Modular Enterprise Design
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Modular Enterprise Design. Johan Strümpfer. EXERCISE 1. DRAW A PICTURE OF YOUR OGANISATIONAL STRUCTURE. BUSINESS SYSTEMS. ORGANISATION COMPANY FIRM ENTERPRISE. ENTERPRISE. PARTS INTERACTING AROUND AN OVERARCHING BUSINESS PURPOSE NOT A CONGLOMERATE

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Modular Enterprise Design

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Modular enterprise design

Modular Enterprise Design

Johan Strümpfer


Exercise 1

EXERCISE 1

  • DRAW A PICTURE OF YOUR OGANISATIONAL STRUCTURE


Modular enterprise design

BUSINESS SYSTEMS

  • ORGANISATION

  • COMPANY

  • FIRM

  • ENTERPRISE


Modular enterprise design

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


Modular enterprise design

ENTERPRISE DESIGN

  • THE DELIBERATE ARRANGEMENT OF FACTORS INTO A SYSTEM

  • THE INTEGRATION OF INTERACTIONS INTO A REGULATED WHOLE


Modular enterprise design

SYSTEM

  • A regulated set of relationships

  • Interacting and interrelated parts

  • Parts organised for a purpose

  • A whole with novel features


Structure re interpreted

Structure Re-interpreted


Meaning of organise

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

?


Reflection on organisation 1

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.


Reflection on organisation 2

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?


Case study 1

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.


Case 1 possible future implications

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].


Case 1 synthesis

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?


Case 2 what is going on the question of structure

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?


Case 2 the issue of structure cont

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.


Case 2 research conclusions

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.


Case 2 key question

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?


Organisational change current dilemmas

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


Means to overcome dilemmas

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


I don t know what organisational structure you need but i do know you won t need it for long

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

Johan Strümpfer


Modular enterprise design

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)


Med process in context of systems thinking

MED Process in context of systems thinking

  • MED is a systems view of organisation

  • MEDP is a systems method


Systems world

Systems World

MEDP


Systems practice areas include

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


  • Systems approaches include

    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


    Problems and solutions

    Solutions

    Problems and solutions

    • There is nothing as problematic as solutions(Argyris & Schön,1967)

    • The Berkeley experiments(C West Churchman)


    Problems with mental models from john t martin

    Problems with mental models(From John T Martin)


    Problem solving is should be

    Problem Solving is/should be...

    • Process of inquiry

    • Group based learning process

    • Group inquiry


    Learning processes handy s learning wheel

    Question

    Reflection

    Theory/Answer

    Test

    Learning Processes:Handy’s Learning Wheel


    Problem solving should deal with the way people think

    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)


    Single and double loop learning

    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


    Problem solving should build

    Problem solving should build:

    1. Shared understanding of problematique (mess)

    2. Alignment w.r.t. ends

    3. Agreement on action

    4. Continuous action


    What is planning

    What is planning?

    • Process of group learning

    • Problem solving with larger scope


    Medp in context of systems methods

    MEDP in context of systems methods...

    • MEDP Purposes

    • MEDP Philosophy

    • MEDP Principles


    Purposes of med process

    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


    Philosophy of med process

    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?)


    Principles of medp

    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


    Dependencies of methodologies

    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


    Modular enterprise design

    PURPOSE

    Planning

    ORGANISE

    MED Process


    Modular enterprise design process reference framework

    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


    What are these methodologies

    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


    What is this

    WHAT IS THIS?


    What is this1

    WHAT IS THIS?


    What is this2

    WHAT IS THIS?


    What is this3

    WHAT IS THIS?


    What are these

    WHAT ARE THESE?

    IMAGES

    MODELS


    Modular enterprise design

    SYSTEM VIEWPOINTS

    REGULATION

    STRUCTURE

    FUNCTION

    PROCESS


    Modular enterprise design

    'WISDOM'

    UNDERSTANDING

    INSIGHT

    INFORMATION

    KNOWLEDGE HIERARCHY

    Difficulty of Inquiry

    Difficulty in communication

    Power of Intervention


    Modular enterprise design

    CLASSICAL ORGANISATIONAL STRUCTURE

    PROCESS DEFINITION

    STATEMENT OF ENTERPRISE PURPOSE

    • What is the input, output and transformation?

    • Who is the client/customer?

    • Who are the actors in the transformation?

    • Who are the owners of the transformation?

    • Who are the decision makers of the process?

    • Why is this transformation assumed to be meaningful?

    • What is the purpose of this transformation?

    • What are its measures of performance?

