OpX Thinking

Posted on Jan 26 in OpX Thinking by

The first thing to understand about the thinking behind OpX is that it is not concerned with just the operations group. It is concerned with the operations of any functional area or the entire enterprise. The technologies and thinking behind OpX, therefore, are equally applicable to improving the performance of the human resources function, the accounting or IT group as well as the operations division and equally applicable to manufacturing, service, public and not for profit sectors.

Why? Because OpX is concerned with the way the work gets done and we all have work to do. Finance processes transactions, prepares statements and secures low cost sources of financing expansion. Human resources is busy hiring new talent, building effective compensation, retention and performance management programs. Operations is delivering products and services to customers, marketing is detailing new product design and IT is trying to keep track of it all.

DemingPhotoOpX is all about doing any and all of these jobs faster, with less waste, greater quality and lower cost. That’s the key to OpX thinking, recognizing that all the work that happens in an organization, from accounting to operations and from assembly to strategic planning, happens as a result of a process.

Systems and processes are the verbs of work. Nothing gets done without them. OpX demands that we understand the organization as a system, just as Dr. Edwards Deming taught us over 50 years ago.

Systems Thinking

It was in the 1950’s that Dr. Edwards Deming gave his series of famous lectures to the Japanese Union of Scientists and Engineers (JUSE) as well as to leaders of Japanese industry. If he taught the Japanese anything it was the importance of thinking of the business as a system. It was a radical idea at the time.

DemingDiagramJust how radical is made apparent by Deming’s version of the organization chart (left). No boxes, no hierarchical levels, no lines of responsibility. Rather, a set of interconnected processes that take in supplies, produce products and services of value and deliver those to customers. And all the while, redesigning those products and services to better meet customer needs while continuously testing processes and taking advantage of opportunities to improve operating performance.

Organization charts depict the business as a static thing. The focus is on who reports to whom and who is responsible for what. When we think of the business this way, we miss the whole point of having a business – producing products and services of value for customers. And that’s never static.

Deming was presenting the organization as something dynamic. A complex set of processes and systems designed with a very specific aim – delivering products and services of value to customers and doing so with greater speed, less cost and greater quality than competitors. In other words, improving how the work gets done.

Implications of Systems Thinking

Appreciation of the organization as a complex system brings with it some important implications. Some of which challenge long held notions concerning how best to manage and lead in organizations. Deming highlighted some of these implications in his Fourteen Points for Management and  Seven Deadly Diseases.  Borrowing from both, our interpretation of some important implications of systems thinking are provided below.

The purpose of business is to create and serve customers because without customers, there is no business. The constant preoccupation of management, including the formulation of strategy and selection of business priorities, must be increasing the value delivered to customers.

Business performance is the sum of its systems and processes. Processes define how the business conducts and organizes the work. Systems define how the business has organized its processes. Together, they provide a comprehensive description of how the work gets done and how value is delivered. Systems and processes are designed, built and owned by management. It’s your responsibility.

The current set of systems and processes represent the collective know-how of the business. How the business accomplishes the work right now, represents the level of best practice and the state of knowledge or know‐how in the organization. If you really knew how to do things any better, you would be doing it now.

To improve business performance, you must improve process performance. Business performance is a function of the processes at work in the business. Roughly 95 % of performance is attributable to the process or system design, the remaining 5% to the people in the process. Don’t waste time focusing on the 5%. Processes and systems are the key.

The scientific method, with its reliance on evidence, is the only reliable way of adding knowledge and improving performance. There is a reason the human race has landed on the scientific method as a means of expanding knowledge – it works. In absence of the scientific method and evidence, performance improvement, and other management activities, are reduced to guesswork, hunches and myth. Greatness doesn’t flow from ignorance.

If we are going to improve performance and the competitiveness of our business, we must change our thinking. Dr. Deming had a different way of stating this truth:

It is not necessary to change. Survival is not mandatory.

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