Creating Winning Businesses: Deming’s System of Profound Knowledge

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When faced with challenging circumstances – declining revenue, loss of customers, declining profits margins, etc. – it is common for business executives to focus their attention on solving the immediate problem at hand by using standard management tools. Declining revenue? Create incentives so your sales staff sell more products. Losing customers? Raise targets for service levels on your customer help staff. Declining profit margins? Set your managers stiff pay-for-performance criteria.

But what if these standard tools were actually part of the problem? What if the actions you took to solve that one pressing problem actually created more problems in another part of your business?

Several decades ago, Dr. W. Edwards Deming – theorist, consultant, professor – pointed out "Seven Deadly Diseases" and argued that common management approaches such as incentives, targets and pay-for-performance would lead to sub-optimal results and could even destroy companies.

Today, however, many companies appear to still be using the same malpractices that Deming identified so long ago. But what’s the problem with them and what is the alternative?

This e-book compiles the PEX Network/Deming Files four-part column series on Deming’s System of Profound Knowledge (SoPK), which is often referred to as The Deming Management Method and sometimes as The New Philosophy of Management. SoPK was explored in Deming’s second book on management, The New Economics, published in 1993. SoPK/The Deming Management Method has four interdependent areas - appreciation for a system, understanding human psychology, knowledge about variation, and the theory of knowledge – to better lead and create an environment in which people can be productive and produce quality products and services.

It is essential reading for executives as well as all process professionals who want to understand how to create enduring and sustainable businesses.