Juran vs. Deming - Your Thoughts?

[Craig H.]

I know that in Marion, Indiana we currently have a Lowe's, a Home Depot, and yet we have a few local lumber yards that have not lost business because they have specialty items and services that the big box stores don't provide. The free enterprise system works, if we allow it (and I don't believe that it's all fueled by greed).

David, I think that there is a lot in your statement. What WalMart, and the other big boxes, are changing in our economic climate is the way that we view our marketplace. Many of the items that we once bought from the mom and pops are now seen as commodities. One thing that I have found in ALL of the big boxes is that, frankly, their service, and often their merchandising, stinks, advertisments to the contrary notwithstanding. In fact, that is exactly why Wally World features "employees" (actors?) in their TV advertising, IMHO.

Now, where does that leave the mom and the pop? Easy, they specialize and offer better service and unique product offerings, which demand a premium. Anyone hear that we are moving to a service economy? That goes double for retailing. People will still pay for "quality". In this case the requirements that equal quality are great service and unique, specialized products.

Painful? You betcha. The question now is: will there be enough demand for specialized services and unique products to give our hard working men and women good jobs? It will take time, but I think that the answer will be yes. I just wish it would happen right now.

As far as greed goes, I like to think of the whole situation as everyone wanting something better - "greed" is a little harsh.

Craig

 

[Wes Bucey]

David, I think that there is a lot in your statement. What WalMart, and the other big boxes, are changing in our economic climate is the way that we view our marketplace. Many of the items that we once bought from the mom and pops are now seen as commodities. One thing that I have found in ALL of the big boxes is that, frankly, their service, and often their merchandising, stinks, advertisments to the contrary notwithstanding. In fact, that is exactly why Wally World features "employees" (actors?) in their TV advertising, IMHO.

Now, where does that leave the mom and the pop? Easy, they specialize and offer better service and unique product offerings, which demand a premium. Anyone hear that we are moving to a service economy? That goes double for retailing. People will still pay for "quality". In this case the requirements that equal quality are great service and unique, specialized products.

Painful? You betcha. The question now is: will there be enough demand for specialized services and unique products to give our hard working men and women good jobs? It will take time, but I think that the answer will be yes. I just wish it would happen right now.

As far as greed goes, I like to think of the whole situation as everyone wanting something better - "greed" is a little harsh.

Craig

Interesting additions, all. I once met the old man, Sam Walton, when he was still alive and driving his own pickup truck. Perhaps his heirs have perverted his original concept of bringing "big city variety" to rural areas.

I recall reading Sam used to visit all his stores personally and would take time to talk to each "associate" individually. I wonder how many of the heirs have done that? Old James Cash Penney (his real name) used to do the same with his J C Penney stores. He wore his suits off the rack from his own stores. Do you think any of the Walton heirs wear clothes from their stores?

I often ask myself (cynic that I can sometimes be) WHY there is so much publicity

Additionally, no one has mentioned the hundreds of thousands of dollars that Wal-Mart donates to local communities to such things as literacy groups, churchs, and even a lawn mower for my son's mowing service when he was 10 years old.

for hundreds of thousands of dollars in donations out of billions of dollars in profits.

Assume that Walmart donates $1,000,000 for every BILLION in profits. If you make $100,000 in takehome pay, how many folks would get excited about you donating $100?

As for my definition of greed, I'm content with the one from Webster's 1913 edition

Definition: [n] reprehensible acquisitiveness; insatiable desire for wealth (personified as one of the deadly sins)
[n] excessive desire to acquire or possess more (esp material wealth) than one needs or deserves

Let me add that profit is nice, but not at the expense of someone's misery (see my comment about buying properties for deep discounts before the actual foreclosure.)

Before you jump in and say, "It's not my fault they're in financial trouble." Think about the consequences of what activities you engage in that could have led to their downfall. Was it the guy who owned the local hardware? How about the family that loses everything because of uninsured illness? Are you the one who approved hiring contract workers with no benefits and therefore no safety net?

