5
Computers ind.Engng VoL 19, Nos I-4, pp. 185--189,1990 0360-8352/90 $3.00 +0.00 Printed in Great Britain. All rights reserved Copyright © 1990 Pergamon Press plc AUTOMATED PERFORMANCE MONITORING PROVIDES A STRATEGIC MANAGEMENT TOOL FOR CRISIS MANAGEMENT. Itarold A. Kurstedt, Jr. and Pedro M. Mendes Management Systems l_aboratories Virginia Polytechnic Institute & State University 1900 Kraft Drive, Blacksburg, VA 24060 (ABSTRACT) Organizational crises ultimately result from an inadequate management ,process. Dysftinctional reporting mech- anism.s cause, m~er management to ~qgr0 a.u~ut emerging problems only whenthey become critical. To strengthen an orga"ni:zatiop's offenses, ~ l~ropose ado'rag a graphical framework to the MIS output for strategic-level managers. Introduction Both Meyers (1986) .and Fink (1986) say that most ('tf not all) crises announce mem.selves, myers (1986) says that a "p/ecrisis" period starts with some iorm oi ~nonpertorm- a~ce," a relSqtitiye oe.c.urrence ox sman ProoJems or failures onen unnoticedat hi~er levels. FinR (1986) defines an ..equivalent "pr.odromaI: sta~e that, he,says, ma~ be ob- lique anq nard to identity, tlere, I empna~ze erim avqiu- an~, rather than crisis management, by ~ocusing on that preliminary stage. I develop a framework to class.'ffy,,and, graphically repre- sent problems that_may.potentiauy qeg~.erate into or- ganizhtional crises. For classification, I Huild on r)revious w_ork by Mitroff and others. For representation, I"borrgw Kiviat graphs pg.Rnlar in comp..uter pe~.ormance .evalu- ation (.F .eryafi, 1978). Continually exercising the frame- work wi.min the m anagenTent process results m a cha.nging picture that provides a global~ intuitive understanding ot the organiTotl?n's cha.~iog rote .real. and external envi- ronments. And understanding is the best crisis (surprise) avoidance mechanism. t~hen presenting the management process, ! emphasize c measurement, data loggrng. MIS or .g~_ iz~ation, and reviewing, methods (Kur.sT~e.dt, 1986). The gap hical ~ameworg is a!a. 9utRut ol the MIS at the stratc~iq level. Kegutar use ot the framework is contingent on the or- gamzation's learning capabilities (Argyris & Sch6n, 1978). I discuss the simil-_arity between organizational learning and managerial information feedback and show how they're rellectco in the management process. The MIS is but one of several kinds of manage.ment tools. The managemant tools, the operation, and the .manager are the _components ol a management system~as identified by the Management System Model (MSM~. 'l'he MSM, shown in t,he left hand side of Figure 1, js .the sta~ing point 10r the conceptual develoRment of the problem moni'toringfr.amewor-k .I propoF .here.. The logical steps to obtain the framework from the MSM are: perfor.mance monitoring requires ~fprmation handl- mg and transmission at all leve~s ol the organ~, tion; intormation handling and transmission nave different mechanisms, which are studied under organizational leLtmin, g theones;~ * elli~ctive ~and emcient) 9rgani~ational learning i.s contingent on a well-tuned ananagement p.rocess; and _the man_agemenl process exercises the Management System Model. So, 1 use the inverse approach: first 1 pre.~nt the MSM, then I discuss the managem.e!3t process~and then I p rese.nt concepts 91_ orga".niz,_ational learn'rag. l~ese provtde the theoretical, tomauaUon mr why the proolem monitoring 1rameworx works. I nen I snow how it works, when pre- senting the framework itself. The Management System Model ()vervi~ We .study systems as collections of components working together for a given purpose. Thee.fore, presenting a m~agement system requtres iaentixying its components and the purpose. ~ne purpo,se m a manag~.ent system may be the long-term sufvtvat oz an organization, may de the production o~ a good or service or zt ma~' oe, m~ting a project's (teaaline. As snown in me lell llano sloe Ol Figure I, the coml2onents of a m.ana~me.nl system are "wbo manages," "what is managed, # and "what as used to manage. The left hand side of Figure I repres-gats the Managemen t ystem Model (MSM),'fhe '_industrialengineer's structured approach to management. In systems terminology, it's a cldsed systems look at.an open system.. A. major MSM leatur.e is ~parating ends -- the physi.eal things we are re- sDonsible tot -- and means -- the tools we use to manage. '1"11.ephy.sical thi.ngs we manage, or "what is mug.age/l," include the people,capital, e q_u.ipmenl, and materials we are held accountable tot. The management tools, or "what is used to manage," include the-MIS, plans, cul- tures, o rgar~i'zation stru.ctures, reports, meetings, and~ in short, all other means ol convertifig data into inlormataon. Many mana~ment systems crises (and failu~s) _a~_'se be- cause of comusing ends and means (Kurstedt, Mendes, & lee, 1988). The MSM is the result of several years of work with government and industry at th_e Managem.ent. System.s Laboratories, a research arm o_f Virgini'a±lech's lndust_fial [;,n~eering and Operations Research Department. 'the IVI~IVI was inspifl~d oy the iunuamemaa works Oi Anthony, Blumenthal, Forrester~ Gorry and Scott Morton, Mintzberg, Simon, and other management, sim- ulation, and information systems sch_olars. Stmpl.e as it is, the MSM captures the essence ot their contributions, showing the structure and interrelationships existing in a .management system, flaying, searched e xtensively..m, the literature, I haven't uncovered any work that puts all these pieces together, much less in such a simple f6rm. An engineering analog for the MSM deal with shared information processing (information for oth the inside and outside world) through ditlerent in- rmation portrayals. 1 use the MSM to understand our "inside world" fir~, and our *outside world" after, i.e., to 1 I use the word crisis in a broader sense to mean any sort of surprise, good or bad. An unexpected cash surplus shows funds that could have been better applied. Surprises are the bane of management. 2 By management system I don't mean management irdbrmation system. I mean the set of resnonsibilities of any decision maker bounded as a system. A shipping department is a management system, as a power substation is an electrical sys- tem or an axle a mechanical system 185

