Thinking about Systems

?

I spy “systems” which I can analyse

and engineerThe Deming View

lends itself to analysis and tends to be data driven

I spy complexity and confusion which I can diagnose as a learning

process The Systems Thinking View

predicated on appropriate starting point and level of engagement

The observers perceived real worldBounded , mechanistic and trabsactional

The observers perceive real worldUnbounded and messy

Open and Closed Systems: Systems and Processes

Central to the school of Lean Thinking and Six Sigma is the implicit assumption of a closed system. Deming was clear to distinguish between a system and the processes contained within it, to quote:-

"If the aim, size, or boundary of the organization changes, then the functions of the sub-components will change for optimization of the new system. Management of a system, therefore, requires knowledge of the interrelationship between all the sub processes within the system and of everybody that works in it.”

And then as the basis of systematic study and the domain for statistical analysis the process: “When the process is stable or in control, all the data points will fall within the two limits. Those points are considered to come from a process that has only common causes of variation.”

“However, if one or more of the data points fall outside the control limits (or show certain patterns), those data points are said to come from a special or assignable cause of variation acting on the process.”“It is the manager's job to know the difference.

Without this basic knowledge, any management action will be mere tampering”. Deming was thus very clear about when lean techniques are applicable and where intervention is mere tampering. This distinction is interpreted by Systems Thinkers as Open and Closed systems, linked and like stacked Russian dolls hierarchically arranged.

Variety and VariationIt is very easy to describe the difference between variation and variety but very difficult to diagnose this

from systems behaviours. Does the scatter of outcomes around the target suggest process errors? Or is the behaviour being observed more complex than a single end point would suggest?

Deming: VariationDisciples of Deming see variation as bad and develop a school of systematic analysis and elimination of

variation down to the limit of natural variation.

Ashby: VarietyAshby and the cyberneticists see variety as necessary for change, every system has to be responsive to

its environment and it is in sustaining variety, through resources and capability, that organisations develop and grow. How do organisations balance the Deming route of standardisation with the Ashby route of sustainability?

Analysis and SynthesisThe mechanical view of an organisation assumes the complete replacement of parts, each element can

be analysed, specified and replaced. The mechanics and processes are more significant than the people: the components and people are replaceable. The organic view of an organisation accepts the interdependency of parts, systems can only be understood as a whole, integrated and interlinked. The people are more important than the system & processes: it works despite the system. There is a gross asymmetry between the approaches. Too much emphasis on synthesis leads to an over-elaboration, too much on analysis can destroy a living system.

Effectiveness and EfficiencyFaced with the current economic crisis leaders and managers have largely focussed their efforts at reducing

costs and improving efficiencies with little emphasis placed on increasing effectiveness. This is akin to surgery and an approach on radical surgery. It is the mistaken belief that an excess of efficiency will deliver a leap in effectiveness. It is proceed without design and with a blind belief of quantity over quality.

Unfortunately most the problem gets demoted to a solution - the language of innovation gets forced into a transaction - rush to a solution. I don't have to understand, the efficiency and logic of process steps I am following will insulate me from having to understand it. Our natural, and economic world, demonstrates the importance of linking sub-systems for efficiency and effectiveness. Equally past economic catastrophes own their origins to systems operating without the moderation of balanced feedback. This dichotomy lies with the interplay between efficiency and effectiveness.

Transactions and Relationships Most of our current focus and emphasis is on lean methods and improving operational efficiency often to the

detriment of improving customer relationships. We are all too well aware of the shallow unsatisfactory nature of formulaic “have a nice day” customer relations.

Whereas efficiency can be improved utilising traditional quality tools the challenge facing public and private sector organisations is to true variety in response to build the requisite relationships. In social services a good outcome may be achieved as much through a transaction less relationship as through a relationship transaction.

Consider the choices presented to the doctor: whether to dispense hope or pills?

