operations management

The Value Creation Machine

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On Tuesday (November 4, 2010), political chatter was all the rage as Republicans gained control over the House, sending a clear message to President Obama that the political landscape had shifted.  The Democrats now occupy the US Presidency and Senate while the Republicans dominate the House of Republications. 

Most experts wonder if Congress will ever get anything done.  As a result of not passing a budget bill in 1995, the federal government was shutdown.  With President Bill Clinton and Speaker Newt Gingrich at the helm, the shutdown was fueled by political fighting.  Sadly, many people look to the government for all of the answers when their own ingenuity would work. 

Yes, the government has an important role to play. I don’t believe that market forces are always the answer to societal problems…the market is not driven by morals or ethics.  In fact, find a cheap labor force across the globe and some businesses will abandon their own creed of “America First.” 

Individuals need to take control of their lives by developing strategies to produce results.  If we are to equip people for the future as scholars, we need to make sure they understand that the future will belong to the aggressor, not the passive in the new economy. During this discussion, we will explore how companies develop value for their customers and how it contributes toward wealth building.

 In uncertain times, it’s virtually impossible to navigate the market without fully engaging customers.  Any operations that fail that economic maxim of the 21st century will fail. Management guru Brian Tracy argues that the duty of businesses is to create and keep customers: “The two most important words to keep in mind in developing a successful customer base are positioning and differentiation.”

Of course, it was possible several decades ago to create products and services without knowing the customer and later convince them to buy.  Many companies during the Industrial Revolution built their success due to scarcity of commodity, limited competition, and uneducated buyers. This is not the case today.

Today’s operations must be value conscious as it relates to the market. Alvin Toffler and Heidi Toffler, authors of Revolutionary Wealth,  research how tomorrow’s wealth will be created, and who will get it and the wealth method. Customer value is defined as the ‘difference between what a customer gets from a product, and what he or she has to give in order to get it.’  They argue, “Today’s wealth revolution will unlock countless opportunities and new life trajectories, not only for creative business entrepreneurs but for social, cultural and educational entrepreneurs as well.”

Daniel Spulber, author of Economics and Management of Competitive Strategy, further suggests that value creation is strategic:  “Managers must pay close attention to value creation because it is the source of the company’s potential profits. The company generates value by providing products to customers, which it produces both by purchasing inputs from suppliers and supplying some of its own.” 

Spulber further outlines a value-driven strategy in three ways:  (a) to attract customers away from competitors, the company must provide sufficient customer value as compared to rival companies, (b) to attract key suppliers away from competitors, the company must offer sufficient supplier value, and (c) to attract investment capital in competition with other market investment opportunities, the company must increase the value of the firm for its investors.

Therefore, effectively managing the attribute of value creation will provide businesses with a competitive advantage.

Briefly explain how value creation has shifted from the Industrial Revolution to the Knowledge Economy and what attributes will be associated with wealth creation in the distant future?

© 2010 by Daryl D. Green

Unleashing the Entrepreneurial Spirit

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While on business travel, I was riding the Metro subway in Washington, DC and got off at the end of the line. The location was in a depressed area with little there for the commuter. As I waited for my ride, I saw two young boys carrying a huge box of M&Ms in hopes of selling to weary commuters. I found it amusing that these young men were catering to this market. I wondered how these inexperienced children could be so successful in business. Many individuals are not.

Our grandmothers told us to find a good government job with benefits, and we would then live happily ever after.  We found that wasn’t true.  In fact, companies are outsourcing functions like employees are disposal goods. In fact, Charles Handy, author of the Age of Paradox, predicts that we are witnessing the end of the full-time employee. In this discussion, we will focus on the freelance industry and how it contributes to the growing outsourcing market.

With a weak job growth, many U.S. jobs will continue to be outsourced globally or automated through technology. In fact, the government estimates that an additional 1.2 manufacturing jobs will disappear by 2018. In this economic downturn, many people are unleashing their ‘Entrepreneurial Spirit rather than depend of others.’  According to the Bureau of Labor Statistics (BLS) data, the number of self-employed Americans rose to 8.9 million in December 2009, up from 8.7 million a year earlier. 