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Page 1: Automated performance monitoring provides a strategic management tool for crisis management

Computers ind. Engng VoL 19, Nos I-4, pp. 185--189, 1990 0360-8352/90 $3.00 +0.00 Printed in Great Britain. All rights reserved Copyright © 1990 Pergamon Press plc

AUTOMATED PERFORMANCE MONITORING PROVIDES A STRATEGIC MANAGEMENT TOOL FOR CRISIS MANAGEMENT.

Itarold A. Kurstedt, Jr. and Pedro M. Mendes

Management Systems l_aboratories Virginia Polytechnic Institute & State University

1900 Kraft Drive, Blacksburg, VA 24060

(ABSTRACT)

Organizational crises ultimately result from an inadequate management ,process. Dysftinctional reporting mech- anism.s cause, m ~ e r management to ~qgr0 a.u~ut emerging problems only whenthey become critical. To strengthen an orga "ni:zatiop's offenses, ~ l~ropose ado'rag a graphical f r a m e w o r k to the M I S output for strategic-level managers.

Introduction Both Meyers (1986) .and Fink (1986) say that most ('tf not all) crises announce mem.selves, myers (1986) says that a "p/ecrisis" period starts with some iorm oi ~nonpertorm- a~ce," a relSqtitiye oe.c.urrence ox sman ProoJems or failures onen unnoticedat h i ~ e r levels. FinR (1986) defines an ..equivalent "pr.odromaI: sta~e that, he,says, ma~ be ob- lique anq nard to identity, tlere, I empna~ze erim avqiu- an~ , rather than crisis management, by ~ocusing on that preliminary stage.

I develop a framework to class.'ffy,,and, graphically repre- sent problems that_may.potentiauy qeg~.erate into or- ganizhtional crises. For classification, I Huild on r)revious w_ork by Mitroff and others. For representation, I" borrgw Kiviat graphs pg.Rnlar in comp..uter pe~.ormance .evalu- ation (.F .eryafi, 1978). Continually exercising the frame- work wi.min the m anagenTent process results m a cha.nging picture that provides a global~ intuitive understanding ot the organiTotl?n's cha.~iog rote .real. and external envi- ronments. And understanding is the best crisis (surprise) avoidance mechanism.

t~hen presenting the management process, ! emphasize c measurement, data loggrng. MIS or .g~_ iz~ation, and

reviewing, methods (Kur.sT~e.dt, 1986). The gap hical ~ameworg is a!a. 9utRut ol the MIS at the stratc~iq level. Kegutar use ot the framework is contingent on the or- gamzation's learning capabilities (Argyris & Sch6n, 1978). I discuss the simil-_arity between organizational learning and managerial information feedback and show how they're rellectco in the management process.

