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Systems Thinking Approaches to Organizational Design
1. Systems Thinking Approaches
to Organizational Design
Business Technology
@martinaziz
What we’ve learned
“Real stories” – Stephen Regoczei
Systems Thinking TO
Meetup
3. Punctuated Equilibrium.
A multi-year journey of discovery and transformation and emerging maturity.
The Journey
Punctuation Points
At Equilibrium
Managed Projects
Some consistent
process
Heroics
Inconsistent
Outcomes
Scrum
Consistent
Outcomes
Teams & Tribes
Want:
Consistent Economics
Continuously Fit for
Purpose
Scrum
All Teams
No projects
No managers Large J-Curve
System Level Management:
Metrics
Visualization
Pull Systems
Limiting System WIP Series of smaller Js
2016 ->2014-2015< - 2013
Equilibrium
Time
4. These Systems Thinking approaches to organizational design attempt to
shift the agenda from tactical success to long term business robustness.
Much of this is driven from the ability to sense, respond and continuously improve. The
following maturity model plots this organizational capability.
Organizational
Maturity
Emerging
Chaotic/Adhoc
Defined
Managed
Quantitatively
Managed
Optimizing5
4
3
2
1
No consistency of process or
outcome
Luck/Individual heroics
Chaos
Consistency of process
Heroic management
Consistency of outcome
Consistency of economics
Model-driven improvement
Sense & respond
Continually “fit for purpose”
Resilient
Fragile
Robust
Anti-fragile **
Maturity Level *
“Built to Last”
Understress
Follow procedure
& improve
Panic & Regress
* Copyright Lean Kanban Inc.
** Anti-fragile. System that improves with change/stress.
6. One metric we use extensively is the Cumulative Flow Diagram (CFD)Metrics
7
6
5
4
3
2
1
1 2 3 4 5 6 7 8 9
Average time customer waits
Average work in
the process
Time (days)
WorkItems
11. Flow
Efficiency
Flow Efficiency
Wait Wait Wait WaitWork Work Work Work
Flow Efficiency =
work
work + wait
x 100%
< 2% common < 15% frequent < 40% good + rare
Industry Range
12. Flow Unraveling our flow yarn.
For this service, our
customers
only ask for 4 things:
1. Resolve System
Availability
2. Maintain
Applications
3. Requests for
Information
4. Enhancement /
Make some
change
Demand Flow routing is
complex.
NxN route combinations
Multiple work specializations
Combinations of constrained /
unconstrained demand
Work is almost always pushed
14. The
System
Identifying the prime suspects
Variability
1. Divergent Market
2. Emergent Information
over time
3. Execution Variability
Demand vs Capacity
Satisfy demand, without
overburdening the system.
Flow
Routing flow optimized for
service delivery vs function
& specialization
15. Fixed “determinist” plans suffer from sources of change and unknowable
information about our environment.
The most common causes:
Variability
Divergent Market
The market need has
changed during the time
lag between idea and
delivery.
Emergent Information
Discovery
Critical information about
what you need to deliver is
discovered during the act of
delivery.
Execution Variability
The complexity
encountered during
delivery can’t be pre
determined.
16. Making Roadmaps & Plans resilient to emergence.Variability
Road Maps & Project Plans
Assumes:
• Path to success remains fixed
• Limits opportunities to leverage
new information
• Limits success to limited options.
Iterative Targets *
• An ongoing process
• Attempts to keep targets small maintaining
focus and momentum
• Replaces deadlines with cadences of
inspection
• Built around experimentation.
The Current
Condition
Target
Condition
• An interim goal that is
hard to achieve but
reasonable to
undertake.
• Multiple TCs are
expected to reach
Vision
• Do not define future
TCs until the current
one is reached.
• The sought
out condition
that represents
success
• Appears
unachievable,
particularly in
one step.
• Feels
overwhelming
Vision
* “Improvement KATA”
17. Keeping deliveries small allow for increased exploitation of new information
and opportunities to obtain earlier and more frequent value.Variability
Day 1 Day 365
Opportunity
for value
Opportunity
for value
Opportunity
for value
Opportunity
for value
Opportunity
for value
Opportunity
for value
Exploit
market
information
Exploit
market
information
Exploit
market
information
Exploit
market
information
Exploit
market
information
18. Organizing around value streams orients an organization into
aligning it’s actions around:
• Seeing the customer needs expressed as services (i.e. streams of
value) delivered to the customer
• Optimizing the value delivery to fit the Customer’s Purpose
Flow
Considerations:
• Value stream end points are
always a customer
• Customer end points can be
internal customers; however
many times parts of the flow
can be confused as
customers
• Value Streams vary in
complexity
• Complex value streams
usually requires people and
teams that also support other
value streams
• If you can express the Value
Stream as a service, you can
optimize it’s delivery of value.
Organization
Team
Team
Team
Team
Team
Team
Team
Team
Value
Value
Value
Customer
Customer
Customer
19. Techniques to design and launch value streams optimized for
value delivery.
Flow
Lean Kanban Process “STATIK” has 8 steps:
1. Understand what makes the service “fit
for purpose”
2. Understand sources of dissatisfaction
regarding current delivery
3. Analyze sources of and nature of
demand
4. Analyze current delivery capability
5. Model the service delivery workflow
6. Identify & define classes of service
7. Design the system – Visualize, Design,
Establish Policies
8. Socialize design & negotiate
implementation
“I need this.” “I have it! Thanks!”
