Deming’s Management System, as expressed in his book: The New Economics has four interdependent parts:

• Appreciation for a System (systems thinking)
• Knowledge about Variation (see: variation definition)
• Theory of Knowledge
• Psychology (the human element of management systems)

Quotes on the Theory of Knowledge portion from The New Economics by W. Edwards Deming.

• “Management is Prediction. The theory of knowledge that management in any form is prediction” (Page 101)
• “Knowledge is built upon theory… Rational prediction requires theory and build knowledge through systematic revision and comparison of theory based on comparison of prediction with observation.” (Page 102).

It took me many years to appreciate the importance of prediction and theory to aid in learning and improvement. When managing many fail to predict when attempting to test improvement ideas through what should be experiments (often they are just changes without verification the change produced a desired effect, any learning or study of the results of the change). Without prediction learning is much less (if there is any at all) than it would be with such prediction.

In addition, when it is understood that management is based on prediction then the impact of the other 3 areas of the system of profound knowledge are clearer.

By exploring the basis for the prediction one must understand the theory they are operating with to make the prediction. Most often managers fail to develop a theory that allows them to predict. They fail to predict the results of an attempt to improve (PDSA), they fail to analyze the results of that improvement experiment, they fail to learn about the system that they are managing (since they fail to predict and then learn) and therefore cannot refine their theory based on their learning. When failing to do these things it is a surprise that learning is very ineffective? And without learning how can effective improvement be expected?

With, even a fairly simple understanding of the theory of knowledge the effectiveness of management improvement efforts are greatly increased. This topic is difficult for most to understand, I recommend reading chapter four of the New Economics. And I recommend returning to that chapter periodically as you apply management improvement techniques and learn and grow as a manager.

More from the Curious Cat Management Glossary: Theory of Knowledge