The MIS is but one of several kinds of manage.ment tools. The managemant tools, the operation, and the .manager are the _components ol a management system~as identified by the Management System Model (MSM~. 'l'he MSM, shown in t,he left hand side o f Figure 1, js .the sta~ing point 10r the conceptual develoRment of the problem moni'toringfr.amewor-k .I p r o p o F .here.. The logical steps to obtain the framework from the MSM are:

• perfor.mance monitoring requires ~fprmation handl- mg and transmission at all leve~s ol the organ~, tion;

• intormation handling and transmission nave different mechanisms, which are studied under organizational l eLtmin, g theones;~

* elli~ctive ~and emcient) 9rgani~ational learning i.s contingent on a well-tuned ananagement p.rocess; and

• _the man_agemenl process exercises the Management System Model.

So, 1 use the inverse approach: first 1 pre.~nt the MSM, then I discuss the managem.e!3t process~and then I p rese.nt concepts 91_ orga ".niz,_ational learn'rag. l~ese provtde the theoretical, tomauaUon mr why the proolem monitoring 1rameworx works. I nen I snow how it works, when pre- senting the framework itself.

The Management System Model

( )verv i~

We .study systems as collections of components working together for a given purpose. Thee.fore, presenting a m~agement system requtres iaentixying its components and the purpose. ~ ne purpo,se m a manag~.ent system may be the long-term s ufvtvat oz an organization, may de the production o~ a good or service or zt ma~' oe, m~t ing a project's (teaaline. As snown in me lell llano sloe Ol Figure I, the coml2onents of a m.ana~me.nl system are "wbo manages," "what is managed, # and "what as used to manage.

The left hand side of Figure I repres-gats the Managemen t ystem Model (MSM),'fhe '_industrial engineer's structured

approach to management. In systems terminology, it's a cldsed systems look at.an open system.. A. major MSM leatur.e is ~parating ends -- the physi.eal things we are re- sDonsible tot -- and means -- the tools we use to manage. '1"11.e phy.sical thi.ngs we manage, or "what is mug.age/l," include the people,capital, e q_u.ipmenl, and materials we are held accountable tot. The management tools, or "what is used to manage," include the-MIS, plans, cul- tures, o rgar~i'zation stru.ctures, reports, meetings, and~ in short, all other means ol convertifig data into inlormataon. Many mana~ment systems crises (and failu~s) _a~_'se be- cause of comusing ends and means (Kurstedt, Mendes, & lee, 1988).

The MSM is the result of several years of work with government and industry at th_e Managem.ent. System.s Laboratories, a research arm o_f Virgini'a±lech's lndust_fial [; ,n~eering and Operations Research Department. ' the IVI~IVI w a s inspifl~d oy the i u n u a m e m a a w o r k s Oi Anthony, Blumenthal, Forrester~ Gorry and Scott Morton, Mintzberg, Simon, and other management, sim- ulation, and information systems sch_olars. Stmpl.e as it is, the MSM captures the essence ot their contributions, showing the structure and interrelationships existing in a .management system, flaying, searched e xtensively..m, the literature, I haven't uncovered any work that puts all these pieces together, much less in such a simple f6rm.

An engineering analog for the MSM

deal with shared information processing (information for oth the inside and outside world) through ditlerent in- rmation portrayals. 1 use the MSM to understand our

"inside world" fir~, and our *outside world" after, i.e., to

1 I use the word crisis in a broader sense to mean any sort of surprise, good or bad. An unexpected cash surplus shows funds that could have been better applied. Surprises are the bane of management.

2 By management system I don't mean management irdbrmation system. I mean the set of resnonsibilities of any decision maker bounded as a system. A shipping department is a management system, as a power substation is an electrical sys- tem or an axle a mechanical system

185

Page 2: Automated performance monitoring provides a strategic management tool for crisis management

186 Proceedings of the 12th Annual Conference on Computers & Industrial Engineering

who What '- s4. ~n t ~ Input I Plant

Raultl I !

