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ProfoundDeming

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Ed began his journey as a mathematical physicist right at the time Einstein’s and others’ theories about the nature of the universe were coming into vogue. This gave Ed an appreciation for the complexity of reality and was a clue that eventually put him onto one piece of Profound Knowledge, an appreciation for systems.

In his thirties, Ed found a mentor, Dr. Walter Shewhart, who introduced him to pragmatism and a theory of knowledge. Essentially, this school of thought approached the world via the scientific method, constantly testing ideas and reevaluating hypotheses. Shewhart also grounded Deming in a theory of variation. In his work with physics, Deming already knew that the very nature of reality is random. From Shewhart, Ed solidified his thinking around variation, seeing randomness as inherent to any system or process, from stuffing envelopes to predicting radioactive isotope decay. Variability is a fact of life.

After World War II ended, Ed traveled to Japan to help with nationwide rebuilding efforts. By this time, he was well grounded in three pieces of Profound Knowledge: knowledge, variation, and systems thinking. But it was in Japan that he gained an appreciation for the final cornerstone of Profound Knowledge: a theory of psychology. In the Japanese, Ed found a culture of inherent respect between manager and employee. In truth, Japan influenced Ed as much as Ed influenced Japan.

For instance, Toyota’s world-class approach to business—called the Toyota Way—is a beautiful fusion of Eastern and Western ideas, bringing together and bringing out the best in both. By this time, Japan was an economic juggernaut, and American businesses were eager to learn from their Eastern counterparts. In his eighties, Ed was finally getting his due. Just after he passed away in 1993, Deming’s book The New Economics was published. In it, he presented his masterwork, the culmination of his life’s experiences. He brought together all four pieces of Profound Knowledge and named it the System of Profound Knowledge (SoPK).

Deming’s System of Profound Knowledge encompasses four elements and includes fourteen points of management and seven deadly diseases of Management.

These four elements of Profound Knowledge are:

1. A Theory of Knowledge: How do we know what we believe we know?

2. A Theory of Variation: How do we analyze and understand what we know?

3. A Theory of Psychology: How do we account for human behavior?

4. An Appreciation of Systems/Systems Thinking: Are we seeing the bigger picture?

Armed with this lens—these four ways of seeing the world—any person or entity can achieve transformational change in any system or process. In other words, this lens is a proven way to make the world a better place. And as Deming said, these four elements are not something he made up. Rather, they are fundamental truths that he discovered along his life’s path, just like the Theory of Gravity or the Theory of Relativity.

From the balance of power in the US Capitol to NASCAR racing and globalization, the ripples of his work seem almost endless. While his story is fascinating by itself, this book isn’t strictly about his life. Rather, it’s the story of the gift he gave the world: a way of thinking that can be applied to any facet of life or work. When Ed worked with Ford Motor Company, he didn’t try to fix specific problems, although he often did in the course of his true aim: to embed the System of Profound Knowledge in the minds of everyone who worked there. Ed’s mission was to work himself out of a job. He wanted to equip the people inside the company with the tools they needed to profoundly change the way Ford worked.

When he stood before the collective remaining industrial base of Japan in 1950, he didn’t try to fix individual companies’ problems. He taught them principles and gave them a different way of thinking about the work they did each day. He didn’t want them to change their practices so much as he wanted to change their mindsets.

It was the same with American manufacturers during World War II. It wasn’t enough that everyone pulled together to create as many war supplies as possible. The workforce and entire business had significantly changed, requiring a massive shift in how they operated day to day. The same thing happened forty years later: the American economy had profoundly changed, requiring a change in how organizations operated.

Deming’s System of Profound Knowledge is about learning how to bring about profound change on your own. That’s why, even three decades after his death, we’re still using his teachings as we head into the unknowns of the future.

I’m a software developer: I can tell you horror stories about cyberterrorists in the Digital Wild West. We’ve never before faced what we are facing today, and we need help figuring out how to deal with it. I and millions of others use Ed’s methods to arrive at profound insights we otherwise would have never found on our own.

