Tag Archives: organization as a system

A Good Management System is Robust and Continually Improving

imagine various people working within it, somehow swapping out gears and cogs without the clock stopping or slowing down even a little.

This is a fairly good quote on a good management system. Some people might not like the mechanistic model – comparing an organization to a clock, and I agree that isn’t the right model, but even so it is a good quote.

The quote, from a story about the San Antonio Spurs captures what should happen with a good management system. Things just keep running well as inevitable changes take place (and keep getting better in the case of a management system).

A good management system doesn’t rely on heroic efforts to save the day. The organization is designed to success. It is robust. It will succeed with all the variation thrown at it by the outside world. A good management system takes advantage of the contributions people offer, but it is not perform poorly when others are relied on.

A well run organization has graceful degradation (when one component fails or one person is missing the performance doesn’t suffer, bad results are avoided).

With software for example, a decently created web sites may use javascript to enhance the user experience but if javascript is unavailable the site works fine (just missing some neat features that are nice but don’t prevent users from getting what they need). Poorly designed software has critical dependencies on conditions that cannot be guaranteed to be present for end users and the software just fails to work when those conditions are not met. Ungraceful degradation is too common in software. It is also too common in our management systems.

An organization succeeds because of the efforts of many great people. But the management system has to be created for an organization to prosper as what we all know will happen, happens: people will leave and need to be replaced. And the people that stay will need to adjust to new conditions inside the organization and in response to external forces. A good management system is constantly improving performance, innovating, increasing the robustness of systems and increasing the capability of people.

Related: Bad Weather is Part of the Transportation SystemHow to Sustain Long Term Enterprise ExcellencePerformance dependent on specific individuals is not robust and not capable of continuous high quality performanceEuropean Blackout: Human Error-Not

94% Belongs to the System

I should estimate that in my experience most troubles and most possibilities for improvement add up to the proportions something like this: 94% belongs to the system (responsibility of management), 6% special.

Page 315 of Out of the Crisis by Dr. W. Edwards Deming.

the system that people work in and the interaction with people may account for 90 or 95 percent of performance.

Dr. Deming’s quote from the introduction to the Team Handbook

I think, in looking at the total of Deming’s work, that the point he is trying to make is that looking to blame people is not a good strategy for improvement. The impact due solely to a person’s direct action (not including their interaction with the system and with others) is small in comparison to that of the system within which they work. So, Deming (and I) want people to focus on improving the system; which will achieve better results than searching for what people did wrong.

What did Deming want people to take from his statements?

Did he want us just to accept bad results? No. He was not saying it is the system there is nothing we can do just accept that this is how things are. He wanted us to focus on the most effective improvement strategies. He saw huge waste directed at blaming people for bad results. He wanted to focus the improvement on the area with the greatest possibility for results.

Did he want to say people are just cogs in the machine? No. Read or listen to most anything he said at any significant length (a full chapter of this book, a full article he wrote on management, an hour from one of his videos) and it is hard to maintain such a thought.

photo of forest trail

Pinetree Trail, Frasers Hill, Malaysia by John Hunter

Did he believe that people were not important? No. He was trying to direct the focus of improvement efforts to look not at the fault with one person but to look at the system. I believe strongly he was correct. If you blame a person as the root cause of a problem, my first, second and third reactions are why? why? why? It is possible the person is to blame and there is no benefit to exploring system improvement instead of settling for blaming the person. But that is rare.

I have written about the importance of developing people to build the capability of the organization. My father wrote about it previously, “American organizations could compete much better at home and abroad if they would learn to tap the potential information inherent in all processes and the creativity inherent in all employees.”

I wrote about the importance of the ideas behind Deming’s quotes here, back in 2006 – Find the Root Cause Instead of the Person to Blame

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Building Adoption of Management Improvement Ideas in Your Organization

Continuation of How to Get a New Management Strategy, Tool or Concept Adopted

Target something that actually provides a good story. It often helps if there have been failures in attempts to solve a problem in the past. That makes the new success more impressive. Something that is relate-able to the audience you are trying to win over is also useful. Even if senior management cares about an issue, if the solution is so technical they are completely baffled, they will be happy with a solution but they won’t be as excited about expanding the strategy you are trying to encourage when they can understand the process that lead to a solution.

