The System of Profound Knowledge

William Edwards Deming was an American statistician, professor, author, lecturer and consultant, best known for his work in Japan to improve quality in general. He advocated that all managers need to have what he called a System of Profound Knowledge, consist of four parts:

1. Appreciation of a system: understanding the overall processes involving suppliers, producers, and customers of goods and services. A system is a network of interdependent components that work together to accomplish some aim. The aim of the system must be stated by management. Without an aim, there is no system. A good orchestra is an example of an optimal system: the players are not there to play solos as prima donnas, to catch the ear of the listener; they are there to support each other; they need not be the best players in the country.

2. Some Knowledge of the theory of variation: One need not have a PhD in statistics to understand variation. Rather, we have to understand and differentiate between controlled, random, or common cause variation and uncontrolled, non- random, special cause variation.

3. Theory of knowledge: Improvement depends on continuous study of the organization. It teaches us that a statement, if it conveys knowledge, predicts future outcome, with risk of being wrong, and it fits without failure observations of the past. Thus, examples and case studies without theory teach nothing. Experience without knowledge of rational theory teaches nothing.

4. Knowledge of psychology: Psychology helps us to understand people, interaction between people and circumstances, interaction between a manager and his people and any system of management. People are intrinsically motivated. They strive naturally for dignity, pride and joy in their work. Unfortunately, the current management system destroys intrinsic motivation by substituting extrinsic motivators such as merit pay, sales commissions and grades in school. Thus, too many students strive for high grades, not knowledge. Too many workers strive for merit increases and high rankings, not quality or the intrinsic joy one experiences from a job well done.

These four parts cannot be separated; they interact with each other. Workers and shareholders don’t need organizations made up of perfect individual divisions. Rather, we need departments that work well together and companies with divisions that work well together.

Summing-up: The theory of Profound Knowledge is a management philosophy based on the principle that each organization is composed of a system of interrelated processes and people which make up system’s components. The success of all workers within the system is dependent on management’s capability to orchestrate the delicate balance of each component for optimization of the entire system.

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