Rethinking Maintenance Strategy

As of now, maintenance strategy looks similar to strategy taken by the medical fraternity in themes, concepts and procedures.

If things go suddenly wrong we just fix the problem as quickly as possible. A person is healthy to the point when the person becomes unhealthy.

That might work fine for simple diseases like harmless flu, infections, wounds and fractures. And it is rather necessary to do so during such infrequent periods of crisis.

But that does not work for more serious diseases or chronic ones.

For such serious and chronic ones either we go for preventive measures like general cleanliness, hygiene, food and restoring normal living conditions or predictive measures through regular check ups that detects problems like high or low blood pressures, diabetes and cancer.

Once detected, we treat the symptoms post haste resorting to either prolonged doses of medication or surgery or both, like in the case of cancer. But unfortunately, the chance of survival or prolonging life of a patient is rather low.

However, it is time we rethink our strategy of maintaining health of a human being or any machine or system.

We may do so by orienting our strategy to understand the dynamics of a disease. By doing so, our approach changes radically. For example. let us take Type 2 diabetes, which is becoming a global epidemic. Acute or chronic stress initiates or triggers the disease (Initiator). Poor or inadequate nutrition or wrong choice of food accelerates the process  (Accelerator) whereas taking regular physical exercise retards or slows down the process (Retarder). Worthwhile to mention that the Initiator(s), Accelerator (s) and Retarder (s) get together to produce changes that trigger of unhealthy or undesirable behavior or failure patterns. Such interactions, which I call ‘imperfections‘ between initiator (s), accelerator (s) and retarder (s) change the gene expression which gives rise to a disease, which often has to be treated over the entire lifecycle of a patient or system with a low probability of success.

The present strategy to fight diabetes is to modulate insulin levels through oral medication or injections to keep blood sugar to an acceptable level. It often proves to be a frustrating process for patients to maintain their blood sugar levels in this manner. But more importantly, the present strategy is not geared to reverse Type 2 diabetes or eliminate the disease.

The difference between the two approaches lies in the fact — “respond to the symptom” (high blood sugar) vs “respond to the “imperfection” — the interaction between Initiators, Accelerators and Retarders”. The response to symptom is done through constant monitoring and action based on the condition of the system, without attempting to take care of the inherent imperfections. On the other hand, the response to imperfections involve appropriate and adequate actions around the I, A, R s and monitoring their presence and levels of severity.

So a successful strategy to reverse diabetes would be to eliminate or avoid the initiator (or keep it as low as possible); weaken or eliminate the Accelerator and strengthen or improve the Retarder. A custom made successful strategy might be formulated by careful observation and analysis of the dynamics of the patient.

As a passing note, by following this simple strategy of addressing the “system imperfections“, I could successfully reverse my Type 2 Diabetes, which even doctors considered impossible. Moreover, the consequences of diabetes were also reversed.

Fixing diseases as and when they surface or appear is similar to Breakdown Maintenance strategy, which most industries adopt. Clearly, other than cases where the consequences of a failure is really low, adoption of this strategy is not beneficial in terms of maintenance effort, safety, availability and costs.

As a parallel in engineering, tackling a diseases through preventive measures is like Preventive Maintenance and Total Productive Maintenance — a highly evolved form of Preventive Maintenance. Though such a strategy can prove to be very useful to maintain basic operating conditions, the limitation, as in the case of human beings, is that it does not usually ensure successful ‘mission reliability’  (high chance of survival or prolonging healthy life to the maximum) as demonstrated by Waddington Effect. (You may refer to my posts on Waddington Effect here 1 and here 2)

Similarly, predictive strategy along with its follow up actions in medical science, is similar to Predictive Maintenance, Condition Based Maintenance and Reliability Centered Maintenance in engineering discipline. Though we can successfully avoid or eliminate the consequences of failures; improvement in reliability (extending MTBF — Mean Time Between Failures) or performance is limited to the degree of existing “imperfections” in the system (gene expression of the system), which the above strategies hardly address.

For the purpose of illustration of IAR method, you may like to visit my post on — Application of IAR technique

To summarize, a successful maintenance strategy that aims at zero breakdown and zero safety and performance failures and useful extension of MTBF of any system may be as follows:

  1. Observe the dynamics of the machine or system. This might be done by observing  energy flows or materials movement and its dynamics or vibration patterns or analysis of failure patterns or conducting design audits, etc. Such methods can be employed individually or in combination, which depends on the context.
  2. Understand the failures or abnormal behavior  or performance patterns from equipment history or Review of existing equipment maintenance plan
  3. Identify the Initiators, Accelerators and Retarders (IARs)
  4. Formulate a customized comprehensive strategy  and detailed maintenance and improvement plan around the identified IARs keeping in mind the action principles of elimination, weakening and strengthening the IARs appropriately. This ensures Reliability of Equipment Usage over the lifecycle of an equipment at the lowest possible costs and efforts. The advantage lies in the fact that once done, REU gives ongoing benefits to a manufacturing plant over years.
  5. Keep upgrading the maintenance plan, sensors and analysis algorithms based on new evidences and information. This leads to custom built Artificial Intelligence for any system that proves invaluable in the long run.
  6. Improve the system in small steps that give measureable benefits.By Dibyendu De

 

 

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P&G’s Case in India: Aligning Strategy with Innovative Management

Aspiration driven consumption is unfolding with gusto in the rural markets of India.

