Blog posts on organization as a system

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  • Peter Scholtes on Teams and Viewing the Organization as a System

    Peter includes a description of the creation of the “organization chart” (which Peter calls “train wreck management”) that we are all familiar with today; it was created in the Whistler report on a Western Railroad accident in 1841.

    Almost a direct quote from the Whistler report: “so when something goes wrong we know who was derelict in his duty.” The premise behind the traditional organizational chart is that systems are ok (if we indeed recognize that there are such things as systems) things are ok if everyone would do his or her job. The cause of problems is dereliction of duty.

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    This is an absolutely great presentation: I highly recommend it (as I highly recommend Peter’s book: The Leader’s Handbook).

    Without understanding a systems view of an organization you can’t understand whats at the heart of the quality movement and therefore everything else you do, management interventions, ways of relating to people, will reflect more likely the old philosophy rather than the new one.


    Points like this are very true but difficult to understand until you come to view organizations as systems.

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  • Understanding and Misunderstanding Variation

    ... one of the central aspects of Deming’s ideas on management: that we need to view the organization as a system. It is not as simple as adopting a couple practices and getting the same results another organization gets from those same practices. The interactions between the existing organization and the new practices will be different. This makes management challenging but it also makes our jobs of improving management continually interesting and full of opportunities to learn.

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  • Applying W. Edwards Deming’s Ideas in Software Development

    In her presentation at the Deming Research conference, Poorani Jeyaseker explains how the management system drives behavior that is not useful to the organization. The business team asks for estimates for software development. Those estimates are treated as promises. The management system creates a punishment mechanism for missing estimates by over 10%. Of course this creates fear and pressure to make sure work can be completed within the 110% * estimate. So logically the estimates are padded (both to account for the natural variation in how close estimates are to final results and for the existing culture that means changes will be made to requirements without the estimate being adjusted)...

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  • Systems Thinking and Management Improvement

    A big part of what makes Deming's framework so useful is he was continually learning and adopting new ideas (Senge does a lot of this compared to most people but I can't think of anyone in the Management area that is close to as good as Deming was at this). I do think most Deming folks today would benefit greatly from much more thinking a about the organization as a system. It is often very superficial in my experience (repeating phrases like "we need to break down barriers between departments" or "it is a mistake to optimize the part because it sub-optimizes the whole"). Those ideas are great but you need to manage based on that concept not just say it and move on.

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  • Transforming Jet-Hot by Viewing the Organization as a System

    Jet-Hot integrates Deming’s system view with their own management or operating system. They have made this diagram the central way they operate as a system with common aim and purpose. They use this innovation in their Jet-Hot system and organize all their work with profound knowledge around their business operating system. Jet-Hot has also developed and implemented an application of technology – an operations support system to support their practice and their enterprise throughout their system. They have made this view and diagram actionable and practicable.

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  • Well Managed Companies

    Do your outstanding people think their importance is in getting through another day through hard work and individual expertise. While those qualities are good most important to the success of the organization is improving the system not getting through one day. If those seen as the stars are not improving the system and processes then get them to work doing so.

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  • Applying Quality as a Business Strategy at Hallmark Building Supplies

    Hallmark Building Supplies has profit sharing for all and doesn’t do annual performance appraisal. They attempt to let the market dictate pay and take pay out of the performance discussions. To manage performance they seek to “coach while the game is going on” (and mentioned the importance of people being receptive to coaching). Cooperation between sales people has increased since they eliminated commissions.

    Everyone is trained on the purpose statement, it is not just something that hangs on the wall. We use it to make decisions on a regular basis.

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  • Standardization With a Systems View Allows Creativity to Flourish

    We all benefit from standardization every day. We can plug our devices into a wall outlet and power them. We can get a replacement battery and have it work as expected. We can type on the keyboard without thinking because the keys are the same on each keyboard. We can connect to a new wifi network with our phone or laptop. We can buy a replacement pipe for our sink and install it.

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    One of the objections I hear to adopting standardization is that doing so takes away our ability to be creative. This is not the case. Dr. Deming’s quote does a good job of explaining this. Standardization allows us to create systems that are reliable and effective. Within that system there should be a great deal of flexibility to apply creative ideas.


    It is true organizations often impose rigid rules that restrict creativity. If standardization is responsible for part of this result then the process by which standards are created and continually improved needs to be examined. A management system needs to continually improve and part of that is continually evaluating how management concepts (such as standardization) are being applied.

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  • Aligning Marketing Vision and Management

    Why do so many companies market one thing and provide something else? I know it might be easier to sell something different than what you offer your customer today. But if you decide to market one vision, why don’t you change your organization to actually offer that?

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    Treating a marketing message as something separate from management is a serious problem. When your marketing message says one thing and your customers get something else that is a problem. I think the message is often based on what the executives wish the company was (and the outsourced marketers think it should be), but it isn’t the customer experience the management system provides.

    If you believe the vision of your marketing then make sure your organization has embraced those principles.

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  • Deming on being Destroyed by Best Efforts

    Best efforts are essential. Unfortunately, best efforts, people charging this way and that way without guidance of principles, can do a lot of damage. Think of the chaos that would come if everyone did his best, not knowing what to do.

        W. Edwards Deming

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  • “Pay for Performance” is a Bad Idea

    The idea of a merit rating is alluring. The sound of the words captivates the imagination: pay for what you get; get what you pay for; motivate people to do their best, for their own good. The effect is exactly the opposite of what the words promise.

    W. Edwards Deming

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  • Applying Deming’s Management Ideas at the Great Plains Coca Cola Bottling Company

    The difficulty in changing is often mostly about our psychology (not the technical difficulty of operating under changed systems and processes after making adjustments to adapt to take advantage of new opportunities).

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    Results matter but within a context of the process. If I double profits by wagering all the cash we can borrow on the roulette wheel that result isn’t a sign that we are doing much better. Using data wisely requires understanding what the data tells you and what it does not tell you.

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  • Give People Enough Rope (and the Right Rope) to Succeed

    You want systems that let people take on challenges without too many restrictions but with enough support and training that you don't leave them hanging.

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    the ropes should suit their situation. A tightrope over a chasm is fine for a trained acrobat with a balancing pole. It is foolish for someone without the right training or tools. They would be better served with something else - a rope bridge with railings.

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  • CEO’s Given Lottery Sized Payouts

    Today, in the USA, CEOs are basically win the lottery when they start and then either win some more and stay or don’t win and are let go. The lottery performance appraisal aspect Deming talked about (rewarding whoever random variation or macro economic and micro economic trends smiled upon during the period). So if a market (housing, oil, steel, investment banking, microchip, hotel…) is booming why give all the CEO’s in that market huge payoffs?

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  • Toyota Execution Not Close to Being Copied

    A company truly driven by a focus on continual improvement, respect for all employees and reasonable executive compensation might be a company serious about adopting Deming and Toyota management principles. It is hard for me to imagine such a situation that doesn’t truly seek, as the primary aim of the organization, to benefit many stakeholders (workers, owners, suppliers, customers…) not just executives (or just executives, board and owners…).

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