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Drawing a new map ch 11

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  • 1. 1 CHAPTER 11 Fine-tuning the Route: Systems Thinking as a discipline closely related to Strategic Learning “All models are wrong. Some models are useful.” ―George Box Senge and co-workers have developed a large body of knowledge around Organisational Learning. After writing The Fifth Discipline Senge formed the Society of Organisational Learning which is active on most of the topics discussed so far. In Organisational Learning, Systems Thinking combines the disciplines of building shared vision, mental models, team learning and personal mastery to realise the potential in Organisational Learning.  Building shared vision fosters a commitment to the long term.  Mental models focus on the openness needed to unearth shortcomings in our present ways of seeing the world.  Team learning develops the skills of groups of people to look for the larger picture beyond individual perspectives.  Personal mastery fosters the personal motivation to continually learn how our actions affect our world. An important disadvantage of Systems Thinking is that most managers find it difficult to understand. I have already referred to Ackoff’s observation that practitioners of Systems Thinking tend to write and speak to each other and not to potential users. Many of its recommendations seem counter-intuitive for organisations in the West that prize action above reflection. If Systems Thinking is closely related to Strategic Learning, then many of the solutions applicable to Systems Thinking/Organisational Learning will be applicable to the Strategic Learning process. This is illustrated on pages 43–46 where I demonstrate the similarities between Systems Thinking and Strategic Learning. This comparison also shows how many of the tools used in Organisational Learning can be used to benefit Strategic Learning. It also demonstrates the areas where other tools such as Theory of Constraints and Lean can be applied. Some research indicates that Systems Thinking does not flourish in organisations, even after being used successfully. There are many reasons for this. Strongly held mental models and assumptions are probably the most difficult obstacles to overcome. Learning also has to be experiential not only lecture-based in order to stick. Managers
  • 2. 2 should initially only be instructed in the familiar terms of Strategic Learning. Only at a later stage should Systems Thinking be used to improve aspects of this process. It is possible that only about 30% of managers will ever really become proficient in Systems Thinking (based on the proportion of Myers-Briggs intuitives in the population). We may have to reduce the extent of our ambition for Systems Thinking to the point that the rest of management does not block the use of these techniques or at least considers them non-threatening. Systems Thinking has been defined as an approach to problem solving. It views ‘problems’ as integral parts of an overall system. Away from the system these problems have no meaning. Rather than reacting to a specific part, outcome or event, the system as a whole needs to be addressed to face the problems (undesirable outcomes). Trying to fix just the problem, without taking the systems in which it exists into account, will probably contribute to the development of unintended consequences. Systems Thinking is not one thing but a set of habits or practices within a framework based on the belief that the component parts of a system can best be understood in the context of relationships with each other and with other systems, rather than in isolation. Systems Thinking focusses on cyclical (feedback loops) rather than linear cause and effect. Systems Thinking is the process of understanding how things influence one another within a whole. In nature, examples of Systems Thinking include ecosystems in which various elements such as air, water, movement, plants and animals work together to survive or perish. In organisations, systems consist of people, structures and processes that work together to make an organisation healthy or unhealthy. Systems Thinking has enjoyed well-reported successes around the world in the business environment. There is no doubt that when properly applied, it can lead to tremendous breakthroughs and step up changes in company performance. Despite the value inherent in Systems Thinking, most managers find it difficult to sustain the use of these techniques. What is also clear is that in most cases this breakthrough performance is transitory. After a few years the original proponents have moved on and most remaining systems thinkers do not openly admit that they use these techniques. As previously noted mental models and assumptions are probably the most difficult to overcome. To bypass this problem I propose that managers are initially only instructed in the familiar terms of Strategic Learning. At a later stage Senge’s ideas and the techniques developed for Strategic Thinking can be added to the Strategic Learning Process. This
  • 3. 3 will enable managers to leverage their company’s performance to an even higher level. I will now look in detail at the similarity between Systems Thinking and Strategic Learning. 11.0 Situation In Systems Thinking it is the situation we are trying to deal with. This situation is different depending on factors such as where we draw the boundaries of the system under consideration and from what perspective we are doing the analysis. It makes a difference as to whether we are looking at the system from the point of view of the employees, management or shareholders. This is the realm of wicked problems, problems that as described by Rittel cannot be written down exactly, for solution and problem are often intertwined. In a poorly performing company (from the point of view of profits) the main undesirable effects could be summarized as follows, depending on which of the stakeholders’ points of view we are considering: For employees: Career not rewarding For customers: Value proposition not good compared to competitors For shareholders: Return on investment not sufficient For the purpose of this discussion we will take the shareholders point of view as the reference. 11.1 Understanding Phase (Situational Analysis in Strategic Learning) This is the stage where we look at the critical interactions causing the situation as viewed by the chosen stakeholder group. We try to identify a few critical leverage points which are sufficient to explain the situation we are observing. This is often modelled through the use of software and then studied as a dynamic system. With Strategic Learning we are, in effect, analysing our system from the shareholders’ perspective. We do the Situational Analysis, look at the competitive environment and the firm’s internal realities. We also look at trends, root causes and eventual equilibriums. We need to challenge our assumptions and mental models. All of this is in an effort to develop superior insights which we can use for gaining a competitive edge.