For instance, take baby diapers. Today, rural sales of baby diapers are in excess of Rs 200 crores. Over the last two years, rural category sales have grown by over 150%, with rural diaper sales accounting for 15% of total value sales of diapers, which is Rs 1300 crores.

A key reason that could be driving such “aspiration driven consumption” is the lowest price of Rs 10/- offered by Procter and Gamble India.

Pampers (P&G’s diaper) has the greatest share of the baby diaper market across India and has also been growing value share consistently. It is a clear sign that rural consumers are choosing to buy branded diapers for their babies”, said a P&G spokesperson.

On the other hand, sale of rural sanitary napkins grew by 74% over the last three years, with sales now at Rs 366 crores.

In this case too P&G’s ‘Whisper’, which is the market leader across India, including rural markets, has also been made available at the lowest priced SKU of Rs 25 for a pack of 8s, which turns out to be Rs 3/- per unit.

(source of all figures & quotes: The Times of India, Kolkata, Friday, March 29, 2013)

The important thing to notice here is the deep relationship between company’s strategy, product design, manufacturing practices and marketing. They are all in sync. Else market leadership isn’t possible.

It does not come as a big surprise when we understand strategy formulation process of P&G.

In the book Playing To Win the former Chairman and CEO of P&G, A. G. Lafley describes the strategy formulation process as answering five important questions, which are the following:

1. What is our aspiration?

2. Where do want to play?

3. How do we play to win?

4. What resources we must have?

5. What management systems must be in place?

Answering these questions did three things for P&G in India:

1. The company matched their aspiration to the aspiration of their consumers.

2. The different management functions that generally run in silos were aligned and were in sync.

3. Helped them to be a market leader in a very short time.

It possibly serves as a clear case where strategy and innovation work together.

While strategy provides the direction and the energy of a vision, innovative management paves the way for achieving the aspirations of both producer and their consumers. And these must be in sync with the aspiration of their customers. Else efforts meet with inauthentic constraints to make operation meaningless.

What do you think about it? Do you think this should be the way to go in such tough economic times?

Other references:

1. Happiest People Pursue the most Difficult Problems:  http://blogs.hbr.org/kanter/2013/04/to-find-happiness-at-work-tap.html

2. Playing to Win: A.G. Lafley, Roger L. Martin, Havard Business Review Press, 2013

Model T in a Famous Hospital

Few days back my friend, Debu and I visited a famous heart hospital called Rabindranath Tagore Heart Research Institute in Kolkata named after the famous poet.

It was founded by Dr. Devi Shetty, a famous heart surgeon. Its team of doctors were top grade specialists. People trusted them for their skills and diagnosis. Even patients from the neighboring countries of Bangladesh, Nepal, Bhutan & Pakistan flocked to the place patiently milling around to have themselves treated.

Started in the year 2000 it has acquired a formidable reputation. In little over a decade the place had an overcrowded look. With the ever-increasing stress of handling the ‘swelling crowd’ the smiles on their employees faces were turning into perceptible unwelcome frowns.

Big photo posters were displayed all around proudly showing their team of competent doctors loudly proclaiming the enviable number of successful operations and other procedures they carried out. It was a service replica of Ford’s Model T. The founder Dr Shetty prided himself for having applied that model so well in service of the people. A well-known national daily covered an interview with Dr. Shetty about his dedicated application of Model T in service industry.

Soon we were discussing with the chief administrator about their operations. He looked a bit worried. Other heart hospitals were coming up in the locality. Some of their patients were switching to their competitors. Many of their loyal patients stopped turning up. Some of their good doctors were leaving them. Profits were going down. And they wanted to boost their profits by opening similar facilities in other towns and nearby states. He wanted to know how we may help him keep their heads high and profits up.

It is at this point I asked, “Where are your research facilities?”

“Well, to be honest we dont have one”, he replied.

“But the name of your facility proclaims that so boldly”, I shot back with curiosity.

He looked blank, unsure of his response.

“Well that might just be the thing that you need to keep your heads high and profits up”, I quipped.

I think, one may choose to find out about anything. Whatever they find out would help them restrategize their business.

What is going wrong? How do they strategize? What else can they do? Any clue?

Feeling/Thinking in Nemetics – A Challenge

Here is a challenge in Complexity Thinking as in Nemetics (2nd stage): –

How or by what method would we be able to figure out  or feel possible or approximate directions to the following questions around a complex adaptive system or a complex creative system — human being.

