The prevailing style of management must undergo transformation. A system can not
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 appears here in four parts, all related to each other:
- Appreciation for a system
- Knowledge about variation
- Theory of knowledge
- Psychology
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 can not 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 will be learned in the experiment
with the Red Beads (Ch. 7) could no longer participate in refinement of a plan for ranking
people.
Further illustrations of entwinement of psychology and use of the theory of variation
(statistical theory) are boundless. For example, the number of defective items that an
inspector finds depends on the size of the work load presented to him (documented by
Harold F. Dodge in the Bell Telephone Laboratories around 1926). An inspector, careful not
to penalize anybody unjustly, may pass an item that is just outside the borderline (Out of the Crisis, p. 266). The
inspector in the illustration on page 265 of the same book, to save the jobs of 300
people, held the proportion of defective items below 10 per cent. She was in fear for
their jobs.
A teacher, not wishing to penalize anyone unjustly, will pass a pupil that is barely
below the requirement for a passing grade.
Fear invites wrong figures. Bearers of bad news fare badly. To keep his job, anyone may
present to his boss only good news.
A committee appointed by the President of a company will report what the President
wishes to hear. Would they dare report otherwise?
An individual may inadvertently seek to cast a halo about himself. He may report to an
interviewer in a study of readership that he reads the New
York Times, when actually this morning he bought and read a tabloid.
Statistical calculations and predictions based on warped figures may lead to confusion,
frustration, and wrong decisions.
Accounting-based measures of performance drive employees to achieve targets of sales,
revenue, and costs, by manipulation of processes, and by flattery or delusive promises to
cajole a customer into purchase of what he does not need (adapted from the book by H.
Thomas Johnson, Relevance Regained, The Free Press, 1992).
There is no substitute for knowledge.
This statement emphasizes the need to know more,
about everything in the system. It is considered
as a contrast to the old statement, "There is no
substitute for hard work" by Thomas Alva Edison.
Instead, a small amount of knowledge could save
many hours of hard work. Here are s few points
about knowledge and its meaning (or lack
thereof).
"The most important things cannot
be measured." The issues that are most
important, long term, cannot be measured in
advance. However, they might be among the
factors that an organization is measuring, just
not understood as most important at the time.
"The most important things are unknown or
unknowable." The factors that have the
greatest impact, long term, can be quite
surprising. Analogous to an earthquake that
disrupts service, other "earth-shattering"
events that most affect an organization will be
unknown or unknowable, in advance.
"Experience by itself teaches nothing."
This statement emphasizes the need to interpret
and apply information against a theory or
framework of concepts that is the basis for
knowledge about a system. It is considered as a
contrast to the old statement, "Experience is
the best teacher." To Dr. Deming, knowledge is
best taught by a master who explains the overall
system through which experience is judged;
experience, without understanding the underlying
system, is just raw data that can be
misinterpreted against a flawed theory of
reality. "Data has no meaning apart from its
context."
"By what method?... Only the method
counts."
When information is obtained, or data is
measured, the method, or process used to gather
information, greatly affects the results. Dr.
Deming warned that basing judgments on customer
complaints alone ignored the general population
of other opinions, which should be judged
together, such as in a statistical sample of the
whole, not just isolated complaints: survey the
entire group about their likes and dislikes. The
extreme complaints might not represent the
attitudes of the whole group.
A leader of transformation, and managers involved, need to learn the psychology of
individuals, the psychology of a group, the psychology of society, and the psychology of
change.
Some understanding of variation, including appreciation of a stable system, and some
understanding of special causes and common causes of variation, are essential for
management of a system, including management of people (Chs. 6 - 10).
