(Holt) Complex Systems and TOC

TOCICO 2010 Conference
Complex Systems, Theory of Constraints, and the Search for Inherent Simplicity
Presented By: Steve Holt, The Boeing Company Date: 21 June 2010
2009 TOCICO. All rights reserved.
My intention
TOC is a broad and growing body of knowledge Contradictions with other approaches may appear as conflict. Finding the inherent simplicity enables synergy between methods (e.g., TOC, Lean, Six Sigma). The Cynefin Framework can help make sense of the synergy, show methods in their appropriate context, show why TOC methods are successful, and provide insight into finding Inherent Simplicity.
Familiar terms and concepts

Dont confuse correlation with causality Many approaches workin the right context.
Local actions should align with global goals

People follow familiar patterns and dont think through situations logically.
Complex systems can be managed by relatively few control points and by increasing or relaxing constraints.
Simple, Complicated, Complex, Chaotic/Chaos
The Cynefin Framework

Created by Dave Snowden, founder and Chief Scientific Officer of Cognitive Edge LLC
Cynefin is Welsh for the place of your multiple belongings, of which you can only be partially aware
Primary references:
http://www.cognitive-edge.com Wikipedia entry on Cynefin A Leaders Framework for Decision Making by Dave Snowden and Mary Boone, Harvard Business Review, November 2007.
Sensemaking
Sensemaking: How we make sufficient sense of whats going on so that we can act appropriately.
Initial Question: Are these two sides of the same coin? How to make sense of the world so we can act in it Finding the Inherent Simplicity in order to live a Full Life
Three Types of Systems

Ordered Systems
System constrains all agent behavior. Predictable and obvious, cause and effect clear to all
Chaotic Systems
System and agents are unconstrained Predictable through probability and statistics
Complex Systems
The system lightly constrains the agents and agents are constantly modifying the system. Results can be influenced/guided, but are not predicted in advance. Emergence of beneficial and harmful patterns.
The Cynefin Model

Complex Cause and effect only clear in retrospect.
Complicated Cause and effect requires analysis and/or expert knowledge.
Probe - Sense - Respond

Emergent practice.
Sense - Analyze - Respond

Good practice.
Disorder
No relationship between cause and effect at systems level.
Cause and effect obvious to all, one right answer
Act - Sense - Respond

Novel practice. Chaos
Sense - Categorize Respond

Best practice. Simple
7
Context: Computer Problem

Complex
Expert tech support: Run tests to see what happens. Zero in on fix. Probe-Sense-Respond
Complicated
Elevated tech support: Ask questions to determine what the problem is. Sense-Analyze-Respond
Disorder
Computer hit by virus: Pull plug out of the wall. Youll accept help from anyone Act-Sense-Respond
Entry level tech support: Follow scripts prepared in advance of common problems. Sense-Categorize-Respond
Chaos
Simple
8
Implications of tools in context

Complex
Complicated Design of Experiments Six Sigma Value Engineering Statistical Process Control
TRIZ DeBonos Lateral Thinking
Disorder
Whatever works. Best advice: Dont go here!
5 Whys (or 2 Whys) Fishbone diagram Best Practice documents Trial & Error Kanban Andon cords Simple
Chaos
How TOC can use Cynefin

Common problems have common TOC solutions. Experience and learning helps us make sense of the situation. We see the problem and solution. But the people dont. Theyve been trying to solve it and cant. Theyre in Disorder. We can use the Cynefin Framework to help bring people out of Disorder and provide a context for appropriate action.
Remember the layers of resistance
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How a problem initially looks

Things well know after they happen
Things only experts know
Things no one knows
Things everyone knows
11
Unclear problems, unclear solutions

Complex We need to run some tests and come up with some ideas for a focus group.
Complicated Expert 1: Let me solve it! Expert 2: No, me.
Disorder
We need strong leadership. Put me in charge, give me ultimate power and Ill fix it.
Chaos
We need to go back to whats worked in the past. We need to follow one common, standard process. Simple
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Cynefin Contextualization
Things well know after they happen

UDE
UDE UDE UDE UDE UDE UDE UDE UDE UDE
UDE
Things only experts know
UDE
UDE
UDE
UDE
Things no one knows

UDE
UDE
UDE
Things everyone knows

UDE
http://www.cognitive-edge.com/method.php?mid=9 13
Build the model with their issues

Complex
UDE UDE UDE UDE UDE UDE
Complicated
UDE
UDE
UDE
UDE UDE UDE
UDE UDE UDE UDE UDE
UDE
Chaos
Simple
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Taking action
Complex Gather coherent theories and ideas. Set boundaries Propose safe-fail tests. Amplify what works. Dampen what doesnt.
Disorder
Complicated Analysis is required. Choose an expert and assign the issue to them.
Immediate action required. Assign leader and act.
We all agree on what needs to be done. Assign action items.

