Introduction to Management Cybernetics Author: Dr. Werner Boysen Cybernetics is a Introduction to Management Cybernetics transdisciplinary approach for exploring regulatory systems— Motivation and their structures, constraints, and Objectives of possibilities. Norbert Wiener this Learning defined cybernetics in 1948 as “the scientific study of Series control and communication in the animal and the machine. Dr. Werner Boysen The author‘s motivation for this Learning Series is to help influential people get to better decisions in our dynamic- complex (business) world. I. Why we need Management Cybernetics Motivation and Objectives of this Learning Series The author’s motivation for this The consequences of our activities Counter-measures are often taken Major problems require holistic Learning Series is to help influen- appear with delay and have a cast- too hesitantly and not with the solutions and well coordinated tial people reach better decisions er effect. That makes it difficult to necessary enthusiasm. processes, also in companies. in our dynamic-complex (busi- enforce effective measures. ness) world. Unfortunately, people introduce People often try to tackle global An example is the high nitrate measures too hesitantly and only problems with local measures, Our (business) world is charac- pollution of our ground and if the pain cannot be cushioned which cannot be successful. For terized by an increasing dynamic drinking water by using too much any more. And people often do example, a German solo attempt complexity which often cannot be fertilizer. Another example is the not wait until their measures show cannot resolve the global climate fully understood. Therefore, this global warming taking course ex- effectiveness, but skip over the problem. A global alignment often complexity is often inappropriately ponentially by human intervention measures too early because they fails because of diverging interests reduced by decision makers. Sim- in natural regulation systems. We do not understand the interre- and (too) long decision-making ple mental models are applied. Ex- can also observe undesired devel- lations and they are not patient procedures. Serious problems are ponential developments, tipping opments in companies caused by enough to wait for the results of often not solved because of rela- points and trend inversions are of- harmful management. correct decisions. tively unimportant rivalries. ten not recognized, underestimat- ed, missed, ignored or faded out. Usually noticeable phenomena As effective decisions normally Because many problems are com- appear with a delay and are ig- imply constraints, they are unpop- plex, measures have to be set Such wrong understanding and nored or suppressed for a long ular and harm the decision makers. up holistically. This also applies handling of complex interrelations time. The later counter measures To avoid personal consequences, to developments and changes in may lead to wrong decisions and are introduced, the more dramat- right decisions are often sof- companies. As in topics with glob- illusory solutions. We observe and ic measures have finally to be tened, are not implemented al relevance, highly qualified ex- suffer the consequencesin bad taken to reach the “green area” with the necessary enthusiasm perts also act in companies within politics, in climatic changes, in again. Often it is not possible at and fail to meet their objectives their departments; the large levers dealing with raw materials and in all. The phenomena continue to while the underlying problems for improvement are the capability the management of companies. have an effect. become worse. to consistently embed compa- nies in attractive markets with We do not treat the roots of aberra- Nitrate diffuses into the soil very In many cases, decision makers high potential and in achieving a tions, but impose covers on acute- slowly and seeps into the ground “buy” apparent carefreeness and high-quality alignment among ly arising symptoms. For example, water many years after having take comfort in continuing to con- specialists – with the background funds are created to compensate been applied in agriculture. But sume resources. Human beings of a mutual goal. Brazilian farmers for economic then the nitrate concentration in also belong to these resources, losses in soja cultivation for large the ground water further increas- suffering physically and psycho- food companies due to the forest es although no additional fertilizer logically from enduring problems. clearance – instead of preventing is applied. Apparent solutions cause further the forest clearance. The system cascaded problems. will tip. The Amazon forest will be- come a steppe. We are destroying our livelihood. 4 The Consumer Goods Forum End-to-End Value Chain 5 What you can What you How can you Index expect from benefit from benefit from this Learning this Learning this Learning Series Series Series? The objective of this Learning By working through my Learn- • Every learning session Series is to set stimuli for self-re- ing Series about Management can be completed in 15 flection and to offer references for Cybernetics, you will be able to minutes. Hence, working benchmarking organizations in dy- considerably improve the quality through the full series of 12 namic-complex environments. of your business. learning sessions will require 2.5 hours of your time. • This learning series • You will recognize that dynamic provides a compact view of complexity is increasing. • To make the most of it, reflect management cybernetics. on the content of each • You will understand why session and transfer the • Within the scope of this traditional management recommendations to your Learning Series it is not my does not work in dynamic- own business and to your intention to deliver a detailed complex environments and specific challenges. Build blueprint for implementation, that we need cybernetic your growing business case! but rather stimuli for self- thinking in management. reflection and references for a rough benchmark for • You will learn the necessary your organization. For further basics about cybernetics details, feel free to contact me. and will be introduced to the most relevant aspects of • Many management areas are cybernetics in management. touched on in this Learning Series, but I consciously avoid • You will gather useful additional an outright management techniques for improving revision course; this Learning your management skills. Series rather highlights the cybernetic specialties • You will become familiar with in each of these areas. practice-proven methods and tools to improve the quality of the dynamic-complex system and to lead systems. • You will get relevant sources for further reading about each topic. 6 The Consumer Goods Forum 7 Management awareness of Why we need Cybernetic reciprocal eects management strategic set-up cybernetics IV III The cybernetic I consulting approach II Show XII SummarySum Systemic Show XIII thinking How to introduce cybernetics Measuring to a business cybernetic excellence Show XI System-orientated process design and stabilizing feedback Integrated mechanisms ITIT workflow appplications HowH to right-size reesources along thhe business process Stay tuned Best-practiceB leadership for the new in cybernetic organizations releases of this Coping with Learning Series! dynamic complexity 11 Why We Need Introduction to Management Management Cybernetics Cybernetics 1 PAGE 11 Index I Learning Objectives 1. Why Session I Management Cybernetics? PAGE 14 In this section… 2. How Does the Cybernetics • You will learn why linear cause- PAGE 20 and-effect thinking does not Approach Work? lead to sustainable results in a dynamic-complex world A. What should this desired complexity look like? PAGE 22 • You will be introduced to basic terms of cybernetics B. How can management in complex environments succeed? PAGE 24 • You will get a first glance of how organizations in dynamic- complex environments can be successfully managed Questions for Reflection PAGE 26 Summary of Section PAGE 28 Relevant Sources for Further Reading PAGE 29 I. Why we need Management Cybernetics Our thinking patterns do not work any more because our world is de-materilizing, 1. Why The relevance of tangible assets is decreasing! Management Our complex world is not explained by the properties and the capabilities of its elements, but by the properties Cybernetics? and the capabilities which arise from the relationship between these elements (emerging properties). Many of our “thinking patterns” …only work reliably in steady environments with Therefore, the new mostly linear cause-and-effect relationships sources for value are: …date back to former times when ad-hoc solutions were required without considering network effects • Individuality, plurality and diversity (“both … and …” instead of “either … or …”) …are the wrong orientation frame and lead to wrong Managers should conclusions in complex environments • Interdisciplinary work make sure that these sources are explored! • Relationships in open networks They should learn to Many of our thinking patterns • Communication along processes think in complementary dimensions! endanger the survival of organizations. • Intangible values (intellectual property, contractually secured rights etc.) Why are these patterns no longer effective? 14 The Consumer Goods Forum End-to-End Value Chain 15 I. Why we need Management Cybernetics ...and because networks increase the complexity and create uncertainty. – By nature,