Theory of Knowledge

The third part of Profound Knowledge is the theory of knowledge – a branch of philosophy and management concerned with the nature and scope of knowledge, its presuppositions and bases, and the general reliability of claims to knowledge.

Deming emphasizes that there is no knowledge without theory and that experience alone does not establish a theory. To copy an example of success without understanding it with the aid of theory may lead to disaster. Experience only describes; it cannot be tested or validated. Theory establishes a causeand-effect relationship that can be used for prediction. Theory leads to questioning and can be tested and validated – it explains why. Many consultant methods that have sustained success are grounded in theory. Managers have responsibility to learn and apply theory.


Psychology helps us to understand people, interactions between people and circumstances, interactions between leaders and employees, and any system of management. People differ from one another. A leader must be aware of these differences and use them to optimize everybody’s abilities and inclinations.

Many managers operate under the supposition that all people are alike and treat them as interchangeable components of a process. However, people learn in different ways and at different speeds and perform at different levels. Leaders have an obligation to make changes in the system of management that will bring improvement. People have an innate need for relationships with other people and for self-esteem and respect. Circumstances provide some people with dignity and self-esteem and deny them to other people. People inherit the right to enjoy work. Psychology helps us to nurture and preserve people’s positive innate attributes.


Little in Deming’s system of Profound Knowledge is original. The concept of common and special causes of variation was developed by Walter Shewhart in the 1920s; behavioral theories to which Deming subscribes were developed in the 1960s; systems theory was refined by management scientists from the 1950s through the 1970s; and scientists in all fields have long understood the relationships among prediction, observation, and theory. Deming’s contribution was in tying together some basic concepts. He recognized the synergy among these diverse subjects and developed them into a theory of management.

Peter Scholtes, a noted consultant, makes some salient observations about the failure to understand the components of Profound Knowledge:

1. When people don’t understand systems;

  • They see events as individuals incidents rather than the net result of many interactions and interdependent forces;
  • They see the symptoms but not the deep causes of problems;
  • They don’t understand how an intervention in one part of [an organizational] can cause havoc in another place or at another time;
  • They blame individuals for problems even when those individuals have little or no ability to control the events around them; and

2. When people don’t understand variation;

  • They don’t see trends that are occurring;
  • They see trends where there are none;
  • They don’t know when expectations are realistic;
  • They don’t understand past performance so they can’t predict future performance;
  • They don’t know the difference between prediction, forecasting, and guesswork;
  • They give others credit or blame when those people are simply either lucky or unlucky. This usually occurs because people tend to attribute everything to human effort, heroics, frailty, error, or deliberate sabotage, no matter what the systemic cause; and
  • They are less likely to distinguish between fact and opinion.

3. When people don’t understand psychology;

  • They don’t understand motivation or why people do what they do;
  • They resort to carrots and sticks and other forms of induced motivation that have no positive effect and impair the relationship between the motivator and the one being motivated;
  • They don’t understand the process of change and the resistance to it;
  • The revert to coercive and paternalistic approaches when dealing with people; and
  • They create cynicism, demoralization, de-motivation, guilt, resentment, burnout, craziness, and turnover.

4. When people don’t understand the theory of knowledge;

  • They don’t know how to plan and accomplish learning and improvement;
  • They don’t understand the difference between improvement and change; and
  • Problems will remain unsolved, despite their best efforts.


The 14 Points for Management, listed below in table have been the subject of considerable controversy and debate. They have their basis in System of Profound Knowledge. Many companies have studied and applied them to their organizations with success.

1.  Create and publish to all employees a statement of the aims and purposes of the company of other organization. The management must demonstrate constantly their commitment to this statement.

2.  Learn the new philosophy, top management and everybody.

3.  Understand the purpose of inspection, for improvement of processes and reduction of cost.

4.  End the practice of awarding business on the basis of price tag alone.

5.  Improve constantly and forever the system of production and service.

6.  Institute training.

7.  Teach and instituted leadership

8.  Drive out fear. Create trust. Create a climate for innovation.

9.  Optimize toward the aims and purposes of the company the efforts of teams, groups, staff areas.

  1. Eliminate exhortations for the workforce.
    1. (a) Eliminate numerical quotas for production. Instead, learn and institute methods for improvement.

2.  (b) Eliminate MBO (Management by Objective). Instead, learn the capabilities of processes and how to improve them.

  1. Remove barriers that rob people of pride of workmanship.
  2. Encourage education and self-improvement for everyone.
  3. Take action to accomplish the transformation.

Detail Explanation of Deming’s Fourteen Points of TQM

  1. Management Commitment – Businesses should not exist simply for profit; their true purpose should be to serve their customers and employees. To do this, they must take a long-term view and invest in innovation, training, and research. Thus, an organization needs a clear mission and statement of purpose.
  2. Learn the New Philosophy – Western management has been built on the Taylor system, which has led to numbers-driven production, quotas, and adversarial work relationships. Old methods of management create mistrust, fear, and anxiety with a focus on “Satisfying” rather than on “optimizing.” Eliminating defects is not good enough. Defect-free production is taken for granted in Japan. Achieving competitive success in today’s global economy requires a customer-driven approach based on mutual cooperation between labor and management and a never-ending cycle of improvement. Everyone, from the boardroom to the stockroom, must learn the new philosophy.
  3. Understand Inspection – Routine inspection acknowledges defects but does not add value to the product. Instead, it encourages defects because “someone else” catches and fixes the problems. This procedure increases costs and decreases productivity. Workers must take responsibility for their own work and be able to take appropriate action to assure good quality. Manager need to understand how variation affects their processes and to take steps to reduce the causes of variation. Inspection should be used as information-gathering tools for improvement, not as an end in itself.
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