David Schwinn ponders the dearth of understanding of statistics among managers, who have often had little training in statistical methods. Using statistics intelligently, understanding variation, and paying attention to the right numbers, he says, will assure better decisions and improved productivity. Hear him out…
As I titled this column, I was reminded that Dr. Deming liked to say, “The most important numbers are unknown and unknowable.” But some numbers are important, and most managers do not know how to manage them. I hope this month I don’t sound like a complainer, but this issue has been close to my heart for nearly thirty years and it arose powerfully for me as I got ready to teach a statistics course I haven’t taught in an academic environment before. I’ll share my story so you can get a sense of my biases and passions for this topic.
I don’t remember formally learning anything about statistics or variability during my undergraduate engineering education. We could find a formula for nearly every situation and get an exact answer. That ended with my senior design project when we were told to use all those formulas and get those exact answers, then multiply the answers by a “design factor” of 200-400%. That was for safety I thought, but, in retrospect, some of that had to do with the fact that up to that point we had unknowingly ignored the variation inherent in the design-and-build processes. I then had to complete my final thesis in which I generated quantitative prediction models about machine downtime. My advisor showed me how to calculate and include statistical confidence limits. I used them as I was told, without really understanding where they came from.
In graduate school, I took courses in business statistics and in operations research. Given that I could barely understand our instructor who spoke with a heavy foreign accent, I got through the course just fine by plugging and cranking the formulae, just as I had done in engineering school. I still did not understand the underlying theory. At Ford, when our corporate operations research folks could not solve a big operations problem, Dr. Deming solved it in ten minutes with a pencil, paper, and a control chart. Years later, when my wife, Carole, and I were working with Russ Ackoff, the co-author of the pioneering textbook on operations research, he declared that operations research in America was dead.
As I review my early career in engineering, management, quality, manufacturing, design, and research, I can remember only two areas where we used statistics. We unknowingly used inferential statistics to inspect incoming parts and we used control charts in another office to monitor and try to improve the quality of a different set of incoming parts. Dr. Deming and others later taught me that managers need to understand analytic studies in statistics. The primary tool for those studies, of course, is a control chart. I did not learn about control charts in school. Dr. Deming, Professor David Chambers, and a few others taught me the power of analytic studies to influence the future, versus the power of enumerative statistics (essentially descriptive and inferential statistics) to make a decision about what you have in your hand…great for deciding whether or not to accept a shipment of material.
At Ford, we started applying Dr. Deming’s theory on a grand scale. After I left Ford, I helped other manufacturing organizations use control charts to improve their operations. After a couple of years, we started to help manufacturing organizations to improve things beyond the factory floor, such as usage of resources, timeliness of orders and estimates, and employee turnover. We used control charts to reduce student dropout rates in educational institutions, reduce teller wait times in banks, reduce repair time in government military facilities, reduce resource usage at utilities, streamline benefits-providing processes at insurance companies, and increase sales at printers, stockbrokerages, and banks. All the while, we noticed plenty of evidence in the media that most people did not understand basic variation…two or three points does not a trend make. Finally, I’m ready to tell you about my most recent reminder of my concern.
I have been asked to teach Managerial Statistics for the first time this fall. The course has been offered for some years, but this is the first time I have been asked to teach it. I found both the syllabus and the textbook to be disappointing because of the heavy emphasis on enumerative studies. I also found the textbook to be very expensive. Remembering the series of “Statistics for Statisticians” workshops Dr. Deming used to lead toward the end of the 20th century and the lines of academicians who emotionally confessed to Dr. Deming that they had never adequately explained the limitations of enumerative studies to their students, I expected to easily find an alternative textbook. As I contacted academic colleagues, I found that they have frustrations similar to mine with no easy solutions. Again, I was deeply disappointed. I was forced to create a course pack. Thank goodness, I had PQ Systems’ Transformation of American Industry and Total Quality Transformation materials to lean on. All this gets me to the point of this column.
I have now committed to teach managerial statistics in a way that, at least based on my own experience, truly helps my students–future and current managers–to use statistics intelligently to make decisions. I am asking you to do the same with the managers of your organizations. Every manager watches numbers. Please help them to do so intelligently and help them to figure out which numbers to pay attention to. I expect some of the managers in your organizations already do use analytic studies of data with which to make intelligent decisions. If you can share such examples with me, I would love to share them with my students. That’s it. Please help your own organization make better decisions and help me better teach my students how some managers already make such decisions.
I am particularly interested in your feedback to this column. It will be useful to try to achieve Dr. Deming’s purpose for the transformation of western management. You can reach me by commenting below.