Since what we think informs & shapes our beliefs & values which, in turn, drive our actions, then what we think REALLY matters. When we are in positions of leadership & management our thinking takes on particular significance as our actions now have a direct impact on other people within the organisation!
Dr W Edwards Deming (14 Oct 1900 to 20 Dec 1993) devoted the majority of his life to the study, teaching & improvement of the leadership & management of organisations. In his final book, “The New Economics”, ‘The System of Profound Knowledge’ appeared as ‘a map of theory by which we can understand & sustainably improve the organisations in which we work.’ It is an elegant and effective Theory of Management, a framework of thought and a guide for action that any leader wishing to transform their organisation into one that will thrive and survive will do well to heed. The System of Profound Knowledge has four elements:
Appreciation for a System teaches us to take a holistic (systemic) view of the organisation which, in turn, leads us to focus on optimising work flow from end-to-end (suppliers to customers). Optimising benefit for all players, not to advantage any one player to the detriment of others, thus becomes the aim of action for improvement.
Knowledge of Variation gives us a view of numbers and performance data that is neither generally taught nor well appreciated. Understanding the concept of Special and Common Causes of variation, and the implications for improvement are vital. The consequences of not understanding are revealed to be truly alarming!
Theory of Knowledge helps us to understand how we learn (& perhaps, even more importantly, how we don’t!) In particular it helps leaders & managers to understand that their focus should be on the future of the system. The job of management is that of prediction; managers should be constantly and systematically learning about what is necessary for future success.
The Psychology component leads us to a profound understanding of the significant difference between extrinsic and intrinsic motivation. Whilst a certain amount of extrinsic motivation, e.g. pay, is required for people to gain a level of self-esteem, Deming was adamant that assuming that people are only motivated by external factors is both incorrect and damaging. People are born with high levels of intrinsic motivation &, to optimise an organisational system, it is the job of leaders & managers to encourage & enable this ‘natural motivation’ in work life.
Interactions between the components
The four components of Profound Knowledge are inter-dependent (a system of thinking); in fact the interactions between them are probably more important than any of them individually. Thus, for example, knowledge of psychology is incomplete without knowledge of variation, appreciation for a system & the theory of knowledge. As Deming explained, “One need not be eminent in any part nor in all four parts in order to understand it and to apply it.”
The Deming (or Shewhart) Cycle – PDSA (PDCA):
Key to the practical application of The System of Profound Knowledge is the PDSA cycle – in Deming’s words “a cycle for learning and for improvement of a product or process.
PLAN – a change or a test aimed at improvement (with prediction of result(s)).
DO – carry out the change or the test (preferably on a small scale).
STUDY – the results against the prediction(s). What did we learn? What went wrong?
ACT – adopt the change, or abandon it, or adapt it i.e. run through the cycle again with a different plan. Note that ACT requires prediction!