Yet, this venture is not just for the young.  Individuals 55 to 64 represented the second-largest jump in their own businesses (just behind 35- to 44- years old) from 2008 to 2009, according to Ewing Marion Kauffman Foundation.  People with talent are finding they can find work anywhere, including abroad. Websites like Elance.com turn local artists to global competitors. However, columnist Nancy Cook notes, “These sites may transform freelancers into mini-nationals, but they certainly don’t offer the wages, benefits, or perks typically associated with global blue-chip companies.” The following list represents the leading freelance websites for employment:

(1)           Elance.com

(2)           oDesk.com

(3)           Guru.com

(4)           PeoplePerHour.com

(5)           Rent A Coder.com

(6)           Demand Studios.com

(7)           Donanza.com

(8)           Sologig.com

(9)           Freelancer.com

(10)        iFreelance.com

(11)       Guru.com

(12)      Gofreelance.com

(13)      Allfreelancework.com

(14)      Worldwideworkathome.com

 Most entrepreneurs are internally driven. According to BLS, the number of employees voluntarily quitting their jobs (February 2010) surpassed the number being fired or discharged for the first time since October 2008. Many people are unsatisfied with their work situations.  In a Right Management poll, 60% of workers planned to leave their jobs when the market got better. 

Gam’s Barbershop is more than a haircut establishment in Knoxville, Tennessee. It is an experience. Men debate. Fans might see a UT athlete or even Coach Pearl there. However, this successful vision came from one person. Despite growing up in a single parent home and fighting numerous youth temptations, Gary Gamble wanted more. Gam explains, “I always wanted to own my own business. I went to barbershop school with my friend. My friend later quit school. I kept on going. I wanted to do something with my life.” He did. In 1993, Gam’s Barbershop was opened. However, it wasn’t easy. Gam says, “I just try to be determined and never give up.”

 

Some people just stumble on a niche. Owners Charles and Gwen Chandlers took a hobby and grew it into a business. Chandler’s Deli, known for its Southern cooking and great service, is located in the heart of an urban area. While many restaurants have failed in the area, this restaurant still stands.

Charles notes, “I think we have been successful for three reasons. They are God, determination between my wife and me, and our personal assets. God just wanted us to have it [this deli].” Currently, the couple is working with the University of Tennessee Agricultural Department to locate a distributor for their new spices. 

With the economic crisis still ahead, organizations are outsourcing more of their routine functions. Additionally, today’s workers cannot depend on their current employer to take care of their indefinitely. Therefore, being a freelance worker can provide a great alternative.

Yet, entrepreneurship isn’t for everyone. Furthermore, there is a continual demand for better services at lower prices by organizations. Therefore, many workers will become independent contractors. Yet, our nation needs to continue its economic development campaign. 

How will freelancers contribute to the outsourcing market?  What operational systems will need to be infused into traditional organizations so that they can use them?

© 2010 by Daryl D. Green

 

[1] “More workers start to quit” by Joe Light

Fueling Intellectual Assets

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When I wrote my first book, My Cup Runneth Over: Setting Goals for Single Parents and Working Couples, it took me two months to write and less than a year to get published (it normally takes 18 months to three years to get published).  People were amazed at my publishing accomplishments.

My world was transformed, from being a little unknown engineer in Tennessee to being a respected expert and quoted by USA Today and Ebony Magazine.  It provided a great avenue for influencing others across the country and the world.  Additionally, it provided me with a more diverse portfolio of passive income and revenue.  In the greater scheme of thinking, I found out that my new platform was centered, not on the physical book—but on the creation of intellectual assets. 

As organizations contend with global competition, many businesses will need to rethink their strategies for sustainability in the knowledge and innovation economy.  Across the nation, companies are depending more on freelance workers.

According to the Bureau of Labor Statistics, the number of workers placed by temporary staffing agencies rose by 404,000 since September 2010. Furthermore, many gifted, laid-off workers are forced to become independent contractors and freelancers.  According to the Freelancer Union, 18% of its members were forced to give up health insurance in 2009 while 39% cut back coverage.  This trend is reshaping America’s workforce.

