Business Analysis Methodology MM543 (3 SCU) Session 2

1. Business Analysis MethodologyMM543 (3 SCU)Session 2 System Thinking & System of System Methodologies Andreas U Kuswara(akuswara@binus.ac.id)

2. Course Announcement • Weekly Assignments • A brief summary of the previous week’s lecture • Lecture Notes • Due to the nature of your weekly assignment, my lecture presentation will be given 1 week after the class session at http://easkwok.cjb.net • Additional resources on the web can be found on the website, if you want to contribute you can submit the URL and description to my email

3. Pre-Class Announcement • Brace yourself!! • There are a lot to covers, a lot of things you need to understand • Today session is the foundation and building blocks for the rest of the course • Be ACTIVE, this is YOUR CLASS. You will LEARN as much as you PARTICIPATE

4. Readings • Creative Problem Solving: • Chapter 1 System Thinking • Chapter 2 System of System Methodologies • Chapter 3 TSI • Internet Keywords: • “System Thinking” • “Soft System Methodology” • “Total System Intervention”

5. Uses analysis and reductionism where believes that all objects, events can be understood in term of ultimate elements Building blocks arranged in a hierarchy, making up a giant machine The whole equals to the sum of the parts Thus easily applied to organizations (mapped as organization hierarchy) Mechanistic Thinking

6. Mechanistic Thinking Failures • Organization failed to perform well as a whole, when the parts were all independently optimized • The need for System Thinking was established in 1940s (originally born in the field of Biology) • Organization treated as a whole entities (or system) with properties peculiar to themselves & cannot be derived from their parts • They are "open" not "closed" to their environments

7. Definition of “System” • What is your definition? • In System Thinking: • A particular way of organizing our thoughts about the world/problem/situation we are facing • It is an organizing concept

8. General Conception of “System”

9. Metaphors • To better understand a system (the nature of the system and its environments) • Machine Metaphor / Pre-Systems Metaphor • Organic Metaphor • Neuro-Cybernetic Metaphor • Cultural Metaphor • Political Metaphor

10. Emphasis on the efficiency of the parts It operates in a routine and repetitive fashion with a predefined set of activities, seeking efficiency to achieve goals Useful if: The tasks are straightforward & repetitive Stable environment E.g. armed forces, large franchise (fast food chains) Consequence: Lower adaptability of organization on volatile environment Machine Metaphor (Closed System) / Pre-Systems Metaphor View

11. Emphasis the human aspect of organizations Issues such as motivation (Maslow’s hierarchy of needs), leadership style, job enrichment, etc Organization as an organism to survive Useful if: Open relation to changing environment Responsiveness toward changes Complex environment (e.g. today turbulence environment) Consequence: Passively adapt rather than proactively Assume harmonious relation among people Organic Metaphor (Open System) View

12. Emphasis on Active Learning & control (organization as a brain) Focus on information processing and viability Depends on the ability to communicate and learn Useful if: Promote self-enquiry, self-criticism & encourage creativity Dynamic goal seeking High degree of uncertainty E.g. autonomous workgroups, innovative firms Consequence: Forget purpose of the parts (may not the same with the whole) Neuro-Cybernetic Metaphor (Viable System) View

13. Emphasis the organization as a collectivity of employee Assume employee has collaborative and community-like spirit Culture is a shared characteristics at all level of organization Useful if: Cohesion of shared values have impact on organizational development (need to be managed) E.g. Done initially by Japanese firms Consequence: Can lead to explicit ideological control (feeling of manipulation, resentment, mistrust) Takes time (culture) Have no structure Cultural Metaphor

14. Emphasis on the relationship between individuals & groups as competitive for power Focus on issues of interest, conflict and power Useful if: Organizational activity seen as interest based and key role of power Conflict in rationality Existence of political activities Consequence: Explicit recognition of the politics of situation will leads to further politicization and generate mistrust Neglecting other aspects Political Metaphor

15. Participants Relationship Characteristics • Based on the relationship between the participating people • Unitary • Pluralist • Coercive

16. Unitary • Interests • Common objectives (well integrated team) • Conflict • Rare and transient • Compatible values and beliefs • Largely agree upon ends and means • All act in accordance with agreed objectives • Power • Replaced by conceptions such as leadership and control

17. Pluralist • Interests • Diverging group interests with organization as mutual focal point (loose coalition) • Have basic compatibility of interest • Conflict • Inherent/diverge values or beliefs • Not necessarily agree, but compromise is possible & act in accordance • Power • Medium, through which conflict of interest may be resolved

