How to Manage Any Organization as a Network

In our fast-changing world, books are still something that people value. With our sixth book coming out in August 2024, we’re delighted at the success of our series of posts on LinkedIn offering mini reviews of books by Deming, Goldratt and the books on our Decalogue methodology. Nearly 100,000 impressions and many hundreds of interactions indicate that these books matter to many people around the world.

We continue to develop and refine the Decalogue through almost thirty years of implementations, including the creation of an online platform for multi-project management to truly support an organization as a Network of Projects. Our more recent publications cover how to achieve the transition from Silo to Network in detail. Everybody understands how much silos suboptimize all the resources available, they just don’t know what a valid alternative can be.

Back in 2011, at Intelligent Management we published our first book by Dr. Domenico Lepore et al on how to evolve the management of organizations for 21st century needs. We called it ‘Sechel: Logic, Language and Tools to Manage Any Organization as a Network’ (available here.)

The book was written at the height of the global financial crisis. It contains the passion and rigour that, over the years, we and a team of physicists, engineers, mathematicians and philosophers have dedicated to the Decalogue. Here we offer a summary of the main points of that first book; it’s a kind of manifesto for systemic management that we remain proud of and adhere to. We believe it is the fully developed organizational solution to more partial ideas like “Systemic HR”.

Summary of the main ideas in ‘Sechel: Logic, Language and Tools to Manage Any Organization as a Network’

• The work of an organization and the way it interacts with its environment is systemic in nature. In other words, the organization viewed as a system is not an ‘invention’ but rather a ‘discovery’: it is the unveiling of something that is structurally inherent to the life of any organization. Organizations are, and must be, considered as systems. The conventional Hierarchical/functional organizational chart is far from adequate to portray what an organization should do and how it should work.

• The most fundamental feature of any system is the way its components (its processes) interact and are interdependent with each other in the pursuit of a stated and agreed upon goal. Such a network of interdependencies shapes and determines the possibilities of the system towards its goal.

• The most effective way to manage the performances of a system is through the understanding of the variation of its processes. Such understanding must be statistical. Hence, managing a system means, in essence, managing its variations. Any meaningful leadership can only be originated by a profound understanding of the nature of process variation and its impact on the system and its environment. A leader must strive to ensure statistical predictability everywhere in their organization in order to allow meaningful managerial decisions.

• The performances of a system made up of processes with well understood variations can be greatly enhanced if we determine one element to be its “physical” constraint. In such a variation-managed, constrained-based system the performances of the whole are essentially linked to the performances of the constraint. A new measurement system is required based on Throughput, Inventory and Operating Expense and their basic interrelations. The Decalogue provides a simple algorithm and a guideline to guide the management of such a system.

• What is the most logical and practical way to coordinate the work of a constraint-based system? In other words, how can we proficiently organize the network of interdependencies making up our organization? What is the organizational structure most suitable to sustain the systemic endeavour?

• Such a structure is a multi-project environment. Any organization that accepts the idea of system will find in the ‘network of projects’ the organizational structure that most naturally leverages the power of a system.

• Leading and managing an organization as a network of projects certainly requires a precise algorithm but, just as importantly, it requires from the members of the organization the development of a new way of thinking, faster learning and a much greater ability to act coherently with the new learning. We call this ‘enhanced intelligence’ sechel.

• Tapping into this exclusively human kind of higher intelligence becomes possible when we learn how to connect three basic faculties of the human mind: the ability to generate new ideas (intuition); the ability to analyze the full spectrum of implication of the newly generated ideas and plan accordingly (understanding); the ability to execute coherently and proficiently upon the plan (knowledge).

• These faculties preside over the ability to accomplish change and, more precisely:

a) the ability to identify what has to be changed; b) the ability to identify the direction of the change (what to change to); c) the ability to cater for the concerted actions needed to bring about the change.

• The Theory of Constraints (TOC) provides a set of logical tools to address and govern these three phases of change. These tools, allegedly simple and easy to learn, if used properly and methodically affect our ability to connect the above-mentioned faculties of the mind: intuition, understanding and knowledge. They help acquire a better sechel.

• The pillars of the conscious and connected organization of the 21st century are then: an increased intelligence (sechel), a statistical understanding of the systemic nature of the work of the organization, an organizational structure based on a ‘network of projects’ that replaces the obsolete hierarchical/functional structure.

• A new leadership is needed to manage in this new scenario. Such a leadership will drive the transformation from the present state to one of optimization: cooperation NOT competition; win-win NOT win-lose; statistical understanding NOT forecast; people development NOT performance appraisal; sustainability NOT short term gains; long term planning and careful execution NOT quarterly results.

• Part Three contains several examples on the application of the knowledge and method described in Parts One and Two. Such examples will be illuminating for those who understand the underpinning theory and of no use to the hasty and unfocused reader.

• Part Four tackles the new frontier of network theory as a basis for managing organizations. This can be achieved on a practical level by designing the organization as a network of projects with a strategic constraint, and by using statistical methods for continuous improvement. The diagram below maps out the complete implementation cycle using the Thinking Process Tools. This cycle can be used both on a macro and micro scale, to transform an entire organization into a thinking system, or more simply to transform a situation of blockage within an organization into a systemic project for increased Throughput. This cycle begins with the collection of Undesirable Effects (UDEs), which allows the core conflict, i.e. the cognitive constraint preventing an organization from achieving its full potential, to be verbalized in the form of the conflict cloud. This conflict cloud includes the goal of the organization and the two fundamental needs underpinning the vision and structure of the organization.

Once the underlying assumptions that create the core conflict are surfaced, a breakthrough solution(s) can be devised, known as ‘injection’. The Future Reality Tree (FRT) uses a logic of sufficiency to connect the injections with statements of reality ensuring the achievement of the goal while satisfying the two fundamental needs identified in the conflict cloud. Any negative implications identified during the building of the FRT are verbalized and addressed using the Negative Branch Reservation (NBR).

In order to implement the injections/solutions, all obstacles are identified and reverbalized in terms of Intermediate Objectives to be achieved. These Intermediate Objectives are mapped using the Prerequisite Tree. Each intermediate Objective is further broken down into actions using the Transition Tree which reveals the logic, need and resulting change in reality of each action to be taken. Once the actions have been specified, they can be scheduled into a project using the Critical Chain algorithm based on finite capacity.

The Implementation Cycle

To find out more about ten guided steps to a systemic leap ahead for your company, contact Angela Montgomery at intelligentmanagement@sechel.ws
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Intelligent Management works with decision makers with the authority and responsibility to make meaningful change. We have helped dozens of organizations to adopt a systemic approach to manage complexity and radically improve performance and growth for 25 years through our Decalogue management methodology. The Network of Projects organization design we developed is supported by our Ess3ntial software for multi-project finite scheduling based on the Critical Chain algorithm.

See our latest books: The Human Constraint from Taylor & Francis; From Silos to Networks: A New Kind of Science for Management from Springer; Moving the Chains: An Operational Solution for Embracing Complexity in the Digital Age by our Founder Dr. Domenico Lepore, and ‘Quality, Involvement, Flow: The Systemic Organization’ from CRC Press, New York by Dr. Domenico Lepore, Dr. Angela Montgomery and Dr. Giovanni Siepe.