06.09.2015 professor tony bendell tocico conference keynote slides
TRANSCRIPT
2015 TOCICO International Conference
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How To Transform Your Organization To Be Anti-Fragile: Why Managing
Constraints is Not Enough
Tony Bendell, Services Limited and The An>-‐Fragility Academy
http://www.theanti-fragilityacademy.com/ http://servicesltd.co.uk/ [email protected] [email protected]
2015 TOCICO International Conference
© 2015 TOCICO. All Rights Reserved.
• Organisa>onal failures are now commonplace, including those of iconic firms
• Conven>onal management and management systems have proved inadequate to protect both private and public sector organisa>ons from catastrophic incidents, adverse publicity and failure
• Fragility associated with: Ø Vola>le Environment Ø Weaknesses in Systems & Processes Ø Weaknesses in Behaviours & Management Ø Rush to Efficiency
Organisational Failures – The Failure of Management & Management Systems
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2015 TOCICO International Conference
© 2015 TOCICO. All Rights Reserved.
The Problem of Risk Management • Numerous repeated and well publicised failures of Risk Analysis and
Management – Inherent Flaw in the Approach: Much of Risk Analysis and Management as we
know it today is part of the problem, not of the solu;on • Reac.ve Approach – Uncertainty & Risks will occur; we need to predict &
reduce/contain it. – We have to be able to conceive the risk.
• Ignores aspects of the internal and external condi>ons in the system, including its complexity and loading, & assumes stability.
• Assumes full .mely informa.on, cri.cal awareness & senior management a?en.on
• Assumes no “Black Swans”
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Enterprise Risk Management – A New Business School Discipline
– Great Poten>al, But… – In its infancy – Not Being Used, Not Being Used Well – Educa>on & Governance Issues – Risk silos
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The Desire for Robust Systems
Ø Whilst they exist to protect people, organisa>ons and communi>es, human systems are naturally fragile.
Ø They fail individual people & stakeholders, and some>mes they fail systema>cally & some>mes drama>cally.
Ø Weaknesses are caused by people, by processes and by environment excess.
Ø We try to make such systems robust, but how can we establish that they are robust enough since a robust system just waits for something more powerful than it to overcome it? Like the Thames Barrier the robust is always wai>ng for a wave that is bigger than it, that will destroy it.
Ø Robustness may imply Rigidity
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The Problems with Robustness
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2015 TOCICO International Conference
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The Problems with Robustness
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There is no prac.cal level of robustness that is `Strong enough`
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The Problems with Robustness
2015 TOCICO International Conference
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Robust systems don’t themselves get be?er
There is no prac.cal level of robustness that is `Strong enough`
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The Problems with Robustness
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© 2015 TOCICO. All Rights Reserved.
Forensic Accounting, Fraud & Mismanagement
• Forensic Accoun>ng is a Safeguard, But.. • Can be a bit late.. • The Whole Governance Issue
– Shortcomings of Current Prac>ce – Arguable; Different Perspec>ves on Risk & ‘Skin in the Game’ – Board Responsibility, Understanding, Educa>on, Knowledge &
Access to Informa>on • The Tip of the Iceberg?
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2015 TOCICO International Conference
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Where Fragility Exists
• At all Levels/Layers… – Strategy & Governance – Opera>ons, Processes & Supply Chain
– People & Culture – Informa>on & Technology – Markets, Products & Services
• Global & Local Fragility/Macro & Micro
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2015 TOCICO International Conference
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Anti-Fragility (Nassim Taleb)
• Fragile refers to systems and organisa>ons that can be easily damaged by changes or shocks in the external or internal environment.
• Robust refers to systems and organisa>ons that are able to withstand such adverse condi>ons.
• An0-‐Fragile refers to systems and organisa>ons that, like biological systems, are more than just robust and within limits actually improve their resilience through being stressed.
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Nature Got There First • Natural systems are An>-‐Fragile • Un>l now, we have only focused
on making human systems Robust.
• But now we know be?er!
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Some Sources of Anti-Fragility • Learning
• Awareness of environment & internal condi>ons • Informa>on systems • The ability to take decisions & act • Flexibility & Agility • Good decision making • Shared & spread risk • An>-‐Fragility (or not) is defined by the Organisa.onal Strategy,
Structure and Systems, its People, Rela.onships and its Culture. We can then Build An>-‐Fragility (or not) into our products & services, use of informa>on and technology base.
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• Safeguarding Systems – All organisa>onal and system informa>on gathering and feedback loops,
that poten>ally use current performance as the basis for control and/or change, represent An.-‐Fragility Features.
• Strategy Review; Risk Management; Budgetary Control; Internal & External Audit; Quality Control; Quality Assurance; Developmental and Evalua>ve Performance Appraisals; HSE Assurance; Con>nuous Improvement, Kaizan, Six Sigma, Lean Improvement, Agile Deployment, & Organisa>onal Assessment against the EFQM or Baldrige Excellence Models.
An.-‐Fragility Features of Organisa.ons and Systems
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• A key part of the An>-‐Fragile mechanism in all these cases is the human role.
• Risk Management is an An.-‐Fragility Feature of our organisa>ons and systems. But, this An>-‐Fragility Feature, is itself oKen implemented in a Fragile way. (Second Level Fragility)
• Lack of a holis;c approach to Fragility Minimisa0on and Management in current prac;ce in organisa;onal or system design and opera;on.