• Figure I.

figure out how our organization works within itself be f`ore worrying how. it _in t_eraets best. wi.tla the outside. This m e a n s I use the MSM to study the static .equilibrium among its components (b_al_anee), an_d its dynamic re- sponse.to varyhig0inpqts (Mendes & Kurstedf~ 1990). In particular, to preuict the ttynamie respon~ o! t heman ; agement sys tem to varying inputs, i u.se an ._a_n_ alyticm n'ameworg oaseQ on automatic control theory (Kurstedt, Mendes, & Polk, 1988)3

1 represent the MS_M.. as_a_cpntrol logp in the right hand side oz figure 1. '['he M SM and the control loop placed tqgetherJo show their analpgous com L2onents aria relationshtps. J n e e ont_rp_a_e.r in the control loop is the "whp mar!ages" in the MSM, the plant is ~what is m a:n- aged~ and the senso_rs are ~what is us.ed to manage#; the hitertaees are intact. l h e e o m p ~ t o r shows the manager's bias relative to the incoming reformation, such that.man- agers in different positions in the oraanization will re- soond differently to the same changes ('Mendes Kurstedt & Koelling, 1998). ' '

OSi (1983) defines the .control structure as ~the set of t9rs, a:nd the_ relationships between them, which elicit

predictable pc rt?rrnance lrom ~naiviauats and groups in o . r g ~ . tinns." tte sees control as influencing oeople to rntgimize, problems and ensure compliance _with nom3s and goals. "~his is the social scientist s way ol stating the quite t raaitio_na~ principle ol systems control: to maintain the v alue.s o lan outpuf variable close to a preset value and absorb disturbances.

'he control theory loop is general. It is also complete cause the control loop shows the interactions with the

environme.nt as inputs (set points)~_disturbanees, and outputs. As a poi n t o l interest~ the M SM-based control framework complements classical industrial engineering Herzog, 1985) and managerial control theories (Amex

t986). "

The management hierarchy

Different people in an organization correspond to differ- ent, se.parate MSM representations. All t'~olale are man- agers in a general sense, because they use in]'ormation to m.~ake d_eci.slonL.affeeting their own domains of responsi- bility,. Each MgM representation is valid for a ~ven do- main with a Iziven manaaer, a given operation an~l a given set of tools. ~fl'tis tripld" ~so represents a position in the organization. At a *wen time, each position is occut~ied by a given person who has some specific responsibilities and uses a specific set of management tools.

In a way, a hierarchical organization chart is a network represenDtion of cha ln~ FdSMs, where each "what is managed" comoonent links to and includes the subordi- nates MSMs.. That is, the supervisor's domain contains the respo.nsibilities of all the subordinates. Figure 2 re- presents_ this particulg mode of hierarchical chaining. We .can go l urther down the 9rganization (1 say furlher inside~ by ifiabedding the subordinates" control loops as part ot each manager's responsibilities.a

At each po. sition in Figure 2 , the supervisor's guidance and incentives (the Action in the MSM) are shown as in- puts to the domain, or control loop, of the subordinate. lhe operational results and responses from the subordi- nates are shown as information feedback to the manager.

]'he control theory feedback loop is a predictive analog of the Management System Model.

'l'[Le important point to retain at this time is that the var- iables manajgers use to measure the perfor-m .ance of their qperations for their own inlormation, and the variables they use to reoort their own perlormance to their super- visors are seldom the same (.I~ins~n, 1987; Ouchi, 1978; Ouchi & Maguire, 1975).

The Management Process The MSM shows the li.nks be_tw.ee.n the components of a management system. Next 1'11 discuss how the MSM C rOOmponents work together within a mana~ment pr.ocess. i ne c.onf-mueu management ol an o ~ t i o n is the

interplay between intentions, and .results: The vehicle to communicate intentions and results is the management process.

