Systems Thinking: Management by Doing the Right Thing

Featured
31536 Views
3 Comments
17 Likes

What we have witnessed in the last 25 years is a series of programmes of change failing to achieve their intended outcomes. Customer Care, ISO 9000, TQM, ABC, BPR. All the research and experience show that the latest panacea does no better than its predecessors. Over and over again improvement programmes are thwarted by commonly-known but illusive forces. The problem is labeled as ‘organization culture’, which typically leads to rationalizations like ‘change takes time’, or ‘each programme is an element in the total change programme’.

Rationalizations prevent learning. Why does behavior not change as was intended? How much time should change take and how do we know? How should each element of a change programme impact performance and why? If we don’t ask and answer these questions we are unlikely to learn. If we do not learn we are more likely to continue to waste resources on ineffective programmes of change. The cost of failure goes far beyond the price-tag of the programme. Demoralization of staff is a frequent and costly consequence of failure.

Organization as a SystemTo understand change in organizations we must understand what influences people’s behavior within an organization and how it does so. Behavior is conditioned by the information people have, their knowledge of what it is they are to do and the means provided to them to do it. It is also conditioned by the prevailing norms - people know what is expected of them, what is acceptable and what is not acceptable. Experience shows that there is a myriad of influences on people’s behavior, but it also shows that some factors have far more influence than others.

To improve our methods of change, therefore, we need to understand more about what actually governs people’s behavior. When no change occurs, it is the pattern of behavior that remains unchanged. Deming and Juran demonstrated that people’s behavior is governed by the system they work in. It was a finding which went against the accepted wisdom of their time and remains outside prevailing management thinking. Yet this is the single, common cause of the failure of programmes of change. When programmes fail it is generally because the attempt was non-systemic. Change in performance requires a change to the system.

There is a critical difference between doing things right and doing the right thing. Much of the effort in programmes of change is given to doing things right: there is not much questioning whether these are the right things to do.

The organization as a system?

Doing the right thing means we have to learn how to view an organization as a system and understand the implications of that view for what it means to manage. It is what Deming taught the Japanese in 1950.

A system is a whole made up of parts. Each part can affect the way other parts work and the way all parts work together will determine how well the system works. This is a fundamental challenge to traditional management thinking. Traditionally we have learned to manage an organization by managing its separate pieces (sales, marketing, production, logistics, service etc.). Managing in this way always causes sub-optimization: parts achieve their goals at the expense of the whole.

The ‘compartmentalization’ logic of traditional thinking is not limited to the design of organization structures. A systems view of organizations shows the fallacy of conceptualizing performance problems as people problems (‘if only they would do it’). They should not be considered separately from other ‘task’ features. Failures in co-operation, poor morale and conflicts in our organizations are symptoms, their causes lie in the system. Training in teamwork or co-operation will only treat the symptoms. The causes usually remain. Managers have been encouraged to think of the ‘human’ (or ‘soft’) issues as distinct from hard or ‘task’ issues when they might be better understood if they were seen as interdependent.

Managers of ‘traditional systems’ impose conditions which limit, constrain or in other ways control people’s behavior in ways which result in sub-optimization. Being prevented from doing their work as they could, people become demoralized. Managers then treat people as though they are the problem. Lack of empowerment, for example, is a pre-occupation of ‘traditional’ management. Unwittingly, they have created systems which dis-empower people. Sending people on empowerment training does not solve the problem. It frequently produces greater cynicism. Only changing the system solves the problem.

A systems view of organizations leads to a different collection of problems to address. Traditionally, managers manage with output or financial data. Their view of the organization is thus conditioned by the data they use. Problems are thought of as variations from budget and such variations attract management attention. While such a view will show up problems of cost, the causes of costs is a different question and can only be addressed from a different perspective. Only a systems view will illuminate the opportunities and scope for improvement.

For example a tele-marketing team was measured on number of calls, contacts, and ‘sends’ (a sale subject to trial). Daily and weekly targets were set. Making target resulted in a bonus. The people were demoralized. They had to experience going home having failed to meet their target. They knew in their hearts they had done their best but their performance had been governed by their system. Success depended on the quality of the lists. Lists had duplications: unused parts were batched and stored for re-use. As all lists came from the same source this resulted in much wasted time and customers being re-called frequently (and not being happy). Product knowledge varied between operators, the time taken to process orders depended on other departments and the type of product, and there were frequent ‘fire-fighting’ interruptions to the working day.

People learned to do whatever they had to do to make their target. They hid good quality lists, falsified activity records, ‘bounced’ incoming customer calls to others so as not to get tied up with a customer problem, and so on. Not because they were bad people; they were working in a bad system. Having to behave this way causes further demoralization.

