Nearly two decades ago I had become familiar with these themes as I sat in a class at Columbia University’s Graduate School of Business. The professor was a ninety year-old man named W. Edwards Deming.
Known alternatively as “the man who taught the Japanese about quality” or “the father of TQM” (total quality management), Deming rejected these characterizations saying “I never taught the Japanese about quality, I introduced them to the principles of a system.” The appreciation of those principles directly resulted in what has been called the Japanese Economic Miracle and Deming’s role was central. To this day the highest honor for business excellence in Japan is The Deming Prize.
In his classes Deming talked about a system of transformation that would be necessary to make America competitive again. He called it a system of a profound knowledge and it contained four interconnected and interdependent components:
- Appreciation for a System
- Knowledge of Variation
- Theory of Knowledge
- Knowledge of Psychology
What Michael Lewis wrote about in a baseball context was what Deming called profound knowledge. Deming applied it not to sports but primarily to the social enterprise of business. The Japanese listened and thrived. Toyota is a great example of a company run using profound knowledge. Deming was very critical of American management which largely ignored him. GM may have dabbled in Deming here and there, tweaking around the edges, but they never embraced profound knowledge as a system. Critics of Deming - especially American critics - say he cared about soft things like human motivation, interdependence, and alignment of aims - and he ignored the harder issues that American managers are up against every day - like profitability and stock price. But you have to ask yourself, whose stock would you rather own today, Toyota or GM?
Applying profound knowledge to baseball is fun, and applying it to American business is important. But there is a more urgent application for profound knowledge in the 21st century. Today’s global economy requires transformation. Addressing climate change and building a sustainable global economic system will be the organizing principles of the 21st century. Climate change is not a problem as much as a symptom – a symptom of a misalignment between two very powerful systems, the planet earth and the global economy that is embedded within it.
To address climate change it must be viewed from a systems perspective, where the planet is the system, and the global economy is a sub-process – a very powerful subsystem – within the system. Using Deming’s systems approach, where each component must align with the aim of the overall system, the global economy must be aligned with the aim of the planet. Failure to do so can result in sub-optimization, decay and the ultimate destruction of the system.
Human civilization has been aligning these two systems for centuries - but getting it backwards. For a very long time we have been putting the earth in service of the human economy, instead of aligning the human economy with workings of the earth. Getting this right has wide implications for how we power our economy, how we feed ourselves, and how we develop and grow. In aligning with the planet’s ecosystem we will find how to (1) live on current energy income (i.e. renewable energy), (2) operate with the knowledge that waste = food (i.e. closed loop recycling,) and (3) become information intense and energy efficient (as biological systems are.)
No comments:
Post a Comment