Aprocess is all changes over time of matter, energy, or infi~rmation in a sysfem. Alternatively, a process is re- peatedly achieving the same known eniis, as compared to a l?.tpject (achievmg a one-t~rne ~sult.) or a problem ~'hiev'-mg an.ungnown end). ~ me thqa is a series o! stueps taken along the way to a given end, snowing the possible sequences of actions necessary to achieve a given result. There.fore, the components o l a system beqome the tFanstormatiqn stations of the process, accessed through the continual application of the same methods. O.rga_9. - izations run several processes in parallel. Fpr exarqple I in a manutacturing organization we study the t>roduct~on process (the pai~icuFar combination of hbrieation meth- ods or operations, l.'tnldng operations tools),_ and the management process (the particular sequence ol manage- ment methods, linking management tools).

l.ike any othe_r industrial process, the .management proc- ess accounts lot the successive transtormatlons o l r a w operational data into managed~ information. As indus- trim engineers, we want to tune this process ~or maximum value added (high informative content) a~.d minimal scrap (loss of inte.rmeuiate imormation), f n . e management process provides the interrelatedness ol all components in .t_n.e management system; it's. the linking mechanism. .Without.a co[3erent prpcess± the manage .merit tools may be at odds with each other. ~'or instance, there is no ~nse in expecting success from an MIS or a reorganization until a management process is fully defined, understood, and set up (Kurstedf, 1986)

Invariably, the objectives of exe.rcising a management process, aretwofold: (1) to contr?l the operating environ- m ent, by c limina.ting surprises .(dis-turba_qee.s), and (2). to achieve high pertormance standards~ by delivering guality products or services and provldiialZ a motlvatini~ _workpl_ace. The management process a'f Citib__a91$_ is dif= l~rentli 'om the management .processes at A T & T o t at Proc.ter & .G.amble, breaua.e the operations are.difle~nt. But by looking at several l extract similarities that .allow me. to define a general manage.me.nt p.r.ocess. Its methods include industrialangineerinc, classtcs ltke ooerating plans, charting, MIS, and reviews. "Not surprisingly, these meth- ods overlay the MSM (Figure 3).

In [;igqre 3 themethods, are c~elic, with no c l~r starting method 9r e.nuing .method. Starting aroi_trarily, at the action side ol tbe decision-to-action interlace, the nine methods of the lzeneral management process are, clock- wise (Kurstedt, 1"989):

Control theory studies the dy.namics of a_given plant to find out how to make it track some desired behayigrs. The de- sired oenaviors represent engineering perlormance criteria. In a management situation, these criteria result from a deci- sion making process.

4 Other possible network representations are, for instance (1) the network of shared "what is managed" components . . . . . ' - • . H • # (building up to a matnx-tyoe structure), or (2) the sltuatton of a computer scientist, whose what Is managed compo-

nent is other people's "wlia't is used to manage."

Page 3: Automated performance monitoring provides a strategic management tool for crisis management

Kurstedt Jr and Mendes: Tool for Crises Management 187

Figure 2.

1. instructing and setting goals, by using situation.al as- sessment to commumeate or negotiate, plans, budg- ets, unit costs, .¢.andard times, and so lorth;

2. eh~arAin." g work flow and sett[tr~g indicators, _by. de- scribinli the opemti_on using diff6rent kinds 9I ch _airs (e.&, flow charts tot production, Gantt charts tot projects, aIJqcation charts Ior resour~s, etc.);

3. laking and logging measurements, by focusing on throughl?ut, v~ input and output volumes, time l~ess and tmc~aog (now much we didn't accomplish on time), rejection levels, or bottlenecks;

4. preparing data for the. MI.S, by cqnverting m o s u ~ s into perlormance indices fige productivity and qual- ity;

5. developing and maintaining management tools, by ensuring the proper ennversmn of data into informa- t i o n ; . .

6. orgamzmg and presenting information, by .s.uraula- riT[an.g.ana aggregating the penormance moices mr visibility purposes; . . .

7. ~viewing information between supen.'or and subor- din ate,o by tocusing on .uninterruptible, regu.larly- scneamoa~ superior-subordinate interaction to di.seu.ss status and progress using the summaries and the M1S; .

8. omanagnlg time, com.munication, and.leadership, by tocusmg on personal erlectiveness; and

9. appralsmg, 13y assessing results and evaluating com- pensation at |he end-of-cycle.

A management hierarchy is a cascaded network of control systems.

