Documente Academic
Documente Profesional
Documente Cultură
Solomon Lew
(BRW, Feb 27, 2003)
MGX 9970 Business & Organizational Dynamics 8
Semester 1, 2007
The Dynamics of Strategy
Ref: Kim Warren. Business Strategy Review, Vol 10. No 3. 1999
Preferred
How?
Why? Where?
Feared
Today Time
Diagnosing
Next
Planning Action
Evaluating Action
Diagnosing
Taking Action
Next
Question Plan
Testing Check
Amplification
Environment/ Situation
Organisation/Manager
Attenuation
Reference: Espejo, Schuhmann, Schwaninger & Bilello. Organizational Transformation and Learning- A
Cybernetic Approach to Management. Wiley, 1996.
Exponential Growth
Fund
Time
MGX 9970 Business & Organizational Dynamics 22
Semester 1, 2007
The Lily Pad Problem
Age 20 Jan 07
MGX 9970 Business & Organizational Dynamics 25
Semester 1, 2007
Example 1
• Watch carefully
Fullness
Rate of pouring
Time
Fullness
Rate of pouring
Time
Houses on market
Price
Time
Houses on market
Price
Time
Systems oscillate
Effort
Rewards
MGX 9970 Business & Organizational Dynamics 36
Semester 1, 2007
Another Key Idea
• Equilibrium states
C. West Churchman
The Systems Approach, 1968, p11
161% $1,214
$86
$41
Acquisitions Capacity
Growth
Resource Limit
S O
To win customers, the sales force has been told to let cli ents use a machine for six weeks
before deciding to buy. The thinking is that in the six weeks you can integrate the new
mi ni into your cli ents systems to an extent they will not want to disintegrate at the end of
the free period.
The sales force has also been given big financial incentives to get placements of the new
mi ni computer. Their early efforts in the field lead to a high level of performance and
sales in computer placements.
Because they are so new and wonderful, the computers generate huge demand for service
and backup. Your two highly trained support staff are unable to cope with the workload
and companies begin returning t he new computers.
While technology and free markets are certainly helpful in allocating resources,
making adjustments and mitigating shortages, they are not capable of preventing
overshoot.
For example, in Stockholm, Sweden in 2002, scarcity of cod drove the price to $80 a
pound. This price ration paradoxically made cod fishing quite lucrative, motivating
more aggressive fishing. When cod supplies plummet, cod fishing will need to be shut
down, something that free markets are not going to do.
Ecologically concerned governments can do this. Canada shut down all Eastern
seaboard fishing grounds in 1992. They remain closed, awaiting recovery of fish stocks.
Norway is just reopening its waters to herring and cod fishing as those stocks recover.
Linking Strategy/Policy/Behaviour
What is the Beer Game
• Avoid stock-outs.
Follow Instructions
Fill backlog
Keep records
The Objective
To minimise costs:
Flow of Orders
Production
Flow of Beer
Flow of Orders
Retailer Wholesaler
Retailer Wholesaler
Flow of Beer
3 Write the Orders Decide and write the order Record orders
Allocate Blame
Lessons of the Beer Game
Events
Patterns
Structures Behaviour
O O
Customer's Orders My inventory My orders
S
O O O
Customer's
Inventory B1 Customer's Orders My inventory My orders
B2
S S
O O O O
Customer's
Inventory B1 Customer's Orders My inventory My orders Supplier's
B2 inventory
S S
O O O O
Customer's
Inventory B1 Customer's Orders My inventory My orders Supplier's
R1 B2 R2
S inventory
S S S
O
O
Archetypes
Fixes that Fail
B S
Problem Symptom
Fix
S
O
S
R S
R
Real Problem Unintended
