Do You Understand the System of Profound Knowledge?

W. Edwards Deming said “without theory there is no learning” while Taiichi Ohno said “understanding means doing.” Deming left a great legacy with his Theory of Profound Knowledge which if followed allows the wayward Western organization to transform itself into one that excels and improves continuously. It could be said that Ohno and others valued practice over theory and transformed Toyota.
In chapter 4 of The New Economics, Deming explains that Western organizations must transform themselves, and that a system cannot transform itself without first understanding itself. One who is part of the system cannot understand the whole without first stepping outside of it and looking in. Deming called this developing a system of profound knowledge:
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

This is indeed a high bar for personal transformation. If as Taiichi Ohno says “understanding is doing” then personally, I am far from transformed.
Deming’s 14 Points for Management rely on a system of profound knowledge as a foundation. This system consists of four parts:
1. Appreciation of a system. How does our system work? Managers must understand the overall process involving suppliers, producers, and customers and consumers of goods and services. Much of the 14 points focuses on cooperation, removal of barriers between people, and optimizing the whole rather than locally. Value stream management has taken on this mantle in the last decade.
2. Knowledge of variation. Why do we have variation? Managers must recognize special cause and common cause variation, and the use of statistical sampling in measurements. In Toyota terms this returns as to mura (variation) resulting in muri (burdening the people, process or system) causing muda (waste).
3. Theory of knowledge. How do we know what we know? Do we have a theory that we tested? How did our predictions fare? Did we approach the gaining of knowledge scientifically, via PDCA?
4. Knowledge of psychology. What makes people tick?
What’s so hard about putting this into personal practice? The first part seems almost intuitive to process thinkers, but often the way we measure ourselves gets in our way. The second part and the discipline of using statistics to understand variation is an area that is not a personal strength. The third part is perhaps easiest to understand, hardest to put into practice. We are paid as managers to make decisions, yet how often do we question what we know and how we know it? And for those who ace the left-brain first three parts of the test, in the fourth part Deming throws us the entirety of human nature:
The various segments of the system of profound knowledge proposed here cannot be separated. They interact with each other. Thus, knowledge of psychology is incomplete without knowledge of variation.

People themselves vary! People are systems and they are complex. People will perform as well or as poorly as the system will allow them to, and this is a major reason that why-based problem solving organizations will increasingly trump who-based problem solving organizations. The bad person is only the surface cause and not the root cause.
So we have a system of profound knowledge. We as humans are placed firmly within this system in point 4, “Knowledge of psychology.” If, as Deming teaches, we cannot be a part of a system and understand it without first stepping outside of it and looking back in, do we need to step outside of this system of profound knowledge in order to understand it? If so, how do we do this?

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