Yet, value creation will be the key to opening endless opportunities for today’s businesses.  We complain about the rate of manufacturing jobs going abroad and how this reality impacts the quality of living. Perhaps the future will be ruled not by the tangible but the intangible.  In fact, the knowledge economy will wreak havoc on traditional thinking. 

 

Thomas Davenport and Kevin Desouza, intellectual strategists, argue the importance of organizations understanding their intellectual assets: “In the industrial economy, a key component of mass production and productivity—and hence economic growth—was the reuse of physical assets: molds, templates, castings and so forth.  Although so much of the economy is now based on intellectual assets, we have yet to achieve a similar level of reuse and productivity improvement for that class of asset.”  In this discussion, we will look at how intellectual assets will fuel the future.

Henrik Vejlgaard, author of Anatomy of a Trend, argues that emerging trends are influenced by gifted people, including entrepreneurs, designers, and artists.  Vejlgaard notes that these people “create new products or invent new styles or begin doing something in a completely new way.”  In the old days, creative people were the butt of jokes pertaining to finding sustainable employment.  

Yet, the future will belong to just these people, as many organizations across the world will need this asset to enhance their survivability.  Fueling the knowledge economy will be knowledge creation (intellectual asset creation) and knowledge management (intellectual asset management).

An important ingredient for the knowledge economy is the creation, use, storage, and positioning of an organization’s intellectual assets.  Intellectual assets are valuable elements created by human ingenuity: written documents, software, musical compositions, and other intellectual spin-offs.  Intellectual assets can be divided into two categories, product assets and process assets.  Product assets are the specific outputs of knowledge work such as software programs or legal briefs.  

In contrast, process assets are codified knowledge about how to perform a task such as manufacturing steps for a new product.  Some countries have already realized the critical value of intellectual assets.  In May 2004, the Ministerial Council in France studied how intellectual assets impacted value creation, growth, and economic performance.  The study noted, “The continuous shift toward a knowledge-based and innovation-driven economy has brought to the forefront the issue of how knowledge is created, disseminated, retained and used to obtain economic returns.”

Intellectual assets will place individuals at the center stage of wealth creation across the globe.  Today, traditional publishers struggle to stay in business as the world has been overrun by knowledge creation.  Many experts will argue that the Big 6 (Random House, Inc., Penguin Putnam, HarperCollins, Holtzbrinck, Time Warner, and Simon & Schuster) dominate the publishing world.  Yet, the world is changing.  

According to a Para Publishing study, traditional publishers are in trouble.  In 2004, more than 1.8 million books were in print.  A new book is published every 30 seconds.  With challenges from the global economies, digital publishing models, and industry standard changes, major publishers are bombarded with changes that impact their bottom-line.  In 2002, major publishers decreased output by 5% yet titles published rose by 6%. 

What is driving the publishing industry now?  It is independent publishers and literary entrepreneurs emerging in this digital age.  In fact, 70% of the titles are now coming from small or self-publishers. In the digital age, individuals can transform one idea into multiple formats including paper back, hardcover, MP3 files, DvD, and other downloadable files.  Therefore, knowledge creators are building an empire of intellectual assets.  Websites like Createspace.com and Lulu.com give individuals the power to create wealth while building influence effortlessly.

What modifications will need to be made in the publishing model to incorporate intellectual assets created by entrepreneurs? How can organizations take advantage of these gifted creators in their organizations and still fully control their knowledge management processes?

 © 2010 by Daryl D. Green

Unintended Consequences

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As companies after company fail in the same industry, I wonder why some organizations continue to follow the same deadly path. In most cases, it starts with managers who do not think about the consequences of short term decisions over the long haul. Sadly, hasty decisions can impact not only the individual but others around them. Several famous individuals have been impacted by this reality.

For example, Vanessa Williams was one of these fallen Hollywood icons. In 1983, Williams became the first African-American woman to be crowned Miss America. However, her immediate success was short-lived due to a scandal.