Simple
Chaos
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Using the Cynefin Model

Complex
Complicated Experts find answers (conflicting advice), synchronize cross functional efforts to maintain integration, use Good Practices.
Disorder
Empowered cross functional teams. Experiment, test, fail. Skilled people with common product level focus and distributed authority. Look ahead metrics
Leader with small crisis team react fast to reestablish order. Use whatever works, there is no one right answer. Chaos
Strong centralized authority to enforce standards and react, find root cause and correct, document as Best Practice. Simple
16
Avoiding common traps

Complex
Complicated Overconfident experts trapped in silos, analysis paralysis, blocking new ideas coming from non-experts
Insufficient boundaries, not enough direction. Too much direction, trying to manage with detailed schedule instead of a plan, oversimplifying complex issues
Disorder
Cult of the leader, using Command & Control longer than needed. Rush to get back to Simple without resolving core conflict Chaos
Complacency, no challenge to status quo, over reliance on Best Practices if context changes (will drive system into Chaos) Simple
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The Appropriate and the Extreme

Complex
Complicated
Appropriate use of expert analysis
Capitalize on opportunities
Disorder
Innovatio n
Appropriate Standards and processes
Chaos
Simple
18
Patterns and Solving Problems

One of the greatest advantages humans have is our brains ability to use patterns.
We dont have to relearn things and can act fast. Patterns develop from experience and listening to stories.
Patterns are seductive traps. We can only come up with breakthrough solutions when we break the patterns. We can break the patterns by learning to think.
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Pattern entrainment
Complex The Domain Master I see it.
Complicated Expert Entrainment My expert analysis shows that Im right and youre wrong.
Disorder
The Great Leader My superior talent and ability shows me the answer. Chaos
Leadership Entrainment Bureaucratic Entrainment The process (recipe) is correct, follow it. Simple
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Contradiction creates Conflict

Complex
Complicated
Pressure to complicate:
Our industry is much more complex than that. If it was that simple wed know about it.
Disorder
Pressure to simplify:
Why do you make it so difficult to understand? Our business is different. We only want 2 metrics. We want only one process
Chaos
Simple
21
A familiar conflict
Because: Our products and processes are complicated. Risk: Over Complicate We need to
Right answers require expert analysis and precision. Create an optimized plan and re-optimize as we go along
In order to
Successfully manage a large project/program
Manage using methods appropriate for Complicated Domain. (More complicated)
Conflict!
Risk: Over Simplify
Keep things simple (Be stable and predictable)
Manage using methods appropriate for the Simple Domain. (Simpler)
Because: Our products and processes fall in the Simple

Domain, they can be executed with simple, basic controls.
22
Lessons Learned...Maybe
After any major project if we conduct lessons learned we will almost inevitably conclude:
We didnt go into enough detail to see the problems and didnt do enough status reports.
This drives Detail-itis

We need more detailed, precise schedules
We need more accurate forecasts We need more accurate stock records
23
The real issue is Complexity

Complex But what if much of what we do is really in the Complex Domain? Hint: Much of it is. Inherent Simplicity
Disorder
Complicated
Pressure to complicate
Pressure to simplify
Chaos
Simple
24
Attributes of Complex Systems

Large number of interacting elements Non-linear interactions Solutions emerge from dynamic circumstances Elements evolve together in irreversible ways Hindsight cannot lead to foresight
Ref: Snowden and Boone, Harvard Business Review, Nov. 2007
25
Managing Complex Systems

Use boundaries (constraints) and attractors to manage the emergence of beneficial patterns. Rapid and frequent scanning and action
See, Attend, Act (Gary Klein) Observe, Orient, Decide, Act (Col. John Boyd)
Anticipatory awareness (weak signal detection), experience primed pattern recognition
26
Paying attention to weak signals

