A New Lens with Balaji Reddie (Part 5)

0:00:02.2 Andrew Stotz: My name is Andrew Stotz, and I'll be your host as we dive deeper into the teachings of Dr. W. Edwards Deming. Today, I'm continuing my discussion with Balaji Reddie, an educator and trainer in the teachings of Dr. Deming, and quality management generally. The topic for today is: The theory of knowledge and psychology. Take it away.

0:00:29.8 Balaji Reddie: Well, thank you. Good morning, Andrew. And it's great to continue our series. So the last time we met, we had begun with the Profound Knowledge, where we said that Dr. Deming brought together four, seemingly disconnected, sciences. He never invented any single one of them, but he saw the connections, and he created, what you could say is, a bootstrap theory of management, if I may say so, a very all-encompassing view of things happening around you. That's why he had no other word to describe it except profound. Because you see things that you normally would not see. That's what we said the last time. And when he proposed that, all of a sudden, I told you the funny thing was that experts in each of those sciences jumped in. I think they realized that they were caught napping, that they did not see the connections, and they did not see a bare minimum set of competencies that you need to have in order to understand things in their entirety. It was very, very... It was amazing that he actually could put that all together.

0:01:44.3 Balaji Reddie: So we started off with the four sciences, in no order of preference. We said here... His words were appreciation for a system. That means, taking into consideration the fact that everything... Having a holistic view, that what we see is not an event but an eventuality, that there's a huge big system behind it. Whatever we get to see in front of our eyes, we're just getting to see the effect. So appreciating that, that's what he said, for a system, a systemic view. I just used a different word, I said connectedness. And I said that from now on, we say that there are no events, there are only eventualities. Which means when something happens in front of our eyes, we always question... We bring in the concept of time and space; that the origins of this, what I'm seeing in front of my eyes, lie somewhere else and maybe actually in a different time frame. So I need to study deeper in order to understand why I'm seeing this in front of my eyes. And you gave that fantastic example of coffee beans, where you said everything has to happen at the right time. So that was the first one.

0:02:54.1 Balaji Reddie: Second one, was about understanding variation. And I would say, that's statistical thinking. I think around 1998, I saw someone come out with the definition of statistical thinking. And they said that it's a holistic view of looking at a process, that everything in the world, happens in the form of a process, and all processes are subject to variation. And understanding and reducing that variation, is synonymous to increasing quality. Now, I'd just like to make a slight change there. Yes, all processes are subject to variation, but talking about reducing... I think, understanding and managing that variation, would lead to better quality. And his entire insistence was understanding variation. Although, let me tell you this, in Henry Neave's book, he wrote about this, where he said that in one of the weekend chats that they had with Deming, he made a statement that if I had to reduce my message to managers in two words, I would say: reduce variation. And this, I've heard from both Henry Neave and David Kerridge. For those who are unaware of who David Kerridge was, because he passed away, I think, around 2018 or 2019, I can't remember... Or maybe before. I'm forgetting the year.

0:04:32.1 Balaji Reddie: But this was... He was from Aberdeen, Scotland. And people used to say, he's like an unofficial person who could be the successor to Deming. So he wrote a lot of wonderful papers. So David Kerridge, Henry, and I, were sitting together having dinner, and they were talking about Deming, and they said that, yeah, he did not... There were some things where he could get really, really upset about when he... About performance appraisals. But there are some things when he spoke of Shewhart, Walter Shewhart, he spoke in a very different tone. And then came this topic, that when we told him that you said reduce variation, he said, "I never said that." They said, "But you said it. We have it... We wrote it down, both Henry and I." And he said, "I could have said that in a context, but I don't think I meant it in that way." So for the record, yes, he uttered it; but he meant it differently. I'm quite sure he said to understand and manage that variation.

