structural change a cornejo 2007
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Complexity Management
through
Structural ChangeBy Alfonso Cornejo
Author of the Book
Complexity and Chaos:
A Guide for XXI Century Management
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Today s organization is being trappedwithin past paradigms that prevent itto be more flexible and dynamic.
In past years organizations haveunsuccessfully sought the formulasthat would allow them to survive in acompetitive environment which isevery day more dynamic anddisorderly.
However, changes have been partialand organizations havent been ableto adapt the business essenceaccording to the new and incrementalenvironmental demands. In spite ofeverything, we know the in the 21stCentury organizations should learn toevolve and adapt their structures inthis new environment if they want tostay within the competition arena.
Old
paradigms
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Environment pressures that
demands continual adaptation
Industry dynamics
Cost Control
Competitors
Technological change
Globalization
Customer
ever changing needs
Economical cycles
Profit Goals
Competitiveness standards
Required performance
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Organizational
Complexity
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Complexity Management
New paradigm to understand thedynamic of organizational
processes. Powerful approach to ensure highperformance and adaptation ofcorporation.
As a result of structural change,organizational behavior improves.
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Complexity
Applications
Strategy
Organization
Processes
Metaphors Principles Applications
Arie de Geus
Living Company
James Moore
The Death of Competition
Margareth Wheatley
Leadership and New Science
Michael Mc Master
Intelligence Advantage
Peter Sengue
Stuart Kauffman
Kevin Kelly
Kees Van Der Heijden
Scenarios
Peter Schwartz
The Art of the Long View
SPM
Archetypes
Scenario Planning
Interactive
Management
Structural
Change
Genetic AlgoritmsJOHN DEERE
CEMEX CaseBordering on Chaos
There are stranger places to see thelatest in complexity theory in action, but
delivering cement in Mexico is apretty good start.
By Peter Katel
CEMEX
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Complexity
Do we look desorder......?
...or the Order behind Desorder......?
Conflict
Lack of priority
Flaws
Misalignment Limited resources
Entropy
Structures
Behaviors
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Complexity
The complexity and chaos that live within the organization is not
a dice game, the situations leading to chaos are perfectly
predictable if we pay close attention to those variables that tend
either to increase or diminish them. We will mention a typical
situation: One company acquires a new and numerous standardized
truck fleet from only one supplier for the delivery of their
products. To accomplish the repairs, parts handling, and spareparts control, it requires ability and learning development that
must be accumulated by the team of people that is in charge of the
product distribution technology.
Two years later, due to the obligations that a top executive has,
a great amount of units is bought again, but from a differentsupplier. Comments are not needed to know that the required effort
within the organization for the management, tracking and control
of, although apparently two similar technologies, needs an
abundant waste of energy, an additional talent display and a more
complex management for a situation that had already been
stabilized.
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How to deal with every day
Complexity ?
7 8 1 1 5
12 10 3 5 4
9 9 7 7 ......
?
Low sales...
Rejected products...
Production delays...
Unsatisfied Customers....
Fails on communication..... Demotivated people ....
Hurries.....
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Types of Complexity
a) Origin Complexity:
Due to original company characteristics,by example. 3M (innovation) vs Budweiser(logistics).
b) Residual Complexity:
Related with the everyday operation ofthe system, i.e. conflict, orderscancelation, lack of raw material,personnel, turnover, etc.
c)Provoked Complexity:
Generated by particular, political or
ego center decisions instead of groupconsensus, i.e. to acquire wrongtechnology, to make inadequateexecutives selections, to launch tomarket new products based on incompleteanalysis, etc.
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Effect of a bad decision
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System Capacity to Manage
Complexity
Everything that happens within the organization consumes energyand it must be taken into account that the energy must be dosedand not be used indiscriminately. Making efficient and effectiveuse of the resources is translated in the capacity to properlymanage the complexity of the situation.
In order to manage complexity the proper capacity is required
(Variety and Ability) from each element to attend the systemdemand.
The System Capacity is optimum when the emergent properties areproperly made use of.
When the system components do not fulfill their roles and theirfunctional expectations about them excess pressure is generatedin the system which manifests itself in an efficiency and effectiveness loss, reducing the parts orientation because ofthe secondary effects that are provoked.