This book chronicles not only the arc of Ed’s life but that of his thinking as well. The roots of the System of Profound Knowledge began even before he was born and reached a beautiful culmination right at the time he went to college. Had he been born a few years earlier, I’m not sure he would have been as exposed to a new kind of thinking (quantum physics) as he was.

Had he not been raised in a hardscrabble life and interned at the cutting-edge social experiment that was Hawthorne Works, I don’t know that his system would have been as humane and human centered as it came to be.

Had he not taken a job as a mathematical physicist, he might not have had the opportunity to learn from the world’s foremost expert on variation and how it shows up in absolutely every facet of existence.

Had he not been an expert in statistical surveys, he wouldn’t have had the opportunity to travel to Japan, and especially not at the crucial moment of a devastated and demoralized country trying to rebuild its economy, looking for hope and inspiration.

This book is truly about how the lens of Profound Knowledge was found.

It just so happens that its discoverer was a man called Ed.

Deming’s Journey to Profound Knowledge - How Deming Helped Win a War, Altered the Face of Industry, and Holds the Key to Our Future - Part 1 - Chapter 1: Humble Origins and Non-Determinism

Deming’s Humble Beginnings

Deming’s one childhood claim to fame was when Buffalo Bill recognized him in the crowd during a performance of “Buffalo Bill’s Wild West Show” outside Los Angeles where “Edwards,” as his family called him, was visiting his cousins.

The notoriously flamboyant showman knew the boy from Cody, Wyoming, by sight if not by name. Buffalo Bill was arguably the most world-famous living American at the time, having extensively toured the US and then Europe, performing before Queen Victoria herself twice. His act made him not only famous but rich. But Buffalo Bill wanted to be taken seriously as a legitimate businessman instead of a circus act. He used his money and influence in an enterprise to create the largest undertaking of its kind ever attempted in the West: using irrigation to create an agricultural empire stretching along the Shoshone River. He began by incorporating a small town in 1896 about fifty miles east of Yellowstone National Park, which Colonel William Frederick “Buffalo Bill” Cody humbly named after himself. Life in and around Cody, Wyoming, revolved around Bill, and Bill was usually in and around “the sweetest hotel that ever was.”1

Named after his daughter, the Irma Hotel not only housed travelers but served as Bill’s headquarters, comprising two personal suites and his professional offices. His hotel was, in effect, the heart of his endeavor. When he built it, he envisaged something akin to an African city serving as a staging point for safari expeditions, perhaps like Zanzibar or Mombasa. He foresaw hosting European nobility hunting big game, East Coast financiers looking for potential investments, and opportunists from everywhere investigating the mining and ranching possibilities. The bread and butter of the Irma, however, would be the promised flood of newcomers flocking to settle the soon-to-be-verdant plains around Cody.

Shortly after the Irma opened in 1902, the Demings arrived from Sioux City, Iowa. The thirty-three-year-old father, William, had been trained as a law clerk but now sought to make his fortune on the frontier. He arranged for temporary employment with an attorney in Cody, then moved his wife and two toddling boys from the breadbasket of America to the barren badlands of Wyoming. The town was still in its infancy. There wasn’t enough legal work to keep the young father employed full time, so he found a job at the Irma as a sort of jack-of-all-trades. In addition to his wages, the hotel provided him and his family with a small house on the grounds. Edwards and his brother became regular fixtures at the Irma. Thus, Buffalo Bill recognized Edwards and his little brother at the LA performance.

Unfortunately for Buffalo Bill, the Cody-based irrigation empire failed. But in 1905, the federal government began a massive public works project via the US Reclamation Service aimed at irrigating ninety thousand acres to turn the semi-arid Bighorn Basin into fertile farms. This necessitated the construction of the Shoshone River Dam twenty-five miles northeast of Cody, around the settlement of Powell. Once completed, the concrete-arch gravity dam—itself a predecessor to the Hoover Dam—was the tallest dam in the world.

The area around Powell was opened to homesteaders, and, in 1906, Mr. William Deming applied for and received forty acres of farmland on the edge of town. Or at least what everyone hoped would be farmland one day. In the meantime, the Demings eked out what living they could out where the Great Plains meet the Rocky Mountains.

