The Resilient Enterprise

"Everybody with systems thinking is so angry over what is going on..."

Yossi Sheffi (professor of engineering systems at MIT) on the Katrina response. Yossi is quickly becoming the global expert on resilient enterprises. Here's an interview with him on NPR. He details the pro-active actions companies took (for example: Walmart and Home Depot) took to mitigate the impact of Katrina. Why did companies move faster and with more foresight than government? Example on the response of Hilton hotels from Business Week:

FRIDAY, AUG. 26 A colleague, David Blitch, hands Sawyers a weather report, saying "Katrina is aiming right for us." With the general manager on vacation, Sawyers tells the staff to offer all comers half-price rates; the $95-a-night fee goes mostly uncollected.

SATURDAY, AUG. 27 Very quickly, half the hotel's rooms are booked up, and many are packed with extra family members. An additional 200 reservations come in. Meanwhile, about 450 employees and their families have taken cots into the health club. By nightfall, Sawyers counts some 4,500 occupants, plus various pets. He cuts off more reservations: "I don't want to overtax our resources."

WEDNESDAY, AUG 31 They decide it's time for everyone to leave. Hilton executives arrange for 19 charter buses, paying wary drivers extra to make the trip from Texas.

Yossi's view is that resilient companies have a corporate culture that pushes decision making to the periphery. In Toyota, for example, anybody on the production line can stop the line if they see a problem. This culture of responsibility runs from the top to the bottom. "People in resilient organizations know that when disruption is evident there is no time to go through the bureaucratic processes."

While communications technology is important, it isn't enough. Companies must have a culture of communications (horizontal and vertical). Example: Dell. Every two hours managers get a report on their phone about the latest status of PC manufacturing. This is done so everyone can jump in to fix things when they go wrong. Added to a cultural of communications is urgency. When things go wrong, the entire company must participate in the solution. This urgency yields a flexibility that mitigates the need for excess redundancy.

Comments

[Jim Hanna]

John,
Thanks for the link. In the context of this date and time, I can't think of a more appropriate topic to bring to the attention of the country. By now it should be apparent to even the less attentive among us that being "the most powerful nation in the world" does not protect us from the consequences of decisions based on ignorance and ideology.

[Charles Cameron]

QUOTE: Yossi's view is that resilient companies have a corporate culture that pushes decision making to the periphery. .... This culture of responsibility runs from the top to the bottom. "People in resilient organizations know that when disruption is evident there is no time to go through the bureaucratic processes."

QUESTION: Where do I find the clearest, pithy-est, most authoritative statement of the need for this kind of distributed decision-making in the military, John?

[JTH]

John:

Even in the Military - those who work fast (Special Forces) are held in suspection by the "Regular Forces" ... slow and steady.
Right?

But I'm pleased with the interviews with Honore on Sunday talk shows ... seems he's getting something done.

Bulldozers aren't as fast as ATV's but move a hell of a lot more.

David Brooks, today's NYTimes OpEd:

"...the brutal fact is, government tends toward bureaucracy, which means elaborate paper flow but ineffective action. Government depends on planning, but planners can never really anticipate the inevitable complexity of events. And American government is inevitably divided and power is inevitably devolved.

For example, the Army Corps of Engineers had plenty of money (Louisiana received more than any other state), but that spending was carved up into little pork barrel projects. There were ample troops nearby to maintain order, but they were divided between federal and state authorities and constrained by regulations.

This preparedness plan is government as it really is. It reminds us that canning Michael Brown or appointing some tough response czar will not change the endemic failures at the heart of this institutional collapse.

So of course we need limited but energetic government. But liberals who think this disaster is going to set off a progressive revival need to explain how a comprehensive governmental failure is going to restore America's faith in big government."

[Stomaphagus]

["...]So of course we need limited but energetic government. But liberals who think this disaster is going to set off a progressive revival need to explain how a comprehensive governmental failure is going to restore America's faith in big government."

I'm not sure where Brooks gets his "plenty of money" theory about the Corps. When funds for a specific project get reallocated, that project doesn't have "plenty" though the org as a whole may be rolling in it. And so what if LA had the biggest cut of the pie? Was it big enough? What we've seen over the last few weeks is not big government but neglected government -- or at the very least government with poor priorities.

(Even a horse requires a certain amount of food and care to remain a reliable source of work. If you cut back on the food and care, the horse stops performing as well. The correct response then is not to distrust the horse -- feed the poor thing!)

[Jim]

How does JIT & SCM fit into an organization such as the Department of Defense