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Applying ISO 9001:2015 QMS within a System of Profound Knowledge

Quality begins with the intent, which is fixed by management. 

W. Edwards Deming

Edwards Deming (c.1900-1993) is indelibly associated with quality management, and rightly so. However, his ideas on quality are interwoven within his broader theory of management and leadership which focused on four interrelated areas: appreciation for a system, knowledge of variation, theory of knowledge, and psychology. Deming called his transformative approach to management and leadership the System of Profound Knowledge (SOPK).  Deming was a critic of the prevalent western style of management and leadership which he believed led to a road to ruin for enterprises and workers. Deming was a champion of the worker.  Through his presentations, papers, and books, he demonstrated empirically and simply the flaws in the western management paradigm.  He believed that workers, societies, and economies paid a steep price for such flawed management and leadership practices.  As the world continues to emerge from economic recession, perhaps it is again time to revisit the Deming SOPK and consider its application within complex organizations applying advanced technologies to deliver products and services.  Can a bridge be built from SOPK to the combining of improved management system standards and methodologies such as ISO 9001:2015 Quality Management System (ISO 9001), and knowledge based risk management techniques?

Deming was a scientist and mathematician with a sharp mind who was able to recognize and understand complexity while at the same time adept at reducing such concepts to a more understandable level.  He was formally educated as an electrical engineer and later specialized in mathematical physics.  (He was an assistant professor at Colorado School of Mines at one point early on in his illustrious career.)  Deming made impressive contributions in his work with the United State Department of Agriculture and the National Bureau of Standards advocating and then applying statistical sampling methods.  While working at the Bureau of Census Deming was introduced to scientist and statistician Walter Shewhart.  Shewhart had a strong influence on Deming.  Shewhart was a pioneer of Statistical Process Control as well as the (now) often referenced Plan-Do-Check-Act cycle.  Through their collaboration Deming helped make Shewhart’s work more understandable to a wider audience.  Shewhart worked with Bell Laboratories searching for ways to minimize variation of products for the expanding telephone industry.

Deming was recruited during World War II to teach courses in these techniques to engineers and scientists.  These courses were very beneficial in improving the quantity and quality of war time production.  During the war, at least temporarily, U.S. industry was steered away from the less effective traditional scientific management techniques.  Following the war, in 1947, Deming begin his work in Japan.  Even though the ideas he taught the Japanese were first formed in the U.S. and to a great extent influenced the outcome of the war by making the U.S. a mass producer of reliable equipment which overwhelmed the armies of adversaries east and west, his teachings never resonated the same in the U.S. and Europe as they did in Japan.  Within the crucible of a war torn Japan desperate to extricate herself from industrial destruction and despair, Japanese industry was able to learn, practice, and improve.  Deming, along with other prominent thinkers of quality from outside and inside Japan, taught and refined the fundamentals of quality management which lead to Japan becoming the second largest world economy by 1978.  It was especially during the years working with Japan that Deming observed, studied, and learned what factors drove quality and refined the SOPK.

Without a standard there is no logical basis for making a decision or taking action. 

Joseph Juran

While Japan’s economy was accelerating and moving forward following the end of the war, this was not true in the west.  Western industry was losing its competitive edge.  It took some time for other economies to address this issue.  Eventually, nations such as Great Britain decided to emulate what the Japanese were doing.  In 1982, Britain revised their BS5750 Standards, Quality, and International Competitiveness.  BS5750 was the precursor the first International Organization for Standardization (ISO) 9000 series of standards for quality management systems which were released in 1987.  In America during the 1980’s the Total Quality Management (TQM) methodology, modelled from the U.S. Department of Defense techniques, addressed similar concerns.  In Deming’s book Out of the Crisis (1986), he formally presents a culmination of his lessons and instruction for organization’s to be competitive and survive in the new reality of delivering products and services if organizations are to survive and thrive in the competitive climate of (future) business.  The ISO 9001 standard is used by organizations to demonstrate their ability to provide product and services that meet customer and regulatory requirements, or put another way, to deliver “quality”.  Since the initial publication of ISO 9001:1987, the standard has been revised three times: ISO 9001:1994, ISO 9001:2000 and ISO 9001:2008.  The newest version ISO 9001:2015 is currently in its final stages of revisions is expected to be released in September 2015.  Technology in an ever more competitive business environment has been an important motivator for organizations to improve the way that they deliver products and services for customers.

Draft revisions of the ISO 9001:2015 standard have been circulating over the past months.   The revised standard is advertised as a format for the next generation that will apply for twenty-five years.  Some key changes to the ISO 9001:2015 (draft) standard are that organizations need to understand the context of their QMS along with establishing a systematic approach to risk.  Organizations will need to determine what strategic objectives their QMS is intended to achieve.  This is important because it now is incumbent on organization leadership and management to understand their QMS beyond only achieving certification itself as an objective.  Organizations cannot benefit simply through attaining certification, the system needs to be well led and managed to deliver its objectives.  ISO contends that “risk based thinking” has always been implicit to the ISO 9001 standard.  The continual improvement of processes through planning, auditing, analysis, and action has always been in respect to delivering products and services that met customer expectations in the most effective and efficient way possible.  However, it is more directly addressed in ISO 9001:2015.  ISO 9001:2015 will now require organizations to identify both risk and opportunities that impact the performance of their QMS as well as define actions to address the identified risks.