Decades later, Ed recalled his family’s hardscrabble life. “Our house in Powell, roughly 1908 to 1912, was a tarpaper shack about the size of a freight car. . . . Electricity and indoor plumbing were out of the question. Snow blew in through the cracks in the door and in the windows.” He recollected owning a cat at the time that slept with him and his brother, keeping them warm at night.

The Shoshone River Dam (also known as Buffalo Bill Dam) was completed in 1910, but with or without irrigation, Deming’s father was never a successful farmer. He once remarked, “A farmer makes his money on the farm and spends it in town. An agriculturalist makes his money in town and spends it on the farm . . . . I’m an agriculturalist.” The eggs, milk, and vegetables that kept the family alive came from their chickens, cow, and garden. Despite their efforts, it wasn’t always enough. Late in his life, Dr. Deming would recall his childhood. “I remember my mother, tak-

ing my brother and me by the hand, prayed for food.”

Elizabeth, his younger sister and the first baby born in Powell, later noted, “We didn’t have much, but nobody had anything.” To make ends meet, William continued to do some legal work in the area while Mrs. Pluma Deming, neé Edwards, taught piano and voice lessons on her Steinway parlor grand piano. William later began traveling, selling real estate and insurance. Over time, his business grew enough that the Demings were able to move out of the little tar shack on the prairie and into a slightly better home.

Though poor, his parents were well educated and poured their knowledge (and, perhaps, thirst for more) into their children. Edwards was raised in an atmosphere that included both left-brain and right-brain learning—his mother provided the right-brain perspective— the synthetic and creative aspects of learning . . . through music, while his father tended more toward the left-brain (cognitive) perspective. The atmosphere created by Deming’s parents served as the basis for his intellectual achievements and quite likely spurred the qualities which contributed to his success—an intense work ethic, devotion to spouse and family, a love of music. This environment set the course for Deming’s life. His hard-knocks upbringing gave him a unique perspective on the on-the-ground reality of the working class that managers—especially those from more privileged backgrounds—couldn’t appreciate. And the atmosphere his parents fostered helped him became a philomath: a lifelong learner and boundary spanner, a master of engineering and statistics in addition to a musician, composer, and linguist. This all resulted in a young man who was serious, studious, and diligent. The family even came to (prophetically) nickname him “the Professor.”

Newton’s Apple and Schrödinger’s Cat Set the Stage The year before the Demings moved from the Irma to the tar shack in Powell, a theoretical physicist published four groundbreaking papers that challenged the laws of physics (and would be instrumental in framing much of the thinking in Deming’s Profound Knowledge). One of the papers held the seeds of what would become the world’s most famous formula, E=mc2.

Before Einstein, everyone relied on Sir Isaac Newton’s explanations of how the physical world works (e.g., for every action there’s an equal and opposite reaction, objects in motion tend to stay in motion unless acted upon by an outside force, etc.). Einstein showed the world that physics is more like the Korean DMZ: Newton’s laws applied only in certain jurisdictions. Past that border was a whole other world. That border was the atom, the basic building block of all matter. Newtonian physics governed the apple: If you drop it, it will fall to the ground. However, once you get to the quantum level, everything goes squirrely. You can’t be certain what subatomic particles will do. For example, from the subatomic perspective, if you drop an apple, it may or may not hit the ground. It’s enough to make your head hurt.

Others quickly built on Einstein’s work throughout the 1920s, including Niels Bohr (who later worked on the Manhattan Project) and Erwin Schrödinger. But these physicists’ discoveries were just pieces of a much bigger shift: the rise of non-determinism.

Before Einstein published his famous E=mc2, and his following Nobel prize for his discovery of the law of the photoelectric effect, the world was seen through the lens of determinism (Newtonian Physics): “If I drop this apple, it will fall.” In simpler terms, the world operates solely on cause and effect. Take the weather, for instance. Decades ago, meteorologists believed that if they knew all the variables, such as humidity, wind direction, barometric pressure, etc., they could predict the weather with 100% accuracy. In fact, the earliest computers were created expressly for calculating all these variables. But even with the advances in technology we have today, meteorologists are never spot-on all the time. Even if we can calculate every variable, there’s still randomness, non-determinism.

