Digital Disruption to the System – A Long View · Digital Disruption to the System – A Long...

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Digital Disruption to the System – A Long View

Neil Bentley, Non Executive Director & Co-Founder, ActiveOps

IntroductionHaving stepped back from the day-to-day development of ActiveOps, I enjoy the luxury of being able to take a bit of a back seat and observe how things are going. So, having not played any part in the run up to our discussions on The Rise of Digital Ops, I feel free to say what a great day it was.

Thanks to all of those who attended and to all of the speakers – this truly was a world-class event.

There is a program on Radio Four called ‘The Long View’ which seeks to shed light on some modern-day issues by looking at lessons from the past. I am going to try to do this with the conference proceedings as a way of giving everyone a brief reminder of some of the subject matter covered on the day…

… here goes.

I am going back to a period in the UK just after the Second World War where there was a need for a rapid increase in productivity to get the country back on its feet. In Longwall Mining in particular, mechanisation was offering the promise of technology being able to help humans achieve vastly higher levels of productivity, while taking away some of the hard work and drudgery of their roles.

Here is a quote from a study published in the Tavistock Institute publication, Human Relations.

I could probably have picked a story from any period of management history about technology not delivering promised productivity improvements and about people-related problems on the rise, but I have gone back to this point in time - and this article in particular - because it represents the birth of the idea of Sociotechnical Systems.

“The study was based on the paradoxical observation that despite improved technology, productivity was falling, and that despite better pay and amenities, absenteeism was increasing. This particular rational organisation had become irrational.” Trist, E. L. and K. W. Bamforth (1951). “Some social and psychological consequences of the longwall method of coal getting.

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The Sociotechnical Systems concept blends the ideas of Systems Thinking with the idea that organisations have to be considered in terms of how changing technology affects the social structures of an operation.

It struck me as I was listening to the various contributors that this classic study from 1951 has huge resonance for today and for how digital disruption will play out in the near future.

I am going to look at two things here:

1. Today there are echoes of the past in the same way that Trist’s and Bamforth’s observations on the mechanisation of longwall mining affected the management of the operation

2. Harold Leavitt’s later “diamond model” gives us a good starting point for setting our agenda and navigating our way through the digital revolution.

Echoes…The mechanisation of mining did more than just speed up the process - it fundamentally changed the nature of the work done by the miners. Whereas previously small teams of miners organised themselves to work across shifts and could each do most of what was required to get the job done, mechanisation brought specialisation. While the technology sped up and replaced some of the human activity, it now required that the humans were organised to fit around the technology.

• Jobs became more clearly segmented with different roles, skills, pay scales, and such like.

• Work was handed from one shift to the next with each shift responsible for a different part of the extraction process.

• Teams became larger and more specialised, leading to the need for a layer of supervision to co-ordinate the work.

Some of the consequences of the above were unintended and not great.

• No single group had end-to-end responsibility for the product. If technical problems meant work was not completed by one shift, the next shift might do little or nothing. No single group saw it as their responsibility (even if they had the skills) to complete the work of another team.

• Supervision – necessarily remote from the coal face – relied on bureaucracy: rules-based command-and-control. As a result, workers at the actual coal face were discouraged from showing any initiative, and the responsiveness to an ever-changing and complex operations scenario was supposed to be controlled – literally and figuratively – from above. Leading, of course, to a lack of responsiveness.

So, are there parallels to today’s digital disruption? I do see some striking ones in the potential disaggregation of the team and the return of centralised command-and-control.



It struck me as I was listening to the various contributors that this classic study from 1951 has huge resonance for today and for how digital disruption will play out in the near future.

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RPA may well take away some dreary tasks and do some work more quickly and more accurately than ever before, but might it also create sub-optimal or highly-specialised “exceptions-based” jobs around the edges?

In his talk on the factors affecting performance of bots, Elliot asked “where should we put the robots?” He was talking technically about where they should fit in the Workware hierarchy for the purposes of planning and measuring performance, but it makes the point that the bots are being inserted into a process – sometimes replacing tasks, not whole processes. So, structures are changing around them. Nigel also mentioned that in some of his operations, the bots were taking up more desk space than people! We know that a number of our clients are looking at the implications of the role of the team leader (and the bot leader/scheduler) for the organisation structure.

On the issue of command-and-control, Paul gave us all pause for thought at the growing accessibility of centrally-collected

(state-collected?) data. With more and more work done either by or with technology, the availability and granularity of data is phenomenal. It could be possible now to know at what minute of the day – and for how many seconds Worker A spent processing Claim X (or Worker B spent on Facebook).

