Systems Engineering: The Missing Link In Business Excellence - Part 1

Systems Engineering recognizes that any type of environment can be viewed from a systems perspective, and it is the interaction of systems that can generate a lot of friction in any organization. Systems Engineering brings a disciplined, holistic approach to interaction within systems and between them at all levels.
Source: INCOSE SEBoK v1.5

"There are quite a few tools and techniques it involves... there's Lean Six Sigma of course which you are damn good at, but then there is Design for Excellence and Concurrent Engineering, Prince2, Total Quality Management, Theory of Constraints, SCOR, Oliver Wight Class A...and that's just the start of what's needed..."

And that was just the start of my reply to the question "So what does this business excellence stuff really involve? I thought we were already doing it. What will we have to learn and what will we need to do differently?". The question was posed by a senior executive I was working with in a mid-size business that is on the cusp of breaking into the big leagues, one that had a lot of experience and success in traditional business practices and indeed with Lean and Six Sigma, but who now wanted to take the "next step". Why? 

Because these days, Lean and Six Sigma are just the essential baseline of Business Excellence.

The cutting edge involves a lot more.

What is "Business Excellence" all about?
The SIMILAR Process that underpins a key aspect of the INCOSE Systems Engineering framework. Created and refined for the development of complex engineering products, its potential in the broader business arena is yet to be fully exploited.
Source: INCOSE SEBoK v1.5

Business Excellence: that's a buzz phrase that has been in (and at times out of) vogue since the 1990s. The term is quite well know, but the definition has been quite fluid...and that's putting it mildly. Everyone knows "pretty much" what it means...but no one can agree on what exactly defines it, what it is comprised of. 

To many people, it's just Lean and/or Six Sigma - and I was one of those people for more than a few years. To others, it's one of the handful of frameworks available (such as the American Balbridge Framework, the European EFQM Excellence Model or Australia's Business Excellence Framework), which enable focus and structure to improve results. Others take a more general view of it being about "doing things really well" or being "a very successful and well run business." Because there are so many different organizations with a different emphasis or focus who say they apply - or can help you apply - the concept, we need to expect that everyone will try and make those snappy two words of business-speak their own. And I'm no exception!

So, I postulate (I have waited a long time to use that word in this blog!) that business excellence can be usefully defined as follows:

"Business Excellence is both a means and an end. It requires the 3C (Cohesive, Consistent and Correct) use of relevant, universally accepted and innovative best practice systems, tools, techniques and thinking throughout a business, which will deliver the reliable achievement of constantly improving results in critical KPIs for staff, customers and investors that benchmark the industry"

Now, I am not saying that this is necessarily the only or indeed the best definition, but I do believe it is one which captures what we are trying to achieve and the way to go about doing it. You want to be the best, and you want to know how to get there. I think that pretty much covers it.

And we have a way to do it...well, actually, we have a lot of ways. Leading on from my quote at the start, we have Lean Six Sigma of course, but TQM and Theory of Constraints also play a key role in improvement techniques. And then we need to be aware that disciplined Project, Programme and Portfolio Management is crucial to implement substantially enhanced capabilities, with either the British Axelos or US PMI bodies offering excellent methodologies in those and many other fields, as well as Agile (and I should also mention the European IPMA standard as well as ISO21500). 

And let's not forget the multitude of other ISO standards as well as those of more specialized bodies that provide great templates / guidelines on how things should be done in a myriad of ways, not just the ISO9001 but also in Risk Management and standards for diving watches. Then we have the Supply Chain Operations Reference (SCOR) Framework as the standard for Supply Chain excellence. And I highly recommend that everyone take a look at the Oliver Wight Class A guides: a superb tool to actually find ways to ask questions and frame metrics for what you should be doing overall in an organization. Furthermore, the Business Analysis Body of Knowledge is a great way to help guide individuals in how to simply find a better way to do things. 

And I could go on, but you get the idea: for pretty much every business need, there is a defined best practice process, approach, toolset, technique, way of thinking - whatever you need - available. It's most certainly well documented, likely proven over many years with an abundance of examples and implementation guidance...and available for no or low cost, along with training and in many cases certification.

So why do so many companies completely fail at even getting a few of these things right....let alone all of them into one happily humming stream of Best Practice bliss?

Why is Business Excellence so hard for so many?

The Challenging Road...

Firstly - let's not kid ourselves - all of these knowledge areas take time to learn individually: it may be a matter of weeks, or sometimes months, but it's still a commitment. And if you add up all of them together in terms of what is the needed skillset for many roles and then take into account staff turns, it's a never ending process of learning for an organization (which is, of course, what it should always be like). But whilst these techniques may not be all that difficult to learn the theory of in many cases, mastering the practice can be a different story. As we all know, writing down something that impresses an exam marker is not the same as trying to apply in the cauldron of the real world.

Next, consider the people themselves who need to master these ideas. If an entire organization was one big individual department in one location, comprised of similar people doing the same thing, then perhaps things would not be that hard. 

But that's not my world,.And it probably isn't yours. 