Consequently, Williams was forced to relinquish her title; she probably didn’t think her youthful deed would come back and wreck her dreams. Yet, the consequences not only damaged Williams but her family, friends, and millions of her fans. In this session, we will examine the impacts of unintended consequences.

Have you ever wondered why some people never consider the aftermath of their bad choices? Many people fail to understand the consequences of their decisions. Nobel Prize author Albert Camus once noted, “Life is the sum of all your choices.” Some people rationalize that an apology or a pitiful stare will erase all of the damages. 

I hear it all the time: “I’m sorry. I didn’t mean for that to happen.” Instead of just chalking it up to immaturity or youthful ignorance, I just cannot make that case because we are often talking about adults, not children. These adults should know better, but they act without realizing the effect of their actions. In spite of all wise counsel, some people live to make poor decisions.

Fortunately, these circumstances can be traced back to a root cause. The Law of Unintended Consequences relate to any purposeful action that will generate unintended consequences. This law can be categorized into several areas: (a) a positive unexpected benefit called serendipity, (b) a negative effect which is contrary to the original intention, and (c) a potential source of problems which is commonly referred to as Murphy’s Law. Additionally, the outcomes are not limited to the results that were originally intended.

Here are some examples of how this law works. A new bridge is built to give a secluded community access to a nearby shopping mall. However, this action results in increased crime in the secluded neighborhood and decreased sales for the mall stores. No one anticipated these unforeseen problems.

Another example is a caring parent who smokes cigarettes around his family. One child gets asthma and eventually becomes a chain smoker as an adult. Another child obtains a phobia related to smokers. In retrospect, the caring parent would have done something different if he had anticipated the long-term consequences.

Likewise, many managers may make alternative decisions if they understand the Law of Unintended Consequences. Furthermore, today’s leaders can be proactive in their decision making by considering the long term ramifications of most decisions.

Like Murphy’s Law, some decisions may appear to afflict some people as if their lives are cursed. Unfortunately, making the right decision is a difficult process. No one will applaud your many good decisions; however, you will probably catch heat over the bad ones. As a matter of fact, some individuals continue to ride a merry ride of worsening consequences.

Yet, it is often their own lack of foresight that haunts them. Eleanor Roosevelt said, “Somehow we learn who we really are and then live with that decision.” Every person, regardless of their background or social standing, can benefit from good decision-making techniques. In this life, most people make decisions to the best of their abilities. When various things happen, especially bad ones, individuals must be ready to deal with them. Therefore, understanding unintended consequences can assist in helping make better decisions for the future.   

 How do organizations anticipate the consequences of their decisions?  Can managers learn to make better decisions?

 © 2010 by Daryl D. Green

The Search of Global Talent

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It is 2150. Science and technology rule the world. Artificial intelligence provides the life blood for the universe. Basic robotic beings conduct all manual labor. Therefore, humanity enjoys endless pleasures and high level thinking. Surprisingly, a rodent dashes through the power grid, bypassing a sophisticated security system and blacks out Earth. Living at the core of the planet, Earth inhabitants stand in darkness. There are no engineers, technicians, and scientists. Humanity has abandoned scientific pursuits in the quest for a better life. 

Why are American businesses excited about global outsourcing while their employees sound the alarm on the impending danger ahead? As I watch numerous companies outsource their corporate souls abroad, I wonder, what is the future of our workforce?  When global competition should bring out the best in humanity, perhaps it is bringing out the worst in us.

As American company after company relishes its stronghold on innovation and creativity to the rest of the world, global competition escalates.  When managers should be developing their employees so that they can get the best performance out of them, managers develop systems that do not inspire or empower workers but maintain the status quo.  Sadly, this is a tragic mistake as countries seek out the best talent in the future.

In a rapidly changing environment, organizations need to understand the rule that talented individuals will play in the future. Some organizations play with strategic planning for the predicted problems of the future, yet they neglect the unintended consequences of what is happening in the near term.

Watts Wacker, Jim Taylor, and Howard Means, authors of The Visionary’s Handbook, explain, “Fail to build your own future, and someone is going to build one for you.” 

