Using systems approaches to manage change in complex and turbulent environments - Patrick Hoverstadt

FRACTAL©www.fractal-consulting.com
Using Systems Approaches To Manage
Change in Complex and Turbulent
Environments
Patrick Hoverstadt - Fractal &
Cranfield

Fractal: Strategy, Organisation, Change

Today
• Why is it important?
• How did we get here?
• Conventional PM approaches
• Underlying theory
• Systems approaches
• Concepts
• Tools
• Example(s)

Is it a problem?
• Sydney Opera House:
• Went from £3.5m to £51m
• 10 years late
• Scottish Parliament:
• Went from £10m to £414m
• 3 years late
• NHS IT
• Went from £6bn to £12.7bn
• Scrapped

Underlying issues
Three Main Variables:
1. What we need: Requirement
2. How long its going to take: Time
3. How much its going to take: Cost

In the beginning…..
Sagrada Familia
1882 - ?
York
252 yrs
Cologne
634 yrs
• Built for the Glory of God
• Requirement is critical, specification flexible
• Time & Cost largely irrelevant

The Age of Heroes…
• Designer & PM
• Iterative design &
engineering
• 45 years
• Requirement is critical & fixed
• Specification flexible
• Time & Cost important, but flexible (pre-budgeting)

The Age of the Professional PM
and the iron triangle
Then along came….
Taylor
Gantt
Fayol
• Meeting Requirement, Time & Cost all critical
• Requirement fixed at start using specification
• Linear process from here to defined requirement
• Manage Progress on linear path, Time & Cost

• Gantt Charts (1896 /
1910)
• PERT (1950s)
• Critical path (1950s)
• PRINCE (1989)
• PRINCE 2 (1996)
• MSP
BUT
Failure rate is as high as
it was before
professional Project
Management
WHY??
The Age of the Professional PM
and the iron triangle

FRACTAL©www.fractal-consulting.com The underlying nature of the problem….
Complexity & Uncertainty
• 3 basic variables: Requirement, Time, Cost
• PRINCE 2 fixes R and from that fixes T & C
• This could work IF:
1. You can work out T & C accurately from R
2. R is fixed and stays fixed
3. Which requires a “Controlled Environment”
• PRINCE is not designed to deal with change, so cannot
cope with uncertainty
• PRINCE is regularly used in conditions it wasn’t designed
for and cannot be expected to work in
“If only they knew what they wanted”

Counter movements….
Skunk works - P38
• Time & Requirement
critical & fixed
• Cost & Spec flexible
• Delta model
• Delivered early & beat
requirements
Agile:
• Time is fixed
• Requirement is flexible &
iterative

The underlying nature of the problem….
Complexity & Uncertainty
• 3 basic variables: Requirement, Time, Cost
• Agile fixes T & flexes R & C
• Skunk works fixes T & R & flexes C
• PRINCE 2 fixes R and from that fixes T & C

Holding back the changes
• Freezing project
“requirements”, doesn’t
stop needs changing in
real world
• Project “delivers” but
doesn’t meet changed
expectations
• Project paradox:
• Projects are about creating
change
• Project management is
about stopping any change
to plan

3 Domains & 2 Problems
1: internal domain
complexity
• “Too many
moving parts”
• Creates incipient
instability
2: Dynamics
between domains
• Dependencies
• Drives instability
Together: instability
feeds instability
Project organisation
Project
task
Project
environment

• Systems approaches were developed specifically to
deal with Complexity & Uncertainty
• Offer different approaches to:
• Building stable systems in all 3 domains
• Understanding & managing dynamics within & between
domains
• The toolkit - all established and proven on very large
complex systems:
1. Complexity equations - domain complexity
2. Viable System Model – organisational & task complexity
3. System Dynamics – dynamic within & between domains
4. Patterns of Strategy – dynamics in & between domains
5. Soft Systems – stakeholders (in environment)
So what’s the alternative?

1. Structure and Complexity in Domains
• Systems with too
many interdependent
elements are unstable
and may NEVER
stabilise
• Getting the structure
right improves
stability through time
Complexity(Variety)
Structuration (no of subsystems)
For a system with 100 elements
Flat system 100 element system
with no internal structure
V = 9.33 x 1023
100 element system
with 10 subsystems
V = 4 x 109

2. Viable System Model – managing task &
organisational complexity
• Complex organisations & multi-
organisational systems
• Interdependencies between
project elements
• Clarifies parameters for
flexibility for each element
• Defines limits of viability for
each project element
• So, can tell if any element is
under threat and which others
it threatens
• So, early warning of potential
failures
Environment
Delivery
Intelligence
Governance
Operations
Co-ordination
Monitoring

3. System Dynamics – managing dynamics
within & between domains
• Conceptual & mathematical
models of dynamics
• Rate of change of:
• Expectations
• Requirements
• Delivery
• Interdependencies
• Scalable
• “are changes in environment destabilising the task
or organisation?”
• “are requirements changing faster than we can
deliver - is this project getting away from us?”

4. Patterns of Strategy – dynamics
between organisations / groups
• Qualitative models of
strategic relationships
• Dynamics & trajectory
• Predictive
• Scalable
• “how stable are these relationships?”
• “who is driving change in the system?”
• “where are these relationships likely to go & what
can we do about that?”

4. Soft Systems – Understanding
stakeholder “Mess”
• Qualitative models
• Multiple stakeholders
• Multiple purposes
• Multiple world views
• Conflicts between
those
• “Who is it for?”
• “What’s it for?”
• “Who says so?”
• “Why do they think that?”

21
Fundamental Shift
• From trying to freeze requirement changes
at the start
• To recognising change is inevitable and
managing it
• Building ability to flex throughout the
project structure & lifetime
• Knowing the limits and implications of
flexibility of each element
• Knowing early if the project becomes non-
viable

3 Domains & 2 Problems
1: internal domain
complexity
• Structure each domain
to reduce instability
2: Dynamics between
domains
• Measure dynamics and
adjust in real time for
all 3
Together: actively &
deliberately manage the
balance of stability
against flexibility
Project
environment
Project organisation
Project
task

Revs & bens in Salford Council
• Failing authority
• Benefits Administration assessed in 2002/3 CPA programme
as 0 = lowest possible score
• BPR project to re-engineer benefits service
• Challenge was organisational change
SO….
• Service redesign ≠ organisational change
• Don’t change the old – create a new organisation
• Innovation model
• Skunk works & VSM

Managing complexity & dynamics in
the 3 domains
1. Reduce task complexity:
• One service element at a time,
• Actively managed interdependencies
2. Reduce organisational complexity:
• Simplified and controlled management structure
• Accountability
3. Manage boundary with environment:
• Recognised, patrolled and defended boundary
• Broad, agreed mandate
• Brand/Set of Symbols
• Joining Ritual

Outcomes
• Benefits Administration assessed in 2002/3
CPA programme as 0 = lowest possible
score
• Benefits Administration assessed in 2003/4
CPA Programme as 4 = highest possible
score
• 2004 Beacon Status
• 2005 “Best of the Best” – voted by peers

Thoughts?
Comments?
Questions?

Using systems approaches to manage change in complex and turbulent environments - Patrick Hoverstadt

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