Organizational Learning Mana~rial actions res.ul, t. from decisions made by persons ".m positions o! responsibility., who decide according to the information they .r~iye. The red#on .we measure and review the results ts to learn so we do it better next time. "Ilais requires a well-established management process, that al lowsus to _pick up impending cri~s and learn what to an to Keep .them. iro.m popping up agai.n. Organizations test and urinate knowledge using the results of managerial actions. Therefore,, an 9rg# .~£tion's practice reflec'fs its members' gnowle.oge. DeT.lcient learmng leads to poor l?m.ctice which in turn leads to Irequent crises and to in- ichor penormance.

Argvris and SchOn (1978) define organizational learning as ]he detection and correction of errors. "l'he~' say the orocess of error detection and correction is smgld.loop learning when an orggnization mai.ntalns its present polt: cies and objectives while people adap.t to environmental variations. It's double-loop, learning when adapting to the environment requires ~no~lifying existing policms and ob- jectives. An orghai~, tton may or may not be capable of either kind of learning, depgn~ling on its members" ability tor updating their knowledge. When evaluating a situ- ation and deciding what to do, managers keep m mind previous decisions,, and either mamta'm or change previously-mated policies (Mendes Kurstedt & Knelling 1988). ' ' '

Arloris and Sch6n say people in organizations are adept wiffi single-loop learning. (In the one hand, they respond to s.malFqnvironmental-tluctuations (disturbances) while, on the other, they adapt to changes of objectives (gui'd- ance input), and act to meet those objedives. Trouble may occur in double-loov learning. When they detect se- rious errors, people may become c~efensive andavoid giv- ing t o their sup.ervisors any_ info.nnation feedback that aught not be well received. Instead, they tend to provide ambiguous information. Then, the supervisors ifitemret this ambiguous information as a confirmation of prevfous

guidance. In practice, this corresponds to reinforcing the errors, and errors lead to crises.

Although all. methods work together, four of them are critical for this purpose. First, when taking and loggin, g measurements, we must Lake speciaL precautions , ~ t h possible olina spots ~see Starbuck, ~reve, ~ tteooerg (19.78) for some examples; see also Levitt (1975) for an early,yet intqre;~ing discussion). Secqncl, wtien preparing data mr me .Lvu~, we must maintain (1) their consistenc~ tZac.nman, 1981), ,~.2) their coherence (Gage, 1980), and (3) tbeir int.egrity~JSnsson, 1987). Third,..wlien organizing a.no presentiqg tmormation, we must remize there are in- lormationai tosses associated with aggreg,9.tion. Finally, when reviewing information between supe~i.-'or and subor- dinate, we must be aware of possible biasing mechanisms (Dutton & Jackson 1987; O'Reilly, 1983' Staw Sandelanns, & Dutton: 1981). ' '

'his is why administering th.e mana~ment process is noamental. The name ot the g . ~ e is to prevent the

dysfpnctioqal effe~s resulting h from "aupre,#.'se hfformation l e e u D a c K . I n a merarcn~, me tugber the l eVel w l l e r c know led~e update i s required, the more diElCUlt informa- tion teectoacK is. I n e management process emphasizes double-loop learning, not onl~.y bgeause its purpose is to change to avert crises, but also because its in'tent is to provl~le i.rfformation abo.ut those t~y.indieations of problems (nits) that may lead to overwhelming probl _eros [tanks). Otherwise, major policy changes only occur alter mrge errors or crises.

A Problem Monitoring Graphical Framework We learn how to cope with errors by finding them and then eliminating them. If we want to streamline pro- duction, we finil bottlenecks, concentrate on the bo'ttle- .necks, and remove them. Some authors call it continued improvement; I call it learnin, g by exercising the manage- ment process, t:,xercising the management process re- .quires an "instrument panel" we can use to locate and identify errors. The next paragraphs deal with different kinds of instruments.

Alarms and gauges

Nunamaker, Weber, Smith, and Minder (1988)propose representing indicators as active values in an artificial in- telligence system. When an active value exceeds some li .rm.t~ it triggers a m_.ar~agement alert procedure attached withm_tl3e system. t h i s t.s a continuous mqnitoring sys- tem of the atarm type. The gauee type is also a contin- uous monitoring system, but tt shows whether the indices and indicators f~ll within or outside acceptable tolerance limits (Bowen & Payling, 1988).