Dr. James Canton, nationally recognized futurist, analyzes 10 critical emerging trends in his book, Extreme Future. Dr. Canton notes, “Everyone needs to think differently about the future, a future that is riddled with change, challenge, and risk.” He further provides the five factors that will shape the extreme future which are speed, complexity, risk, change, and surprise. Yet, what emerges from Dr. Canton’s prediction is an increasing need for more worldwide talent.

There is a growing battle developing as companies fight for positioning on the global market.  In fact, this war is waging across the globe.  Countries are searching for the brightest and smartest talent. The Global Talent Management and Rewards Survey involved a study of 1,176 companies across the world, including 314 from the United States.  The survey found that the vast majority of the companies were having difficulty attracting the critical-skill and talented employees to help them compete during this economic crisis. 

According to the study, 65% of the companies reported having problems obtaining the needed talent (52% of American businesses).  In fact, many businesses aren’t even able to retain their own employees.  American businesses were reporting losing 11% of their workforce while globally it’s over 20%.

Gaining the right kind of attributes will make workers more valuable. Ryan Johnson, WorldatWork Vice President, notes “This study is a good reminder that employers need to reassess their employee value proposition to key in on those factors, both tangible and intangible, that would make them attractive to recruits.”

According to the survey, the top talent management priorities were (a) Ensuring the readiness of talent in critical roles, (b) Increasing the investment in building an internal pipeline of talent, and (c) Creating more development opportunities within (rotations, etc.).  Therefore, the quest for worldwide talent will dominate most countries economic agenda as they seek to position themselves in the future.

What is the workforce aftermath if America cannot compete for future talent? What effect will global outsourcing have in the overall strategy of tomorrow’s organizations? 

 © 2010 by Daryl D. Green

Market Turbulence

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For many people, the bad economic picture will not change soon enough. According to a USA Today/Gallup Poll, almost three-fourths of those surveyed don’t like what’s going on in the country. David Walker, the former chief of the Government Accountable Office, predicts a poorer America if the economic ship doesn’t change direction: “We’ve kicked the can down the road as far as we can. We are at the abyss.”

Market turbulence has overtaken our ability to realize the American Dream. This turbulence relates to the chaos that now plaques our financial institutions, wrecking havoc on our normalcy. With a weak job growth, many U.S. jobs will continue to be outsourced globally or automated through technology.

In fact, the government estimates that an additional 1.2 manufacturing jobs will disappear by 2018. In this economic downturn, many people are just happy to have a job. Yet, the hectic work environment creates severe consequences to today’s workers as well.  In our discussion, we will focus on market turbulence and how to leverage against it.

Market turbulence is transforming businesses across the globe.  International markets have been shaken.  It’s like riding first class on a cruise ship during a terrible hurricane. You have plenty of the creature comforts.

Yet, it doesn’t change your situation. You are in for a rough ride. Today, American businesses, like other nations, are on this rough ride. The hurricane is market turbulence. Stanley Gryskiewicz, author of Positive Turbulence, stresses the dangers of this rocky ride: “Turbulence is energic, forceful, catalytic, and unpredictable.” 

Many organizations do not understand what to do or how to survive it.  Stan Davis, author of Future Perfect, declares, “The external environment-technology, economy, society and so on—is changing so fast that businesses scurry to keep up. Organizations, however, simply cannot run that fast. So our organizations don’t change as fast as do the businesses that they are managing.”

Charles Handy, author of The Age of Unreason, argues “Discontinuous changes require discontinuous thinking. If the new way of doing things is going to be different from the old, not just an improvement on it, then we shall need to look at everything in a new way.”  Many managers brag about their extensive experience. 

Many managers brag about their extensive experience. However, in a market plagued by uncertainty, this experience works against traditionalists. Today change is rapid and unpredicted.  Loaded with their vast experience, managers can lead organizations into business despair. Given the large degree of uncertainty and unknowns, some organizations continue on the same path…to nowhere!

Innovative managers can leverage market turbulence to their advantage. Everywhere we look we see this disruptive change breaking down traditional thinking.  What worked yesterday, will fail today. The best companies know how to adapt to turbulence. While others downsize and contract their market efforts, great companies infuse their organizations with creativity and expand their operations, competing on their strengths. 

