Designing an Operation Part 2

Comment: This is the eight post in an Operations Management series.  We have looked at the 4M's, focus areas, and set a scenario. In this post, we want to continue discussing the designing an operation and to develop the operational design structure.  The idea is to draw on the concepts  from this as restructuring the overall operation can be a challenge. Nonetheless, I will present this as an overall design restructure. 

Designing an Operation Part 2: Discussion

The problem statement for designing an operation for sustainability and adaptability begins with environmental conditions in which there is a high degree of uncertainty due to political, social, and economic instability. The organizational construct presented was built upon Complex Adaptive Systems, CAS, concepts.  Under this construct componetized business elements are organized in a web of communications links exchanging information. The benefit of this construct is scalability, encapsulation of processes, polymorphisms, and  identification of the irreducible state of the operation.  The operation begins to take on a crystline molecular appearance if designed correctly, Figure 1. 

Figure 1:  Crystalline Molecular Structure

When overlayed with business operations the crystalline structure takes on an operational construct, Figure 2.

Figure 2:  Complex Adaptive Systems applied to Business Operations

The fascinating aspect of this is that further inspection of the network reveals that nodes are structured more like a U-shaped production cell. Each node recieves inputs, processes the information and work, then outputs results. The results are communicated to other nodes over the dynamic connections between them. The beauty of this design is that the organization can manage the operations through node management. Nodes can  be added, removed, outsourced, expanded, combined and partnered.

This design lends well to an adaptable operation in many ways that allow for:

1. Componentized Cost and revenue:  Nodes are well defined in terms of staffing, materials, and equipment. Adding new nodes or outsourcing nodes have known associated cost. Therefore, operations managers can formulate costs impacts on the fly of adding increases in capacity or assess cost savings when contracting. Likewise, some nodes or sets of nodes may earn revenue. These nodes can be easily consigned earning rates based on thier design.
2. Scalable Operations:  The nodes can be used as either a virtual node representing entire encapsulated nodal network or the node can represent a fundamental process. These fundamental processes could be automated or human supervised processes that are basic and cannot be further reduced without losing the function of the process or assigned node. 
3. Manageable Communications:  Node inputs and outputs are managed as the links between the nodes are dynamic or polymorphic. Nodes can self determine or self-organize the linkages and adapt to the operational and information requirements by realigning connections to other nodes as information demands require. The information flowing through the linkages is formatted and known. Bandwidth consumption can be estimated and telecommunication networks can be right sized. 
4. Change Management:  Human beings are most resistant to change. At least in their personal sphere where change affects them the most. Organizations can maintain a high degree of flexibility and adaptability by managing the organizational change virtually. Humans operate and work within thier assigned nodes conducting the work they are accustomed performing. Meanwhile, the nodes are coming on and off line or moving connections around adapting to change without disruption to the work being performed within the node. The only times humans would be affected is when a node's process or work becomes obsolete and during a period of contraction when the node is set dormant. Hence, the outward appearance of the organization is stable while virtually node loading and communications is radically changing. 
5. Strengthened Financial management:  Nodes can be financially managed in several ways. The sunk and variable cost of a nodes are well defined. More interesting is that nodes are managed also at the inputs and outputs.  Nodes acquire raw inputs then process those inputs producing an output. The inputs can be purchased and the outputs sold in such a way as to make the node economically viable. Therefore, in a complex adaptive network of nodes an internal micro-economy can emerge in which nodes are buying inputs and selling the outputs to each other.  The collective output is the organizations net worth economically managed along the way. This is a financial management reflective of total quality management in which the balance sheets and income statements are managed along the way rather than at the end, sort of a new slant on activity based accounting. The benefit is trimming out waste and loss. 

Other positive aspects of the concept is total virtualization of the business and operation. This does not mean there will not be brick and mortar aspects. Total virtualization does mean a major shift of processes and operations away from the brick and mortar and paper towards an increasing paperless office. The paperless office originally meant that the systems drove the paper rather than the paper driving the systems. Total virtualization is when the systems and the operations become significantly virtualized dramatically reducing paper usage. Staff work from virtual desktop sessions within virtual nodes, the organizational structure virtually adapts to emerging conditions, and the datacenter is fully virtualized such that staff can select from within their session the amount of RAM, processor power, and diskspace required to perform their work. The system resources may be allocated based on an internal currency used to budget the resources. This will also lend to strengthening the financial management of the organization. 

I hope there was something of value you found in what I have presented. In the end, reflecting natural systems in the organizational structure should lead to more efficient operations than the traditional stop gap and continuous improvement efforts. The correct design in the beginning can dramatically reduce the cost of correcting after the fact such as the high cost of continuous improvement.