Dr. Deming believed that in order to manage the systems we work in, we need to have " profound knowledge " of those systems. Because many of us work in very complex systems, it is easy to get lost in the way we work, forgetting about the system that governs (consciously or unconsciously) the work we do. This is a mistake because the system in which people work frequently sets boundaries for how successful they can be in it.
The following is an excerpt from Chapter 4 of The New Economics, second edition by W. Edwards Deming:
The prevailing style of management must undergo transformation. A system cannot understand itself. The transformation requires a view from outside. The aim of this chapter is to provide an outside view-a lens-that I call a system of profound knowledge. It provides a map of theory by which to understand the organizations that we work in.
The first step is transformation of the individual. This transformation is discontinuous. It comes from understanding of the system of profound knowledge. The individual, transformed, will perceive new meaning to his life, to events, to numbers, to interactions between people.
Once the individual understands the system of profound knowledge, he will apply its principles in every kind of relationship with other people. He will have a basis for judgment of his own decisions and for transformation of the organizations that he belongs to. The individual, once transformed, will:
- Set an example
- Be a good listener, but will not compromise
- Continually teach other people
- Help people to pull away from their current practice and beliefs and move into the new philosophy without a feeling of guilt about the past
The layout of profound knowledge, all related to each other:
- Appreciation for a system (especially the need to optimize total system performance and not any one part, which is what often happens by default when no one is managing the system as a whole)
- Knowledge about variation (especially the difference between common and special causes for variation because the corrective actions differ)
- Theory of knowledge (especially how people learn, because there can be no learning without theory)
- Psychology (individual behavior/motivations/growth and interactions between people)
One need not be eminent in any part nor in all four parts in order to understand it and to apply it. The 14 points for management (Out of the Crisis, Ch. 2) in industry, education, and government follow naturally as application of this outside knowledge, for transformation from the present style of Western management to one of optimization.
The various segments of the system of profound knowledge proposed here cannot be separated. They interact with each other. Thus, knowledge of psychology is incomplete without knowledge of variation.
A manager of people needs to understand that all people are different. This is not ranking people. He needs to understand that the performance of anyone is governed largely by the system that he works in, the responsibility of management. A psychologist that possesses even a crude understanding of variation as can be learned in the experiment with the Red Beads (Ch. 7) could no longer participate in refinement of a plan for ranking people.
Deming's 14 Points
(Excerpted from Chapter Two of OUT OF THE CRISIS by W. Edwards Deming)
1. Create constancy of purpose toward improvement of product and service, with the aim to become competitive and to stay in business, and to provide jobs.
2. Adopt the new philosophy. We are in a new economic age. Western management must awaken to the challenge, must learn their responsibilities, and take on leadership for change.
3. Cease dependence on inspection to achieve quality. Eliminate the need for inspection on a mass basis by building quality into the product in the first place.
4. End the practice of awarding business on the basis of price tag. Instead, minimize total cost. Move toward a single supplier for any one item, on a long-term relationship of loyalty and trust.
5. Improve constantly and forever the system of production and service, to improve quality and productivity, and thus constantly decrease costs.
6. Institute training on the job.
7. Institute leadership The aim of supervision should be to help people and machines and gadgets to do a better job. Supervision of management is in need of overhaul as well as supervision of production workers.
8. Drive out fear, so that everyone may work effectively for the company.
9. Break down barriers between departments. People in research, design, sales, and production must work as a team, to foresee problems of production and in use that may be encountered with the product or service.
10. Eliminate slogans, exhortations, and targets for the work force 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 work force.
a. …work standards (quotas) on the factory floor. Substitute leadership.
b. …management by objective. Eliminate management by numbers, numerical goals. Substitute leadership.
12. Remove barriers
a. …that rob the hourly worker of his right to joy of workmanship. The responsibility of supervisors must be changed from sheer numbers to quality.
b. …that rob people in management and in engineering of their right to joy of workmanship. This means abolishment of the annual merit rating and of management by objective
13. Institute a vigorous program of education and self-improvement.
14, Put everybody in the company to work to accomplish the transformation. The transformation is everybody's job.
Theory of Knowledge
Management in any form is prediction. Knowledge is built on theory. Rational prediction requires theory and builds knowledge through systematic revision and extension of theory based on comparison of prediction with observation. Without theory, experience has no meaning because there is nothing to revise. Without prediction, experience and examples teach nothing. To copy an example of success, without understanding it with the aid of theory, may lead to disaster.
Psychology helps us to understand interactions between: people, people and circumstances, customer and supplier, teacher and pupil, and a manager and his people. People are different from one another and managers must realize this to optimize abilities and inclinations. This is not ranking people. People are born with a need for relationships and the need for love and esteem by others. They are also born with a natural inclination to learn. Learning is a source of innovation. Good management helps nurture and preserve these positive, innate attributes of people. The most important act a manager can take is to understand what it is that is important to an individual.
The job of a leader is to accomplish transformation of his organization. He possesses knowledge, personality, and persuasive power. First, he has a theory of why transformation would bring gains to his organization and all people who deal with it. Second, he feels compelled to accomplish the transformation as an obligation to himself and his organization. Third, he is a practical person. He has a plan, step by step, and can explain it in simple terms. Fourth, what is in his own head is not enough. He must convince enough people in power to make it happen. He possesses persuasive power and understands people. Acceptance and action on a great idea depend on simplicity and brevity in presentation.
Common causes and special causes
There are two types of variability: variation that comes from common (inherent in the process as it now occurs) causes and variation from special (assignable) causes.
Common causes of variation produce points on a control chart that over a long period all fall inside the control limits. Common causes of variation stay the same day to day, lot to lot.
A special cause of variation is something special, not part of the system of common causes. It is detected by a point that falls outside the control limits. It is a serious mistake to treat these two types of variation the same and respond to one as if it were the other.
Special Cause Variation: may not need to fix at all. May be fixed by adjusting one or two things. Just involves 1-2 people
Common Cause Variation: won’t change unless you change one or more factors in the process. Best fixed by all the process ‘owners.’
Deming's Theory Summary (http://www.thefarm.org/lifestyle/albertbates/akbp9.html, esp Sidebar 6, near the bottom of the page)