The red bead experiment, created by Dr. Deming, demonstrates how variation exists in any process and is mostly due to common causes within the system, not individual performance. In the experiment, workers try to produce a standard number of beads per trial but often fail due to the inherent variation in the bead drawing process. This shows that blaming individuals and incentivizing performance does not work. The key lessons are that the system, not individuals, is usually the cause of variation, and the focus should be on understanding and reducing common cause variation through systematic improvements.

1. The Real Lessons Of
Dr. Deming’s Red Bead Factory
@MarkGraban
@MikeStoecklein
June 27, 2016

2. Why Are We Here?
“To learn… and
to have fun!”

3. Key Management Questions
• How are we performing?
– Are we getting better or worse?
• What action should we take?
Some rights reserved by Marco Bellucci

4. Or Not Take Action
“Management must understand the
theory of variation: If you don’t
understand variation and how it
comes from the system itself, you
can only react to every figure.
The result is you often
overcompensate, when it would
have been better to just leave things
alone.”
W. Edwards Deming

5. History of the Game in One Slide
• Created at HP as a gift for Dr. Deming in 1982
by William (Bill) Boller
• Deming used the “Red Bead Experiment” or
“Red Bead Game” in his seminars

6. Creating Beads

7. Willing
Worker of
the Day

8. Lesson: Standardized Work
Alone Doesn’t Work
Account
Name:
White Bead Corporation CREATION DATE: 2/14/02
Process Location: Chicago IL CURRENT REVISION LEVEL: 3.1
Operator Process Type: Producing White Beads PREVIOUS REVISION DATE: 9/15/15
JOB GUIDANCE SHEET
PROCESS TYPE QUALITY/SAFETY
ORDER OF
PROCESS
JOB
STEP
DESCRIPTION OF
JOB CONTENT
Analysis Information
(Process Type & Estimated
Time)
DESCRIPTION OF
KEY QUALITY ("Q") AND
SAFETY("S") POINTS
CODE ESTIMATE WHAT WHY
1 1 Ensure paddle holes are empty of all beads I 2
1 2 Grasp the paddle by the handle. TL 2
Ensure holes are oriented
upwards.
Necessary for proper
capture of produced beads
1 3
Slide the paddle down into the beads until paddle is covered
with beads.
LD 4
1 4 Pick up paddle to 4 inches above the bead level. VA 5
1 5 Tilt paddle at a 47 degree angle to release excess beads. VA 5
Must be at precisely 47
degree angle.
Best utilizes gravity.
1 6 Withdraw paddle from container UL 3
Make sure one bead is in
each hole.
Production quota
2 7 Walk to Quality Control WK 5
Be careful to not spill bead
any beads.
2 8 Present to Quality Control for count of beads produced. I 10
3 9 Walk back to Production area. WK 5
4 10 Empty paddle back into bead container. RW 3

9. Lesson: Goals Alone Don’t Work

10. Lesson: Incentives Alone Don’t Work

12. Lesson: Clever Programs
Don’t Always Work

13. Lesson: Slogans & Posters Don’t Work

15. Dr. Deming’s Lessons
https://blog.deming.org/2014/03/lessons-from-the-red-bead-experiment-with-dr-deming/
“Workers will try to do a good job even when they
know they cannot. Doing your best doesn’t
matter, unless you know what to do, why you are
doing it, and how to do it.” (Dobbins)

16. Lesson: Firing the “Below Average”
Workers Doesn’t Work

18. SPC Chart – A Stable System

19. Deming Said…
“The worker is not the
problem. The system is
the problem. If you
want to improve
performance, you must
work on the system.”

20. Deming Said…
“Management should be
working with the
supplier to reduce the
number of red beads.
Reduce lot-by-lot
variation. That is how
to get better numbers.”

21. Deming Said…
“94% of the
problems in
business are
systems driven
and only 6% are
people driven.”

22. Workplace Red Beads
• What are “red beads” in our workplaces?

23. http://www.bbc.co.uk/news/magazine-10729380

24. BBC Online Simulation
• “…in the calculator, every patient in every
hospital has exactly the same chance of dying
and every surgeon is equally good.
• This is to show what chance alone can do,
even when the odds are the same all round.”

25. BBC Online Simulation
• The calculator shows 100 hospitals each
performing 100 operations
• The probability that a patient dies is initially fixed
at five in 100
• The government, meanwhile, says death rates 60%
worse than the norm are unacceptable (in red)
• So any hospital which has eight deaths or more out of
100 ops - when the expected average is only five - is in
trouble.
• We've assigned one hospital to you, with a box around
it - it could come out green or red.