  • 4. 4 Supporting techniques Apart from the Strategic Learning techniques prescribed for this stage, there are a number of other insights and techniques that will add value. To improve the odds of developing superior insights from the analysis phase, we need to create a supportive culture. A supportive culture is one that values discussion and displays a willingness to admit that we do not know everything. By creating an environment that is conducive to discussion the learning that emerges surpasses that of the cleverest individual present. Since mental models differ depending on education and seniority and on the particular functioning of a department, it is useful to put together groups which vary according to these characteristics. Groups work separately on the same problems and then bring their completed thinking together for further discussion. Various dialogue techniques such as World Café28) and Dialogue Mapping29) have been developed to reduce the effect of dominance (authority) in discussions and to allow the free flow of ideas until a new consciousness or shared meaning emerges. Senge proposes that we develop the ability to discern certain recurring archetypes such as growth and underinvestment (cause – time delay – effect) in order to make sense of the mountain of information flowing towards us. This is the first step in developing the capability of seeing the forest from the trees – of seeing information in terms of broad and detailed patterns. Many of our mental models that we use to understand cause and effect are based on assumptions. These are often so ingrained that we are not even aware that we are making them in our interpretation of events. Goldratt developed the Thinking Processes which are extremely powerful in surfacing assumptions and also in breaking the artificial conflicts these induce in systems. The Thinking Processes are also useful in determining the significant needs of various customer segments. 11.2 Strategy phase (vision and strategic choice in Strategic Learning) In the Systems Thinking environment we put together a strategy which we believe will improve the situation we are in. In Strategic Learning we have to focus on our efforts and actions since we have limited resources. It is even more important to decide where we will not focus. The intention is to provide a superior value proposition to selected sections of the market. In order to translate this intention into terms simple enough for the whole organisation to understand, we need clear vision statements. Personnel at all levels are then able to take decisions that bring the organisation in line with this vision.
  • 5. 5 As part of the strategy we have to be clear on what our value proposition will be for the clients we focus on. The strategic priorities are translated into operational goals. We also identify the gaps between our current capabilities and what we require. Supporting techniques In focussing on the significant needs of customers, the Thinking Processes from TOC can once again provide insights into the few critical needs of these customers. There are various industry-specific custom solutions available in TOC which provide superior value propositions. Of great help here is ‘Unrefusable Offers’ as set out by Dr Lisa Lang. 30) External standards for cost, lead time and quality should be established based on what producers locally and around the world are able to offer. As long as these sectors are part of the strategic plan, these standards should be kept current and not relaxed. This means that investment in technology and production capacity needs to take place in advance. Given the complex environment and time scarcity that managers operate under, these standards are often sacrificed. This is a major mistake and often leads to reduced profitability. Elliot Jacques in Requisite Organization emphasizes the ability of managers to understand what could be coming down the road and to respond proactively.31) He maintains that the further a job description requires the incumbent to look into the future, the better it should be remunerated. Techniques such as Lean, Six Sigma and TOC can be combined to ensure costs stay competitive, lead times improve and quality is acceptable. 11.3 Align in Strategic Learning This part is not explicitly dealt with in Systems Thinking. It is possibly the most difficult aspect of Strategic Learning. The structures and processes, culture and measurements and people skills in place are there to deal with problems and strategies of the past. These have all to be realigned towards the new strategy. Effective project management is required. Disciplines, measurements and accountabilities must be applied to close the gaps. Continuous follow through is required. Supporting techniques Dialogue is once again helpful in identifying the critical measurements that need to change and what structures and processes should look like. It can also help to identify the type of culture required for supporting the new alignment.