Sometimes the little boy cries, Wolf and there is no wolf.
Sometimes there is.
27
Necessary characteristics
Distributed Cognition Fine Granularity Objects Disintermediation
28
Distributed Cognition
Need for weak signal detection means everyone must be alert and aware of emergent patterns.
Wisdom of crowds, peoples sense of how things are going Example: Pre-Mortem (Gary Klein) Example: Roundabout instead of traffic lights
Awareness is distributed, not centrally controlled.
29
Fine Granularity Objects

Over simplifying Complex Systems drives them into Chaos. Details are important.
Sufficient detail to see emergent patterns Be alert to the time scale: Consider difference between Twitter, Blog, Web Site, Newspaper, Magazine, Book Example: Each person gives remaining duration status. Example: No more than 300 tasks in a project plan.
A B C D Buffer
A1 A2 A3
A4
BUT, for large projects use subprojects and/or checklists
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Disambiguation
Decision makers can access information directly without filtering Example: CEO reads all incoming customer email Example: Buffer Management meetings: Whats going on? What are we doing about it? Do you need any help?
Filtered
% Buffer Consumed
Unfiltered
100
P2
Based on the average status, were expecting to release on time.
Av
P1
0 % Critical Chain Complete 100

31
TOC through a Cynefin lens

Task: implement Critical Chain Project Management in organization with widespread multi-tasking and strong milestone driven approach to project management. Complex
8
Complicated
4 7
Overly constrained schedule Multi-tasking chaos Mandated priority, no multi-tasking, freeze 25%, limit incoming work (Imposition of constraints to restore order) Scheduling staff experts with Detail-itis Shallow dive into Chaos, where expertise is of limited value Multiple safe-fail experiments (pilots) Planning, scheduling, commitments made with CCPM CCPM in execution (Buffer Management)
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2
3 6 4 5 5 6 3 7 2
Chaos
Simple
CCPM through a Cynefin lens

CCPM is in Chaos, Simple, Complicated, & Complex.

Complex
Execution, Buffer Mngt
Complicated
Plannin g
Prioritize and Freeze is Chaos Planning is Complicated.
Establish priority Freeze projects Stop multi-tasking
Common templates Resource pools Common priority Common behavior Common status
Execution is Complex. Many tasks are Simple.

33
Chaos
Simple
Cycling between domains

Complex Exploration
Complicated Exploitation
Complicated and Complex: Natural path of discovery and analysis. Common to product development.
Disorder
Unstable
Stable
Simple and Chaos Simple to Chaos is as easy as falling off a cliff. Chaos to Simple is difficult. Watch for informal organizations
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Chaos
Simple
Watch for Informal organizations

The presence of strong informal, shadow networks can be a bad sign. If process descriptions are overly simple or bureaucratic, informal work-arounds will form. Informal networks are countermeasures that enable the formal network to appear to function.
When the formal and informal networks can no longer cope the system fails catastrophically.
35
The Thinking Process in the Model

Complex Necessity and Sufficiency logic tools create resilient pathways. Find a way to Flying pig injections S&T concepts
Disorder
Complicated Thinking Process excels. Analysis of core problems and solutions. Superb at explanations. If A, then B S&T detail
Impose constraints.
Thinking Process works fine, but-Thats obvious
Guidance from 5 Focusing Steps and Flow.

Chaos
Simple
36
Pattern entrainment
Complex The Domain Master I see it.
Complicated Expert Entrainment My expert analysis shows that Im right and youre wrong.
Disorder
The Great Leader My superior talent and ability shows me the answer. Chaos
Leadership Entrainment Bureaucratic Entrainment The process (recipe) is correct, follow it. Simple
37
Learning from the Domain Masters

Complex Domain Masters often solve problems by experience primed decision making They seem to just know the answer because of their long study and experience.
The samurai practices night and day until sword becomes no-sword, intention becomes no-intention. Practice is the only way that you will ever come to understand what the Way of the warrior is about Words can only bring you to the foot of the path The Book of Five Rings Miyamoto Musashi
Fidelity in Revenge portrait of Musashi Painted by Kuniyoshi, circa 1848
39
Retrospective Coherence
Many Complex Domain solutions look obvious in hindsight. A Domain Master may solve a problem in the Complex Domain and then explain the solution as if it was in the Complicated Domain. Obvious solutions can lead to tautologies and only noticing whats noticeable. The Inherent Simplicity is the spark that starts the solution. It is the essence of Sensemaking.
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Put Sensemaking before solutions

