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Setting the sceneThe problemThe direction for solutionAlready doing it...Why doesn’t everyone do this?Getting started

2Black Belt in Thinking Boot Camp | Copyright (C) 2012 ViAGO Limited

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Most managers live a life of interruptions and fire fighting

An endless stream of issues demand management attention

Is this because the situations we manage are complex?

What if our realities are actually simpler than they appear?

Black Belt in Thinking Boot Camp | Copyright (C) 2012 ViAGO Limited 3

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For the next 15 minutes we will journey into the fundamental nature of complex situations and the simple truths they hide...

And how to get to those simple truths in a fast and effective manner...

... to release management creativity

Ready?Black Belt in Thinking Boot Camp | Copyright (C) 2012 ViAGO Limited 4

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It is tempting to assume that this deluge is because the system is complex

After all, managers got to be managers because they are good at handling complexity...

If we can blow away the fog of complexity to see the underlying simplicity in complex systems, we will: Make faster, more accurate decisions Do more, with less (increase leverage) Produce more creative solutions Solve apparently unsolvable dilemmas


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We don’t have enough time today to “prove” that all complex systems have simple solutions We can prove it... But not in 15 minutes

We do have enough time to show why it could be true

And draw some commercially useful conclusions based on that


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The underlying problem that managers face when examining complex systems, is this:

Managers assume that if the relationships are complex, then

there are many issues that must be dealt with right now

This leads to prioritising... ... based on urgency (fire fighting)


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This view is false (sorry)

In fact, complex systems are held in place by two powerful forces: A core conflict Feedback loops

Let’s take a closer look...


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It’s true that the system is complex; but what does this mean?

Usually it means: Many undesirable effects The effects are all interacting to form a

mess of “pain chains” Changing any part of the system impacts

other parts of the system Improvements get “undone” as other parts

of the system re-assert the old causalityBlack Belt in Thinking Boot Camp | Copyright (C) 2012 ViAGO Limited 9

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Imagine we could “map” the pain chains, the UnDesirable Effects (UDEs)... something like this:

Black Belt in Thinking Boot Camp : Third Degree | Copyright (C) 2012 ViAGO Limited 10

UDE

UDE

UDEUDE

UDE

UDE

UDE

UDE

UDEUDE

UDE

UDE

UDE

UDE

UDE

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Or... something like this:


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If we did map these pain chains, we would discover that...

Complex systems are always held in place by two powerful forces: A core conflict Feedback loops

Like this...

It’s true that the system is complex; but what does this mean?

Usually it means: Many undesirable effects The effects are all interacting to form a

mess of “pain chains” Changing any part of the system impacts

other parts of the system Improvements get “undone” as other parts

of the system re-assert the old causality


UDE

UDE

UDEUDE

UDE

UDE

UDE

UDE

UDEUDE

UDE

UDE

UDE

UDE

UDE

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A: Cloud’s

objective

B C

D D’

UDE

UDEUDE

UDE

UDE

UDE

UDE

UDE

UDE

UDE

UDE

UDE

UDE

UDE

UDE

Company values and performance measures

Functional areaperformance measures

Functional area UDEs

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If we could break the feedback loops...

... and resolve the core conflict (which is usually an interaction of policies, measurements or beliefs) ...

... then reality would immediately begin to transform...

The underlying problem that managers face when examining complex systems, is this:

Managers assume that if the relationships are complex, then there are many issues

that must be dealt with right now

This leads to prioritising... ... based on urgency (fire fighting)

Complex systems are always held in place by two powerful forces: A core conflict Feedback loops


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... then reality would immediately begin to transform...

... and this transformation would be inevitable ...

... Because of the same causality that held the original system in place

That is management leverage!


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What about larger organisations where the functional areas behave almost autonomously?

Each area has its own “current reality”

And, those realities are held in place by overall system constraints...


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A

B C

D D’

UDE

UDE

UDE

UDE

UDE

A

B C

D D’

UDE

UDE

UDE

UDE

UDE

A

BC

DD’

UDE

UDE

UDE

UDE

UDE

A

BC

DD’

UDE

UDE

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But isn’t this what managers already do?

Find core problems and fix them?

We wish that were true...

But the reality is, it’s more complex than that...

Hey, wait a minute!

Undesirable effects experienced by many managers

We have many conflicting prioritiesEveryone is demanding more time, more people, more moneyProblems we thought we’d fixed keep resurfacingIt is difficult to focusWe feel we need better systemsIt is difficult to hit our targetsThere are a lot of excusesWe have inter-departmental in-fightingIt feels like we are a going in different directionsIt’s hard to find and retain good peopleCompetition is fierceWe have many constraints; people, equipment, market etc


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Yes, the current reality of a manager (or business owner) is also a complex system, and as such can be analysed using the same process

And, like all such systems, there is a core problem...


