Post by Bill Bellows, Deputy Director, The Deming Institute.
There is little evidence that we give a hoot about profit.
W. Edwards Deming
On July 22, 2014, Apple announced financial results for its fiscal third quarter, reporting a revenue of $37.4 billion and a quarterly net profit of $7.7 billion. From sales of iPhones to iPads to computers, Apple executives offered explanations for these results and predictions for the future. The value of profits as an ingredient for organizations to sustain and develop their operations is undeniable. Thinking beyond the design and development of the next iProduct, profits allow for improvements to current products, not to mention needed technology upgrades, employee development, and dividends for shareholders. But, do organizations solely exist to earn profits or meet financial goals, or, are their profits the result of how well they invest their resources, from innovation to revenue and equipment, and then deliver new and improved products or services? As with Russell Ackoff, who once described a focus on “sufficient profit” as “like a person saying his mission is to breathe sufficiently,” Dr. Deming saw profits as the result of a well-designed and managed organization. In his 1993 book, The New Economics, he posed “Profits must exist, and industry must work as a team in which all participants, large and small, prosper.” Further, “The boundary of a system….may be drawn around a single company, or around an industry, or…the whole country. The bigger be the coverage, the bigger be the possible benefits, but the more difficult to manage. The aim must include plans for the future.”
Moving from profits to pragmatism, let us not lose sight of the need to be practical in our efforts to manage systems of increasing size and complexity. Although definitions vary, a common description of a pragmatist is one who “takes a practical approach to problems and is concerned primarily with the success or failure of his or her actions.” In consideration of this explanation, I was once asked, ”Is it practical to work on things which are good and arrive on time?,” in reference to a question I posed during a presentation, specifically “How much time is spent (every day) discussing parts, tasks, activities, program milestones, etc. which are good and completed on time?” While the answer to this question is routinely “none,” my response to this inquiry was, “Is it practical to wait for a crisis to take action?” In other words, why wait for trouble that can be prevented, if it can be anticipated by using “other eyes”? Consider, for example, being the passenger in a car and asking the driver if the car has gas? That is, are things going well? Ask again in an hour and the answer may remain the same, yet the amount of gas in the tank has declined and will continue to do so until the car runs out of fuel. In asking questions such as “Does the car have gas?,” “Is the part good?,” and “Does this step add value?”, each of which has only two answers, yes or no, we are overlooking how the tasks are organized as a system.
When we shift our thinking from these forms of “yes or no” questions to “How much petrol does the car have and what action should we take now?” and define quality, as Dr. Deming did, we begin to see systems with “other eyes,” comprised of interdependent parts, tasks and elements, and move away from value streams of independent parts, activities, actions, tasks, and elements. In doing so, what is pragmatic in terms of seeing systems (asking “how well” the parts, tasks, and elements work together) will be viewed as impractical for those who continue in the tradition of seeing parts, tasks, and elements as independent (asking if the parts are “good or bad”). Could it be that pragmatism depends on how one sees systems?