Management strategist Stanley Gryskiewicz argues that turbulence associated with change can be a positive force for innovation.  He recommendations four elements in taking advantage of turbulence, which are (a) difference (breaking out from the status quo, (b) multiple perspectives (inviting divergent viewpoints and nontraditional interpretations, (c) intensity (keeping the speed, volume, and force at an optimal level for change, and (d) receptivity (providing mechanisms for individuals to be able to thrive in turbulence.

Gary Hamel, author of Leading the Revolution, suggests “In the new industrial order, the battle lines don’t run between regions and countries…In a nonlinear world, only nonlinear ideas will create wealth.” Creative expert Michael Michalko argues that creativity:  is the answer for surviving market turbulence: “It is not a result of some easily learned magic trick or secret but a consequence of your intention to be creative and your determination to learn and use creativity.”  Yet, succeeding during market turbulence is no accident. In fact, organizations must be deliberate in creating sustainable performance during market turbulence.

How do organizations effectively implement nonlinear thinking to be successful during market turbulence?

 © 2010 by Daryl D. Green

Management Shift

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With current changes in workforce demographics, operational managers need to build the right organizational culture to stimulate employee growth and performance. For decades, human resources experts have been proclaiming the massive exodus of retiring workers. This situation creates a huge human resource problem for most businesses.  

 Therefore, organizations need leaders who are attune to cultural changes in society that impact their processes as well as their employees. In this discussion, we will focus on the inherent leadership characteristics that managers need to posses in the new millennium.  Many managers do not follow culture shifts that impact their organizations. You can simply look at the Baby Boomers. Some individuals proudly note that the massive Baby Boomer departure, predicted by many experts, did not happen. Many managers have grown confident that their most experienced workers will not be leaving for a very long time.

 Of course, they hedge their bets that the economy will not rebound any time soon.  Yet, one thing is for certain. Baby Boomers will leave one way or another; every generation eventually must exit the workforce environment because man’s existence is finite.  Therefore, the Baby Boomer generation will be replaced.  Researcher Kerry Harding describes this new generation as the “Emergent Workforce,” which crosses age groups, gender, race, and geography. This generation is very concerned about their professional growth. With the advent of reengineering and outsourcing of jobs, many organizations have made it difficult for employees to consider their career development in any one organization.

 

In a hypercompetitive environment, some managers view their workers simply as a disposable workforce due to employees’ lack of organizational loyalty. However, in reality, what we are seeing are a new set of employee value systems taking place. In one workforce study, Emergent employees (88%) believed that loyalty is not related to employment length, while Traditional employees (94%) felt that loyalty was about the willingness to stay with an employer for the long term.

Therefore, managers must be able and willing to infuse organizational values into their workers. This process starts at the very beginning when prospective workers are in the initial hiring process. Usually, the selection of a new employee is both time consuming and labor intensive. Companies conduct a series of interviews to determine if a potential employee is the right fit.

Yet, managers must listen to what their employees are saying. Alan Murray, author of The Wallstreet Journal Essential Guide to Management, insist the bosses must think differently:  Managers will not be able to assume they know the answer-because more often than not, they won’t.” Murray argue, for the fully engagement of workers as well as other stakeholders.

In the 21st century, managers must consider adjusting to the changing culture. This process will help foster better management-labor relationships and stimulate employee personal growth. This starts in the hiring process, in the employee orientation process, and then in continual employee development. Organizations must be zealous in their approach of clearly stating their values and employees must clearly see that fact in the lives of their organizational leaders. If organizations continue to ignore these value issues, they may find themselves cleaning up their own business mess.

Furthermore, today’s employees want more than the status quo. In fact, individuals want help in discovering their career path and meaningful life. Labor intense workers are being replaced with knowledge workers and learning becomes part of an organization’s competitive advantage.

Gary Yukl, author of Leadership in Organizations, explains that the immediate supervisor has considerable influence over a person’s leadership development; however, many bosses fail to do the right things to facilitate growth in their employees. Therefore, today’s managers make shift their thinking if they want to increase workers’ performance.  