0:05:35.4 Balaji Reddie: So what is that managing variation? Okay. We saw this last time, in the very narrow sense of the term, that is when Walter Shewhart invented the control chart. He said there are two kinds of variation that exist: natural variation and unnatural variation. And to distinguish between these two, he created the control chart, which was based on... It was an empirical formula, and people confused it to be a statistical thing. He demarcated, brought in two lines, what he called as the upper control limit and lower control limit. And he said as long as the outcomes of any process or system, if you could measure them and you're plotting them on a graph, as long as they lie within these limits, well, that's the natural behavior of the process or system under study. And the moment their performance crosses the limits, one of these limits on the higher side or the lower side, then you can say there's something unique, special, that has happened. So he used the term, random variation, and assignable cause variation. Because he said you could assign a particular cause to the points that lie outside limits. But when you are studying the variation that lie within limits, the variation that lies within limits, then you can't ascribe a particular cause. There is a system of causes acting. This particular difference in approach...

0:06:58.1 Andrew Stotz: That's a great point. The assignable thing is a great, great point. It really helped me just understand it better.

0:07:04.7 Balaji Reddie: Oh, yeah. Because you could assign a particular, that's why he said assignable. And this is random. Assignable, has its advantage that you can isolate it. And initially, he said you could isolate, and you could eliminate, that cause because it is something which is alien to the system under study. And one by one by one, when he said you eliminate all those causes, you land up with a system or a process that fluctuates only within limits, and he called that as a statistically controlled process. Now, he said your real work begins when you start looking into the reasons for each of those points lying within limits, and I made that statement. You don't have one cause, you have a system of causes. Here's where we studied systems the last time, and I'm just refreshing all of this. I said that in a system, you have interconnectedness, you have interdependencies. And then cause and effect are not closely related in time or space. You have synergistic relationships. So when you start studying, it becomes very, very complicated. Because the performance of each of those causes is also subject to variation. So you can never, ever tell with absolute certainty, what is causing the system variation. Because each of the causes is part of a bigger system. So he made that statement that the complete knowledge of any process or system, is unknown and unknowable. He was not being pessimistic; he was being realistic. We discussed this the last time. And so I said, what do we do then? Yeah, we'll come to that. But now comes the other part, which gets really, really interesting.

0:08:46.7 Andrew Stotz: By the way, I want to... Before you move on from the variation, I want to add something. But continue on.

0:08:55.2 Balaji Reddie: Okay. So he said the reason for the point lying outside... And I said it's assignable, what Dr. Deming called as, special cause variation. You can assign a cause, and I said it's alien to the system under study. And I started by saying you can eliminate it. And even Walter Shewhart began by saying, eliminate it. But now, I'm going back on my words slightly. If you eliminate that special cause, it could be a special cause for the system under study, but it could be the common cause of another system which is related to this. And so what can you do? Well, here's the best part that comes in. You reduce the effect of that cause, to the extent that it does not cause any harmful variation here, to the system under study. And that, Andrew, is optimization. "I want this, and I want that", not, "I want this, or I want that." So I need that.

0:10:01.0 Balaji Reddie: Because I can begin with eliminating, but then I have to keep my eyes and ears open. Because this is what I did in my own company when I started implementing all of this. I'll be honest, I drew a control chart, and when I found points lying outside limits and we discovered causes, I used to eliminate them. But since I was exposed to Profound Knowledge, and what Dr. Deming said about optimization, I kept my eyes and ears open to any change that we observed in the company, anywhere. If I... Even if I got a feedback within a day, two week, month later, saying, "See Mr. Reddie, this is what's happening," and I said, "Wait, wait, wait. Let's see the connection." And invariably, the systems would be connected. And so we could not eliminate, we had to reduce. So we had to go back and check. And that's optimization. Because what happens is if you just keep eliminating... Which is a good place to start... The system under study could get attacked by that interrelated, the other system which you have just actually disturbed. And the problem would resurface with a new face. And you would then say, "Wait a minute. We had solved this problem. Why is it back?" So here's where Profound Knowledge comes in. And that's why the word is continual, it's not continuous. You gotta keep at it, you gotta keep learning. So when he said, yeah, that for common causes, or what he called as random causes, they're so complicated... And for these special causes too, they become complicated... Then how do we understand, and what action do we take? Do we just wait on our haunches and do nothing? That's where he brought in the Theory of Knowledge. And I'll begin with his...

