Technology, by design or not, pushes the boundaries of what is possible. In doing so, it opens up new cognitive realms and provides new perspectives. The speed at which it progresses is much greater than our ability, as humans, to adapt to the changes it brings along. Technology is de facto dictating the pace of our “evolution,” and schools, institutions, and industries frequently fail to grasp its transformational, sociological, and neuro-psychological content.
Some technologies, to use a popular term, are “disruptive”; they alter the existing paradigm so much, so quickly, and so abruptly that entire sectors are bowled over by them.
Digital is, by all means, one of these technologies: IoT, AI, Industry 4.0, etc. are all messengers of a new world in which closer integration of value chains is paramount.
As we said before, digital heralds the transition from a worldview centered on “atoms” to one based on “zeros and ones.” One of its most intriguing, paradigm-altering developments is Blockchain. So far, the debate has been almost exclusively around one and only one application: Crypto-Currencies. Bitcoin and the likes have been stealing the show and shifted the debate away from where I believe it should be.
About 10 years ago, in a white paper signed by Satoshi Nakamoto (nobody seems to know if the person really exists; he/she may be the Homer of our millennium and the paper his/her boringly technical Odyssey), a new possibility for digital emerged: bypass the omnipresent power of clearing houses in economic transactions.
Immediately, people interested in speculating (or simply conducting dodgy activities) started to swarm to the arena of crypto, boosting a delirious debate around the concept of currency and the role of Central Banks. I will not get into that (and the dangers of pegging a currency to something that glitters and could be “mined”).
It is the implications of this technology, instead, that are society-altering. What Blockchain seems to be able to do is not just bypass the nonvalue-added (and expensive) activities of a bank, allowing peer-to-peer transactions; what it promises is the possibility to build a whole new, higher level of value to the chains that deliver products and services. It creates trust by ensuring transparency and accountability in all phases of complex chains of value (provided that the majority of the nodes of the network are not controlled by “bad guys”).
This will directly impact the way organizations are structured. Such trust, “guaranteed” by contracts that promise to be “smart,” does indeed go hand in hand with alternative forms of organizational structures that are not conventionally hierarchical. Many alternatives that are being proposed mirror some biological phenomena, such as “ecosystems” or “self-organizing systems.” The word “Holon,” in all its declinations, seems to have gained ample consensus among the advocates of a different way of organizing people’s work. Holacracy is an example. In the last few years, nonhuman forms of leadership such as DAO (Decentralized Autonomous Organizations) also seem to be gaining traction.
Needless to say, computer Leviathans such as IBM and SAP are all over Blockchain. It is paradoxical that very rigid, Command and Control, cost-centered giants seem to be promoting a different design for work … putting “lipstick on the pig,” to quote a sorely missed leader from Chicago. Succumbing to the mirage of a life-saving technology that echoes the glory days of picks and shovels (mining) still seems to have an allure. Perhaps this is because deep-seated images always trump the thinking process. Unfortunately, the issue of redesigning our organizations for the digital age to truly reap the advantages of promising technologies is not (simply) a topological one. It is something that goes well beyond the surface.
Redesigning Organizations for the Digital Age
When Dr. Deming was asked to comment on the latest “Quality Improvement Technique” as an allegedly “practical” way to promote Quality, he would inevitably respond: “Let’s go back to serious business.” So let’s.
If Quality (low variation of all processes and focus on the customer), Involvement (the intrinsic motivation generated by people’s job satisfaction and alignment on the goal), and Flow (how we arrange for products, services, information, and money to move through the organization and along the chains the organizations are part of) are the hallmarks for a transition toward a truly Systemic Organization, then we have to design for that and abandon any bio-computational fantasies.
Where is a good place to start to build a successful organization? A group of people, bound by a commonly agreed goal, who are asked to lend their competencies and ingenuity for the achievement of that goal in exchange for a fair compensation and a climate that nurtures their desire to learn and be part of something meaningful and bigger than themselves I think it is a good start.
What this group of people needs is a structured way of communicating, cooperating, and progressing toward their goal within a statistically predictable timeframe, an agreed-upon budget, and in full compliance with their client’s needs. In English (and in many other languages, I am confident) there is a precise word for this kind of arrangement: Project.
