Deming and others showed that when you look at the performance of an organisation (however you measure performance), about 85% to 95% (one can argue pointlessly about the precise figure but the scale is key) is due to the system, i.e. the way the work works and is designed. That leaves roughly only about 10% that is due wholly or in the total control of the person doing the work. How often have you heard people say in their 1:1 appraisal "that goal was out of my total control to deliver". Think about the profundity of what Deming discovered and taught for many years, but which we have ignored to our great organisational, societal and human cost. This is because we have focused on the wrong problem.
“It's not the people but the system.”
So what's the hack? Deming, John Seddon in Vanguard, Senge, Ackoff, Scholtes, and countless others have demonstrated many times over that
- you need to get people to begin recognising the organisation as a system,
- understand human motivation (Dan Pink),
- look at the design of the work from the outside in,
- focus on what is the real purpose and what matters to the customer, and
- creating the opportunity and permission to allow people to re-design the work and then getting out of their way!
Then you simply get the people who do the work to re-design the work in order to achieve purpose and what really matters, and what happens is almost magical! Service improves, costs reduce, morale increases, and the culture change happens for free. At no time do we do anything to the people, we simply get the people to work on the work.
The World is Flat, Humans are Resources, and Organisations Behave Like Machines!
For how much longer do we want to continue:
· treating employees as if they were another kind of materials?
· ignoring orgranisations as social rather than mechanical systems?
· wasting away passion and engagement through “ruling over” instead of “working with” people?
· denying the collective wisdom of the many by believing in the sole superiority of position?
· separating decision making from those who do the work?
· valuing optimization over resilience?
· controlling operations through mechanistic painting by numbers approaches?
There is strong empirical evidence that suggests that:
· Managing organizations as a (socio-technical) system is the only way to remain successful/stay in business in the century of ever increasing uncertainty and complexity (Sources: IBM, Pontifex, Vanguard, Bain, McKinsey, etc.)
· Command & Control Management leads to sub-optimisation, stastis, and structural concretion (Sources: Ackoff, Hamel, Schaubert & Gottfredson, etc.)
· Contemporary performance management (approaches) failed to yield positive returns (Source1: Performance Management and the New Workplace Tyranny; Source 2: Beyond Performance)
We failed for too long to provide the structures required for people to be able to unleash their full passion, energy, power, insights and wisdom to best contribute to the purpose of their organizations. Those self-imposed structural limitations are not only constraints to human capabilities, but also insidious denominators for technological and financial investments.
Problem 1: Disempowerment through Performance Mis-Management
HR and management focus on managing the people which represent only 10% of the outcomes, and ignore the fact that 85%+ of outcomes that are delivered/governed by the system, i.e. the design of the work. To make the point clear, the system is represented by the people working in control, information, spatial, timing, policy and rule structures which are more often than not counterproductive to relationship building, collaboration and interaction.
Understanding that 85% of outcomes are outputs of the system is counterintuitive to traditional legacy management thinking. Employees are expected to deliver objectives set during Performance Appraisals that are outwith their control, subjective, resulting in demotivated and disengaged employees and a waste of time of all involved in the process.
No one actually manages the 85%+, i.e. the system, that is responsible for delivering the outcomes and this is where performance improvement can be achieved.
Problem 2: The Current Paradigm has Lost Sight
“People are the determinant of the rise or fall of Toyota” (Eiji Toyoda)
That doesn’t mean that Toyota haven’t spent 60 years working on their systems, rather it means that Toyota have understood that getting right the relationship between why are we here, what we do and who does it is absolutely critical to the success of the organisation.
The specific problem that we are trying to address is that organisations have lost the connection between why they exist and what their people do on a day to day basis. They have ignored the scientific evidence that people cannot be motivated. This leads to a myriad of problems such as wasted effort, ineffective processes, rising costs (we pay for both the work we need doing and the work that is just happening), disaffected workforces, overburdened leaders, and so on. Systems thinking is about re-connecting these two halves of the equation, and placing the people who deliver for the customer at the core of the organisation’s process decisions.