Both ISO 9001:2015 and the SOPK are grounded in system based thinking.  A system is composed of interrelated components such as company culture, product or service complexity, resources, and processes.  Quality is the optimization of performance for all of the components relative to the objectives of the system.  With respect to ISO 9001:2015, context is the business environment, such that leaders and managers of the organization consider both the external and internal influences that impact the organizations strategic objectives before they develop a quality management system. As the ISO 9001 standard is generic, how it is applied is specific to the organization’s products and/or services.  Quality is essentially optimizing the performance of the system that produces the output product or service.  The optimization of performance is mostly determined from outside the system by how the interdependencies are coordinated and managed.  In this respect, the greatest risk to quality is system management.  Appreciation of the system is management understanding that every decision is a risk because it determines the components which form the constraints or context which impact overall system performance.

Deming did not believe that traditional (western) management practices allowed optimum system performance to be realized.  He believed the traditional management paradigm needed to be transformed.  Likewise, each iteration of the ISO 9001 standard has placed greater emphasis on top management engagement and understanding for how their organization manages quality.  In parallel to the changes in ISO standards, there has been realization that workers in the information age should not be managed the same as workers from the industrial age.  While the ISO 9001 standard works well in team based, knowledge sharing work environments with appropriate training and development which support the delivery of customer focused products and services, ISO 9001:2015 does not mandate a particular management structure.  Deming listed fourteen points for transformation that leadership and management would need to practice for the benefits of incorporating a SOPK to be fully realized.

We must learn our limits. We are all something, but none of us are everything.

Blaise Pascal

Key to optimizing system performance is management understanding variation.  Processes are optimized when the output product or service shows no variation.  (No variation can never really happen in the delivery of products or services because there is always some variation in the system and process components that impact output.)  Special cause variation are one-off assignable events, like accidentally dropping a glass.  Common cause variation is sometimes referred to as the noise or natural pattern and are historical and quantifiable process variation.  If 1% of the glasses emerging from the glass making machine come out of specification, this would be common cause.  Special causes can become common causes if different workers accidentally drop glasses over time to the extent that it could statistically predicted that a certain percentage of glasses will be dropped and become out of specification.  The challenge for managers is identifying whether the variation is common cause or special cause and then improving the process accordingly.  Shewhart’s control charts would establish the limits to be within specification and it would also be expected that 1% would be outside specification.  The significance in understanding the cause of the out of specification glass is especially relevant to the worker.  Managers often rate workers poor performance based on common cause variations.  Deming has demonstrated this with his Red Bead Experiment.  What he concluded was that the system is responsible for over 85% of the out of specification production.  Blaming worker performance based on the random outcome of management designed processes is demoralizing and can actually negatively impact production.  In reality, workers have substantially less impact on the system performance. If a worker fails because of performance, over 85% of the blame is due to system management.  The concept of variation applies to auditing and managing ISO 9001 as well as the SOPK.  However, the SOPK reinforces why transformation is required.  In traditional management performance issues are not being addressed properly because system thinking is not in place.  Deming also identified “seven diseases” that impede organization transformation.

In order to properly understand the big picture, everyone should fear becoming mentally clouded and obsessed with one small section of truth.

Xunzi

Knowledge is the most important element of the SOPK in my view.  Deming cautions that we cannot mistake information for knowledge.  A room full of books holds a lot of information.  But, only after the information is organized and accessible to be used does it become a library of knowledge.  The study of knowledge is directed to improving the system.  There needs to be understanding of the historical components of the system to be able to form the basis to change the certain components of the system and also predict the impact of the change and expected improvement.  In the information age that we are living in now substantial amounts of important information often remain unshared and therefore unknown and inaccessible in forming evidence based decisions that reduce risks.  Losing experienced workers is essentially tantamount to losing access to knowledge.  The key to reducing risks and uncertainty as well as improving the basis of decision making is to organize and make accessible organization knowledge.  Silo organizations must be transformed into organizations where knowledge is no longer hoarded but easily shared.  In complex organizations decision makers need to have confidence that they are referencing the most current and high fidelity knowledge to form decisions.  Improved decision making processes is what risk based thinking boils down to.

Organization success and sustainability in the information age comes down to improving business performance for competitive advantage.  Traditional management paradigms of command and control structures over individual workers impede knowledge flow and process improvement.  To improve organization performance requires systems thinking which challenges the notions of the super or terrible worker being at the core of organization success or failure.  System thinking involves all workers coordinating and optimizing processes.  Performance is driven by effective and efficient processes.  Stop blaming workers for the poorly designed processes which they have no control over and concentrate on continually improving processes with worker contribution and job satisfaction and productivity will rise.  Deming believed that a transformation from traditional management paradigms was necessary for sustainability.  ISO 9001:2015 embraces many of the SOPK concepts.  Integrated understanding of how the system works along with what the objective of the system are is fundamental to improving performance.  Being able to recognize the causes of variation in processes will guide improvement of the system.  Improvement needs to be guided by historical and contextual knowledge of process performance and constraints which will inform decision making and reduce risks.  Deming was correct that business in the information age needs to be managed differently it was during the industrial age.  Managing the scale and complexity of organizations and the goods and services which they provide requires a new type of management based on systems thinking.  Deming proposed a transformation to a system of profound knowledge to achieve quality.  ISO 9001:2015 is comprised of the combined knowledge of many of the great thinkers of quality.  How an organizations QMS is managed is of paramount importance to realize improved performance.  Using the SOPK as a guide, an struggling economy known for producing poor quality goods and services transformed to a leading economy praised and copied for its high quality.  It is time that we revisited the methods and lessons which contributed to this transformation once again.

Improve quality, you automatically improve productivity.

W. Edwards Deming