Digital transformation for chiefs and owners. Volume 2. Systems thinking. Dzhimsher Chelidze

Chaotic (Chaotic) and Random (Disorder).

      Kenevin model

      1. Simple system

      Characteristic: Causal relationships are clear and unambiguous.

      What we do, we get the best practices.

      Order of Action: Understand – Classify – React.

      Examples: repetitive and relatively simple projects, such as paving the sidewalk in the yard, webinar.

      You can use any «cascade» standard. The main thing – not to be seduced by simplicity and do not neglect planning and points of control.

      2. Complex system

      Characteristic: Causal relationships exist but are not always obvious.

      What we do: we use good practices and standards. There is no single «best practice», but there are many «good practices».

      Action Sequence: Understand – Analyze – React.

      Examples: ERP system implementation, production line reconstruction.

      Here you need to comply with the requirements of PMBOK, Prince2, P2M, work with stakeholders and risks.

      The «flexible» methodologies could lead to unreasonable budget overruns and delay. However, they can be used as part of a «hybrid» approach.

      3. Complicated system

      Characteristic: Cause-effect relationships are not clear. Similar actions lead to different results due to external factors.

      What we’re doing is, there’s a field for hypotheses and experiments. In such systems, it is difficult to rely on historical information and individual observed facts. It is necessary to invent the practice of achieving results.

      The order of action in this environment: Explore – Understand – React.

      Examples: developing a new mobile app, entering a new foreign market, creating a bill in the field of artificial intelligence.

      This is the territory of Agile and Scrum. Clear technical tasks do not fit here. Flexibility and awareness of risks, deviation from strict requirements are needed.

      It will be a lot to communicate with the customer. As a rule, he himself does not fully understand what he needs. The final product may differ significantly from the original plan.

      This is one of the reasons for the problem of IT implementation in large companies. Everything is done on paper, with budget restrictions. As a result, they come to uncomfortable and expensive in content and no budget for improvement, which is explained by the following points:

      – Made according to the original requirements, which means the project can be considered successful. What other investments can be made?

      – In bureaucratic organizations, it is almost impossible to grasp the fallacy of original desires or of understanding what is really needed. And when the mistake is finally revealed, they look for the culprit to punish.

      – The limitations of budgetary rules. Who has faced this, understands what the problem is and how much it consumes time.

      4. Chaotic environment (crisis, innovation)

      Characteristic: No causal relationships. This is a transient short-term state, either to simple or complex systems (by means of strict restrictions) or to a confusing environment (by means of point measures).

      The order of actions in this environment: Act – Understand – React.

      What we do: The first step in chaos is action. The goal is to reduce chaos. Then it is necessary to feel the result of this action and to react in order to transfer the system from a chaotic state to a confusing or ordered one. There’s just no time to test hypotheses, and chaotic systems are incredibly fast.

      The result depends on the literacy, courage and innovation of the thinking of particular managers.

      5. Disorderly environment

      It is particularly difficult to recognize because of the many competing options. The recommendation is to divide it into parts and to determine the context in which each of the parts relates.

      Types of organizational structures

      To choose the right project management standard, you need not only to determine in which environment it will be implemented, but also the type of your organizational structure:

      – Weak – a lot of projects, but they are small, without routine, not critical for the company. Or just one project that purposely takes 10—20% of the company’s resources. If you look at the model of Keenevin, it is suitable for simple systems. Such a structure is particularly demanding to develop a communication plan between the participants and to receive feedback from the project manager, who is usually not a senior manager.

      – Balanced – medium projects that can take 20—50% of the company’s resources. If you look at the Kinevin model, these are complex and confusing systems. You can also apply to chaotic structures, but you have to evaluate the project. For example, implementing an ERP or separate digital projects.

      – Strong – strategic projects where the price of error is high for the company, and a large number of resources (more than 50%) is required. These are, for example, transformation programs, complex automation, implementation of lean production systems and so on. Here, it is essential to work through the initiation and planning phase, to make short milestones between phases and to remain flexible.

      – Next, we will look at all the basic standards that underlie all approaches. This may seem superfluous to you as leaders, but through understanding the tools you will be able to choose the right one. Additionally, for the executives of large companies, this will allow more effective management of the team and not collect bullshit, which is often tried to hang particularly smart managers.

      Project implementation methodology

      PMBOK

      PMBOK (Project Management Body of Knowledge). In Russian, it is a «collection of knowledge about project management». Process classifier (until 2021), which says that and when to execute in order for the project to achieve its stated goals.

      This code is the result of Americans’ work in their desire to create a universal instruction manual. They wanted to move away from the human factor in management and to ensure that anyone who took this instruction could implement the project. The PMI (Project Management Institute – Institute of Project Management) certifies the volume.

      PMI also issues a PMP (Project Management Professional) certificate. Additionally, it’s the certificates that this organization wants to see from project managers in big corporations.

      PMBOK is the most common methodology that can be used in most projects.

      This approach was the first to introduce the concept of a «project triangle» which describes the balance between cost, time and quality of the project.

      Project triangle

      At the same time, the sixth version of PMBOK is still valid, but in 2021 the seventh version was released. It is moving to a more flexible management. The standard no longer says what to do and when, but gives tools and clues, encouraging managers to define their own actions.

      This was a response to the uncertainty and instability of the modern so-called VUCA-world:

      – Volatility (instability) – constant changes in the environment, customer requests.

      – Uncertainty (uncertainty) is almost impossible to predict and plan. Now strategic planning covers not 3-5-10 years, but