Anti-Fragility Features of Organisations and Systems
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But the limitations are in how these Safeguarding Systems are implemented
– Oken designed for Robustness, not An>-‐Fragility – Incomplete informa>on flow – Assume some stability & no “Black Swans” – OKen delegated to middle management, formalised and standardised, so in danger of
becoming compliance-‐driven rituals, with incomplete informa>on; with most importance being given to the integrity of the paper trail for audi>ng purposes, & inadequate senior management amen>on.
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2015 TOCICO International Conference
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A Basic Fragility Test for Your Organisation (Score out of 100; (0-10 :10=maximum optimisation)
• How good is our current Approach? (0-‐10) • Do we include deliberate Diversity of Approach and Deployment? (0-‐10) • How Aware are we of our Environment? (0-‐10) • Do we Learn? (0-‐10) • Do we Implement what we Learn? (0-‐10) • Do we Learn fast? (0-‐10) • Do we have the Infrastructure to Learn? (0-‐10) • Do we Evolve? (0-‐10) • Do we have the Infrastructure to Evolve? (0-‐10) • How Op>mised are Our Processes? (0=highly op>mised)
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Ten Ways An Organisation Can Become More Anti-Fragile
1. Don’t think you are there; Realise that Never Completely get there/never completely not there.
2. Be aware, scan the external & internal environment, risks, scenarios & possible black swans. 3. Be joined up & nimble, keep learning, apply. 4. Avoid rigidity, ultra efficiency & relying on robustness. 5. Don’t automate, engage. 6. Reduce the fragility of an>-‐fragile systems. 7. Use diversity. 8. Apply precau>onary principles. 9. Fail oken & small. 10. Stress test.
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Where Can We Start?
• How ideal is your world? • The Board. • Execu>ve management. • Opera>ons management. • Supply chain. • Front line. • Risk • The Quality Department-‐ organisa>onal quality/TQM/excellence
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Getting Started
• Take stock. • Further develop the vision & business case. • Plan & Manage Change. • Help develop the influencers. • Constant review.
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Anti-Fragility as an Holistic Theory of the Firm
• No single current Business School Discipline unifies our view of the Organisa.on
• Also tells us that a naive focus on Op.mising Efficiency, or even Effec.veness, is Wrong
• Unifies and provides both structure around, and safeguards in applying, change, improvement & quality approaches such as Lean, Six Sigma, EFQM Excellence Model, Benchmarking, QA etc.
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Efficiency Fragility Robustness An.-‐Fragility
Process Throughput rate, OEE
No. Of breakdowns, lost >me
Up>me Rate of decline in no. of breakdowns & lost >me
People U>lisa>on, output per head
Absenteeism, turnover Amendance, reten>on
Rate of decline in absenteeism, turnover
Technology U>lisa>on, Output
Failure rate, non availability
Availability Rate of decline in Failure rate & non availability
Informa>on Timely, reliable, accurate.
Delay, inaccuracy. Timely, reliable, accurate.
Rate of decline in Delay, & inaccuracy.
Supply Chain Throughput rate, OEE.
No. of breakdowns in supply, unsa>sfied demand.
Con>nua>on of supply.
Rate of decline in number of breakdowns in supply, & unsa>sfied demand.
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2015 TOCICO International Conference
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Stress or Time in Denominator of Rate of Decline?
• Using >me enables us to establish easy to measure metrics, which can be used to monitor the an>-‐fragility of the organisa>on
• Like “nega>ve velocity” • Stress may also be useful in specific “red flag” condi>ons.
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2015 TOCICO International Conference
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Anti-Fragility & the Theory Of Constraints
• TOC op>mises system throughput • Op>mised throughput… … stresses the system & may cause fragility • Opportunity to extend the TOC Model to incorporate An>-‐Fragility
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Tony Bendell, Services Limited and The An>-‐Fragility Academy England
`Every day organisa>ons fail, unnecessarily, with massive financial and human cost. We need to change. An>-‐Fragility is the most important poten>al breakthrough in business thinking in my career. It provides a language and unifica>on for all of the improvement and produc>vity methodologies I have been assis>ng companies with for over 20 years. It makes us realise that our current op>misa>on criteria are wrong and efficiency, and even effec>veness, are not such a good idea. It unifies our business model, giving a new coherence to the disjoint func>onal specialisms in our business schools. Go out and tell people, they need to know what you know .. and soon.`
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2015 TOCICO International Conference
© 2015 TOCICO. All Rights Reserved.
Tony Bendell, Services Limited and The An>-‐Fragility Academy England
Book may be ordered at: www.gowerpublishing.com/isbn/9781472413888 35% discount code G13iCO35 Or for signed or dedicated copies go to: hmp://www.thean>-‐fragilityacademy.com/#!book/c1enr
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2015 TOCICO International Conference
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Any Ques>ons
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2015 TOCICO International Conference
© 2015 TOCICO. All Rights Reserved.
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Any Ques>ons ………… Or Debate?
2015 TOCICO International Conference
© 2015 TOCICO. All Rights Reserved.
http://www.theanti-fragilityacademy.com/ http://servicesltd.co.uk/ [email protected] [email protected]
2015 TOCICO International Conference
© 2015 TOCICO. All Rights Reserved.
http://www.theanti-fragilityacademy.com/ http://servicesltd.co.uk/ [email protected] [email protected]
2015 TOCICO International Conference
© 2015 TOCICO. All Rights Reserved.
http://www.theanti-fragilityacademy.com/ http://servicesltd.co.uk/ [email protected] [email protected]