Natural Systems Leadership Rev 1.01

Asian Network for Quality

6th Annual Congress, Bangkok, Thailand October 2008

Jane Seddon, Managing Director, Jan Gillett, Chairman,

;

Process Management International Ltd

Villiers Court, Meriden Business Park, Birmingham Road, MeridenCV5 9RG, United Kingdom

+44 1676 522 766

Natural Systems Leadership

Underlying principles that enable you to lead change better.

Summary

Process Management International has worked around the world for over 20 years for global clients such as AP Moller Maersk, Rolls-Royce, Airbus, GlaxoSmithKline, BMW, International Paint, and many others including health, police and local government organisations. Jane and Jan have addressed many conferences, including the ANQ in Delhi, Taipei, Singapore and Korea. PMI are partners with the UK’s Chartered Institute for Quality, the world’s oldest professional quality association.

We have been working in the field of quality, business improvement and transformation for many years. Our practise has been based upon Dr Deming’s System of Profound Knowledge as described in “The New Economics” 1993. One of the four components of the System of Profound Knowledge is system thinking, and Deming outlined aspects of this that are critical for effective leadership both of ongoing operations and change.

Whilst we have found the practical application of systems thinking to be powerful, we are well aware that all models should be challenged in the light of new knowledge. A model developed a generation ago may be losing its relevance for the 21st Century. In particular, a wealth of research into natural systems has been conducted recently that depends upon technologies not available in the 1980s.

This paper explores the possibilities we have uncovered. We believe that three characteristics or principles of natural systems are very useful for those who want to lead human systems to be more successful in their purpose and to relate more harmoniously with the global environment.

The conclusions of this work build upon the System of Profound Knowledge, validating its structure and enriching it for the benefit of those tasked with leading and improving human systems.

Background –30 years of improvement programmes

Over the last thirty years and more, many programmes and approaches have been used to try toimprove quality, predictability and innovation forcommercial, government and not-for-profit organisations.Activities normally create benefits that more than repay the investment within the first year to eighteen months. However,even though at the outset it is usually acknowledged that a programme must be sustained for years in order to create a self sustaining change of culture, they often lose their way after this time.Despite all this, it is still usual for new improvement programmes to receive a good initial reaction from leaders and participants and so there is plenty of scope for improving future interventions.

Many reasons for disappointments in improvement programmes have been proposed by researchers, ranging from inadequate leadership through to a supposed lack of focus on tangible gains.

Our studies lead us to propose that a reason for loss of momentum in many improvement efforts is that they have been in conflict with Natural Systems Principles. Where the approach has been in accord with these principles the enthusiasm and application have continued, even after the programme itself has finished.

Structure of the paper

  1. We describe characteristics of successful organisations and
  2. Characteristics of the Three Natural Systems Principles themselves
  3. Wepropose theories of how the Three Principles might provide guidelines for improvement.
  4. We relate these guidelines to a particular example
  5. Recommendations; how the Principles are useful in every aspect of planning the approach to change, from individuals in their local circumstances to leaders of organisations wanting tooptimise relationships with the global environment.
  6. Conclusions

1.Characteristics of successful organisations

The quality and performance improvement approaches of the last 20-30 years have generally been intended to achieve the standards of leading Japanese companiesthat have sustained a good reputation with their customers, owners and the wider environment.When such organisations are studied, a list of shared characteristics emerges, for example;

  • They are conscious of their wider system including suppliers. In recent times this has led some of them to include their raw material resources and waste disposal as part of their system.
  • They have a clear and well understood overall purpose.This purpose is more likely to sound like the attainment of a philosophic state than to be financially defined.
  • They are able to economically create deliberate variety and flexibility in the service of the customer and in response to changing external factors.
  • They respect the diversity of people and seek to enable ell staff to contribute toward change,
  • They are able to recognise and address undesirable variation in a systematic way,
  • The flow of product and service provision is smooth and predictable.
  • All work seen in terms of process.
  • Change and improvement are considered and managed in terms of the processes that make up the organisation.
  • They monitor progress performance in order to improve, rather than trying to force change by imposing targets on the outputs.

In their search to improve, many Western-owned companies and government organisationshave adopted the tools ofimprovement, such as Lean and Six Sigma, that have been observed in the Japanese model companies. Such programmes have realised some ofthe potential, but not the overalltransformation of performance quality they hoped for. Informal discussions with managers in such companies when considering their own approach will often reveal great frustration, expressed as “well it’s easy for xxx (Japanese company), they don’t live in the real world.”

At this stage it is useful to consider what the real, i.e. natural, world is like.

2. Characteristics of Natural Systems and the Three Principles

Natural Systems in the broadest sense extend across all domains from the universe, the organisation of sub-atomic particles, the way the brain develops and ecological domains such as islands or forests.