1. Around what time human beings or their ancestors were able to stand erect?

2. Around what time human beings started to cover their bodies or wore clothes or dresses?

Hint:

Any complex adaptive/creative system has many elements in it which are interdependent and coexist and co-evolve along with other elements over time.  As one thing changes the other changes too. The trick is to feel the ecology and then think of elements that were present in the ecology of the human adaptive system right from the earliest times and have evolved along with human adaptation through the ages.

Feelings/Thoughts?

 

(note – such feeling/thinking is needed in the Engage stage of Nemetics, which comes after the Notice or Attention stage of Nemetics)

How the Heck we Cascade Strategies of a Balanced Score Card?

Note: This is a talk to be given by me at CII-SNCEL – 3rd National Seminar on Manufacturing Excellence 26th Sept 2012 at Kolkata.

How the Heck we Cascade Strategies of a Balanced Score Card?   

By Dibyendu De,

Director Reliability Management Consultant Pvt Ltd

And Chief Mentor of International Institute of Nemetics Foundation

Summary

We would discuss the groans and joys of cascading strategies developed in a Balanced Score Card down to the shop floor level in a manufacturing unit and examine the importance of the interface between Human and Technology to bring about changes, order and balance in an otherwise uncertain world. In other words how do we implement the strategies that would help an organization to survive and do better?

Why is this question so important?

It is important because we aren’t always quite sure about how to implement good strategies in reality. As of now a top-down approach is usually taken with employee ‘buy-in’ in mind. Hence we have a 3 tier approach to the traditional roll out usually accompanied by loud and clear drum rolls. The first of these tiers, i.e. Tier 1 is about framing the Balanced Score Card (BSC) by the top management.  This is followed by Tier 2 roll out where departmental and unit heads are involved, which then is finally handed down to the shop floor – Tier 3 usually not on a platter though always accompanied by a lot of anxiety and trepidation.

What is a Balanced Score Card (BSC)?

But before we delve any further let us have a working metaphor for BSC.  It is a dashboard. It is something like we have in an aircraft’s cockpit which is laid out with wonderful and often beautiful looking array of impressive instruments measuring all sorts of parameters and variables, while an aircraft is in flight. Such a dashboard informs a pilot whether everything is going on track and whether he/she would be able to achieve a given objective of safely flying hapless passengers to their desired destination. That is the good part. The bad part is that these same instruments also inform when something starts to go wrong so that the pilot can take corrective actions to maintain the safety of the aircraft and its passengers, which, fortunately,  in most cases they are able to do.

With this metaphor in mind it might be easy to understand as to why a firm’s strategy as outlined by a BSC has four fundamental components or building blocks, which are as follows:

a)      Financial Performance

b)      Internal Processes

c)       Learning and Growth

d)      Customers

Clearly all of them are interdependent on one another. The success of such interdependence as a whole would then determine the overall performance, productivity, profitability and future sustainability of the firm.

However, it might be fair to say that creating a strategy through BSC is relatively easier than cascading the strategy down to the shop floor for any measurable improvements to take place. Why is it so? This is because there are no clear cut defined strategies in place. But that is not an error or mistake. It is nearly impossible to think of any pre-defined strategies to take care of implementation. This is simply because of the complexity involved within the whole organization. Therefore, emerging strategies have to evolve. And these would be uniquely different in style, content and application from one strategic unit to the other. Even the implementation strategy for sister units might not be the same. That is precisely the challenge and the beauty of cascading or implementing the broad overall strategy formulated at the top management level.

It is easier to picture it like the famous Russian doll, Matryoshka, having strategies within strategies each with their own implementation plans. It goes without saying that it would not only involve a very liberal dose of applied creativity but also a non-linear process of sense making within the overall complexity of an organization and its various interfaces. Moreover, such measureable improvements must be done quickly enough so as to be reflected in the balance sheet and customer happiness.

Let us now see through some examples of how cascading takes place in real life in some manufacturing units. For want of time and space, I would take only one objective from each component of the overall top strategy of a BSC along with its specific measure and then illustrate the point through a live example, to demonstrate how that objective is effectively met to provide on-going benefit to a manufacturing organization. Perhaps it is not out of place to mention that in each of these cases I have been intimately engaged. That might have possibly left me wiser with a receding hairline that helps me to share such intimate moments with you all.

Financial Performance (the 1st Component)

Objective -> Cost Leadership (this appears to be a very common objective for most manufacturing organizations)

Specific Measure -> Unit cost

Case:

This is a case of a polyester yarn producing unit located in the eastern part of India. During the years following economic liberalization they were facing tough competition from the Chinese. While they were selling their yarn at Rs 112 a kg the Chinese competitors were happy selling the same quality of yarn at Rs 97 a kg.

To bring down the cost to a competitive level was a difficult proposition due to various factors the first of which was their complete dependency on import of raw material. Second was their inability to scale up operations owing to chronic fund crunch. Third was the cost of energy that went into the process. So this was a complex problem waiting to be resolved.