Regarding the lawnmower - wonderful! I let my neighbor's kid use mine (electric start) for his business (he does old people in the neighborhood for free.) Who deserves the sainthood, him or me? My vote is on him. Actually, I get superb maintenance on my mower in return. Whenever he returns it to the shed, it looks as good as the day I brought it home from the local hardware.

The point of my post was not to launch an all-out boycott of Walmart or any other business, it is only that we think through the consequences of our actions, from buying a gas hungry Hummer (when we only drive on paved roads) to driving ten miles to save sixty cents on a tank of gas at the Walmart pump.

There are rich people who "get" it and those who don't.

Ray Kroc, the founder of McDonald's, belonged to the same Shrine temple as I. I don't recall any attempt on his part to get publicity for the fact he used to volunteer time to man a Salvation Army kettle during the Christmas season (standing for hours in the cold at a windy Chicago intersection.) His widow remembered - she donated a large portion of her inheritance to the Salvation Army in her will. Could you imagine Donald Trump standing on a corner without a gaggle of TV and print photographers (gathered by Trump's PR people)?

Many of us were brought up in the same atmosphere as some nefarious politicians around the world - they all seem to ask the same ubiquitous question, "What's in it for me?" when asked to put their influence behind a project. My contention is the focus should shift to "What's in it for the community [and the world?]" Does that make me too goody goody?

 

[Mike S.]

I often ask myself (cynic that I can sometimes be) WHY there is so much publicity for hundreds of thousands of dollars in donations out of billions of dollars in profits.

Maybe there is "so much publicity" because someone is always bashing them for not giving, or not giving enough, so they publicize it to counter the bashing. Wouldn't you?

I have no association whatsoever with Wal-Mart except that I shop there from time-to-time. But, because of your post I went to their web site and found this (full info here http://www.walmartstores.com/wmstor...1&catID=-8248&template=DisplayAllContents.jsp)

(Added later: I'm no finance wizard, but I calculated they gave 1.9% of profits to charity last year. Someone can check me on that. What do other "model companies" give?)

Overview
Wal-Mart Stores, Inc. believes each Wal-Mart store, SAM'S CLUB and distribution center has a responsibility to contribute to the well being of the local community. Our more than 3,400 locations contributed more than $150 million to support communities and local non-profit organizations. Customers raised an additional $75 million with the help of our stores and clubs.

Philosophy
Wal-Mart's Good.Works. community involvement program is based on the philosophy of operating globally and giving back locally. In our experience, we can make the greatest impact on communities by supporting issues and causes that are important to our customers and associates in their own neighborhoods. We rely on our associates to know which organizations are the most important to their hometowns, and we empower them to determine how Wal-Mart Foundation dollars will be spent. Consequently, our funding initiatives are channeled directly into local communities by associates who live there.

Implementation
Wal-Mart's approach to community involvement is unique, combining both financial and volunteer support. We encourage our associates to be involved in their local communities and to support the programs that are making a positive difference. In addition, associates conceive and carry out creative fundraising efforts on behalf of local charitable causes, particularly Children's Miracle Network (CMN) and the 170-plus children's hospitals nationwide that receive support from CMN.

Recognition
The American public appreciates Wal-Mart's community-involvement efforts:

In 2003, Wal-Mart was named by FORTUNE magazine as the most admired company in the United States.

In 2002, Wal-Mart was presented with the Ron Brown Award for Corporate Leadership, a presidential award that recognizes companies for outstanding achievement in employee and community relations.

Forbes magazine recognized Wal-Mart in 2002 as being one of the most philanthropic companies in America.

In 1999 and 2000, Americans named Wal-Mart as the company they think of first in supporting local causes and issues, according to Cone, Inc.

Wal-Mart ranked among the top five corporate foundations by giving in 1999 and 2000, according to the Foundation Center.

Some of our giving achievements for last year include:

More than $88 million in community grants. Stores, clubs and distribution centers frequently conduct fundraisers for local nonprofit groups, such as Boys and Girls Clubs. The Wal-Mart Foundation may match funds raised by each location. More than 60,000 grants were awarded through the matching grant program in 2002.

