What do you do when faced with uncertainty? Consider for example that you are scheduled to arrive at a meeting location where you have never been and are uncertain about the length of time it will take to get there, what do you do? If you are like most you leave a bit earlier, just in case. Or consider you are not quite sure exactly how many ceramic tiles you will need when remodeling your kitchen, what do you do? If you are like most you order a little extra, just in case. I could go on, but I think these two examples are sufficient.
What do these two very simple examples tell us about what most do when faced with uncertainty? Most very likely inventory that which is central to what they are doing. Essentially most buy insurance, just in case—which is not free!
Moreover the greater our uncertainty the larger will be our inventory and thus the greater will be our cost. In short, all things being equal, greater uncertainty leads to greater costs.
However this does not mean that you must manage costs. A cost is not a cause: it is an effect, a result! That is, you can’t manage results—that which has already happened—you can only mange the causes. So no matter how much attention and effort is placed on results, it won’t change the underlying cause system for the better. Therefore if you wish to improve performance and optimize costs , you must focus your attention on the system of causes—the source of uncertainty, and not resultant costs.
The source of uncertainty
Basically, at least in business, most people are uncertain because they lack knowledge and understanding of the system of causes (i.e. the system that produces the results they are intent on achieving). This is not to say that most people don’t know their job, it is just that they don’t understand and manage their work as a system.
Furthermore there is a general lack of understanding about systems and variation in regard to each outcome. In other words, no system outcome value will be exactly the same from one point in time to the next.
Accordingly, a system communicates its status or state, with respect to a particular result, in the language of variation. Unfortunately most managers/leaders don’t understand how to read and interpret variation. But since this understanding is not part of the usual business curriculum, how could they know?
Business schools don’t teach future managers/leaders how to think systemically, statistically and critically! All that the vast majority of business schools do is train people to be highly skilled mechanics of the profit-producing machine (a.k.a. business enterprise).
Consequently there is more tinkering (a.k.a. tampering) going on than thinking. This inevitably perpetuates a vicious cycle: greater system variation causing greater uncertainty leading to higher costs. As a result, work becomes more (detail) complex and more costly. People annex to their work, things they should not have to do—non-value-added tasks—just in case. All the their efforts to control what they don’t understand is creating more variation. No wonder there is so much chaos and complexity in business!
Chaos is disorder
When things behave predictably there is order and when unpredictably there is chaos. By predictably I don’t mean deterministically, but rather I mean in a random pattern of variation about its average. So in other words, chaos is simply a pattern of variation whose order is not yet understood. For example, jazz to those who don’t understand it hear disorder or simply noise, but to those who understand they hear order and so it is music.
To understand the system requires being fluent in the language of variation. No amount of skillful tinkering can overcome the chaos created from past tampering. As Deming often asserted “there is no substitute for knowledge!” If learning is the pathway to reducing uncertainty and unnecessary costs, why is it those in authority refuse to learn how to read and interpret the language of variation?