Operations and Technology

Over the past 30 years information technology has had an increasing presence in the operational side of most businesses. At the same time, approaches to the organisation of work and the management of people have changed and developed. Debate exists today around the role that information should play in operations. Some argue that IT can have a significant impact on operations while others argue that IT is being over used and that the focus should be on simplification.

This post traces the history of approaches to operations management and the role that information technology might play in these. Scientific management, human relations and socio technical systems are outlined. More recent approaches in lean operations and enterprise resources planning are considered, particularly the debate over the pursuance of a lean strategy and the role (if any) for ERP within this. The role that information technology takes in operations will depend on the overall operations strategy adopted. This will be influenced by beliefs about the motivation of people at work.

Scientific management and the human relations school were explained in the previous post.  In 1979 the United Nations’ International Labour Organisation described scientific management as:

“Under this system the operative is regarded as a person of a very low intellectual and educational level, a waster with an innate tendency towards low output, needing regular pacing to overcome habitual apathy, and requiring close supervision, but capable of positive motivation through payment by results.”

The human relations school was critical of scientific management and McGregor’s theory X and theory Y questioned the model of employee motivation that scientific management was based on:

Socio technical systems also emerged as an approach to operations in the 1950s. They expanded on human relations theory, arguing that it was too narrow. They argued that the human relations school assumed that the use of technology in operations was fixed and that activity to improve worker motivation could not change this. The socio technical school argued that work is a combination of social and technical systems and that both had to be optimised together to create a work environment that would maximise employee motivation and operational performance. The design of manufacturing environments should take both into account.

Many companies adopted a socio technical systems approach. Volvo, in their plants in Kalmar and Uddevalla in Sweden and, more recently, General Motors’ Saturn plant in the US were examples of this. Research evidence of the performance of socio technical systems vs. other manufacturing approaches is inconclusive – we don’t know if the socio technical approach produces better performing operations. The following video describes the use of socio technical systems by Volvo:

By the mid 1980′s there was a recognition that North American and European manufacturing performance was falling significantly behind that in Japan. Womack, Jones and Roos researched this and in 1990 published their very influential book, The Machine That Changed the World. Their research quantified the gap: 

Study of Japanese manufacturing identified a new approach to operations – Lean Manufacturing which was argued to be the reason for the gap. North American and European companies were urged to adopt this lean approach.

Writing in 1987, Voss described lean manufacturing as:

    “a disciplined approach to improving overall productivity and eliminating waste. It provides for the cost effective production and delivery of only the necessary quantity of parts at the right quality, at the right time and place, while using a minimum amount of facilities, equipment, materials and human resources.”

and argued that it required:

“total employee involvement and teamwork”

The main elements of a lean approach were described by Bhasin and Burcher in 2006 who argued that a lean approach was a new philosophy of operations management that had the following elements:

•Decisions at the lowest level
•Clarity of lean vision
•Strategy of change
•Clear responsibilities
•Supplier relationships based on trust and commitment
•Learning environment
•Focus on customer
•Lean leadership and metrics
•Maintain challenge of existing processes
•Maximise stability
•Assess fraction of employees operating under lean conditions
•Long term commitment

The following video provides a good introduction to lean operations:

Toyota are seen as one of the leaders in lean:

Lean has now been applied beyond the manufacturing environment, in most other parts of the economy. In service industries it has featured the introduction of problem solving groups, upgrades to housekeeping and quality, clarification of process flows, changes to equipment and process technologies etc. The following video looks at lean in an office environment:

The Lean Enterprise Research Centre at the University of Cardiff in Wales looks at how lean is applied in a variety of sectors:

Information technology has been applied in operations increasingly over the past thirty years. It has been applied in operational equipment and in more recent years information technology has been used to integrate operations. Computer integrated manufacturing focused particularly on the application of information technology to processing equipment:

Enterprise resources planning is described by PC World as:

“An integrated information system that serves all departments within an enterprise. Evolving out of the manufacturing industry, ERP implies the use of packaged software rather than proprietary software written by or for one customer. ERP modules may be able to interface with an organization’s own software with varying degrees of effort, and, depending on the software, ERP modules may be alterable via the vendor’s proprietary tools as well as proprietary or standard programming languages.

“An ERP system can include software for manufacturing, order entry, accounts receivable and payable, general ledger, purchasing, warehousing, transportation and human resources. The major ERP vendors are SAP, Oracle (PeopleSoft and J.D. Edwards), SSA Global (Baan) and Microsoft.”

The following video describes ERP:

The following grahic illustrates the latest generation of ERP that focuses on total integration of business processes:

There is debate about enterprise resources planning technology and lean operations. Some argue that a lean approach is not compatible with ERP. Lean focuses on simplifying processes and using shopfloor level visibility to control process flow.  ERP is based on using information technology to manage shopfloor activity and a wide range of other functions which is argued to work against the lean approach. They point especially to the use of pull systems of process flow in lean and push systems in ERP, as the following graphic illustrates:

Others argue that ERP is more appropriate than lean in managing operations. They accept that the approaches are incompatible and assert that ERP will produce better results.

