Flattening the curve of complexity – An operations viewpoint
25/05/2020
During conversations with colleagues I started to have this strange connection between the exponential pandemic spread and the challenges facing operations managers in our Primary Sector companies. Weird I know. But hear me out.
The virus has had an exponential growth.
Every time someone gets the virus it has the potential to more than double its spread. Each country is now having to manage this new “variable” of life with its citizens. Essentially each country has an operational economic model and the Govts are constantly trying to manage that model for the benefit of the country’s citizens (although the latter can be argued).
In a company, the GM Operations is trying to manage the operating economic model with the resources available. He or she is having to manage many variables, many risks, coping with change from inside and outside and looking at ways to be “Leagile” i.e. lean for efficiency yet agile to respond to the customer.
If one of these variables causes a doubling in operational management daily or even monthly a traditional company cannot sustain itself in the long term because it won’t have enough people power to manage the challenge.
There’s an old story about the inventor of chess. As the story goes, when chess was presented to a great king, the king offered the inventor any reward that he wanted. The inventor asked that a single grain of rice be placed on the first square of the chessboard. Then two grains on the second square, four grains on the third, and so on. Doubling each time.
The king, baffled by such a small price for a wonderful game, immediately agreed, and ordered the treasurer to pay the agreed upon sum. A week later, the inventor went before the king and asked why he had not received his reward. The king, outraged that the treasurer had disobeyed him, immediately summoned him and demanded to know why the inventor had not been paid. The treasurer explained that the sum could not be paid - by the time you got even halfway through the chessboard, the amount of grain required was more than the entire kingdom possessed.
The king took in this information and thought for a while. Then he did the only rational thing. He had the inventor killed, as an object lesson in the perils of trying to outwit the king.
For the most part, this fable is used as a lesson in the power of exponential growth. From the one grain of rice on the first square of the chessboard, the amount increases to the point that by the time you get to square 64, there are over 18 quintillion grains of rice on the board. It's a demonstration of extreme growth.
But in the real-world exponential growth cannot be sustained. Our world is becoming increasingly complex. Its gets even more complicated when issues like the pandemic hit. Some business operations have not been able to cope and have stopped. Some countries have struggled to cope and have had mass unemployment and catastrophic economic impact.
Our team has been speaking to a number of operations and IT managers in the Primary sector and they all see more and more complexity coming. The “new normal” from COVID-19 for Operations managers is another layer of complexity on top of; compliance, regulation, traceability, ethical labour management, sustainability, packaging, export markets etc. This all means very challenging and time-consuming tasks for many operations teams in the primary sector. In order for operations management to cope, there needs to be a way to flatten the curve of complexity and to create more time!
There is a new operating model coming in the Primary sector that is centred around the 4th Industrial revolution, the adoption of cyber-physical systems, the Internet of Things and the Internet of Systems. As we implement smart technologies in our factories and workplaces, connected machines will interact, visualise the entire production chain and make decisions autonomously. It will use a form of digital decisioning where Operations teams give empowerment to an intelligent digital core brain with automation capability that is consistently optimising based on the business rules, integration, data analytics and contextual management of service at scale directed by the operations team.
A worldwide industry that leads in using new technology to transform is Finance. An example of a company that has re-looked at its operational model is Ant Financial.
“In 2019, just five years after Ant Financial Services Group was launched, the numbers of consumers using its services passed the one billion mark. Ant Financial Service provides variety of services including, consumer lending, money market funds, wealth management, health insurance, credit-rating services, and even an online game that encourages people to reduce their carbon footprint.
Unlike traditional banks, Ant Financial is built on a digital core, there are no workers in its critical path of operating activities. There is no manager approving loans, no employee providing financial advice, no representative authoritative authorizing consumer medical expenses. And without any operating constraints that limit traditional firms, Ant Financial can compete in unprecedented ways and achieve unbridled growth and impact across variety of industries.” (Harvard Business review Jan – Feb 2020)
People on average can only cope with 7 +/- 2 variables to manage at once (from a paper by George Miller Cognitive Psychologist, Harvard University). Therefore, people in Primary sector operational supply chains make decisions that are not optimal because they can’t cope with exponential complexity. They make “best guesses” given their own human constraints or use spreadsheets that only one person can understand to manage a handful more than 7 +/- 2 variables.
The only way Operations managers will cope with the increased complexity we inevitably create in the future will be to use intelligent design and advanced technology that helps our workers do their jobs, helps organisation's supply chains flourish and delivers an exceptional customer experience.
Cucumber was formed in 2004 and its aim was make the complex simpler – our tag-line was "Refreshingly Simple Solutions". Our DNA is to help you reduce operational complexity using design and technology together.
To help flatten the complexity curve, Cucumber provides a number of techniques and capabilities to support you as you move into the 4th Industrial Revolution.
Human-centred and customer experience design
Data integration, management and automation
Data analytics and optimisation
Benefits management
To get started we can help you and your team assess your position on the Curve of Complexity. We can help put together a holistic view of your business and the information needed to illustrate to the board the need to invest in new ways of working and new technology to support the business of the future.
If you would like to talk to us about how we can help flatten your complexity curve please contact me.
Written by Ian Gray