Non-determinism also has roots in Charles Darwin’s Theory of Evolution: If you cross a black cow with a black cow, the offspring will probably be another black cow . . . but a gene might mutate and result in a two-headed white calf. You just can’t ever be certain. This is what physicist Max Planck (the father of quantum mechanics), Einstein, and others observed: No matter how much you know, there is an infinite amount of chance and randomness in the universe. Therefore, there can be no such thing as absolute certainty; the world is constantly in flux. This academic environment prepared Deming to pursue probability and statistics, a cornerstone to his Theory of Variation.

Niels Bohr and Werner Heisenberg took this idea of infinite variability to its extreme with the Copenhagen interpretation, which states that a quantum particle does not exist in one state or another, but in all of its possible states at the same time.

Erwin Schrödinger gave us an easy way to understand how those two physicists saw the way the world works (the difference between deterministic thinking and non-deterministic thinking). Say you put a cat in a sealed box. Inside, there are two items. One is a can of poisonous gas. The other is a radioactive isotope giving off gamma rays. When the isotope decays and releases gamma rays, it triggers the poison gas. The cat dies. The catch is you can’t predict when the isotope will decay.

Radioactive decay can be random; no two isotopes decay at the same rate. It could decay in a minute or in a thousand years. Therefore, you’ll never know when the isotope in the box will decay, triggering the poisonous gas. According to Bohr and Heisenberg, since you can’t predict when the element will decay, you can never be sure at any given moment whether the cat is dead or alive. Until you open the box to see for yourself, you have to simultaneously assume that the cat is alive and that it’s dead. Schrödinger’s thought experiment here was to show the absurdity of those physicists’ extreme and extremely theoretical view.

While this cat-in-the-box concept is funny, it illustrates how these two schools of thought differed. Determinism saw the world in black and white, cause and effect. With enough information, you could control any situation.

Non-determinism sees the world in shades of gray. Everything has an element of randomness. Much of how the world works is unknowable. Mathematical formulas don’t always hold true; we can’t accurately predict the future. We can only speak in probabilities: “The apple will more than likely hit the ground, but we can’t say that with 100% certainty.”

This idea of non-determinism—that reality is inherently random—would form the basis of Deming’s worldview when he began his academic career. It taught him to see the world as a series of interconnected systems, sparking the beginning of his questioning knowledge and leading to the first element of the System of Profound Knowledge: How do we know what we know?

Missing the Forest for the Trees

Let’s look at a real-life example of non-determinism.

Post–World War II, the island of Borneo in Southeast Asia had a serious malaria problem. In 1952, the World Health Organization (WHO) of the newly formed United Nations sent antimalarial experts to address the situation. One of the primary carriers of malaria is mosquitoes. Over the next three years, the WHO sprayed the chemical pesticide DDT on interior surfaces in the village longhouses, each of which housed about a hundred families. After malaria cases sharply declined, the WHO declared the mission accomplished and proceeded to host a world assembly in Mexico City to extol the virtues of DDT.

Five years after the conference, Borneo started raining cats. Literally.

And not just any cats. These were special cats: twenty-three rat catchers that floated down in their very own little cat parachutes from a British Royal Air Force transport plane.

The cats’ mission: to replenish the island’s feline population. What happened to the native cats? As it turns out, DDT had killed more than mosquitoes. Later autopsies revealed that the WHO’s practices resulted in lethal amounts of DDT accumulating in cats. Without their natural predator, the rat population exploded. Rats don’t just eat crops; they carry diseases. In Borneo’s case, typhus and sylvatic plague (the same bacterium that caused the bubonic plague of Black Plague fame). Nature could reset the ratio of cats to rats elsewhere, perhaps, but Borneo is an island. If all the cats die, there are no more cats. To remedy the WHO’s mistake, the RAF flew twenty-three cats (plus three tons of food and supplies), blessed them to “go forth and multiply,” and let ’er rip.