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Join Derek Hudson as he explores Essential Dynamics, a framework for approaching the challenges facing people and organizations. Consider your Quest!
Welcome to Essential Dynamics, I'm Derek Hudson, host of the Essential Dynamics podcast, and creator of the Essential Dynamics framework for helping us see the system. It's a special episode, I'm coming to you almost live from London, England. Last episode, I talked about an upcoming talk at the TOC Innovation Summit, I wanna recap that talk today. My speech will be available on the official TOC Innovation Summit website, but I wanted to share the text of it today, so that it's on the record as part of this podcast, and because this particular speech is really important as we transition from season five to season six. Before you understand the talk, you need to understand a little bit about the book, The Goal, and I know I've talked about it before, but just to set things up, The Goal is a novel about Alex Rogo, a plant manager who has a problem.
Derek:The problem is that his plant is not profitable, and head office is gonna shut it down unless he can turn
Derek:it around. And the book really chronicles Alex's journey of discovery, and understanding what
Derek:it is that helps manufacturing plants be profitable, and bigger than that, how
Derek:to think of things like a system. One of the early turning points in
Derek:the book is when Alex goes on a hike with his son and the fellow boy scouts, he ends up being the only leader, and has trouble keeping the boys together on the trail because they hike at different rates. And while he's trying to manage this, he realizes that he has
Derek:a similar problem in his factory. And this provokes the insight, which really takes us through the book, and helps Alex solve his problem. That's important to understand because my story, and my talk, is based on my experience with the book in the early days. So I'd
Derek:like to share the text of the talk with you now, give it as if it was a speech, I don't think it'll be quite as interesting and animated as the live presentation, but I do want to have this stuff in the record on this podcast, because I think it's important. What does it take to see a system? My journey to the system site started in 1997 with a book, A Bunch of Boys, and the Tallest Peak in the Canadian Rockies. I had just become the CFO of a growing high-tech manufacturing startup. After years in Big eight Consulting, was excited to actually be in the
Derek:game, helping to run a company.
Derek:One day, a colleague came into my office and put a book on my desk.
Derek:Our most promising customer was insisting that every bidder everybody at our company read it. Of course, that book was the goal. I loved it
Derek:from the start, I just finished reading about Herbie and the hike when I was unexpectedly called upon to lead a group of teenage venture scouts on a backpacking trip to Mount Robson in the Canadian Rockies. This was not my first backpacking trip, nor my first as a leader. But this one was different, because I had finally met Herbie. The night before we started the hike, I said
Derek:to my co leader, hey Jim, tomorrow when
Derek:we start hiking, the boys are gonna hike at different speeds, it's gonna be hard to keep them together. Pretty sure Matt and Zach are gonna be the fastest hikers, and I expect that Luke might be the slowest. Once the boys start to spread out, we're gonna stop them, and we're gonna put the slowest hiker in the front.
Derek:Jim wasn't so sure, won't that slow down all the other boys? Jim, we've gotta keep the boys together, trust me. That's The next morning, that's exactly what happened. After a while, Luke fell behind. We grabbed the boys,
Derek:called them all together,
Derek:put Luke in the front, told him that Luke was the leader, and told him they couldn't pass Luke.
Derek:From that point on, the boys tended to stay close together, because all the boys were able to keep up with Luke's pace. That worked for a while, except that Luke actually seemed
Derek:to speed up a bit.
Derek:Well, he was the leader, he felt a sense of responsibility, and he also wasn't demoralized by being at the back, so I think he picked up the pace. Now as the day warmed up, the heat took us to all on Ryan, and we ended up, he ended up falling behind. So we stopped the boys, put Ryan in the front, told everyone they couldn't pass Ryan, and managed to keep the group together. So over the course of that hike, a number of times we found a new slowest boy, put him in the front, and we're able to keep
Derek:the group together. We didn't lose anybody. On the
Derek:way a few days later
Derek:on when we hiked out, Matt and Zach begged to
Derek:be the leaders, they never had that chance. I finally gave in and told them, of course, that they needed to check behind them and to make sure that they kept the group in sight. Well, the next time I saw them was in the parking lot 15 kilometers away, and four hours later. By the end of that trip, had the basic concepts of theory of constraints burned into my mind.
