It seems obvious that our organizations, and the environments that they operate in, are complex and dynamic. Yet, there appears to be an insatiable appetite for simple answers. Unfortunately, many to most simplistic solutions don’t work. As Dr. W. Edwards Deming used to say, “there is no substitute for knowledge.” In the latter part of his life, Deming developed a system of profound knowledge that includes four components necessary to understand organizations, including systems, psychology, variation, and a theory of knowledge. Last week I had the pleasure of doing a webinar on this topic for the American Society for Quality, Emerging Quality Leaders Program. This post is an overview of that session and the first in a series of posts on the four components of Deming’s system of profound knowledge. Whether you are a leader or a researcher, Deming’s system of profound knowledge will provide a richer, more in-depth understanding of the organization.
Organization as a System
The first component is an understanding of the organization as a system. Deming first presented his notion of the organization as a system to the Japanese executives in the 1950s when he introduced his production system (Deming, 1994). Over the last 50+ years, there have been a wide variety of perspectives on the organization system put forth from Michael Porter’s value chain to Jay Forrester’s work on dynamic systems to Russell Ackoff’s work on organizations to excellence models such as the Malcolm Baldrige National Quality Award Criteria for Performance Excellence which has been used by a wide variety of organizations to achieve and sustain high performance. While systems approaches to organizations have helped leaders understand and create high performance, these systems are operated by a wide range of less predictable humans.
While systems are essential to organizational performance, as Dr. David Spong, retired President of two Boeing Co. Baldrige recipients noted, they do not eliminate the need for leaders to go in every day and “blow up the balloon.” The people who occupy our organizations come in a wide variety of personalities, backgrounds, motivations, so on and so forth. While both Deming and Peter Drucker proposed that management was “prediction,” when it comes to people, predictability is often challenging to achieve. The lack of understanding of psychology all too often results in management practices and policies that do not work. Why do so many managers continue to use practices and policies that don’t work? Jeffrey Pfeffer and Robert Sutton discuss this issue in detail in their book, Hard Facts, Dangerous Half-Truths, and Total Nonsense (Pfeffer & Sutton, 2006). Organizations are a combination of both systems and people, and one must understand both and the combination to truly understand organizations.
Organizational results vary because the people and processes vary. All too often managers fail to understand the normal variation inherent in the organizational systems and their reactions end up causing, even more, variation. When performance declines, managers often get involved and ask, “what you are going to do about the decline.” However, if you react to the latest data points without understanding the normal variation for the system, you may achieve only temporary improvement and ultimately cause even more variation. This is even more likely when there is a delay between the action and the results, as is often the case in organizational systems. Poor performance and variation are complex social phenomena that require a deep understanding of people and the systems.
Theory of Knowledge
As Kurt Lewin wrote, “there is nothing so practical as a good theory.” Unfortunately, all too often, managers either do not have an explicit theory of knowledge, or they unconsciously adopt the theory of knowledge that is embedded in their original education or discipline. For example, those with engineering or physical science backgrounds sometimes assume a positivist view of knowledge and the world while those from the social sciences sometimes assume a constructivist perspective. Organizations are composed of pieces, parts, and combinations that are sometimes predictable and relatively free of context and other times highly context-dependent and unpredictable. Consequently, in management, we often adopt a pragmatic view that combines both aspects.
Whether leading an organization or conducting research, applying Deming’s system of profound knowledge requires both critical and systems thinking. Critical thinking is needed to identify and challenge the underlying assumptions in our thinking, recognize the importance of context, and imagine and explore alternatives (Brookfield, 1987). Also, systems thinking is needed to identify root causes, understand the distance and delays between cause and effect in many organization systems, and develop solutions that will achieve the desired results. Ultimately, design thinking is needed to design the tools, techniques, and technologies to improve organization performance. Over the next several weeks, I will discuss the four dimensions of Deming’s system of profound knowledge along with practical tools to help you apply these concepts.
- Brookfield, S. D. (1987). Developing critical thinkers: Challenging adults to explore alternative ways of thinking and acting (1st ed.). San Francisco: Jossey-Bass.
- Deming, W. E. (1994). The new economics: For industry, government, education (2nd ed.). Cambridge, MA: Massachusetts Institute of Technology Center for Advanced Engineering Study (MIT CAES).
- Lewin, K. (1951). Field theory in social science: Selected theoretical papers (D. Cartwright, Ed.). New York, NY: Harper & Row.
- Pfeffer, J., & Sutton, R. I. (2006). Hard facts, dangerous half-truths, and total nonsense: Profiting from evidence-based management. Boston: Harvard Business School Press.
- Wayhan, V. B., Khumawala, B. M., & Balderson, E. L. (2010). An empirical test of Deming’s chain reaction model. Total Quality Management & Business Excellence, 21(7), 17. doi: 10.1080/14783363.2010.483107