0:11:44.1 Andrew Stotz: And maybe I can add something.

0:11:46.3 Balaji Reddie: Yeah, sure. Now you could. Yeah.

0:11:48.7 Andrew Stotz: The first thing I was thinking about, a special cause, or an assignable cause in a factory, particularly in Asia... But maybe also in the US and maybe more in Europe these days... Is a fluctuation in the electricity. Not necessarily a blackout, but that can be a special cause.

0:12:12.1 Balaji Reddie: Right.

0:12:13.6 Andrew Stotz: But just fluctuations in electricity, can cause an impact on a system, so it can be a special cause. And then once you understand it, you may decide, "Hmm, is there a way we can smooth this? Is there a way we can think about the electricity input into this system, which is really critical for this system, by putting something in between the electrical source and this particular system?" So that's an example of the idea of a special cause, potentially, that is just a common cause, possibly, of another system.

0:12:55.3 Balaji Reddie: That's right. In fact, in India, we did have this problem in the 1990s, when the whole world descended into India because of the cost advantage. The rupee got devalued, the dollar really sprung up. And so people found India as a gold mine, when it came to establishing organizations. And what they would do is bring in much of their semi-automatic technologies that they had in the US, or wherever, Europe at that time, into India, which were largely electronic, had components which were electronic. And in India, the temperature conditions are... I mean, you're in Thailand, you know how it is. It's extreme.

0:13:35.1 Andrew Stotz: Yeah.

0:13:36.9 Balaji Reddie: And so it was not ready for that. And we would have these problems with the components conking off. We had to come out with some remedial stuff, some short-term stuff. And then we started discovering things, we started inventing things. And they almost started losing the cost advantage. Then they said, "Okay. Let's get a little smart." When the next set of machines etc., started coming to India... This was in '91-'92, if I remember right. By '93-'94, that realization came in and so they said, "Why don't we send it in with a cooler," the cooling system, "so that no matter what happens outside, the components would be unaffected." But that led to another problem in cities like Mumbai, where you had extensive humidity.

0:14:24.2 Andrew Stotz: Yeah.

0:14:25.3 Balaji Reddie: And that would cause droplets, which would short-circuit the electronic components again. And so they came up with climatizers. It was crazy.

0:14:34.4 Andrew Stotz: Round and round you go.

0:14:36.7 Balaji Reddie: Yeah.

0:14:38.5 Andrew Stotz: That's interesting.

0:14:39.8 Balaji Reddie: You see, when I was exposed to Profound Knowledge for the first time, and when I wanted to teach it, I remember, I used to want to look out for examples; but I found none. And then when I started digging deeper and deeper, I said, "Wait, I do have examples. It's just that I didn't know that I was looking at it differently." And so it was amazing. Like I said, what Dr. Deming said, you see things that you normally would not see. And I began seeing things in retrospect.

0:15:09.4 Andrew Stotz: Yeah. And that's sometimes... I think the teachings of Dr. Deming have made me a very calm and relaxed guy. I no longer freak out over, what I now know, is just normal variation. And I feel like it's a world of people, that you have to react. If you don't react, you're not doing something. And it's almost impossible for most people to see that the next outcome of this, is not a special cause. And I spend a lot of time in my ethics class trying to help young people understand, that there's just normal variation. Which brings me to my last point I wanted to make with what you said. It reminded me of my studies... Which are limited... Of insight meditation, concentration meditation, or Buddhist... What the Buddha taught. And I remember sitting in a temple in Los Angeles many, many years ago, and I thought, "I'm gonna try to learn from this monk."

0:16:24.6 Andrew Stotz: And I left there thinking... So we did meditation, and he said, "Just try to clear your mind. And just..." And so I left that meditation going home thinking, "My brain was on fire," and there's so many things going on. So I went to him, and I studied more, and I learned more. And I realized that I had misunderstood. You're not trying to control your thoughts, or reduce your thoughts. You're trying to observe your thoughts. And once I started to realize, just observe, then I started to make progress in really understanding that reduce will come over time; maybe, maybe not. But observing was really the step. Because once you observe something, particularly with your mind, if you observe thoughts coming out, then that actually means you're somewhat disconnected because it's hard to observe something that's happening. So therefore, you're starting to look at it from a different perspective. And that's what I thought about when you were saying, it's not just reduce, reduce, reduce. It's first, observe.