Effectiveness v Efficiency

Efficiency: Closed System attributes• Here and now (today, hours and minutes)• Bounded• Defined rule set• Transactional activities /processes• Agreeable to LEAN methods (efficiency)• Focus on reducing variation • Focus on solutions • Task focus and analytical tools, e.g. PDCA

Effectiveness: Open System attributes• Tomorrow – extended decision action cycle• Unbounded – boundary can be fluid• Rule set outside of systems boundaries• Focus on requisite capabilities and resources• Not agreeable to LEAN methods (efficiency)• Focus on increasing variety and effectiveness • Focus on options for change - “Trade off” of resources and capabilities• Relationship focus

Which is your dominant system: where & when?

Effectiveness v EfficiencyWhich is your dominant system: why, where & when?

Effectiveness: Open System attributes• Tomorrow – extended decision action cycle• Unbounded – boundary can be fluid• Rule set outside of systems boundaries• Focus on requisite capabilities and resources• Not agreeable to LEAN methods (efficiency)• Focus on increasing variety and effectiveness • Focus on options for change - “Trade off” of resources & capabilities• Relationship focus - People dominate the problem and its setting• People being• Divergent thinking• Diagnosis• Holism• Human activity systems and Mode 2 thinking (Knowledge)

Efficiency: Closed System attributes• Here and now (today, hours and minutes)• Bounded• Defined rule set in operation• Transactional activities /processes• Agreeable to LEAN methods (efficiency)• Focus on reducing variation • Focus on solutions • Task focus and analytical tools, e.g. PDCA• Things dominate the problem and its setting - Non Human activity systems machine paced production line• People doing• Convergent thinking• Reductionist / Cartesian• Mode 1 thinking (Knowledge)

Zachman Framework (Simplified)

1. Scope (context) 2. Business model (concept)

3. System model (logical)4. Technology model (Physical)5. Detailed representation (component)6. The Real system (as built)

DiagnosisDivergent thinking

Analysis, Design & Build

Convergent thinking

How do you move from Diagnosis to Analysis, Design & Build?

ProcessLogic – six and lean sigma operates here

Lean Systems Thinking

• What do we mean by lean thinking?

• What outcomes do we want from lean systems thinking?

• How will we know that we have succeeded?

• What are the benefits of lean thinking?

• What are the issues with lean thinking?

• What do we mean by systems thinking?

• How does it help us with the issues of lean thinking?

• What are the issues with systems thinking?

• How do we go about developing lean systems thinking

What do we mean by Lean Thinking? (1)

• It is the antidote to WASTE?

What is Waste?

• Any human activity which absorbs resources but creates no VALUE

• Lean thinking is a systematic and structured approach to precisely specifying Value in terms of specific products and services with specific capabilities at specific prices to specific customers

• Lean thinking ignores the existing investment and re-thinks where value is created

• A lean system has no resilience – it is in effect a closed couple system which is not adaptive to environmental change.

What do we mean by Lean Thinking? (2)

Service Excellence Involves:

• Delivery Performance• Relationship Performance• Trade off of service v functional attributes

Service ExcellenceDelivery Performance Relationship Performance

1. Define your corporate mission in terms of customer benefits

2. Develop organisational and service/product visions

3. Gain commitment across the organisation

4. Select the right people

5. Train, train and retrain

6. Change the measure to incorporate customer service values

7. Use technology to enhance customer satisfaction

8. Quality is about exceeding customer expectations

9. Use scenarios to scan for breakpoints in the environment

Traditional Lean Thinking (1)Traditional Lean Thinking Our View – Systems Thinking

Specify Value Service Excellence – moving beyond six and lean sigma. What is critical re different customer segments and service & functional attribute trade offs, relationship & delivery performance?

Integrate the Value Stream Yes, but which flow is critical and what is the context. More importantly Core Processes do not equal Distinctive Competences. Emergent properties need to be managed

Make the Offering Flow Yes, but needs to consider work design and the electrician and house wife problem. Additionally work design is recursive ; lean assumes a linear flow of work and activities

At the Pull of the Customer Yes, but need to understand service as well as functional attributes of the offer plus the other stakeholders

Right First Time Yes, But what is critical to quality, service or functional attributes, all attributes whether specified or not can kill the system

Service Attributes Functional Attributes

· Problem solving· Courtesy· Listening· Understanding· Responsive

· Quality· Reliability· Maintainability· Design· Functionality

Traditional Lean Thinking (2)Our View –

Systems Thinking“Lean Systems

Thinking”Viable Systems

Focus on the performance of the system

Which customers? What environments . Context is all.Systems need to be open, adaptive and resilient

