Organization as a System

Organization as a System: A 10-Step Process

Introduction

Step 1. Outputs

Step 2. Customers

Step 3. Environment / Community Need

Step 4. Customer Knowledge

Step 9. Plan to Improve

Step 10. Design and Redesign

Introduction

Deming first called attention to the importance of linking a system for production with a system for improvement and tying them to a common aim for the future. He referred to this as "viewing production as a system." Dr. Thomas Nolan, of Associates in Process Improvements, Silver Spring, MD and Dr. Paul Batalden of the Center for the Evaluative Clinical Sciences, Dartmouth Medical School, are responsible for creating this document based on the work of Dr. Deming. This exercise has helped many leaders view their organization as a system. This document is used with permission.

All the tools and methods of quality improvement revolve around a basic understanding of "production as a system." Whether the organization produces cars, bank deposits, surgery or education, the principles are the same. Therefore, it is important to read through this section in its entirety being mindful that this will later be part of your project.

Deming defined a system as a group of interdependent people, items, processes, products, and services that have a common purpose or aim. A system that is capable of continual improvement can be illustrated as:

To understand an organization as a system of production we must consider:
How we make what we make.
Why we make what we make.
How we improve what we make.

This can be depicted as:

OAS

By defining a system in this way, we can link the means of production with the aim or purpose of the organization in order to continually improve. "Aim" means the connection to the underlying social or community need. The aim also considers the environmental issues that may effect the future of the organization. General systems theory, originally proposed by Von Bertalanffy and then by others in biology, psychiatry, management, and engineering, is all related. An "open system" is a system that permits continued access from "outside" of the system itself.

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Step 1: Outputs

The question we seek to answer is: What do you produce? or What do you make?

Tips:
List the important ones first (e.g., highest volume, etc.)
Be sure you are listing services or products, not the activities necessary to produce them. For example, "lab result reports" is the product and laboratory testing is the process; "organizational policy" is the product and "policy-making" is the process.
Manufacturing organizations produce a product. Service organizations produce services. Health care workers commonly produce information, procedures, reports and decisions, patient interventions, services, and a therapeutic environment among other outputs.
This is a difficult exercise for service organizations. We are in the habit of describing what we do -- not what we make. Being able to describe what we make is the beginning of being able to figure out how to improve.

The answer to this question helps begin the knowledge building activity by focusing on what care, service,or products the hospital produces.

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Step 2: Customers

The question we seek to answer is: Who uses or receives these services or products?

Tips:
List the customers you often encounter. Focus first on the external customers.
Be as specific as is practical.
Customers are those who need and/or benefit from the products and services you produce.

The answer to this question is a clarification of the identity of those who benefit from what you make.

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Step 3: Environment / Community Need

The question we seek to answer is: What is the underlying need that those customers have for what you make?

Tips:
What environmental issues can impact what you provide ? (competitors who have developed innovative approaches, national or international issues, change in Federal laws/regulation, etc.)
Focus on the fundamental, underlying needs for your services. "Why do people actually need what you make?"
Sometimes it is helpful to take each major customer and carefully ask about their need for what you make.
It is often helpful to work with the highest volume outputs and the most important customers rather than initially trying to address the needs of all customers for all services and products.
Sometimes it is helpful to ask, "What other services or products might meet that need?" as a means of gaining further insight into the underlying need. Remember that the focus is on the need--not what you or anyone else may do to meet that need.

The purpose of this question is to help you gain insight into the underlying need for what you do.

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Step 4: Customer Knowledge

The questions that must be answered here are:
What measures or characteristics do customers use when they assess and judge the goodness or quality of what you make?
What about the customers might prompt or drive their interest in assessing and judging quality that way?

Tips:
Start with a single customer, identify what you produce for them, and ask how that specific customer assesses quality or "goodness" about that product or service.
Now focus on what might prompt each customer (or customer group) to assess and judge quality that way. What are their reasons for that quality characteristic? Connect those "prompts" to the measures of quality with an arrow from the prompt to the measure. These prompts can be thought of as "drivers" of the measures of quality and goodness.

The answers to these questions help develop further insight into the ways in which improvements in what is done can be guided by the specific quality concerns of those who benefit from what you do. The intention here is to build further knowledge of the customers that you serve.

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Step 5: Processes

The question we seek to answer here is: What methods or activities do you use to make your service or product?