0:17:40.1 Balaji Reddie: That's right. Yes, understand, see what's happening, ask the right questions, "Does this happen every day? Or has it happened only today?" things like that. And then you could say, "Okay. If it's happened only today, why did it happen only today? Is today a special day?" So that's the understanding of variation in the broadest sense. And that's why statistical thinking is about asking the correct questions, even in the absence of data. It's thinking, statistical thinking. Don't confuse it with statistical methods, where all kinds of mathematical mumbo jumbo come in. This is thinking statistically. And that's where theory of knowledge, where Dr. Deming said, comes in to help us, first, enlist what's unknown. And then from that, you start pinpointing, or segregating what is knowable, faster. And then you... Once you do that, then you start recycling your thoughts and trying to understand those systems much better. And that's the theory of knowledge.

0:18:45.5 Balaji Reddie: Now, just a statement which he said, what is a theory of knowledge? He said, "A statement conveys knowledge, if it relates some cause to some effect; It fits without fail, all the observations of the past; It helps us predict the future with the risk of being wrong." So I'll repeat the whole thing. He said, "A statement conveys knowledge, if it relates some cause to some effect," it provides us information, it relates some cause to some effect. "It fits without fail, all the observations of the past; It helps us predict the future, with the risk of being wrong." Now, if you go through this step by step, when you say here, take this example of a small five-year-old child. At least this is a very, very Asian and an Indian kind of an example, but I'm quite sure people all over the world will relate to this. A five-year-old child, here in India or in Asia, watching his father go to work every day. Father goes to work on, what we call as, a two-wheeler, a scooter as they call it. And if you know, in the old days, you could kickstart the scooter. We didn't have push-button starts, we used to kick the lever. And so this kid is very intrigued as to how does this scooter start. And he knows that he's at that age, if he keeps asking questions, he'll be told, "You'll learn when you grow up," or "Don't waste my time."

0:20:18.2 Balaji Reddie: And so he decides to observe and learn. And so he starts observing his father every morning from the small little balcony that they have. The daddy brought the scooter out into the compound and then put it on stand. And he did a big ritual around the scooter, and then he kicked the lever and the scooter started. And so he would write down. This is happening every day. And then he noticed that the scooter wouldn't start till he kicked the lever. And so he wrote down his first theory: kick is equal to start. Now, he decided to test this theory. A couple of days where he wasn't even in the balcony, he would sit inside the house and he would hear the kicking sound, and he would tell his mother, "Now the scooter's gonna start." And guess what? The scooter started. So this theory can't be wrong. Now, he decided to test the theory differently. He decided to start the scooter one day. So there was nobody at home, he goes to the garage where the scooter is there, and he gives the lever a mighty kick. But it doesn't start.

0:21:23.3 Balaji Reddie: Now, he says, "This is crazy." So he goes and reads the notes that he made. And then he saw a lot of funny things that were happening. His father was taking a bag off his shoulder, putting it on the handlebar, and touching the scooter two, three places and then kicking the lever. So he went and brought his father's bag, put it on his shoulder, took it off, put it on the handlebar, did that whole ritual, and then kicked the lever. But the scooter didn't start. He said, "Now, what's wrong? Maybe I've not observed properly." So the next day, the whole system came under scrutiny. But he didn't observe anything special at all. But then again the next day, and then he said, "Wait, wait, wait, wait. There is something he's doing there. He takes the bag off his shoulder, but then he touches the neck of the scooter on the inside, and then he kicks the lever." So what could that be? And then when he observed the next day, he saw there was a key he was inserting and twisting it. And he said, "Oh, damn." So he wrote down his provisional theory: key plus kick is equal to start.