26. Simulation Round 1 Results

27. Simulation Round 2 Results

28. Simulation Round 3 Results

29. Blaming the System
• 10. Eliminate slogans, exhortations, and targets for
the workforce asking for zero defects and new levels
of productivity. Such exhortations only create
adversarial relationships, as the bulk of the causes of
low quality and low productivity belong to the
system and thus lie beyond the power of the
workforce.
– Deming’s “14 Points for the Transformation of
Management”

30. “Disappointing Results”

31. An SPC Chart View
0
25
50
75
100
125
150
175
200
225
250
275
300
325
350
375
400
425
450
475
Oct-12
Nov-12
Dec-12
Jan-13
Feb-13
Mar-13
Apr-13
May-13
Jun-13
Jul-13
Aug-13
Sep-13
Oct-13
Nov-13
Dec-13
Jan-14
Feb-14
Minutes
ED Arrival to Admission
CMS Top Decile = 175 minutes
CMS Median = 277 then to 269 minutes

32. The Wrong Questions
• “Why was performance disappointing
yesterday?”
• “Why were we worse than our goal
yesterday?”
– Don’t ask for a “special cause” explanation when
you have common cause variation

33. An SPC Chart View
0
25
50
75
100
125
150
175
200
225
250
275
300
325
350
375
400
425
450
475
Oct-12
Nov-12
Dec-12
Jan-13
Feb-13
Mar-13
Apr-13
May-13
Jun-13
Jul-13
Aug-13
Sep-13
Oct-13
Nov-13
Dec-13
Jan-14
Feb-14
Minutes
ED Arrival to Admission
CMS Top Decile = 175 minutes
CMS Median = 277 then to 269 minutes
?
What was
different this day?

34. Reacting to Special Causes
• Can we identify what was different in that
time period?
– There’s a small chance there was no difference
• Can we:
– Prevent reoccurrence? (bad outlier)
– Make that a permanent change? (good outlier)

35. Two Kinds of Mistakes
1. To react to an outcome as if it came from a
special cause when actually it came from
common causes of variation.
2. To treat an outcome as if it came from
common causes of variation, when it actually
came from a special cause

36. Mark’s Most Favorite Book Ever
http://www.spcpress.com/
Amazon: http://bit.ly/wheeler-book
Donald J. Wheeler, PhD

37. Red / Green Charts
http://www.leanblog.org/RYG

38. Red / Green Charts with SPC
http://www.leanblog.org/RYG

39. Red / Green / Yellow
http://www.leanblog.org/RYG

40. Common Cause (Random)
Variation
Special Cause
(Assignable)
Variation
What you are dealing with:
Choicesforaction:
Changethesystem
totrytoImprove
futureresults
Reactto,investigate
searchforrootcause,
removeifnecessary
Correct action
Correct actionDisappointment
(make matters worse)
“Tampering”
Disappointment
(make matters worse)
90% 10%
90%10%
81% 9%
9% <1%
Making Matters Worse - Consequences

41. W. E. Deming, The New Economics, p. 36
“Somehow the theory for transformation has been applied mostly on the shop floor.
Everyone knows about the statistical control of quality. This is important, but the
shop floor is only a small part of the total. The most important application of the
principles of statistical control of quality, by which I mean knowledge about common
causes and special causes, is in the management of people.”

42. Deming Said…
“The most important
application of the
principles of statistical
control of quality, by which
I mean knowledge about
common causes and
special causes, is in the
management of people.”
The New Economics, 2nd Ed., 1993, p. 37 and Chapter 6.

43. Three Possible Worlds
Individual
System
World 1
IndividualSystem
World 2
System Individual
World 3
Heero Hacquebord, OQPF, 1996
The red bead demonstration

44. The better you understand how to react to variation when you have figures,
the better you will be at reacting appropriately when you don’t have figures.
Understanding and reacting to behaviors.
variation
systems psychology
Theory of
Knowledge
Deming’s “system of profound
knowledge”
Systems drive (affect) behaviors.
Rules
Education
Training
Roads
Weather
Light
Law Enforcement Other drivers
“backseat drivers”
Cell phone
Is it the individual? Or the system?

45. Is it the individual? Or the system?

46. Is it the individual? Or the system?
This just in ….
http://bit.ly/performanceisrandom
“If the good people are always good and the bad
people are always bad, we can explain 100% of your
scores because next year’s score will be identical to
this year’s score. If it’s random, which would be kind
of astonishing, then it would be zero. There’d be no
relationship between how people on average perform
this year and how they perform next year. The good
people could be good, the bad people could be good
or bad.
People in human resources guess 80%. The correct
answer is 27%, so it’s way closer to zero than it is to
100%”.

47. NOT Understanding Variation Leads To…
• Pressuring people to get better
results by working harder within
the same system
• Wasting time looking for
explanations of a perceived trend
when nothing has changed
• Taking the wrong sorts of actions
in response to variation
• Not focusing on systemic
improvements

48. Quick Recap
• Don’t blame individuals for performance
variation that’s actually due to the system
• Don’t ask for “special cause” explanations
when the chart shows “common cause”
variation

49. Q&A and Contact Info
@MarkGraban
mark@markgraban.com
www.LeanBlog.org
www.MarkGraban.com
@MikeStoecklein
mike.stoecklein@
instituteforexcellence.org