A system must be managed. It will not manage itself. Left to themselves in the Western world, components become selfish, competitive, independent profit centres, and thus destroy the system. . . . The secret is cooperation between components toward the aim of the organization. We can not afford the destructive effect of competition.

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The aim of this book is to try to explain to top management of America that their job is to improve competitive position. One need not be an economist to understand from the papers that many American products are not competitive at home or abroad, lost to foreign invasion, causing unemployment at home. Failure of management to plan for the future and to foresee problems has nurtured waste of manpower, of materials and of machine time, all of which raise the manufacturers costs and the price the purchaser must pay. The consumer is not always willing to subsidize this waste.

They realized that the gains that you get by statistical methods are gains that you get without new machinery, without new people. Anybody can produce quality if he lowers his production rate. That is not what I am talking about. Statistical thinking and statistical methods are to Japanese production workers, foremen, and all the way through the company, a second language. In statistical control you have a reproducible product hour after hour, day after day. And see how comforting that is to management, they now know what they can produce, they know what their costs are going to be.

Why waste knowledge?... No company can afford to waste knowledge. Failure of management to breakdown barriers between activities... is one way to waste knowledge. People that are not working together are not contributing their best to the company. People as they work together, feeling secure in the job reinforce their knowledge and efforts. Their combined output, when they are working together, is more than the sum of their separate

Statistical methods had taken fire in America around 1942, following a series of ten-day intensive courses for engineers, initiated by Stanford University on a suggestion from this author. The war department also gave courses at factories of suppliers. Brilliant applications attracted much attention, but the flare of statistical methods by themselves, in an atmosphere in which management did not know their responsibilities, burned, sputtered, fizzled and died out.

Loss of market begets unemployment. Emphasis has been on short-term profit, to the undernourishment of plans that might generate new product and service that would keep the company alive and provide jobs and more jobs. It is no longer socially acceptable performance to lose market and to dump hourly workers on to the heap of unemployed.

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In Europe and in America, people are now more interested in the cost of quality and in systems of quality-audit. But in Japan, we are keeping very strong interest to improve quality by use of methods which you started....when we improve quality we also improve productivity, just as you told us in 1950 would happen.

The prevailing style of management must undergo transformation. A system cannot understand itself. The transformation requires a view from outside. The aim of this chapter is to provide an outside view—a lens—that I call a system of profound knowledge. It provides a map of theory by which to understand the organizations that we work in. The first step is transformation of the individual. This transformation is discontinuous. It comes from understanding of the system of profound knowledge. The individual, transformed, will perceive new meaning to his life, to events, to numbers, to interactions between people. Once the individual understands the system of profound knowledge, he will apply its principles in every kind of relationship with other people. He will have a basis for judgment of his own decisions and for transformation of the organizations that he belongs to.