Favor efforts that will help you build organizational capacity to do more of what you want going forward (adopt lean thinking, use design of experiments…). Some of this is about building expertise in the organization. It is also about building your circle of influence. Growing your ability to influence how the organization grows will help you encourage the improvements you believe in.

It is very helpful to show connections between individual efforts. Often you build using various tools: in several instances using PDSA cycle to guide improvement, in others mistake-proofing to cement improvement, in another adopting one piece flow to make problems visible and encourage improvement, in another assuring the respect for people to build the right culture for improvement, and in another using an understanding of variation to make evidence based decision rather than jumping to faulty conclusions with limited information. These management tools, concepts, methods and ideas any many more, are used together for a reason. They support each other. So it is very helpful if you tie them together. As you start adding new tools, ideas and concepts to the management system show how they support each other. Individual tools can help. But the gains they offer are minor compared to the gains possible with a systemic change of management.

Another good strategy is picking the right people to involve in an effort. If you are trying to gain support, find those people in the organization that set the tone that others follow (which are not merely those with organizational power due to their job title). It is nice if you can find such people that have generally positive outlooks and like new challenges (this is often the case). If the culture is very toxic you may well have some who are likely to try and discourage hope in others (often because they have been disappointed so many times themselves they have finally decided not to be disappointed again). Often (though not always) you can win these people over.
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Circle of Influence

In, The Seven Habits of Highly Effective People, Steven Covey discusses the circle of control, circle of influence and circle of concern. This provides a good framework from which to view issues as you look for improvement strategies.

Within your circle of control you have much more autonomy and have less need to win others over to your plan. However, in practice, even here, you benefit from winning over those who are involved (for example you are their boss).

Our circle of concern covers those things we worry about. Often, we believe because we worry we should find solutions. Problems that fall into this category (but outside our circle of influence) however often prove difficult to tackle. And often people don’t understand why they get frustrated in this case. You can save your energy for more productive activities by seeing some things are outside your influence and avoid wasting your energy on them.

A problem with this, I see in practice however, is that if you are creative many things that people think are beyond their influence are not. With some imagination you can find ways to have influence. Good ideas are powerful. And often that is all that is needed for influence is offering a good idea.

Understanding to what extent an issue is within your control or influence can help a great deal in determining good strategies. Where you have a good chance to influence the process you can focus on strategies that may require much more of your participation to be successfully adopted. As you have less influence such a strategy is likely a poor one.

You should remember, that there is a temporal component to your circle of influence. On some current issue, I may have a very low chance of success for getting the organization to adopt an improvement I think is best. But certain actions can build the understanding that will allow me later to have more influence. This can even be completely separate from how people normally think of circle of influence. By building an organization that moves toward data based decision making and therefore reduces HiPPO (Highest Paid Person’s Opinion) decision making I increase my ability to influence decision making in the future.

Long term thinking is a very powerful, and much under-practiced, strategy. Your influence within an organization is limited today but has great potential to expand, if you act wisely.

Thinking about the extent a current issue falls within your sphere of influence is important it determining the best strategies. But the most valuable insight is to understand how import your sphere of influence is. It determines what strategies you can pursue. And building your sphere of influence should be part of your decision making process.

By taking the long view you can put yourself in good positions to have influence on decisions. There are many ways to do this. My preferred method is fairly boring. Prove yourself to be valuable and you will gain influence. Help people solve their problems. They will be inclined to listen to your ideas. Provide people useful management tools and help them apply them successfully. Help get people, that you know are good, opportunities to succeed. Often this gains you two allies (the person you helped gain the opportunity for and the person that was looking for someone to step in). Work hard and deliver what is important. It isn’t some secret sauce for quick success but if you make those around you successful you grow your circle of influence.

