China's Quality Problem: A Long-Term vs Short-Term Thinking Teachable Moment

With the recall by Mattel of 19 Million toys made in China, the question on my mind is "How will the business world -- and the American people in general -- respond to this teachable moment in the never ending struggle between short-term and long-term thinking?"

Here's what I mean: We have a product quality crisis on our hands, one that is so big it could upset the entire economic relationship between the United States and China. Both short and long-term thinking based solutions exist to this crisis. And the differences between these two types of solutions is huge... like night and day. In fact, the real difference is that one will actually solve the problem, while the other will just sweep it under the carpet. Guess which is which.

That's right, short-term thinking will not solve the crisis. Only long-term thinking will. And isn't it funny how you knew the answer intuitively, even without knowing what the long-term oriented solution is in detail?

Regrettably, the main stream media voices are not speaking from an intuitive place. They are speaking from a classic regulatory mindset, which says "If there are bad things in the world, we should put more people in place to catch the bad things before they reach us." Here's what I mean, from the New York Times:

In its editorial - "China, Unregulated" - The New York Times says "What China needs is an effective and transparent regulatory system to enforce product safety standards. The United States and other countries can help with technical advice and warnings about what would happen if Beijing refuses to take it."..."American regulators...must also do a lot more to ensure the safety of Chinese-made goods, sending their own personnel to China to perform inspections of factories and test goods before they are shipped."...and - lamenting the inability of the Consumer Products Safety Commission to protect us - "(The CPSC) must inspect tens of billions of dollars worth of goods sold every year with only about 100 field investigators and compliance personnel."

Yup. Regulations and enforcement...threats to stop doing business with them...that's how to get people and organizations to change. Motivation by fear. (By the way, while to the best of my knowledge it hasn't been widely reported, the head of a major Chinese toy manufacturing company at the center of this crisis committed suicide over the weekend. Anger, fear, betrayal and other related emotions got to him. This is a real tragedy. Not only has a human life been lost, but any knowledge he had regarding why his products were of such poor quality was lost with him.)

Speaking of people who are no longer with us, if he were still alive, Dr. W. Edwards Deming - famous for helping the Japanese make "Made In Japan" a symbol of world class quality (even though right after World War II it meant the opposite) -- would be saying something like this to government leaders, manufacturers, and consumers in both the US and China:

"You cannot produce high quality products by inspecting them at the end of production. All you can do at that point is prevent poor quality products from reaching consumers, at a tremendous waste of time, energy, and materials. High quality results from a process of redesigning your manufacturing processes - including your relationships with your suppliers - so that your products are built correctly in the first place. This is a long-term process requiring a continuous learning and improvement mindset. I predicted it would take the Japanese five years to turn their manufacturing processes around. Through dedicated effort, they did it in four."

(I studied with Dr. Deming in the early 1990's.)

This is how you really solve a production quality problem. You design the manufacturing system so that it produces a high quality product from the get go... Or re-design the system, in the case of one that's already up and running.

At the end of World War II, the American government sent Dr. Deming (and others, such as Dr. Joseph Juran) to Japan so they could help the Japanese successfully rebuild their manufacturing capacity. Our government did this, because our foreign policy was amazingly enlightened at the time. Just like with The Marshall Plan, we knew that helping rebuild the countries of our former enemies would benefit them, us, and the whole world in the long run.

I would like to humbly propose (and if I'm lucky, maybe someone from one or more of the political candidates' organizations will pick up on this) that the US government send a team of experts to China to teach Dr. Deming's methods. Dr. Deming may no longer be alive, but his and related work continues thanks to such organizations as The W. Edwards Deming Institute, the In2:InThinking Network, and - perhaps most appropriately since it's funded by our tax dollars - the Baldrige National Quality Program or people from the State-wide programs that are based on the Baldrige criteria.

This is the long-term thinking solution. Why? Because quality management takes time to implement. It takes time to learn. But so does anything that enables you to do something you've never done before.

In an American society that continues to be fixated on "instant gratification" and "flavor of the month" lifestyle choices (not to mention addicted to quarterly profit statements), long-term thinking and its associated life long learning approach is the true route to solving China's poor product quality problem (and problems in our education and health care systems as well).

Will average Americans realize that short vs. long term thinking is at the crux of our problems? Will America's opinion and policy making leaders? Will the Chinese? Only time will tell.

But there is a parallel to China's quality problem in American history. If you go back to the 1970's, our poor quality products (especially our automobiles) were losing market share to products from Japan. There was a lot of time spent asking "If Japan Can, Why Can't We?" (which is the name of a famous 1980 NBC- TV White Paper report). That report showed what was going on in Japan, including their use of the management theories taught to them by Dr. Deming, who was still consulting with Japanese businesses at 80 years old. America learned then that it needed to get the "quality religion". And it worked for a while. But old, short-term thinking habits die hard...especially when supported by the demand for quarterly profits at any cost.

It's not too late to learn those lessons once again my friends. Short term thinking is killing China's export business. And, if truth be told, it is killing the American way of life too.

So you can learn more about Dr. Deming and the quality revolution he helped launch, here's the first part of a 3-part BBC documentary from 1991. Links to the other three parts can be found when it's done playing. In it, Dr. Deming himself speaks about his work, as does Don Petersen (former CEO of The Ford Motor Company) and others.