Clearly there weren’t any self evident solutions in sight. They would be forced to rely on their imports, pay the energy bills in time without being able to scale up owing to the prohibitive cost of technology that has to be obtained from Japan.

So what was done? They focussed on improving the plant reliability and upgrade their production capability within the given constraints.

With 24 failures in a month plant reliability was extremely poor. Such frequent stoppages also caused a lot of work in progress material loss with the consequent rise in energy cost apart from the poor productivity of the plant.

With this in mind they concentrated on improving plant reliability through the following means –

  1. Focus on the plant as a whole.
  2. Understand the ‘failures’ and the nature of the failures that were taking place.
  3. Implement small inexpensive design changes to improve both performance and reliability
  4. Implement integrated Condition Based Maintenance by taking a systems approach.
  5. Try to extract more production out of the given resources with the help of accelerated testing methods.
  6. To cascade the strategy it took them around 24 weeks (6 months) of intensive effort.

Results:

  1. They could produce 129% of their given capacity, which meant a total reduction of energy cost by around 20% apart from the increase in productivity by 29% using the same resources.
  2. 24 failures in a month were brought down to 1 failure in a year bringing down both energy cost and loss due to loss of work in progress material.
  3. Cost of imported spares brought down by more than 50%
  4. The improvements enabled them to sell their products at a rate of Rs 87/- per kg against the Chinese price of Rs 97/- per kg.
  5. And they could sustain the on-going benefits for the next five years.

 

Customer Perspective (the 2nd Component)

Objective -> Responsive Supply

Specific Measure -> On- time delivery (this also appears to be a persistent problem for many manufacturing firms).

Case:

With the opening up of markets in India a manufacturing company suddenly found themselves flush with orders, which was much more than what they really expected. As a result they began to fail in their deliver y commitment to their customers and in no time the delay in delivery grew exponentially to touch 725 days. This meant that the unit could only deliver the goods to the customer in 2 years. It was obvious that it wasn’t acceptable to the customer and if this continues the sudden opportunity for accelerated growth the company found themselves in would quickly evaporate.

Considering the cash flow and the company’s resources it was also not possible for the company and the unit to immediately build up on their existing infrastructure to match the demand.

Hence what was done instead was to look at the entire production process and initiate quick changes in the design of the production system, which fundamentally meant the following:

  1. Institute a ‘factory within factory’ concept. That meant produce different types of products in separate designated spaces instead of everything going together in one space. The amount of space given for each type of product depended both on the product volume and the expected growth in that market segment.
  2. Instead of measuring their throughput in terms of tonnage they started measuring the throughput in terms of order processed and adapted their processes according to the number of orders to be handled in a month and the committed delivery dates against each order.
  3. Always trying to find the shortest path to accomplish an order in the shortest possible time. The strategy was to combine flexibility and structure.
  4. It took them 6 months to implement the strategies to reorient their production systems.

Results:

  1. The delay in delivery was brought down from 725 days to only 17 days.
  2. The turnover of the company increased from a mere Rs 8 Crores (Rs 1 Cr is around $ 0.2 million) to over Rs 150 Crores in the next 5 years (i.e. over 15 fold increase) without any major capital investment to boost their infrastructure.
  3. The cost of production went down drastically and their profitability improved by over 50%.
  4. Now the company has grown to a size of Rs 1500 Crores in just under 12 years from the start of cascading the strategy.  It is now a legitimate Indian multi-national having their presence in 4 continents.

 

Internal Process Perspective (the 3rd Component)

Objective -> Manufacturing Excellence

Specific Measure -> Cycle Time, Yield, Quality etc..

Case

This is a case from a FMCG (Fast Moving Company Goods) company. The company had a strategy to increase their sales of shampoo. In order to do so they thought of penetrating the market of rural India and make its product available to the masses instead of concentrating in the cities for their turnover and survival. In order to do so they strategized to sell their shampoo in small sachets and sell those at Re 1/- per sachet. The idea was grand and it was rolled out from one of their strategic units in India.

For this they bought some expensive machines from Germany and Italy to run a pilot. Soon the pilot became quite successful and the demand for their product was growing by the day. In order to meet the rising demand they would have to quickly do something to boost their productivity and quality else the new found market would soon be taken over by their competitors who by that time have deployed similar strategies to tap into the large Indian rural market to ensure sustainability of their business. But they had a few problems in hand, which were the following:

