Deming’s System of Profound Knowledge

Overview – First published in LinkedIn 24 Oct 2014

As I learn more about Six Sigma and Lean I find more connections with Deming’s greatest creation.

Deming’s System of Profound Knowledge is the culmination of his thinking to create a method for better managing organizations.

The System of Profound Knowledge is a four-part way of thinking and managing useful to any leader who aims to transform its business so that it may be prosperous and may create an environment where its employees will thrive.

The SoPK is made of these four components: appreciation for a system, knowledge of variation, a theory of knowledge and how to gain it, and human psychology.

Together, these components lead to an increase in quality of products and services while creating a learning organization that operates better all the time, resulting in higher productivity and stronger competitive position; this way, the business can establish itself as a leader in its field, and the employees have stable jobs where they can grow their skills.

Following is a summary of the first part of the System of Profound Knowledge.

Appreciation for a system

Dr. Deming’s SoPK proposes to view every organization as a system, that is, “a network of interdependent components that work together to try to accomplish the aim of the system” (The New Economics). Like natural systems (respiratory, digestive), the aim for any system should be that everybody gains, not one part of the system at the expense of any other.

Natural systems have this organization and aim already embedded in order to provide life, but in the case of social systems the right organization and aim must be created – businesses are one type of social systems.

The components of a business include shareholders, customers, suppliers, employees, the community and the environment. This view results in a responsible business operation with long-term viability which supports the “triple bottom line” of profit, person and planet. There are other aims for an operation, such as joy in work for the employees and the managers.

One of the immediate positive consequences from taking a systems approach is that management begins to view its business as a series of connections and interactions, instead of discrete departments managed and incented independently.

This concept appears in Six Sigma as the process scoping tool called SIPOC, which takes its name from the components of a system, namely, Suppliers, Inputs, Processes, Outputs and Customers. A SIPOC diagram presents a summary of the steps needed to complete a process from beginning to end, listing in broad strokes the inputs that are transformed into outputs, as well as the source of the inputs called Suppliers and the destination of the outputs called Customers.

In Lean the concept of a system shows up in the Value Stream Map, a flowchart diagram which pictures the transformation of inputs into outputs plus the flow of information from Customer to Company to Supplier which triggers all work activities.

In Program Management, the concept of a system guides the scope of a program so that it may have a deep impact on the organization through series of projects focused on solving problems across the company.

TheCompanyAsALearningSystem

Click here for larger image

Deming’s original diagram of the organization as a system also represents a company improving itself via feedback cycles, which may be implemented through Business Process Management applications as indicated above. The Plan-Do-Study-Act cycle, which Deming uses to implement his theory of knowledge acquisition through experimentation, may be clearly superimposed over the diagram to represent continual learning and improvement at the company level.

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