0:22:23.7 Balaji Reddie: And so again, he tests this when there's nobody at home. He gets the key, inserts it and turns it, then he kicks the lever and the scooter starts. So here's where his theory becomes a little more elaborate: key plus kick is start. Now, this works very well till, months down the line, he hears kicking, kicking, kicking, but the scooter's not starting. And so he comes out and looks at his father. His father's desperately kicking away. And he says, "Looks like the old man's got it wrong." So he comes down and asks his father, "Have you turned the key?" And he says, "Oh yeah. You're trying to teach your father how to start the scooter." "Then why isn't the scooter starting?" "I don't know." So they take it to an elderly gentleman staying nearby. "Look, the scooter's not starting." So that elderly gentleman is quite unperturbed. "Oh, no problem." He does something totally out of the playbook. He runs with the scooter, jerks it into motion, and the scooter starts.

0:23:20.4 Balaji Reddie: So key plus kick completely collapses, and this kid is flummoxed. He asks his father what made the scooter start, and that's where he gets the answer, "You'll learn when you grow up." Now, this kid grows up with the question in his head, "How did the scooter start that day?" And he reaches seventh grade where they're having a subject called science, general science. And the teacher that day in class is discussing Newton's laws of motion. And she starts, "Body continues to be in a state of rest..." etc., etc. "And to every action there's equal and opposite reaction," and, "rate of change of momentum is equal to force." And the moment that kid hears that sentence, "Rate of change of momentum is equal to force"...now here's the point I'm making. To every child sitting in that classroom, this was just information. But one of those things answered a question; it became knowledge. He suddenly realized when his teacher said, rate of change of momentum is equal to force, that's when he said, "When you're running with the scooter or kicking that lever, I'm generating a force which is making the scooter start."

0:24:32.2 Balaji Reddie: And soon, of course, when he grows up, he inherits the scooter, and every time he has a problem, he runs with it, jerks it into motion. But one day he's doing that and then the scooter is just not starting. So he takes it down to the motor mechanic, and the mechanic does something very funny. He goes underneath the scooter and comes out with a contraption called the spark plug and shows him how dirty it has become. Then cleans it, puts it back and then kicks the lever and the scooter starts. So now he's got a big elaborate theory. When I kick that lever or run with the scooter, I'm generating a force, the force ignites a spark, the spark ignites the fuel, and the scooter starts. Now, I know this is not how it happens, but I think I made my point.

0:25:13.9 Balaji Reddie: But if you go through this entire narration that I've just made, if you realize something, that every time this child was proven wrong, he learned something new. And he was proven wrong because he had a theory. It may not have been correct, but it was a theory. So theory is not the opposite of practice; theory is a guide to better practice. And the more your theory is proven wrong, the more you learn. And the theory is based on what you have seen, what you see before your eyes. You liken it to something, an experience, something you've seen, something you watched. And that's how theories are generated. And that's when Dr. Deming said, if you want to understand the complexities in a system, you begin with theory. "I think. I feel. Let's try this." It worked? Great, "Let's do it again." If it did not work? Great, "Let's see under what conditions it would work?" And that's why he said we need to cooperate to understand the system, because when we sit together, each one comes out with a different theory based on what our backgrounds are. I think once we had this discussion, like if I were to start describing to you the road reaching to my place, you already start constructing a mental picture based on whatever you've seen in life. And that's your theory.

0:26:50.3 Balaji Reddie: Now, when you actually land here, you say, "Oh, I thought this and I'm seeing this." So that's what happens with Plan-Do-Study-Act. We're all born with this. It's a natural way of learning. It begins with a theory: I think; I believe; Let's try. And then you actually carry out that set of steps which you think would give you the result. And then you study. "Did I get the result? Did I not get the result?" And then you act. "Maybe I need to modify my theory. Maybe I need to add to it. Maybe just abandon the theory."

