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Enterprise Design Process: Function View
Johan Strümpfer
Enterprise DesignEnterprise Design
Workshop 3Workshop 3FunctionsFunctions
ENTERPRISE
• PARTS INTERACTING AROUND AN OVERARCHING BUSINESS PURPOSE
• NOT A CONGLOMERATE
• NOT NECESSARILY A GROUP WITH PARTS MORE OR LESS IN THE SAME BUSINESS
• NOT A FINANCIAL HOLDING
• A SYSTEM
ENTERPRISE DESIGN
• THE DELIBERATE ARRANGEMENT OF FACTORS INTO A SYSTEM
• THE INTEGRATION OF INTERACTIONS INTO A REGULATED WHOLE
Meaning of OrganiseMeaning of Organise
– Way the enterprise works– Pattern of interaction between parts– How enterprise is set up to deliver what is
required– How the parts fit together, statically and
dynamically
?
SYSTEM
• A regulated set of relationships
• Interacting and interrelated parts
• Parts organised for a purpose
• A whole with novel features
SYSTEM VIEWPOINTS
FUNCTION
STRUCTURE
PROCESS
REGULATION
DEFINITION OF FUNCTIONDEFINITION OF FUNCTION
ROLE OF ENTITY IN WIDER CONTEXT
RELATIVE TO CONTEXT RELATIONSHIP: ENTITY/CONTEXT EMERGENCE & HIERARCHY
FUNCTIONFUNCTION
P={F,F,...,F}1 2 n
Single structure--multiple function Multiple structure--single function Multiple function ---> Purpose “WHY?” Purpose & Meaning & Worldviews
F
S
S
S
1
2
n
S
F
F
F
1
2
n
P
C
M & W
?
MED Process FrameworkMED Process FrameworkIntro & Overview
Org. struct.Deconstruct
Immersion
Stakeholder Analysis
VSM BPD
Analysis of MED
Intervention Design
MED
ENTERPRISE FUNCTIONENTERPRISE FUNCTION
ALIGNMENT WITH ENVIRONMENTShifting values & expectationsViability: Serve its environment
Stakeholder view
INTERNAL ALIGNMENTOrganise dynamicallyViability: Variety management
Viable Systems Model
STAKEHOLDER VIEW STAKEHOLDER VIEW
What is required to align with the environment?
What does the enterprise need to deliver to be viable?
STAKEHOLDERSTAKEHOLDER
Stakeholder’s view of the enterprise Stakeholder’s logic, rationale and
value systems Stakeholder’s choice to be
stakeholder
Measuring enterprise successMeasuring enterprise success
S1
S2
Sn
S4
S3
Enter-prise
STAKEHOLDERS
• Who should be (are) the stakeholders?
• Who should be served?
• Who are the clients/ beneficiaries?
EXPECTATIONS
• What should the purpose be, from the client’s (beneficiary’s) perspective?
• What should (are) the client’s measures of performance?
• What are the underlying worldview assumptions that makes this meaningful to the client?
P
C
M & W
STAKEHOLDER RATINGSTAKEHOLDER RATING
CRITERIAPowerSatisfactionCertainty Impact Influence
PRIORITISINGAnalytical Hierarchical Process
Stakeholder RatingStakeholder Rating
WHAT ARE THE OUTPUT GOALS FOR SELECTED
STAKEHOLDERS?
• What should be produced to satisfy the expectations of the particular client/stakeholder?
• What are the tangible and intangible deliverables?
• What are time related requirements to satisfy the expectations?
PURPOSEHow the enterprise intends serving its
stakeholdersVisionMission statement
IT’S A PROCESS!What needs to be delivered?
BUSINESS PROCESS DESIGNWhat needs to be done to deliver?
STATEMENT OF ENTERPRISE PURPOSE
P={F,F,...,F}1 2 n
VIABLE SYSTEMS MODELVIABLE SYSTEMS MODEL
History and popularity Background Essence Use
VIABILITY AND SUSTAINABILITY:VIABILITY AND SUSTAINABILITY:
Viable Systems Model (VSM) is a model for questioning functions required for the whole enterprise to act as a viable and sustainable system.