The pumose of these continuous monitoring systems is to provide learning mechanisms that allow the organ'tza- tion to respond to different kinds of problems before they escalate into crises (the nits that become tanks~.5 Using a vevy simple example~ a ear can be equipped wttta just an oil pressure alarm hght or with an oil pressure gauge. When the alarm ligh.t goes on, it may already be too late to avoid major repairs, yet not too late to fix the trouble. The recommended action is, of cour t , regular inspection. When regular ins .i?ection is supported by a pressure gauge, the chances of beingcaught [,~' surprise are slim. Herd, I develop a framework of the gauge type, based on papers

5 An ~tem_ a_tive application of the framework is in a simulation-based DSS or corporate training simulator (Mendes, Roach, & Kurstedt, 1989).

Page 4: Automated performance monitoring provides a strategic management tool for crisis management

188 Proceedings of the 12th Annual Conference on Computers & Industrial Engineering

( , ) DECISIONS_ I ACTIONS IL~

(s) MN~GF..8 ~ E D (a)

INFORMATIONI~ ,~M cv~ PERCEPTION ~.~ EASUREMENT ¢3)

(s) INFORMATION ~] ~/DATA (4) • WHAT 18 USED PORTRAYAL I TO MANAGE / (s).

Figure 3.

about crisis . ~ _ . ~ m e n t by Mitroff and co-workers (Mitroff, 1988; Mitroff, Shrivastava, & Udwadia, 1987).6

A Taxonomy for Cri,~,s

Mitroff (1988, p. 17) identifies f o ~ "families of preventive actions that org _~zations can take to blunt crises." Ire represents these families in a two-dimensional dia~am. His X-Y axes are labelled "Internal - External and ~l'eehnieal/Economic - ltuman/Social/Organizational ." At. though M itrolTs preventive actions don't exactly, coin- cide with. the axes, my making them coincide ~loesu't change his m e ~ ' n g suhst.antially. Therefore, for simplic- ity, I use Mitrotl's names for the X-Y axes to discriminate among the four areas of intervention for preventive actions.

In another work, Mitruff uses the same labels for the axes, this time to id_ent.ffy "causes and sources of corl~, rate cri- ses" (Mitroff, Shrivastava, & Udwadia, 1987). l'his time, the ea_u~s ~ placed in the ceils (quadrants).between the axes. Labelling the quadrants or, alternatively, the diag- onal axes,pro;rides a taxonomy for potential- crises. Tlie labels I chose are operational, eornrhitment, responsive- ness, and adaptability problems.7

A hollstic framework

Superimposing both .diagrams faxes and diagonals) shows al.ternat~g crises and preventive actions. Making them adiacent calls attention to how crises result from irriproper action or lack of balance, llere, I p l o t orgapi#'tional (preventive)loci of actlon and types of.problems (that may [~ad to crises) as hlternate rays on a ctrcnlar diagram (see Figure 4).s All quantities arc nonnegative, wit~ smaller values, plotted close to the center. The foci of action comprise four continua, I label external, internal, techhieal/economic, and human/social, respectively. An organization will id~lly do as much as poss~le in all four di/ections, but its ellorts may or may not be equally bal- anced.

When Mitroff (1988) says "if it ain't broke yet, now that's the time to make sure itstays fixed," he implies crises re- sult from lack of preventive actions. For instance (see lower right hand side diagonal in Figure 4), paying insuf- lieient attention to the human-internal aspects of the business may lead to commitment problems (sources of concern) resulting from employee dissatisfaction. Simi- larly, operational problems are of a teehnical-interual na- ture; examples ~ high_product reiection, high equipment maintenance, and insufficient cash-flow. Examp.!es of re- spqnsivepess problems are .customer and supplier eom- p'la'mts. And examples of adaptability (enviromnental fit) problems are low market-share and undervalued stock. A single snapshot may not have any special meaning, but by continually applying the framework (looking at suc- cessive pictures), managers learn to identify patferns and .quickly diagnose problem areas where intervention can tielp.