Instead, we have organizations that are comprised of thousands of people, in some cases hundreds of thousands. They work in dozens or hundreds of different locations across the world. They originate from dozens of different countries (even states - try getting a Texan and a New York engineer to agree on something) and cultures, products of different education systems. They have different priorities. Their roles require them to do very different things. And what makes them good in one area may make them less capable in another. They often don't understand much of what goes on outside their corner of the working world...or care to.

And let's be realistic: a lot of the time, people simply don't like each other. Or they are rivals. Or they just can't see the situation - or the world - the same way. 
They find it hard to get along...and that is putting it mildly. And that means friction: processes that can't be agreed on, or that fall apart when put under even moderate pressure. Even if people are taught the same techniques and understand them well, get them to try and make it work in the real world and the 'issues' start.

I have seen it far too often: smart, experienced and learned individuals schooled in best practice techniques get together in a room: product development, supply chain, operations, marketing, sales, finance. And the result is ...well, no result worth mentioning. It's just competing viewpoints that create a veneer of accepted outcomes.

How can you make this diverse tension all work together?

Strangely enough, there is one technique, one method that I have used extensively in one sector, but seems to have completely escaped any sort of adoption outside it.  And it is the one technique, one way of thinking that can help unite all of the above. 
One of the most fortunate aspects of my work is the incredible diversity: from high technology bio-medical research to coal mining; from complex retail supply chains to be new materials in the aerospace arena - I have been lucky enough to see it all. And ever so often, I see something that is very effective in one sector...and may be able to resolve a situation in another.

Back to the Future with...Systems Engineering 

Image result for systems engineering v model
The Systems Engineering V Model: whilst developed and optimized for software, the logical structure and detailed discipline has applications including business process and organizational design.
Source: Adapted from INCOSE SEBoK v1.5

I speak of Systems Engineering...or as MIT has it, Engineering Systems (which is just their way of re-branding for a bit more of an all encompassing approach - good on 'em!)

Systems Engineering defies a quick explanation that really does it any form of justice (or that has universal acceptance), but imagine a way to bring about a disciplined, logical creation and sustainment of an optimal Supersystem even when it is comprised of very diverse and dynamic people, technologies, structures, components, processes and other elements. The INCOSE Systems Engineering Body of Knowledge (far more expansive than the PMI Project BoK is but much less structured and disciplined) defines it as:

" interdisciplinary approach and means to enable the realization of successful (engineered) systems"

It's a way to succeed in the ultimate balancing act - and then get everything you need (the whole) as right as possible. That is perhaps as much as is agreed on. From there on, there is huge divergence. Many Universities focus very much only on IT systems, others focus on more limited control systems for complex engineered systems such as powerplants or refineries. But the main focus b y many Universities in Systems Engineering seems to be on software development.

At this stage it is important to state that in this context, Systems Engineering goes far beyond designing the processes for a software implementation. Indeed, there is much confusion as to the way the terms Systems Engineering / Analysis, Business Analysis, Business Process Re-Engineering are used are used: many individuals use the terms interchangeably, many use all of them to refer to IT related matters. But what I refer to in Systems Engineering is the intelligent design of an entire business supersystem, which includes IT systems...and everything else.

It's hardly a new concept: it was developed in the 1940s at Bell labs and has been evolving slowly - and perhaps somewhat too focused - since then. That said, it is in many ways still a very immature field, especially compared to the very well defined areas of project management and of course Lean Six Sigma. It has developed significantly, but very much in the higher end engineering field - aviation and defense products especially. Contrast that to Lean Six Sigma, which now has well defined specializations ranging from health care, to IT, to manufacturing and support services. And it has done so in a far shorter timeframe than Systems Engineering, becoming the de-facto application for business excellence.

Despite this, I believe that Systems Engineering is - potentially - the ultimate 'Master Toolset' for Business Excellence in fields such as the retail and transport sectors, simply because it is so over-arching and encompassing. It does not over rule or replace any existing methodology: rather it, embraces it, finds the key strengths and applies them to the most relevant part of a system framework in a way that makes it cohesive with other parts.

It's basically about making the whole optimal, by using the best sum of their parts. After having been involved in this field for so long, I have long sought one single framework to guide things, and Systems Engineering is the one framework that gives me the best hope that such is not just possible, but plausible. The use of the word engineering is telling: it implies the disciplined analysis of situations, design of solutions and management of operations according to best practices in analysis, logic, testing, formulation and usage of the sciences. And that is something so much of the retail sector around the world needs.

Many would argue that this is exactly why it may be suitable for complex engineering products, but totally unsuitable for human created business systems. The human element, with emotion, chance, and unpredictability. This is where psychology comes in, and that's hardly a science with the same 'exactness' as fluid dynamics. Systems Engineering could not be needed.

I would argue the opposite: the need for disciplined analysis and formulation is especially greater in a field which does not easily lend itself to the hard sciences. And one area where that would apply more than others is in vertically integrated retail.

In Part 2, we will look in a little more depth about how Systems Engineering can apply to an overall business environment.