“There is no substitute for knowledge.”
[W. Edwards Deming, The New Economics]
At Conversation Agent we believe in developing knowledge so that we can extract the right data at the right time to make decisions appropriately. Which is why there are no shortcuts to knowledge —it is an acquired taste, and a product of the refinement of our skills and wisdom rather than that of fashion, label, or popularity, just like a good wine.
We take into account context when we experiment in our work to test the validity of a hypothesis, or determine the efficacy of something previously untried. We acquire knowledge similarly, by exploring the body of work of a person (or school of thought) rather than focusing on one thing likely quoted to make a single point.
The late William Edwards Deming was an American statistician, professor, author, lecturer, and consultant#. His philosophy has been summarized as follows:
Dr. W. Edwards Deming taught that by adopting appropriate principles of management, organizations can increase quality and simultaneously reduce costs (by reducing waste, rework, staff attrition and litigation while increasing customer loyalty).
The key is to practice continual improvement and think of manufacturing as a system, not as bits and pieces.
Deming advocated that all managers need to have what he called a System of Profound Knowledge, consisting of four parts:
- Appreciation of a system: understanding the overall processes involving suppliers, producers, and customers of goods and services;
- Knowledge of variation: the range and causes of variation in quality, and use of statistical sampling in measurements;
- Theory of knowledge: the concepts explaining knowledge and the limits of what can be known.
- Knowledge of psychology: concepts of human nature.
He viewed these four points as interconnected and interdependent —each interacting with the others. In The Need to Change, which was reprinted in The Essential Deming, he says (emphasis mine):
There are four prongs of quality and four ways to improve quality of product and service:
– Innovation in product and service
– Innovation in process
– Improvement of existing product and service
– Improvement of existing process
The common mistake is the supposition that quality is ensured by No. 4, improvement of process, that operations going off without blemish on the factory floor, in the bank, in the hotel will ensure quality. Good operations are essential, yet they do not ensure quality. Quality is made in the boardroom.
A bank that failed last week may have had excellent operations— speed at the tellers’ windows with few mistakes; few mistakes in bank statements; likewise in the calculation of interest and of penalties and loans. The cause of failure at the bank was bad management, not operations.
In other words, it is the quality of our decisions that determines the effectiveness of the outcome. That should be our starting point when we want to study the source of potential disconnects or even success. Because repeatable results are based on good decisions.
Deming's fourteen key principles# for transforming business effectiveness became popular at the onset of the Total Quality Management (TQM) movement, a term he did not use explicitly. People associated TQM with his work because of his reflection and study of the Japanese way of working.
This association led to attributing another system to him, one that has become popular in recent times— the Plan-Do-Check-Act (PDCA) cycle. Deming warned his audiences that the PDCA version is frequently inaccurate because the English word “check” means “to hold back,” as in keeping in check.
Instead, he credited his work as originating from the Shewhart cycle. Which over time he developed into the Plan-Do-Study-Act (PDSA) cycle. In it, he introduces the idea of deductive and inductive learning built into the learning and improvement concepts associated with the PDSA.
When asked about the relationship between the Quality Control (or PDCA) and his circle Deming says the distinction resides in who is using the method for what:
“They bear no relation to each other.
The Deming circle is a quality control program. It is a plan for management.
Four steps: Design it, make it, sell it, then test it in service. Repeat the four steps, over and over, redesign it, make it, etc.
Maybe you could say that the Deming circle is for management, and the QC circle is for a group of people that work on faults encountered at the local level.”
One is global or meta, the other is local or situational.
Deming considered his cycle as distinct and separate from the Japanese PDCA because his main purpose was to use his method for learning and improvement. In Out of the Crisis, Deming says the “Seven Deadly Diseases” of management# are:
- Lack of constancy of purpose to plan product and service that will have a market and keep the company in business, and provide jobs
- Emphasis on short-term profits: short-term thinking (just the opposite from constancy of purpose to stay in business), fed by fear of unfriendly takeover, and by push from bankers and owners for dividends
- Evaluation by performance, merit rating, or annual review of performance
- Mobility of management: job hopping
- Management by use only of visible figures, with little or no consideration of figures that are unknown or unknowable
- Excessive medical costs
- Excessive costs of liability, swelled by lawyers that work on contingency fees
Lack of constancy of purpose, emphasis on short-term, little or no consideration of figures or data that is unknowable or not visible plague our thinking and prevent us from learning better. This includes our experiences —for example, if we do our own annual performance and year after year we find the work wanting, do we consider the constant, us? Are we making new mistakes or using new excuses?
The famous quote attributed to Deming, “In God we trust, all others must bring data,” may actually be something he repeated from the work of either George Box or Bernard Fisher.