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Simplifying Complex Management Problems
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Contents Setting the scene The problem The direction for solution Already doing it... Why doesn’t everyone do this? Getting started
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Setting the scene Most managers live a life of
interruptions and fire fighting
An endless stream of issues demand management attention
Is this because the situations we manage are complex?
What if our realities are actually simpler than they appear?
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Setting the scene For the next 15 minutes we will
journey into the fundamental nature of complex situations and the simple truths they hide...
And how to get to those simple truths in a fast and effective manner...
... to release management creativity
Ready?
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Setting the scene It is tempting to assume that this deluge is
because the system is complex
After all, managers got to be managers because they are good at handling complexity...
If we can blow away the fog of complexity to see the underlying simplicity in complex systems, we will: Make faster, more accurate decisions Do more, with less (increase leverage) Produce more creative solutions Solve apparently unsolvable dilemmas
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The problem We don’t have enough time today
to “prove” that all complex systems have simple solutions We can prove it... But not in 15 minutes
We do have enough time to show why it could be true
And draw some commercially useful conclusions based on that
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The problem The underlying problem that managers face
when examining complex systems, is this:
Managers assume that if the relationships are complex, then
there are many issues that must be dealt with right now
This leads to prioritising... ... based on urgency (fire fighting)
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The problem
This view is false (sorry)
In fact, complex systems are held in place by two powerful forces: A core conflict Feedback loops
Let’s take a closer look...
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The problem It’s true that the system is complex; but
what does this mean?
Usually it means: Many undesirable effects The effects are all interacting to form a mess of
“pain chains” Changing any part of the system impacts other
parts of the system Improvements get “undone” as other parts of
the system re-assert the old causality
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Undesirable effects interacting in a complex system Imagine we could “map” the pain chains, the
UnDesirable Effects (UDEs)... something like this:
UDE
UDE
UDE UDE
UDE
UDE
UDE
UDE
UDEUDE
UDE
UDE
UDE
UDE
UDE
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Undesirable effects interacting in a complex system
Or... something like this:
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The problem If we did map these
pain chains, we would discover that...
Complex systems are always held in place by two powerful forces: A core conflict Feedback loops
Like this...
It’s true that the system is complex; but what does this mean?
Usually it means: Many undesirable effects The effects are all interacting to form a
mess of “pain chains” Changing any part of the system impacts
other parts of the system Improvements get “undone” as other parts
of the system re-assert the old causality
UDE
UDE
UDEUDE
UDE
UDE
UDE
UDE
UDEUDE
UDE
UDE
UDE
UDE
UDE
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Core conflict, feedback loops
A: Cloud’s
objective
B C
D D’
UDE
UDEUDE
UDE
UDE
UDE
UDE
UDE
UDE
UDE
UDE
UDE
UDE
UDE
UDE
Company values and performance measures
Functional areaperformance measures
Functional area UDEs
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Direction for solution If we could break the
feedback loops...
... and resolve the core conflict (which is usually an interaction of policies, measurements or beliefs) ...
... then reality would immediately begin to transform...
The underlying problem that managers face when examining complex systems, is this:
Managers assume that if the relationships are complex, then there are many issues
that must be dealt with right now
This leads to prioritising... ... based on urgency (fire fighting)
Complex systems are always held in place by two powerful forces: A core conflict Feedback loops
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Direction for solution ... then reality would
immediately begin to transform...
... and this transformation would be inevitable ...
... Because of the same causality that held the original system in place
That is management leverage!
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Direction for solution
What about larger organisations where the functional areas behave almost autonomously?
Each area has its own “current reality”
And, those realities are held in place by overall system constraints...
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Relationships between functional areas
A
B C
D D’
UDE
UDE
UDE
UDE
UDE
A
B C
D D’
UDE
UDE
UDE
UDE
UDE
A
BC
DD’
UDE
UDE
UDE
UDE
UDE
A
BC
DD’
UDE
UDE
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Relationships between functional areas
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ContentsSetting the sceneThe problemThe direction for solutionAlready doing it... Why doesn’t everyone do this? Getting started
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Already doing it... But isn’t this what managers
already do?
Find core problems and fix them?
We wish that were true...
But the reality is, it’s more complex than that...
Hey, wait a minute!
Undesirable effects experienced by many managers
We have many conflicting priorities
Everyone is demanding more time, more people, more money
Problems we thought we’d fixed keep resurfacing
It is difficult to focus We feel we need better
systems It is difficult to hit our targets There are a lot of excuses We have inter-departmental
in-fighting It feels like we are a going in
different directions It’s hard to find and retain
good people Competition is fierce We have many constraints;
people, equipment, market etc
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Already doing it...
Yes, the current reality of a manager (or business owner) is also a complex system, and as such can be analysed using the same process
And, like all such systems, there is a core problem...
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Already doing it... The wording isn’t the key, it’s the sentiment under the words...
