new econmics
The New Economics was first published in 1993; the year of its author, W. Edwards Deming’s, passing. Now on its third edition; however, it is arguably more relevant now than it has ever been. Deming has never received the acclaim in the United States that he undoubtedly deserves. He seems to be one of those authors that people cite, but rarely read.

The New Economics does not feel like an almost 30-year-old business book. Its ideas seem fresh and its voice is refreshingly new. If it was written today, and there are several books that focus on several of his core ideas such as the excellent Measures of Success, it would be hailed as a master piece of business literature.

Deming is an advocate for the process. This is often interpreted reducing the people is those processes as mere cogs in the machine. This, however, is unfair to Deming who is a believer if people driving the process. He is also a believer in management managing by taking responsibly for its failures. “The operator is not responsible for quality.” Says Deming. “That is the responsibility of management in conjunction with the customer.” He then proceeds to prove it with his famous red bead experiment (see below.)

Deming was an advocate for a sensible use of numbers, but Deming also believed that “We manage by theory prediction, not by numbers.” The use of numbers can help inform the theory, but really it is the manager’s responsibility to make that intuitive leap. “He who innovates, and is lucky, will take the market” says Deming. As an example of this Deming uses training. We never use numbers to justify training, but everyone does it – why?

I find Deming, and The New Economics, particularly interesting when it comes to goal setting and the importance of having a system which is often overlooked, even with our obsession with S.M.A.R.T. goals. “Companies have aims. With goals you must have by what method. Numerical goals need processes. A numerical goal without a process is meaningless.”

This is a heavy and involved book that is probably not for everybody. But it focuses on the way that management is performed. Not in how we motivate out employees to do their tasks better, but in how we design those tasks so they are naturally performed better. A the red bead experiment points out we often grade and evaluate employees based on the results of a system that they have little to no control over. We so rarely focus on process in business, we leave bad processes in place and then pour money and energy into managing employees who by their very actions are telling us that the problem is the process.

It is not too late to learn the lessons that Deming was trying to teach us 30 years ago.

It is about time.