  1. In order to meet the growing demand they would have to increase their productivity from their present level of 60 sachets per minute per machine to around 80 sachets per minute per machine.  But their present machines just would not allow that to happen. As soon as they wanted to step up the production rate the machines violently shook from a level of around 15 microns to 65 microns making it impossible to continue operation.
  2. This meant that they would have to augment their production system by adding 10 more new machines each of which would cost them a little over Rs 1 Crore (around $ 0.2 million). The return on investment on the additional Rs 10 Crore in 2 years time wasn’t working out. The additional problem was that such machines were neither designed nor built in India. So none had the expertise to help the company with a cheaper but more effective machine.
  3. In addition the wastage of material with the present process was around 8%. That was pushing up costs which was undesirable in the cost conscious business landscape the company wanted to grow in.
  4. Then there was another major issue. The sealing of the sachets was giving way under pressure which led to loss of material and customer complaints. Such losses occurred during transportation and during end use of the product.
  5. On top of all this there was an rigid labor issue. The contract with the labor union was to operate at the maximum designed rate of 60 sachets per min and not go beyond that. They would only agree to produce more than the agreed rate only if the company procured higher rated machines.

So, the problem as a whole seemed insurmountable. Moreover it appeared to be a problem that involved many disciplines like Quality, Maintenance, Production, Finance, Personnel etc. It was clear from some initial efforts that this complex problem cannot be addressed by the usual reductionist approach to solve problems.

Since the company was not making any headway they decided on the following strategy:

  1. Redesign the machine by not only keeping the functional objectives in mind but also find ways to address the present failures and problems to improve upon the situation.

Soon a completely new design was drawn up and local vendors were engaged to build the machine. Initially one machine was built to test out how it works.

Results:

  1. The machine effortlessly produced 80 sachets a min. That meant an increase in productivity and energy conservation.
  2. The vibration level at the enhanced rate of production was only 6 microns way below the previous level of 65 microns.
  3. Material loss reduced from 8% to less than 1% helping them achieve cost effectiveness.
  4. The sealing problem vanished.
  5. More importantly the machine could be designed and built at Rs 7 Lacs, which was less than 1/10 the cost of an imported piece of machinery.
  6. However, the more important point was that workers cooperated in the production process as promised. The production process was re-designed accordingly.
  7. The company achieved its given strategy by installing 10 such new machines at the cost of 1 imported machine giving them an ROI in less than a year’s time.
  8. The company continues to enjoy the on-going benefits till date.

 

Learning and Growth Perspective (the 4th Component)

Objective -> Manufacturing Learning (a vital but often overlooked fact in manufacturing units)

Specific Measure -> Time to design a new product and quickly bring it to market

I think Product Design and Development would soon become a very important aspect for Indian companies in as our focus on manufacturing keeps growing if we are to keep up with other competing nations in the manufacturing sector.

The usual reason of not being able to keep up with the desired pace of creating and bringing in new products in the market that is cited and felt is the lack of adequate manpower – those who might be exclusively dedicated to this purpose since all manufacturing units try their best to operate on minimum possible manpower taking cost into consideration.

However, we would see in the following case how this problem can be cleverly addressed without much strain on manpower or budgets. This is indeed a true leading indicator of strategy that would help any manufacturing organization to be in good stead as learning within the organization grows.

Case

An Indian MNC felt the need of quickly developing a few new products and also improve upon their existing products to suit changing requirement of the market and also to face competition. However, for reasons as cited above, the company was in a fix as to how this issue might be properly addressed to increase their haul of patents to help them penetrate new markets and grab a part of the market share from their competitors.

What was done?

  1. Every year students in their third year of engineering go for internship by being attached to some company doing real work. This was the opportunity that was exploited. Five to six good students from a good engineering college were carefully selected or handpicked through an innovative process making them eligible for a paid internship with the company to work upon new product development and improving design of existing products.
  2. The new interns are given a liberal dose on how design improvements are done and how new designs are created. This was  supported by live examples with hands on understanding. They are then given a firsthand experience of the applications and the manufacturing processes that produce the product. This is followed by presentation of the design problems.
  3. The interns work on these problems for around 2 months with minimum guidance (based on the principle of self organized learning) to bring their concepts to the prototype stage before they return to their college for their academic sessions. Their designs are then subjected to rigorous tests including field tests. If it passes the tests the product is given the finishing touches to form the final shape.
  4. Once through, the new products are rapidly introduced in the market.
  5. The time taken to complete such a process is around 3 to 6 months.

Result:

  1. This method has now been tested over the last 5 years. In this short span the company has been able to obtain 12 new patents in international markets and many of their existing designs were upgraded.
  2. With a slew of new or upgraded products backing them, the company has been able to make inroads into markets which were thought to be impenetrable at one point of time thereby making their presence felt in existing markets which helped them to flourish and create a ‘niche’.
  3. It has proven to be extremely cost effective. However to step up on the proven success the next natural course of action would be to go for more open innovation.