0:27:23.6 Balaji Reddie: I remember once somebody asked me this question, "That if we abandon the theory, what happens?" Well, you get to know the limitations of your existing theory. And the more you know where your theory fails, the more powerful it becomes for you. If you can predict failure, you have really understood the process. So when you know that this is gonna fail, then you've really understood this. So this theory, this is a system of learning, and all of us are born with this. We all have this natural inclination of asking questions. So that system of learning which leads to theory, we're born with it. But the problem is this: there are some people who learn by watching, some people who learn by doing, some people who learn by reading, some people who learn by writing. For some people, one word is enough. For some people, you have to keep repeating the theory till the person says, "Okay. I understand it."

0:28:22.9 Balaji Reddie: Now, is this wrong? We're just different from each other. And that, is what Dr. Deming said, is the understanding of psychology. You need to understand the learning process of a person, and then you need to interact with that person. So whether it is an employee in your company, whether it's your customer, whether it's your supplier, you need to understand. And I would reduce that word to being empathetic. Understand, be empathetic, and not just understand what makes that person tick. Broadly, we say learning process. Now, a lot of corollaries that come out of this, that you cannot copy an example without understanding the underlying theory behind it. It's not how that person has been successful, but why. And for that, you need to... Because we come from so many different backgrounds, that's why Dr. Deming said, you need to have operational definitions before you start communicating to each other. So all of these are an outcome of the Theory of Knowledge. One is the concept of experimentation. That means the more you fail, actually, the more you learn. But management rewards only successes. The appraisal system works only on successes. We need to also recognize failures, because that's where you know where it failed and what you need to do next. And as they say, failures are the stepping stones to success, etc. Fine. But if you're doing it in a very structured scientific way, your rate of success would go faster.

0:30:05.1 Andrew Stotz: And I think that's an important part, is the structured way. Because one of the things... I was just teaching a management team, about 35 people, yesterday. And I was teaching them about corporate strategy, and that there's many ways to win in corporate strategy. Could be the low-cost leader, or whatever. But one of the ways I describe, is what I call, know-how. That your firm has some special knowledge, or some special skills, or expertise, that you've accumulated over time. And this brings us to the point of... Because many times, I've thought about the Theory of Knowledge, and thought, "Yeah, we do that." We casually do exactly what you said. We ask a question, we have a little theory, we test it. But the problem is, many companies think that they have know-how as a competitive advantage, until the person with the know-how leaves. And then they realize, "Oh, we just had one superstar." The question is, do we have a formal or structured way of acquiring and disseminating knowledge, till it becomes common knowledge in our company? And that's where the Theory of Knowledge, and the PDSA, I see brings a lot of value.

0:31:36.2 Balaji Reddie: Yeah. So that's why the joke going around is know-how, know-what, but more important now is know-when and know-who. Even if you know who, it leads to the when, what, and how. Sometimes, you tend to thank the person profusely because that person says, "I know who knows to solve this," and then it takes you right there.

0:32:01.7 Andrew Stotz: Here's a fun thought exercise that I like to think of, is that... You and I both read physical books. And I've got thousands of them surrounding me in my office. But we're in a point in time where the future generations are not gonna read physical books. They're gonna read books that are online and...

0:32:27.0 Balaji Reddie: Right.

0:32:29.0 Andrew Stotz: And then we look at someone's house in the future. There's not gonna be books in their house. It's gonna be on their pad, on their phone, in the cloud. Now, one thing that's kind of interesting is, think about... Imagine that there's a solar flare hits the earth and wipes out all the books. They're all gone. In fact, all of our accumulated knowledge, of research studies, and everything. For the first time in human history, there's like this moment where everything's gonna... It wouldn't happen nowadays because people still have a distributed libraries, distribution of the knowledge. And all of a sudden, you could be without knowledge. And so this is part of the reason why, in a company context, it's important to have a method for acquiring, but also a method for consolidating, and collecting, and building knowledge, and upgrading it. Anyways, that was just some fun thing that I've been thinking about in my head. So anyways, keep going.