Complexity is a very particular situation reality that we mustunderstand and manage. Its proper management requires severalobservers (which form part of the complexity) that share theShared Map reality in order to understand and manage it.
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System Capacity to Manage
Complexity
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StructureProcess Model
SPM
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Need of alternative
perspectives
Improvement approaches have come and gone and still it seems that
we are unaware of the possible effects of our acts, we dont have
identified levering points nor the key variables to manage the
organization conduct. All of this is due to the fact that many
tools have been developed (with great improvement potential) to
attack in an isolated and independent way parts of the system.
Nevertheless, as any other strong drug, we forget the lateraleffects when applying the antidote, and all this in non
controlled situations may be delicate for the organization.
In fact it is still common practice to attack the symptoms of the
problematic in the organizations without properly questioning if
we have reached the bottom of the situation. We havent realizedthat everything that happens within the organization is
interconnected and when we attack one variable it generates
effects in other parts of the system. If this is not taken care
of, we can lose control of the system.
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Need of alternative
perspectives
Also, it has been common practice to try to improve anorganization from within its processes and not from itsstructure, when the latter is the one who generates the rules forpossible actions to the processes. We had mistakenly searchedattacking the chaos and organizational complexity throughimprovement processes without questioning which structures weregenerating the disorder.
After all, what is the organization?, but a chess board where thefigures live through events under certain rules and a squaredboard. On one hand, the board and the game rules are at the sametime the structure that defines the game to be played and itspossibilities, and on the other hand, the processes are the placethat are gradually generating the systems dynamic. And here iswhere the cycle ends because when the processes occur graduallythey modify little by little the structure of the system, justlike the water drop that graves the hardest rock as time goes by,and deforms it by the effect of a repetitive event.
.
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The Need for a Model of
Complexity Management
Organizational
Behavior and Conducts...
...are the result of
different interacting
structures, forms,
patterns
Relations, paradigms,
principles, etc.
We can separate
current situations
that we observe and
live in a model ofpolarities:
1.- Complex conducts
2.- The variables that
generate these complex
behaviors
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Structure Process Model
and Chess...
Board
Rules of the Game
Characteristicsof pieces
Relationshipsbetween pieces
Plays &Possibilities
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Which set of structures
generate the processes?
S1
S2
S3
S4
S5
S6
S7
P1
P2
P3
Structures Processes
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Structure Process Model (SPM)
Structures Processes
System Frontier
Environment Environment
Struct Proc
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Structure Process Model (SPM)
Structure and Processes is a universal duality; it is the form and
function. Is the dancing relation of two virtual poles with dynamic
movement for any system at any level of the universe, from the atom
up to galactic cumulus. One requires from the other to exist, andsince there are no processes if there is no structure, nor
structure without processes. We can imagine the structure-processes
model as two separate entities but united through bonds which
connect both and are used to feedback their effects and modify
their form through time.
Structures Processes
System Frontier
Environment Environment
Struct Proc
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Structure Process Model
(SPM)
On how many repeated occasions we were faced trying toimplant a change in an organization, whether is calledquality program, leadership, productivity, team work, etc.(processes). The problem is that we never were aware thatwe were trying to change the organization.
Now it is clear that in the majority of cases is notpossible to modify processes attacking the processes. Itis necessary to adjust, create or modify the structure(may be policies, procedures, game rules, roles, etc.) inorder to provoke the emergence of processes required bythe organization. This is why it is important to discover
the system natural levering points, that is, places wherewe can stimulate the variable with a minimum effort andgreat results can be achieved.
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Structure Process Model
(SPM)
Chaos, complexity, lack of control, are concepts which we have been exposed to without
knowing what produces them. Understanding the organizational dynamic seems to be
unreachable because the quantity of dynamic variables involved and the quantity of
possible states that are generated. Nevertheless, The Structure-Process Model allows us
to see things from a different viewpoint, it allows us to step further into the Chaos
and Complexity Management, in a world where the multiplicity of states darkens our
vision and hinders our way to the predictability of future events.
Some of the most important principles and properties of The Structure-Process Model are
the following:
The systems structure generates its own processes
The processes through time modify the systems structure, rising this way another
structure... which generates another kind of processes...and so on.
Changes in the Structure modify the processes and in the same way even the minimal
change in processes has an effect on the structure.Solid and aligned structures allow controlled processes. If the structural elements
lack solidity then it will be easier that the processes modify the structure.