SOURCES OF MANAGERIAL COMPLEXITYSOURCES OF MANAGERIAL COMPLEXITY
MANAGEMENT
ORGANISATION
INTERNAL ENVIRONMENT
EXTERNAL ENVIRONMENT
MANAGEMENT & COMPLEXITYMANAGEMENT & COMPLEXITY
MANAGEMENT
EXTERNALENVIRONMENT
INTERNAL ENVIRONMENT
ORGANISING FOR MANAGERIAL COMPLEXITYORGANISING FOR MANAGERIAL COMPLEXITY
MANAGEMENT
EXTERNALENVIRONMENT
INTERNAL ENVIRONMENT
POLICY
INTELLEGENCE
CONTROL
MANAGERIAL FUNCTIONS: INTELLIGENCEMANAGERIAL FUNCTIONS: INTELLIGENCE
MANAGEMENT
EXTERNALENVIRONMENT
INTERNAL ENVIRONMENT
POLICY
INTELLEGENCE
CONTROL
MANAGERIAL FUNCTIONS: CONTROL
MANAGEMENT
EXTERNALENVIRONMENT
INTERNAL ENVIRONMENT
POLICY
INTELLEGENCE
CONTROL
Developing policy (decision rules) Responding to signals from other
functions Arbitration between external and
internal demands Represents the whole in the
environment
MANAGERIAL FUNCTIONS: POLICY
MANAGERIAL FUNCTIONS: OPERATIONS-1
ENVIRONMENT A
ENVIRONMENT B
ENVIRONMENT C
DIVISION A
DIVISION B
DIVISION C
MANAGEMENT A
MANAGEMENT B
MANAGEMENT C
MANAGERIAL FUNCTIONS: OPERATIONS-2
ENVIRONMENT A
ENVIRONMENT B
ENVIRONMENT C
DIVISION A
DIVISION B
DIVISION C
MANAGEMENT A
MANAGEMENT B
MANAGEMENT C
CONTROL
DIRECTIVES RESOURCE BARGAINING
MANAGERIAL FUNCTIONS: CO-ORDINATION
ENVIRONMENT A
ENVIRONMENT B
ENVIRONMENT C
DIVISION A
DIVISION B
DIVISION C
MANAGEMENT A
MANAGEMENT B
MANAGEMENT C
CONTROL
COMMANDS CO-ORDINATION
MANAGERIAL FUNCTIONS: AUDITING
ENVIRONMENT A
ENVIRONMENT B
ENVIRONMENT C
DIVISION A
DIVISION B
DIVISION C
MANAGEMENT A
MANAGEMENT B
MANAGEMENT C
CONTROL
DIECTIVES RESOURCE BARGAINING
CO-ORDINATION
MONITORING/
AUDITING
VIABLE SYSTEMS MODELVIABLE SYSTEMS MODEL
ENVIRONMENT A
ENVIRONMENT B
ENVIRONMENT C
DIVISION A
DIVISION B
DIVISION C
MANAGEMENT A
MANAGEMENT B
MANAGEMENT C
CONTROL
DIECTIVES RESOURCE BARGAINING
CO-ORDINATION
MONITORING/
AUDITING
POLICY
INTELLEGENCE
EXTERNAL
ENVIRONMENT
VIABLE SYSTEMS MODELVIABLE SYSTEMS MODEL
System 1: Implementation systemSystem 2: Co-ordination of System 1 partsSystem 3: Control of System level 1 partsSystem 4: Development or intelligence functionSystem 5: Policy setting system
ADVANTAGES OF VSMADVANTAGES OF VSM
Directs questioning to essentials of organising for handling complexity
Directs internal organisation to promote learning and adaptation
Directs internal organisation to fulfilling set goals Puts focus on management ROLES and clarifies actual
roles Emphasises viability as a function of environment and
internal functioning being aligned Directs attention to interaction of parts not lines of
authority Good systemic conceptual basis
LIMITATIONS OF VSMLIMITATIONS OF VSM
Organismic origins of VSM silent on essence of social systems (human dimension)
VSM silent on purposefulness, notions of power, culture, values, management style
Over-emphasis on System 1 at expense of higher system levels weaken ability to adapt.
