Jerry poses a very interesting and worthwhile question.
Im not a theoretician but Ive lived the underlying issue for many
years in a commercial context. My practical experience has been quite
clear on the assumption that "If you optimize the performance of the
parts, the whole will also be optimized" The experience is that exactly
the reverse is true, optimizing the parts actually guarantees that the
whole will be sub-optimized, sometimes seriously.
We are used to counter-intuitive results in the SD world and this is a
big one, part of widely held folk wisdom and very pervasive in
management policy setting and decision making. A theoretical
contribution, even a clarification, would be most helpful in supporting
those of us trying to change "the system". Real progress seems to
require more support than the anecdotal evidence most practitioners rely
on.
To set the context... how do we define the "system" of which there can
then be "subsystems". Definitely not trivial unless youre talking about
systems so simple they can genuinely be separated from all other
systems. In my experience these happen only in classrooms and
immediately become irrelevant to the "real" systems we all have to deal
with. The following is drawn from my direct response to Jerry Winston...
In my case the system I want to optimize is Bell Canada, Canadas
largest phone company and the operating component of Canadas largest
Corporate entity. I can even precisely state the optimisation criteria
and measurement... the creation of Shareholder Value computed according
to a rigid set of rules. So far so good.
When I look down and inward, I see that were made up of entities
I could define as systems (say... internal business units). For years
weve wrestled with pushing accountability for performance downward...
usually to the point of carefully designing internal profit centres.
Each is charged with optimizing its performance and "contribution to the
whole".
To our great chagrin I can also attest that this does not and CANNOT
work. Because were so connected and interdependent any optimisation of
a component part
automatically suboptimizes the whole. In SD terms, feedback kicks in and
ruins your carefully designed plans.
This would be true even if there was no cost to the optimisation of the
parts because each would have to accomodate the conflicting interests of
all the others. But there is a cost and it can be huge. For some time I
worked on designing elaborate transfer pricing schemes between internal
subsystems, just to count the beans, in the pursuit of optimisation.
This intervention alone suboptimises the target system because it
consumes energy and money without adding value. In the end, we, like
almost all other telecom companies had to give up. The currently
favoured slogan is "Customer First, One Company, One Team". Sounds
trite, makes good ad copy but really is an explicit recognition of
failure in optimising component systems to the benefit of the whole.
Further, when I look upward and outward from my "defined" system I see
that were part of many other systems. Two in particular would be the
previously mentioned corporate entity and the Canadian
telecommunications marketplace. If the above arguments are true then
optimizing my performance will also act to sub-optimize these
super-systems... but this would be another story....
What I keep coming back to time and again are some of the fundamental
observations of system dynamics... First, complex systems tend to LOW
performance. Second, boundaries between systems are necessary but ONLY
because of our limited, inadequate ability to deal with the real system
of the whole. Any definition of a subsystem is indeed arbitrary and we
deny this only at our peril.
Bob Walker
Director-Performance
Bell Canada
From: "WALKER, BOB J" <
bob.walker@bell.ca>