organization. The losses to the individ-
ual and the company that are caused by fear are unknown,
unknowable, and huge.
Japanese TQC has no statement about the use of fear
as a managerial tool; however, an underlying principle
of Japanese TQC is respect for humanity, which means
that employees can contribute to customer satisfaction and
quality assurance if they are given suitable education and
training. This interpretation of respect for humanity, in
conjunction with an emphasis on process improvement,
creates an environment in which it may not be necessary
to state explicitly that fear must not be used as a managerial
tool.
5.5 Differences Caused by Views of Numeric Targets
In Deming's theory of management, many numeric tar-
gets are viewed as arbitrary and destructive to the improve-
ment of quality. Some examples of destructive numeric
targets are (1) numeric targets set on managerial desire
only, (2) work standards and piece rates, (3) zero variances
in cost accounting, and (4) return on investment calcula-
tions that do not consider unknown and unknowable costs.
Numeric targets that are acceptable in Deming's theory of
management include facts of business such as, (1) break-
even values, (2) nominal values and specification limits
that are based on customer needs and process capabilities,
(3) budgets, plans, and forecasts that are based on process
capabilities, and (4) customer deadlines.
In Deming's view, a group of components come together
to form a system with an aim. The aim requires that the
components organize in such a way that they create sub-
systems. The subsystems are complex combinations of the
components. The subsystems require certain methods to
accomplish the aim. Resources are allocated between the
methods by setting goals, which may be numeric, which
optimize the overall system and not the subsystems, in re-
spect to the aim. For example, a group of individuals form
a team with an aim. The individuals must combine their
efforts to form subsystems. These combinations may re-
quire complex interactions between the individuals. The
subsystems require methods, and the methods require re-
sources. Resources are allocated between the methods,
and ultimately the subsystems and individuals, by setting
goals that optimize the aim of the team. The aim, methods,
and goals are all part of the same system; they cannot be
broken into three separate entities. Separation of the aim,
methods, and goals destroys them because they are defined
by their interactions. In Deming's theory of management,
the aim of a system defines its methods, and its methods
defines its targets; hence, methods precede targets.
In Japanese TQC, managers have no problem setting
all manner of targets; for example, targets that serve a
motivational function only. Furthermore, the targets es-
tablished by management in a Japanese TQC organization
may not (directly) reflect customers' needs; for example,
if reducing down time to zero minutes per year is the ulti-
mate goal of management, and the current stable process
average down time is 100 minutes per year, a manager in
a Japanese TQC organization might set a numeric target
of reaching an average of 50 minutes down time per year
in two years; this could come from a survey of down time
in similar companies in the same industry or similar in-
dustries, or from a "spirited" challenge. The 50-minute
target does not reflect customers' needs and is viewed as
arbitrary by proponents of the Deming school.
In Japanese TQC, it is believed that methods and targets go
hand in hand; they define policy. It is not necessary,
however, for a method to precede a target. A method can be
used to define a target, or a target can be used to define a
method. This is in contrast with the Deming view that a
method must precede a target.
5.6 Differences Caused by Views of Performance Quality-Control Audit and Quality-Control Diagnosis.
Appraisal A quality-control audit involves comparing a best-practice
method, as monitored through a control item, against a
In Japanese TQC, there is no administrative system
target. A quality-control diagnosis involves finding prob-
for performance appraisal. Japanese TQC uses what-
lems with a best-practice method and making appropri-
ever mechanism exists in an organization for performance
ate improvements or innovations; this involves the PDCA
appraisal; this includes systems that rank individuals.
cycle. The results from a quality-control audit and a
Consequently, it is reasonable to ask the proponents of
quality-control diagnosis should be incorporated into the
Japanese TQC the following question: What happens to
best-practice method that was audited. The focus of the
an individual who does not receive a good ranking because
quality-control diagnosis is on hidden chronic problems in
of poor results? The answer is that attention is focused on
the best-practice method as opposed to obvious occasional
the process that produced the undesirable results, not on
problems.
the individual. This reward system nurtures a focus that
Variance Analysis. The managerial reactions to differ-
is oriented on the process.
ences between actual results and targets are the subject of
In Deming's theory of management, performance ap-
variance analysis. Managerial reactions consider both
praisal systems that promote ranking of individuals or
special and common causes of variation.
areas are not an acceptable tool of management. Git-
Deming Prize. The Deming Prize is a quality-control
low and Gitlow (1987, pp. 120-122) state that ranking
audit and quality-control diagnosis process through which
is considered a dysfunctional practice in Deming's theory
an organization increases customer satisfaction and qual-
of management. Scholtes (1987, 1992) stated that tradi-
ity assurance. The Deming Prize is a journey, not a
tional performance appraisal systems must be replaced by
destination.
a practice called unbundling. Unbundling calls for de-
veloping separate systems for giving feedback to employ- [Received December 1993.]
ees, providing an alternative basis for salary and bonuses,
giving direction to employees, providing an occasion for
communication, identifying candidates for promotion, and
assessing training needs of employees.

6. SUMMARY
Deming's theory of management and Japanese TQC are
viewed as similar by many people; for example, they both
use the same the seven basic quality-control tools. They
both promote different types of organizations, however.
In my opinion, the future of quality management rests in
the integration of both schools of thought into one school
of thought. Scherkenbach (1991) stated that quality has
emotional, logical, and physical foundations. I propose
that the logical and emotional foundation of the new school
of thought be Deming's system of profound knowledge
and 14 points, and the physical foundation of the new
school of thought be modified versions of the vehicles of
Japanese TQC.

APPENDIX
The vehicles of Japanese TQC assume expertise in the
theory and practice of the following support mechanisms.
Development of Control Items (Indicators). Control
items are developed for a machine, a piece of equipment,
a facility, a process, a system, and so forth, to evaluate
its actual performance and to determine the best practice
methods necessary to accomplish its primary purpose or
objective.