VSM can entrench mechanistic/organismic autocratic management style
VSM designed enterprise is not solution to change management
VSM approach traditionally diagnostic and not design orientated
Seductive in its simplicity
Case StudiesCase Studies
Case 1: Description given in the handout pp 15-17.
Case 2: Helping a group see itself in the whole.
VSM SYSTEM DIAGNOSISVSM SYSTEM DIAGNOSIS
[SYSTEM IDENTIFICATION] SYSTEM DIAGNOSIS
STAKEHOLDER ANALYSIS --> OUTPUTS
VSM DIAGNOSIS OF ENTERPRISE
DIAGNOSIS: SYSTEM 1DIAGNOSIS: SYSTEM 1
How do enterprise parts map to the required outputs?
What parts of the enterprise are System 1 components?
What measures of performance are applied? How is accountability, responsibility and
authority acquired, devolved and implemented? What is the scope for decision making? [process modelling]
DIAGNOSIS: SYSTEM 2DIAGNOSIS: SYSTEM 2
Identify sources of turbulence for System 1 parts, including conflicting demands
Identify System 1 co-ordination requirements
Identify System 2 components Examine facilitation role of System 2
components, as opposed to control role. Query perceptions of System 2 role in rest
of enterprise
DIAGNOSIS: SYSTEM 3DIAGNOSIS: SYSTEM 3
Identify System 3 parts Determine shared System 1 resources and
allocation rules Examine scope of authority, responsibility &
accountability Determine measures of performance System 3
applies to System 1 Clarify audit/information gathering into System 1. Examine perceptions about System 3 in System 1
& System 3 management style
DIAGNOSIS: SYSTEM 4DIAGNOSIS: SYSTEM 4
Is System 4 functions discernible? What activities constitute System 4, and who does it
involve? Assess degree on inward/outward focus, and
openness of System 4 to environment Assess scope and time frame of interest to System 4 Assess preoccupation of System 4 with maintaining
stability vs renewal Examine degree to which System 4 support learning
in Systems 3 and 5.
DIAGNOSIS: SYSTEM 5DIAGNOSIS: SYSTEM 5
Who represents the enterprise when viewed from stakeholders’ perspectives?
Assess degree of identity and positioning of enterprise determined by System 5
Does System 5 manage the enterprise vision, mission and alignment with this?
Assess degree of preoccupation of System 5 with System 3 (operational) vs. System 5 (strategic)
DIAGNOSIS: INTERACTIONSDIAGNOSIS: INTERACTIONS
List the vehicles for interaction between different systems
Check that appropriate information is channelled through these vehicles
Check for parallel communication lines (informal) that bypasses/replace Systems 2-5
Assess speed of communication Vs perceived turbulence
FREQUENTLY DIAGNOSED FAULTS FREQUENTLY DIAGNOSED FAULTS
Systems 1 are often not handled as viable systems in their own right.
Systems 2-5 seek viability in own right Additional structures not explainable in terms of VSM
are found Systems 2 and 4 are often weak and immaturely
developed. System 5 collapses into System 3 and fails in truly
performing System 5 role Inappropriate information is channelled between
systems, or not rapidly enough communicated
ApplicationApplication
Go through an application of the stakeholder design of enterprise functions
Do a VSM diagnostic and design of your enterprise
ORDERING OF ACTIVITIES ACROSS ALL PROCESSESORDERING OF ACTIVITIES ACROSS ALL PROCESSES
CATEGORIES OF ACTIVITIES:Monitoring and AuditingCo-ordinating activitiesControl activitiesPrimary production activities.Support process activitiesCommon, shared activities