Recently, I wrote about Asset Constraint Management and the capabilities required to achieve remarkable results. None of that will amount to much if you don’t encourage a systems thinking mindset with behaviours to match. Systems thinking is at the heart of what we do, encapsulated in our mantra: ‘know the whole, focus on the constraint’. Knowing the whole and being able to focus on the constraint is not possible without a commitment to lifelong learning—another core tenet of the Ensemble Way.
[Listen to audio version, read by David Hodes]
In our consulting, we use a spaceship as a metaphor to highlight the aspects you need to consider when looking at your organisation as a complex and organic whole—a system, not a collection of parts. On the left is the head office where, amongst others, the executive sit. At the behest of the shareholders, they set the goal, define the strategy to get there and provide the governance around the planning and performance of all strategic, tactical and operational work. They are custodians of the culture, and the calibre of their managerial leadership determines the likelihood of the success or failure of the organisation.
In our metaphor, the head office contains the usual group functions you would expect in any reasonably sized organisation. Functions such as Finance, HR, IT, Marketing, Engineering, Supply and Corporate Affairs. To the right of the head office sits ‘Cape Canaveral’ where we construct the spaceships and launch them. Each spaceship represents a big idea—perhaps a new product, a capital expansion, the development of a new operation or an acquisition. In this place, call it the shop floor, the work defined in head office is made manifest in the real world (although, in our age, the ideas may be made ‘real’ in digital form first, then in the material world). The shop floor is where we’ll find project managers, field engineers, supervisors, coordinators, tradecraft, storemen, safety officers and the like. Some spaceships may be brand new models, while others are in the shop being maintained, repaired and overhauled for their next mission.
On the right, you see a spaceship that has launched, fired up with ‘Big Idea’ fuel. Your goal is to create additional value and wealth by applying expertise and leverage to the core domains of the spaceship—your value-creation engine. Once you have your Big Idea, our systems thinking approach calls on you to methodically examine each of the core domains, not only as individual entities but how they are interwoven one with the other:
1. STRATEGY: Strategise across every domain
How will your idea flow through the engine that powers your organisation? Each interlinked area is affected, whether or not you make intentional changes. Through strategic planning, you align your system in each field and exert positive influences to differentiate your strategy and maximise your competitive advantage.
2. CULTURE: Cultivate a winning culture
When you understand, codify and develop the shared assumptions and behaviours of your team, your people will learn to better adapt to the external world and to work together energetically towards a common goal.
3. LANGUAGE: Engage purposeful language
People are meaning-making machines, basing action on verbal, written, visual, aural and bodily cues. How you communicate plans and possibilities makes all the difference in the world.
4. ORGANISATION: Cleave to a requisite organisation
When you match accountability with authority at each level of work, your people can take empowered ownership of their roles, with inspired results for the whole team.
5. RESOURCES: Mindfully manage resources
How will you turn intention into reality, every time—on time and budget? Here we define the human, material, information and financial resources required to do the work.
6. OPERATIONS: Design systematic operations
We apply the Theory of Constraints to the way you work with your resources in and across time and place to achieve your organisational goal.
7. PEOPLE: Develop the amazing in people
When you empower your people by building their sense of autonomy, mastery and purpose, you increase the rate at which they energetically perform value-adding work.
8. PROCESS: Engineer seamless processes
What can you standardise and repeat? Who does it? When? With what aim?
9. TECHNOLOGY: Profoundly transform with technology
Understand how to leverage technology to create value across your organisation, and you reap the rewards of our revolutionary digital age.
10. INNOVATION: Bring value into the world
Your idea only becomes an innovation when it starts creating value—for you, your team and your organisation. At that point, you unleash new power to start again and sustain the virtuous cycle.
The small module that’s about to dock is the VMO (Value Management Office) put in place to instrument and control the flow of value. Head office governs the rhythms and routines, while mission control ensures every part of the system functions with the sole objective of doing what’s best for the whole. It provides the operating system with the firepower to counter any disruption and seize every opportunity.
“The firepower to counter any disruption
and seize every opportunity”
In our figurative and generic system, you can imagine the complexity involved in managing it for high-performance outcomes. What choice do you have to apprehend the complexity, let alone control it if you don’t simplify it all by breaking it up into parts? In the absence of systems thinking, people give primacy to the elements and manage them to within an inch of their lives. Each function, sub-function and operation dwells in their silo, doing what they think is best for the whole. And every measure used is predicated on the idea that if all the parts are efficient, then that’s the most effective way to manage the whole.
