Simplicity in Profound Knowledge - A Seemingly Boring Knowledge

“System of Profound Knowledge” from late Dr W. Edwards Deming (1900-1993) should not be something that is unfamiliar to those who have gone through traditional quality, Industrial System Engineering or Lean Six Sigma training.

Dr Deming was the quality guru who has brought to us the idea of PDCA (which many argued to be the foundation of Six Sigma and many problem solving techniques) and who helped to set the foundation of quality culture in Japan (click here).

System of Profound Knowledge is a succinct summary of 4 key ideas (components to view the world) from Deming at the late stage of his life (i.e. through decades of continuous learning, refinement and reflection. Not some untested ideas).  While it might sound esoteric, outdated or boring to some (as compared to recent business literature with catchy titles), it remains very relevant in my view to understand the world or business. More importantly, it provides a simple and practical way to remind oneself things to take note while driving change or improvement in an organization.

1. Appreciation for a system

The basic idea is to see problem from a system perspective (much like “System thinking”). That is to say instead of focusing on the specific problem area, expand the thinking to inter-connected areas of a system.

For example, if you are trying to improve end customer experience at a frontline operation of sales, you look for opportunities (root causes and solutions) beyond the sales function.  You might look at direct (i.e.  those who pay for the product or service) or indirect (i.e.  those who influence the purchase or have a stake in the sales. This include regulators) external customers. You might also look at suppliers of sales ( i.e.  those who provides the product or service that is to be sold by sales). The list goes on.

To truly appreciate a system and its interdependencies, it is important to document common understanding of the system.

Practically, I find it useful to document using some of the Lean Six Sigma tools.

• SIPOC – Use this to document boundary of process for improvement. In particular, use this as a tool to initiate conversation with your stakeholders and subject matter experts to uncover hidden customers
• Process map – Use this to document how the process works. This may be in the form of PMAP (Standard Process Mapping Convention), VSM (Value Stream Map) or BPMN. Each convention has its Pros/Cons. Spend less time arguing over which is better or worse. Spend more time on using the process map (regardless of any conventions) as a means of building common understanding and communication.
• Relationship map – Use this to document relationship between different entities or functions via their input and outputs

Takeaway:

• Recognize inter-dependencies in a system or as a system when you are solving a problem
• Use simple tools to document understanding of a system (KISS - keep it simple and sweet)

 2. Knowledge of Variation

The basic idea is to recognize variation as something that is natural, but has to be quantified and improve (reduce, eliminate or contain).

For example, consider order fulfilment by courier (someone who delivers good that is ordered). It is important to quantify the variation in delivery. This could through collection of time taken from order to delivery. Then, understand variation statistically (e.g. via calculation of its standard deviation for data which are normally distributed) or graphically (e.g.  histogram). I will leave out the technical details on how to understand variation out. In shorter, we need to understand how bad is the problem from a variation perspective in a system. Then work towards improving it as goal

Practically, it is important to recognize that there are two type of causes to variation: Common and Special causes. Common causes are causes within a system. For example, it could be due to inherent problem lack of tracking system (e.g. for courier, there may be a lack of real-time and tamper-proof system to track delivery time) or training (e.g. for courier, they might not be trained to ensure strict delivery as per stipulated time).  Special causes are causes due to unique events that is outside system. (e.g. Higher failed delivery due incorrect address). As general guide, focus on special causes first (i.e. focus on those quick wins first). Then, progressively reduce the variation of system through improvement (people, process and tools).

My takeaway:

• Understand variation statistically (or at least graphically)
• Focus on special causes and then common causes.

 3. Theory of knowledge

“Experience only describes (it cannot be tested or validated) and alone no help in management. Theory, on the other hand, helps one to understand cause-and-effect relationships that can be used for prediction and rational management decisions” (Evans and Lindsay 2005).

In practical terms, while experiences are useful, it is important to understand (and respect) the theory behind it. For example, if you are chief lifeguard at Bondi beach. From your experience (fictitious), you might notice that there is higher number of people getting drown in the summer months. You might also have noticed that there is a correlation between numbers of people getting drown and number of ice-cream wrappers on the beach. Just using experience, you might try (in vain) to reduce number of downing cases by banning people from using the beach during summer month (if that is possible) or eating ice-cream. I bet it will not work. However, it you try to understand variation (as mentioned earlier) and to establish a theory (i.e. form a hypothesis and then test if it is true) why there is a higher number of downing cases, you could probably have a better chance of improvement. Only if you have a proven theory (between cause-and-effect and its associated assumptions) based on data that you can truly drive improvement

My takeaway

• Go beyond experiences. Adopt a data-driven approach towards a proven theory (between cause-and-effect and its associated assumptions).

4. Psychology

Deming reminded us to give sufficient focus to the understanding people, interactions between people and circumstances (Evans and Lindsay 2005). This is logic why in GE (General Electric)’s Change Acceleration Process (CAP), it has highlighted that change involved both a technical as well as cultural strategy. The problem solving approach (e.g. technical tools used in DMAIC) offers the technical strategy. The focus on people (reward system, organization structure, resources, communication) offers the culture strategy.

For example, when one tries to improve courier delivery of goods ordered, one has to understand the psychology behind the people who raise the order (i.e. the sale person) and the makes the delivery (i.e. the courier). The foundational basis is to recognize that everyone has the good intention to do the best for their job. Unfortunately, there are barriers that demotivates or prevents them from doing their job well. To address the motivation, it requires a genuine interest knowing what motivates the respective people (e.g. sale person and courier) and then taking necessary action to improve the situation. It may involve having the right incentive ( e.g. reward system accurate information entered by sales or on-time delivery by courier) or disincentive ( e.g. warning letters) .

From experience, incentive (not necessarily monetary) are more motivating than dis-incentives (aka punishment). Intrinsic motivators (e.g. sense of achievement and recognition) are often more powerful than extrinsic motivators (e.g. monetary rewards) especially for skill-based work.

 My takeaway

• Focus on the understanding people, interactions between people and circumstances (i.e. human psychology)
• Be mindful of the motivators, especially intrinsic motivators in driving change and improvements

Conclusion

In conclusion, Deming’s “System of Profound Knowledge” probably appears or sounds less exciting than recent literature/books on strategy and business. In modern day soundbite-driven taxonomy, it should be more appropriately called “Simple logic to understand the world” or “4 great ideas that will change your life”. The beauty and power (in my view) lies in its simplicity. In the simplicity, there lies its practical applications which I have shared. Despite its simplicity, It remains relevant in modern times. Deming no doubt truly understands how the world or business works. After all "if you can't explain it simply, you don't understand it well enough" (Einstein n.d).