Six leaders of the largest business associations in Canada recently wrote an open letter to the Prime Minister Trudeau, praising him for his swift response with relief measures that succeeded “thanks to the government’s conscious decision to act quickly, pursue bold policies and take risks.”
The signees stress that for success to be achieved going forward, policy makers will need a “growth mindset” and collaboration with the business community to build a roadmap for economic recovery.
As a Canadian firm that works internationally, we couldn’t agree more, and we take this opportunity to write an open letter to all leaders who can make a difference. Adopting a growth mindset may sound obvious, possibly even straightforward, but the reality of implementing it through businesses is quite different. We believe that there is one major constraint that will prevent sustainable growth: management.
Why is this? Because our reality today is one where interdependencies and interconnections multiply at an ever-increasing speed. This is complexity in its most dynamic manifestation. Our businesses, instead, are mainly managed by people with little or no understanding of these dynamics, let alone methods and tools to operate successfully and grow within them. This lack of understanding and knowledge in management translates into a series of very real barriers to a true and lasting recovery once the positive impact of the government relief measures has gone. These barriers include:
- businesses organized in a traditional functional/hierarchical way that slows down flow, sub-optimizes resources and frustrates people’s efforts
- structural inability to organize for speed
- flawed measurements that emphasize cost instead of throughput
- flawed measurements that do not allow speed of cash generation
- Over-reliance on linear thinking
- Decisions based on flawed assumptions
- Inability to understand systemic implications of decisions and actions for supply chain and wider stakeholders
- Cognitive challenges of continuous change
Not the big 4
Let’s not fool ourselves. Seeking help from the big 4 consulting firms or any of the big business schools from our pre-COVID19 world is not the way to go. These are the very institutions that have embedded unsustainable thinking and practices into the way most people do business. The pandemic is rapidly exposing unsustainable business models, the social consequences of a zero-sum game mentality and the severe limitations of linear thinking in a world immersed in complexity. We cannot rely on old models. Instead, we have a unique opportunity to move out of the crisis wiser, stronger, more profitable, more resilient and more sustainable. We can achieve a new economics and a new covenant for sustainable prosperity and progress based on collaboration and win-win solutions.
How can we do it?
We believe that the two major priorities to help businesses recover and grow is to enable them to:
- a) accelerate cash generation through sales
- b) do more with the resources and competencies currently available
Neither of these priorities is addressed by traditional accounting methods or anything taught in an MBA. This is because accounting methods and MBAs exist within a pre-complexity paradigm. Accelerating cash generation through sales and doing more with the resources we have is precisely the realm of an existing body of knowledge and methods for management based on systems science. Without a systemic understanding of what it means to manage businesses, we are doomed to repeat the same mistakes.
10 weeks to move out of the crisis
We believe, based on over 20 years of international experience, that a practical way forward comes in the form of a 15-day program over 10 weeks for leaders and managers where they learn how to accelerate cash generation through sales and do more with the resources and competencies they have available. The major elements of the program are:
- what complexity means and why it matters
- organizations as systems: a network of interdependent processes and resources working towards a goal, based on the work of W. Edwards Deming (Deming’s teachings provided the foundations for the Japanese economic recovery post WWII)
- variation, how it affects all processes, and how to drastically increase Quality (overall ability of the company to sustain performance through continuously addressing customer needs)
- buffer management to radically simplify and accelerate production (Theory of Constraints)
- how to leverage the constraint of an organization to radically improve overall performance (Theory of Constraints)
- how to increase rate of cash generated through sales (throughput) to a wider market share, using the same resources (External Constraint method)
- how to measure and report performance systemically – measurements for speed of cash generation
- how to manage projects systemically for maximum speed and reliability (Critical Chain method)
- how to redesign our organizations and manage them as a Network of Projects to increase Quality, accelerate Flow and increase Involvement of people
- methods for systemic thinking to challenge assumptions and develop breakthrough solutions
- methods for systemic thinking to support decision-making that takes into account implications for all stakeholders and to adopt a throughput improvement mindset for sustainable growth
To quote Klaus Schwab, Founder of the World Economic Forum, “We must build entirely new foundations for our economic and social systems…The level of cooperation and ambition this implies is unprecedented. But it is not some impossible dream.”
No matter how noble our ambitions for our businesses and our society, unless we address the constraint of management, we are stuck. What we are proposing is an operational way for businesses to accelerate flow of materials, information and cash, optimize the way resources contribute to the goal and lay the basis for sustainable prosperity.
We no longer need to be artificially limited by the anachronistic thinking and behaviours of a pre-complexity world. The knowledge, method and tools for a sustainable transformation exist. Let us learn to work together and grow together with all our infinities*.
Dr. Domenico Lepore
Dr. Angela Montgomery
Dr. Giovanni Siepe
Intelligent Management Inc.
*Quote from Rav Menachem Mendel Schneerson