Managing Systems 3.
3 Managing Systems
I. Systems vs. Hierarchies
A. Components of a System
C. Responsibility for Output
II. Managing Measurable Activities
1. Stabilizing a System 2. Improving a Stable System
B. Common vs. Special Causes
III. Managing What Can’t Be Measured
Theory of a System
An Organization is a System more than it is a hierarchy.
A System needs an aim. The Aim is provided by the Charter.
Managing a system requires knowledge of its components, their relations to each other and to the external environment. The capabilities of the system determine its output to a much greater extent than the efforts of individuals in the system.
The Organization’s Leadership is responsible for the aims and methods of the system, and thus for its output.
Many activities in an organization can be measured. The Organization’s Leadership is responsible for understanding: - the purposes of measurement - the difference between stable and unstable systems - how to stabilize unstable systems - the meaning of variation in stable systems - how to improve stable systems.
Most activities in an organization cannot be measured, yet they must be managed.
I. Systems vs. Hierarchies
“A business is a system, not a hierarchy.” W. Edwards Deming
Dr. Deming stated that the Prussian Army developed the Organization Chart during the early 1800’s for use in war time, for the purpose of understanding the chain of com- mand in times of crisis. He further stated that they did not referred to Organization Charts during peace time.
Two ways to look at an Organization: - Who reports to whom - the Flow of activities.
What kind of questions and ideas does an Organization Chart raise? A system diagram? The second is a more useful tool to manage a system. The simplest representation of a system: providing a product or service to a customer, then getting feedback on how well you met the customer’s requirements.
Product or Service
Components of a System
Pro od r uct Service
1. The Idea (from management); the Aim 2. Design/Re-Design of Product or Service 3. The Customer 4. Feedback
5. Outside Suppliers 6. Internal Processes
A. Components of a System
1. The Idea (from management)
The aim here is to raise questions about quality, what it is, who defines it, who cares, who makes the decision on whether to buy your product? . . . impressions of quality are not static....the customer is not in a good position to prescribe product or service that will help him in the future. The producer is in far better position than the consumer to invent new designs and new service. (OCC, Ch. 6) A consumer can seldom say today what new product or new service would be desirable and useful to him three years from now, or a decade from now. New product and new types of service are generated, not by asking the consumer, but by knowledge, imagination, innovation, risk, trial and error on the part of the producer, backed by enough capital to develop the product or service and to stay in business during the lean months of introduction. (OCC, Ch. 6) The customer generates nothing. No customer asked for electric lights. An educated customer may have a firm idea about his needs . . . He may be able to specify these needs so that a
supplier may understand them. A wise customer nevertheless listens and learns from suggestions from a supplier. They should work together as a system, not as one trying to outdo the other. (Sem., Ch. 1) A product or service possesses quality if it helps somebody and enjoys a good and sustainable market. (Sem., Ch. 1) ...it is necessary to innovate, to predict needs of the customer, give him more. He that innovates and is lucky will take the market. (Sem., Ch. 1)
Pro od r uct Service
A system is a network of interdependent components that work together to try to accomplish the aim of the system. (Sem. Ch.3) Every activity is part of a process. Any stage has a customer, the next stage. Each stage works with the next stage and with the preceding stage toward optimum accommodation, all stages working together toward quality that the ultimate customer will boast about. (O.C. Ch.3) A systemmust be managed...Left to themselves... components become A systemmust have an aim. Without an aim, there is no system. The aim of the systemmust be clear to everyone in the system. The aimmust include plans for the future. The aim is a value judgement. (We are of course talking here about a man-made system). (Sem. Ch.3)
Recommended aim The aim...is for everybody to gain...over the long term... with respect to employees, the aimmight be to provide for them good management, opportunities for training and education for further growth, plus other contributors to joy in work and quality of life.
Development of an aim A systemmust create something of value...
It is...management’s task to determine those aims... It is important that an aim never be defined in terms of activity or methods. It must always relate directly to how life is better for everyone. Workers...cannot be the source of the aim... ...there must evolve a sense of agreement upon the aim that extends through the organization. (Sem. Ch.3) A system includes the future Preparation for the future includes lifelong learning for employees. It includes constant scanning of the environment (technical, social, economic) to perceive need for innovation, new product, new service, or innovation of method. (Sem. Ch.3) What business ought we to be in five years from now? How could there be life without aims? Everyone has aims, hopes, plans....there must be a method to achieve an aim. (Sem. Ch.2)
Long Term Aim for a System Allocate resources for long-term planning.
Mobility of management ...how can anyone be committed to any policy when his tenure is only a few years, in and out. (O.C. Ch.3) Short-term solutions have long-term effects. Of course, management must work on short-term problems as they turn up. But it is fatal to work exclusively on short-term problems, only stamping out fires. (Sem. Ch.2) Emphasis on short-term profits Most American executives think they are in the business to make money, rather than products and service...The Japanese corporate credo, on the other hand, is that a company should become the world’s most efficient provider of whatever product and service it offers. Once it becomes the world leader and continues to offer good products, profits follow. No shareholders to please, Japanese firms are free to operate on behalf of...their workers. Practically all of our major corporations were started by technical men...who had a sincere interest in quality of products. Now these companies are largely run by men interested in profit, not product. Their pride is in the P&L statement or stock report. (O.C. Ch.3) (O.C. Ch.3)
Many System problems can be addressed right here - no clearly defined aim - the aim not clearly communicated or not understood. ( see Charters, Managing Internal Communication. )
What is quality? Quality can be defined only in terms of the agent. Who is the judge of quality? In the mind of the production worker, he produced quality if he can take pride in his work. The difficulty in defining quality is to translate future needs of the user into measurable characteristics, so that a product can be designed and turned out to give satisfaction at a price that the user will pay. This is not easy, and as soon as one feels fairly successful in the endeavor, he finds that the needs of the consumer have changed, competitors have moved in, there are new materials to work with. (Walter A. Shewhart) What qualities create dissatisfaction in the customer’s mind? How do you know? The quality of any product or service has many scales. (Sem ch 4? ch6?)
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