    • What environmental factors impact directly on this transformation?

    • PURPOSE

      • How the enterprise intends serving its stakeholders

      • Vision

      • Mission statement

    • IT’S A PROCESS!

      • What needs to be delivered?

    • BUSINESS PROCESS DESIGN

      • What needs to be done to deliver?

    P={F,F,...,F}

    1

    2

    n

    S

    R

    E

    F

    P


    Enterprise design process

    ENTERPRISE DESIGN PROCESS

    STRUCTURE

    REGULATION

    SYSTEM

    FUNCTION

    PROCESS


    Med process and med tools

    MED Process and MED Tools

    STRUCTURE [1]

    CONCEPT

    OF

    PROCESS

    2

    ENTERPRISE

    1

    DESIGN AS

    3

    FUNCTION

    INQUIRY PROCESS

    REGULATION

    4


    Med process framework

    Intro & Overview

    Org. struct.

    Immersion

    Deconstruct

    Stakeholder Analysis

    VSM

    BPD

    MED

    Analysis of MED

    Intervention Design

    MED Process Framework


    Med process framework1

    MED Process Framework

    • Orientation

      • Introduction and Overview

      • Organisation structure re-interpretation (SDM)

      • Immersion (MOI questions)

    • Design

      • Stakeholder Analysis

      • Viable Systems Model

      • Business Process Design (Modified SSM)

      • Modular Enterprise Design

    • Reflection

      • Analysis of MED (SDM)

      • Intervention Design


    Systems view underlying med

    Systems view underlying MED...

    • Review

    • Implications for MED Process


    Modular enterprise design

    PHILOSOPHY OF MED

    • Human Systems are Different

    • Manage people as people and not as systems

    • Don’t control actions, manage the rules of the game

    • “We do not believe the organisation can be controlled from the top”

    • Most (people) systems suffer from over management (autopoesis)

    • Loosely organised systems are more robust

    • Assume change: Learning, adaptation and evolution underlie viability

    • Causality in complex systems is complex


    Human systems are different

    Human Systems Are Different


    How is system controlled

    How is system controlled?

    Low

    Fear, Inaction

    Chaos

    Low

    High

    AUTONOMY

    Empowerment

    Alignment

    Authoritarian

    High

    CONTROL


    Modular enterprise design

    PRINCIPLES OF MED

    • Differentiate and Integrate simultaneously

    • Centralise and De-centralise simultaneously

    • Organise for change:

      • Enable evolutionary rather than revolutionary change

    • Organise for viability:

      • Implement Viable Systems Model functions

    • Internal Market mechanisms guide interaction

    • Manage the interactions, not parts:

      • Tweak measures of performance

    • Management style: Hi delegation, hi control

    • Support structures must support


    Modular enterprise design

    IMPLEMENTATION OF MED

    • Differentiate and Integrate simultaneously:

      • Use multiple bases of differentiation

      • Co-ordinate w.r.t. each basis of differentiation

      • Develop and integrate compatible measures of performance

    • Centralise and De-centralise simultaneously:

      • Centrally develop shared decision criteria; alignment w.r.t

        • Culture

        • Values

        • Strategy

        • Policy

        • Principles

        • Standards

      • Maximum devolution of line (executive) authority and responsibility

      • Selective collective decision making & empowered individual decision making


    Implications of medp intervention

    Implications of MEDP intervention

    • Different way of interrelating

      • Information and financial systems

      • Need for integration

    • Different approach to “control”

      • People skills

      • Facilitation (“coach” metaphor)

    • Role of Purpose

      • Planning & vision building, alignment

    • Performance measures, incentive systems, reward systems re-design

    • Need to redesign business processes

    • Culture: Entrepreneurial, empowered, development, accepting responsibility

    • Learning organisation


    In short holistic change management is required of which medp is one strand

    In short, holistic change management is required, of which MEDP is one strand.

    • What are other strands in holistic change management?

    • What are typical delivery vehicles?

    • Who manages the integration of the interventions?


    Modular enterprise design

    IMPLEMENTATION OF MED

    • MED is NOT a strict structural intervention

    • Shift Management style, worldview, culture

    • Adjunct interventions:

      • Strategic planning process

      • Management style: social, systems paradigm

      • Culture and value system development

      • People skills:

        • Facilitation skills,

        • Behavioural insight

        • Group dynamics

      • Training:

        • Financial concepts

        • Entrepreneurship

        • Marketing skills


    Organisational change current dilemmas1

    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


    Modular enterprise design

    END

    • End overview of MED Process

    • Process view of MED follows


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