The 20th Century saw unprecedented study of all natural systems, and as research technology became ever more sophisticated it became apparent that in each case the diversity of the natural world is generated by surprisingly simple means. Thus, for instance, there are basic rules about natural selection in determining evolution, about how the individuality of an animal or plant grows from a very few apparently undifferentiated cells, and how all the elements of the universe have been made and remade in stellar explosions.

Given the volume of fields to study it is not surprising that most researchers have been concentrating on their own fields, with little awareness of the underlying principles behind other discoveries.

One who has looked across the disciplines is Dr. Elaine Johnson of MBM Associates, Portland, OregonUSA. Her proposition is thatthe characteristics of a small number of key principles have a lot in common across the domains.

In summary, the three principles that underlie the natural creation of order and structure are;

  1. Interdependence: Everything in nature is connected to everything else.
  2. Self Organization:Natural entities havetherulesforcreationinsidethemselves,theydonotneedtobeinstructedfromoutside.
  3. Differentiation: Nature constantly generates newnesswithoutlosingthepreviousidentity.

These Three Principlesof Natural Systems become relevant to management and leadership because they can help us understand, improve and lead human systems.

The Three Principles and human systems

We believe that a key reason why managers in traditional organisations find it so hard to achieve and sustain the improved results they seek is that they often work in conflict with their system in ignorance of how it could work. We suggest they learn to understand how to help their system to move in the desired direction. In this there are parallels with martial arts, where a small, light person can prevail against a much larger opponent by amplifying or diverting their moves rather than confronting them. Appreciating and working with the newly-recognised Natural System Principles enables a change agent to help rather than fight their organisation.

Toyota is a leading example of a globally successful large organisation that has sustained its reputation over the decades and has been widely studied.It has been shown[1] that their approach has evolved to be consistent with the ThreePrinciples, for example;

  1. Interdependence:

They are highly conscious of their widersystemincludingsuppliers and customers,andofseeingalltheworkwithinitintermsofprocess.

  1. Self Organization:

Thereisaclearpurpose,andthe capabilities for understanding and improving their processes in order to serve this purpose are developed internally. Employees are held in respect, and the flow of product and service provision is smooth and predictable with an emphasis on local rather than central planning and response.

  1. Differentiation:

They havelearnedtorecogniseandaddressundesirablevariationinasystematicway.They respect the diversity of their people and are able to economically create variety and flexibility in the service of the customer.

It will be apparent that there is some overlap between the Principles, which is inevitable if one accepts the first Principle of interdependence. However, we will demonstrate that the broad categorisation is sufficiently clear to help in programme design.

3. Using Natural System Principles to provide guidelines for improvement

In developing guidelines for operational and change leader we can categorise PMI’s practises according to the insights offered by the Three Principles.If these categorisations contain all that we can show to be constructive, then in future the conscious use of the categories would help any leader to reduce the application of destructive practise.

We will illustrate our approach by means of the questions we ask and the responses we make.

  1. Interdependence:Dothepartsoftheorganisationrecognisetheirrelationshipsandinterdependencieswithotherparts? Is the purpose of the whole organisation clear, particularly to everyday operational leaders who make day by day decisions?

We have for many years used the System Map in working with leaders seeking an alternative view to that given by the organisation chart, which only describes command and control relationships.

The template guides leaders in representing their organisation as a system. It is based upon a model used by Dr W Edwards Deming in Japan from 1951 onwards. It is useful at all levels of an organisation, from the whole company through to individual components such as departments or functions. Management teams find it powerful in many ways;

  • understanding the environment in which they operate; customers, suppliers, stakeholders, the community
  • clarifying the relationships and dependencies between the various parts of the organisation
  • helping people understand where their job fits in the organisation, and how what they do relates to the purpose of their employer
  • Identifying those parts of the leader’s jobs that relate to the future; listening to the environment of the organisation, relating what they hear to the future purpose, and marshalling change resources in response.
  • prioritising and directing change towards the key leverage points in the system

So this is a good start—using the System Map to work top down into the organisation leads to heightened awareness of the interactions and consequences unavailable from the org. Chart point of view.

  1. Self Organization:Are the operational processes by which products or services are produced stable and capable of providing what the customer needs? Or do they require constant attention from bosses or outsiders? Does the whole organisation sense its environment and can it adapt, preferably ahead of a crisis? Is there a regular culture of local improvement, within the standardised operations, that capitalises on the knowledge of the operators? Are there standard methodologies for making step change improvement, either in response to problems as they emerge or to take advantage of innovation and new opportunities? Do leaders appreciate the potential talent within their staff? Dostafffeelthattheirideasandcontributionsarewelcome? Do the measures help in diagnosing the effectiveness of processes or are targets used to judge people?