Related: How to ImproveHelping Employees ImproveOperational ExcellenceManagement Advice FailuresManagement Improvement

Focus on Customers and Employees

As I have stated I believe it is the purpose of organization to serve many stakeholders (customer, employees, stockholders, community…). Thankfully some companies agree: Compensation at Whole FoodsStarbucks: Respect for WorkersGoogle: Ten Golden RulesAmazon Innovation. Here is another example – How Costco Became the Anti-Wal-Mart:

But the Pièce De Résistance, the item he most wanted to crow about, was Costco’s private-label pinpoint cotton dress shirts. “Look, these are just $12.99,” he said, while lifting a crisp blue button-down. “At Nordstrom or Macy’s, this is a $45, $50 shirt.” Combining high quality with stunningly low prices, the shirts appeal to upscale customers

Costco’s average pay, for example, is $17 an hour, 42 percent higher than its fiercest rival, Sam’s Club. And Costco’s health plan makes those at many other retailers look Scroogish. One analyst, Bill Dreher of Deutsche Bank, complained last year that at Costco “it’s better to be an employee or a customer than a shareholder.”

I am happy to invest in companies where all stakeholders are winning – I think that is a great long term strategy. Especially since so often, so many of the rewards seem to, inappropriately, go to the senior executives and everyone else [the employees seem to get the most abused but that is just my wild guess] including the owners share what is left over). I don’t own Costco, though: I prefer Tesco. I also don’t mind owning companies for a decade or more – unlike many “owners” which contributes to supporting such a long term strategy.
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Be Careful What You Measure

Be Careful What You Measure by Mike Wroblewski:

Although this recalculation of productivity had a positive affect, it is not what I would consider a triumph. Ongoing efforts are still required to truly increase productivity, so it’s back to gemba. However, I am modifying the lesson to “Be careful what and how you measure, measurements drive action and behavior”

Excellent points. Behavior can be changed by what is measured. The problem with arbitrary numerical targets (to take one measurement related example) is not that attempts to achieve those targets won’t have an affect. They very well may have an affect. However they may not lead to the desired result. When focused on improving a number (which can happen when focused on measures – especially as the focus on those measures is tied to bonuses, favorable treatment…) the focus is not necessarily on on improving the system. Often distorting the system is the result.

Measures need to be used with a conscience effort to remember the data is merely a proxy to quantify the results (not the end themselves). Taking care in choosing the measures is one necessary step to assure the best improvement results. One strategy is to include some measures that are outcome measures. Often those measures are difficult to pin to specific process improvements tightly so you will also want to include specific process measures. The outcome measures help make sure you maintain a focus on the important system level results. Process measures will help you test and improve processes (as well as monitor and react, when necessary to ongoing processes).

Often improving the process measures can be mistaken for the aim. Care needs to be taken to underscore the role of process measures (process management). Also measures should be re-examined periodically to determine if they are still the correct measures. Systems with people are heavily influenced by what is measured. People will often react to what is measured and make adjustments to how the work is done to make the numbers better. The danger is that those attempts to make the measures look better can actually harm the overall system (when poor measures are used).

Related: Targets Distorting the SystemUnderstanding DataOperational Definitions and Data CollectionDangers of Forgetting the Proxy Nature of Data

Firing Workers Isn’t Fixing Problems

I commented on a post on Evolving Excellence that Jim Jubak is a wall street guy who has good ideas. He has posted another good article: Firing workers isn’t fixing problems [the broken link was removed]

Both CEOs, Edward Zander at Motorola and Jeffrey Kindler at Pfizer, of course, kept their jobs and their paychecks. According to Motorola’s latest proxy statement, Zander received a salary of $1.5 million, a $3 million bonus and $2.3 million in restricted stock in 2005.

For this kind of money, investors — let alone the workers who are being fired — deserve something a little more imaginative as a turnaround strategy. Cutting jobs has become a reflex, not because it works especially well at fixing the real problems at companies like these but because firings produce the kind of immediate earnings improvements that help CEOs keep their jobs. Getting rid of workers, you see, lets a company forecast the kind of immediate cost savings and surging profit margins that keep shareholders from marching on the executive suite.

