Modular Enterprise Design

1. Modular Enterprise Design Johan Strümpfer

2. EXERCISE 1 • DRAW A PICTURE OF YOUR OGANISATIONAL STRUCTURE

3. BUSINESS SYSTEMS • ORGANISATION • COMPANY • FIRM • ENTERPRISE

4. ENTERPRISE • PARTS INTERACTING AROUND AN OVERARCHING BUSINESS PURPOSE • NOT A CONGLOMERATE • NOT NECESSARILY A GROUP WITH PARTS MORE OR LESS IN THE SAME BUSINESS • NOT A FINANCIAL HOLDING • A SYSTEM

5. ENTERPRISE DESIGN • THE DELIBERATE ARRANGEMENT OF FACTORS INTO A SYSTEM • THE INTEGRATION OF INTERACTIONS INTO A REGULATED WHOLE

6. SYSTEM • A regulated set of relationships • Interacting and interrelated parts • Parts organised for a purpose • A whole with novel features

7. Structure Re-interpreted

8. Meaning of Organise • Way the enterprise works • Pattern of interaction between parts • How enterprise is set up to deliver what is required • How the parts fit together, statically and dynamically ?

9. Reflection on organisation:-1 • Work in groups of 2-4 people. Time allowed is 45 minutes. • Your group must choose an enterprise (organisation) you want to reflect on. It is not necessary that you choose your own enterprise, but do select one that you are familiar with. • This reflection is on the way the enterprise is organised, and how this way of organisation is affecting performance. Refer to the preceding slide for a definition of “organise”. • “What is going on?” Develop a list of about 10-15 points of striking issues, problems, features, trends and patterns that relate to the manner of organisation. Consider how appropriately the enterprise is organised, issues of transforming the enterprise to be organised differently, and the impact of such interventions. Relate these points to the performance (success, failure, profitability, etc.) of the enterprise.

10. Reflection on organisation:-2 • “What are the future implications or possible consequences?” Develop a list of 3-5 points of future implications if the current situation and trends continue. Where is pattern of organisation and changes to the manner of organisation, coupled to performance, leading to? • “What are your concerns?” When considering the future implications, what are your concerns regarding the way the enterprise is organised? List 2-3 major concerns. • “What question would capture your concerns?” What is the essential knowledge that you feel is needed to resolve your concerns?

12. Case Study 1 • What is going on? • ABC Division is important and stressed close to the limits. • DEF Division is lucrative, but has barriers to foreign competition, [yet] is not (well) linked into [distribution] structure. • [Distribution] system is very important but that’s where the greatest structural stresses are. • Present systems and structure inhibits appropriate customer management and focus. • Structural divisionalisation inhibits cross-selling and marketing; loss of [significant] potential income; lack of appropriate cross functional incentives. • Lack of overall responsibility and accountability for the (integrated) whole/customer as a whole.

13. Case 1: Possible Future Implications • Loss of market share and profitable customers. Client defection rates increase. • Continued and worsening problems to differentiate [from major competitors]. • Work place becoming more corrosive on people in [organisation]. Possible loss of key people. • Loss of energy and flexibility to embark on new ventures, partnerships. • Continued see-saw between [sales] and [service levels].

14. Case 1: Synthesis • It is very complex. • Structuring is an issue of [gaining/maintaining] appropriate customer focus. • Incentive systems, support systems, management style and organisational structuring cannot be “fixed” or dealt with in isolation. • High levels of [current] success re-enforces current thinking and organisation (design). Key question: • What is the (appropriate) logic for the design of the whole, and how do we inquire into this?

15. Case 2: What is going on?“The question of Structure” • We have had a strongly centralised structure now for a decade or longer ... During this time we have seen this structure consolidate into specific strategic business units - with the rationale behind it primarily for cost control/profit focus and associated accountability. It had little to do with improving our marketing/sales. .... • During the past decade numerous changes have occurred in the market place, as well as in other aspects of business life. ... • Our business is increasingly technology dependent. .... • Our performance: ...over the past nine years, in the two areas we can influence directly, ..., we have not performed nearly as well as our competitors. • [Has] our structure developed power blocks inhibiting innovation, development, accountability and performance and created introspection, intrigue and arrogance?

16. Case 2The Issue of Structure, cont. • ...our centralised structure, while of administrative attraction, may have become more of a hindrance than a help to our new business efforts. • [The paper reviews trends in organisational forms world-wide, and in particular those used in the industry of this organisation.] • The successful [enterprises] are good at managing the relationships between the components (something we have failed at - perhaps because we did not recognise the need?) • A very fluid and borderless environment allows [specialist independent organisations] to ‘bond’ and interact for business reasons as long as it is mutually beneficial to do so.

17. Case 2: Research conclusions • Business in future will have to be far more fluid to be able to cope with changes and turbulence in the environment. • This fluidity will require businesses to group/disgroup/regroup according to mutual benefit over time. • Success will come to those who, foreseeing the need, group excellence together to achieve common objective(s) before competition. • Success though will also be dependent upon how well the group members manage the relationships between themselves. this in turn implies more integrity, honesty, trust, openness and mutual co-operation than in the past. • The customer is the key common component and a group’s collective efforts should deliver [in the customer’ needs] - thus the common good of the group becomes primary.