Derek:And I have never looked at hiking in groups the same way since. The goal gave
Derek:me a new way of looking at something that I thought I understood, I was starting to
Derek:gain system sight. So let's go to
Derek:the goal and consider Alex Rogo. Alex is smart, experienced and hardworking, but he's in serious trouble. If he
Derek:doesn't turn the plant around, he and most of
Derek:his colleagues could lose their jobs, the plant could be shut down, and the local economy would be devastated, and he doesn't know
Derek:what to do. He's sitting alone in his office trying to
Derek:make sense of it, trying to figure out what the problem is, and he says, I've got the machines, I've got the people, I've got all the materials I need, I know there's a market out there, because the competitor stuff is selling,
Derek:so what the hell is it? Everything is there, and he still can't see it. Alex's problem is that he's inside the system, he sees the pieces, he sees the crises, but he can't see the system. His mentor Jonah eventually says it
Derek:to him pretty directly, it's right in front of
Derek:your eyes, but you don't see it. And at one point, Alex finally admits, our ability to see what's in front of us resembles that of moles. Alex was blind, Alex needed system sight.
Derek:So let's talk about how Alex, or anyone, can
Derek:gain system sight. Look at
Derek:what happened in the book.
Derek:First point is to get some distance, frustrated Alex leaves an important meeting, he's there with the top executives, but the conversation is frustrating him because it's all the old stuff that got him into the trouble that they're in, and he can't stand it anymore, so he leaves the meeting and intends to drive to the office and keep working on things. But he finds himself sort of unconsciously driving up to
Derek:the top of a hill, overlooking the plant. And from that distance, now he he looks upon the plant and he sees that the trucks bring materials in, which the machines and the people inside use to make something, and on the opposite side, the trucks are being filled with what they've produced, and shipping out to customers, and I'm supposed to manage what goes on down there. Okay. So Alex is starting to develop system site, he's looking at it
Derek:as a process, looking at it as a system, input, process, output. From inside, was drowning in details, from outside, he's starting to see. The second thing is to get a guide. Distance alone isn't enough, Alex doesn't know what to look for, he can't see this alone, he
Derek:needs someone from outside the system to talk to. He remembers his old professor Jonah, who he'd recently ran into at an airport, because of the kinds of questions he asked. He tracks down Jonah relentlessly, waking him up with phone calls, accosting him in airports, anything to get some time with Jonah. Jonah doesn't diagnose, he doesn't prescribe. He asks Alan questions that help Alex see the system, that's what a guide does.
Derek:Well, the third thing is, that in order to really see the system, you need a way of looking at the most important things.
Derek:So let's call that a framework, you need to
Derek:know what you're looking for.
Derek:So the framework that I propose for seeing systems is that we don't wanna just jump to the constraint to figure out who
Derek:the slow hiker is, but we wanna look for three essential elements, purpose, path, and people.
Derek:Element number one is purpose, what is the system trying to achieve? If you don't know what it's trying
Derek:to achieve, you can't approve it. In most organizations, the purpose isn't obvious. It might not
Derek:be well understood, and maybe there are two purposes, intention with each other.
Derek:I worked with a lot of organizations where it's not clear what the purpose is, and if you don't understand the purpose, you can't understand the constraint that's limiting your ability to accomplish the purpose. A constraint can only be described in relation to the purpose, if you can't see the purpose, you can't see the system. Element number two, is the path. How does the system get where it's trying to go? What drives it forward?
Derek:Where does it get stuck?
Derek:It's no accident that Doctor. Goldratt used the hike as a metaphor, the path is the perfect metaphor for the system trying to accomplish its goal. Theory of constraints is extremely powerful in this case, we understand flow, we
Derek:understand constraints and the progress on the path, but there's more to the path than just the constraint. What's actually driving the system forward, where's the energy coming from? Is it getting stronger or is it getting weaker? Are people
Derek:understanding the whole path or are they only looking at the little section that they walk every day,
Derek:optimizing that to the detriment of everything else? If you can't see the path, you can't see the system. Element three is the people. But people are not the path,
Derek:they're not just additional resources in the chain of producing value, they're living, breathing, loving, thinking beings, they're individuals, they're agents, they make choices.
