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It Takes A System To Beat The System

November 16, 2009

“The head bone’s connected to the back bone, the back bone’s connected to the leg bone….” The old song reminds us that the human body is a system. While the parts are marvelous individual creations, they are of little value unless connected in a healthy system.

A business is also a system. It consists of a variety of different parts, people, departments, policies, and assets. When those independent parts are combined in a healthy system, their interaction creates value.

The first principle of the systems approach is totality. In a healthy business, the value of the system is greater than the sum of the parts. The business results from the interaction of the parts.

In the big business world, companies that violate this principle find themselves the object of hostile acquirers interested in the “break up” value of the enterprise. The management of these companies have let the parts, valued individually, become more valuable than the whole.

In athletics it’s called chemistry. The skills of the best player on one team may not fit well with the talents of the players on another team. While the skilled player may be the best “part available”, his addition to the “system” may actual decrease its effectiveness.

A department within your company may be operating less than perfect. The introduction of a “state of the art” solution will improve that department, but it will also impact other parts of the system. That impact may be positive or negative. Any change, regardless of how it improves a part of the system, must ultimately be viewed by its impact on the entire system.

A second principle of the systems approach is interaction. The interaction between the various parts is as important as the parts themselves. To understand any of the elements, you must understand the interactions between that element and the rest of the system.

Good problem solving involves simplifying any complex situation into its essential components. Once segmented, solutions can be found to each individual piece of the puzzle.

In a business system, solving the parts to the problem won’t solve the problem. The pieces need to be put back together and may require modified solutions to accommodate the different properties that they acquire through their interaction.

Imagine for a minute an automobile assembled from the best components of each of the world’s leading car manufacturers. At first it sounds like a dream. My guess is, however, that it would eventually be seen as a nightmare of poorly fitting parts. Nothing wrong with any of the components, its just that in putting them together, no consideration was given to the system’s interaction.

Examine a business whose manufacturing costs are too high, where quality is poor, deliveries are late, and morale is low. The focal point of attention becomes the production department. Is the manager competent? Are the supervisors qualified? Have the employees been properly trained? Are the right tools and equipment available?

A “state of the art” production department may have little impact on the original symptoms. The systems view of a business holds that although the symptoms might first be observable in the production department, the real problem might well lie elsewhere.

Special orders and expedited deliveries may please some customers in the short run, but eventually they will disrupt the integrity of an orderly production schedule. Production should proceed when design is done, but all too frequently they overlap. The result later manifests itself as an inferior product.

Any accounting department will sooner or later be able to report cost overruns to the last penny. The information will be of little practical value if it doesn’t get to the production department in time for them to take corrective action. Information that is 70% accurate the next day is worth considerably more than 100% accuracy next month.

Different businesses have different focal points that first show the signs of a dysfunctional system. The systems approach broadens the search for solutions. It explains why so many “can’t miss solutions” miss, why “quick fixes” aren’t, and why “dream teams” never wake up.

A healthy business system is one in which all the individual parts that comprise the system are integrated in a rational manner that makes the business greater than the sum of its parts. A healthy system is characterized by open communication, reinforcing goals, clearly assigned responsibilities, and timely feedback.

Because its your business, take the systems approach to beat the system.

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