Management of the tele-marketing team was focused on activity, not purpose. The measures they used encouraged them to explain differences in performance as people differences and the management job was thought of as ‘motivating’ people. Yet they had designed a system which robbed people of pride, the most important source of motivation. The managers assumed people would be motivated by targets and bonuses. People will do, in these conditions, whatever it takes to get the bonus, but the consequences are that the wider system is put at risk and the task loses its intrinsic value. Pride is lost.

‘Traditionally’ minded managers see the organizational world in parts. They put in place reporting and accounting procedures which account for, or report on, parts of the organization separately. The prevailing thinking would have it that if each part of a system performs as specified (to budget), then overall the system will perform as expected. It is assumed that looking at the parts gives us the means to manage the whole. Nothing could be further from the truth. It may be true in many cases that the numbers add up to the intended budget, but managing in this way guarantees sub-optimization. This is the first step in changing a manager’s thinking. It is not a step to ignore. If a manager does not know what was sub-optimal about the old system and why, he or she is likely to repeat the mistakes of the past (management attitudes are as strongly held as any others). Change in organizations begins with a change in thinking.

Change means changing the system

Change for improved performance means changing the system. When features of a traditional management system are left in place, they undermine (or, minimally, compete with) quality principles and practices. If change doesn’t change the system, the system doesn’t change.

Any intervention in a system which does not change the thinking will produce no change. This is why training in quality techniques fails to improve performance over the medium term (and sometimes even in the short term). The principles and practices of traditional, hierarchical, functional management, which today constitute the accepted norm, are antithetical to quality principles and practices. This is not just a matter of attitude and belief. The everyday practical matters which managers work with are different in a quality organization in very real ways. A systems view of the organization leads to different measures used in a different way. It means designing work according to different principles.

A systems view of an organization starts from the outside-in. How does this organization look to its customers? How easy are we to do business with? (One company used this as its slogan but was very difficult to do business with,. It was the customers who had to manage them to get anything done). The starting place for understanding the organization as a system, is to be able to predict what will happen next week if nothing changes.

Implications for management

It is only when people’s view of how to do work changes that their behavior changes. Changing the system means taking out things which have been limiting or damaging current performance. For example, removing activity measures, arbitrary targets and ceasing to manage performance through budgets; changing structure and processes to enable them to better achieve their purpose. Managers will only take such radical action if and when they appreciate that their traditional means of control in fact give them less control: managing costs causes costs.

When the organization is understood as a system, the inappropriateness of such practices becomes stark. It is a major source of motivation for action. Action means ‘doing the right thing’, putting in place the right ‘system conditions’ to ensure that performance is managed from a strong base of understanding.

Deming taught the Japanese to manage their organizations as systems. In four years they out-achieved his expectations. When people work from theory they learn. What Deming gave them was a theory of management which started from the premise that the organization is a system. Organizations of the future will be learning because their people, the people who do the work, will be learning. But that will only happen as fast as we change the way we run organizations. Without doubt it is the right thing to do.

Author: Professor John Seddon

Professor Seddon is a Conference Speaker for the Business Analysis Conference Europe 2010.

He will be presenting the Keynote: “Business Analysis and Management Thinking: it's Time for Change!” at the conference.

The Telegraph described John as a 'reluctant management guru', a description John accepts as his interest is in changing management thinking, the focus being managers rather than himself. John has pioneered the Systems approach to the design and management of service organizations. Managers who employ his ideas gain improvements that would never be conceived as achievable if proposed in a plan, just one reason why John rejects the idea that any change requires a plan. Change, he argues, is an emergent property; change should be based on knowledge, and knowledge can only be gained by looking at things in a different way. When you study service organizations as systems, he argues, you learn that much of what you believed to be good management is anything but.

John has received numerous academic awards for his innovative work.

IIBA UK Conference 2010 - Business Analysis Conference


NOTE: Top picture © Levente Janos - Fotolia.com

Like this article:
  17 members liked this article
Featured
31536 Views
3 Comments
17 Likes

COMMENTS

richord posted on Tuesday, August 10, 2010 8:39 AM
This statement is broad and misleading generalization: “What we have witnessed in the last 25 years is a series of programmes of change failing to achieve their intended outcomes”.

Some organizations did improve their performance through adoption of these programmes. But many who followed them did not and certainly the factors stated in this article are relevant but not necessarily the only reasons for failure of these progammes. These organizations tried to implement the “lean”or “agile” versions of these programmes and discovered they did not get the expected results. Perhaps this need to “dumb it down” is also as a result of culture or behavior and inability to think from a systems perspective but I think part of the reason is more basic, laziness. Organizations reach a level of entropy where activities are done by rote. Their energy level is low and inertia is high.

The Japanese industry wanted to change and Deming had the tools and techniques to help them. What happened to in the U.S. was the dumbed down version like Ford’s “Quality is job one”. And of course GM’s demise is another example of pervasive entropy. Of course look what happened to Toyota. They too reached a level of entropy.