This increase in the accessibility of data has led, in my view, to a resurgence of the centralised command-and-control style of management. Some managers believe that they have an infallible window on their operation and that small teams of specialist planners and schedulers can optimise production from a central hub.

While there is no doubt a place for specialist planners and for central functions, the knock-on effect to the organisation culture where management appears to be all top-down could be damaging in the same ways as it has been historically: reducing engagement, suppressing local innovation, and driving a spiral of bureaucratic controls that increasingly battles its own unintended consequences.

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A framework for thinking about the answersI don’t have the answers, and I am not sure that anyone does right now. But the point of a long view is that maybe it can help us identify a good starting point to create a framework for the questions. If we can think about the likely knock-on effects, maybe we can try to design out some of the potential unintended consequences that will inevitably come along with the great promise of Digital.

Here, I turn to another of my favourite theoretical frameworks. This is the idea that operations are best thought of as complex, social entities with many dynamic and interacting components. In the mid 1960’s Harold Leavitt produced a “diamond model” that described an organisation as the interaction of a task being carried out by people using technology and organised into a structure.

I prefer a slightly modified version of this, whose origin I cannot recall, shown here:

The additional ingredients being that people work in structures, co-ordinated by control processes and that the whole thing is bound together by an organisation culture.

Systems Thinking would have us understand that such a set of interacting sub-systems will exist in a state of dynamic equilibrium. That is to say that each element has changed, and is changed by, all of the other elements to reach a point where they are all balanced. Far from being a fragile or precarious balance, this is going to be quite a strong structure as each part is holding all of the others in place.

So now we get to the point of all of this… what happens if one element of this dynamic equilibrium is dramatically and permanently changed? What if there is a step change in technology?

The first reaction of the system (unthinking and automatic) will be to resist the change, to pull everything back to “normal”. I don’t mean just the natural human response that we often talk about with resistance to change, but rather the systemic effects that will pull on the system to keep everything in balance.

But what if the disruption is greater, or if we really force the change to stick?Ecosystems give us a good insight into what happens when there is a sudden and dramatic change to a stable, steady state. Think about the implications of the introduction of cats and rats into the habitat of the flightless Kakapo of New Zealand. Or think about the introduction of the Cane Toad to control pests in Australia.

In her excellent keynote address, Nina mentioned ecosystems in an even wider context: we have to start thinking about how the boundaries – not just within – but between organisations are changing. Nina’s talk covered three big themes: The need to have a holistic business model, the imperative to drive the digital transformation based on customer data, and the importance of taking an enterprise approach. It seems to me that Nina and Harold Leavitt are pretty much on the same page.

So let’s take a look at how the insights from the various contributors to our conference can be reflected in this Leavitt model.





TASK

CULTURE

CULTU

RECULT

URE

CULTURE CULTURE

TECHNOLOGIESPEOPLE

CONTROL PROCESSES

STRUCTURE

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The TaskWhat humans “are for” in a digitally enabled operation might change quite dramatically. People may be managing exceptions or maybe tweaking algorithms rather than doing the old tasks. Are there certain tasks better suited to humans than robots? Maybe some tasks associated with customer service and human interaction – or maybe not.

It may be that it is not just the human role that changes, but the whole nature of the operation. Kevin gave some very clear examples of this. Airbnb, Uber, and some of the others that he mentioned completely redefine the definition of the task. Tasks change, structures change… systems of employment and control change. The gig economy has its good and bad bits but whatever else it is, it is a very different employment model.

At a lower level, we know that the push to capture data in a machine-processable format has, for some time now, been “outsourcing work to the customer” – requiring them to fill in online forms in a prescribed way so that the operation doesn’t have to carry out that step. Mandana talked about the way processes were changing in her organisation and some of the challenges associated with capturing dealing instructions that could be written free format while Andrew’s fascinating insights into the world of AI showed how this was beginning to cope with non-standard inputs. I wonder how long it’ll be before the customer is expected to complete an online form so that the robot can pick digital input without the need for OCR or human interpretation. The human task will change from one of data recognition to one of confirmation or exception handling.

The People For a conference on Digital, it was striking how much we kept coming back to the people issues. Nina said, “People are what make it [digital] a success”. Gemma’s talk on the development of a centre of excellence showed the importance of the people dimension. The use of gamification is an acknowledgement that we need to continue to innovate in ways to engage and empower the people within our operations.