... Managers are torn between fire-fighting to retain control (or stop things getting worse), versus creating long term lasting change through increased leverage
Solution?
AEffective manager
BLeverage my time (achieve
more)
CKeep
everything under control
DFocus on core problem (don’t fight the fire)
D’Fight the fires that come at me every day
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Already doing it...
The solution is to use the Thinking Process Tools to: Complete an analysis of the current
reality, and Discover the feedback loops Discover the core conflict Build management solutions that last
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Tools Roadmap
A: Cloud’s
objective
B C
D D’
UDE
UDEUDE
UDE
UDE
Subject definitio
n UDE List……
1. Define the subject area
2. Generic cloud process
(3 UDE clouds)
A: Cloud’s
objective
B
C
D
D’
Generic Cloud Core
Problem
3. Evaporating cloud:What is the core conflict, thatis responsible for the UDEs?
4. Current Reality Tree: Is the core conflict
responsible for all of the UDEs?
A: Cloud’s
objective
B C
D
Inj.
Inj.
DE
DE
Inj.
DE
DE
DE
Cloud’s objectiv
eAssumption -> Injection
5. Evaporating Cloud: What
assumptions are we going to challenge?
6. Future Reality Tree: Will the
injection lead to all the desired effects?
7. Negative Branch
Reservations: Without creating any new UDEs?
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Tools Roadmap
10. Transition Tree: What actions have to be taken to effectively implement the intermediate objectives?
A: Cloud’s
objective
B C
D
Inj.
Inj.
DE
DE
Inj.
DE
Inj.
DE
DE
Cloud’s objectiv
eAssumption -> Injection
5. Evaporating Cloud: What
assumptions are we going to challenge?
6. Future Reality Tree: Will the
injection lead to all the desired effects?
7. Negative Branch
Reservations: Without creating any new UDEs?
I.O. I.O. I.O.
I.O.I.O.
Inj.
I.O.
Inj.
I.O.Obst
Obst
ObstObst
Obst
Obst
9. Prerequisite Tree: What major obstacles currently
prevent the implementation of the injections?
Inj.
I.O.
I.O.
Inj.
I.O.
Inj.
8. Necessary Condition Network:
Implementation plan(s) to deliver
each of the intermediate
objectives, and injections
Obst
Action
I.O.Obst
Action
I.O.
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Why doesn’t everyone do this? So if it’s that easy, why doesn't
every manager do this?
There are negative side effects, and obstacles, to taking this approach...
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Why doesn’t everyone do this?NEGATIVE SIDE EFFECTS Increased management (or
customer) heat on avoidable day-to-day incidents
Pressure from subordinate managers (“you are being unreasonable” or “you don’t care about me”)
Accusations of over-simplicity Scrutiny; cannot hide the
logic anymore
Feeling overwhelmed by the big picture
OBSTACLES Lack of authority to make
changes, especially to policies Resistance from others, from
whom collaboration is required
Unclear thinking Unclear communication Fire-fighting is rewarding and
reinforcing
Unwilling to accept; “it’s all my fault!”
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Why doesn’t everyone do this? To train all managers to use these tools
effectively, there is a need to overcome these negative side-effects, and obstacles
And while most people are more logical than we realise (inside their own heads)...
... what comes out of their heads (written and spoken) often does not seem so logical to us
So we know training is required to increase clarity, simplicity and logical communication
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Why doesn’t everyone do this Which leads us to a new conflict...
... Managers are torn between paying for training (which is very time-consuming and expensive) versus paying only for education (which ticks the box but might not change anything)
AEffectively deploy new concepts
BUse new
techniques every day
CKeep training costs under
control
DTrain
(transfer skill and fluency)
D’Educate(transfer
knowledge)
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Why doesn’t everyone do this Time’s up!
I’ll let you figure out that last one yourself...
... or if we have time for questions, we can discuss it now...
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ContentsSetting the sceneThe problemThe direction for solutionAlready doing it...Why doesn’t everyone do this?Getting started
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Getting started Research “TOC Thinking Processes” Read Thinking for a Change by Lisa Scheinkopf Behind the cloud: Enhancing logical
thinking by Jelena Fedurko The Choice by Eliyahu Goldratt Thinking Smart: You are how you think by
Khaw Choon Ean It’s Not Luck by Eliyahu Goldratt
Visit www.viago-international.com Visit www.blackbeltinthinking.com
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Thanks!
