Culture | Operations | People | Process | Strategy
STAY CONNECTED AND SIGNUP TO RECEIVE INSIGHT updates
It pays to stand on the shoulders of giants, those who have come before and exposed eternal truths. You get to see further, you have a reference point to test your own understanding and insight and it gives you the confidence to continue, even when you are not sure of the ground you’re standing on. Their work is the compass you pull from your pocket when you’re not sure which direction to take.
Dr W Edwards Deming was a giant amongst the giants. He studied electrical engineering at undergraduate level, and mathematics and physics as a postgraduate. He worked as a statistician in the US Department of Agriculture and was a leader in the post-war reindustrialisation of Japan. Lean, Six Sigma and TOC all owe Dr Deming an enormous debt.
[Listen to audio version, read by David Hodes]
He managed to distil his life’s work into his System of Profound Knowledge, which incorporated in it his famous 14 points:
- 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.
- 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.
- 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.
- End the practice of awarding business on price alone; instead, minimize total cost by working with a single supplier for any one item, on a long-term relationship of loyalty and trust.
- Improve constantly and forever every process for planning, production and service.
- Institute training on the job.
- Institute leadership. The aim of supervision should be to help people and machines and gadgets do a better job.
- Drive out fear, so that everyone may work effectively for the company.
- 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.
- Eliminate slogans, exhortations and targets for the workforce asking for zero defects and new levels of productivity.
- Eliminate numerical quotas for the workforce and numerical goals for management. Substitute leadership.
- Remove barriers that rob people of their right to pride of workmanship and eliminate the annual rating or merit system.
- Institute a vigorous program of education and self-improvement for everyone.
- Put everybody in the company to work to accomplish the transformation.
When I look at these fourteen points, I can’t think of a single organisation I have worked with which has successfully implemented all fourteen. I wonder what kind of workplaces we would create if we understood better what Deming was driving at. So long ago Deming articulated a path that encouraged me to pursue my ideal of Just Work. A way to frame the transformation that the 14 points calls for is Deming’s system of profound knowledge:
- Appreciation for a system
- Knowledge of variation
- Theory of knowledge (epistemology)
- The psychology of people, society and change
Let’s take each in their turn and recognise how such a seemingly simple construct can provide a pathway to transformation.
Appreciation for a system
Systems, by their nature, are complex. They are made up of parts but have a quality that makes them function in a way that none of the parts can on their own. Take a car, for example. You could lay out all the parts of a car on a workshop floor and not one of the pieces can get you from where you are to your destination—only the car can do that. A fundamental characteristic of a system is that the sum of the parts is never equal to the whole. And yet, when we examine systems, we will often get overwhelmed by the complexity and resort to trying to understand the whole by breaking it up and then looking at the parts. This is the reductionist approach to making sense of and trying to influence the world we live in.
We make an additional fundamental error when we consider our systems—be they of education, business, government, health or any number of others. We have emerged from the mechanical age and tend to ignore the distinction between living and non-living systems. How often do executives and managers talk about driving change? As if the system they are looking to influence were a machine. When non-living systems, such as software programs, bicycles and steam turbines are broken, we fix them. Bugs are reprogrammed, chains are fixed and bearings are replaced. Living systems, though, are complex and adaptive. In our free society, if your boss is tyrannical, you can leave; if I lose my sight, my other senses will attenuate to mitigate the effect; if a meteor hits the earth and the dinosaurs disappear, the conditions arise for the human experiment.
‘Systems are perfectly designed to give the results we get’
With our anthropocentric view of life, we often forget that we are a part of that ecosystem of nature which made it possible for us to be here in the first place. We’ll tend to think that we have an existence which dwells in independent, disembodied thought and forget that we are bound by the same time and space in which all of this good earth dwells. We should constantly practice lifting our awareness of the axiom that systems are perfectly designed to give the results we get. Such awareness should encourage us to take a humbler stance towards the challenges we face, acknowledge the progress we have accomplished so far and understand that if ever we are going to solve our most pressing problems it cannot be other than through a profound appreciation for and primacy of the whole.
Knowledge of variation
Our very existence depends on variation. No random mutation of genes, no evolution and no human beings. But, we needn’t go so far. Deming was referring to the context of business and the economy. How can we hope to get better and better quality if we don’t know how to understand variation? In Deming’s world, he talked of two different types of variation: common cause and special cause.
Common cause variation occurs as an intrinsic part of the system being examined. If I have a jig which saws steel at a tolerance of 1mm, then I can expect that all the measurements of my cut pieces of steel will be within 1mm. He and his thinking partner from Bell Telephone Labs, Walter Shewhart, developed and popularised the idea of statistical process control and taught the world how to use control charts to routinely improve quality. He was quite adamant that poor quality could not be ‘inspected out’ but could only truly be remedied through improving the system responsible for the outputs.
Special cause variation is that which cannot be accounted for by the system’s daily operations. If my production target is 1,000 steel bars, each to a tolerance of 1mm, but the bearings on my saw seize because someone forgot to lubricate them, I cannot say that the production loss for the day was a part of common cause variation.
