The Red Bead Experiment

Don Berwick, MD, MPH, President Emeritus and Senior Fellow at IHI Rebecca Steinfield, MA, Improvement Advisor

Dr. Don Berwick: Thank you for working in my company. I'm so glad to have you here. And you're happy to be here, is that right?

Shula: It depends on the salary.

Dr. Don Berwick: Yeah, well, any other workers out there that... Salary is great. No, look, we have a great product. People want it. And as long as we do well, we're going to thrive. We'll make all the money you could imagine. So you're going to be very well off, and so am I. So that's great, thank you. And look, they're smiling. They're happy to be here. I'm really, really pleased you're here. Thank you. So we have a mission, make beads. We have customers, we have workers. We also have a factory. We're in it. I'll show you my bead factory here, if I can do it. So this is the bead factory, and I'm actually going to show you how to make beads. You can start making notes, but don't skimp on training. Training's important. So I'm doing it now. The customers are out there. We're saying, "Sorry, customers. Wait a minute. We're training."

Dr. Don Berwick: Okay, so here's how you make beads. You take this bead box, you put your right hand in it and you stir three times clockwise, and then you take a bead paddle. You can't see this too well, but the paddle's a plastic paddle with 50 holes in it, five by 10, and each hole is the size of one bead. So you stir, you take the beads, the paddle, you put it under the beads, you sweep across the paddle. Are you watching?

Speaker 3: Yeah.

Dr. Don Berwick: Okay, good. And then when you do that, you have made 50 beads. That's one day's work for one worker. See it? Got it. Okay. Notice anything here?

Hiroshi: The colors are blue and red.

Dr. Don Berwick: Potential supervisor. Yeah, there's more than one color. I put some reds and blues in there. Let me explain. Mission, you were asking? We don't make red beads here. We make blue beads. So blue beads are what the customers want. Reds or defects. So we're the bead company, we're the blue bead company. We make blue beads. Okay? So no reds. Got it? Okay. Got it. Thank you very much. I don't want to cut corners here. We are going to be a quality operation. And to have a quality operation, what do I need? A quality department. We can actually watch your performance, your productivity. Exactly right. So let's see, we're going to work for a few days here, so that's a day. And your job... That's your tool. We don't need your name, you're quality.

Speaker 5: I'm quality.

Dr. Don Berwick: I'm going to come over here and show you the paddle, and you just write down the number of reds, the defect report. This is transparency, right? Transparency feedback. Are you getting this? Goals, the manual, the factory, transparency and feedback. Hey, what could be wrong with this? So let's get going. Hiroshi, time to go. Customers are out there. The sales department is good. Hiroshi is right on it and sales department is excited, as I am. We're going to make a lot of money here and even Shula might be happy.

Speaker 5: Okay. Number of defects, one, to three, four, five, six, seven, eight, nine, 10, 11, 12, 13.

Dr. Don Berwick: 13. Hiroshi, 13. That's really, really not very good. You said you'd try harder. Keep trying harder. Okay. No, reds, no reds. Got it? Okay, please. Would you like to be trained? Listen, did you read the manual? Let's make blue, not red. Okay. What is going on here? Oh, wait a minute, of course. It was me. It's my problem. I left out something. Go ahead, Hiroshi. You can start. It's the goal. How could I possibly expect the workers to be successful when I haven't given them their aim, their standard.

Dr. Don Berwick: And I happen to know what that is, which is we have a competitive, bead company out there, another bead company and they're making beads, and we know their achievement. They're at about seven reds per 100. Seven is the goal. Seven is the goal. Would you please go ahead here. It's not going to work? Well, that's up to you. Okay. Just try harder, like your colleague there. Seven's not such a hard... Can you help them remember seven? Look, what we're going to make mugs with seven on them and posters with seven. We could even have a company cheer, couldn't we, with seven. It has to rhyme. It has to rhyme. Can someone come up with a company cheer? Please, would you like to go ahead, Shula? You're trying to think of a cheer?

Shula: Yes.

Dr. Don Berwick: Something that helps the workers remember seven as their goal. And Shula, would you please start? Come on, you can make some money here as consultants. Seven what?

Speaker 6: Seven or heaven?

Dr. Don Berwick: Seven or heaven. I think that's great. That's great. Yeah. Seven or... No, you see, we need... Hey, guys, guys. No, let's use it. Here's your mugs. They have the seven on them. The company poster says seven and the cheer, seven or heaven. Ready? One, two, three.

Speaker 7: Seven or heaven.

Dr. Don Berwick: Yeah. I like it. Good. All right. Now they'll remember. Now they know the goal here. Why didn't I do that as the start? Please go ahead, absolutely. Yeah, seven or heaven. And we know it can be done. I mean, look at Rhea's performance in the old days. Yeah, when you make a goal, everything changes because then people know what to do, they know what hill to take. Annie, there you go. A little round of applause for Annie here. Thank you.

Dr. Don Berwick: The problems we're getting now are my board of trustees is getting upset. We haven't been hitting seven. All right, this is starting to be a problem. We have a manual, we have the rules, they have the algorithm, it's written out the guideline is right there, but we got to get going because the pressure is on here. Everybody was getting better, and look what you did to us. We're going to have to start some really serious consideration of what we're doing. And I'm going to have to add one other thing. I don't like to do this, but write it down. The next thing is, pay for performance. I mean, right now obviously, our company's future depends on this. Their's doesn't it, but it's going to go into now. So look, hey guys, we're introducing pay for performance. Here's how it goes.

Dr. Don Berwick: If you get seven or fewer, bonus time. Okay? Any one of you can get a bonus. And Rhea already got one. Great. If you get eight to 10 territory, no bonus. More than 10, 11, you're going to be on probation. I have no options here. This is the hard part of management. I was taught if you're not... Yeah, you agree? Yeah. If you're not willing to draw blood, you shouldn't be in management. And you're confusing me. Are you committed to this company or not? Well, you escaped probation, but you're not helping the company yet. I'm starting to get some real serious news from our finance people though, with this level of performance, the company is really not able to thrive. It's starting to get moot and we're going to have to begin to right...

Dr. Don Berwick: Shula, would you like to [inaudible 00:07:04]? Rightsizing and downsizing, and my job is at risk I must tell you. No, no, seriously. You're on probation, and that's sad for me. It's sad for me. I mean, you were one of the real stars, and either we get better or we don't survive. Unfortunately, I've got the memorandum now. The banks have called in our loans, our company is out of capital. I can't pay you and can't pay myself. We're going to have to shut down and so the company's over. Please take your seats. Can you-