In Chapter 2, Sam talks to May about the idea of transformation from a hierarchical organization to a systemic one, where people focus on improving the whole system and shift from a culture of competition to one of cooperation.
Managing Transformation
- Everything changes, nothing remains the same.
- How do we manage transformation?
- Managing transformation means transforming management (W.E. Deming).
- Improvement is achieved not because of “hard work” but working smarter.
- Competition vs Cooperation – Hierarchy vs System
Sam is a scientist by training, and mentions the law of thermodynamics in relation to the financial markets. He says what is happening in the markets with financial products like derivatives is not sustainable because in trying to create something out of nothing, it contradicts simple thermodynamics.
What markets and organizations actually need is stability and yet every human process is affected by variation, the impossibility for a process to be repeated in a completely identical manner.
Variation can be measured and managed through the use of Statistical Process Control (SPC) and the use of Control Charts (Process Behavior Charts).
