The New Thinking on Economy

7/29/2019 The New Thinking on Economy

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The New

Management Thinking AN URGENT NEED OF THE HOUR…





“ In Edwards Deming words

Defining a starting point for the New Management Thinking is impobut the work of Edwards Deming, starting in the 1950’s, is as useful aas he laid the foundation of so much that was to follow. Demingthree points concerning organizations that are fundamental to thmanagement thinking.

1. Organizations are systems.

2. Processes determine performance.

3. Improvement is a continuous scientific process.





Basically, hierarchical thinking focuses on the boxes of the organchart and what gets assigned to them – people and dollars. Hierathinking also generates silo behavior, where departments or individuaout for themselves rather than the good of the organization In coSystems and processes represent the productive strategy oorganization. Systems and p

-Convert inputs into outputs with the aim of delivering value to the cu-Represent the collective know how of the organ

Hierarchy



Systems’ thinking

SYSTEMS’ THINKING FOCUSES ON THE FLOW OF WORK ACROSS THESILOS. IMPROVEMENT EFFORTS FOCUS ON THE WORKFLOW TYPICALLYSEEKING TO REDUCE CYCLE TIMES, INCREASE THROUGHPUT, REDUCEWORK IN PROCESS, COST AND WASTE WHILE ENHANCING VALUE ANDCUSTOMER SATISFACTION.

A VARIETY OF VISUAL MAPPING TOOLS ARE USED TO PRESENT THISWORKFLOW: VALUE STREAM MAPS, PROCESS FLOWCHARTS, CRITICALSYSTEMS DIAGRAMS, SIPOC DIAGRAMS (SHOWN).

REGARDLESS OF THE TOOL, THE INTENT IS THE SAME, TO REPRESENT THEORGANIZATION AS THE FLOW OF VALUE ADDING WORK THATULTIMATELY SERVES CUSTOMERS.



SIPOC DIAGRAM



The systems thinking approach has anumber of important implications:

The purpose of business is to serve customersbecause without customers, there is no busi

The business is the sum of its systems and processes.

The current set of systems and processes repthe collective know how of the business.

Teamwork is required.



2. Processes determine performance.

PERFORMANCE, REGARDLESS OF HOW IT IS DEFINED, IPRIMARILY A FUNCTION OF THE ORGANIZATION’PROCESSES (INCLUDING THE VALUE CHAIN). DEMINGESTIMATED THAT 94% OF PERFORMANCE OF THORGANIZATION IS ATTRIBUTABLE TO THE SYSTEM OPROCESSES AT WORK. EVERYTHING ELSE, INCLUDING THIMPACT OF PEOPLE WORKING IN THE PROCESS, AMOUNTTO THE REMAINING 6%.



To improve performance you must improve the

process. Performance of any process is measuredin terms of the value delivered to a customer.

Performance measurement can only measure the

processes Performance measurement (and

process management) requires an understandingof variation and statistics.



Improvement in organizational performance requires an evidencebased, scientific approach. Deming captured the essence of thi

approach in his Continuous Improvement: Plan, Do, Study, Act (PDSA

Cycle. As such, this requires an understanding of systems and processesperformance measurement and statistics as well as of human behavior.

The foundation of the PDSA Cycle is the scientific method. Our ideas antheories (Plan) are put to the test through experiments and pilots project(Do). The results of the experiment are examined (Study) and changeare made (Act).

3. Improvement is a continuous

scientific process.







The Bottom Line

MANAGERS MAY BE F A LITTLE OVERWHELME ALL THE NEW THEORMANAGEMENT. ALL NEW THEORIES, HOW

ARE CONSTRUCTED FOUNDATION OF BASIC PRINCIPLESORGANIZATIONS

SYSTEMS, PRO

DETERMINE PERFORM AND IMPROPERFORMANCE IS CONTINUOUS SCIEPROCESS.



THANK YOU

The New Thinking on Economy

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