What are the implications for people? For skills, competencies, personalities required? Nina showed us a changing list of personal qualities – with things like creativity, problem solving, and emotional intelligence becoming increasingly important. On the one hand it can only be a good thing if RPA replaces dull, repetitive work, but might we have a situation where all firms increasingly want to recruit from a pool of highly educated, flexible, empathic workers who are good with technology and good with people?

Such people might be relatively scarce – shifting the balance of employer/employee power. They might also have certain expectations and demands about how they are managed. What implications might this have for our resurgent command-and-control systems for optimising performance?



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Structures The Theory of Constraints reminds us that speeding up part of a process will just mean that we get to the next bottleneck sooner. Thinking about how digital changes end-to-end processes or not will be important, and we will have to start to think about organisation structures that support the flow of work – and keep the customer front-and-centre. Nina, Mandana, and others mentioned Lean in their talks and the importance of looking at the process before automation.

This, of course, is reminiscent of Michael Hammer’s 1990 article for the Harvard Business Review: Don’t automate – obliterate. His argument was that we should first eliminate non-value-adding activities, then simplify what is left – and only then consider automation. I recently read an excellent piece from Mark Palmer’s firm OEE that counselled us to not “automate inefficiency.“ To do so risks locking that inefficiency into the organisation.

I say all this about process because it is intimately tied into structure. Some of our clients are looking again at semi-autonomous work teams – trying to do away with old-style hierarchies, but how do we achieve this without the downsides of creating internally protective, competing silos? As Trist and Bamforth showed, this was a real challenge once mechanisation/automation changed the task and pushed people into specialist functions around the edges of the technology.

Control ProcessesMy suspicions around top-down command-and-control are pretty well known – and I do fear that the rise of big data and cheap semi-intelligent computing power risks making this management approach the easy default.

At ActiveOps we have identified the rise of the knowledge worker and how this is changing the nature of operations and capacity management. Paul talked about our research into time-management methods for knowledge workers. Methods that provide tools to help individuals to make best use of their time and to collaborate – trading work and time – with colleagues without the recourse to unitised tasks with standard unit times.

Nigel’s talk on the command centre was fascinating in this regard. I loved his picture of Brownian Motion and the assertion that the “operations world is more complex than ever before”. This level of complexity can never be handled by a single, central brain. To pursue the analogy, we need a peripheral nervous system that can sense disruptions to the system at a distance and reflex actions that respond to, and resolve, those disruptions locally.



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At ActiveOps, our aim is to move control as close to the customer as possible – empowering team leaders and teams (through technology in part) to be able to respond to complexity. This will always work better than taking on the fool’s errand of trying to eliminate that complexity. Of course, Nigel also made the case that the last thing you need in a disaster is everyone sitting around empathising or innovating! Sometimes only command-and-control will do. The key is to have the right control processes for each circumstance.

Digital is changing both the demands on our control processes and the nature of our control systems.

CultureCulture, (values and attitudes, shared ways of working, “The Why”) is as important now as it has ever been. We all chuckled when Elliot talked about asking if the performance measurement of the bots is “fair on the robots” – but this reminds us how much we rely on benchmarking things back to our values – to our sense of what is right, what is fair.

Culture will continue to be the glue that holds a system together, or the grease that allows its frictionless operation if you prefer. Digital Disruption will change the tasks that businesses perform and redefine the jobs of people within those businesses. This will change the requirements for people and for their skills and competencies which will, in turn, dictate elements of the way we create workable organisation structures – and structures of interrelated organisations. All of this will require us to innovate around our control processes and systems.

But fundamentally, the operations that embrace the digital disruption and create viable new operating models will be the ones that get the culture right – the ones that give people space to learn and adapt, who value the contribution everyone has to make, and commit to involving everyone in making it work.

That is why we had a room of people talking about this subject – not a bunch of bots chatting.

Biography Neil Bentley, Non Executive Director and Co-Founder, ActiveOps

Neil Bentley has been helping organisations to improve their front-line operating performance for over 20 years. Originally qualified in Psychology, he went on to work at Lucas Industries in the 1980s, gaining experience in manufacturing production management, before focusing on financial services and the public sector, first with PA Consulting Group and then as a partner with specialist consultants OCP.

He launched ActiveOps with fellow OCP partner Richard Jeffery in 2005. Neil brings with him an unparalleled understanding of the mix of the human and the technical aspects of performance improvement.



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