18. Coercive • Interests • Oppositional and contradictory interests (rival forces) • Conflict • Inevitable and likely to lead to radical change of whole structure • Conflicting values and beliefs • No agreement possible (ends and means) • Power • Unequally distributed thus allowing domination, subjugation and so on

19. Simple System Small number of elements Few interactions Attributes are predetermined Interaction are highly organized Well defined laws govern behavior System does not evolved over time Sub-systems does not pursue their own goals Unaffected by behavioral influence Largely closed to environment Complex System Large number of elements Many interactions Attributes are NOT predetermined Interaction are loosely organized There are probabilistic in behavior System evolved over time Sub-systems are purposeful and generate their own goals Affected by behavioral influence Largely open to environment System Complexity (Elements)

20. Problem Context • Participant’s Relationship • Unitary • Pluralist • Coercive • System Complexity • Simple • Complex

21. Methodologies: Operational Research System Analysis System Engineering System Dynamics Assumptions: Problem solver can easily establish objectives Little or no dispute over these objectives (unitary) Approach: Quantitative or highly structured model to simulate performance scenarios under different operational conditions Machine/Pre-Systems Metaphors Simple-Unitary

22. Methodologies: Viable System Diagnosis General System Theory Socio-Technical System Thinking Contingency Theory Assumptions: General agreement about the goals despite the open-ness of the system Approach: The organization is seen as an organism adapting to environment (Organic Metaphors) And it is actively learning just as brain proactively response to the environment (Neuro-Cybernetic Metaphors) Complex-Unitary

23. Methodologies: Social System Design Strategic Assumption Surfacing and Testing Assumptions: Primarily caused by disagreements among participants (about goals) Other problem relatively insignificant Approach: A softer system approach to deal with the corporate culture issues (Cultural Metaphors) in tandem with coalition setting and address the political issues (Political Metaphors) Simple-Pluralist

24. Methodologies: Interactive Planning Soft System Methodologies Assumptions: Lack of agreement about goals and objectives among participants, but genuine compromise is achievable The system is complex (multi elements & open) Approach: Be sensitive with the cultural issues of organization (Cultural Metaphors) & ensure to achieve coalition Acknowledgment of the organism-ness of organization (Organic Metaphors) Proactively respond and learn from experience (Neuro-Cybernetic Metaphors) Complex-Pluralist

25. Methodologies: Critical System Heuristics Assumptions: There are severe political problem with real difference in values and beliefs Properly manage debate is important Sources of power from different participants can be easily identify (thus simple) Approach: Prison Metaphor (part of Political Metaphors) with indept political perspective of the situation Simple-Coercive

26. Methodologies: N/A Assumptions: Situation of concern hides the true source of power. Thus we can’t clearly diagnose the situation from political perspective The system is open and highly interacting with the environment Conflict of interest clearly visible Approach: None Considerations: Various sources of power Organizational culture and what changes are feasible Mobilization of bias in organization Relationship between hierarchy with class, sex, race and status division in wider society Complex-Coercive

27. Problem Context Participant’s Relationship Unitary Pluralist Coercive System Complexity Simple Complex Metaphors Machine/Pre-Systems Organic Neuro-Cybernetic Cultural Political Summary

28. Case Study – Perspective #1(Creative Problem Solving, Chapter 1, pp.22-28) • The Construction Industry in Singapore • Important industry for national economy (6-10% of GDP, employ 9% of total workforce) • Labor shortage since few Singaporean wanted to work in the industry • Perceived as dangerous • Low social status • Unpleasant line of work • Thus, majority of the workforce in this industry come from Malaysia and Thailand • What metaphor/Problem Context?

29. Case Study – Perspective #2(Creative Problem Solving, Chapter 1, pp.22-28) • Construction Industry Development Board established to formulate policies • The board encourage architects and engineer to develop easier building design to be tackled by less skilled foreign worker • Architects worried the practice will inhibit creativity and freedom of the procession • Building material suppliers and manufacturer concern on changes in manufacturing and distribution process of materials • What metaphor/Problem Context?

30. Weekly Assignments #1(Due: The beginning of Session 3) • Case Study (Creative Problem Solving, Section 1.13.3, pp.23-28) • The previous slide was just a preview (it may not be the answer, you never know if you don’t read the case thoroughly) • Read the case thoroughly and discuss in your group then present your work as a written report • Discuss what metaphor (or combination of metaphors) suitable for the case; Why/where they are suitable; What are the problem contexts; Present your argument