Statistical thinking

Statistical thinking is a tool for process analysis. Statistical thinking relates processes and statistics, and is based on the following principles:

• All work occurs in a system of interconnected processes.
• Variation exists in all processes
• Understanding and reducing variation are keys to success.

W. Edwards Deming promoted the concepts of statistical thinking, using two powerful experiments:

1. The Red Bead experiment,[1] in which workers are tasked with running a more or less random procedure, yet the lowest "performing" workers are fired. The experiment demonstrates how the natural variability in a process can dwarf the contribution of individual workers' talent.

2. The Funnel experiment, again demonstrating that natural variability in a process can loom larger than it ought to.

The take home message from the experiments is that before management adjusts a process—such as by firing seemingly underperforming employees, or by making physical changes to an apparatus—they should consider all sources of variation in the process that led to the performance outcome.

Statistical thinking is a recognized method used as part of Six Sigma methodologies.