Understanding Organizational Barriers Through Systems Thinking

Segment-II
Chapter4
Sessions 6-7
Barriers
Barriers
Organization Systems Technology
Understand, organize and address barriers
Session 6-7,MIS-PRM37
 Organization as systems!!
 Systemic Views
 Systematic Views
 What is a System?
 Is an association of some components
(Do organizations have components?)
 Has goal/objectives (Do organizations have
components?)
 Has control mechanism (organization also
needs controls on resources!!)
 What is a System?
System needs a structure to
relate its components (organization
also has structure)
System’s components:
Input (organizational resources and
environment)
Process (organizational structures and
operating procedures)
Output (organizational steady state)
Organizational Organizational Organizational
Organization
Resources Structures Performance can be treated
as a “system”
Organization Purview
RBV
Organizational Organizational Organizational

Memory
Inputs Processes
Systems Purview
Market
Environmental Organizational Organizational

Inputs Feedback Steady State
Organization Purview
Systems Approach
 Systems have components
 Components need to interact
N= n(n-1)/2
N->no. of interconnections, n-> components
 Two ways for systems approach
◦ Functional Approach (it uses Mintzberg model with
functions as inputs)
◦ Traditional Approach (Table 4.1)
 Mechanistic systems
 Organic systems
Function: Layers:
*Domain Specific *input from
*Can provide specialist Mintzberg model
services
*Explicit Knowledge
*Provides standards
Organizational Organizational issues Systems Issues Technology Issues
Layer
Strategic Organization Structure, Environmental Feedback Technology Selection for
(Pro-active/ Decision Style, Maintenance mechanism, Procedures Systems, knowledge and
Systemic/ of organization culture, for internal resource Intelligence Management
Systems Thinking) Formalization of management and external
organizational Performance interfaces, Systems
Indicators Modelling
Tactical Establishment of process, Process modelling Preparation of process
(Systematic/ process parameters related to and data models to
Preventive and organizational performance, optimize costs on
Reactive) Process interface transactions, agency and
mechanisms as per the coordination
organization structure,
establishing role clarity in
organization as per
organization structure
Operational Identification of transactions Identification of modes of Induction of technology for
(Systematic/ and taking ownerships transaction, mapping the managing transactions
Reactive) frequencies and volume of
transaction, formalizing
transaction cycles,
generation of information
Systems Thinking
 Systems Thinking
◦ Reaction to an event would
depend on:
 Understanding “Cause-Effect”
 Identifying stakeholders
 Effect on their relationships
 Systems
Thinking
emphasizes:
◦Enduring strategies (long
term…..)
◦It opposes short term views
of a problem
 Has “Systems Thinking” Helped?
◦ Business Paradigm
 Automation of various processes
 ERP, Banking Solutions etc…
 Web Technologies….
 Internet Solutions
◦ Weather Forecast and Analyses
◦ Rural Services
◦ Governance and E-Governance
◦ Education Systems
Approach to Systems Thinking
 Traditional systems analysis is
◦ Monolithic
◦ Looks at problems in isolation
◦ Incremental
◦ Problem specific
 Advantages:
◦ Can be handled efficiently
◦ Can improve upon
 Disadvantages
◦ Short term, needs corrections very often
 It looks for events and arrests its recurrence
 It may ask for a “World View”
 It is strategic in nature
 Perhaps all the stakeholders need to exercise
their power to contribute
◦ Democratic/political/social
◦ Relationship management
 Advantages
◦ Long term view
◦ Pattern can be forecast and embedded in the
system
 Disadvantages
◦ Difficult to reflect all requirements
 State encounters “Famine” – This is an event
 Scenario-I
State announces schemes – State is “Reactive”
 Scenario-II
◦ State helps people and study the causes
 State tries to analyze patterns and cause-effects
of famine on “Livelihoods”
 State plans for alternate livelihood
opportunities
(In scenario-II, state has a “systems thinking
Approach”)
 Behaviour Over Time
(BOT)
 Fish-Bone Diagram
Effect
Cause
Effect
◦ Effective in seeing the “Big Picture”
rather than just their “parts”.
◦ Identify recurring challenges and fix
them
◦ Deal with “Problems” whose solutions
are not “Obvious”. (Problems with
obvious solutions can be managed
systematically.)
 Systems Thinking as a Special Language
 Should have the capability to communicate with
others
◦ It emphasizes wholes rather than parts, and
stresses the role of interconnections.
◦ It emphasizes circular feedback (for example, A
leads to B, which leads to C, which leads back to
A) rather than linear cause and effect (A leads to
B, which leads to C, which leads to D, . . . and so
on).
(For Example: Increase in Subsidy ->Likely increase
in political affinity -> Likely increase in Subsidy)
 It contains special terminology
◦ To describes system behavior, such
as reinforcing process
◦ For balancing process (a feedback
flow that controls change and helps a
system maintain stability).
 Example of a Car Manufacturing
Business
 Traditional Thinking
Economic View
Cost (Unit)
Price (Unit)
Volume of Sales
Profit
Break Even
 Break even point ( BEP) is the point where the
revenue is equal to total cost.
 At BEP, the company makes neither profit nor
loss.
 This point is important to determine the price of
a product such that the company still gains net
profit.
BEP=TFC/(SPUP-VCUP)
BEP= Break Even Point
TFC=Total Fixed Cost
SPUP= Sales Price Per Unit Production
VCUP= Variable Cost of Unit Production
 Economic Order Quantity (EoQ) for Inventory
Management
 Rules:
Calculate Ordering Cost,:
Ordering Cost = (Annual Demand / Order
Quantity) * cost per order
Calculate Carrying Cost = (Order Quantity / 2 )*
Annual Holding Cost per unit
 Calculate Total Cost = Ordering Cost + Carrying
Cost
Find out Least Total Cost (use small function)
Calculate EOQ (Use offset and match function to
find out the order quantity for least total cost)
D: The demand for the product in quantity per unit time.
Q*: The order quantity. This is the variable we need to optimize
C: The order Cost
h: Holding cost per unit. For storing X units, the holding cost is Xh.
 Case of BEV
Takes a view of economic value
Concentrates on production and sales
 Case of EoQ
Takes a view on Inventory of raw material, finished
goods
Concentrates on inventory holding costs
 Way Forward? (Holistic Approach through Systems

