SIMULATION

The Organizational Transformation™ Simulation
 
   In the real world of organizational change, it is fair to say that every business in every industry has changed in the past 10 years. Even McDonald's is trying to provide hamburgers "your way." Yet many change initiatives have failed to produce intended results.
   As industrial engineers, we are challenged every day to provide solutions to accelerating demands for competitive advantage. Faster, cheaper, smaller, bigger, and more are the goals that drive a continuous search for differentiation. The re-engineering revolution of recent years has brought new meaning and purpose to our profession.
   Now, the emphasis has shifted from re-engineering to transformation. "Transformation" implies a change in form, not function. Transformation is therefor not a problem-solving experience, it is a process of creating a new context of existence.

Context and Content

   Transformational change demands change in both context and content. What's the difference between the two? The content of any business includes the legacy systems, structures, practices, and physical configurations that dictate how processes function. Content is the focus of re-engineering. Context, on the other hand, comprises the deeply imbedded business models and mind sets that drive organizations. Mass-production thinking with the regimen of "plan, organize, and control" has been the model of American businesses for nearly 70 years. The transformation of any business comes face-to-face with the enormous barrier of contextual change.
   As Jane Gaboury pointed out in her October 1999 editorial "Context is Everything," workers seldom create the context within which their work is performed. Likewise the context in which industrial engineering takes place seldom is influenced by industrial engineers.
   As a result, engineers and workers around the world are being challenged to change content within the old context of mass production, trying to find combinations of systems, resources, and people that can win the war of market share and linear economic improvements. Simulation technology has become an unprecedented tool in pursuit of content innovation.

Simulate contextual change

   In any organizational transformation, the context must be changed before new content can be created. Think about it in these terms: The engineers at Aztec Boats in 1492 could not install a 3,000-gallon water tank on a "flat-world boat." Neither can a modern call center drive customer retention by reducing minutes per call.
   Content manipulation within the old context will not lead to a transformation in form.
In the early 1990's, I recognized the magnitude of the mass production context barrier. Employee empowerment became the buzzword, but there was very little substance behind the desire. Then came teamwork, re-engineering, partnering, and eventually innovation. All these issues appear to be content-relation, but the real issue is context. My trusty old industrial engineering handbook does not contain references to "interdependent human interaction." The mass-production business model divides jobs into discrete functions to speed up the flow of things.
   Interdependent human interaction is new content within a new context.
   Total quality management programs, rope courses, white water rafting, and wilderness experiences can't break the contextual strangle hold of mass-production thinking. It has become clear that change in content can't and won't change the context. Therefore, the only way to impact the contextual barrier is to simulate context change.