Lessons Learned and Conclusions:

  1. Cascading the strategies of a Balanced Score Card is often difficult and at times confusing. The primary reason for this is not the lack of management focus or lack of employee ‘buy in’ as usually thought. The difficulty of cascading lies in the difference in the perspective we take on improvement and cascading strategies.  The usual perspective is the linear perspective. We think that cause and effect are directly linked for anything we would like to improve upon. Unfortunately that is not the case. The world of manufacturing is a highly complex system that necessarily calls for a different type of skill set to negotiate the given non-linearity within this complexity.
  2. In most cases of improvement initiatives, we focus on changing people’s ‘behaviour’ through some methodology. My experience has shown that such a perception hardly works or to tell the truth has not worked at all. The trick is to focus on either changing the behaviour of products or machines or technology or focus on ‘failures’, which then changes the collective consciousness of the organization to create good hard value that sustains the organization in the long run. This as I find is a proven and effective route to change human behaviour for the better. It also makes their job and life easier and effective leaving human beings to do what they do best – that is focus on exceptions rather than focus on periodicity.
  3. In every case that we discussed was focussed on any or all of the following: a) Productivity b) Performance c) Profitability. However, the spin offs are of no lesser importance, which are a) Energy conservation b) Material conservation  c) Cost effectiveness d) Sustainability. It helps the society and our planet at large.  And in every case the underlying focus has continued to remain on ‘failures’. So ‘failures’ and their nature inform both strategy and its cascading to create value. The principle that is involved is ‘model failures’ not ‘systems’.
  4. Lastly, there is no ‘one hat that fits all’. Every case as I have tried to show is unique in its own context. What works in one situation might not work at all in other situations, however similar they might appear. Therefore, strategies, innovations and implementation plans are to be worked out based on the emerging context a manufacturing organization operates in. Only some clever thinking would not do. Only some brilliant ‘doing’ would not do either. The difference lies in thinking and doing things differently and contextually. This is the only difference that creates the essential difference in performance. It calls for contextual intelligence which when developed to a collective level is simply unstoppable.

Let us create the difference that creates the difference in our lives. So much depends on us to build a sustainable future for the next seven generations.  And the best thing is we don’t need a big theory to create that essential difference since we live in a non-linear world that calls for creative non-linear approach. We call this a Nemetic approach to life. And it works. We as Nemeticians assert this claim with evidence based confidence.

Note: It does not really matter whether we improve through BSC or Business Case or Business Plan since the principles of long lasting changes and improvement remain exactly the same. The principles of Nemetics employed to improve any situation goes beyond all changing terminologies, which are often called fads. Surprisingly, the same principles can be employed in Design, Health, Education and a host of things.

References:

a) Research notes of the Institute

b) Discussion notes with Gautum Dhar, Mgr, TMKPL on pitfalls of cascading BSC.

The author wishes to thank Mr Fabian Szulanski for encapsulating the Nemetic idea through his slogan ‘Don’t Model Systems; Model Failures instead’

The author, Dibyendu De, might be contacted over email – dde337@gmail.com

How to Embrace Uncertainty of Complex Systems with a Smile!

Summary:

In this post I would like to describe the Nemetical strategies and tactics we have in hand to adapt to complexity so as to make our lives better. Without these strategies I think it would be completely meaningless to embrace uncertainty presented by our relationship with the complex environment we presently live. Without knowing how to adapt we would be forever going round in circles in despair. In other words we can say these strategies and tactics, as described below, would help us to stay and remain agile, resilient and sustainable. However the tactics and strategies mentioned here are the fruits of our research in the field of Nemetics which synthesizes various disciplines such as Complexity science, Complex Adaptive Systems, System Dynamics, Chaos and Design. This gives the discipline of Nemetics its own distinct character and versatility. Moreover the strategies and tactics, described below to engage with complexity are not to be found elsewhere so far as my knowledge goes. It is hoped that it would help people to provide better leadership in whatever field they have chosen to engage.

Complexity

We know that we operate mostly under complex environment swamped by complex problems often referred to as ‘messy wicked problems’.

Of course one might ask, ‘Where do I find complexity that generates such wickedness?’

It is just like asking, ‘What are my chances of finding non-tigers if I visit a zoo?’

Well I think you got it.

Given that we are constantly playing around with complex issues and problems we must then find solutions and strategies to play the game well;  just like any footballer would know when to dribble, when to race forward and when to go all out for a goal and where exactly to aim for.

To me complexity is the game of life. And if I am unaware of the rules of the game and how to play the game I would simply act like a dumb spectator to this game of life.

Imagine I am standing somewhere and looking at a game of bridge over the shoulders of four players. Now, if I know the rules of the game of bridge and know what one should do then I would be intently engaged with the game. Otherwise I would be acting as an utterly bored bystander yawning at times and looking stupid.

What then makes me feel confident when I am playing the game of life if I simply don’t know the rules of the game and how to get a handle on it?

So without wasting much time let us see what complexity is really made up of (like the protons, electrons and neutrons of an atom).

