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“Red beads” is the name given to defects in a product or service. Red beads cost profits and jobs. Red beads diminish competitive advantage and put companies at risk.
Quick History: Dr. W. Edwards Deming conducted the White Bead Factory game during his famous 4-day seminars. The factory is in business to produce white beads, but too often it produces red beads. Kelly Allan Associates, Ltd. conducts this engaging factory game to communicate a number of important lessons Dr. Deming taught.
Important points about Taking Out the Red Beads:
- 5% of defects (red beads) are created by the system in which people work.
- For awhile, workers will often try to improve the results of their work efforts even when they know the game is rigged against their success. They are intrinsically motivated to do so.
- Posters that “inspire” workers, pep-talks, and incentives which attempt to extrinsically motivate workers typically create cynical, even hostile workers –and do not affect the system, which is 95% in control of outcomes.
- Quotas are a barrier to improvement and represent a failure of management to understand the capability of the system and processes.
- Bonuses and rewards given to people for outcomes are usually based on luck rather than on skill. This creates disgruntled workers.
- Performance appraisals and pay-for-performance schemes do nothing to improve the system in which people work, and alienate people from one another which makes progress difficult.
- Attempts to reward, motivate, and punish people typically result in worse outcomes, not better outcomes.
- The red beads (defects) CAN be removed from the organization in a variety of ways which were taught by Dr. Deming—and which are not difficult to implement.
- The management philosophies and approaches (such as extrinsic motivation, incentives/ rewards, and pay-for-performance) that have been taught to most people are counterproductive, but go mostly unquestioned.
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