Ideally, quantities on the actions axes should increase, whereas quantities on the problems axes should decrease. That's not always the ease. For example, commitment

The management process fits the management system.

prob!ems ~e a~ area demanding at teaation in the example ox n~tgure ,~. / n e organization s ultimate objective is to drive all problems to zero, but that's unrealis[ic. In prac- .tice, the organization keeps raising its stand~ds, as it !cams t 9 cope with crises and inc~ases its pertorrnance. We apply tliis principle when we deal with quality con- trol, J]T, and o~ther industrial engineering methods.

The framework depicts information already in the MIS. The variables represented on the axes and diagonals are variables that were either directly measured or a result of a series o! computations. '['his means building the frame- work, as part ol method number 6 in the list" on page 2, does npt "by itself create new information. What creates new information is the possibility of representing toKether .quantities apparently unrelated. The advantage ol this l~ind of representation is that it provides a holistic repre- sentation of an organization's behavior. In patTticular, the coherence mad independence of the information is pre- served instead of collapsed within a financial summary.

Conclusions

Many of the problems found in actual situations may be overcome, or at least minimized, if managers place them- selves within a designed management system. A major difference between management and industrial process contrul is that people are inherently adap.tive. With more or less effort they can deviate from obstacles and that's the way things have always been. Now, in a world of tough comp.etitton an.d quick response to environmental fie- mantis, it may be too dangerous to rely on management systems that have grown 13y force of tr~tdition. OrganiT.,a- ttons need to build-reliable self-learning mechanisms, de- sigmed to work with people, for people.

! believe .a sufficient condition for orga~.ational learning

y y ge y y vanables in their operat,ons and desxgn reporting mech- anisms to track errors in those variables. Enther repgrting is fast and without distortion or ~to go oneself and 1oo1~ is the only reliable feedback" (Drue'ker, 1967, p. 141). Another problem is the way delays and distortxons iri- crease as endeavors broaden in scope. In short, managers must remove barriers and provide opportunities for earlier update.

All organizations are vulnerable to internal and external environmental threats. At strategic levels, the manager's role is to mediate between a cpntinually changing envi- ronment and an operation seeking stability (l~lintzberg, 1978). Stability calls for control, and control calls fdr continued, automated yerformanee monitoring. Research in human factors engineering shows that people seldom look at specific figures on instrument panels; rather, they react to changes By selectively Ricking information from any dial or indicator that slfifts from its normal position. "l.'lie alarms are still there, but will only go off in extreme situations. Building this sort of dial (and alarm) into the manager's instrument panel (MIS), provides a manage- ment tool that helps make strategic endeavors easier and crises fewer.

6 This work is apparently still in evolution.

7 I prefer to talk about emerging probletns as potential crises, rather than referring to crises as if those actually existed. An organizations have problems, it's a tact of life. What's dangerous is not taking care ot them.

s This rel~resentation is borrowed from Kiviat graphs, popular in computer performance evaluation (Ferrari, 1978). These are different from star diagrams as described m SchfiocBerger (1987).

Page 5: Automated performance monitoring provides a strategic management tool for crisis management

Kurstedt Jr and Mendes: Tool for Crises Management 189

m n m m

Figure 4.

Acknowledgements The id .e~. pre.sented in this. paper represent the cu _m..ulativc work ol hundreds e l Reople over thtrteen years, at Virginia lech 'S M anagemeqt Systems La. boratorie±s. " rrotesstonm managers Item business and i n d u ~ , and faculty, gradu- ate stuaents, a~a una~gra.ouates:rom a wiae variety o f engineering aria other m/~ip_lin.es nave participated in the _.r3~arcn ano qevempment_ e l these too Js and techniques. The authors thank them lot their good work. ~ The pro- noun I is used throughout to separate a u o t us using management syste.m.s (we) rro.m the aumor U.). ttowever, please recognize "1" is more than one contributor to this work.

The prel~a~tion of this paper is funded_by U.S. Depart- m e n t o t tmerg~ ~pec~m t~eseareh Lirant No. DE F.G02-88DP48058. Management Systems Laboratories t_hanks the_ Depar~t.ment o f Energy's..Qflice of N.uctqar Materials t?r p rov~ning us a reat-wor~a mboratory_ lpr the researen, oeve~oPment, and test ing ox state-el-the-art management tools and the/ramewor-ks for understanding how to make them SuccesslUL

A framework for crisis anticipation: successive snapshots show a developing problem.

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