The 4 aspects of Complexity

Complexity has four parts, which are the following:

a) Diversity

b) Interconnections 

c) Interdependence

d) Adaptation

If these are the four things that make our situations complex what drives all these? It is non-linear relationships between different entities. Obviously the possible solutions then lie in re-designing or tweaking these four parameters and also learn about the number of ways I can tweak each of these parameters.  Once I master that I can then tweak the various parameters in different ways either individually or in combination to resolve a given issue without creating undesirable long-term consequences that harm the collective interest.

General Solutions

Let us get to it one by one.

A) Issue = Diversity

General Solutions = 1) Tune Amplitude or numbers. 2) Tune alignment 3) Tune Shape

In a complex system Diversity generally causes problems in ‘sync’ (or synchronicity). Sync is responsible for causing periodic oscillations to happen. We know when periodic oscillations happen the system is in harmony. When things are out of sync messy problems and failures take place. In organizational terms things are not aligned to each other.

If Diversity is the main issue in a Complex Adaptive System then the ways I can handle that is by changing the ‘Amplitude’ or aim for better alignment. In simple terms ‘Amplitude’ means amount. That is I can either increase or decrease the amount of diversity.

For example, if an organization is handling too diverse an operation that is creating messy problems it can either choose to decrease diversity if it is also affecting their profitability. However, if diversity is necessary for their profitability then they can choose to create separate divisions or groups to manage several portions of the diversity independently thereby reducing the diversity of the whole. That is one of the ways in which the organization can change or tweak their shape to manage diversity. Or the organization may also aim for better alignment between different ‘diverse’ operations and entities so as to allow them to work with more synergy without breaking down the system.

Or for instance, changing amplitude might mean something like changing interest rates or changing the degree of intensity of intervention etc.

B) Issue = Interconnections

General Solutions = 1) Tune Frequency 2) Tune Tightness/Looseness or Rigidity 3) Tune membrane porosity

We can’t help being interconnected and remain so. This character of interdependence is scale free. A useful way to think about it is through an image of being coupled to each other in a vast and ever-expanding network. We might imagine each entity as an oscillator. There is no harm in imagining so since every entity is a bundle of energy, which vibrates on its own. When connected to each other we behave as coupled oscillators, i.e. we start moving and dancing together.

This is where the problem starts. As soon as we couple two oscillators the phenomenon is no longer linear. It immediately turns non-linear which is not prone to easy mathematical manipulation or treatment. Now imagine thousands and billions of such coupled oscillators jumping around a the same time. It becomes immensely complex — something quite beyond our comprehension and simple mathematical treatments.

However, we are fortunate in two significant ways. First, when many oscillators couple together they form a general group pattern. Appearance of such a group pattern is what is known as ’emergence’. Thus our task perhaps simplifies to understanding and interpreting such patterns exhibited by group behavior, which are simply known as emergence.

Second, we know that by creating small changes in either the relationships between different entities or the entities themselves we may significantly alter the quality and nature of the interdependent network.

Hence faced with an issue on ‘interdependence’ we have two tasks ahead of us. First is to understand and interpret the group behavior and patterns that emerge. There are several ways of going about it. One of my favorite is to see the wave patterns generated. The idea is to identify the type of wave and the type of attractor that it might be associated with.

Having understood that we can then go about our task to bring in the needed harmony by adopting any or all of the strategies or solutions as listed above, i.e 1) tune frequency 2) Tune rigidity 3) Tune membrane porosity.

For example, tuning frequency might mean — a) Frequency of communication or interactions b) changing the time interval c) Raising or lowering the frequency of anything d) Changing quality of the frequency e) Creating resonant frequencies in various manner.

Similarly, tuning rigidity might involve — a) Strengthening a relationship b) Weakening a non-linear relationship c) Cutting off a relationship d) Adding more entities to a relationship e) Changing rules and regulations f) Changing critical parameter that contributes to non-linearity. etc.

Likewise, tuning membrane porosity means a) changing the sizes of pores b) changing the number of pores c) changing the number and quality of pores d) changing the number or nature of agents that assist exchange across membranes through pores e) Changing the quality or strength of the material across the membrane — all aimed at altering the rate or quality of the diffusion process across membranes.

Perhaps it is order to have a quick word on ‘membranes’. For any exchange to happen whether meaningful or not, membrane and pores are required. A very simple example of a pore would be a window. Think of a wall as a membrane that stands between two entities (inside and the outside) and the windows on the wall as pores that let in sunlight, wind, dust, moisture and lets out bacteria. This exchange phenomenon can be assisted by agents like fans, blowers and air conditioners.

Now if we look around us we would see the presence of membranes and pores virtually everywhere. It exists in plant roots, metals, furnaces, organizations, national boundaries, lungs, departments, …. so on.  And across each membrane are agents who are either helping or inhibiting the process of exchange.  For example, setting up ‘trade barriers’ is also a type of membrane with pores with agents helping or hindering the process on either sides. Or there is a membrane between an organization and its business environment which operates with agents on both sides of the membrane (like marketing people and law enforcement officers) who are either assisting or blocking the process of exchange.