I’m not saying change isn’t possible but most organizations wait until a crisis occurs to embark on change and many times it is too late. A systems view won’t help them. They need a kick in the pants to wake them up!
davidede posted on Tuesday, August 10, 2010 3:38 PM
Interesting to see an article by John Seddon here - articles on specific techniques and tools relating to business/requirements analysis, relating directly to IT systems development, are much more prevalent.

Seddon's school of thought comes from a broader perspective than this, and it's a very welcome addition to the site.

I wouldn't entirely associate Seddon with Systems Thinking, at least not in the sense that I understand the term - his is more a specific approach ("the Vanguard Method"), rather than the systemic/holistic methodologies proposed by Checkland, Senge and others. Vanguard do acknowledge the common roots their method has with the works of Checkland and co., but I find it much closer to Deming's work in practice. Not that this makes it invalid, just better suited to more 'transactional' systems, I feel.

Re. richord - "A systems view won’t help them. They need a kick in the pants to wake them up!". Interesting... A bold statement to say that a systems approach (for which I infer one based on systemic, rather than systematic, thinking) won't help. I disagree. A systems approach is much more likely to help than, say, Six Sigma, which is the equivalent of using a hammer to solve all your problems, whether these problems are nails or not.

As for a kick in the pants - well, yes, we all need one of those every now and then.

D.
zarfman posted on Saturday, August 14, 2010 2:17 PM
Greetings:

Seddon writes about Deming.

Zarfman writes: From what I remember about Deming is that he was big on improving quality, productivity and competitive position.

Deming said everyone doing his/her best is not the answer. It is necessary that people know what to do.

Deming also said that performance of management is no longer measured by the quarterly dividend. I suggest that Wall Street still can punish a publicly held corporation for not meeting its quarterly forecasts

Seddon wrote: Doing the right thing means we have to learn how to view an organization as a system and understand the implications of that view for what it means to manage. It is what Deming taught the Japanese in 1950.

Zarfman writes: Many years ago before I began working in the fields of Accounting and Finance. I along with others designed flight control systems. We could mathematically calculate if the system was going to be stable. Our control systems contained feedback loops that compared the actual output with the specified input. If the difference was too large the system corrected its self. For example the computer/control system flies the airplane in a precise ever expanding box pattern. No pilot intervention required.

As far a I know we have not reached that level of sophistication with respect to organizations.

Seddon wrote: This is why training in quality techniques fails to improve performance over the medium term (and sometimes even in the short term).

Deming wrote: In his book (Quality, Productivity and Competitive Position Chapter 1 page 1) why is it that productivity increases as quality improves? Deming’s answer is less rework. If I recall correctly Deming did the majority of his work in manufacturing. Manufacturing is considered a different part of the economy than the service industry. That may account for the different point of view.

Seddon wrote: It is only when peoples view of how to do work changes that their behavior changes. Changing the system means taking out things which have been limiting or damaging current performance. For example, removing activity measures, arbitrary targets and ceasing to manage performance through budgets; changing structure and processes to enable them to better achieve their purpose.

Zarfman writes: Peoples view of how to do work. Sounds like acquisition of knowledge. How is that knowledge acquired? Someone wrote that it is rather easy to write a specification for a multimillion dollar piece of equipment. But, how do you write a specification for brains/knowledge. Moreover, how do you know if you got them?

Changing structure and process, how does the inquiring mind identify which structures and processes to change and how do we know if we are doing things right?

Seddon wrote: ‘Traditionally’ minded managers see the organizational world in parts. They put in place reporting and accounting procedures which account for, or report on, parts of the organization separately. The prevailing thinking would have it that if each part of a system performs as specified (to budget), then overall the system will perform as expected.

Zarfman writes: The parts of the organization (income, costs etc.) are aggregated on the income statement, balance sheet and other reports. In fact corporations required by law to do so.

Seddon wrote: It may be true in many cases that the numbers add up to the intended budget, but managing in this way guarantees sub-optimization.

Zarfman writes: Optimization is basically a mathematical technique for working in N dimensional space. Not easy to do for an organization. More over organizations change in some manner over time. That means the constraints used in optimization may change over time. Thus, what is optimal at one point in time may be sub-optimal at another point in time. What seems to be required is an organization that is an adaptive control system which is what a flight control system is. However, we still have the problem of predicting the future, something we don't seem to be very good at.

Seddon wrote: Change in organizations begins with a change in thinking.

Zarfman writes: Zarfman agrees to a point. Our present economic problems have changed a lot of corporate thinking. This is if the corporation still exists.

If I have gone astray in my interpretation of your article please let me know. As you may have noticed I have my own set of biases. Besides it’s past my bedtime.

Regards,

Zarfman
Only registered users may post comments.




Latest Articles

Practical Approach To Elicit Requirements Successfully
Sep 16, 2018
0 Comments
Project statistics state that most project rework/failure is due to incomplete/improper/unclear requirements, hence the role the Business Analyst beco...

Featured Digital Library Resources 
Copyright 2006-2018 by Modern Analyst Media LLC