Thinking)
Can we combine these two issues for a better cause?
What is the effect of BEV and EoQ on profit?
What is the effect of BEV and EoQ on Employee Productivity,
Employee stock option, employee satisfaction, etc.?
Presentation of the Model:
Sales- [[Cost of Goods Sold] + [Overheads]]= [Profit]
Discussions:
1. Will the profit be influenced by “stock”? ( + ive or –ve)
2. Will the stock influence “cost of goods sold”? ( + ive or –ve)
3. Will Creditors influence “profit”? ( + ive or –ve)
Generally speaking :
the linear equation could be

“y = ao + a1X1 + a2X2 + . . . + anXn ”
where
y = dependent variable
Xi = independent variables
ai = coefficients (or weighting factors) for each of the
independent variables
Influences could be Cause-Effect
 Chaos
◦ Is the pattern Linear/ Non Linear!
 Linear thinking is “Absurd”!, it does not
exist in real world.
If assumed, it may lead to Chaos
 Expansive: Not Reductionist
◦ Reductionist means reducing some behavior
through identifiable measures ( Better Sales
would have Better Margin!!)
Systems Thinking cannot depend on this
Cause-effect alone!
◦
 Closed and Open Systems
◦ A systemic View may be taken
 Feedback and Relationships
◦ Balancing Act
 Steady state, Events
◦ Reinforcing
 Continuous (Once successful may lead to do same things with more
vigor!)
 Archetypes (Structure/Patterns- Experts!)