A third group argue that a blended approach is possible with lean being used to control shopfloor operations and ERP being used to manage areas and activities beyond the shopfloor. The following graphic illustrates this:

The following video discusses the relationship between ERP and Lean:

This post has discussed the development of approaches to operations in organisations. A historical view is taken of this so that the progression of approaches that has led to current practices can be understood. Debate continues today on the approach that should be taken – that debate implies beliefs in human motivation.

People and Technological Change

People in organisations today often experience efforts to achieve change:

Today’s managers are usually expected to achieve change that will improve the performance of their organisations but this has not always been the case:

The following video provides a short introduction to change management:

In this week of the course we look at people’s motivation at work and the different approaches that might be taken to their management based on beliefs about their motivation. We will look at the two major theories of the management of change: organisational development and emergent theory. Leadership is often argued to be a critical element in successful change management and we will explore the concept of transformational leadership. Finally we will examine how people’s working lives are impacted by information technology with an interview with Caroline Axtell from the University of Sheffield.

Theory X and Theory Y

Douglas McGregor developed Theory X and Theory Y in 1960. It is a theory of approaches to managing people.

In the early 20th century the theory of scientific management was developed. Henry Ford and Frederick Taylor were key exponents of the theory which emphasised the division of planning and execution of work and the specialisation of jobs. In this model organisations featured a small number of people with a high level of skill and a large number of people with a small amount of skill. The role of managers was more clearly defined in this model and work methods were carefully studied and developed to maximise their effieciency. The following video explains scientific management:

By the second half of the 20th century scientific management was being questioned. Hackman and Lawler, writing in 1971, described it as:

“The general expectation of the scientific management approach was that by simplifying jobs, work could be carried out more efficiently, less skilled employees would be required; the control of management over production would be increased; and, ultimately, organisational profits would be increased.”

The Human Relations school argued that scientific management led to sub optimal performance, that it was not the best way to organise work. They argued that jobs should be designed to improve employee motivation, satisfaction and performance. McGregor’s Theory X and Theory Y is part of that approach. Now often seen as overly simplified, its value is in questioning the beleifs about human motivation that lie behind different approaches to work organisation and management. Theory X managers beleive that most people are lazy while Theory Y managers take a more positive view:

Why Does Change Fail and What Can We Do About It?

Statistics suggest that change fails on a regular basis – some studies suggest that as many as 90 % of change initiatives fail. Studies of reasons for change failure are weak and generally say that failure is due to weaknesses in planning or execution or due to lack of competence or commitment.

A recent study by the McKinsey consulting organisation of 3199 global executives found that only one third had achieved a significant improvement in their corporate performance. Those that did set high and clear expectations for their subordinates, engaged the company as whole in the change activity. were highly visible and involved their Chief Executive Officer, engaged in more communication and had good accountability methods. They built on success rather than focused on problems. The following video looks at why change often failes:

Many authors have written about approaches that might be taken to successful change – arguing that they have the one best way. Kanter et al (2009) described 10 commandments for successful change, Pugh (1993) proposed four principles of change while Kotter developed an eight step model in 1996. Many organisations have adopted one of these approaches.

Theory of change has two main themes, organisation development and emergent change. Organisation development approaches seek to carefully plan change in an organisation. They view organisations as integrated systems and plan to change in the system as a whole. They see change as being managed by senior management and requiring support throughout the organisation and being designed to impact organisational performance by aligning organisational systems and people. Organisational development is based on behavioural science knowledge – research that seeks to understand the behaviour of people and organisations.

The following video describes the problems with old approaches to change management:

While this video describes the benefits of a new participative approach:

Emergent theories of change argue that change in organisations does not usually happen in an organised way – it is often less formally controlled, It argues that everyone in the organisation can potentially cause change and good communications can make change easier. Change, it argues, is based on interactions inside the organisation. While leadership still exists in organisations it does not control everything. McGill University’s Henry Mintzberg is strongly identified with this approach:

Types of Change

Three types of organisational change are usually discussed: developmental, transitional and transformational.

Developmental change is focused on the improvement of existing aspects of an organisation. It is typically smaller scale change.

Transitional change  is designed to move the organisation from on state to another. It is usually planned and large scale and most organisational change literature is focused on this type of change.

Transformational change is fundamental – it transforms the organisation so that processes, culture, strategy etc. may be radically different from what they were before the change.

Transformational Leadership

Transformational leadership that can have a radical impact on an organisation is said to require four elements from leaders:

1. Be a role model and respected in the organisation.

2. Inspire and motivate others

3. Have genuine concern for the needs and feelings of followers

4. Challenge followers to be innovative and creative

The literature argues that transformational leadership results in organisations with higher levels of performance and employee satisfaction than other groups. They hold positive expectations of their followers and inspire and empower people to perform at a higher level.

This article further explains transformational leadership and provides a test to assess your transformational leadership capabilities.

Interview With Caroline Axtell

The following interview is with Dr. Caroline Axtell, who researches the impact of technology on people at work.

Part One:

Part Two

Part Three

This post has looked at people and change in organisations.. It considered the approach that managers take to thepeople they manage ith McGregor’s theory X and theory Y. It looked at approaches to managing change and how change happens in organisations with organisation development and emergent theory. We discussed transformational leadership and looked at people and information technology with Caroline Axtell.