Accordingly, if we want to be minimally credible in our desire to bring about all the undeniable advantages put forth by the marvels of the digital age, we must reconcile the project-like nature of collaborative work with the way this work is led and managed and how its results are measured.
Before we get into semantic trouble, we must understand what we mean by Processes and Projects.
Processes, Projects, and Managing Projects with Critical Chain
We believe that any serious conversation about “systems thinking” when it comes to managing organizations must start from acknowledging that a system is a network of interdependent processes (the basic components of the system) that work together for a common goal.
A process is what transforms an input into an output; such a process, no matter how complex, innovative, mental, or physical, has a beginning and an end; it has a viable temporal span for its execution, a variation that must be managed, and it requires resources. If we accept the idea that resources, human and material, are finite and their role is to maximize their contribution to the overall chosen and accepted goal of the system, then having a metric in place can only be beneficial. If we choose a metric that cohesively integrates resources and time, then we have Projects that we can schedule with some hope of success, which means that can realistically be on time, in specs, and within budget.
In his 1997 business novel Critical Chain, Dr. Goldratt casts a new light on the controversial issue of managing finite resources in a project environment by offering a radically different view of how projects should be scheduled and how their execution should be managed. By leveraging the concept of covariance and presenting a powerful finite capacity algorithm, he redefines the rules for successful Project Management.
Traditional project management methods using a critical path cannot guarantee that projects are completed on time, according to specs, and within budget. The shortcomings of project management were examined by Dr. Goldratt in Critical Chain, where he presents a profound innovation for reliable management of projects. Traditional PM is often based on an assumption of infinite capacity and therefore can lead to resource contention.
The traditional critical path method is plagued by wrong-thinking and wrong habits, such as multitasking and “student syndrome,”—putting off tasks until the last minute—that can slow projects down artificially. The Critical Chain method tackles head-on many of the issues that prevent projects from completing successfully by
- eliminating milestones; instead the entire project is protected with a buffer at the end (project buffer) to protect from accumulated variation;
- making realistic assessments of task length instead of adding protection to each task, thus speeding up the project;
- resolving resource contention by allowing for finite capacity by calculating the Critical Chain, i.e., the longest sequence of dependent events taking into consideration the sharing of resources. This sequence determines the length of the project, and this is the limiting factor (constraint) of the project itself (Figure 6.1).
- Noncritical branches, called feeders, are also protected with a cumulative buffer (not individually) placed at the end of the “feeding chain.”
Figure 6.1 The critical chain of a project
Critical Chain and Organizational Design
Critical Chain is much more than simply an algorithm to accelerate project completion; it is the vehicle to integrate, control, and deploy the resources of the organization. In this way, the Critical Chain algorithm also provides the foundation for the redesign of organizations.
In the process of our work over the last two decades, we have come to understand how organizations in their entirety can be seen as networks made up of Processes and Projects; some of these processes will be very repetitive and easily managed, DFC and Process Behavior Charts will suffice; some others will be more innovative, have a higher level of complexity, and will require a more comprehensive management approach, i.e., a Critical Chain project management schedule and an execution plan.
Process Behavior Charts for essentially repetitive processes and the Critical Chain approach to the management of projects provide all the profound knowledge, as well as the holistic measurement and control mechanisms, to transition safely from the largely obsolete Hierarchical/Functional organizational design to a very “all hands on deck” systemic model.
Summary of Chapter 6
- The speed at which technology progresses is far greater than our ability, as humans, to adapt to the changes it brings along.
- The implications of new technologies are society-altering.
- The issue of redesigning our organizations for the digital age to truly reap the advantages of promising technologies is not (simply) a topological one. We need to understand that the work of organizations is made up of processes and projects.
- We must reconcile the project-like nature of collaborative work with the way this work is led and managed and how its results are measured.
- Critical Chain Project Management is much more than simply an algorithm to accelerate project completion; it is the vehicle to integrate, control, and deploy the resources of the organization. In this way, the Critical Chain algorithm also provides the foundation for the redesign of organizations.
- Process Behavior Charts and the Critical Chain approach to the management of projects provide the profound knowledge and holistic measurement and control mechanisms to transition safely from the Hierarchical/Functional organizational design to a systemic model.