Right. Wall street is not incapable of seeing past short term “thinking.” Even if many on wall street can’t seem to understand. I am far from convinced short term thinking is Wall Street’s fault, it seems to me many executives have this problem and blame “Wall Street.” I believe short term thinking is mainly management’s fault.

Short term thinking is part of the management system. Exorbinant executive pay exacerbates the problem. A failure to understand variation exacerbates the problem.

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Transformation and Redesign

photo of the White House

Photo of the White House, see more of my photos of Washington DC.

Here is an excellent article from 1999: Transformation and Redesign at the White House Communications Agency (WHCA) (pdf link) by March Laree Jacques

This article describes an organizational transformation effort undertaken at the White House Communications Agency. It shares the Agency’s efforts through the period of 1992-1998, beginning with a Deming-based approach to continuous quality improvement through implementation of a total organizational redesign using systems thinking precepts. It describes the obstacles to implementing quality concepts in a high visibility, high security organization and examines the influence of Agency’s organizational culture on quality performance and improvement. The discussion examines the applicability of several broadly accepted quality concepts to the “ultimate command-and-control” organization.

The article is informative and interesting, enjoy. A couple years after this article I went to work for Gerald Suarez at the White House Military Office (WHMO). WHCA is one of seven operational units of WHMO, others include: Air Force One, Camp David and the White House Medical Unit.

See more management improvement articles including in the Curious Cat Management Improvement Library.

Related: articles and podcasts by Russel AckoffDeming on ManagementDeming related blog postsPublic Sector Continuous Improvement Site

Ackoff’s New Book: Management f-Laws

Russell Ackoff is in London promoting his new book: Management f-Laws (see previous post: Ackoff’s F-laws: Common Sins of Management). A BBC article captures some of some of the great ideas from one of his talks (more articles… by Ackoff). How to avoid the fatal F-Laws by Peter Day:

“Companies and organisations get things wrong most of the time,” he said.

“The average life of a US corporation is only 11-and-a-half years, the rate of bankruptcy is increasing very year. There’s a great deal of evidence that we don’t know how to manage organisations very effectively.

“The F-Laws are simply based on observations over the year about regularities which are destructive to organisations.”

As always he is insightful and not afraid to shake up conventional wisdom.
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Ritz Carlton and Home Depot

Don MacAskill writes of his great service from Ritz-Carlton and horrible service from Home Depot. Neither result is surprising, see related posts below. On the Ritz:

The next day, Ritz employees were still greeting us in the halls by our name and wishing us “Happy Anniversary”. The bottom line: We felt special. We felt pampered. We felt like the Ladies and Gentlemen of the Ritz-Carlton knew us personally and really cared about making sure we were happy. They’ve earned a customer for life.

Ritz-Carlton’s motto [the broken link was removed, sadly while they strive to be ladies and gentlemen Ritz-Carlton hasn’t learned basic web usability practices such as not breaking web links] is “We are ladies and gentlemen serving ladies and gentlemen.” And they actually turn those words into reality. They are not platitudes with no action. The system is guided toward achieving that vision.

Worst. Service. Ever: Home Depot & HOMExperts [the broken link was removed] (which includes videos of NBC investigation of customer service problems [the broken link was removed]):

As the CEO of a company that strives to provide top-notch customer service, this has been incredible to watch. At no time during the process, other than the design and purchasing phase, have we felt taken care of, or even like our satisfaction was even a consideration. I wish I could say that the experience has been highly educational, like my visit to the Ritz-Carlton, but I have to imagine that any human being would realize that this is ludicrously bad customer service. The two companies involved, The Home Depot and their contractors, HOMExperts, must have some serious problems internally.

Related: Customer Focus at the Ritz – Effective Leadership Strategies are Driven by Total Quality Management (TQM) Principles [the broken link was removed] – 1999 Ritz Baldrige Application Summary [the broken link was removed] – Not Lean RetailingMore on Obscene CEO Pay