Problem 3: Rulership and Control have Displaced Real Leadership
If the process of work design is not owned and controlled by the people who do the work, then the result is simply a different command and control structure.
The other key point here is that if the people doing the work own it, they also own keeping up to date with and agreeing, and moreover creating the changes.
Leadership have a key role to play in helping to create common processes for implementing new working practices and ensuring adequate training, but what is changed, when and how belongs to the people who do the work.
Problem 4: Optimizing the Parts Corrupts Optimizing the Whole
Human behavior is the most essential factor for corporate performance and PROGRESSION. It is substantially influenced through group interaction (relationships), technologies, market demands, and business structures - nothing falls more short to address the real “levers” (and we use this word very advisedly) for human performance than a mechanistic way of thinking.
Systems Thinking is about optimizing the whole (organisation, group, etc.) and not optimizing the parts (unit performance, etc.). If you go for part optimization, what then is left for the relationships between the parts? If the relationships don't work, the parts will not interact. If there is no proper interaction among parts because the parts simply do not FIT, what then happens to the performance of the whole?
The Age of Machine World Thinking is Over - Look at Your Organisation as a (Social) System Instead
One of the most severe fallacies resides in the misled behavior to run for the quick fix. In software development, there is a saying: think first, code later. Unfortunately, the opposite way seems to be very common in today’s practice of management.
Problems can only be solved at their root causes, not by applying quick fixes at the intermediate level (even though this is what quarterly reporting pressure may demand). In contrast, symptom treatment very often only manifests in finger pointing. By a little bit better understanding of how social systems work, most of the time the underlying structures can be identified as the real sources of trouble – “It’s not the people, it’s the structures!”
Who amongst us hasn’t worked in a business unit whose targets were set to compete with that of another unit? What was the consequence? Both units immediately start to compete with each other and people stopped cooperating. Is that to the benefit of the company? Certainly not. As long as the old thinking paradigm of optimizing the parts rather than the whole is followed mindlessly, people, teams, groups, units, departments, subsidiaries, etc. will not effectively work together because they are designed to perform best in separation instead of being one whole (company
The essential truth is that performance is determined by the quality of relationships and not that of single individuals. Stop optimizing the parts - optimize the relationships!
Hierarchies are Designed for Enforcing Command and Control – Unleash the Power of the Many by Distributing Accountability (and Freedom)
It is like stirring a cup of coffee; the movement of the spoon creates the rotation which has a big influence on the micro-dynamics (molecular movement of water and milk). But what happens if managers (macro level) stir their teams (micro level) without a good concept about people’s behavior (micro-dynamics)? The outcome cannot be predicted by them even though they think they can. The crux is that unless you have a very good concept of people dynamics, all you will achieve by command and control is fixing people the way you think they function best.
Today’s practice of management applied to managing a football game would be comparable to a trainer instructing any player how to make his next move. People are highly adaptable and designed to adjust to changing situations in real time by using their intelligence. Command and control denies the collective intelligence of the many by the superimposition of the notional intelligence of some few. Unfortunately, this kind of dogmatic command and control thinking permeating most of our organisations today is built upon the so called "fundamental attribution error" dramatically limiting the effectiveness and efficiency of people.
"And if the person at the top of the organization pyramid knows more, is smarter, or is a better leader than the other workers, then hierarchy leverages that person's abilities.
If the person at the top is not particularly knowledgeable or smart or effective, however, the organization will be worse off." (Bryan/Joyce 2007)
Historically, strategy, planning and operations sit top to bottom in a hierarchy. This goes along with the notion that the most competent people are concentrated in the top positions. Some decades ago, the foreman was the most experienced person in the production facility but today, things have changed dramatically. The experts are no longer those in the higher ranks. Decisions should be made at the places of greatest expertise, insight, and competency by utilizing the wisdom of crowds.
For the health of the majority of organisations, there needs to be some control in place in order to provide the means of self-correction in the system. In absence of self-control, the command and control may tend towards someone else in the team rather than disappearing. Self-organisation and control require control structures to be designed in accordance to the functioning principles of living systems.
