Furthermore, numerical measures can no longer be the sole benchmark on which to base company success or individual performance. Deming recommends the abolition of commission-based sales and substantiates that recommendation by noting that number-based systems permit the distortion of facts. In sum, Deming claims that America has fallen pray to a "goals without method" mentality.
Chapter 3 begins Deming's offer of a solution to our culture's short-sightedness: "The Introduction to a System." In addition to transforming corporate culture, a new systems theory would also help transform the educational and public service organizational cultures. Deming calls his system the system of profound knowledge. The system of profound knowledge has definable goals and definite and manageable methods to achieve those goals. Moreover, the goals must remain foremost in the mind of all managers, at the risk of losing sight of core values. Deming makes the analogy of the consumer need for mobility and not necessarily for automobiles or airplanes (p. 51). In order for the system to succeed, it must be managed by people: systems when left to themselves will fail. Managers guide systems, steering them toward their goals and navigating them through potential potholes. Interestingly, Deming includes competitors into the system, calling on managers to view systems as having discreet boundaries as well as definite goals. To support his argument, Deming notes real-world examples of successful systems and failures that help illustrate his point.
The "System of Profound Knowledge" is based on the principle of cooperation, and is outlined in Chapter 4. Again sounding New Age, Deming claims that the individual, "once transformed," will "move into the new philosophy without a feeling of guilt about the past," (p. 93). In fact, the author admits that his theory of profound knowledge stems in part from an understanding of human psychology. Deming advocates interdependence and urges self-reflection and "rational prediction," (p. 102). In keeping with his advice in Chapter 2, Deming claims that an overemphasis on quantifiable goals has profoundly hurt the American educational system. Grades in school create an apathetic, competitive educational environment. Deming's assessment of educational culture also parallels what the author claimed in Chapter 3 regarding the inefficiency of competition. Intrinsic motivation and the cultivation of deep and genuine pride in one's work are the goals of Deming's new economy.
In Chapter 5, "Leadership," Deming claims that an understanding of profound knowledge will help transform management. The leaders in the new economy transform their organizations and their culture through theory, personal pride, and systematic pursuit of goals. Leaders with ambitious goals need also to learn how to communicate their goals to others in succinct, simple ways. Deming offers real-world and personal examples of successful leaders.
Chapter 6 addresses the "Management of People," reiterating the argument against competition. The present system offers incentives for destructive habits and insidious interpersonal relationship styles. Instead of fostering competitive attitudes and selfishness, the system of profound knowledge rewards joyful work, creativity, and cooperative participation in the fulfillment of collective goals. Deming asserts that such a deep transformation is necessary in several arenas of public life in America, most notably government, industry and education. Devoting considerable space to how American educational systems can be positively transformed, Deming claims that schools should enrich curriculum with knowledge that fosters natural curiosity for learning. Abolishing grades should ideally accompany an abolition of merit systems for teachers for the same reasons: they don't work and they foster hostile and unproductive organizational cultures. In business school, students should learn the ropes of the new economics by less emphasis on short-term and quantifiable goals and also by moving away from the incentive-based and self-interest-based management styles.
Deming illustrates his theories with diagrams, charts, and equations. In Chapter 7, "Red Beads," the author also presents an illustrative experiment to demonstrate the efficacy of his key ideas. Chapter 8, "Shewhart and Control Charts" is filled with valuable examples of the system of profound knowledge and how it can be effectively implemented and Chapter 9, "The Funnel" offers an example to illustrate a major source of waste and loss. The final chapter of the New Economics, "Some Lessons in Variation," also includes theoretical explanations of Deming's core ideas. Although seemingly New Age and out of place, Deming's final three chapters address what would otherwise be dry and complex economic issues that have profound impacts on daily lives. The New Economics offers a visionary theory of…