More than $265 million in 15 years for Children's Miracle Network (CMN). Wal-Mart is the No. 1 corporate sponsor of CMN and raised more than $34 million for CMN in 2002. Every dollar raised by each Wal-Mart store, SAM'S CLUB and distribution center throughout the year is distributed to a local CMN-affiliated hospital. These hospitals treat 17 million kids in North America each year.

More than $184 million in 19 years to United Way chapters. The Wal-Mart Foundation matches associate payroll deductions and presents a gift to the local United Way chapter. In 2002, United Way chapters received almost $19 million from the Wal-Mart Foundation.

$80 million in scholarships since 1979. Every store and club awards a $1,000 Sam Walton Community Scholarship to two college-bound high school seniors. In addition, the company offers scholarships to associates and their dependents. Last year, $6.7 million in scholarships were awarded to deserving students. Education-related giving totaled more $11.4 million.

 

[Wes Bucey]

Maybe there is "so much publicity" because someone is always bashing them for not giving, or not giving enough, so they publicize it to counter the bashing. Wouldn't you?

I have no association whatsoever with Wal-Mart except that I shop there from time-to-time. But, because of your post I went to their web site and found this (full info here http://www.walmartstores.com/wmstore/wmstores/Mainnews.jsp?BV_SessionID=@@@@2071302844.1077649308@@@@&BV_EngineID=ccccadcjjgkkfhmcfkfcfkjdgoodglh.0&pagetype=news&categoryOID=-8771&catID=-8248&template=DisplayAllContents.jsp)

Overview
Wal-Mart Stores, Inc. believes each Wal-Mart store, SAM'S CLUB and distribution center has a responsibility to contribute to the well being of the local community. Our more than 3,400 locations contributed more than $150 million to support communities and local non-profit organizations. Customers raised an additional $75 million with the help of our stores and clubs.

From the same website

Net sales for the twelve months ended January 31, 2004, were a record $256.3 billion, an increase of 11.6 percent over net sales of the similar prior year period. Income from continuing operations after minority interest and taxes for the twelve months increased 13.3 percent to a record $8.9 billion or $2.03 earnings per share, up from $7.8 billion or $1.76 earnings per share in the same prior year period.

By my calculation, $150,000,000 is nearly 6 hundredths of 1% of total sales or about 1.7% of profits AFTER taxes. OK - make that a $2000 donation from a guy earning $100,000 takehome pay! (of course his heat, light, mortgage, and real estate taxes haven't been deducted as in the Walmart figures)

(I helped a neighbor one year who had a broken foot drive his pickup truck and all his barbecue stuff to his church's annual picnic. The AVERAGE family in his church donates about 5% of their gross income to charity [not just their church.] They rotate the picnic each year to a different nursing home where all the residents and staff and their families are invited. I was there the whole day and the closest thing to proselytizing was the prayer before the meal. No collection plates either!)

I find it interesting Walmart takes credit for money people drop in a Salvation Army kettle at their store locations.

For those who are seriously interested in exploring the concept of where unbridled greed can lead, I direct your attention to an essay written at the height of the Viet Nam War, The Tragedy of the Commons by Garrett Hardin, 1968 (a copy is available here: http://dieoff.com/page95.htm) This may help lead you to the conclusion these are not new thoughts, nor are they easily resolved. As I have continually said, "Keep your mind open to new data which can help you expand the depth of your knowledge." (Not too different from SoPK, Huh?)

 

[David Hartman]

Wes,

Even if Wal-Mart were the evil empire that is out to ruin us all, it is only one of a horde of big box chains that ultimately will be our undoing.

What is the systemic problem(s) that we need to address? What are our metrics to determine if we have improved the system (in-fact what metrics do we use to ensure that we have identified the right problem/root cause)? How do we educate the masses to change their paradigm and lock in our changes?

So far all we have done is argue the perceived problems/benefits of Wal-Mart, if we are going to "change the world" how do we ensure we are changing the right things, and what steps do we take to begin the transformation?