Derek:Now I put Luke in front,
Derek:like he was a machine and expected that he would continue to operate at the same pace, which I knew the others could match, but then Luke made a choice about how he was going to
Derek:be with the others, he stood up, only people do that. Every person in
Derek:the organization is an individual with their own interests, their own motivations. Just because we see on a process map what they
Derek:should do, doesn't mean they're gonna do it, people choose. Have you earned the right choice? If you can't see the people, you can't see the system. So for my theory of constraints friends, when you step out of the system, what are we doing?
Derek:Well, first of all, look at, start with a purpose, before you can identify a constraint, you need to understand the purpose. Not what the mission statement says, maybe not even what the focus of the month is, but what is the system really genuinely trying to accomplish, and what does better look like? That takes a lot of work to understand purpose, it's uncomfortable work. The purpose may not be what you assume, there may
Derek:be more than one, it may
Derek:be pulling in different directions, but until you've done that
Derek:work, you don't know what the constraint is.
Derek:When you work on the path, don't stop at the constraint, see the whole path, what is driving it?
Derek:Why is it flowing or not flowing? And then
Derek:of course, we have to recognize that it's all about the people, all the time. Process maps, policies, none of that makes a difference if the people aren't on-site. A purpose problem needs to
Derek:be understood as a purpose problem. A path problem is a path problem, and people are not machines, and we have
Derek:to understand people in the context of their own individuality.
Derek:So I've certainly been clear on this podcast that I have concluded, that the three essential elements for seeing a system are purpose, path and people. But you don't have to take my word for it, there's another witness. If we
Derek:go back to the book, The Goal at the very end of the book, Alex and his team have been successful, they've turned the plan around, it's profitable, senior management notices, they want this in other places, so Alex gets a promotion. He's about to take over the division. As he thinks about this, he knows he can't keep relying on Jonah to ask him the right questions, he needs to learn how to figure out these things for himself. You could say he's looking for system site. So Alex and his colleague Lou have a conversation, and Alex says, let's try again from first principles.
Derek:What do they start with? First thing they write down, it's on page three thirty one, every organization was built for a purpose.
Derek:Okay, that's purpose. On page three thirty two, write down, any organization is comprised of more than one person.
Derek:Hey, that's people, we've got that one too.
Derek:And then on page three
Derek:thirty three, they work through it a little bit, and they think about a bunch of people doing activities, dependencies, the need for synchronization or links, and then a chain. And they come up
Derek:with organizations are not just a pile of
Derek:different links, they should be regarded as chains. Okay, that's the path. So very end of
Derek:the book, we have the key principles, purpose, path and people. They're there along, right in front of our eyes, you can't see the system from inside the system, including this one. So that was my speech, it was about fifteen minutes, it was TED talk style, and I produced it, I put it out there, I thought I
Derek:did a reasonable job of conveying the message, but as I think about it now,
Derek:I think there's a lot more work that needs to be done in this community, and everywhere else to help people appreciate
Derek:that they need to step back and see the system. Essential Dynamics is designed as a way to do that. If you
Derek:if you look at our almost a 140 episodes of Essential Dynamics podcast, and the
Derek:first few were just trying to sort out what we're talking about, then we look at application, and how to help businesses, and now I think we're coming around to what we've
Derek:talked about before as the simplicity on the other side
Derek:of complexity. So this podcast concludes season five. In season six, we're going
Derek:to start being very focused on the idea that we need to see the system, and Essential Dynamics is the framework that can be very useful to help us see the system. So I look forward to those conversations, look forward to being back in Canada,
Derek:and be able to pick this up and run with it, share it with others, and so that we can run our organizations more effectively,
Derek:run them for flow, run them supporting and respecting the people that we work with, and having a much better time at it. And so until next time, consider your quest.