What are effective ways organizations get their managers to embrace the culture shift necessary to manage a 21st workforce?

  © 2010 by Daryl D. Green

Human Factor Buy-in

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Steve Proud gets his biggest promotion as the latest senior executive to run this troubled business. With lots of talent and experience, the organization struggles to meet performance goals. Being on the fast-track, Steve quickly makes significant changes to impress the corporate board. He fires the old managers and surrounds himself with the better talent. His team rolls out a comprehensive strategic plan.

The corporate board starts seeing positive results.  However, things change within two years. Many employees view Steve as a ‘paper manager.’ Despite his ‘talk about empowering workers,’ his actions demonstrate he cares little about any worker’s opinions. Steve cannot understand why his strategy failed.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

Most organizations move swiftly ahead reacting to market forces without truly empowering workers to make organizational decisions. Managers preach that employees are a critical asset to an organization’s bottom-line. However, few managers ever show it. Given that percept, we will discuss the final component of effective socio-technical systems. It is the human factor buy-in. Organizations must shift their paradigm to viewing workers as more than mechanical parts for their organizational objectives.

According to a USA Today poll, nearly half of those interviewed said that corporations can be trusted only a little, or not at all, when it involves looking out for the best interest of employees. Michael Hackman and Craig Johnson, authors of Leadership: A Communication Perspective, argue that a leader’s credibility is directly related to the quality of his relationship with followers.

Marios Katsioloudes, a researcher specializing in socio-technical analysis, explains that as profitability of mechanization increases, the importance of technology is implied while there is a devaluation of the workers. Clearly, U.S. businesses cannot point to the lack of employee performance for mismanagement errors.

Japan, a long-time benchmark for American companies, is being defeated by American employees. Today, the average U.S. worker puts in 36 more hours than Japanese workers (1,825 vs. 1,789). Over the last two decades, balancing work and home life have been difficult since Americans have added 200 hours to their annual work schedule.

Employees want to be valued. Felix Harris, a financial director with over 8 years in the banking industry, acknowledges the importance of people in a socio-technical system. He states, “When employees are appreciated, they work harder.  A machine is only as good as its operator.”  Jeffrey Pfeffer, author of The Human Equation, acknowledges that organizational success is directly related to implementation, and this capacity comes from the workers, how they are treated, their skills, and their efforts as it relates to the organization.

Managers should see followers as more than mechanical parts for their organizational objectives. Managers assume that giving employees new technology is enough to keep them happy. Likewise, leaders should view followers as vital components of the socio-technical system.

Today’s managers in technical organizations must understand the delicacy of balancing a socio-technical system. The recent mirage of culture changes such as outsourcing, scandals, and unethical dealings by both governmental and business senior managers have made American employees skeptical about the seriousness of organizations implementing corporate values into their workplace.

Furthermore, today’s executives are falling short in promoting the desired values to support socio-technical systems due to understanding the value of employee buy-in.

In fact, this insight would be valuable to any manager, trying to integrate the man – human interface mechanism. Understanding the uniqueness of the socio-technical system may increase leadership effectiveness and better management strategies for your organization.

How can organizations best gain employee buy-in when they possess less than a stellar track record of worker empowerment?  

 © 2010 by Daryl D. Green

Value Modeling

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In the 1987 classic Movie Wallstreet, America witnessed a growing trend of the American Dream. Bud Fox (Charlie Sheen), a Wall Street stockbroker, wanted to get to the top at any cost. This short track path to riches led him to broker Gordon Gekko (Michael Douglas).  Gekka was shrewd and dangerous; his philosophy was built on “Greed is Good.” Fox soon became engulfed in the glamorous life of the powerful. But—it was at a high moral cost.

Scandals may drive media ratings and turn the trivial into the most critical. However, moral decay does not help companies compete or make society a better place. We’ve discussed the socio-technical system as it relates to global markets. In building effective socio-technical systems, one needs to focus on (a) value modeling, (b) technology relevancy, and (c) human factor buy-in. With the continual ethical failures of government officials and business executives on Wall Street, many workers view ethical policies of today’s organizations with some cynicism. Do you?

