In search of "Common Sense"

Jan 15, 2009

Benefitting from Portal and Web 2.0 Technologies

We have to have clear and common-sense answers to following set of questions: (I am sure you would have come across these from Goldratt's "Necessary but not sufficient" business novel)

  1. What is the power of the technology?
  2. What is the limitation that the technology helps in diminishing?
  3. What are the business rules that organizations have formed to function 'with the limitation'?
  4. What are the new business rules that need to be formed so that the power of the technology can be directly applied to diminish the limitation?
  5. How to cause the change from old ways of doing things to new ways of doing things?

The technology vendors focus on selling the 'Power' of the technology but the business users need to look at the same from the context of how this power helps them achieve their Goal of 'making more money now as well as in future'

The examples of MRP and ERP given by Goldratt could help us in thinking through.

Question

MRP

ERP

Portal / Web2.0

What is the power of the technology?

Completing dependent calculations in a jiffy

Store and retrieve enormous amount of data quickly

  • Display and organize data and information on demand
  • Power to individual to have a say

What is the limitation that the technology helps in diminishing?

Inability to create and modify the shop-floor production schedule as frequently as possible as manually preparing the schedule was very laborious

Inability to guide managers and workers to take 'local decisions' based on a global picture.

Individuals have to depend on their own limited visibility of the system, selective memory clouded by prejudices and limited experience to arrive at the view on health of the overall system, role played by different players and the next best action for the self interest and interest of the overall system.

What are the business rules that organizations have formed to function 'with the limitation'?

Create the schedule on a monthly basis.

Create common-sense business rules for local optima. E.g. optimum batch size, inventory re-order levels, evaluate the machine and shop-floor worker by utilization / efficiency, product costing as a basis for deciding a sale etc, in short Cost Accounting based measures

  • Promote specialization in job roles; give weightage to 'marquee qualification', 'experience' and 'eloquent references' for deciding on awarding posts of importance in the organization.
  • Promote hierarchical organization with power to decide, reward and punish concentrated in the hands of few.
  • Promote competition amongst organizations even when they are part of the same value chain.

What are the new business rules that need to be formed so that the power of the technology can be directly applied to diminish the limitation?

Create the schedule on a daily or bi-weekly basis.

Throughput accounting and basing local decisions on the primary criteria of impact on the system throughput

One thing is very clear; this will lead to SIMPLE ORGANISATIONs.

To my mind it will be on the lines of Toyota Productions System for information processing especially from the Goals and Long Term Philosophy point of view.


How to cause the change from old ways of doing things to new ways of doing things?

Point out the ridiculousness of not utilizing the power.

Educating everyone concerned on systems thinking with effect-cause-effect mode, changing the measurement system, creating incentives which promote increasing throughput rather than reducing cost.

Organisations will not on their own change to the new ways of doing things. It will be through a process of survival of the fittest that the organizations who adopt this will survive in the long run while the others who sit on the fence or adopt this half heartedly will be forced to close down as we are witnessing in the Automotive Crisis in the US

No comments:

Post a Comment