 

[Rob Nix]

But, we digress.

Posts 1-21: Juran vs. Deming
Posts 22-24: Greed
Posts 25-34: Walmart (with growing soliloquy)

The oneupmanship is fascinating to behold.

Someone call the diatribal elders!

(NOTE: Tongue is firmly in cheek)

 

[Wes Bucey]

But, we digress.

Posts 1-21: Juran vs. Deming
Posts 22-24: Greed
Posts 25-34: Walmart (with growing soliloquy)

The oneupmanship is fascinating to behold.

Someone call the diatribal elders!

(NOTE: Tongue is firmly in cheek)

Does it get me points if I say I have used Juran's books when the occasion warranted?

 

[Mike S.]

From the same website By my calculation, $150,000,000 is nearly 6 hundredths of 1% of total sales or about 1.7% of profits AFTER taxes. OK - make that a $2000 donation from a guy earning $100,000 takehome pay! (of course his heat, light, mortgage, and real estate taxes haven't been deducted as in the Walmart figures)

As I have continually said, "Keep your mind open to new data which can help you expand the depth of your knowledge." (Not too different from SoPK, Huh?)[/color]

What interests me, Wes, is that you start cynically assuming (obviously not knowing) that Wal-Mart only gave 0.1% of profits to charity and you berated them for it. Now, when it is shown that you underestimated their giving by a whopping factor of 17 you still unapoligetically berate their giving. Do you check to make sure that every business you use gives more than 2% of their profits to charity? What level of giving gets your personal okay? What does your grocer give? What does your hardware store give? I assume you must know.

I did not ask about personal giving, I asked, "What do other "model companies" give? That can be a "model company" in your book or as recognized by the general public. Seems like Wal-Mart is one of the better givers among public companies.

IMO the idea of keeping one's mind open is good advice, though.

 

[Wes Bucey]

Small type for a small part of the whole topic:

I did not ask about personal giving, I asked, "What do other "model companies" give? That can be a "model company" in your book or as recognized by the general public. Seems like Wal-Mart is one of the better givers among public companies.
IMO the idea of keeping one's mind open is good advice, though.

You are correct Mike.
One part of my statement seems to have escaped notice

The difference in regard to greed is that the profits from all those sales are siphoned out of the community, never to return.

It is not only the profit dollars allocated to charitable purposes I was writing about - it is the profits that went toward buying goods and services for the owners - dollars that also stayed in the community, but evaporate from the community when the profits go back to the Walmart heirs. Dollars that were deposited in local banks, providing funds to be lent out to other community residents, are now swept up each day and spirited electronically to central holding and investing facilities. Does the local manager of a Walmart, who may soon receive a promotion (and transfer) to a larger Walmart elsewhere have the same attachment and devotion to his community as the business owner? Maybe. I hope so.

A true cynic might label those charitable dollars as a form of advertising. (Especially when someone spends extra money (also deductible) to publicize the fact they gave a donation.) Maybe. Maybe not. Personally, I never thought one way or the other about the motives behind publicizing a donation before this current thread.
Interesting fodder for another thread in the Coffee Break Talk, perhaps.

Rob Nix is also more correct than either of us - we have strayed very far afield from the original Juran vs. Deming. I think the two aspects of Quality represented by Deming and Juran CAN work together. The ideal practicioner is the person familiar with both and the insight to figure out which is more pertinent for a given situation.

 

[Mike S.]

Rob Nix is also more correct than either of us - we have strayed very far afield from the original Juran vs. Deming. I think the two aspects of Quality represented by Deming and Juran CAN work together. The ideal practicioner is the person familiar with both and the insight to figure out which is more pertinent for a given situation.

While I have some rebuttals I'll refrain from stating them lest this go on forever, so you got the last word.

Okay, so what did Deming or Juran say, if anything, about the issue of business giving back to the community?

Didn't both men help to improve and even create some mega-companies?

After his death, did Deming leave anything tangible of his "empire" to charities?