18. Case 2: Key question • .... • ....[Questions related to strategic intent] • Do we retain an administration-orientated SBU structure or invoke a ‘closer-to-the-customer’ marketing-orientated change?

19. Organisational change: Current dilemmas • Change very disruptive (human, $) • Instability: Inappropriately organised cf. environment/context demands • Time lag to organise: Rapidness of (re-) organisation required • Wrong paradigm: Changing to get organised vs. organising to get change

20. Means to overcome dilemmas • Isolate change to where it is required • Have more frequent smaller adaptations • Shorten lag for perceiving and acting on change signals • Build learning and evolutionary adaptation into the organisation structure rather than having it as extraneous interventions on structure

21. “I don’t know what organisational structure you need, but I do know you won’t need it for long” Johan Strümpfer

22. WHERE ARE WE? MODEL WHERE DO WE WANT TO BE? CONGLOMERATE GRAVEL AGGREGATE SYSTEM IMAGE: LOOSE CANNON BALLS VS AIMED SHOTGUN PELLETS Continuum of: Externally Co-ordinated vs. unco-ordinated individual behaviourIndependent vs. interlinked behaviour (INTEGRATED)

23. MED Process in context of systems thinking • MED is a systems view of organisation • MEDP is a systems method

24. Systems World MEDP

25. SYSTEMS PRACTICE AREAS INCLUDE.... • Problem Solving • Planning • Organisation Structure Design • Organisational Change Management • General Management • Business Management • Operations Management • Total Quality Management • Disciplines • Psychology • Geology • Ecological Management

26. SYSTEMS APPROACHES INCLUDE.... • Soft Systems Methodology • Systems Dynamics Modelling • Organisational Dynamics • Global Dynamics • Critical Systems Heuristics • Modular Enterprise Design • Viable Systems Model • Interactive Planning/Interactive Management • Total Systems Intervention

27. Solutions Problems and solutions • There is nothing as problematic as solutions(Argyris & Schön,1967) • The Berkeley experiments(C West Churchman)

28. Problems with mental models(From John T Martin)

29. Problem Solving is/should be... • Process of inquiry • Group based learning process • Group inquiry

30. Question Reflection Theory/Answer Test Learning Processes: Handy’s Learning Wheel

31. Problem solving should deal with the way people think: • DEVELOP: • An appropriately rich and relevant mental model of reality • Decision criteria (value system) • Knowledge (insight, understanding, wisdom)

32. Single and Double loop learning Beliefs World View Problematic Actual Action Paradigm Outcome Situation Theory in Practice Single Loop Learning Gap Double Loop Learning Desired Outcome Soft Problem solving Hard Problem solving

34. Problem solving should build: 1. Shared understanding of problematique (mess) 2. Alignment w.r.t. ends 3. Agreement on action 4. Continuous action

35. What is planning? • Process of group learning • Problem solving with larger scope

36. MEDP in context of systems methods... • MEDP Purposes • MEDP Philosophy • MEDP Principles

37. PURPOSES OF MED PROCESS • Make change in organisations less disruptive in human terms • Make organisation change more continuous and pervasive • Build shared and appropriate model of enterprise • Integrate intervention processes

38. Philosophy of MED Process • Participative inquiry • Who should participate? • Group learning • Whose mental model of the organisation requires development? • Who needs to share an understanding of how the enterprise is organised? • Systems thinking structures what gets inquired into • What systems model is used as basis? MED (What is MED?)

39. PRINCIPLES OF MEDP • Participative process of inquiry • Process of group learning (problem solving, planning) • Build a (shared) model of of how the enterprise is or should be, constituted and work • Systems models and methodologies guides the process of inquiry

40. MEANS PURPOSE Planning MEDP Dependencies of Methodologies MEDP • What & How of Enterprise • Why of the Enterprise Planning You cannot hope for success with MEDP without context/purpose setting adjunct process

41. PURPOSE Planning ORGANISE MED Process

42. Modular Enterprise Design:Process Reference Framework • MODES OF INQUIRY FRAMEWORK • System viewpoints • Generic methodologies • Inquiry patterns • GROUP INQUIRY PROCESSES • Problem solving and planning • Shared understanding of problematique • Alignment on Future Implications & Desired System • Agreement on Action • Continuous action

43. What are these methodologies? • Multi-dimensional organisation design • Garajedaghi, Ackoff, Self • Viable systems model • Beer, (self) • Systems Dynamics Modelling • Forrester, Senge • Modified Soft Systems Methodology • Checkland, Wilson, Churchman, self • Biomatrix • Jaros & Cloete • Stakeholder analysis • Mitroff, self • Modes of Inquiry • Self MED BPD Process

44. WHAT IS THIS?

45. WHAT IS THIS?

46. WHAT IS THIS?

47. WHAT IS THIS?

48. WHAT ARE THESE? IMAGES MODELS

49. SYSTEM VIEWPOINTS REGULATION STRUCTURE FUNCTION PROCESS