◦ Complexity can be reduced to small and predefined
structure and pattern with proved relationships
(Example: Car fails to start!, check battery, starter, fuel and go
on..)
 Time
◦ Delays (minimum…)
◦ Timeline (Longitudinal Analysis)
(Example: verifying response time in Railway
reservation system/ ATM!)
 Leverage
◦ Threshold for systems decomposition
 Through use of technology
 When to do it?
Example: Technology intervention in ticketing, round the
clock?, who should issue tickets- Outsource,
departmental?
 Corporate Social Responsibility
 Customer Relationship
 Call Centre Management
 Customer Service
 Sales Force Effectiveness
 Farming
 Income Generation
 When thinkers stop appreciating role of “Forest”
while addressing problems for “Trees”
 Problem is Complex
 Recurrence of Events
 Issues are part of larger Structure
 Non-Obvious Problems
( confirmatory, It might exist somewhere- Not to reinvent the wheel)
 Problems with multiple perspectives; may not
have “Obvious Solutions”
 Problems/Challenges are in “Circular
Referencing”
 When there is a pattern
Systems: The Base for Systems Thinking
Systems Types Description Examples
Closed Do not interact with environment for Atoms and molecules.
existence
Open Organic and must interact with their Human organism,
environment in order to maintain Furnace, Fridge
their existence
Reactive Systems react to an event Thermal sensor controls a
compressor in
Refrigerator
Responsive Regulating Thermal Sensors having
Thresholds
Optimizing Simulations Critical Path Methods,
EoQ
Adaptive Continuous Aviation Controls
Deterministic Predictable in inputs and delivery Computer programmes,
machines
Probabilistic/Stochastic Considers past trends and predict Inventory controls
Self-Organizing Method of adaptation is uncertain Social groups
 Entropy
◦ Is the normal phenomenon in a system
◦ Refers to LOSS
 Entropy needs to be “Negated”
◦ Possible through cybernetics
◦ System needs to attain “Steady State”
 Open systems address entropy seamlessly
 Entropy, if not addressed, will enforce
system’s termination (life cycle would end)
 Example of STEADY STATE:
◦ Competitor changes price
 Change is recorded by the system
 Processing is done
 Verification is done based on the output
 Price is changed suitably – (This is the steady state)
 Example of Entropy
◦ Competitor changes price
 Changes are recorded
 Process ignores the change
◦ This ignorance is called Entropy
 Capturing “change” in competitors price is called as
negative entropy (INFORMATION)
 Systems should resist entropy
Cybernetics
 It is a control component in the system
 Feedback is the main requirement to control
◦ Needs capture expected behaviour of the system without getting
into details
◦ Based on +ive or –ive variations with respect to the expected
behaviour
 Tow Types of Cybernetics:
◦ Management Cybernetics
 Organization can be managed with certain variables
that system can understand
 Ex: Targeted Sales Turnover vs. Production Capacity
 Mostly internal control with machine turnover as an input
 Mostly internal control with push sales
 Organizational Cybernetics
◦ Needs to go beyond push sales with better
marketing procedures, feedback from market, mass
customization with internal preparedness
Customers Regulatory Agencies
Feedback Feedback
Outputs:
Inputs: Organization Products &
resources Services
Feedback Feedback Feedback

Suppliers Stockholders Competitors
Some examples of Systems Thinking

Understanding Organizational Barriers Through Systems Thinking

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Segment-II

Organization Systems Technology

Understand, organize and address barriers

Organizational Organizational Organizational

Environmental Organizational Organizational

 Way Forward? (Holistic Approach through Systems

1. Will the profit be influenced by “stock”? ( + ive or –ve)

2. Will the stock influence “cost of goods sold”? ( + ive or –ve)

3. Will Creditors influence “profit”? ( + ive or –ve)

the linear equation could be

 Archetypes (Structure/Patterns- Experts!)

Feedback Feedback Feedback

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