Customers are taken as setting the systems boundaries. The systems is defined as a closed system of work activities defined and controlled by the workers . However, work and expertise are not synonymous

Context is allNot all customers are equalDemand is variable and not predefined as per a production line

What does the systems do – its purpose

Context is allSystems can exist for multiple purposes

Assumes perfect knowledge on the part of the worker

Context is allSystems can exist for multiple purposes

Serves to improve performance

What performance? Organisational or transactional. Improving order entry is sub optimal to improving the supply chain

Cost of poor quality (failure demand)

Focus is on the organisation as a system and the relationships /interfaces which need to be maintained. That is the viability of the organisation as a system of work

Considers long term viability Yes – the Organisations as a result transactions may change. Transactional improvement can be sub optimal and ultimately a fix to fail change

Focussing on end to end process optimisations is sub optimal

Yes, see above

Is designed in a participatory way

Work design is a strategic issue not to be confused with how transactional processes are to be executed. RAEW analysis. Work and expertise are not synonymous

Assumes work design can be undertaken at a transactional level by the participants. This assumes perfect knowledge!!

Yes, see above

Assessing Context & Selecting Approach

Issue Prognosis ApproachesPoor product/service Readily changeable TQM, 6 Sigma

Low productivity Changeable Work Study/BPR/Lean Sigma

Long cycle times Changeable JIT/Agile

People reluctant to change Moderately changeable Good leadership with a cadre of change agents

Middle management blocking Moderately changeable If due to BOHICA, combination of RACI/RAEW, resource planning and good communication

People refusing to change Moderately changeable VOE - mass resistance probably means that policy communication has been poor.

Poor morale Probably changeable VOE / Resource planning & deployment

Narrow vision Hard to change Needs enough highly visionary leaders to turn around large organisation

Short-term orientation Very hard to change To change mindset – need to change KPI’s

Narrow constituency Very hard to change Needs big kick by other stakeholders, e.g. regulator, but VOC is best bet.

Addiction to latest management fad Probably unchangeable Organisation exhausted by initiative overload because top team think that everyone else has the problem – not them

Closed culture Probably unchangeable Needs takeover by well resourced management

People unable to change Unchangeable Except by removal

Obtuse/Political/Unscrupulous Top Team Unchangeable Except by removal but only if the total culture of the organisation is changed as well

Some things about Systems - Basic Principles 1

1. Systems do not exists – they do not have a singular definition? See Boulding2. What is your concept of systems and what are we talking about? Linked processes a la Deming or Human

Activity Systems?3. Systems always have to exist for a purpose or can exist for multiple purposes4. There are always two systems in simultaneous operation

1. The problem solution system2. The problem context system3. The solution System can never map completely to the problem context

5. All Systems can be defined in terms of 1000’s of attributes – only a few mattered from a customer perspective ( re values based segmentation)

6. All Systems exhibit multiple views (so what view is correct – the answer is all views are correct – see the housewife and the electrician problem.

7. All attributes have to be fit for purpose, i.e. zero defect v customer perceptions8. Only a few attributes matter from a customer perspective9. All attributes can kill the systems whether defined or not10. All Systems are open i.e. adaptive. 11. ICT systems are always closed. I.e. non adaptive - no feedback loops12. All systems to survive must demonstrate requisite variety13. You are part of the problem and solution space, i.e. multiple perspectives always exist

Systems Hierarchy

The concept of organization goes beyond the formal hierarchy of functionally based reporting. Relationships between people matter

A closed network ofrecurrent interactions

Relations

Socialrelationships

Organizationalidentity

Stable forms ofcommunication

Organizationalstructure

Raul Espejo, “The viable system model: a briefing about organisational structure,” 2003

ExternalEnvironment

ExternalEnvironment ManagementManagement OperationsOperations

The challenge is to balance the varieties of operations & environment and management & operations via appropriate attenuators and amplifiers.

Information

Actions

Information

Actions

Variety ofEnvironment

Variety ofOperations

Variety ofManagement

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Variety needs to be managed actively along all communication channels - adapted from Rudolf Kulhavý