All entries for Wednesday 12 October 2005

October 12, 2005

Measurements or why we need to study physics.

Deming’s system of profound knowledge is a really powerful theory, once again it was proved during today’s seminars. Deming’s ideas seem to be very holistic and the more I know about it, the more connections I see with another fields of knowledge.

Today’s observation is devoted to measurements. Since quite recently (I think the end of 80’s of the last century) measurements of business results were obviously too shallow due to the fact that Deming’s ‘Appreciation for a system, Knowledge about variation, Theory of knowledge’ were totally ignored while performing business measurements. ‘Be guided by theory, not numbers’ – looks quite simple at the first glance, but appeared to be quite hard to understand and realize. Only in 1992 Kaplan & Norton published the article about the principles of the Balanced Scorecard, which presents a balanced approach to business measurements. However, even nowadays lots of companies widely use paired comparisons measurements and measurements against targets, not realizing how limited this approach is and how many difficulties it produces.

As I have already mentioned below, I am a physicist (at least I have a graduate diploma in solid state physics). When a scientist performs some experiments (read making measurements) with an object, a Black Box, if he/she does not have a theory or some models about this Black Box constitution, the experiments are useless. Because the data he/she receives can not add anything to the understanding of the Black Box. This data is rubbish. I feel this fact is clear for any second-year postgraduate students of Physic Department. Nevertheless, business community probably haven’t learnt physics very hardly.

The most important thing is to be conscious about why you need to measure something. To my mind, the measurements must be justified by one of the following criteria:

  • Do the measurements we perform help us to understand the system/business processes we deal with?

  • Do the measurements we perform help us to understand what particular part of the system/ business process can be improved?

  • Do the measurements we perform help us to understand are our improvements successful?

In the logical consequences it can be presented as follows:


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