Goldratt, with his Theory of Constraints, built on the work of Deming and Shewhart, among others, when creating his production system Drum Buffer Rope and his project management system, Critical Chain. Common to both methods is a profound understanding of statistical phenomena such as covariance (the effect of fluctuations on dependent events) and the central limit theorem (the law of large numbers and the power of aggregation).
Theory of knowledge (epistemology)
How do we know what we know? The simple beauty of a sunset is in fact the earth rotating. If you mix the two deadly elements of sodium and chlorine, you get the indispensable condiment of salt. And if the foetus you carry has x and y chromosomes, congratulations! You’re having a boy. Galileo, often referred to as the first scientist, presaged the enlightenment and its adoption of reason as the basis of expanding our knowledge. The scientific method tells us to ask a question, do background research, construct a hypothesis, test our hypothesis by doing an experiment, analyse the data and draw a conclusion and then share our results.
Deming and Shewhart distilled this scientific method down further with their Plan-Do-Study- Act (often misrepresented as Plan-Do-Check-Act). You plan what you are going to do, you do it, you study the results against what your hypothesis said would be the outcome, and then you act according to that new knowledge. This is the heart of the empirical method of advancing knowledge and stimulating progress. As evidence of progress, how vastly superior are even our least expensive cars today in terms of comfort, safety and economy than those Deming was helping perfect in the fabled Toyota production lines?
‘Having a theory of knowledge allows us
to make predictions of the world around us’
What are other ways of knowing what we know? We can apply our powers of reason: think deductively and you take a known fact and, through the application of logic, arrive at another known fact. This is what we do when, for example, we apply our minds to the puzzles of algebra. Alternatively, we can think inductively: we see a pattern of observable phenomena and create a model for how we think the pattern might evolve. Complex modelling of the effects on climate of putting ever increasing amounts of carbon into the air is one such example. Deming argued that having a theory of knowledge allows us to make predictions of the world around us and actively shape our future rather than merely reacting to events.
But reason and logic alone are not the only ways we come to know what we know. The psychologist Jonathan Haidt uses the metaphor of an elephant and its rider to understand how we make decisions. The rider is our conscious mind, with which we make sense of the world around us and use our reasoning faculties to do everything from knowing when to cross the road to developing a business strategy. The elephant however is the unconscious mind. ‘Like the rider on the back of the elephant,’ writes Haidt, ‘the conscious, reasoning part of the mind has only limited control of what the elephant does.’
The unconscious mind is the home of emotion, justice, courage and love. How do we know those virtues? How do the poet and the artist come to share their knowing with the rest of us? What theory of knowledge will prise open those secrets? Can musicology ever trump music?
Of course, you could argue we’ve already crossed over from epistemology to psychology. Which is entirely appropriate as Deming insisted these four parts were indivisible.
The psychology of people, society and change
According to the Cambridge English dictionary, psyche means the mind, or the deepest thoughts, feelings or beliefs of a person or group. You cannot hope to transform a system such as a business without a deep appreciation of how the human mind works. Since the pioneering days of Freud, Jung and Alfred Adler, we have come an incredibly long way in understanding intellect, temperament, behaviour and motivation. Deming implores us to drive out fear and remove barriers that rob people of pride of workmanship and eliminate the annual rating or merit system. I find it difficult not to be moved by Deming’s unswerving belief in the worker’s desire, given the opportunity, to do what is noble and dignified. Driving out fear is the precondition of learning, experimenting and ultimately of innovation.
And if we talk about society, what kind of society offers the best chance of increasing prosperity? We ignore the hard-won freedoms of our civilisation at our peril. Freedoms that include free speech, free enterprise, and freedom of association, all under a rule of law that prevents the arbitrary exercise of state power. If you think the business of free speech isn’t an issue for business, have a look at the world’s most successful hedge fund run by Ray Dalio and the way how, as he describes in his book Principles, he has inculcated into everything he does at Bridgewater the propelling question ‘How do I know I’m right?’ Or read in the book One Mission about the radical transparency that General Stanley McChrystal brought to his victorious fight against Al Qaeda in Iraq.
Then there is the perplexing issue of change. Most of us are at our best when we find ourselves surfing the boundary between what is old, known and ordered and what is new, unknown and chaotic (or at least unstructured). Too much order and we become sclerotic. Lots of rules and regulations, but no clean, fresh air to breathe. At best, it’s soporific; at worst, tyrannical. Without discipline, however, life becomes chaotic—at best merely a dream, and at worst a nihilistic nightmare. To live our most fully expressed life, we must search within for the seat of the dynamo – that place which perfectly couples the power of intention with the discipline of the will.
Deming allows us to stand on his shoulders. His insights remind me of eternal truths which talk across all ages in the same way that philosophers since Socrates have done for these thousands of years. It pays to pause from time to time and enjoy the view. Then let’s get back to work inspired by what’s possible.
____________________________
What’s next?
The change from standard thinking to Theory of Constraints (TOC) is both profound and exhilarating. To make it both fun and memorable, we use a business simulation we call The Right Stuff Workshop.
We’d love to run it with you. To learn more:
- download the brochure (no email required)
- schedule a call
____________________________
[Background photo by Elena Taranenko on Unsplash]“Learning is not compulsory…
neither is survival.”—Dr W Edwards Deming____________________________