Tips:
Arrange the processes in a typical scenario that illustrates what usually happens. This may be the steps of how a patient comes and moves through the major steps in the hospital, or it can be the production of a car.
Some processes come together to form the "core" process--or mainstay--of what you do. Other processes support that core process. Both are important. Supportive processes find their way into many steps of the core process.
Arrange the steps in the core process in such a way that it is clear that the supportive processes help the core process. If displaying the Post-It notes on a piece of butcher paper, consider turning the sheet on its long side and starting the first step in the core process in the upper left hand corner of the sheet, then list the steps in sequence across the top of the sheet. The supportive processes can be clustered on the bottom one-half of the sheet.

The answers to these questions reveal that there are several processes at work to generate what you produce. Some of them are linked to each other. Some of these linked processes form a "core" that represents the basic work of the organization as it constitutes the "mainstay" of what is regularly produced. Further, it will be clear that some other processes are linked in a supportive way to that "main" or "core" process.

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Step 6: Inputs

The question we seek to answer here is: What comes into your process and is changed by the regular actions of the process to create the services or products?

Tips:
List the human, financial, material, and information inputs to your processes.
Inputs come from internal as well as external sources.

The answer to this question builds knowledge of the needs, skills, materials or goods that regularly enter your system and which form the beginning point for your work.

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Step 7: Suppliers

The question we seek to answer is: Who or what specific people, departments, or organizations provide the inputs?

Tips:
For each input in step 6, list the supplier(s).
List suppliers of patients, goods, manpower.
Sometimes the same person or department can be a supplier as well as a customer of the process. If so, they supply one thing and receive another -- presumably your process has added value to what they have supplied.
Remember that the concept of supplier applies both inside and outside your organization.

The answer to this question identifies those you depend on for what you do.

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Step 8: Vision

The question we seek to answer is: Based on what you know about the need for what you do, and your knowledge of the customers, what is the vision for the future in your organization?

Tips:
Your "vision" for what you seek to become should be clearly related to the underlying need in the community and society for what you do, as well as to your knowledge of the customers.
Placing those social/community needs and customer knowledge items (the "prompts" behind the way in which people define quality) side by side on a single sheet of paper sometimes allows you to begin thinking about what it might take to become an organization in the future that better meets those needs.
Note that your knowledge of the processes of what you do helps inform your understanding of what those processes are able to produce (process capability) in relation to the needs and to the knowledge of the customer.
Is the "vision" shared? What is shared is likely to actually inform ongoing efforts.
Be as specific as you can. If the "picture" of the future is clear--like a photograph--it is easier for people to know what is meant and, therefore, it is more likely to be realized.
Remember that your ability to clearly state this aim will improve as you keep working on it.
Sometimes it is helpful to ask this question for five years from now. "What do we need to become in five years that we are not now, based on our knowledge of needs and our knowledge of the customer?"
Some have found it helpful to realize that a vision of the future should permit your organization to be recognized as "responsive" and as "discernible" by those you intend to serve.

The ingredients of your shared view of the future for your organization underlie what will be needed to build a shared sense of that future. The shared sense of the future is what every worker needs in order to align what they do and how they might improve what they do with the future of the organization.

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Step 9: Plan to Improve

The question we seek to answer is: Based on your vision for the future, on your knowledge of the needs, on your knowledge of the customer, and on information from employees involved and knowledgeable about your work, what is strategically important to improve?

Tips:
Remember that you answer this type of question each time you build a capital or operating budget.
Limit number of responses to an important few; certainly less than five.
Sometimes it is helpful to think of these as "themes" of improvement.
Sometimes it is helpful to think of these as the names of major "gaps" against which the next layer of the organization will be asked to "plan."

The answers to this question provide the near-term focus (12-18 months) for work on the improvement of what you do. They integrate the improvement efforts of the organization.

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Step 10: Design and Redesign

The final question we need to answer is: What specific process(es) will offer you the greatest leverage in securing the strategic improvements you seek to make?

Tips:
Be as specific as you can.
Limit the number of processes to 3-8.
In keeping with your strategic priorities for improvement, you may identify some processes that simply need to be stabilized so that they are more predictable.

The answers to this question offer greater precision for the immediate improvement plans and recognize that improvement will occur either by designing some new processes or by re-designing existing processes.

Now examine the arrows in the diagram that you first saw in the Introduction. These must be managed in an organization. Who assures that customer knowledge is gathered and translated into a vision? Who monitors the involvement and feeds it back to enhance the vision?

OAS Diagram

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Organization as a System: A 10-Step Process

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