The W. Edwards Deming Institute podcast with Dr. Sophronia (Frony) Ward, Managing and Founding Partner of Pinnacle Partners, Process Behavior Charts are the Secret to Understanding the Organization as a System (direct download), is another in our understanding variation series. Frony discusses the importance of Statistical Process Control (SPC) in all parts of an organization.
Frony first encountered Dr. Deming’s ideas when the University of Tennessee established an institute surrounding statistical process control. The institute became a place for people to continue learning after Dr. Deming’s 4-Day Seminar.
When I learned SPC 34 or 5 years ago, it was totally new to me. It took a little while for me to become an advocate, in the way I am not. I really didn’t recognize the impact of knowing common cause and special cause variation. But after a number of engagements, actually with organizations, it became obvious to me that SPC was the name of the game. It was the analysis technique for data off of processes that would just guide anyone at any level.
I also find the power to improving performance is understanding if the problems are due to common causes or special causes. For common causes we need to explore the entire system, and all the data, and seek to improve the overall system. For special causes we need to seek what is special about the bad result and seek to eliminate that problem from causing problems in the future. Unfortunately most problems are system based and we most often jump to special cause thinking (so we often take the wrong approaches to improvement).
She discusses how data can provide insight into the processes within the organization and how that view is often missed due to a failure to use process behavior charts (control charts) in order to understand what is really going on.
Also, there are incentives within systems that lead to, for example:
the way this organization’s financial evaluations worked would force people to run the machine and make stuff that couldn’t be used. I think the silo effect of the finance (or accounting) piece versus the production piece… [results in] parts of your system [where] the sub-optimization kills you.
When we create incentives to optimize parts of the system (low-cost supplier, sales incentives, evaluating return on investment for individual business units, etc.) the overall system is sub-optimized. In order to achieve the best overall results individual parts of the system may have to suffer in order to achieve the best overall result.
Another topic she discussed was working with Harley Davidson and how their use of SPC.
Frony finds it fascinating and frustrating that many organizations are aware of SPC but don’t use it.
The theory of variation is completely, completely, tied to being able to understand your organization as a system; and being able to manage and improve that system through knowing whether you have common cause variation or special cause variation.
She closes with some wise thoughts on issues with “big data.” “Big data” has value but those are different from the value of process data.
Related: Podcast with Lynda Finn, The Value of the Simple Run Chart – Data Can’t Lie (if there is a lack of understanding of data then people can manipulate or misinterpret the data) – 94% of Problems Belong to the System (only 6% are special cause related)