0:33:35.7 Balaji Reddie: Yeah, no. That's what's going on right now with the HR departments in companies, knowledge management, because they say, like you said, the person leaves and everything leaves along with them. So apparently, what happens is, when they are debriefing after a successful project... And this implementation thing which I read in Dr. Juran, he used to call it the Santayana review, George Santayana, who made that famous statement, "Those who forget the past are condemned to repeat it." And so he would say at the end of the entire project, y'all sit together... And like from the defense, you have this thing called, debriefing. You narrate everything, and it's verbatim. You take down what you went through so that that remains on record. And so we used to do this in our company. At the end of the project, we used to have the last meeting, and the last document that we used to put on the file, which used to close the file, the improvement file, was "Things Gone Right, Things Gone Wrong."

0:34:37.7 Balaji Reddie: And without that, no project file was completed. No project was completed. We used to have that last meeting, and the new team coming in would ask for the recently completed projects, and begin with reading that document first, because we don't want to repeat the same mistakes. And this is the only way. So nowadays, I've seen this, that the HR person also sits around in that meeting and asks the question, "Okay. You took this decision, but what made you take that decision?" Because they want that to be replicated. Turning tacit into explicit. So that that comes from here. If you understand why Juran explained... That's why I keep saying this, that I could understand Juran because I read Deming; and I could implement Deming because I read Juran. They're not mutually exclusive. And so when people get into this stupid argument of who was better, you're losing out on their learning by getting into that silly argument. They were very compatible. Maybe, they had different ways of expressing themselves.

0:35:51.7 Balaji Reddie: And so coming back to what Deming said, he said that this is Theory of Knowledge, and so you are in a continual state of learning when you're dealing with, what you call as, random causes. But in a state of assignable causes, that's the low-hanging fruit. It gives you the instantaneous results that management wants to see. But at the same time, if you're exposed to Profound Knowledge, you know that if you take such drastic steps of elimination, etc., etc., to show those results, the low-hanging fruit, a person with Profound Knowledge would keep his eyes and ears open to note any kind of changes, anywhere, in either a related or an unrelated system. And then make changes accordingly. You can't just leave it at that.

0:36:44.4 Balaji Reddie: So my experience in my company when I started implementing this... Because we had... What? 77 different interconnected processes which were running to make the company... Well, from start to end. Which included some manufacturing, some finance, some personnel. So these are all interconnected. And we found that if you're making changes, they would affect the other processes, sometimes directly, sometimes indirectly. So you have to keep revisiting those processes again and again, and seeing how you can optimize. And my estimate, is that it takes around three, to three-and-a-half years to actually attain some kind of predictability in the entire organization, if you're using good teams and using Profound Knowledge. If you are not using Profound Knowledge, you will gain some very good... You'd have some very quick gains, no doubt about it. But then the other problems may resurface. And if you've seen the path of frustration that Dr. Deming has drawn in, 'Out of the Crisis,' there's a diagram that you reach... You expect improvement and you don't, and it stagnates. And that's exactly what happens when you don't have Profound Knowledge. You tend to stagnate, and in fact, you start going the opposite direction. If you see it as a better way of learning and understanding your processes, then definitely, things can get much, much better. That's how I look at it.

0:38:28.8 Andrew Stotz: Excellent. Right.

0:38:29.9 Balaji Reddie: So in my own company, it took three-and-a-half years, to see things. And then we saw the effect of all this when we had to grow as a company, and from having something like 30-40 people, to close to 300. The growth was crazy. But because we had been exposed to all this, things became easier, let me put it that way.

0:38:57.4 Andrew Stotz: Yeah. It's funny because what I was just thinking about... Normally, when we say, "You have to grow," we're talking about like growing revenue, growing market share. But what you're also talking about, is you have to grow in your knowledge.

0:39:11.0 Balaji Reddie: Yes. You have to.

0:39:13.7 Andrew Stotz: Otherwise you can't manage it.

0:39:17.4 Balaji Reddie: Right.

0:39:20.7 Andrew Stotz: And anything else you want to add on this topic?

0:39:24.1 Balaji Reddie: Well, this is... So this is where you have all the four sciences acting together. So if I were to, in a nutshell, put together what we have just discussed of all the four sciences, I'll just pull up a list of points, and if we can sometime do perhaps a video call... Excuse me... Then... Just give me a minute.

0:39:55.5 Andrew Stotz: Yep.

