Transcript - SEDC Conference 2014

Applied Systems Thinking
Mark A. Wilson
Strategy Bridge International, Inc.
[email protected]
©2014 Strategy Bridge International Inc.
Applied Systems Thinking:
The Organization as a System
©2014 Strategy Bridge International Inc.
Fig. 2
What is a system?
a combination of interacting elements organized to
achieve one or more stated purposes
“an integrated set of elements, subsystems, or assemblies that
accomplish a defined objective. These elements include
products (hardware, software, firmware), processes, people,
information, techniques, facilities, services, and other support
elements.”
SE Handbook v.3.2.2, Copyright © 2011 International Council on Systems Engineering
A system is a set of things, connected in such a way that
they produce their own pattern of behavior over time.
Donella Meadows
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Fig. 3
What is systems engineering?
Systems Engineering (SE) is an interdisciplinary approach and
means to enable the realization of successful systems. It focuses
on defining customer needs and required functionality early in
the development cycle, documenting requirements, and then
proceeding with design synthesis and system validation while
considering the complete problem: operations, cost and
schedule, performance, training and support, test,
manufacturing, and disposal. SE considers both the business
and the technical needs of all customers with the goal of
providing a quality product that meets the user needs.
SE Handbook v.3.2.2, Copyright © 2011 International Council on Systems Engineering
Is our definition broad enough to include
the “engineering” of organizations?
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Systems Thinking (INCOSE)
Systems thinking is a unique perspective on reality—a perspective that
sharpens our awareness of wholes and how the parts within those
wholes interrelate. A systems thinker knows how systems fit into the
larger context of day‐to‐day life, how they behave, and how to manage
them.
Systems thinking recognizes circular causation, where a variable is both
the cause and the effect of another and recognizes the primacy of
interrelationships and non‐linear and organic thinking—a way of thinking
where the primacy of the whole is acknowledged.
SE Handbook v.3.2.2, Copyright © 2011 International Council on Systems Engineering
©2014 Strategy Bridge International Inc.
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Systems Thinking
Systems thinking is a discipline for seeing
wholes. It is a framework for seeing
interrelationships rather than things, for
seeing patterns of change rather than static
“snapshots.” … And systems thinking is a
sensibility — for the subtle
interconnectedness that gives living
systems their unique character.
Peter Senge
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Contrast with Analytic Thinking
 Separate the “whole”
into its component
elements
 Address the components
separately
 Integrate your
understanding of the
components back into
the “whole”
Whirlpool Galaxy by Hubble
http://photojournal.jpl.nasa.gov/catalog/PIA04230
How often do we practice “analytic” thinking?
How much “systems” thinking are we practicing?
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Problem-Solving Approaches
 Systems Engineering
 I understand the problem and I know a solution that will address it.
My goal is to engineer that solution and control how we go about
doing so (focus is on “how”).
 Systems Engineering is systematic: relating to or consisting of a
system; presented or formulated as a coherent body of ideas or
principles; methodical in procedure or plan; marked by
thoroughness and regularity (Reference: Merriam-Webster On Line, m-w.com)
 Systems Thinking
 I can’t yet define what the problem is. I want to explore the
possibilities. I’m willing to be open and adapt my approaches.
 Systems Thinking is systemic: of, relating to, or common to a
system (Reference: Merriam-Webster On Line, m-w.com)
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When Systems Thinking Is Absent
Law of Unintended Consequences:
Actions always have effects that are unanticipated or unintended.
Examples:
• Credit Card Accountability Responsibility and Disclosure Act of 2009
made it harder for many people to obtain a credit card
• Patient Protection and Affordable Care Act of 2010 limited many part
time employees to working < 30 hours/week
• U.S. government quotas on imported steel protected U.S. steel
companies and steelworkers, but caused U.S. automakers to pay more
for steel than their foreign competitors.
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Fig. 9
Thinking about System-Level Behavior:
Emergence
 Macro-level behaviors (patterns) that cannot
be predicted from studying the micro level
behaviors in isolation.
 Systemic behavior that is only observable as a
consequence of system element interactions.
 All systems display emergent characteristics.
 Emergent behavior is often non-linear.
 The output is not necessarily proportional to the inputs.
 Emergent properties can be anticipated by creating
patterns that have previously produced similar results.
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Characteristics of Emergence
 System-level properties exist only at the system level
as the system functions.
 Properties are not observable at the constituent element or
subsystem levels.
 They cannot be understood, explained, or inferred from the
structure or behavior of constituent elements or their local
properties.
 Cause and effect relationships can only be established
through retrospection.
 Reductionist analytic techniques are incapable of useful predictions
of emergent, system-level behavior.
 Implication: traditional systems engineering may not be sufficient
for addressing SoS challenges.
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Fig. 11
Examples of Emergence
 Biological Systems Examples
 Consciousness is an emergent property of the human brain.
 Crickets tend to synchronize their mating calls - calling all at once at
the same speed.
 Engineered System Example
 Geosynchronicity is an emergent property of a particular satellite
orbit at a precise altitude and inclination.
 Social System Example
 Our way of life in the United States of America is an emergent
property of the cultures of people who settled here, the U.S.
Constitution, and legal and political governance mechanisms
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Fig. 12
Organizational Culture is an Emergent Property
Culture
Attitudes
Behavior
How does culture affect your organization?
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The System of Systems (SoS)
“A set or arrangement of systems that results when independent and useful
systems are integrated into a larger systems that delivers unique capabilities.”
U.S. DoD Systems Engineering Guide for Systems of Systems (Version 1.0)
“…a collection of task-oriented or dedicated systems that pool their resources
and capabilities together to create a new, more complex system which offers
more functionality and performance than simply the sum of the constituent
systems.”