So a leader might choose to focus on membrane and pores and choose to alter their characteristic and quality to moderate the flow of energy (in the economic world of business that would translate into ‘money’) that either strengthens or weakens the exchange that sustains or demolishes the interactions.

C) Issue = Interdependence

General Solutions = 1) Tune Coupling strength 2) Tune Phase 3) Tune Speed

The important thing to understand about the concept of ‘interdependence’ is the non-linear dependence of one element of the system to overall goal of the system. Let us take a simple example. We fix nuts and bolts to obtain strength of a joint. But the strength of a joint is proportional to the square of the diameter of the bolt. Similarly the moon and the earth are interdependent on each other and the stability of the interdependence is governed by gravitational attraction, which in turn is inversely proportional to the square of the distance between them. Likewise the spread of a virus or disease is exponentially distributed – again a non-linear characteristic. Similarly, non-linear relationships are driving other things like happiness, earthquakes, tsunamis, organizational growth, employee attrition, etc.

Such non-linear interdependence creates the complexity, which at times enables a system, under certain conditions, to fly off towards chaotic states.

So, in a way the strength of the coupling (since all are interconnected as a whole) is dependent on the quality and strength of the non-linear parameters. Therefore, the only way we might have a handle over such interdependence is by paying attention to ‘non-linearity’. We might do so by tweaking the strength of the coupling or the phase of its relationship or speed.

For example, if we want to ensure the strength of a bolted connection we must make sure that a nut and bolt are tightened to a particular torque, which incidentally is proportional to the cube of the diameter of the bolt (our situation gets more serious – no wonder nuts and bolts loosen up easily).

Similarly, we can play around with the phase of vibration of the two entities dancing in relation to each other. For example, two nations at war are completely out of phase with each other. To improve the quality of the interdependence we might try to get them talk at the same table in an attempt to bring the two hostile parties in phase. Likewise, two departments, (say for example, engineering and purchase), within an organization may inadvertently be out of phase with each other where each department pursues the given objective or identified performance or result area of the department. Management might then try to bring in better harmony between the two departments by tweaking or changing their rules and policies so as to bring them in phase.

The third option is speed or more technically velocity. Hidden behind velocity is ‘energy’, which again follows a non-linear relationship since kinetic energy is proportional to square of velocity. So wherever we get to see ‘velocity’ energy follows. And it is this energy that sustains the interdependence. In general it helps interdependence. But if wasted it affects the quality of the interdependence. Hence velocity or speed by default becomes a critical parameter that might be tuned to obtain the desired degree and quality of interdependence in order to improve system performance.

D) Issue = Adaptation

General Solutions = 1) Damping or conflict 2) Changing Gradients/Authentic Constraints 3) Redesign, Re-position or Change System

Perhaps the most important part of Complex Adaptive Systems is ‘Adaptation’. That essentially determines whether we survive or die. By nature adaptation is basically a question of redesign.

The first of the general solution is 1) Damping or Conflict. In simple terms ‘damping’ or ‘conflict’ means ‘friction’ or ‘resistance’. Needless to mention the importance of ‘damping’. Without it we would not be able to even walk (except for ice skaters perhaps). Damping changes the characteristic of the system. It can help maintain the stability or throw the system into chaos to create a new order. Strikes, trade embargo, conflicts, wars are simply various forms of damping that change the performance characteristic of the system. Hence its usefulness or uselessness.

The second general solution is ‘changing gradients or authentic constraints. It is worth remembering that any flow takes place against a gradient. Water flows against a gradient. So does heat or electricity, which also flows against gradients. Similarly traffic, economic aid, economic exchanges, money and in fact any system operates by flowing against a given gradient. If the gradient isn’t sufficient flow stops unless sustained by additional forms of energy. Hence a gradient in a given context forms the boundaries between two opposing constraints known in Nemetics as Authentic Constraints.

Hence it is clear that by changing the authentic constraints we can change the system dynamics the way we want. It creates new opportunities.

The third option is the re-design the system either in whole or in parts in order to achieve the desired ‘sync’ between different parts of the system. It is an option we all have. We may change our course completely by leaving behind or destroying the present system or parts of  the system to either create a new level of system performance or create a new system.

Field of Applications

I am almost tempted to say, ‘any field’ which has some worry or the other, some problem or nagging issues that refuse to go away.

However, to my mind,  the potential fields of applications are the following:

a) Engineering

b) Manufacturing organizations

c) New non-manufacturing organizations.

d) System Design and Architecture

e) Product design

f) Organizational Sociology

g) Economics

h) Business and business strategy

i) Psychology

Conclusions.

This in brief are the Nemetical strategies and tactics we have in our hand to create something better than what we presently have without creating long-term adverse consequences and aimed at improving collective benefits. These strategies can be applied either individually or in combination as  situation or context demands. Skillful use of these strategies would not only  make our lives better but would also enable us to live life with a big smile on our faces.