Systems Thinking: The System by Andy Lipok

A quick recap: In our new world we have discovered our purpose from the customers perspective to give our organisation and staff a new focus on what really matters – turning off and stopping anything that detracts from meeting this purpose.

In doing so we have uncovered that demand is varied but predictable, that care is needed on using the right measures to support success, that there is huge economic leverage in removing failure demand, that we can absorb variety in value demand and by using economies of flow we can reduce costs and improve service.
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Systems Thinking: Flow by Andy Lipok

In order to understand flow we must first understand the current organisational theory, design and management in more detail. This can be best explained by exploring the relationship between our industrial past and our understanding of economics which has led to the theory of economies of scale, for which there are two main arguments:

  1. The organisation design argument: specialisation and standardisation will lead to lower costs and greater productivity.
  2. The savings argument: cost savings will be made through common IT systems, less buildings and fewer staff.

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Systems Thinking: Measures by Andy Lipok

In discussing the concept of purpose we briefly explored how the wrong purpose can be reinforced by measures and targets that create further distance between meeting the true purpose for the customer. Even worse, measures and targets themselves can become the default purpose of an organisation, pulling it in different directions and hiding the continued degradation of service in the eyes of the customer. To put it simply, measures can make performance worse!
It is often said that ‘you get what you measure’ as any metric you care to hold someone accountable for will drive us humans to further our scores against it, especially when livelihood is at stake. Traditional thinking sees measures and targets as motivational tools to encourage competition and further performance. The fundamental problem is they so often encourage the wrong behaviour to achieve the wrong goal. For example, the reason CEOs of the worlds biggest companies care so much about share value is because that’s how we measure them, and it’s what we pay them on. But a focus of our CEOs on share value leads, both strategically and operationally, to disastrous consequences for customers, staff and ironically, the share price and said CEO!
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