The greater influence actors can modify the structure and the processes in order to
achieve the stability level that satisfies the interests of the groups with greater
influence on the system.
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Structure Process Model
3 Levels (organization)
Organizational
Cultual
Individual
Structure Process
Process
Process
Structure
Structure
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Structure-Process Model
Organization level
S P
Organization
Culture
Individual
S P
P
P
S
S
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Culture
One of the most important phenomena yet not definedbut which we can understand under the Structure-Process Model is that of the Organizational Culture.
This variable has always been extremely complex tocomprehend and because of that there is a greatnumber of definitions trying to structure it underdifferent criteria and viewpoints, all of them validand rich in possibilities for its analysis.
However, Im convinced that the organizationalculture contains both elements of duality and from
this perspective it may be perfectly understandablefor managing it within the organization, and in thisway it may not be seen as a caprice of human groupswho exchange ideas, values and conduct codes to rulethe behavior which characterize it.
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Structure-Process Model
Cultural level
S P
Organization
Culture
Individual
S P
P
P
S
S
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Structure-Process Model
Individual level
S P
Organization
Culture
Individual
S P
P
P
S
S
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Structural
Change
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Design
One crucial point for any system itshis own design, because it is
precisely at this moment in which its
structure is molded and defined and
so, the capacity to trigger the
possibilities in its processes are
created.
The possibilities from whether the
organization will be successful or not
depend from now on. In fact a badly
designed system is a costly system to
manage, because it is a system where
the entropy starts to grow without
measure and eventually it may make the
organization lose its capacity to
create positive cycles.
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I. Current Situation
Diagnostic of currentobserved processes.
Structures thatgenerate the current
processes Current situation
Observed environment: competitive
environment characteristics that
affect organizational dynamics.
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II. Desired Situation
Profile of required
processes in order to
maintain competitive
edge.
Structures requiredare identified to
support the new
organizational
processes.
Desired situation
Change Perspectives: Environmental
Trends and new Change Perspectives
that trigger new organizational
atitudes and behaviors
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III. Structural Change
May 2001 Alfonso Cornejo Alvarez CM~SC
Required changes are implementedto ensure the appearing of new
organizational process, and as a
consequence, desired behaviors and
patterns emerge.
Detailed action plan in order to
implement Structural Changes
required, involving differentorganizational areas (Technological,
Administrative, Cultural and Human).
S P
33
Structural Change
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IV. Learning
A learning about the performance
of processes is carried out,
Structural adjustments are made,and a new stage for organizational
adaptation is established..
New processes and behaviors are
observed and measured in operation in
order to detect effectiveness ofStructural Change previously planned.
Learning
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Organizational Complexity
Among other things, the Structure- Process Model may support the
organization with:
Environment Analysis and its repercussion on the Organization
The diagnostic of the organization as a whole, as an Open
System and exchanging energy and information with its
Environment.
Its capacity to adapt to its Environment. Evaluate its structures vs. its the must be state
Evaluate its fundamental processes.
Evaluate the Organization Chronological Age as a function of
the rigidity of its Structures.
Detect the greater influence Structures within the
Organizational Culture. Detect how the Culture influences different Processes types
within the Organization and how it affects the Organization
Structures.
The Organization Attractor effect: Vision
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The importance of Design
All the organizations are perfectly
designed to obtain the results that theygenerate
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If there is not Structural Change
there wont be significant andlasting change.......
Structures Processes
System frontier
Environment Environment
Struct Proc
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The Book
Complejidad y Caos: Gua para la
Administracin del Siglo XXI
Complexity and Chaos: Guide for XXI Century
Management
You can download or read the book here:
www.structural-change.com
http://www.eumed.net/cursecon/libreria/2004/aca/aca.htm
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http://www.structural-change.com/http://www.eumed.net/cursecon/libreria/2004/aca/aca.htmhttp://www.eumed.net/cursecon/libreria/2004/aca/aca.htmhttp://www.structural-change.com/http://www.structural-change.com/http://www.structural-change.com/http://www.structural-change.com/http://www.structural-change.com/ -
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Alfonso Cornejo
www.structural-change.com
www.structural-change.jimdo.com
S t b 2007 Alf C j CM SC 39