Service
Delivery
Design and Operate
20. Our existing delivery patterns optimized flow of work through
team. But doesn’t fully optimize for the customer.Flow
Sense
& Promise
Push
Stories
Scrum
Team
Scrum
Team
Scrum
Team
Story
Accumulation
FeaturesIdeas
Kanban
Team
Customers
Delivery
Customers
Doing
White spaces between teams
sources of greatest delays.
Stories hard to recognize by
customers or actors on the left end
of the flow.
Unconstrained demand
Early Commitment
without
connection to
capability
21. For each Value Stream, demand is always expected to outstrip supply. The
VS needs to be designed to limit the flow of work to that which maximizes
positive business outcomes and minimizes economic risk.
Sense
Pull
Features
Features
Do Next
Ideas
CustomersDelivery
Customers
Features
Do
Features
Good Constrained delivery
pipeline
Upstream Downstream
Progress Customer
Recognizable
Delivery Improvements
aligned to optimize for
value delivery
Demand
vs
Capacity
Work is pulled into delivery pipe
automatically as capacity
becomes available. Push is
avoided to prevent
overburdening.
22. Value Streams may have shared teams across multiple VS’.
The balance between dedicated and shared teams will be
emergent as the value streams are optimized over time. Teams do
not need to be “Agile” though they may choose to be over time.
Customers
Demand
vs
Capacity
Customers
Customers
CustomersDelivery
CustomersDelivery
CustomersDelivery
Team
Team
Team
Team
Team
Value Stream 1
Value Stream 2
Value Stream 3
T
e
a
m
Team
Team
Team
23. Value streams are not all of equal value. Resources for VS’ are
part of a zero-sum pool of resources. Allocation of resources
a strategic decision at value stream level (not by initiative)
Customers
Demand
vs
Capacity
Customers
Customers
CustomersDelivery
CustomersDelivery
CustomersDelivery
CustomersDelivery
The organization needs
mechanisms to adjust
allocations over time.
Each value stream
constrains work pulled
based on their available
capacity
Value Stream 1
Value Stream 2
Value Stream 3
24. Techniques to establish positive business outcomes while
balancing demand and capacity .
Demand
vs
Capacity
Service Fidelity
Not all types of demand are equal
in priority. Understand cost of
delay. Classes of Service can be
used to separate this.
Queue Management
Understanding business tolerances
to waits, managing to limits,
determining quantities of queues,
their location, and their nature (e.g.
shared or dedicated).
Liquidity
The degree to which you can respond to
changes in the demand with the current
supply while balancing specialization.
System Management
Roles to actively determine
how the system needs to be
designed and changed to meet
business needs.
Pull System
Work is pulled in by teams through
established policy. Teams stop
pulling when capacity is at
established limit.
Policies
Transparent and agreed
policies across the system.
Managing the flow of work vs
directing people.
25. Liquidity effects the degree to which you can respond to changes in the
demand with the current supply while balancing specialization.Demand
vs
Capacity
Achieving optimal liquidity is a balancing act between
organizing for a known need and developing capacities to
respond to changing needs.
Business
Investment
Liquidity
High
Low
Low High
Cross Functional
Associates
Cross Functional
Teams
Constrained
pull
systems
Specialists
Specialty Teams
Slow
Response
to Change
Respond
and/or
Exploit
Change
26. Considerations such as Due Dates, Emergencies and other aspects of what
makes something successful needs to be part of a Value Stream’s capability.
This is achieved by understanding the Cost of Delay profile of requested
work and slotting it to the right Class of Service.
Service
Fidelity
Classes of Service
Expedite - “Security Breach”
Fixed Date - “Stadium on time for Olympics”
Standard – “Regular delivery from Amazon”
Significant impact to the organization. High amount
of resources are sourced from multiple areas to
delivery as soon as possible. Degrade other services
to support this. Should not be used often.
To be delivered by a fixed delivery date given
sufficient advanced lead time given.
The regular delivery method leveraging the allotted
capacity that the organization has provided for this
service.
Cost of Delay Profiles
Time
Impact
of
Delay
Time
Impact
of
Delay
Impact
of
Delay
Time
27. Resources
Antifragile: Things That
Gain from Disorder
Nassim Nicholas Taleb
Kanban from the Inside
Mike Burrows
The Principles of Product
Development Flow
Donald G. Reinersten
Actionable Agile Metrics
for Predictability
Daniel S. Vacanti
Focused Objective Tools
& Resources
focusedobjective.com
Troy Magennis
Okaloa – Flow Lab
www.okaloa.com
Patrick Steyaert Business Technology
@martinaziz
29. Decentralized Control.
Signals moving up and down a hierarchy delay responses. Autonomy of
decision making needs to be linked with the speed tolerance of the
decision.
Flow
Slow to Change
Quick to Change
Moderate Change
CEO
Executive
Sr. Management
Middle Management
Sr. Associates
Associates
Location of Decision
Overall Mission
Divisional Missions & Strategy
Value Stream Identification
Value Stream Allocation
Value Stream Management
Value Stream Population (Features, Tactics, Initiatives)
Execution Improvements
Team Organization
Decision Examples
Execution
30. Often referred to as “servant leadership” this approach of achieving
successful decentralized control relies on leadership at all levels through:
Alignment -> Establishment conditions for good decision making.
Empowerment -> Providing sufficient space to make adaptive decisions.
Transparency -> Providing feedback loops throughout the organization.
Flow
CEO
Executive
Sr. Management
Middle Management
Sr. Associates
Associates
Alignment
Alignment
Alignment
Empowerment
Empowerment
Empowerment
Transparency
Transparency
Transparency