  • 6. 6 Holistic thinking is vital since none of the requirements such as structures and processes, culture and measurements and people skills can be implemented in isolation. This is a typical wicked problem that calls for a holistic solution. The company’s values and behaviours, that is, its culture, must directly support its strategy. Culture can be thought of as a set of behaviours and beliefs that persist because they help to solve the group’s problems. To repeat, all societies have systems of reward and punishment that ensure that supportive behaviour continues and obstructive behaviour is stopped. Johnson argues that higher level objectives can only be achieved by focussing on the processes operating at a lower level. For example, if quality rejects are too high they may be caused by employees who do not understand the importance of creating and maintaining proper process specifications. Measuring the availability of and conformity to these specifications should result in improved quality. The danger in measuring only quality rejects is that employees may take unwanted actions to perform according to this specification, and not deal with the root cause. It is important to involve the lower levels of employees in deciding what the processes and specifications should look in order to achieve the higher level objectives. Managers’ jobs are to enable the lower levels, not to micromanage. After carefully considering (through dialogue involving lower level and younger employees) the new set of measures, processes, culture and skills required, correct Change Management needs to be practised. This requires conscious communication from top to bottom. Peter Drucker32) states that it is almost impossible to clearly convey messages downwards so communication must be followed by questions as to what was understood. The Current Reality and Future Reality trees used in Theory of Constraints can help with communication. Change Management is required to get people on board with the necessary changes that must follow. 11.4 Strategy Implementation (implement and experiment in Strategic Learning) When the strategy is implemented we cannot know for sure that we will have only positive effects. Sometimes the cure can be worse than the disease. The changes introduced may make the current situation worse or lead to new problems. These need to feed back into the whole cycle and have to be dealt with anew in the strategy phase. Usually the changes lead to an improved situation in the next part of the cycle. The strategy is executed in the implementation and experimental stage. We can never be perfectly sure of what will work, what will not work; nor be sure of the negative
  • 7. 7 effects of what otherwise is a good strategy. This is why we should allow room for experimentation and actively learn from the results obtained in practice. (Many successful strategies have been discovered by accident.) This information is later fed back into the analysis stage. Supporting techniques As explained, we often have unintended consequences from even the best thought-out strategy. The TOC Thinking Processes can deal with negative outcomes of proposed solutions through a process called Trimming Negative Branches. Since emergent behaviour in systems cannot always be predicted, it is important to make sense of the effects of the new implementation as quickly as possible. Proper dialogue techniques and creating specific opportunities for these discussions are helpful at this stage. To repeat, long held assumptions and mental models can be particularly obstructive in interpreting events. Systems Thinking and Strategic Learning complement each other. Strategic Learning is simpler and relates to familiar management terms. Systems Thinking is more advanced and difficult to use but offers more context for improving strategy. Disciplines proposed by Peter Senge in The Fifth Discipline and developed further by the Society of Organisational Learning and others can be applied to parts of the Strategic Learning Process. The five disciplines of the learning organisation discussed in The Fifth Discipline are:  Personal mastery is a discipline of continually clarifying and deepening our personal vision, of focussing our energies, of developing patience, and of seeing reality objectively.  Mental models are deeply ingrained assumptions, generalizations, or even pictures of images that influence how we understand the world and how we take action.  Building shared vision is a practice of unearthing shared pictures of the future that foster genuine commitment and enrolment rather than compliance.  Team learning starts with dialogue, the capacity of members of a team to suspend assumptions and enter into genuine thinking together.  Systems Thinking – the fifth discipline that integrates the other four.