Monday, July 21, 2014

Focus and Leverage Part 364

One of the concepts that Bruce Nelson and I have written about in our unpublished sequel to Epiphanized is the concept of systems thinking.  In today’s posting, this is the topic I want to present to everyone.  It’s not a new concept, but for us it’s the proverbial missing link in most improvement initiatives.

One of the things that many companies fail to appreciate is, that in order to improve an organization, the organization, must be viewed at a much higher level of thinking than simple processes within it.  This thinking is referred to as systems thinking. So just what is systems thinking and why should we care about it?  One of the best analogies I’ve ever seen, was put together by Bill Dettmer in his paper, Constraints Management written in 2000.  (Note:  This paper is actually a full chapter in a book on the CQM body of knowledge called The  Complete Guide to the CQM, written by Thomas Pyzdek and originally published in 1996 by Quality America, Inc. (Phoenix, AZ).

In his paper, Dettmer tells us to consider the analogy of a football team.  Dettmer goes on to say that “major professional sports spend a lot of time and money on process improvement, even though they probably don’t look at it that way.” He tells us, for example, “that a pro football team owner can spend millions on a contract for a star quarterback and they expect their passing process to improve as a result. Unfortunately, many times the touchdowns don’t happen at the rate expected, even though the owner spent these huge sums of money signing a star quarterbacks.” Dettmer explains that “at some point in the “process failure mode effects analysis,” the coaches discover it’s impossible for this highly-valued quarterback to complete passes from flat on his back.” They typically find that the offensive line needs shoring up.  Or a good blocking back is needed, or a better game plan, or any number of other factors." 

Dettmer’s point with this football analogy is that any organization succeeds or fails as a complete system, not as a collection of isolated, independent parts or processes.  “But like the football team alluded to above, once you have a “star performer” at every position, you have a challenge of a different sort: coordinating and synchronizing the efforts of every component in the system to produce the best system result.” In other words, once the ducks are in line, the task is to make them march in step together." So just by improving isolated parts of a system, does not at all guarantee that the total system will improve.

Many times in my blog postings I’ve written about the importance of identifying and focusing improvement efforts directly on the system constraint.  Just like the owner of the pro football team, it is critical to consider the impact of any changes on the total system.  What good does it do the owner to go recruit a great quarterback, if the offensive line doesn’t give him adequate protection?  Or even a great running back who doesn’t get the blocking he needs to get him into the opponents backfield?  It’s the system impact that needs to be considered.  Or as Dettmer tells us, “constraint management seeks to help managers at all levels of an organization maintain proper focus on the factors that are most critical to overall success: system constraints.”

One last point from Dettmer’s article, In this same article, Dettmer points out how important is it to optimize the system, rather than its component parts? He quotes Dr, Deming who answered that question in The New Economics for Industry, Government, Education (Deming, 1993, pp. 53, 100). Deming observed:
  • Optimization is the process of orchestrating the efforts of all components toward achievement of the stated aim. Optimization is management’s job. Everybody wins with optimization.

  • Anything less than optimization of the system will bring eventual loss to every component in the system. Any group should have as its aim optimization of the larger system that the group operates in.

  • The obligation of any component is to contribute its best to the system, not to maximize its own production, profit, or sales, nor any other competitive measure. Some components may operate at a loss themselves in order to optimize the whole system, including the components that take a loss.

To finish this posting, I want to quote Dettmer one last time, when he wrote the following paragraphs:  “This is a powerful indictment of the way most companies have been doing business since Frederick Taylor’s time, not excluding the “quality enlightenment” era of the 1980s and 1990s. In essence, Deming said that maximizing local efficiencies everywhere in a system is not necessarily a good thing to do.”

“To express the concept of system constraints more simply, Goldratt has equated systems to chains (Goldratt, 1990, p.53):  We are dealing here with “chains” of actions. What determines the performance of a chain? The strength of the chain is determined by the strength of its weakest link. How many weakest links exist in a chain? As long as statistical fluctuations prevent the links from being totally identical, there is only one weakest link in a chain.”

“Goldratt goes on to suggest that there are as many constraints in a system as there are truly independent chains. Realistically, in most systems there aren’t very many truly independent chains. The dictionary (Barnes and Noble, 1989) defines system as: an assemblage or combination of things or parts forming a complex or unitary whole; the structure or organization, society, business...Thomas H. Athey defines a system as any set of components which could be seen as working together for the overall objective of the whole (Athey, 1982, p.12). The underlying theme in these definitions is an interrelatedness or interdependency. By definition, then, a “system” can’t have too many truly independent chains. So if there aren’t too many independent chains in a particular system—whether a manufacturing, service, or government system—at any given time, only a very few variables truly determine the performance of the system.”

“This idea has profound implications for managers. If only a very few variables determine system performance, the complexity of managers’ jobs can be dramatically reduced. Look at it in terms of the Pareto rule, which suggests that only 20 percent of a system accounts for 80 percent of the problems within it. If this is a valid conclusion, managers should be able to concentrate most of their attention on that critical 20 percent. Goldratt’s concept of chains and “weakest links” takes the Pareto concept a step farther: the weakest link accounts for 99 percent of the success or failure of a system to progress toward its goal (Goldratt, 1990, p. 53).”

I don’t very often quote authors on a word-for-word basis, but in this case, Dettmer presented the point of systems thinking in such a powerful way, that I thought it best to leave it as is.  As I said earlier, Systems Thinking is the missing link that separates excellent improvement results from mediocre ones.  We all live and work within systems, so if you're trying to improve yours, then think at a higher level than an individual process.

Bob Sproull

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