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The wording isn’t the key, it’s the sentiment under the words...

... Managers are torn between fire-fighting to retain control (or stop things getting worse), versus creating long term lasting change through increased leverage

Solution?


AEffective manager

BLeverage my time (achieve

more)

CKeep

everything under control

DFocus on core problem (don’t fight the fire)

D’Fight the fires that come at me every day

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The solution is to use the Thinking Process Tools to: Complete an analysis of the current

reality, and Discover the feedback loops Discover the core conflict Build management solutions that last


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Black Belt in Thinking Boot Camp : Second Degree | Copyright (C) 2012 ViAGO Limited 24

A: Cloud’s

objective

B C

D D’

UDE

UDEUDE

UDE

UDE

Subject definitio

n UDE List……

1. Define the subject area

2. Generic cloud process

(3 UDE clouds)

A: Cloud’s

objective

B

C

D

D’

Generic Cloud Core

Problem

3. Evaporating cloud:What is the core conflict, thatis responsible for the UDEs?

4. Current Reality Tree: Is the core conflict

responsible for all of the UDEs?

A: Cloud’s

objective

B C

D

Inj.

Inj.

DE

DE

Inj.

DE

DE

DE

Cloud’s objectiv

e

Assumption -> Injection

5. Evaporating Cloud: What

assumptions are we going to challenge?

6. Future Reality Tree: Will the

injection lead to all the desired effects?

7. Negative Branch

Reservations: Without creating any new UDEs?

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Black Belt in Thinking Boot Camp : Second Degree | Copyright (C) 2012 ViAGO Limited 25

10. Transition Tree: What actions have to be taken to effectively implement the intermediate objectives?

A: Cloud’s

objective

B C

D

Inj.

Inj.

DE

DE

Inj.

DE

Inj.

DE

DE

Cloud’s objectiv

e

Assumption -> Injection

5. Evaporating Cloud: What

assumptions are we going to challenge?

6. Future Reality Tree: Will the

injection lead to all the desired effects?

7. Negative Branch

Reservations: Without creating any new UDEs?

I.O. I.O. I.O.

I.O.I.O.

Inj.

I.O.

Inj.

I.O.

Obst

Obst

ObstObst

Obst

Obst

9. Prerequisite Tree: What major obstacles currently

prevent the implementation of the injections?

Inj.

I.O.

I.O.

Inj.

I.O.

Inj.

8. Necessary Condition Network:

Implementation plan(s) to deliver

each of the intermediate

objectives, and injections

Obst

Action

I.O.Obst

Action

I.O.

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So if it’s that easy, why doesn't every manager do this?

There are negative side effects, and obstacles, to taking this approach...


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NEGATIVE SIDE EFFECTS

Increased management (or customer) heat on avoidable day-to-day incidents

Pressure from subordinate managers (“you are being unreasonable” or “you don’t care about me”)

Accusations of over-simplicity

Scrutiny; cannot hide the logic anymore

Feeling overwhelmed by the big picture

OBSTACLES

Lack of authority to make changes, especially to policies

Resistance from others, from whom collaboration is required

Unclear thinking Unclear communication Fire-fighting is rewarding

and reinforcing

Unwilling to accept; “it’s all my fault!”


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To train all managers to use these tools effectively, there is a need to overcome these negative side-effects, and obstacles

And while most people are more logical than we realise (inside their own heads)...

... what comes out of their heads (written and spoken) often does not seem so logical to us

So we know training is required to increase clarity, simplicity and logical communication


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Which leads us to a new conflict...

... Managers are torn between paying for training (which is very time-consuming and expensive) versus paying only for education (which ticks the box but might not change anything)


AEffectively deploy new concepts

BUse new

techniques every day

CKeep training costs under

control

DTrain

(transfer skill and fluency)

D’Educate(transfer

knowledge)

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Time’s up!

I’ll let you figure out that last one yourself...

... or if we have time for questions, we can discuss it now...


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Research “TOC Thinking Processes” Read Thinking for a Change by Lisa Scheinkopf Behind the cloud: Enhancing logical

thinking by Jelena Fedurko The Choice by Eliyahu Goldratt Thinking Smart: You are how you think by

Khaw Choon Ean It’s Not Luck by Eliyahu Goldratt

Visit www.the-competitive-advantage.com Visit www.blackbeltinthinking.com


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Nice to meet you today

Please pass forward your business card if you’d like to connect with me via LinkedIn, or receive our monthly newsletter

The following slides are appendices: Some common current realities The Boot Camp


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There are sets of UDEs which a Third Dan Graduate should recognise

When you see these pain chains, you can turn to the pre-prepared analyses of these common CRTs, and use those as a starting point for solution design These are called “Applications”


