The goal of this article is to bring together socio-technical systems (STS) thinking and methodology and lean management thinking. There is a huge advantage in combining the two along with an important third and missing piece of the “whole-system.” For lean or STS implementations to be sustainable it is critical to understand and align the whole system.
Organizations, whether public or private, are all organic, living, changing things. Most will die, sooner or later. The cause of failure is rarely the external threat, the attack of the barbarian or the fierce economic competitor, rather the cause is most often an act of suicide, self-inflicted by one’s own hand. Or, as Jerry Harvey said, “How come every time I get stabbed in the back my finger prints are on the knife?”
Organizations as Systems
The beginning of creating a sustainable system is in understanding the nature of organizational systems and the requirement for alignment and adaptation. Some have the view that our entire planetary system is headed for extinction because: A) we as human beings are not aligned in our values, our beliefs about the world and our behavior toward each other. This misalignment has caused the destruction of prior civilizations. We would not be the first. B) We are failing to adapt to a changing environment. All species, companies, countries, survive to the degree that they adapt to the changing external environment and fail when they don’t.
Sustainability of every system, whether an ocean or forest, a school, hospital or other business, all have the same following elements: First, there is input into the system from a supplier or input system; then there is some process that transforms input to output. That transformation, in the case of a business, must be value-adding to the customer who is the receiving system. Every business must have a process that creates more value than the cost of operating the work system, otherwise it is not sustainable. And, every systems adjusts to its environment by processing feedback.
Then it is important to realize when designing any system, that there are big systems and little systems, or sub-systems to a larger system. For example, the human body is a system which contains numerous sub-systems (cardiovascular system, digestive system, nervous system, etc.). Similarly, within companies there are sub-systems of different production units, marketing, information technology, human resources, etc. Every company is a sub-system of an industry or market system. That, in turn is a sub-system of the larger economy. The functioning of the whole, whether human body or company, or country, is dependent on the alignment of these sub-systems to each other and to the whole. This is where things often go wrong.
For example, in the human system, our brain or nervous system may be sending signals to other systems to eat more sugar and fat, and that response may not be in alignment with the needs of our digestive system and other systems. Hence, you get fat and die of a heart attack – system failure. Misaligned sub-systems produce failure in the larger system. You can easily see the parallel in a company system. The functioning of production, marketing, finance, etc., must be aligned otherwise there is a system failure. That is why we have strategic planning, budgeting, etc., to create organizational alignment. But, that planning often is less than optimally successful because it generally deals with only some parts of the system and ignores others.
Many, many years ago, like 25, Norman Bodek (who should be familiar to all you leanaholics) gave me an article by Lou Davis, at UCLA on socio-technical systems. It was one of those “ah-ha” moments when something becomes obvious and useful. The theory of STS is simple and elegant. In every organization there are work or technical systems (the work process) and there are social systems, the “people” systems or culture that surrounds the work process. In most organizations these have been designed independently and are misaligned, producing sub-optimal performance. Socio-technical system design, or what I chose to call Whole-System Architecture, is a change methodology as well as a way of looking at the nature of the system. STS or whole-system design is based on a process of co-creation, in which the stakeholders in the process together analyze the current state and design a future ideal state.(Cherns, 1976) (Trist, 1980) The theory is that by having managers, employees who work in the system, customers, suppliers and anyone else who knows, cares or must act on the system engaged together, not only will the future design be more effective for all, it will also have their ownership and commitment which will lead to successful implementation. This is the principle of co-creation and it is a key element in successful change management.
Whole-System Architecture presents a useful metaphor. When you walk into a great cathedral your head goes back and you look up into the heavens of stained glass and flying buttresses. You marvel at the construction. And your first impulse is to focus on the physical thing of the structure. But, the architect had an end in mind. The architect understood that the nature of physical space, the interior structure of the cathedral, has an effect on the human spirit, emotions, and possibly behavior. You feel that effect when you walk into the cathedral, regardless of your religious views. The structure of your organization also has an effect on your spirit, emotions and behavior. But in most cases the effect is unintentional and often stifling, rather than uplifting of the human spirit. Our organizations need more than engineering; they need architecture. We must become architects of our organizations to promote the spirit of service to customers and the habits of innovation.