0:39:56.5 Balaji Reddie: Okay. So here we are. So let's get to Profound Knowledge. Okay. So let's begin.

0:40:07.5 Balaji Reddie: So understanding... So appreciation for a system. The points you need to look at: that cause and effect are not closely related in time and space; that outputs are the results of a myriad of inputs; there exist synergistic relationships among the inputs themselves; And we need to understand the importance of a common aim and purpose for a system to function well. We come to understanding variation. That's learning how to think statistically, that is how to distinguish between matters that require immediate attention, what we call as, assignable cause variation; versus matters that require constant attention, which is what we call as, random cause or common cause variation., And understand that taking cognizance of and managing this variation, is synonymous to better quality. About Theory of Knowledge: the importance of theory; using theory to interpret observations; and experience is not doing the same thing again and again, but doing different things and learning from your failures. So you keep doing... Even if a person says, "I've got 30 years of experience," it could be... I don't say it's always... It could be the same thing being done for 30 years. But doing different things in 5 years, you could gain a lot more experience than doing the same thing for 30 years. And then you understand how to learn faster. The day you discover your learning process, is the greatest day of your life. And the funny thing is you can't discover it yourself. You need outside help. And that could be a mentor, maybe a teacher, maybe a friend, I don't know, it could be anybody. And understanding of psychology: okay, that people are inherently good; they want to do a good job; they learn differently, therefore they think differently. Working on people's learning systems and processes, rather than trying to exhort them, that would be better, learning their processes... And ranking... You cannot compare one person's learning system with another. Each one has their own learning system. You have to learn how to appreciate that and hone it, and make a person better at what they do.

0:42:40.2 Balaji Reddie: So these are the four sciences acting together. And that gives you Profound Knowledge. And we said here when we started, that when you have Profound Knowledge, you ask different questions. So when you start looking at things happening around you, and you start asking these questions... Because Dr. Deming said that people are the only living parts of any organization, and so you need to understand them. So I keep joking about this sometimes, that how do we learn this theory and psychology? The best thing is to... If you have a pet at home, if you can predict the behavior of your pet, then you really have Profound Knowledge. Because here is a living creature who can't communicate to you what they want, and if you can understand that, that's real empathy. When you understand your pet, or whatever.

0:43:43.5 Andrew Stotz: That's competitive advantage.

0:43:45.6 Balaji Reddie: Yes.

0:43:49.2 Andrew Stotz: Fantastic.

0:43:50.4 Balaji Reddie: Also, I keep saying this, when the womenfolk, they take a break when they are expecting. And then they come back to work after they've had their children, they had a child or something, people say that they've come back to work. I said, "Oh, they have not been away from work." They've done work which is so different right now. They've learned so much. So it's unfair to say that you've taken a break. I think women are never on a break. Whether they're in the family way, whatever, they are working. It's just that we define work as something that you do at a place of work, that is an office where they're doing work. Even when they're with a child trying to understand what that damn child is trying to say. I mean, just imagine, they learn how to... What that kid is going through, even though that kid can't communicate. And somehow, they have that instinct. So they have it more than us. I mean, of course, when you have parenting, which is done by both men and women now... During our time, of course, it was more women-oriented. We came from a different generation. But I see that change now. And so I keep saying this, that if you spend time trying to understand babies, or trying to understand your pets, I think you become more empathetic. And automatically, your Theory of Knowledge bit, and your psychology, starts getting stronger.

0:45:21.7 Andrew Stotz: Yes. I'm gonna test the theory. If I give my child this, they're gonna be quiet. Yeah. There you go, Theory of knowledge.

0:45:33.5 Balaji Reddie: There you go.

0:45:34.4 Andrew Stotz: Fantastic. Well Balaji, let's end it there. And on behalf of everyone listening, I want to thank you again for this discussion. And for listeners, remember to go to deming.org and jump into DemingNEXT to continue your journey. There's so much there now, it just keeps growing. So, this is your host, Andrew Stotz. And I want to leave you with one of my favorite quotes from Dr. Deming, I just can't stop saying it: "People are entitled to joy in work."