Wikipedia (February 2012)
“…a set of collaboratively integrated systems that possess two additional
properties: operational independence of the components and managerial
independence of the components.”
Maier (1998)
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SoS Observations
 Most systems today are part of an SoS whether
or not explicitly recognized
 Most systems are created and evolve without explicit SE at
the SoS level
 The SoS comes into existence when something
occurs to trigger recognition of the SoS
 An organization may be identified as responsible
for the SoS along with definition of the objective
of the SoS
 Does not include changes in ownership of the component
systems in the SoS
©2014 Strategy Bridge International Inc.
Fig. 15
The Extended Enterprise is
a System of Systems
 Definition
 An extended enterprise is a loosely coupled, self-organizing network of
firms that combine their economic output to provide products and
services offerings to the market.
 Firms in the extended enterprise may operate independently, for
example, through market mechanisms, or cooperatively through
agreements and contracts.
 Example: "McDonald's” includes not only McDonald's Corporation, but
also franchisees and joint venture partners of McDonald's Corporation,
the third party logistics providers that provide food and materials to
McDonald's restaurants, the advertising agencies that produce and
distribute McDonald's advertising, the suppliers of McDonald's food
ingredients, kitchen equipment, building services, utilities, and other
goods and services, the designers of Happy Meal toys, and others.
Reference: Wikipedia
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Fig. 16
The Systems Diagram:
A Tool for Understanding Enterprises
 A technique to help you understand complex
systems interactions
 Fosters systems thinking about the problem
 Helps keep you focused on original intent
 Enables you to analyze systems boundaries
 Illustrates how a change in one factor may
have an impact elsewhere
 Helps you understand the factors and relationships
that are important
 Helps you see aspects suggested by “the whole” that
might not be obvious from the parts
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Example
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Could you diagram your extended
enterprise?
Actors:
nouns or noun phrases
Interactions:
Verbs or verb phrases
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Scenario: An Extended Enterprise
 A state judged blocked New York City's planned ban on the sale of
large sugary drinks, calling them "arbitrary and capricious.”
 The law would have restricted sale of sugary drinks to 16 oz. or less.
 The law would have exempted a variety of retailers -- including 7-Eleven. "The effect would
be a person is unable to buy a drink larger than 16 ounces at one establishment but may be
able to buy it at another establishment that may be located right next door," Tingling wrote.
 The lawsuit was brought by a group of business associations -including the American Beverage Association, the National
Association of Theatre Owners of New York State and the New York
Korean-American Grocers Association.
 The mayor's office quickly vowed to appeal the decision. City officials
believe the health department has the legal authority to use the ban to
fight an "obesity epidemic," according to a tweet from Bloomberg's
office.
 Nearly 60% of New York City adults and 40% of city schoolchildren are overweight or obese,
according to the decision.
 Critics have decried the rules as a sign of the growing "nanny-state"
and an unfair intrusion on personal freedom.
Reported by CNN, 11 March 2013
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Applied Systems Thinking:
A Systems View of the Organization
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Attributes of Successful Organizations
 A future-focused strategy based on reality
 Recognition that the organization is a system
 Broad and deep understanding of the interactions within
organizational system and the larger enterprise system of which it
is a part.
 Clear, unambiguous governance
 Explicit objectives, roles and responsibilities, resources, methods
of accountability and measurement of progress
 Leaders commit adequate time and resources
 Leaders devote the necessary time to think and act strategically,
as well manage the daily in-box transactions.
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Fig. 22
A Generalized Systems View of the Organization
System Boundary
Environment, Relationships, Strategic Situation
STRATEGIC
PLANNING
WORKFORCE
FOCUS
LEADERSHIP
RESULTS
CUSTOMER &
MISSION
FOCUS
OPERATIONS
FOCUS
MEASUREMENT, ANALYSIS & KNOWLEDGE MANAGEMENT
Reference: Criteria for Performance Excellence, 2011-2012
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What is “Strategy?”
“unified, comprehensive, and integrated plan
that relates the strategic advantages of the firm
to the challenges of the environment.”
Jauch & Glueck, 1988
Etymology:
derived from the Greek strategos
– a military commander.
Good strategy is coherent action backed up by an argument.
Richard Rumelt
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Fig. 24
Levels of Strategic Thinking
Strategic
Level
Enterprise
Operational
Level
Programs
Divisions
Groups
Tactical
Level
Projects
Work Centers
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Fig. 25
Manage Systemically and Systematically
gov·ern·ance
Origin: 1325–75
…the system of management and controls
exercised in the stewardship of your
organization.
2011-2012 Criteria for Performance Excellence
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Systems Thinking is Critical
 Changes in our environment are driving us to
think differently about governance
 Can’t effectively legislate behavior with new
generation workers
 Information explosion—more accessible knowledge
 World is smaller—everything is connected
 Communication is more complex
©2014 Strategy Bridge International Inc.
Fig. 27
Thinking Systemically
about Governance
 Culture
 Reward structure must facilitate behavior change
 Roles and Responsibilities
 Aligning objectives and expectations
 Communication
 Sufficiency, context, content
 Measures
 How do you measure the value of intangibles?
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Fig. 28
Tracking Progress
 Establish a few, carefully chosen measures which
provide useful information
 Too many measures can obscure information
 Focus on trends, not snapshots
Customer
Satisfaction
 Measurements taken over a period of time
 Balanced perspective
 Product and Process Outcomes
 Customer-Focused Outcomes
 Workforce-Focused Outcomes
 Leadership and Governance Outcomes
Supplier
Performance
 Financial and Market Outcomes
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A Roadmap for Managing Strategically
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Questions?
Systems
Thinking
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