The Deming Files

The Trouble With Motivation - Deming's SoPK Part II

Contributor: Jussi Kyllonen
Posted: 08/01/2011
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What makes the difference between ordinary people achieving extraordinary results on one hand, and extraordinary people achieving ordinary results on the other? Management insight makes the difference, says contributor Jussi Kyllonen in the second of a four part series on Deming's system of management, SoPK. Here's why managers need to have a better understanding of the appropriate use of psychology.

Read Part I: Systems Thinking and the Three Musketeers

Read Part III: Variation, So Meaningful Yet So Misunderstood

Read Part IV: How Do We Know What We Know?

Dr. Deming’s theory of management developed over a long period of time. He articulated significant milestones in this development such as via his "14 Points for Management" and "Seven Deadly Diseases" in his 1982 break through book Out of the Crisis. This work is the foundation for later development of his theories, including the concept of Psychology of People.

He articulated his management theory further in his 1993 book The New Economics. He referred to the overall theory for managing in a number of ways including "the System of Profound Knowledge" and "The New Philosophy of Management". An integral part of the System of Profound Knowledge is Psychology. In the System of Profound Knowledge, Deming named four interdependent elements; Theory of Knowledge, Appreciation for a System, Variation, and Psychology. Dr. Deming believed the System of Profound Knowledge to be the most important concept for any leader to know in his job.

How is Deming’s work relevant to businesses today?

The answer in a word is: survival. Let me provide a little context. One sometimes asks: what makes the difference between ordinary people achieving extraordinary results on one hand, and extraordinary people achieving ordinary results on the other hand? A simple answer is that the management of people makes the difference. Understanding the psychology of people –and psychology of people in relation to the system in which they work, and in relation to the processes, procedures, tools, insights that are available to them. Typically the system affects the psychology of a person more than a person can affect a system.

A more complex answer about Deming’s relevance is: the need to achieve sustainable results in the ever changing world is the main reason why Deming’s New Philosophy of Management continues to be one of the key success factors for any organization. The future without Deming’s New Philosophy of Management (both theory and practice) does not look appealing. Dr. Deming would sometimes say "Survival is not mandatory". The track record of the survival of organizations is not one in which we can take comfort given how few companies survive for even 50 years.

Understanding the Psychology of People

Let us view in more detail the intellectual content of Dr. Deming’s element of Psychology. His work is consistent with that of several others, most notably Maslow, Hertzberg, and Deci and Ryan.

The main points he makes in chapter four of The New Economics, are:

#1: Human needs

Dr. Deming recognizes that we as humans are social creatures. We are born with basic needs for love and esteem, and the need to relate to each other. We are driven by curiosity, joy in learning, and accomplishments. In his 1943 paper "A Theory of Human Motivation" Abraham Maslow, proposed a hierarchy of needs as a way to explain motivation. He subsequently extended the idea to include his observations of humans' innate curiosity. This groundbreaking work was undoubtedly known to Dr. Deming, but he went further in his effort to understand human motivation.

Motivation is literally the desire to do things. Dr. Deming recognizes that there are two sources of motivation: intrinsic and extrinsic. Intrinsic motivation refers to motivation that is driven by an interest or enjoyment in the task itself, and exists within the individual rather than relying on any external pressure. Extrinsic motivation comes from outside of the individual. Common extrinsic motivations are rewards like money and gold stars on the one hand, and coercion and threat of punishment on the other. Competition is in general a source of extrinsic motivation because it encourages us to win and beat others, not to enjoy the intrinsic rewards of the activity. Dr. Deming discusses the results and the impact of these two sources of motivation throughout his work. His insight to the nature of human beings and his ability to see the long term consequences of extrinsic drivers that cause people to do things are cornerstones of his management theory.

#2: People are different

This concept highlights Dr. Deming’s understanding of - and a concern for - an individual in the organization. The statement that people are different is an application of Theory of Variation, and illustrates how the theoretical components of the System of Profound Knowledge become interlinked in practice; in this case Psychology and Variation.

The simple statement that "people are different" highlights many of shortcomings of the current style of management. Typically, in most organizations Personnel Administration and Human Performance Management emphasize uniformity of requirements, and in most cases lead into a forced ranking and forced distribution of what is simply a natural phenomenon – the fact that people are different. The differences between people –instead of being used to punish and shame some and reward and idolize others—can be put to good use to foster creativity, multiple routes to making improvements and innovation. An organization’s policies can waste time, money, and human differences –and thus jeopardize its own competitive future, or accept that people are different and manage accordingly –and in so doing unleash the intrinsic motivational desire to do things and to make a difference –and reduce costs at the same time.

