This week, the Intelligent Management team is in Italy for week 4 of total lockdown. We hope that all our subscribers and readers and their families are safe and healthy and have the opportunity to practice the social and physical distancing that is gradually producing its first results in Italy. May we all emerge from this very soon.
We are fortunate to be in a safe area with very low contagion. It’s hard to know when people will be going back to work. Thanks to the nature of our methodology, we have been able to continue to support clients on GoToMeeting and Zoom. It is a critical moment for all of us. After more than twenty years of communicating and delivering a systemic approach, we like to think that perhaps now leaders will be more sensitive to a systemic, sustainable mindset because it is has never been so clear that our very survival is at stake.
We are producing a White Paper that we are calling ‘Out of the Crisis: A New Kind of Science for Sustainable Prosperity’ (the title contains a homage to the work of W. Edwards Deming). We will make it available for download mid April. Stay tuned!
In the meantime, we wanted to share here some highlights from the paper:
Out of the Crisis
Our world is globally interconnected and this exponential increase in interdependencies has generated a level of complexity never before experienced by humankind. A new paradigm has emerged, but the problem is that the speed of change has outpaced the ability of leaders to understand the full implications of this complexity and to adapt policies and behaviours accordingly.
A serous Knowledge Gap
In our extraordinarily complex world, where interdependencies and interconnections multiply at an ever-increasing speed, the cause-effect relationships that govern the world as we experience it form a complex ‘network of networks’ and the majority of people, including political and industrial decision makers, have a very limited understanding of the underlying properties of these networks and the laws that govern them.
Flawed economic and financial models
The models of most economists and financiers are far from being the offspring of any scientific method.
The prevailing economic and financial thinking has led to the squandering of the resources that the planet has available and to the stifling of innovation. This thinking has systematically favoured short-term decisions over long-term planning.
A new kind of science for sustainable prosperity
Our resources are scarce and we need to learn how to use them; the name of the game of any serious economic effort then becomes “sustainability”. We need a new economics that becomes the science that studies the optimization of scarce resources and in order to do so must tap into the bodies of knowledge that deal with how finite resources can be successfully managed.
What these areas of knowledge have in common is an understanding that sees the “whole” as opposed to a sum of separate parts. A systems view focuses on interactions and dynamics, it encompasses complexity and non-linear phenomena as inherent in our reality and it allows us to find solutions for optimization that would otherwise be inaccessible.
What the crisis is unveiling about an organizational and management paradigm
As the complexity of our contemporary life evolves, the COVID-19 crisis (and the many more that will inevitably continue to plague the world going forward, perhaps with increasing frequency) is revealing an organizational crisis. We need to understand much better the underlying organizational paradigm that this crisis is highlighting so violently.
Putting new knowledge to work: Variation and Constraint
The vital insight that businesses and organizations need in order to understand how they are performing as an interconnected whole is a systemic measurement, something that lets us know how the whole system is performing so we can make informed decisions.
There are two profoundly intertwined measurements that help us to understand how a system is performing: variation (see Theory of Profound Knowledge) and throughput (see Theory of Constraints). Neither the Theory of Profound Knowledge nor the Theory of Constraints are currently taught in Business Schools as necessary for decision makers.
Revealing the Network of Projects organization
A new organizational model emerges that is based on the management of a complex, strongly interconnected network of projects. We call it the Network of Projects organization design.
This requires a complete shift from a “mechanical” mindset to a systemic one to overcome the command and control management style in favor of whole system optimization.
Learning to think systemically to make informed decisions and pre-empt crises
COVID-19 is showing us that we did not think systemically about the issue in order to prevent a tragic shortage of resources when needed. Why? What did we lack in order to think along these lines?
The Thinking Processes from the Theory of Constraints enhance our ability to think systemically and connect a series of dots that otherwise we would not even see. They support decision-making as we become capable of seeing a bigger picture and the systemic implications that decisions can trigger.
Addressing fear and vision in a practical way
We take a look through the lens of Theory of Constraints at a dilemma that many companies will be facing regarding their sustainability as a result of the current crisis. We illustrate a “universal” dilemma and then look at a more specific verbalization of the situation of blockage the companies may be facing today.
A New Covenant and a New Economics
We need a new covenant with the way we want to lead our lives and use our minds to ensure proper sustainability for our planet. Coronavirus is taking a tragic toll on human lives; we must transform this tragedy into a stimulus to rethink a new economics based on sustainability and on a rational use of our resources.
We believe that, in spite of the disasters around us, we are experiencing a unique phase in our human history: we have the science, the knowledge and the tools to foster a more systemic use of the intellect to capitalize on our intuition, to develop thorough analyses, and to design and take correct actions for the common good. We are talking about a transformation that comes from a more evolved form of human intelligence that connects cause and effect and governs decisions always in the awareness of their wider, systemic implications.