A high performing organization must model its values to both first line supervisors and managers in a socio-technical system. Many organizations expect employees to understand its culture, values, and principles by attending new employee orientation or by reading a company brochure. This is simply not going to happen.

Vince Adams, who has over 19 years as senior environmental manager, understands the delicacy of balancing a socio-technical system. Adams has extensive experience with both government and private organizations that are find themselves neglecting to outline and demonstrate their value systems to employees. Adams states, “Companies must build values into their employees so that employees know what the expectations are for that organization.”

James Kouzes and Barry Posner, authors of The Leadership Challenge, have researched over several thousand businesses and government executives and they outline setting the example as a critical attribute of effective leadership. Kouzes and Posner argue, “Once people are clear about the leader’s value, about their own values, and about shared values, they know what’s expected of them and can better handle the conflicting demands of work and personal affairs.”  Therefore, employees expect leaders in organizations to model the way in their organizations, and this is also true for socio-technical systems.

Is it possible for today’s managers to regain the confidence of workers on the ethical front? If so, how

© 2010 by Daryl D. Green

Socio-technical Systems in Global Markets

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Another problem is presented. A worker gets injured on a subcontractor’s job. We gather around the table dish out the blame. Everyone wants to point fingers. The operations manager blames inadequate funding while the safety engineer cites an inadequate preplanning process. Nothing gets resolved. The issue rackets up for a senior management decision. There’s a meeting to discuss the matter.  Someone leads out and says what can be done to prevent this problem.

 Numerous technical recommendations are offered. Standing up, I state, “Why don’t we ask the workers about this problem? Let’s get them involved so that they can help find the solution.” The room gets quiet. Finally, one senior manager suggests that we should take money away from the subcontractor, buy new technology, and fire the worker’s supervisor. Everyone agrees. After dealing with this same problem every month, I was hoping for a different answer. I was disappointed again.

 Why do we see managers make the same mistakes over and over and never want the day-to-day workers involved in the process? Executives are then shocked when their employees don’t buy-in on their latest management initiative. One of the reasons organizations do not reach peak performance is because managers do not create socio-technical systems to support organizational values.  We will discuss the concept of building socio-technical systems in global markets.

With fierce global competition and a need for a market advantage, I found it surprising that managers move toward the quick fixes like downsizing for short-term gain without analyzing the organization over the long-term. I am not suggesting that this approach is easy; however, I am declaring that over the long haul an organization will be a stronger institution in the process.  First, the concept of a socio-technical system is defined by the interdependence of humans and machines that operate in harmonious fashion. Eric Trist (1909-1993), a renowned researcher, is considered the architect of socio-technical systems. Being of British origin, he was the leading authority in organizational development. His research engaged the workers as one of the critical components to successful operations in high performance organizations.

Researcher William Fox maintains that socio-technical systems effectively blend both the technical and social systems of an organization: “These two aspects must be considered interdependently, because arrangements that are optimal for one may not be optimal for the other and trade-offs are often required. Thus, for effective organization design, there is need for both dual focus and joint optimization.”  Therefore, an environment is created where these working parts can co-exist in this industrial system. 

 Since the industrial age, researchers have recognized that both technical and social factors impact organizational performance. Daniel Wren, author of The Evolution of Management Thought, concludes that analyzing a social system gives management an avenue to measure conflict between the “logic of efficiency” demanded  by the formal organization and  the “logic by sentiments” by the informal organization. In profit hunting, many businesses lose focus of the importance of socio-technical systems. Given these precepts, the questions for most managers become how to use this scholarly perspective in the practitioner’s avenue where time is money and money is time.

For next few weeks, we will discuss three practical applications so that socio-technical systems within organizations can support organizational values. These critical supporting mechanisms include a) value modeling, b) technology relevancy, and c) human factor buy-in.  I pray that emerging leaders will understand the implications of this concept with America’s fight to compete in global markets.

How can today’s organizations implement the concept of socio-technical systems, thereby overcoming institutional barriers?

    © 2010 by Daryl D. Green