Out of the Crisis.Org

[Louis Altazan]

Tim decided he wanted to build the “perfect” car. He reasoned, if he looked at all of the cars available, he should be able to take the “best” part of each and combine them into his creation. He chose a radiator from on car, because it really never gave any problems. The engine came from another vehicle that was noted for reliability and economy. The transmission he found was noted for smooth shifting. He then found a computer from a vehicle that never gives computer problems and so on.

With a great deal of effort every part was assembled, but the vehicle did not perform properly. The transmission ratio was not right for the engine’s power curve. The radiator, which was a fine part, did not flow properly with this engine. His car ended up as an expensive, under-performing mess.

I know this is a silly analogy. But businesses often do the equivalent with their management. Often they start out with what a past boss used. They attend a weekend seminar or two and add that. When there’s a problem they invent new solutions, from the hip. Sometimes they see something in other businesses that looks good and add that into the mix. The problem is, many of these parts may not be compatible. There is no cohesive strategy, no philosophy of management. One part contradicts others and the business never really performs.

Like Tim’s car the whole performs poorly, even though each part may be acceptable or even good. Point one of Dr. Deming’s philosophy is ‘create constancy of purpose.’ In order to accomplish this you must have an all encompassing theory of management and it must be applied to every part of the business. A car, well designed and built for a specific purpose will perform that purpose well. The same holds true for a business.

_________________
Louis Altazan
Owner/Manager AGCO Automotive Corporation
Baton Rouge, LA

[Jeff S]

Hi Louis,

Thanks for the analogy. I think this is at least a part of explaining what I mean by a business is "holistic"? I believe this is because Tim paid a great deal of attention to the individual components and as good as they may have been failed to look at his project in a holistic manner. Although he did end up with a car, the end result wasn't very good. Even if Tim had ended up with a very good car it likely could have been far better if he had paid more attention to how the various components would interact with each other.

Another analogy would be the way it seems to me many dealerships are operated. A dealership likely has several departments (service dept, Parts, used car, new car, financing) and it appears that many dealers operate each department as individual businesses each with their own profit, accountability, and sort of in competition with one another. This seems a bit odd to me as I would think a greater success could be achieved by operating the business as a whole (as it really is).


In the two examples you gave the other day [in another thread] to point out single factors that determined the failing of one [had a very good plan, did everything good except; had no market] I would say this is a perfectly good example of what happens when there is a failure to have a holistic view. Perhaps a mathmatical analogy would be: Any number multiplied by zero equals zero. It doesn't matter how good the other parts of the business were concieved because there was really no business to begin with? Or, perhaps in Tim's case it wouldn't matter how good the engine and transmission were if he couldn't bolt them together.

In your other example the single factor you pointed out was a very good location but the rest of the business was done poorly. Due to the single factor success was achieved. I would say, "success" is a reletive term. Had they done other things differently (better) the results would have also been different. This businesses success was determined holisticly. This IMO is the 'trap' a business could fall into. They see a measure of success that was obtained due to a single factor and concentrate too much effort into improving upon the single factor, failing to see the business (or success/failings) is determined by everything, not the single factor.

_________________
Jeff Speed
HQ Automotive
Lathrop MO
http://hqautomotive.com

[Louis Altazan]

[tomdruz]

This discussion brought to mind Systems Theory, or "Systems Thinking". I am sure many of you will be familiar with it, as Deming is one of the names, if not the name associated with Systems Theory.

A system is an organized collection of parts. The parts all work together to accomplish a set goal. There are many different inputs or variables that the system needs to deal with effectively to reach that goal. It is easier to break the system down into subsystems (e.g. Parts dept., service dept, admin, etc.) and monitor the ins and outs of these smaller systems. You still have to take into accoutn, however, that each system affects the others.

A good system will ecourage feedback throughout its various subsystems to make sure they are always headed in the same direction (i.e. towards the overall goal of the system) If one of the parts strays or weakens, the system needs to adjust to correct the issue, or it will fail.

Peter Senge wrote a book, "The Fifth Discipline", in which he theorizes that there are five disciplines that an organization must embrace to cultivate a true systems thinking effort. One being systems thinking itself, the others:

Personal mastery. "continually clarifying and deepening our personal vision, of focusing our energies, of developing patience, and of seeing reality objectively"

Mental models. "Mental models are deeply ingrained assumptions, generalizations, or even pictures or images that influence how we understand the world and how we take action"

Building shared vision "If any one idea about leadership has inspired organizations for thousands of years, it's the capacity to hold a shared picture of the future we seek to create"

Team learning: "How can a team of committed managers with individual IQs above 120 have a collective IQ of 63?"--- "Team learning is vital because teams, not individuals, are the fundamental learning unit in modern organizations"

This was a long way to go to point out that even having all of the best individual components means nothing if you cannot tie them together and point them in the same direction.

(Systems theory is a favorite subject of mine, it would be great to see it have it's own forum. I have a list of great books in case anyone is interested also)

[Louis Altazan]

Hi Tom,

I think your thoughts are pretty well right on target. Deming called the collective components of management 'profound knowledge.' He felt there were four major components that were necessary:

• The theory of statistics
  
• The theory of systems
  
• The theory of knowledge
  
• The theory of Psychology

He felt a manager need not be a master of any, but must have a working knowledge of all. This seems to agree well with what your statements.