Organizational transformation simulation

   The organizational transformation simulation I refer to is a human experience; it is not computer-based. This simulation experience is about the transformation of both the context and the content of the business environment. Participants are randomly assigned jobs in two factories that manufacture a paper origami "flier." Some participants are cutters, folder, or painters. Others are customers, sales-people, or plant managers. The dynamics are driven by customer demand rather than business strategy.
   The simulation takes place in an eight-hour day and contains three 30-minute manufacturing iterations. Participants are told there are no rules, yet they willfully conform to the demands of the manager. Cutters cut, folders fold, painters paint and salespeople sell. In the first 30-minute iteration, the awareness of the participants is limited by the mass production system design. No one is aware of the strangle hold on this contextual issue.
   In the beginning, some of the factory workers express concern for the needs of the customer, but they are reminded that the customer is the domain of sales-people. Some participants may suggest cross training, but they are limited by their job descriptions. People quickly accept their condition and begin to blame others for their own inability to perform. The customer is over-promised and significantly under-delivered as the simulation unfolds.
   The key to any simulated experience is learning. People must learn from the experience; thus, the simulation contains time-outs in which the entire group can understand the agony of the painter and the plight of customers. Since everything is based on random job assignments, people are reminded constantly that the actual experience is not about them personally. Anyone could have been the painter; the cutter might just have likely been the plant manager.
   The learning experience from the first iteration is profound. Most groups conclude that sophisticated plan must be prepared, more organization is required, and more control over the manufacturing process is needed. This is mass-production thinking personified!
   The second iteration is an industrial engineer's paradise. Driven by selected customer input, the two factories now experience dramatic improvement in two-dimensional effectiveness. Factory A is committed to serve one customer and Factory B serves another. The other customers are ignored. Differentiation in product - heavyweight fliers and lightweight fliers - is possible, and paint can be eliminated in favor of colored paper or stickers.
   The performance challenge now shifts from the factories to the salespeople. Can they sell all the product that the factories can make? The salespeople are bombarded with customer requests that "don't fit the factory." Their challenge is to find the customers who want what the factory can make. (If you don't want two all-beef patties, please step aside.)
   The human dynamics are almost oppressive. Folders complain that their hands hurt. Cutters, aided by a paper cutter, easily swamp the folders. Painting is identified as the bottleneck, and the inevitable question is asked, "Why paint?" External distraction of any kind leads to a sign on the door: "Employees only beyond this point." Output of standardized fliers improves, but customer neglect increases. "You can't be all things to all people" justifies the lack of customer focus.
   The second time-out reveals the oppressed state of many workers. While efficiency and effectiveness have increased, employee morale has suffered. Customer neglect is accepted as a condition of the environment, and the economic reality is not a cause for concern.
   At this point most people are very frustrated. The planning process didn't work, the organization process is autocratic, and the control mechanism led to low morale. It's lunchtime and the challenge for the third iteration is to produce 100 percent quantity, 100 percent quality and 100 percent responsiveness while serving all customers. This assignment appears unrealistic. The context of mass production is still alive and well.
   After lunch, the participants are told that changing the content without changing the context will not product results. The simulation facilitators suggest to them that the answers are mass customization and wholeness. But at this point, these words have no meaning to anyone.
   As preparation for the third iteration begins, something dramatic and dynamic happens. In 20 minutes, the facilitators simultaneously change the context and the content. They suggest that it is the business of the business - not the organization of the organization - that must change. They facilitate a different form of practice and suggest that the fliers don't have to fly.
The contextual shift in thinking is profound. The chaos that results is amazing to watch. It appears that all control is lost. Customers ignore the "Employees only" signs and invade the factories seeking innovation. The heroic plant manager and sales roles dissolve in the wake of high commitment and self-directed activity. The mass production assembly lines vanish in favor of work cells. The creative potential of the people is released, and innovative ideas flow effortlessly to meet customer demands.
   The third iteration is almost beyond comprehension. In my 10 years of conducting the simulation, it has never failed. All customers are served. The emotional experience is exhilarating. With no increase in the number of people, the factories easily meet all the demands for 100 percent quantity, quality, and responsiveness. The key learning point is that people love to apply their creative potential. Once the mass production context is removed, human potential is released to serve customers.
   Of most significance, mass customization becomes the new business model for the factories. The context change was not carefully planned by senior leaders and forced on the people. A sense of purpose replaces the plan, and alignment around achieving that purpose causes the people to invent the new content required for success.
   Further, and equally significant, the entire transformation from mass production to mass customization has nothing to do with technology.
A key point to note is that human potential must be released by the context shift before innovative changes in content can be created.
While communication, collaboration, and customer partnerships all improve during the third iteration, none are aided by technology. The keys are to transform jobs to roles, blame to principle-centered action, and the control mechanisms of the mass production business context into aligned behavior.
   Extracting experience is a critical step and must wait until the second day of the training exercise. By the end of the simulation, everyone is physically and emotionally exhausted. The next morning people have the answers. Everything they have been told about teamwork, empowerment, partnerships, and innovation now makes sense. They can now see the contextual shift from mass production to mass customization.
   The absolute keys to the overall experience are:

• Mass customization is a context change, not a new strategy within mass production.
• Human potential and creativity must be released before new content will work.
• People already know about this level of change. They can't do it because the mass production business model is deeply embedded in every organization.
• You must transform the business of the business, not reorganize the organization of the old business.
• The either/or tyranny must be resolved. Mass and customization are not mutually exclusive.
• Speculation, polarization, and blame prevent transformation of context.
• New content within the old context leads to incremental change.
• When the going gets tough, the tough are helpless. The key is effortless effectiveness of aligned behavior.
• You cannot "solve" a new context into existence. The new context is not a problem to solve; it is a new universe to create within.
• A vision for change must precede strategies for resource deployment.

   What are the interdependent desires of teamwork, empowerment, and partnerships? What is innovation? All are natural processes when people are creating within a new context of reality. Once people are free to see the factory from the customer's point of view, they will choose to make the path to the door effortless.
   Simulations of new content are useful and interesting, but the old context of mass-production thinking will prevent transformational change from occurring.