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UDES PROPOSED BY OPERATIONS Raw materials/parts are not always

available when needed Priorities constantly shift Often needed equipment is not available Often resources are not available when

needed Often there is a need to reduce/increase

quantities and/or change the mix of an order already in process

There is too much expediting There is too much over time There is too much rework There is too much scrap

UDES PROPOSED BY OTHER FUNCTIONS Lost sales Too many customer complaints Too often we pay premiums for urgent

deliveries of raw materials and/or parts Often we need to pay our customers

penalties A high portion of the sales people time is

spent on customer service Our reputation is damaged We are unable to sell to some markets There is high staff turnover We have high working capital needs Profitability is not as high as it can be Too high levels of finished goods

inventories


Typical measures in operationsDue Date Performance Operating CostLead Time Work In ProcessQuality Throughput (rate of output)

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UDES PROPOSED BY DISTRIBUTION Too often there is a need for an

urgent delivery Priorities constantly shift Too many shortages Too many inventory items have too

high inventory levels Too many inventory items are

obsolete Dead inventories level is too high There are too many cross-shipments There are too many customer returns Delivery costs are too high

UDES PROPOSED BY OTHER FUNCTIONS Lost sales Introduction of new products is often

delayed Reduced profit Too low ROI Lost customers There is constant shift in priorities

(Ops)


Typical measures in distributionDue Date Performance Inventory turnsAvailability Operating CostLead Time Quality

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UDES PROPOSED BY FINANCE Too many decisions do not result with

the anticipated impact on bottom line Too often investments do not result

with the anticipated impact on bottom line

The priorities on investment requests constantly shift

Too often savings from outsourcing are not translated to more profits

Some of our products are not contributing to profit as expected

UDES PROPOSED BY OTHER FUNCTIONS Profit is not as high as it could be ROI is too low Cash flow is too low

In addition to the above 3, the current level of performance has contributing influence on many of the other functions UDE’s, so these are also acceptable here.


Typical measures in financeProvide decision makers with the relevant information needed for

their decisionsProvide decision makers with feedback on their decisions

effectiveness

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UDES PROPOSED BY PROJECTS Too often promised due dates are not

met Too often tasks take longer then

planned There are too many changes Too often resources are not available

when needed (even when promised) Necessary things are not available on

time (information, spec., designs, etc.) There are fights about priorities

between projects There are budget over-runs There is too much re-work

UDES PROPOSED BY OTHER FUNCTIONS Lost sales We pay too many penalties We are not competitive in some markets Our ROI is too low Too high costs of urgent procurements Too high staff turnover Poor due date performance (Ops) Too long lead-time (Ops) Too much rework (Ops) There are too many customer complaints Too often there is a need for field

upgrades/maintenance


Typical measures in projectsDue Date Performance Throughput Operating ExpensesLead Time Quality

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UDES PROPOSED BY MARKETING Our products are not differentiated enough Too many of our offers to the market are

not in line with the actual market needs Too many new product introduction

failures Our product’s effective market life is too

short There is a constant pressure to reduce

prices Too many marketing initiatives do not

result with the desired market impact Too often introduction of new products to

the market is late reaction We have conflicting priorities

UDES PROPOSED BY OTHER FUNCTIONS Lost sales Too long lead-times (NPD) Low due date performance (Ops, NPD) High over time (Ops, NPD) Too many defects (Ops) Too much re-work (NPD) Too much scrap (Ops) Reduced profit Too low ROI Lost customers Constant shift in priorities (Ops, NPD)


Typical measures in marketingMarket share New markets createdBrand awareness Potential customers seeking our products & services (demand)

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UDES PROPOSED BY SALES

Sales cycles are too long (the time it takes prospects to make a decision)

There is high pressure to reduce prices Often times our offer is rejected before it is

presented to the right decision maker Often times competition offers are

perceived to be of a higher value then ours Too often, even when we have good

reaction to our offer, the prospect rejects it (due to internal reasons)

We often promise things we know we cannot deliver

Our good past performance is often forgotten for repeated sales purposes

Often there is a need to do promotions (discounts)

UDES PROPOSED BY OTHER FUNCTIONS Constant shift in priorities (Ops) High pressure to reduce cost (UDE’s

that result from this) Very large number of initiatives for

new products/ services (leads to….UDE’s)

Poor due date performance (Ops) Low profitability High levels of redundant inventories Introduction of new products/services

prematurely (with bugs) New products jeopardize the sales of

existing products


Typical measures in salesSales revenues ($) Sales volume (quantity)Rate of conversion of leads to customers

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The Boot Camp is a “referral only” live-in workshop lasting for 8 intensive days If you do not know a Graduate,

you’ll need to meet one to obtain a referral before you can register: contact us for assistance with this▪ If you have completed a consulting

project with a ViAGO consultant, they can refer you

Visit www.blackbeltinthinking.com for more information, to ask questions or to register


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