About a month after I read the Lou Davis article I was presenting a consulting proposal to Moody’s Investor Services in New York and I couldn’t help myself. I proposed that we do an STS intervention to redesign their work system. They bought it and miraculously it worked. After that my consultants and I did more than one hundred STS or Whole-System Architecture projects. When I became involved at Honda it was very obvious that their system was a dramatically different technical and social system. They did not use that language, but they didn’t use “lean” language either. But, language is beside the point. I simply incorporated the lessons from Honda into our whole-system architecture projects as a model of what another system looks like.
As we implemented these projects we increasingly recognized the complexity of the organization systems we were dealing with. For example, we designed Shell Oil Company’s deep water operations in the Gulf of Mexico and Corning’s Fiber Optics manufacturing. These were not simple operations. They were complex systems that included a great deal of information processing, relationships with contractors, high levels of uncertainty (will we find oil?), and risks. They were complex systems. We realized that they were not only social and technical systems; they were economic or financial systems. That should be obvious, but it is not to many doing change management. It became apparent that the failure to take into account the flow of money into and out of the system (and what is left) may make the design of the social or technical system fail or not sustainable.
Lean Systems and the Missing Link
STS theory and methodology was the basis for all of the early self-directed team plants in the United States. The Gaines Topeka pet food plant was one of the first. At one point I hired the plant manager from Gaines Topeka who had been on the original design team. Proctor and Gamble and Corning designed many of their plants using STS methods and the team process became the norm. For the most part these plants were successful. But, not in all cases. Just as many lean implementations fall far short of expectations or even completely fail. There is a common cause and it has to do with understanding the “whole-system.”
STES PlanningOne of the most well-known cases of STS was Volvo’s very progress work system at their Uddevalla plant in western Sweden. The plant was designed by joint union-management committees and they designed the system for small teams of eight workers to assemble an entire car. The moving assembly line that determined work speed was abandoned. In the Volvo system a work team controlled their own pace of work; they were all trained to do all jobs on the team and they could decide when to rotate jobs within the team. According to STS theory, this was ideal. They assembled four cars per day per work team. That amounted to a productivity rate of about twenty work hours per car. The problem was that Honda and Toyota were assembling cars in less than twelve work hours per car and every other auto company was rushing to adopt the lean model that enabled this rate of production. And, unfortunately, the Volvos being produced at that time were not of high quality. Their quality ratings were significantly below those of Honda or Toyota. After four years of operating this production system, in 1994 Volvo closed the plant. It is now a warehouse.
Enter the Economic System
Does this mean that STS is a bogus theory, or that developing a work system that is humane and provides for an enriched work experience is a bad theory? Or, that the method of high participation design is not workable? Absolutely NOT! I have done this successfully about one hundred times. What it does mean is that if you focus only on the work system and social system it is possible to design a system that is not economically viable.
Every business enterprise is an economic system. Money comes into the system first as capital, and then revenues. Money goes out in the form of expenses and goods produced. The revenue must exceed the expenses and input value of the goods produced. In other words, the system must add value in economic terms. This is no news to anyone running a business. But it is news to some who implement both lean and STS systems. In both cases they can be designed without regard to the economics of that system.
In fact there are three sub-systems – social, technical and economic. So, I am modifying or presenting a new theory, whichever you choose: In order to design the ideal system one must design and align the technical, social and economic system together. If either of the three is not aligned with the other it is not sustainable and will fail.
The same model can be applied to any institution and even a country. We can call this theory and methodology STES (socio-technical- economic systems). This Whole-System Architecture process must begin with an analysis of the work system (cycle time, eliminating waste, variances, etc.); an analysis of the culture or social system (the empowerment, decision-making, competencies, motivation, etc.); and an analysis of the money flow. It is entirely possible that some major elements of a work system are not worth doing at all because of internal costs versus contract costs. It may be that incorporating or not incorporating a new technology will be determined by the economic benefit of that technology.
There are many economic implications for organization and system design and it is important that an analysis be made that the proposed system will not only produce benefits in reduced cycle time, improved quality, improved motivation and the ability for people to engage in continuous improvement; but, also that the new system provides economic benefit to the organization.
Cherns, A. (1976). The principles of sociotechnical design. Human Relations, 29(8), 783-792.
Trist, E. (1980). The Evolution of Socio-Technical Systems. Perspectives on Organizational Design and Behavior.