Current Work Load
For this to work, we must demonstrate how the management work load will be reduced Future Work Load using Applications of TOC
Manager Capacity
Additional Work Load to Implement Applications of TOC
Rees Furbeck, Some Thoughts on Using the Theory of Constraints for Very Large, Complex Projects, TOCICO, 6/8/2009
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Emergence of Inherent Simplicity

The Cynefin Model helps us make sense of the world. Life is complex.
People are complex.

Business is complex. TOC provides the tools to find the Inherent Simplicity and the opportunities the complexity provides.
How to make sense of the world so we can act in it Finding the Inherent Simplicity in order to live a Full Life
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References:
Furbeck, Rees. Some Thoughts on Using the Theory of Constraints for Very Large, Complex Projects, 2009 TOCICO North American Regional Conference, 2009. Goldratt, Eliyahu, et al. Isnt It Obvious?. North River Press, 2009.
Goldratt, Eliyahu, The Choice. North River Press, 2008.

Klein, Gary, The Power of Intuition. Broadway Business, 2004. Klein, Gary, Sources of Power. The MIT Press, 1999. Snowden, David and Mary Boone, A Leaders Framework for Decision Making Harvard Business Review, November 2007. Dave Snowden: blog, papers, presentations http://www.cognitiveedge.com Noah Raford: blog, presentations http://news.noahraford.com
Cynefin. Retrieved May 15, 2010, from http://en.wikipedia.org/wiki/Cynefin

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About Steve Holt

Steven C. Holt has been at Boeing for over 30 years, in management and engineering. During that time he has had the opportunity to study and practice a number of continuous improvement disciplines such as Total Quality Management, Systems Thinking, TRIZ, Lean and the Theory of Constraints. He received his initial TOC training through Washington State University in 1997 and holds a Constraints Management Certificate from WSU, He has been a member of TOCICO since 2003. Steve is TOCICO certified in Project Management and is on the TOCICO Project Management Subcommittee. His primary focus is the application of TOC in the management of complex product development programs.
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TOCICO 2010 Conference

2010 TOCICO. All rights reserved.

Familiar terms and concepts

Local actions should align with global goals

2010 TOCICO. All rights reserved.

The Cynefin Framework

2010 TOCICO. All rights reserved.

Three Types of Systems

2010 TOCICO. All rights reserved.

The Cynefin Model

Complex Cause and effect only clear in retrospect.

Complicated Cause and effect requires analysis and/or expert knowledge.

Probe - Sense - Respond

Sense - Analyze - Respond

No relationship between cause and effect at systems level.

Cause and effect obvious to all, one right answer

Act - Sense - Respond

Sense - Categorize Respond

Context: Computer Problem

Implications of tools in context

TRIZ DeBonos Lateral Thinking

Whatever works. Best advice: Dont go here!

How TOC can use Cynefin

Remember the layers of resistance

2010 TOCICO. All rights reserved.

How a problem initially looks

Things well know after they happen

Things only experts know

Things no one knows

Things everyone knows

2010 TOCICO. All rights reserved.

Unclear problems, unclear solutions

Complicated Expert 1: Let me solve it! Expert 2: No, me.

2010 TOCICO. All rights reserved.

Things well know after they happen

Things only experts know

Things no one knows

Things everyone knows

2010 TOCICO. All rights reserved.

Build the model with their issues

UDE UDE UDE

UDE UDE UDE UDE UDE

Immediate action required. Assign leader and act.

We all agree on what needs to be done. Assign action items.

Using the Cynefin Model

2010 TOCICO. All rights reserved.

Avoiding common traps

2010 TOCICO. All rights reserved.

The Appropriate and the Extreme

Appropriate Standards and processes

Patterns and Solving Problems

2010 TOCICO. All rights reserved.

Complex The Domain Master I see it.

Contradiction creates Conflict

Manage using methods appropriate for Complicated Domain. (More complicated)

Risk: Over Simplify

Keep things simple (Be stable and predictable)

Manage using methods appropriate for the Simple Domain. (Simpler)

Because: Our products and processes fall in the Simple

This drives Detail-itis