Systems Management Business Model

By M. Isi Eromosele

Every improvement is a change, but not every change is an improvement.  This saying has been circulating around business for many years and is the fundamental reason for so many different approaches to business improvement such as LEAN Manufacturing, Six Sigma, Process Re-engineering, TQM, and more. 

Almost every company we know is taking some sort of action to change the way it does business, but unfortunately, many of those changes don’t translate into an increase in the bottom line. Why not?  Too many approaches to improvement are just about change.  

There are two primary forms of improvement approaches in business today – the Mechanical (or traditional) Approach and the Systems Approach. 

Mechanical vs. Systems Approach

The Mechanical Approach to business management and improvement has its basis in the Realist View of the world.  In other words, the global improvement is the sum of  many different local improvements. 

The Systems Approach to business improvement and management more closely follows the principles of Archimedes – “… if I find the leverage  point, I can move the  earth…” 

In other words, the global improvement may not necessarily be equal to the sum of many different local improvements.  Instead, to improve the business, you might need to find its leverage point and focus the improvement there.

The Mechanical Approach

The approach you adhere to fundamentally depends on how you view your business and how people behave inside the business. Organizations that operate according to the Mechanical Approach to business management and improvement view a business like a machine with individual parts with each performing a separate function that together perform a whole function.  

We claim this because the best way to fix or overhaul a machine is often to break it into its component or manageable parts, fix each of them, and then put it back together. 

Likewise, many companies in the global business world are in the middle of a large scale enterprise wide transformation where all of their departments are trying to separately improve the way they function.

It is as if someone somewhere performed a diagnosis of the business and determined that if each department improves on its own, the whole company will improve.

The primary problem with the Mechanical Approach to business management and improvement is that  today’s businesses are often very complex and are made up of many different inter-related and interdependent departments.

Given these facts, trying to improve every part of each department of any company is time consuming, expensive and extremely challenging to coordinate. Additionally an improvement in one department often leads to a big problem in another.  Have you ever seen or heard of any one of the following:

• In an effort to reduce material cost, the purchasing department switches vendors which lead to a longer lead time to secure the part resulting in a manufacturer's inability to supply on time. 
• A reduction in the number of crews manning a particular department leads to the inability to meet a surge in customer demand resulting in either increased overtime costs or excessive freight costs to supply on time

In implementing the Mechanical Approach to business management and improvement, the results  take too long to achieve, too much effort is required for limited results and the real problem limiting the business from greater profitability is never leveraged, as too many  resources are improving in too many places.

The good news of the Mechanical Approach is that if the business manages to improve all the parts, the whole business will most likely improve – but at what cost?

The Systems Approach

The Systems Approach to business management and improvement views a business as an organism of interconnected and interdependent parts - just as the human body is an organism of parts. 

If the body starts to feel ill and exhibit symptoms of muscle pain, chills, cough and fever, the patient concludes that he/she has a problem.  After treating each symptom with a specific remedy of aspirin, rest, cough syrup and cold medicine with no improvement, the patient often seeks the doctor’s advice as to the root cause of the illness.  The doctor’s diagnosis of the illness leads to the conclusion that the patient has pneumonia.  

The doctor then explains to the patient that the pneumonia creates the fever which leads to the chills; also the pneumonia creates the cough which leads to the back ache.  After explaining the cause-and-effect of the root cause to the prevailing symptoms, the doctor then prescribes the remedy to cure the root cause – in this example, antibiotics.

Likewise, the Systems Approach to business management and improvement doesn’t break the business down into manageable chunks and treat the symptoms.  Rather, the Systems Approach seeks to understand the cause-and-effect relationships between each of the business problems (symptoms) and drives back to the root cause of what limits the business’ improved profitability. 

This often unidentified root cause or leverage point is the area of the business, which if all the improvement efforts were focused on, often leads to dramatic and quick bottom line increases.

M. Isi Eromosele is the President | Chief Executive Officer | Executive Creative Director of Oseme Group - Oseme Creative | Oseme Consulting | Oseme Finance

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