professor tony bendell's tocico workshop slides

2015 TOCICO International Conference

© 2015 TOCICO. All Rights Reserved.

http://www.theanti-fragilityacademy.com/ http://servicesltd.co.uk/ [email protected] [email protected]

Anti-Fragility & The Theory of Constraints

TWO DAY WORKSHOP 10-11 September 2015

Tony Bendell, Services Limited and The An>-‐Fragility Academy




3 Ques/ons you might ask 1.  Why should I consider developing An>-‐Fragility within my organiza>on,

what does that mean in prac>ce, and why is a focus on robust safeguards insufficient protec>on?

2.  What is the rela>onship between An>-‐Fragility and the Theory of Constraints (TOC)?

3.  How and where do I start applying this?




Learning Objec/ves

1.  To extend the Theory of Constraints model and the emphasis on the pursuit of efficiency & effec>veness, in order to enable delegates to transform organiza/onal design and management thinking and prac>ce within their organiza>ons taking account of the links between flow and fragility in their systems and organiza>ons.

2.  To enable delegates to undertake an organiza>onal Stocktake of current fragili>es within their organiza>ons, and iden>fy immediate areas for aCen/on.

3.  To enable each delegate to develop an Ac/on Plan to transform their organiza>on from fragile or robust to An>-‐Fragile.




Book may be ordered at: www.gowerpublishing.com/isbn/9781472413888 35% discount code G13iCO35 Or for signed or dedicated copies go to: h^p://www.thean>-‐fragilityacademy.com/#!book/c1enr




Programme Day 1 am: Introduc>on to An>-‐Fragility Answering Ques>on 1 pm: Guest Speaker(s)




Programme Day 2 am: Answering Ques>on 2 -‐ Extending TOC Answering Ques>on 3 -‐ Organisa>onal stocktake pm: Building Your Personal Ac>on Plan Review & Close





Day 1 am

•  Introduc>on to An>-‐Fragility •  Answering Ques>on 1: Why should I consider developing An4-‐Fragility within my organiza4on, what does that mean in prac4ce, and why is a focus on robust safeguards insufficient protec4on?




Anti-Fragility (Nassim Taleb)

•  Fragile refers to systems and organisa>ons that can be easily damaged by changes or shocks in the external or internal environment.

•  Robust refers to systems and organisa>ons that are able to withstand such adverse condi>ons up to a limit.

•  An0-‐Fragile refers to systems and organisa>ons that, like biological systems, are more than just robust and within limits actually improve their resilience through being stressed.




Are you anti-fragile?




People are fragile




People are fragile & anti-fragile ………but sometimes only robust




Are natural systems Fragile, Robust or An/-‐Fragile?




Are natural systems Fragile, Robust or An/-‐Fragile? E.G. a Meadow, a Person, a Community of Bees




Are natural systems Fragile, Robust or An/-‐Fragile? E.G. a Meadow, a Person, a Community of Bees •  Incorporate aspects of all 3




Are natural systems Fragile, Robust or An/-‐Fragile? E.G. a Meadow, a Person, a Community of Bees •  Incorporate aspects of all 3 •  Simultaneously, even in the ‘same’ aspect/dimension




Are natural systems Fragile, Robust or An>-‐Fragile? Are manmade systems Fragile, Robust or An/-‐Fragile?




Are manmade systems Fragile, Robust or An/-‐Fragile? •  Fragile & Robust, possibly simultaneously in ‘same-‐ish’ dimensions

•  But un>l now not focused on An>-‐Fragility





What about Organisa/ons?




What about Human Organisa/ons? •  Have characteris>cs of both manmade & natural systems




Nature Got There First •  Natural systems have An>-‐Fragile

features •  Un>l now, we have only focused on

making human systems Robust. •  But now we know beCer!




The Fragility of Human Organisa/ons




Is it GeRng Worse? •  Professor Richard Foster from Yale University states that the average lifespan of a

company listed in the Standard and Poor’s 500 index (S&P) of leading US companies has decreased by more than 50 years in the last century, from 67 years in the 1920s to just 15 years today.

•  Foster es>mated that by 2020, more than three-‐quarters of the S&P 500 will be companies ‘that we have not heard of yet’.

•  There is no proof that age makes a company any more profitable than younger companies; If the S&P 500 were made up of only the companies that were part of the index in 1957, overall performance would be some 20 per cent worse.

•  The immediate causes of failure are numerous; changing markets, simple insolvency, corporate crime, inability to adapt. The Fragility of Human

Organisa/ons




•  Organisa>onal failures are now commonplace, including those of iconic firms

•  Conven>onal management and management systems have proved inadequate to protect both private and public sector organisa>ons from catastrophic incidents, adverse publicity and failure

•  Fragility associated with: Ø  Vola>le Environment Ø  Weaknesses in Systems & Processes Ø  Weaknesses in Behaviours & Management Ø  Rush to Efficiency

Organisational Failures – The Failure of Management & Management Systems




The Problem of Risk Management •  Numerous repeated and well publicised failures of Risk Analysis and

Management –  Inherent Flaw in the Approach: Much of Risk Analysis and Management as we

know it today is part of the problem, not of the solu4on •  Reac/ve Approach – Uncertainty & Risks will occur; we need to predict &

reduce/contain it. –  We have to be able to conceive the risk.

•  Ignores aspects of the internal and external condi>ons in the system, including its complexity and loading, & assumes stability.