But, that’s not how to get the best from the system. In fact, it’s counterproductive. A characteristic of a system is that it can do what none of the parts can do on their own. You may have every component needed to make a bicycle, but if it’s not correctly put together, it ain’t going nowhere. Tyres, chains, gears, saddles and handlebars cannot do anything until you assemble them into a bicycle. And then there’s the issue of intention: what is the system’s purpose? It’s one thing to have a bike, but what about the rider? What about the destination? What about the journey?
These questions raise a thought about a fundamental divide in types of system: non-living and living. A non-living system, like our bicycle, needs repairs when it gets a puncture, greasing of the chain to keep it running smoothly and adjustments to the saddle to fit the cyclist. It’s the same with a piece of computer code or an asset like one of our rockets. By contrast, living systems are complex and adaptive. Our rider is always sensing traffic, the condition of the road, the direction he is riding and making adjustments. He imagines the destination and what he’ll be doing once he’s there, hoping he doesn’t get a puncture or get run over by a bus.
Our value-creation engines are fabulously complex combinations of people, equipped with a diverse range of capabilities, infused with personal and professional motivations, interacting with a wide array of technologies to accomplish individual and collective outcomes.
For example, take a moment to think about an organisation you’re a part of and have a go at answering these questions:
1. How many people do you interact with on a given day? Think of yesterday and put a name to every person with whom you had a conversation?
2. What systems were these people a part of? Your organisation? A vendor? A customer? A community organisation? A friend? A call centre?
3. In each of those conversations, what were you setting out to achieve? What were you thinking? What were you feeling? How did it move you to act?
4. What capabilities did each of them bring to the challenge your conversation was trying to address? What were they thinking? What did they feel? How did they act?
5. What means did you use to hold the conversation: Telephone? Video conference? Email? Face-to-face? What systems of people, process and technology provided the services you used?
6. If you met face-to-face, how did you get there: Did you fly? Go by rail? Drive? Who engineered, sold, financed, operated and maintained the ‘planes, trains and automobiles you may have used?
7. If you had a cup of coffee and a biscuit, how did you pay for it? Did you get cash from an ATM or pay for it with your credit card? What banking systems allowed you to lay your hands on your money or settle your payment with a swipe of your mobile?
I could go on, but you get the picture. The truth is we are immersed in so many living and non-living systems in our day-to-day lives that we barely notice them. Instead, we tend to look at the challenges we face in our organisations and our lives as if we were separated from the systems of which we are not only a part but in which we are deeply enmeshed.
I was recently on an assignment with a leading global agribusiness firm. We were trying to think from a systems perspective of how they could improve the return they get from a substantial investment in a palm oil estate. We figured the plantation labourer cutting down oil palm fruit, paid by the kilogram, wouldn’t be much concerned about sorting his output by ripeness. Downstream, though, once the mill has crushed the fruit and shipped it to the customer, those overripe fruits included in the tally of the harvest have a material effect on the price the customer is willing to pay.
If you don’t understand the system and the time and effort required to go from forest clearing to planting, fertilising, harvesting, crushing, storing, shipping and converting, you’ll never be able to sustainably out-compete your rivals. And, if you don’t understand the living system that is the labourer responsible for the harvest, all your knowledge of the non-living systems and processes will come to naught. Importantly, all of this occurs in the much bigger system of our good earth’s ecology.
My client is acutely aware of the stigma associated with palm oil and its historical destruction of tropical forest—the habitat of the endangered and beloved orangutan. Our systems thinking must, therefore, embrace every aspect of the value chain—from the labourer in the field to the environmentally concerned consumer in the supermarket—each wanting to make their contribution to sustainable prosperity.
Whether building spaceships to conquer the new frontier or harvesting palm fruits on a tropical plantation, a profound understanding of systems thinking is a prerequisite of delivering on the potential of Asset Constraint Management.
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The change from standard thinking to Theory of Constraints (TOC) is both profound and exhilarating. To make it both fun and memorable, we use a business simulation we call The Right Stuff Workshop.
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