Manage the MEANS rather than the ENDS
The old saying goes: “If you can’t measure it, you can’t manage it.” (Peter Drucker)
Objectives (ends) are expressed as targets and MbO is directed at making decisions to support achievement of these targets. But, can objectives be managed? Objectives can be changed and adjusted but the only thing you can manage are the means to achieve them. The means are projects, initiatives, measures, assignments, tools, technologies, and methods etc. which represent supporting or containing structures for the people who should work toward goal achievement. Only an understanding of the work system itself will reveal the right levers for goal achivement. In contrast to numbers which are descriptive by nature, insight can only be gained through explanatory information about the system, information about the means, not the ends.
For example, an END that most manufacturing organisations target is Zero Accidents. If you measure accident rates, you only measure the result and cannot affect it - the accidents have already happened. If you measure Near Misses, it is a move in the right direction, but the END as not having an accident is still a matter of chance. If you measure Potential Hazard Spotting and Hazard Correction, you are adjusting the levers that will lead to the desired END.
For example, Toyota’s success story is not only a methodological or cultural thing; it's a collective philosophy of management and a confession filled with everybody's passion and convictions about the superior performance of a company working as a coherent system rather than individuals working as individuals! Managing the means is the most fundamental principle to become adaptable as an individual as well as on the aggregate level (organisation).
Systemic Leadership is servicing your people, is facilitating people and technology interdependencies, is supporting group interaction processes, is coaching human activity systems, is helping people to develop and making the best out of their strengths, is coaching project work, is engaging in process improvement. Pie counting doesn’t serve this purpose. Leaders who take a systems thinking viewpoint are with their people and cannot be found in ivory towers. As Taichi Ohno the chief engineer at Toyota once remarked when some visitors sought him in vain in his office, “I don’t make cars in my office!”
Don’t Optimize for Agent’s Interests - Be the Principals’ Architect for Work and Collaboration
The solution is for the organisation to adopt a systems thinking methodology that focuses upon the study of the work, and then redesigns the work from the outside in, i.e. from the customer’s perspective. There are a number of methodologies and approaches available to adopt, e.g. The Vanguard Method, where the approach is Check Plan Do. The model for Check always gets people to start with agreeing the purpose from the customer’s point of view, then analyzing demand, agreeing measures, analysing the end-to-end work process and flow, then finally assessing what are the system conditions and thinking that determine how the system works. The Plan and Do phases are all about the employees who do the work re-designing the work to meet purpose.
One can also follow the guidance provided by Peter Scholtes in his book “The Leader’s Handbook”, which sets out in considerable detail what to think about and what to do.
For an organization to become really work process focused even setting it on its side is not enough, it needs to be completely inverted.
It all starts with how leaders support, coach, and facilitate people within their daily tasks and duties. The most important people in the organisation are those who add value from the customer’s perspective: the role of everyone else in the organisation is to make their job as easy as possible. The further you are from the “coal face”, the more important it is that you keep reminding yourself of this.
Learn to See (M Rother & J Shook) – understanding the concept of designing your processes to focus on delivering what the customer wants (and when and how) and what is actually happening in any process stream.
Replacing the current scientific, analytical, mechanistic notion of how organisations work with a holistic, synthetic, social systems view would elevate thinking, acting, and behaving of all agents much closer to how the world really works instead of forcing human beings into models and structures that may work for machines, but not for individuals.
As a result, our organisations could again become places of pleasure and fun where people dream about fulfilling purpose and futures.
HR has a pivotal key role in reshaping an understanding of organisations where people are not downgraded solely as resources. People and their relationships are the sole drivers of ingenuity, insight, inspiration, and innovation.
Wrong paradigms ignoring the social nature of people and teams lead to dysfunctional structures resulting in stress, agony, and finally destroying valuable capabilities, careers, and existences. Therefore, putting work and those who do the work into the center of attention is central to making the best out of your most valuable drivers for corporate performance and progression – the people who committed their trust to you and your organisation!
Relationships are the key element of system performance and HR’s role is to provide all functions necessary to keep the complex inter-relationships of interacting parts intact. Therefore, the HR organisation of the 21st century needs to understand the functioning principles of complex organisational systems and the roles people (intelligent agents) have in them.