This category includes much of our approach to building expertise within the client. In order to be capable of being self organised those leading and operating a work system need to know how to understand it and improve it. The “quality” approach, which maybe expressed as Lean or Six Sigma, provides a practical set of tools and a common language for improvement and innovation, and for communicating between themselves and their neighbours.

  1. Differentiation:Istherearobustunderstandingofvariationinprocessesandoutputs,andhowtoreacttoitappropriately?Isthereanappreciationofthevalueofthevarietypresentinthepeople,andinthepotentialtobeabletoprovideflexibilityandvarietyofresponsetocustomers? Is the an appreciation of the constant nature of change, that processes degrade simply by the passage of time, and need constant improvement in order to remain stable? Is there an understanding of which historic strengths can be the best foundations for the challenges of the future?

Our approach to improvement has always been expressed as “on target with minimum variation”. This simple phrase encapsulates the powerful concepts that on the one hand there is always something better to aim for, whilst on the other hand the process will drift off target if it is not diligently attended to. Also included in this principle is the incremental nature of change inherent in the PDSA cycle. This implies an understanding of the current situation as a necessary foundation for implementing changes that will work. Such changes may be large or small scale, slow or fast, but if well led they will be seen as continual and not destructive.

We therefore consider that the Three Natural System Principles are a useful summary and provide a robust basis for leaders.

4.How does a successful change programme relate to the 3 NSPs?

Global Paint company, over more than four years

The initial purpose of this work was to enable the organisation to make step-change improvements in two key aspects of their business; speeding up the development of new products, and in being able to provide consistent products and services to global customers from multiple manufacturing locations. As the understanding of the approach became clearer, so did the desire to apply it more broadly, in creating a new culture of improvement across the whole business.

The programme as it developed over the first year consisted of

  • Working with global leadership team
  • Supporting global projects
  • Training the project leaders and participants, later development s for process managers
  • Developing a consistent approach to process management across the functions
  • Reviewing the ongoing activities
  • Communication across the group

The planning, development and implementation work was characterised by;

  • Continuity with past programmes including the name of the launch programme
  • Building the skills of their own people (There was no external hiring of change agents)
  • Their own people carrying out the investigation and improvement work
  • Teams were Multi-national and represented multiple functions

As the programme developed into its second and ongoing years there was,

  • Cycling of active improvement people into line jobs
  • Integration with the company business plan

Many benefits were observed

  • Business growth targets reached early
  • Recognition of the value of new-developed processes in underpinning the growth and target efficiency improvements
  • Many specific improvements in efficiency and effectiveness
  • Use of the approach helps collaboration across the varied cultures in global operations.

This success has not been easy, but it has been powerful, and we consider that it does actually respect the Natural System principles,

  • Interdependence

From the start it was intended that the work would apply to all the parts of the company as the relevance was demonstrated. We also ensured as far as possible that as well as training the project teams we incorporated those managers of processes that were affected by project trials and would be operating the newly –developed processes.

  • Self-Organisation

Managers from within the company were appointed as project leaders, and subsequently as area improvement leaders. Continual training at levels from Project champions (4 weeks) to team members (on-line modules) has emphasised the value the company places on building its own skills. The use of their own people in key change roles has built on their credibility and continuity.

  • Differentiation

Care was taken from the start to adapt the project team and training structures to the local circumstances, acknowledging that “one size does not fit all”. The standardised language and methods have paradoxically helped to develop a family felling across diverse activities and cultures.

This justifies a claim that the 3 NSPs would be useful for the design of change programmes.

5.Using the Natural System Principles in leading change

In our experience, those change programmes that have led to lasting impact exhibited the following general characteristics.

  • Interdependence

There isa conscious recognition that every part of the system is to some extent dependent upon the others; efforts are not to be constrained by project, function or geography, although the actual spread has of course needed careful handling

  • Self-Organisation

The workstreams and activities have clear and customer-focussed purposes, they build upon the potential of the staff, and seek long term local self sufficiency for everyday improvement. Measures help local managers rather than distant bosses.

  • Differentiation

Leaders and participants become aware that change is continual, not one-off, and thus require constant cycles of PDSA. They aim to generate improved performance and process change without losing the essence of the existing strengths, and ensure that all activities are adapted locally, not imposed uniformly.

Our knowledge of natural systems principles can therefore help guide the key characteristics of a good change system. The very best change system is one that improves performance and reduces the organisations’ impact upon the environment so we illustrate in the Appendix some illustrations of how to turn the general principles into guidelines for example programmes on a large scale using this ambition, and on a small scale by relating to one’s personal world.