#3: Over-justification:

On occasion people act based on purely altruistic motives and simply want to help other people and do a good deed. The target of this action may be the customer, a coworker or the boss. The rewards people get from such actions are intrinsic and intangible; a warm feeling and a sense of joy. People do these type things with no expectation of any compensation or benefit. Over-justification, then, is offering a reward, or otherwise compensating an altruistic act –and in so doing disengage the individual from the joy, erase the original motive of the action, and replace it with an extrinsic motive. This is likely to lead into discontinuing the altruistic behavior.

How do you motivate people?

Contemporary management texts typically focus on the extrinsic motivators, rather than on removing the barriers that managers erect to intrinsic motivation. If you know of the Red Bead Experiment (sometimes referred to as "The White Bead Factory") you know that the Willing Workers are to produce only white beads, not red beads. Yet, the results (which are always unsatisfactory) are pre-determined by the fact that there are red beads in the factory. The Red Bead Experiment is an encapsulated scene of how most organizations operate. It is an exercise filled with Dr. Deming’s management concepts – some more obviously displayed than others. And although the experiment takes place in a "factory" the lessons apply in service industries and government just as much as they do in a production environment.

Here is a summary of the Red Bead Experiment which displays the role of psychology in management of people:

  • When examining the results, it becomes clear to observers that the influence of the system in which the Willing Workers work dwarfs the contribution of the Willing Workers. Yet, the management of the factory fails to recognize this. Instead managers focus on the workers and use various aspects of psychology to try to motivate them to achieve better results. Managers set quotas, reward good results, punish poor results, pay for performance, and pit workers against one another in the name of "friendly competition". The result is mismanagement of the organization, de-motivation of the workers, and ultimately the failure of the business. The actions the management took to motivate the workers and to create a change in were ineffective. They are equally ineffective in real world, yet they continue to be used for several reasons, including the emotional default trained into our brains that we must motivate people and pay-for-performance –despite the overwhelming evidence to the contrary.


Dr. Deming articulated what he called the Forces of Destruction of individuals –and subsequently of organizations. The Forces of Destruction include such things as incentive pay, numerical goals without methods, and competition between people who really need to be cooperating. [You can find a list in Figure 10 on page 122 of The New Economics, second edition].

The Forces of Destruction have a major psychological component and cause emotionally healthy people to want to leave the organization that uses the Forces of Destruction to manage. Ironically, what is destroyed in such a style of management is the intrinsic motivation and natural curiosity of the individual – the very sources of the competitive advantage companies are desperately seeking. Thus, what such organization end up with, under the current style of management, are the most expensive type of workers, the ones who quit but stay after having their motivation and curiosity driven from them.

Copyright 2011 by Jussi Kyllonen


Deming's SoPK Series on PEX Network

System of Profound Knowledge (SoPK) is the main subject of Deming’s second book on management, The New Economics. SoPK is Deming's system of management and has four interdependent areas:

  • Appreciation for a System –how to lead a system, and systems thinking
  • Knowledge about Variation, including statistical variation
  • Theory of Knowledge -the study of how we know what we know
  • Psychology - understanding the human aspect of management, and especially intrinsic motivation vs. extrinsic motivation.

Dr. Deming pointed out that one need not be an expert in any of the four elements, but viewing the world through the lens of the four elements with some proficiency would provide the viewer with profound knowledge of how to lead, diagnose data and issues, plan for the future, have everyone work together to optimize the system, innovate, and create an exciting win/win environment for customers, suppliers, employees, and managers alike.

Read Part I: Systems Thinking and the Three Musketeers

Read Part III: Variation, So Meaningful Yet So Misunderstood

Read Part IV: How Do We Know What We Know?


Editor’s Note: The columns published in THE DEMING FILES have been written under the Editorial Guidelines set by The W. Edwards Deming Institute. The Institute views these columns as opportunities to enhance, extend, and illustrate Dr. Deming’s theories. The authors have knowledge of Dr. Deming’s body of work, and the content of each column is the expression of each author’s interpretation of the subject matter.

Contributor: Jussi Kyllonen