The Enduring Relevance of W. Edwards Deming

It is not necessary to change. Survival is not mandatory.

- W. Edwards Deming -

The Performance Circle

The concept of the performance circle, also known as the performance management cycle or performance improvement cycle, has been widely used in various disciplines and industries. While there isn't a specific origin or single historical account of its development, the framework draws from principles and practices in performance management and continuous improvement.

The roots of the performance circle can be traced back to management theories and practices that emerged in the early 20th century. Notable contributions include Frederick Taylor's scientific management principles, which focused on optimizing work processes for increased efficiency and productivity, and W. Edwards Deming's Total Quality Management (TQM) approach, which emphasized continuous improvement and quality control.

Over time, the performance circle concept evolved and was refined by various management thinkers and practitioners. The framework gained prominence in the field of performance management as organizations recognized the need for a systematic approach to improve individual and organizational performance.

One influential model that contributed to the development of the performance circle is the Plan-Do-Check-Act (PDCA) cycle, also known as the Deming Cycle or Shewhart Cycle. Developed by Walter A. Shewhart and popularized by Deming, the PDCA cycle follows a continuous improvement process of planning, implementing, evaluating, and making necessary adjustments.

The PDCA cycle is closely associated with Kaizen thinking and Just-in-Time manufacturing. It draws inspiration from the Scientific Method, developed by Francis Bacon, which follows the Hypothesis-Experiment-Evaluation-Do-Check structure. Another variant of the PDCA cycle is OPDCA, where the "O" emphasizes the importance of observation and understanding the current condition, aligning with Lean manufacturing and the Toyota Production System.

Implementing the Deming Cycle offers numerous benefits across various corporate functions, including daily routine management, problem-solving processes, project management, continuous development, vendor development, human resources development, new product development, and process trials.

Let's explore each of the four PDCA phases:

1. PLAN: In this initial phase, we establish a goal, develop a theory, define success metrics, and create an action plan. We focus on setting objectives and designing processes that will deliver the desired results. Ensuring the completeness and accuracy of specifications is an integral part of targeted improvements.
2. DO: During the DO phase, we execute the plan by implementing its components, such as manufacturing a product. The primary objective is to carry out the plan, execute the defined processes, and produce the intended outcome.
3. CHECK: In the CHECK phase, we examine the actual results obtained from the DO phase and compare them against the expected outcomes defined in the PLAN. We analyze any deviations from the plan's implementation and evaluate the appropriateness and completeness of the plan, enabling further execution.
4. ACT: Based on the results obtained in the CHECK phase, we take appropriate action. If the CHECK phase demonstrates improvement over the prior standard, the newly implemented plan becomes the organization's new baseline. However, if no improvement is observed, the existing standard remains unchanged. Regardless of the outcome, any disparities from the expected results provide opportunities for learning and further refinement.

The Deming Cycle is an iterative process, leading us back to the PLAN phase after completing ACT. With each cycle, the organization advances in quality, building upon previous knowledge and extending its capabilities.

In the 1980s, Robert Kaplan and David Norton introduced the Balanced Scorecard, a strategic performance measurement framework that incorporated financial and non-financial indicators. The Balanced Scorecard emphasized the need to align performance measures with strategic goals and track progress over time.

Since then, the performance circle has become a widely recognized and utilized framework in performance management. It has been adopted and adapted by organizations across industries to evaluate and improve performance, set goals, align resources, provide feedback, and drive continuous improvement.

While the specific terminology and models may vary, the underlying principle of the performance circle remains consistent: the cyclical process of setting objectives, planning, implementing actions, measuring results, and making adjustments to improve performance. Its history reflects the ongoing efforts of management practitioners and theorists to develop systematic approaches for optimizing performance and achieving organizational goals.

?Here's a brief explanation of each dimension:

1.?????Inputs: Inputs refer to the resources, skills, and knowledge that individuals or teams bring to a task or project. This can include factors such as experience, education, training, tools, and materials. The quality and adequacy of inputs have a direct impact on the performance outcomes. When individuals or teams have the necessary inputs, they are better equipped to execute tasks effectively and achieve desired results.

2.?????Processes: Processes encompass the activities, methods, and procedures employed to convert inputs into outputs. It involves how work is organized, coordinated, and executed. Efficient and effective processes optimize resource utilization, enhance productivity, and improve the quality of work. Well-defined processes enable individuals or teams to streamline their efforts, collaborate efficiently, and achieve desired outcomes consistently.

3.?????Outputs: Outputs are the tangible or intangible results produced as a result of the inputs and processes. This can include products, services, deliverables, or outcomes achieved. Outputs are the visible outcomes that indicate the success or effectiveness of the efforts invested. They are often measured against predefined objectives, targets, or key performance indicators (KPIs) to assess performance and determine the level of success.

The performance circle emphasizes the interconnectedness of these dimensions. Inputs influence the effectiveness of processes, which in turn impact the quality and quantity of outputs. Feedback from outputs can also inform the refinement of inputs and processes, creating a continuous improvement cycle for enhancing overall performance.

Why is the circle of improvement important in VUCA environment?

The performance circle framework is particularly important for businesses operating in a VUCA (volatile, uncertain, complex, ambiguous) environment. Here's why:

1.?????Adaptability: In a VUCA environment, businesses face rapid changes, unpredictable market dynamics, and complex challenges. The performance circle framework helps businesses adapt by focusing on inputs, processes, and outputs. It encourages organizations to assess and adjust their inputs (resources, skills) to match the changing demands. It also enables them to refine their processes (workflows, strategies) to be more agile and responsive. By continuously evaluating outputs (results, outcomes), businesses can identify areas for improvement and adapt their approach accordingly.

2.?????Efficiency and Effectiveness: VUCA environments demand that businesses optimize their performance to stay competitive. The performance circle framework promotes efficiency and effectiveness by streamlining inputs and processes. By aligning inputs with the specific requirements of the VUCA environment, businesses can allocate resources wisely and enhance their capabilities. Furthermore, by continuously evaluating and improving processes, organizations can increase productivity, minimize waste, and achieve desired outcomes despite the complexities and uncertainties they face.

3.?????Performance Monitoring and Learning: The performance circle framework provides a structured approach to monitor and evaluate performance in a VUCA environment. By measuring and analyzing outputs against predefined objectives and KPIs, businesses can assess their progress and identify areas of success or improvement. This enables organizations to learn from their experiences, make data-driven decisions, and refine their inputs and processes for better performance. Regular performance monitoring and learning foster an adaptive and resilient culture within the organization, crucial for navigating the challenges of a VUCA environment.

4.?????Strategic Agility: VUCA environments require businesses to be agile and responsive to changing circumstances. The performance circle framework supports strategic agility by encouraging organizations to regularly review and adjust their inputs, processes, and outputs. By proactively assessing market trends, customer demands, and competitive landscapes, businesses can align their inputs and processes with emerging opportunities and challenges. This enables them to pivot their strategies, seize new opportunities, and maintain a competitive edge in the volatile and uncertain business environment.

In summary, the performance circle framework is important for businesses in a VUCA environment as it enables them to adapt, optimize efficiency and effectiveness, monitor performance, and foster strategic agility. By embracing this framework, businesses can navigate the complexities and uncertainties of a VUCA environment more effectively and enhance their overall performance and competitiveness.

This article is powered by GPT-4. Special thanks to David Tang and to The W. Edwards Deming Institute .

Check for more in this great HBR article: https://hbr.org/2016/06/the-management-thinker-we-should-never-have-forgotten