Only then HR will find its new adaptable role in a new world of changing challenges and rewards.
Moving from the deeply ingrained and mechanistic but still very popular paradigm to a holistic, integrated Systems Thinking perspective is not simple. The traditional paradigm will be difficult to move given that those who succeeded under that paradigm will be loath if not downright intransigent to change!
It requires both the leaders to be prepared to step back from control and decision making, and the workforce to step into the gap that is left. Both require structure, consistency and support over a long period of time to make them stick.
This process takes a minimum of 3 years to become normal and 5+ years to become well enough established that it is hard to revert.
We need to get the language correct to get buy in. Even though new philosophies, methodologies and practices are emerging, there is still a long way to go. Toyota’s A3 method, MIT’s System Dynamics approach to business simulation, Alex Osterwalder’s Business Model Canvas, David Sibbet’s Visual Meetings and many other highly useful tools to “humanise” collaboration and work point into the right direction.
We have to win the hearts and minds of people to regain momentum that work can be fulfilling pleasure, fun, and giving life a purpose – this task cannot be accomplished with narrow notions of profit and power possessed by only a few. We have to make clear that Systems Thinking is Thinking in human, social, ecological, economical, etc. terms. Systems is what our life is about!
Some promising and easy to implement first changes could be achieved by:
Start to educate your people in Systems Thinking problem solving
- Make your people aware, that there is a different set of books! Read Deming, Scholtes, Ackoff, Senge, Ohno, Kohn, Seddon, etc.
- Send your people to business schools who practice systemic thinking (e.g. Delft University of Tech, MIT, Nijmegen Sch. of Mgmt., University at Albany, University of Bergen, Washington U/St. Louis)
Send your people to conferences and seminars which have the usage of Systems Thinking methods and tools on their agendas
Get your people to study, use and apply systems thinking methodologies such as the Vanguard Method
Some big challenges still remain; how will decisions be reached when there is disagreement, how will processes be changes and re-trained, who will have responsibility for ensuring full and proper implementation, how will old and existing activities / paperwork / computer systems / etc. be removed, and how can we ask senior and middle managers in an organisation to support this, when it may mean that they have to work themselves out of a job?
The freedom to think is essential to the long term health of the organisation, but the thinking has to be in line with the organisation’s core characteristics, customer deliverables and economic viability.
- Find a volunteer team (size doesn’t matter, only enthusiasm) and an empty room and make them some time.
- The role of the leader is to facilitate the process and organise the work so that the team has time. They should also be fully involved as a participant.
- Ask the team to work out what their contribution is to one group of end customers’ outcomes. Define purpose from the customer’s point of view.
- Ask the team to measure and analyse the demand customers place into the organisation
- Get the team to devise measures that show how well they are meeting the purpose, i.e. what and how the customer wants their product or service
- The team draws a map (1 sheet of flipchart) that shows the major steps through the organisation which generates those customers’ outcome, with the volunteer team’s work highlighted. Hang it in the empty room as an overview.
The team focuses on that one group of customers and maps the activities and processes that they do to meet that group’s needs:
- Use post-it notes and write one step or item per note.
- Hang the notes on the wall in process order - keep adding until they are sure that they have captured everything, including all the different ways that the same tasks get completed
- Show all inputs and outputs (and where to and from so that they start to see circular movements and zig zags).
- Don’t judge as they go along, just map what is actually happening.
- Highlight the places where there are problems and inconsistencies.
Generate a list of all the problems in the system - physical movement, IT hiccups, processes that need to stop, processes that need to be defined, repetition and replication,and so on.
Up to here should be achievable in 30 days with about half an hour a day
The team work systematically through the list to solve the problems ensuring that:
- changes will enable the team to better deliver to the customer.
- changes are agreed with input providers and output receivers.
- changes meet safety, system (ISO), and customer process needs.
- timescales for implementing changes are realistic.
- any existing system is fully removed and closed down (paperwork, IT, etc)
- new processes are properly trained and implemented.
- the team agrees how it will continue to keep that process stream customer focussed and how it will make future changes.