Great to speak to you today
Please pass connect with me via: LinkedIn:linkedin.com/in/petercronin Email:[email protected]
The following slides are appendices: The Boot Camp Some common current realities
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Appendix 1: The Boot Camp
The Boot Camp is a “referral only” live-in workshop lasting for 8 intensive days If you do not know a Graduate,
you’ll need to meet a ViAGO consultant or partner to obtain a referral before you can register: contact us for assistance with this▪ If you have completed a consulting
project with a ViAGO consultant, they can refer you
Visit www.blackbeltinthinking.com for more information, to ask questions or to register
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Appendix 2: Common current realities There are sets of UDEs which a Third
Dan Graduate should recognise
When you see these pain chains, you can turn to the pre-prepared analyses of these common CRTs, and use those as a starting point for solution design These are called “Applications”
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Operations UDEsUDES PROPOSED BY OPERATIONS Information is not always available
when needed Priorities constantly shift Often external resources
(customers/suppliers) are not available
Often resources are not available when needed
Often changing needs in the number of staff needed in a process
There is too much expediting There is too much over time There is too much rework
UDES PROPOSED BY OTHER FUNCTIONS Lost sales Little visibility of how work is moving Too many customer complaints Too often we pay premiums for
urgent/late deliveries Often we need to pay our customers
penalties A high portion of the sales people
time is spent on customer service Our reputation is damaged We are unable to sell to some markets There is high staff turnover We have high working capital needs Profitability is not as high as it can be
Typical measures in operationsDue Date Performance ReworkWork In Progress Quality
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Distribution UDEsUDES PROPOSED BY DISTRIBUTION Too often there is a need for an urgent
delivery Priorities constantly shift Too many shortages Too many inventory items have too
high inventory levels Too many inventory items are
obsolete Dead inventories level is too high There are too many cross-shipments There are too many customer returns Delivery costs are too high
UDES PROPOSED BY OTHER FUNCTIONS Lost sales Introduction of new products is often
delayed Reduced profit Too low ROI Lost customers There is constant shift in priorities
(Ops)
Typical measures in distributionDue Date Performance Inventory turnsAvailability Operating CostLead Time Quality
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Finance UDEsUDES PROPOSED BY FINANCE Too many decisions do not result with
the anticipated impact on bottom line Too often investments do not result
with the anticipated impact on bottom line
The priorities on investment requests constantly shift
Too often savings from outsourcing are not translated to more profits
Some of our products are not contributing to profit as expected
UDES PROPOSED BY OTHER FUNCTIONS Profit is not as high as it could be ROI is too low Cash flow is too low
In addition to the above 3, the current level of performance has contributing influence on many of the other functions UDE’s, so these are also acceptable here.
Typical measures in financeProvide decision makers with the relevant information needed for
their decisionsProvide decision makers with feedback on their decisions
effectiveness
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Projects UDEsUDES PROPOSED BY PROJECTS Too often promised due dates are not
met Too often tasks take longer then
planned There are too many changes Too often resources are not available
when needed (even when promised) Necessary things are not available on
time (information, spec., designs, etc.) There are fights about priorities
between projects There are budget over-runs There is too much re-work
UDES PROPOSED BY OTHER FUNCTIONS Lost sales We pay too many penalties We are not competitive in some
markets Our ROI is too low Too high costs of urgent procurements Too high staff turnover Poor due date performance (Ops) Too long lead-time (Ops) Too much rework (Ops) There are too many customer
complaints Too often there is a need for field
upgrades/maintenanceTypical measures in projects
Due Date Performance Throughput Operating ExpensesLead Time Quality
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Marketing UDEsUDES PROPOSED BY MARKETING Our products are not differentiated enough Too many of our offers to the market are
not in line with the actual market needs Too many new product introduction
failures Our product’s effective market life is too
short There is a constant pressure to reduce
prices Too many marketing initiatives do not
result with the desired market impact Too often introduction of new products to
the market is late reaction We have conflicting priorities
UDES PROPOSED BY OTHER FUNCTIONS Lost sales Too long lead-times (NPD) Low due date performance (Ops, NPD) High over time (Ops, NPD) Too many defects (Ops) Too much re-work (NPD) Too much scrap (Ops) Reduced profit Too low ROI Lost customers Constant shift in priorities (Ops, NPD)
Typical measures in marketingMarket share New markets createdBrand awareness Potential customers seeking our products & services (demand)
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Sales UDEs
UDES PROPOSED BY SALES Sales cycles are too long (the time it takes
prospects to make a decision) There is high pressure to reduce prices Often times our offer is rejected before it is
presented to the right decision maker Often times competition offers are perceived to
be of a higher value then ours Too often, even when we have good reaction to
our offer, the prospect rejects it (due to internal reasons)
We often promise things we know we cannot deliver
Our good past performance is often forgotten for repeated sales purposes
Often there is a need to do promotions (discounts)
UDES PROPOSED BY OTHER FUNCTIONS Constant shift in priorities (Ops) High pressure to reduce cost (UDE’s
that result from this) Very large number of initiatives for
new products/ services (leads to….UDE’s)
Poor due date performance (Ops) Low profitability High levels of redundant inventories Introduction of new products/services
prematurely (with bugs) New products jeopardize the sales of
existing products
Typical measures in salesSales revenues ($) Sales volume (quantity)Rate of conversion of leads to customers