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Change is necessary on the path of digital transformation. Based on the teachings of Deming and Goldratt, Intelligent Management came up with an organizational structure able to support this change. [shutterstock: 1043337913, KC Jan]
[shutterstock: 1043337913, KC Jan]
Blog Digital Transformation

Deming And Goldratt: The Software

At the eve of the new millennium, following four years of intense collaboration, Oded Cohen, a highly regarded TOC scholar, and I published with Larry Gadd at North River Press "Deming and Goldratt – The Decalogue".

This is the last article of a mini-series. All articles of this mini-series are available as PDF download at the bottom of the page.

It was a first step towards a cohesive, coherent and rigorous integration of two bodies of knowledge that at the time very few perceived as compatible: Theory of Constraints and The System of Profound Knowledge, Deming’s legacy to the world of management. The book was successful, it was translated in several languages and became recommended reading in universities around the world.

In the last 10 years, my team and I at Intelligent Management have come to believe that the only way to see the teachings of Dr. Deming and Dr. Goldratt bear fruit was to envisage an organizational structure capable of capitalizing on the scope and depth of their work. Such a structure, we argued, must be consistent with the systemic nature of their management approach; it must contain the seeds for the transformation from Silo to System.

Starting from 2010, in different books (‘Sechel: Logic, Language and Tools to Manage Any Organization as a Network’, ‘Quality, Involvement, Flow: The Systemic Organization’, ‘The Human Constraint’), publications, blogs, seminars, podcasts and, indeed, in our work with organizations, we started to evolve the ten steps of The Decalogue into a full-blown roadmap to accomplish this transformation.

The questions we asked ourselves were: How can we make operational the systems view of the organization first laid out by Deming in 1952? How can we factor in the leverage point called “Constraint”? How can we give the right emphasis to the role of “Flow” while preserving the need for “Control” in the management of the operations?

At an even more fundamental level: How can we overcome the inherent conflict between pursuing local vs. global optima, made evident by the ever-increasing level of interdependencies and interconnections that every organization is weaved into?

The Network of Projects

We called the result of our work on Organizational Design the “Network of Projects”. We believe that the essence of the work that organizations carry out is project-like in its nature.

  • The success of every organization depends on the success of its projects. Every organization is, essentially, an ongoing collection of unfolding projects. For this reason, the focus of leadership, boards and C-suites must be on how well and timely these projects are executed.
  • Projects require a pool of competencies. Every person in the company brings a set of competencies at various levels. When we have a way to schedule those competencies into projects, we can truly unlock the potential of all the resources available. We can facilitate teamwork by removing the barriers that prevent it, orchestrating people’s talents and skills in a time-sensitive and continuously evolving Network of Projects. By scheduling available competencies, we gain unprecedented flexibility and we accelerate project completion. This accelerates the achievement of the overall goal of the organization, financial or otherwise.
  • The Critical Chain algorithm is effective. Originally developed by Eliyahu Goldratt, the Critical Chain algorithm has long been adopted by a myriad of sectors, including high tech, aerospace and military, for its effectiveness. Critical Chain schedules projects based on real availability, i.e. finite capacity, it accelerates project completion through realistic estimates of task duration and absorbs the variation that affects all the tasks into one Project Buffer at the end.

Ess3ential

“Ess3ntial” is the result of an ongoing collaboration with a team of scientists and software engineers; their ingenuity and commitment to support the quest of Intelligent Management for a more evolved form of management are commendable. Thanks to them, Ess3ntial is also the first step towards a much more meaningful way of conceiving and developing software for true value creation.

Ess3ntial is a software platform that enables managers to work with a Network of Projects at finite capacity by scheduling competencies according to their availability. The engine of the software is the Critical Chain algorithm, appropriately modified by Intelligent Management to account for multiple projects and to manage levels of competencies. We started from the math; we wrote the algorithm, built the code and developed it into a software solution. Moreover, we have introduced a statistical understanding of Project Buffer variation that allows a true insight into project progress, far from the fallacies of the three-zone, spec-induced and tampering-prone management approach.

Meaningful control and a better future of work

Ess3ntial provides managers with meaningful control through managing the Project Buffers that are the real thermometer that measures the temperature of an organization. By constantly monitoring the state of the buffer for each of the ongoing projects, leadership can have a real insight, not numbers from a spreadsheet, into how well the flow of events is generating units of the goal the organization is pursuing.

I strongly believe that it also enables a better future of work. It addresses the multilayered issue of how to optimize finite resources to maximize throughput. This is critical if we are to generate wealth sustainably and in a way that maximizes Quality of products and services, meaningful Involvement of people and accelerated Flow of project completion.

Ess3ntial is the fruit of 25 years of work from Intelligent Management, supporting organizations in a continuous feedback cycle between sound theoretical development and on-the-field validation. Ultimately, we are Applied Scientists and our realm of operation is organizations striving for better performance at every level: we are successful if they are.

At the very core of all this work there is our vision to provide a meaningful contribution to the advancement of Deming and Goldratt’s teachings; our goal is, to use the words of Deming, “the transformation of the prevailing style of management into one of (whole) systems optimization”.

With this article, Domenico Lepore concludes his mini-series of articles that focuses on how to build companies that are fit for the digital age.

Source:
Intelligent Management

About the author

Domenico Lepore, Intelligent Management

Dr. Domenico Lepore is Founder of Intelligent Management Inc. With a background in physics, he is an international expert and innovator in leveraging systems theories and complexity science to radically improve business performance. He has led international implementations with his Decalogue™ methodology at over 30 national and multinational organizations in a variety of industries including IT. His latest international publication is ‘Quality, Involvement, Flow: The Systemic Organization’ from CRC Press, New York.

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