How to Understand Variation and Manage Chaos in Your Business
Variation is inevitable in any process, whether it is manufacturing, service, or management. However, not all variation is bad. Some variation is natural and inherent in the system, while some variation is caused by external factors that can be controlled or eliminated. Understanding the difference between these two types of variation is the key to managing chaos in your business.
That is the main message of the book Understanding Variation: The Key to Managing Chaos by Donald J. Wheeler, a renowned expert in statistical process control and quality improvement. In this book, Wheeler explains how to use simple tools such as run charts and control charts to analyze data and identify the sources of variation in any process. He also shows how to use these tools to make better decisions, improve performance, and reduce waste.
The book is written in a clear and engaging style, with many examples and case studies from various industries and domains. It is suitable for anyone who wants to learn how to use data effectively to manage their processes and achieve their goals. The book also includes a PDF version that can be downloaded for free from the Internet Archive website.
If you want to learn how to understand variation and manage chaos in your business, you should read Understanding Variation: The Key to Managing Chaos by Donald J. Wheeler. It will help you to see your data in a new light and use it to improve your processes and outcomes.
One of the main concepts that Wheeler introduces in his book is the distinction between common causes and special causes of variation. Common causes are the normal and expected sources of variation that are inherent in the system and affect every outcome. Special causes are the unusual and unexpected sources of variation that are external to the system and affect only some outcomes. For example, in a manufacturing process, common causes of variation could be the natural variability of raw materials, machines, and operators, while special causes of variation could be broken tools, power outages, or human errors.
Wheeler argues that most managers fail to recognize this distinction and treat all variation as if it were caused by special causes. This leads to two types of mistakes: overreacting to common causes and underreacting to special causes. Overreacting to common causes means tampering with the system and making unnecessary changes that increase variation and reduce quality. Underreacting to special causes means ignoring or tolerating problems that need to be solved and corrected. Both types of mistakes result in wasted time, money, and resources.
To avoid these mistakes, Wheeler suggests using run charts and control charts to monitor data and identify the type and source of variation. A run chart is a simple plot of data over time that shows the pattern and trend of variation. A control chart is a run chart with two additional lines: the center line and the control limits. The center line represents the average or expected value of the data, while the control limits represent the range of natural variation due to common causes. If all the data points fall within the control limits, the process is said to be in statistical control and only affected by common causes. If any data point falls outside the control limits, or if there is a non-random pattern in the data, such as a run or a shift, the process is said to be out of control and affected by special causes.