Consequence
S
Problem Symptom
S
O
Fix
Fixes that Fail
S
Unintended
Real Problem Consequence
Symptoms
Fixes
B
S
B S
O O
S S
Internal R
capacity
S
Dependence on Consultant
S O
B
Shifting the Burden
Skills shortfall
B Us e of consultant
Technical Problems
O
S
S
S
Internal
capacity R
S
Dependence on Consultant
3: Skills shortfall
1: Technical Problem
2: Use of consultant
S O
R R
Allocation of Resources
Success of A to A instead of B Success of B
S O
Success to the Successful
S O
R R
Allocation of Resources
Success of A to A instead of B Success of B
S O
Success of A
Success of B
Escalation
A's results B's results
S S
S
O
B B
Activity by A A's situation Activity by B
relative to B
S S
O S
Threat to A Threat to B
S
A's results B's results
S
Escalation
S
B O
Activity by A A's situation B
Activity by B
relative to B
S S
O S
Threat to A Threat to B
B's Activity
A's Activity
Threat to B
Threat to A
S
A's results B's results
S
Escalation
S
B O
Activity by A A's situation B
Activity by B
relative to B
S S
O S
Threat to A Threat to B
Threat to A
A's activity
Tragedy of the Commons
Gains for A S
S S
R
S R B
A's Activity
S
O
S Gain per
Total Activity Common Resource
individual Activity
B's Activity
R B
S
R
S
S
Gains for B S
Tragedy of the Commons (ii)
Gains for A
S S
S
B
O R B
A's Activity
S
O
S Gain per
Total Activity Common Resource
individual Activity
B's Activity
R B
O
B
S
S
Gains for B S
Tragedy of the Commons (iii)
1: Commons
Drifting Goals
O
B
Goal Pressure to Lower the Goal
S
S
Gap
Drifting Goals
Desired Goal
Gap
Quality Quality
Desired Goal
O
B
Goal Pressure to Lower the Goal
S
S
Gap
O
S
Action B Correction
"Pressure Goal"
Causal Diagrams
Rabbits
S S
Rabbits
Foxes
Hunting of foxes
S
B
Attacks on Chooks
S
O
Foxes
S
B
S R S S
Births Rabbits O Deaths
Attacks on Chooks
S
O
Foxes
S
S S S
Births Rabbits O Deaths
S
S
Poisoning
MGX 9970 Business & Organizational Dynamics 95
Semester 1, 2007
Rabbits (iv): An insight
Rabbits
Rabbits
Hunting of foxes
S
Attacks on Chooks
S
O
Foxes
S
S S S
Births Rabbits O Deaths
S S
S
The Super Rabbit R Poisoning
S S
Resistant Strains
MGX 9970 Business & Organizational Dynamics 97
Semester 1, 2007
Key Concepts (i)
• Causation
• Feedback
• Leverage points
• Lags
• Policy is often counter-intuitive
• Closure of the loops
• Story
S
Chickens Eggs
S
Chickens Road Crossings
O
O S
Road Crossings Chickens Eggs
S S
S
S
S O
Earnings Savings Spending
O
O
Weight
Exercise Smoking
Food Intake
to
Stock-Flow-Rate Diagrams
The Story
Petrol stocks
Deliveries Use
Deliveries Purchases Us e
• Accumulations
Gains Losses
Profit
Staff
Inventory
Outlets
Students
Cars
Backlog
MGX 9970 Business & Organizational Dynamics 119
Semester 1, 2007
Your turn
Profit
Revenue Costs
Profit
Revenue Costs
Profit
Revenue Costs
Gradu atio ns Prom otio n to Capta in Prom otio n to Major Resi gnations
• Show to a partner
Vi sa Vi sa Gol d Vi sa Pl atin um
Lo sses 1 Lo sses 4
Lo sses 2 Lo sses 3
Customers
Gains Losses
Word of Mouth
Customers
Gains Losses
Customers
Gains Losses
Engineering Capability
Hires Quits
Revenue Profit
Revenue Profit
Causation
Revenue Profit
S
Directionality
Where S means
“moves in the Same direction”
MGX 9970 Business & Organizational Dynamics 141
Semester 1, 2007
Another aspect (i)
Costs Profit
Costs Profit
O
Profit Costs
Where O means
“moves in the Opposite direction”
S O
Revenue Profit Costs
Word of Mouth
Customers
Gains Losses
Customers
Gains Losses
S
S
Customers
Gains Losses
Product Failure
O
Engineering
Capability
Hires Quits