A System Will Not Manage Itself

?“When left to themselves, components can become selfish, competitive, and independent profit centers capable of undermining and destroying the system.” These are thoughts paraphrased and adapted from W. Edwards Deming (1994, p. 50). At the time, he was concerned that systems often lacked coherence—a common purpose where lack of alignment fostered competition and created a system incumbrance to overall best efforts.

While this may be the case in some systems, recent news has documented organizational problems where management has focused on investor wealth. Stockholders have been the primary emphasis, rather than customers, clients, the workforce, suppliers, and the community at large.? Short-term thinking and prudently designed incentives for those at the top, including board members, have created a perverse mentality where everything gets squeezed to bring down costs and increase profits.

Temporarily, the attention on returns may work. Perhaps even for several years. Investment brokers are selling shares and pension funds are loading up on what seems to be a sure thing. “But he that would run the company on visible figures alone will in time have neither a company nor figures.” (W. Edwards Deming,1982, p. 121). ?In time, because customers are not getting what is needed or expected. Ultimately, sales collapse and investors will look elsewhere to plump their portfolios.??

Yes, purpose is important, but customers determine the requirements, features, and characteristics that define purpose—the individuals who will own and utilize the system’s outputs.? So, the best place to start is with the end in mind and construct process elements in reverse order. ?Beginning with the customer can increase the likelihood that those who are true clients will get what they need and need what they get.? In this case, market research becomes an important management consideration.?

Although stockholders, insurance companies, elected officials, and suppliers may feel they are extremely important, they are not customers. From a systemic point of view, these are system inputs and are not directly relevant to the system’s true purpose. ?Market research should be used to answer these questions:

• What is needed and not being supplied?
• What is being supplied and not needed?

When thinking about a system’s configuration, managers usually consider inputs, processes, and then outputs, but rarely from a customer sensibility. In business terms, stockholders and return on investment are typically the first thought. Not customers or the continued boost in revenue that comes from needs that are meeting and exceeding expectations, or the quality and pride in workmanship that is making it all happen. ?

?The Need for an Outside View

For centuries leaders have been rallying people to greater accomplishment:? to win wars, build empires, and of course complete the mundane rigors of day-to-day work.? It seems the world has been able to produce leaders sufficient to match almost every challenge.? Anyone interested in becoming a leader can—through effort and will—promote herself or himself by applying what is already known.? Then why is a new system of leadership needed???

Many now realize a new system is needed because recent circumstances have produced too many failures in finance, industry, and politics.? The consequences have been economically troubling with uneven gains in many sectors while whole industrial segments have exited the country.? Individuals society has looked to for leadership have not facilitated improvement or a better manufacturing outlook.? The responsible for this tragedy has been close to criminal with bottom-line schemes that focused on short-term gain and self-serving pocket-stuffing behavior.

Something can be done; however, it will take leadership.? Not the traditional kind, but profound leadership.? A different type of leadership, one that is transformational and has at its core a set of principles that produces benefits for all stakeholders not just the count-the-money-now few. ?The System of Profound Knowledge, (W. Edwards Deming, 1994, p. 92) provides a different viewpoint on leadership.? Its ideas and underlying principles were first shaped by the 1980s economic downturn, a period when the quality of United States products reached rock bottom and the demand for foreign goods steadily increased while domestic manufacturing slowly declined.

The System of Profound Knowledge is a theory of related principles that requires a leader, or manager for that matter, to consider all organizational aspects when making decisions.? This means recognizing how processes are interconnected and how these function within the larger environment so an organization can reach intended expectations.? This system of leadership has at its foundation the following four elements:?

• Appreciation for the system:? The ability to understand the relationship between system components—suppliers, producers, and customers—and how they contribute toward the overall good of the organization, its stakeholders, and the adjoining environment.?
• Knowledge about variation:? The ability to recognize that two data points do not make a trend and that all systems vary over time, sometimes positive and sometimes negative; however, the information produced can help decide what is normal and what is not normal and indicate when to act.
• Theory of knowledge:? The ability to understand how people learn and develop, and how to advance their capability to make decisions, improve work processes, and contribute to the organization’s common good.
• Knowledge of psychology:? The ability to recognize why people behave as they do, then create an environment—not one based on slogans, quotes, incentives, or exhortations—where individual differences and skills are used to optimize the system for everyone’s benefit.

A company or other organization may have all the trappings of a system and the potential to function like one. Yet if the purpose is not long-term, and there is no aim to improve performance so customers receive what is wanted and needed, then the arrangement is not truly a system. ?

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