•  Assumes full /mely informa/on, cri/cal awareness & senior management aCen/on

•  Assumes no “Black Swans”




Enterprise Risk Management –  A New Business School Discipline

–  Great Poten>al, But… –  In its infancy –  Not Being Used, Not Being Used Well –  Educa>on & Governance Issues –  Risk silos




The Desire for Robust Systems

Ø  Whilst they exist to protect people, organisa>ons and communi>es, human systems are naturally fragile.

Ø They fail individual people & stakeholders, and some>mes they fail systema>cally & some>mes drama>cally.

Ø Weaknesses are caused by people, by processes and by environment excess.

Ø We try to make such systems robust, but how can we establish that they are robust enough since a robust system just waits for something more powerful than it to overcome it? Like the Thames Barrier the robust is always wai>ng for a wave that is bigger than it, that will destroy it.

Ø Robustness may imply Rigidity




The Problems with Robustness




There is no prac/cal level of robustness that is `Strong enough`





Robust systems don’t themselves get beCer

There is no prac/cal level of robustness that is `Strong enough`





Forensic Accounting, Fraud & Mismanagement

•  Forensic Accoun>ng is a Safeguard, But.. •  Can be a bit late.. •  The Whole Governance Issue

–  Shortcomings of Current Prac>ce –  Arguable; Different Perspec>ves on Risk & ‘Skin in the Game’ –  Board Responsibility, Understanding, Educa>on, Knowledge &

Access to Informa>on •  The Tip of the Iceberg?




Where Fragility Exists

•  At all Levels/Layers… –  Strategy & Governance –  Opera>ons, Processes & Supply Chain

–  People & Culture –  Informa>on & Technology –  Markets, Products & Services

•  Global & Local Fragility/Macro & Micro




Some Sources of Anti-Fragility •  Learning

•  Awareness of environment & internal condi>ons •  Informa>on systems •  The ability to take decisions & act •  Flexibility & Agility •  Good decision making •  Shared & spread risk •  An>-‐Fragility (or not) is defined by the Organisa/onal Strategy,

Structure and Systems, its People, Rela/onships and its Culture. We can then Build An>-‐Fragility (or not) into our products & services, use of informa>on and technology base.




•  Safeguarding Systems –  All organisa>onal and system informa>on gathering and feedback loops,

that poten>ally use current performance as the basis for control and/or change, represent An/-‐Fragility Features.

•  Strategy Review; Risk Management; Budgetary Control; Internal & External Audit; Quality Control; Quality Assurance; Developmental and Evalua>ve Performance Appraisals; HSE Assurance; Con>nuous Improvement, Kaizan, Six Sigma, Lean Improvement, Agile Deployment, & Organisa>onal Assessment against the EFQM or Baldrige Excellence Models.

An/-‐Fragility Features of Organisa/ons and Systems




•  A key part of the An>-‐Fragile mechanism in all these cases is the human role.

•  Risk Management is an An/-‐Fragility Feature of our organisa>ons and systems. But, this An>-‐Fragility Feature, is itself oVen implemented in a Fragile way. (Second Level Fragility)

•  Lack of a holis4c approach to Fragility Minimisa0on and Management in current prac4ce in organisa4onal or system design and opera4on.

Anti-Fragility Features of Organisations and Systems




But the limitations are in how these Safeguarding Systems are implemented

–  Owen designed for Robustness, not An>-‐Fragility –  Incomplete informa>on flow –  Assume some stability & no “Black Swans” –  OVen delegated to middle management, formalised and standardised, so in danger of

becoming compliance-‐driven rituals, with incomplete informa>on; with most importance being given to the integrity of the paper trail for audi>ng purposes, & inadequate senior management a^en>on.




Is an An/-‐Fragile Organisa/on possible? •  High Reliability Organisa>ons (HROs) •  Japanese Shinise

–  more than 20,000 companies in Japan that are more than 100 years old –  a handful that are more than 1,000 years old –  small, mostly family-‐run –  focus on a central belief or credo that is not solely >ed to making profit –  focus primarily on the Japanese market –  avoide the mergers and acquisi>ons




A Basic Fragility Test for Your Organisation (Score out of 100; (0-10 :10=maximum optimisation)

•  How good is our current Approach? (0-‐10) •  Do we include deliberate Diversity of Approach and Deployment? (0-‐10) •  How Aware are we of our Environment? (0-‐10) •  Do we Learn? (0-‐10) •  Do we Implement what we Learn? (0-‐10) •  Do we Learn fast? (0-‐10) •  Do we have the Infrastructure to Learn? (0-‐10) •  Do we Evolve? (0-‐10) •  Do we have the Infrastructure to Evolve? (0-‐10) •  How Op>mised are Our Processes? (0=highly op>mised)




Ten Ways An Organisation Can Become More Anti-Fragile

1.  Don’t think you are there; Realise that Never Completely get there/never completely not there.

2.  Be aware, scan the external & internal environment, risks, scenarios & possible black swans. 3.  Be joined up & nimble, keep learning, apply. 4.  Avoid rigidity, ultra efficiency & relying on robustness. 5.  Don’t automate, engage. 6.  Reduce the fragility of an>-‐fragile systems. 7.  Use diversity. 8.  Apply precau>onary principles. 9.  Fail owen & small. 10.  Stress test.




Where Can We Start?

•  How ideal is your world? •  The Board. •  Execu>ve management. •  Opera>ons management. •  Supply chain. •  Front line. •  Risk •  The Quality Department-‐ organisa>onal quality/TQM/excellence




Getting Started

•  Take stock. •  Further develop the vision & business case. •  Plan & Manage Change. •  Help develop the influencers. •  Constant review.




Anti-Fragility as an Holistic Theory of the Firm

•  No single current Business School Discipline unifies our view of the Organisa/on

•  Also tells us that a naive focus on Op/mising Efficiency, or even Effec/veness, is Wrong

•  Unifies and provides both structure around, and safeguards in applying, change, improvement & quality approaches such as Lean, Six Sigma, EFQM Excellence Model, Benchmarking, QA etc.




© The An>-‐Fragility Academy 50

Efficiency Fragility Robustness An/-‐Fragility

Process Throughput rate, OEE

No. Of breakdowns, lost >me

Up>me Rate of decline in no. of breakdowns & lost >me

People U>lisa>on, output per head

Absenteeism, turnover A^endance, reten>on

Rate of decline in absenteeism, turnover

Technology U>lisa>on, Output

Failure rate, non availability

Availability Rate of decline in Failure rate & non availability

Informa>on Timely, reliable, accurate.

Delay, inaccuracy. Timely, reliable, accurate.

Rate of decline in Delay, & inaccuracy.

Supply Chain Throughput rate, OEE.

No. of breakdowns in supply, unsa>sfied demand.

Con>nua>on of supply.

Rate of decline in number of breakdowns in supply, & unsa>sfied demand.




Stress or Time in Denominator of Rate of Decline?

•  Using >me enables us to establish easy to measure metrics, which can be used to monitor the an>-‐fragility of the organisa>on

•  Like “nega>ve velocity” •  Stress may also be useful in specific “red flag” condi>ons.




Anti-Fragility & the Theory Of Constraints

•  TOC op>mises system throughput •  Op>mised throughput… … stresses the system & may cause fragility •  Opportunity to extend the TOC Model to incorporate An>-‐Fragility




Tony Bendell, Services Limited and The An>-‐Fragility Academy England

`Every day organisa>ons fail, unnecessarily, with massive financial and human cost. We need to change. An>-‐Fragility is the most important poten>al breakthrough in business thinking in my career. It provides a language and unifica>on for all of the improvement and produc>vity methodologies I have been assis>ng companies with for over 20 years. It makes us realise that our current op>misa>on criteria are wrong and efficiency, and even effec>veness, are not such a good idea. It unifies our business model, giving a new coherence to the disjoint func>onal specialisms in our business schools. Go out and tell people, they need to know what you know .. and soon.`




Exercise -‐ Ques/on 1: •  Why should I consider developing An4-‐Fragility within my organiza4on?

•  What does that mean in prac4ce?, and •  Why is a focus on robust safeguards insufficient protec4on?




Ten Ways An Organisation Can Become More Anti-Fragile

1.  Don’t think you are there; Realise that Never Completely get there/never completely not there.

2.  Be aware, scan the external & internal environment, risks, scenarios & possible black swans. 3.  Be joined up & nimble, keep learning, apply. 4.  Avoid rigidity, ultra efficiency & relying on robustness. 5.  Don’t automate, engage. 6.  Reduce the fragility of an>-‐fragile systems. 7.  Use diversity. 8.  Apply precau>onary principles. 9.  Fail owen & small. 10.  Stress test.




Issues with Developing An>-‐Fragility within an Organisa>on •  Understanding objec>vely the current state, complacency & lack of awareness •  Overreliance on Human Role & Lack of Systema>c Processes for An>-‐Fragility •  Paradigm issues with pursuing ultra efficiency & relying on robustness •  Paradigm issues in using diversity within the organisa>on, pursuing precau>onary

principles, & encouraging broad stress tes>ng & failure •  Paradigm issues in challenging current governance, vested interests •  Danger of introducing Second Order Fragility




Issues with Developing An>-‐Fragility within an Organisa>on •  GeRng Started •  S>cking to it




Where Can We Start?

•  How ideal is your world? •  The Board. •  Execu>ve management. •  Opera>ons management. •  Supply chain. •  Front line. •  Risk •  The Quality Department-‐ organisa>onal quality/TQM/excellence




Ten Common Pi`alls of Fragile Organisa/ons 1.  Not knowing that they are fragile. 2.  Not being joined up. 3.  Knowing, not doing 4.  Doing Risk Management incorrectly. 5.  Too much emphasis on money and short-‐termism.





Ten Common Pi`alls of Fragile Organisa/ons 6. Bureaucracy and emphasis on control. 7. Badly managing change. 8. Weak processes or an emphasis on ini>a>ves. 9. Non-‐transparent decision making. 10. Naive offshoring and ignoring customers.




Has Management of Constraints added to Fragility?

•  Managing constraints can reduce process fragility •  But TOC op>mises system throughput •  Op>mised throughput… … stresses the system & may cause fragility •  Opportunity to extend the TOC Model to incorporate An>-‐

Fragility




Exercise •  Which, if any, of the 10 Common Pi{alls of Fragile

Organisa>ons Apply to Our Organisa>ons? •  How Can We Get Around/Manage These? •  Where & How Should We Start to Apply An>-‐Fragility? •  How Does this Impact on Management of Constraints?




Getting Started

•  Take stock. •  Further develop the vision & business case. •  Plan & Manage Change. •  Help develop the influencers. •  Constant review.




64

Change includes: •  Developmental: correc>ng exis>ng aspects of an

organisa>on •  Transi4onal: to achieve a known desired state that is

different from the exis>ng one: •  unfreezing •  moving and •  refreezing

•  Transforma4onal: radical, may result in a different

organisa>on




65

Resistance to Change •  Fear:

•  Personal standing •  Loss of job •  Increases in workload

•  Change is being ‘imposed:’ •  Not chosen

•  Lack of faith in those making the change: •  Limited respect

•  Something has been overlooked: •  Own insight or area of exper>se

•  Habit: •  ‘we have always done it this way’

•  Economic implica>ons: •  Pay and condi>ons of service




66

An Approach for Managing Change -‐ Force Field Analysis •  Based on the concept of ‘forces’

•  driving forces •  restraining forces

•  Three fundamentals •  Increasing driving forces can result in an increase in restraining forces

•  Reducing resis>ng forces is preferable •  Group norms are an important force




D R I V I N G F O R C E S

R E S I S T I N G F O R C E S

MANAGERIAL

PRESSURE

NEW PEOPLE

NEW TECHNOLOGY

FEAR

COMPLACENCY

ESTABLISHED WORK PATTERNS

SKILLS DEFICIT

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67

COMPETITION

CURRENT STATE

DESIRED STATE




DISPOSITION RESPONSE TO CHANGE

Commitment Want change to happen, will work to this goal, create whatever structures, systems and frameworks

Enrolment Want change to happen, will devote time & energy within given frameworks.

Genuine compliance See virtue in what is proposed, do what is asked of them, act within the letter of the framework

Formal compliance Can describe the benefits of what is proposed and not hostile to them. Do what they are asked but no more

Grudging compliance Do not accept benefits, do not go along with it, voice opposition, hope for failure

Non-compliance Do not accept benefits, have nothing to lose by opposing the proposition, will not do what is asked of them

Apathy Neither in support nor in opposition, just serving time.

V29

68




CURRENT STATE

DESIRED STATE

1. Creating a sense of urgency

2. Put together a guiding team

3. Create vision and strategy

4. Communicate the changing vision 5. Empowerment

6. Short-term ‘wins’

7.Consolidation

V29

69

8. Culture




70

Kotter’s Recipe for Successfully Managing Change

§ Establish a sense of urgency: changes necessitate motivation

§ Create a guiding team: forming a powerful group of enthusiasts

§ Create vision and strategy: create a vision that will help to direct and guide the change

§ Communicate for buy-in: use every medium and vehicle possible to constantly communicate the new vision and strategies

§ Empower people: removing the obstacles, appropriate support and resources




71

Kotter’s Recipe for Successfully Managing Change

§ Short-term wins: creating short-term organisational and personal wins

§ Consolidating achievements: build momentum through consolidating gains

§ Implant the new approaches into the organisational culture: unless part of culture long-lasting results may not be achieved




72

Exercise: Successfully Managing Change Towards Anti-Fragility

§ How will you manage change towards Anti-Fragility, what are the challenges for you? Use a SWOT analysis to help

§ Identify the Driving and Resisting forces to change for Anti-Fragility and construct a Force Field Analysis

§ What responses to change do you expect and who is crucial to managing change for Anti-Fragility?

§ What strategies will you use to overcome resisting forces and people?




Day 1 pm

Guest Speaker(s)




Day 2 am (& pm) •  Answering Ques>on 2 -‐ Extending TOC What is the rela4onship between An4-‐Fragility and the Theory of Constraints (TOC)? •  Answering Ques>on 3 -‐ Organisa>onal stocktake How and where do I start applying this?





75

Theory of Constraints •  All systems have constraints that constrain/control flow •  In a process there are only a few capacity constraint resources •  We put buffers in front of these to keep them working •  Types of constraints -‐ physical -‐ policy -‐ paradigm




76 -23-

‘BUFFER MANAGEMENT – CARDIFF & VALE NHS TRUST

Split the patients journey to discharge into 3 zones: green, amber, red

Actively manage patients in the amber buffer zone. Patients n the Red buffer zone to be ‘expedited’ (advance) through their journey to prevent breaching into Black buffer zone

Green Amber

Red Black




77

CARDIFF & VALE NHS TRUST Buffer Mee>ngs •  Weekly mul>disciplinary ward mee>ng •  Top 5 delayed pa>ents or pa>ents who are predica>vely

delayed – project plan/escalate •  Monthly mee>ng to address system constraints •  Monthly health community execu>ve mee>ng –

commissioning & policy issues & top pa>ents to test new ideas/ways of working




78

An underlying premise of TOC is that organiza/ons can be measured and controlled by varia/ons on three measures: THROUGHPUT -‐ The rate at which the system generates money through fulfilling customer requirements INVENTORY -‐ Everything that the system invests in that it intends to use to fulfil customer requirements OPERATING EXPENSE -‐ All the money the system spends in turning inventory into throughput




Managing Constraints Allows Us to Increase Throughput BUT, are these: •  The Wrong Set of Constraints?, or •  The Wrong Way of Looking At Them?




Managing Constraints Allows Us to Increase Throughput BUT, are these: •  The Wrong Set of Constraints?, or •  The Wrong Way of Looking At Them? IS TOC TOO ONE DIMENSIONAL?




Has Management of Constraints added to Fragility?

•  Managing constraints can reduce process fragility •  But TOC op>mises system throughput •  Op>mised throughput… … stresses the system & may cause fragility •  Opportunity to extend the TOC Model to incorporate An>-‐

Fragility




83

Spreading troops means high inventory. Closely packed troops means lower inventory.

INPUTS JOBS COMPLETED

Classical TOC




84

Put the slowest soldiers at the front and the strongest ones in the rear. In other words, restructure operations so that the most loaded operations (the primary capacity constraints) are at the first operations and have the operations with large excess capacity downstream

1 Classical TOC




85

Put a drummer at the front to set the pace Have the sergeants constantly urge the soldiers to close any gaps e.g. in manufacturing, the sergeant is the expeditor and the drummer is the computerised material management system.

2

Classical TOC




86

Policy & Paradigm Constraints Typically the drum beats according to unrealis>c assump>ons…. Like: •  Fixed, constant batch sizes •  Predetermined lead >mes •  Infinite capacity

Classical TOC




87

3 Classical TOC




88

Synchronized Opera/ons Assembly Lines and Kanbans Predetermined inventory buffers (limited by space, number of cards etc.) regulate the rate of processing for opera>ons and Kanban systems. The instruc>on given to the worker is

“Stop working when the buffer is filled!” The work is synchronized, inventory is low… but any significant disrup>on will cause the en>re system to stop

Classical TOC




89

The drum is held by the excess capacity of the gating operations (strong soldier in front) RESULT: §  Inventory is high §  Current throughput is protected §  Future throughput is in danger §  MUDA!

Inputs Jobs completed

Just-‐in-‐Case System (Tradi/onal)




90

The drum is held by customer demand RESULT: §  Inventory is low §  Current throughput is in danger §  Future throughput is increased §  FRAGILE!


Just-‐in-‐Time System (Lean)




91

§  To prevent spreading, tie weakest soldier to the front row §  To protect overall pace, provide some slack in the rope (time buffer) §  Note that only one soldier is tied to front row

Drum-‐Buffer-‐Rope

4

Classical TOC




92

A Rope tying the Gating operation to the Buffer


Synchronised Opera/ons/Drum-‐Buffer-‐Rope

Major Capacity Constraint Time

buffer

Classical TOC

4




93

Time buffer The Capacity Constraint Resource should dictate the schedule based on demand and its own potential

The schedule for succeeding operations should be derived accordingly

The schedule of preceding operations should support the time buffer and thus be derived backwards in time from the C.C.R. schedule

rope

FINAL OPERATION (assembly)

Devising a DBR System

for Synchronized

Operations

Classical TOC




94

Assuring High Due-Date Performance §  All other operation schedules must support

the final operation schedule §  To avoid harm due to disruptions, they should

support a time buffer in front of any final operation (assembly) that is based on a CCR operation

§  Inventory is low, but nevertheless any disruption that can be overcome within the buffer time will not affect the throughput of the plant

rope

rope

rope

Classical TOC




95

In any process there are few capacity constraint resources

CUSTOMERS

FINAL OPERATIONS (ASSEMBLY)

OPERATIONS

Classical TOC




96

•  Iden/fy the constraint of the system •  Exploit the constraint •  Subordinate everything else to the above decisions •  Elevate the constraint •  Prevent iner/a, go back to the first step •  Do not focus your people, 4me and money on a NON-‐CONSTRAINT opera4on

within the process. It will only increase WIP prior to the constraint and it will not improve the cost effec4veness of the process, in fact it will achieve the opposite

Classical TOC




97

•  The view of the organisa/on as a series of dependent links – a chain •  Only strengthening the weakest link improves the whole •  Most improvements, in most links, has no effect on the whole •  The chain starts in the supply base and ends with the customer •  Global management is different to the sum of the local management

Classical TOC




98

Iden/fy the Constraint •  What is controlling the flow?

–  What is the rate limi>ng factor? •  Informa>on? Resource? Skill? Demand?

•  If external, select an internal control point

Classical TOC




Extending TOC

We don’t want them to spread, but the faster a weak soldier goes, the more likely he is to fall over & the harder is coordina>on..




1

Low Throughput & Low Fragility But may not meet demand, so meta system fails.




2

Increased Fragility due to increased features & Complexity •  Process failure (job not delivered) & •  System failure (systema/c e.g. system stops)

Put a drummer at the front to set the pace Have the sergeants constantly urge the soldiers to close any gaps.




102

3 Assembly line & Kanban

Fragile •  Low inventory implies process fragility •  Loaded system implies system fragility




103

A Rope tying the Gating operation to the Buffer


Synchronised Opera/ons/Drum-‐Buffer-‐Rope

Major Capacity Constraint Time

buffer

4

Less fragile than Assembly line & Kanban, but s/ll fragile due to Loading & low inventory.




Capacity Constraints •  Volume Constraints Bo^lenecks Constrain Flow & Throughput System Failure&/or Degrada>on •  Time Constraints

The TOC Model

The TOC Model





The TOC Model

The Extended TOC Model





The TOC Model


EXAMPLES?





The TOC Model

Managing Buffers in TOC to Feed BoClenecks & Increase Flow

Buffer Stocks




Capacity Constraints •  Volume Constraints Bo^lenecks Constrain Flow & Throughput System Failure&/or Degrada>on •  Time Constraints Increases Loading

The TOC Model BUT…..

Buffer Stocks





The TOC Model


Buffer Stocks Increases Loading





The TOC Model


Buffer Stocks Increases Loading

EXAMPLES?





The TOC Model


BoClenecks may protect the system from failure & degrada/on: A bo;leneck has a purpose





The TOC Model


BoClenecks may protect the system from failure & degrada/on: A bo;leneck has a purpose EXAMPLES?




113

•  Iden/fy the constraint of the system –  Now, NOT just in rela/on to Flow, but also Fragility

•  Exploit the constraint –  Management of Constraints is now seen as Two Dimensional

•  Subordinate everything else to the above decisions •  Elevate the constraint

–  Now, NOT just in rela/on to Flow, but also Fragility

•  Prevent iner/a, go back to the first step •  Do not focus your people, 4me and money on a NON-‐CONSTRAINT opera4on

within the process AND do not ignore Fragility in considering constraints.

Extended TOC Model




114

•  What are the possible implica>ons and unintended consequences of the applica>on of the Theory of Constraints within an organiza>on?

•  What changes/ addi>ons need to be made in applying TOC within an organisa>on bearing in mind fragility?

•  How can we do this in prac>ce?

EXERCISE




115

•  If An0-‐Fragile systems and organisa>ons, like biological systems, are more than just robust and within limits actually improve their resilience through being stressed, then by using TOC to reduce stress on the organisa>onal system (including the human element), may we be preven>ng it from developing to be An>-‐Fragile?

•  Are any aspects of TOC An>-‐Fragile? •  How do we make the TOC approach itself more An>-‐Fragile, not

just proof against fragility?

Other thoughts about An/-‐Fragility & TOC




Day 2 am (& pm) •  Answering Ques>on 2 -‐ Extending TOC What is the rela4onship between An4-‐Fragility and the Theory of Constraints (TOC)? •  Answering Ques/on 3 -‐ Organisa/onal stocktake How and where do I start applying this?




A Basic Fragility Test for Your Organisation (Score out of 100; (0-10 :10=maximum optimisation)

•  How good is our current Approach? (0-‐10) •  Do we include deliberate Diversity of Approach and Deployment? (0-‐10) •  How Aware are we of our Environment? (0-‐10) •  Do we Learn? (0-‐10) •  Do we Implement what we Learn? (0-‐10) •  Do we Learn fast? (0-‐10) •  Do we have the Infrastructure to Learn? (0-‐10) •  Do we Evolve? (0-‐10) •  Do we have the Infrastructure to Evolve? (0-‐10) •  How Op>mised are Our Processes? (0=highly op>mised)




Where Fragility Exists

•  At all Levels/Layers… –  Strategy & Governance –  Opera>ons, Processes & Supply Chain

–  People & Culture –  Informa>on & Technology –  Markets, Products & Services

•  Global & Local Fragility/Macro & Micro




Organisational Stocktake for Your Organisation

•  Score each of the bullet points for each of the following out of 10.

–  Governance, Strategy and Risk –  People and Culture –  Processes and Opera>ons –  Use of Informa>on and Technology, and the Impact of Innova>on –  Supply Chain, Environment and Corporate Social Responsibility –  Markets, Products and Services

•  Note Areas of Strength & Areas for Improvement.




Where Are You? - Governance, Strategy and Risk (1)

•  To progress towards an>-‐fragility, our organisa>on needs to be subject to stresses and progressively gain strength from these. Principally, we want to design it and manage it to progressively gain in strength from being stressed, rather than protect it from stress.

•  In doing this, we need to work to ensure that the stresses are both propor>onate and relevant to the development of strength for survival. Since these aspects are hard to ensure in a world exposed to Black Swans, we also need to apply precau>onary principals, such as the deliberate crea>on of diverse stresses, to provide some protec>on.

•  Our management, leadership and stakeholders need to be fully aware of the conceivable risks the organisa>on is facing, and the existence of as yet unknown Black Swans, that may impact on its survival. To achieve this, the collec>on and dissemina>on of full, >mely, valid informa>on is required, as is the ability to see the Big Picture.




Where Are You? - Governance, Strategy and Risk (2)

•  The management of risk should have a genuine enterprise-‐wide perspec>ve, be the concern of the leadership team and not be delegated to middle or lower management, and not be ritualised into a compliance-‐driven ‘>ck box’ process.

•  There are some simple things that we can do immediately to ensure the integrity and an>-‐fragility of the organisa>on’s governance, including training board members and other key stakeholders in their responsibili>es.

•  Organisa>onal strategy needs to be emergent, but based on planning and re-‐planning.

•  Based on empirical evidence, as well as theory, change strategies based on the EFQM Excellence Model, or well-‐founded equivalents, appear to be an>-‐fragile.

•  We will owen rely on people, rather than systems and processes, to provide robustness and an>-‐fragility in rela>on to inherent weaknesses in our organisa>on, or ones created by unforeseen stress. We need to develop their ability to do this, support them in the process, and incorporate longer-‐term solu>ons into systems and processes.




Where Are You? -‐People and Culture (1)

•  People are both a major exploitable source of an>-‐fragility, and a major source of fragility in themselves. To develop an an>-‐fragile organisa>on, we need to avoid thinking based on the Classical Approach to Management and Transac>onal theory, both on the part of the organisa>on and of individual employees and managers. This is primarily an educa>on issue.

•  In contrast, a number of theories in the area, such as the Con>ngency Approach and Maslow’s Hierarchy of Needs, have a natural affinity with an>-‐fragility and can help us in achieving it.

•  An organisa>on’s posi>on in rela>on to Hoefstede’s cultural dimensions clearly relates to its overall fragility, robustness or an>-‐fragility, and could be used to iden>fy areas of fragility and organisa>onal development needs.

•  In general terms, the EFQM Excellence Model criteria and sub-‐criteria on Leadership, People and People Results support much of the requirements for an>-‐fragility, but are more focused on efficiency and effec>veness, and so are deficient and need extension.




Where Are You? -‐People and Culture (2)

•  Real management commitment, and the iden>fica>on of a shared owned vision, are crucial to the pursuit of an>-‐fragility and are owen not properly established. A facilitated approach to Forming, Storming, Norming and Performing can be very useful to achieve this, as can the use of appropriate crea>vity tools.

•  Change can be undertaken at various levels and will always create resistance. Undermining this resistance, typically through providing support and informa>on, is owen be^er than just pushing harder.

•  To become an>-‐fragile an organisa>on also needs to become a Learning Organisa>on. •  Internal organisa>onal poli>cs cannot be avoided in considering organisa>onal change towards an>-‐

fragility. The change agent needs to learn how to be very good at establishing and managing alliances with stakeholders in pursuit of change objec>ves.




Where Are You? -‐ Processes and Operations (1)

•  Operations management and process management typically give limited attention to fragility issues, and in practice much of the optimisation of these is concerned with efficiency and effectiveness rather than fragility.

•  Typical process fragility issues include more than just the danger of the process stopping, but also the process opera>ng with no output, the process opera>ng but with no acceptable output, and the process opera>ng but with performance below a specified acceptable level in terms of delay, volume, disrup>on and/or varia>on.

•  There may be a U-‐shaped characteris>c for the rela>onship between process fragility and process efficiency. This would suggest that there is an op>mum process efficiency to deliver minimum process fragility and a possible flat area un>l we reach an intrinsic process efficiency boundary, beyond which the increase in fragility may become severe.




•  QA is an an>-‐fragile aspect of our organisa>ons and systems but is owen implemented in a fragile way, so that a QA or ISO9001 system may be fragile or an>-‐fragile in prac>ce, dependent on how it is implemented.

•  The Lean Approach is inherently fragile but can make a very real contribu>on to process, opera>ons and organisa>onal an>-‐fragility, depending on how it is implemented. The difference between fragile Lean and an>-‐fragile Lean are subtle and complex.

•  A similar situa>on exists for Six Sigma, which is inherently an>-‐fragile, but can s>ll be implemented in a fragile way.

•  Poka Yoke Mistake Proofing is inherently robust or an>-‐fragile. The poten>al to mistake proof every process in an organisa>on, u>lising ongoing feedback from these processes in real >me, including unexpected shocks, is an aspira>onal an>-‐fragile target opera>ng model but will depend on the efficacy of the source inspec>on approach and the iden>fica>on and response to Red Flag condi>ons.

•  The EFQM Excellence Model criterion and sub-‐criterion covering processes gives a good summary of many of the requirements for an>-‐fragility, except that the model is more focused on efficiency and effec>veness, and so must be used carefully.

Where Are You? -‐ Processes and Opera/ons (2)




Where Are You? -‐ Use of Informa/on and Technology, & the Impact of Innova/on (1)

•  Technologies and informa>on systems that start robust, or even an>-‐fragile, will over >me become fragile, as market and technology developments and so on occur. It follows that a technology’s an>-‐fragility is at best temporary and itself fragile.

•  Currently, technology and systems are causing considerable organisa>onal fragility , including hard-‐wired use of technology and large inflexible sowware business systems that represent major purchase decisions.

•  Cloud compu>ng is an opportunity to reduce this dependency on major purchase decisions associated with large sowware systems,; hence poten>ally trading a decrease in local fragility for an increase in global fragility.

•  The relevant EFQM Excellence Model sub-‐criteria and the RADAR scoring matrices again give considerable insight to the requirements for organisa>onal an>-‐fragility, in rela>on to technology and informa>on. However, as previously, their emphasis is primarily on suppor>ng efficiency and effec>veness rather than fragility, robustness and an>-‐fragility.




Where Are You? -‐ Use of Informa/on and Technology, and the Impact of Innova/on (2)

•  Properly conducted Benchmarking can contribute to organisa>onal an>-‐fragility in rela>on to technology and informa>on systems, but with the development of the Internet, there are considerable dangers in trus>ng analyses based on public domain data sources.

•  Measuring & comparing an>-‐fragility is inherently more difficult in comparison to measuring efficiency or effec>veness as it requires measuring and comparing the system’s or organisa>on’s ability to increase its own resilience over >me through its experience of being stressed.. However, it is easier to compare fragility, rather than an>-‐fragility, by considering metrics such as lost >me, number of process stoppages, breakdowns etc.

•  Innova>on, especially in the context of disrup>ve technologies, is a cause of fragility, and organisa>ons need to protect themselves against it and develop an>-‐fragile approaches. Innova>on strategy should be incremental and firms should focus on fluidity, integrity and energy.

•  There is a rela>ve rigidity, inflexibility and lumpiness in rela>on to technology and informa>on management decisions. Accordingly, we need to consider the fragility, robustness and ant-‐fragility of our decision-‐making processes themselves.




Where Are You? -‐Supply Chain, Environment and Corporate Social Responsibly (1)

•  Supply Networks and Supply Chains are fragile because they rely on linkages and relationships which go beyond the boundaries of the organisation, and on the goodwill, rationality and self-interest of many other organisations. This can go wrong, particularly where the supply chain crosses multiple national boundaries.

•  Organisa>ons use various mechanisms to a^empt to maximise the efficiency and effec>veness of supply chains, and to minimise and control their fragility.

•  Good quality informa>on flow is an underlying requirement for an>-‐fragility in the supply chain; if suppliers do not receive market informa>on, or receive misinforma>on, then there will be errors and delays in supply that will impact on customer sa>sfac>on and organisa>onal performance.

•  The relevant parts of the EFQM Excellence Model criteria, together with the RADAR mechanism, are once again extremely helpful in giving a good summary of many of the requirements for an>-‐fragility.




Where Are You? -‐Supply Chain, Environment and Corporate Social Responsibly (2)

•  Cost is not a good proxy for fragility measurement as, e.g. a stockout may or may not kill the organisation depending on environmental circumstances.

•  Human skills are again crucial to developing an>-‐fragility within the management of supply chains.

•  The informa>on (sub) supply chain is more problema>cal than the rest of the supply chain within which it is embedded.

•  The environmental and societal/CSR impacts of the supply chain are related to an>-‐fragility at a number of levels: they impact on organisa4onal fragility, the fragility, robustness or an>-‐fragility of the environment itself, and/or of society, and the organisa4onal environmental management system itself, and its CSR equivalent,




Where Are You? -‐ Markets, Products and Services (1) •  An>-‐fragility of product and service offerings is more appropriately considered on the basis of a

product or service por{olio, rather than in terms of individual products and services. •  Cash cows are a source of robustness, Dogs are a source of fragility, Ques4on marks could be

sources of either future fragility or robustness, and Stars are at least temporarily a source of robustness, but may become a source of fragility over >me.

•  The EFQM Excellence Model has an impressive coverage of key aspects needed for an>-‐fragility of products and services, and customer rela>onships. However, fragility perspec>ves of the offerings are not explicitly addressed, apart from the physical lifecycle management considera>ons, and instead efficiency and effec>veness are stressed. In addi>on, there is no explicit considera>on of the customer’s view of fragility.

•  Fragility for public sector organisa>ons has dis>nct and subtle differences, e.g. they are more risk adverse , and typically subjected to lower likelihood and magnitude of risks.




Where Are You? -‐ Markets, Products and Services (2) •  Many large consumer-‐facing organisa>ons display rigid fragile customer interfaces, with disempowered staff, restric>ve technology/systems, lack of holis>c ownership of the total customer experience, inadequate access to useable data, and a reliance on informa>on from, processing by, and a tendency to blame, the customer. Authority and the ability to make ad hoc excep>onal decisions, or substan>ally change the system, in these systems are owen high up, and not easily accessible to the front line or customers.

•  Different types or classifica>ons of service have different an>-‐fragility issues; overall Professional Services may also be the most fragile as they use a lot of labour and need a lot of customisa>on, so may be under cost and >me pressure.

•  Organisa>onal fragility has 3 dimensions corresponding to the service concept, the package of service elements and the service delivery system. To some extent this is hierarchical, with fragility in the concept poten>ally causing greatest overall fragility to the service.

•  The Gap Model gives us with an interes>ng insight into the issue of fragility, robustness and an>-‐fragility of the service provision; examina>on of which of the gaps are the most major will iden>fy the most major sources of fragility.




Day 2 pm Answering Ques>on 3 -‐ How and where do I start applying this? •  Building Your Personal Ac>on Plan •  Review & Close




Where are we now?

“Anti- Fragile Excellence”

Prioritisation

Tools & Techniques

Priori/sa/on of Improvement – You cannot improve everything!

Improving What is Worth improving




Where to Apply?

•  Your decision. •  Based on defined criteria or risks. •  Strategic & thema>c. •  See as the first steps. •  Project based approach.




Your Personal Ac>on Plan •  A limited number of “areas for ac/on” should be taken forward. •  This may include ac/ons to build on Strengths, as well as

addressing Areas for Improvement •  This could include, say, 3-‐4 significant Improvement Projects •  The Improvement Projects could be a mix of “immediate

benefit driven” and “capability building” projects •  Whilst there are a number of “tools” to help priori/sa/on;

“personal choice” is oVen a key factor




PARETO 80:20

EFFECT

•  Based on the insight that there is an built-in imbalance •  between causes and

results, •  inputs and outputs, and •  effort and reward.

•  A minority of causes, inputs or effort often lead to •  a majority of results, •  outputs or •  rewards

CAUSE




•  Two factors considered – what will be the impact of this change and how easy or difficult will it be to make this change

•  Analysis, based on these questions, provides a calculation to help the selection and prioritisation process

Easy

Low Impact

Hard

High Impact




Strategically

important

Strategically

not important

Urgent Improvement ac/on required

Maintain high performance

Improve to minimum acceptable levels

Poten/al to reduce investment

AFI’s Strengths

Improve vs. Maintain vs. Reduce




We Can Apply RADAR To the Improvement Projects:

–  Define the Results You Want Them To Give –  Develop Approaches For Them To Do This –  Deploy Those Approaches –  Assess & Refine Those Approaches Within the Project ac>vity




Group Exercise •  Agree Priori>sing Criteria For Areas For Ac>on/Projects For Your

Organisa>on –  What Evidence Do You Have To Suggest That These Criteria Are

Appropriate? •  Based On These Criteria, Define 3 Or 4 Key Improvement

Projects That Your Organisa>on Should Consider –  Suggest Objec>ves, Measures, Timescales, Ac>vi>es and Risks for

Each of These