It is astonishing how software becomes more and more an artificial constraint to the development of organizations. The unsuitability of the majority of software to add any meaningful value to the work of organizations is easily explained by looking at the way companies are structured.
Quality is a mindset
In our last post we looked at Vital Component Number One for managing an organization as a system: The Playbook, i.e. the detailed mapping out of processes and interdependencies, who does what, when, how, and why. The Playbook is the practical device that embodies and enacts W. Edwards Deming’s PDSA cycle. It is the offspring of Deming’s vision of a company guided by the all-encompassing concept of Quality. Quality and Statistical Process Control are not about techniques. They are a worldview and a mindset where continuous improvement is continuous, because variation and entropy never stop. The Playbook supports steps Two and Three of the Decalogue management methodology, and it is grounded in the idea of process predictability as a prerequisite for knowledge-based management. It also provides a meaningful mechanism to enhance company communication because it is based upon open and transparent flow of information and knowledge. The Playbook is the open book where no personal agenda can hide. The writing up and, most importantly, the enactment of the Playbook, is not the job of a “company function”; it is the first and most important job of top management.
Vital Component number Two: The Information System. What is it and what is it for?
One of the most important applications of computers is in the almost endless possibilities that they have to support human interaction. The power of these machines increases relentlessly and so does the software that makes them useful. In principle, software should exist only to help humans live and work better. It is astonishing, instead, how software becomes more and more an artificial constraint to the development of the organizations. The unsuitability of the majority of software to add any meaningful value to the work of the organizations is easily explained by looking at the way companies are structured.
Software specialists develop their applications following inputs; the more these inputs are wrong, the more the software will be useless and the more developers will be asked to produce more software. In a function-based organization there is no possibility for software to generate any company-wide value because inputs will be by definition aimed at supporting local optima. Moreover, in a function-based organization software specialists will be “stored away” in a box called IT services and will always be considered nothing more than a necessary evil, just like accounting.
In a systemic organization, the purpose of an Information System is clear and relatively simple. As the word implies, in any company there should be a system that enables timely access to the creation, storage and retrieval of information (see data management). Needless to say, the first step towards creating such a system is to understand what this information should be for. It is very simple (too simple for some developers): this information should serve to remove limitations (constraints) towards a stated goal. Accordingly, the role of an information system should be to facilitate the functioning of a chosen constraint.
The very few vital pieces of information a company must always monitor
An Information System should certainly mirror the Playbook and support its enactment but should also facilitate the management of the constraint(s). An Information System should be made of a database where all the information is stored and connected with a scheduler for the optimization of the chosen physical constraint(s). With very few exceptions, essentially very large and very spread out companies, an IS could and should be built “in house” and should be almost free. An IS should provide information regarding the very few vital pieces of information a company must always monitor, for instance: daily cash in-cash out; on-time payments to suppliers and from customers; provide visibility to customers and suppliers on our inventory and WIP as well as facilitating order entry, etc. Most importantly, an IS should be equipped with the possibility to perform easily and timely all the statistical analyses needed to understand and improve the performances of the company.
The most critical part of an Information System, however, is the ability to synchronize the work of the organization. A thorough understanding of what finite capacity and synchronization mean, both conceptually and operationally, must precede any attempt to design an organizational structure suitable to sustain the effort to bring about effective systemic management. We will look at this further in our next post.
We will continue to look at the other vital components of the systemic organization in future posts.
This blog post is an extract from the book: Sechel: Logic, Language and Tools to Manage Any Organization as a Network of Projects
See also our series on Systemic Management: