With globalization comes increased risk and uncertainty in nations, environments, communities, and businesses. As growing complexity makes it more difficult to determine the source of risk in these complex systems, it also reveals the interdependent nature of risk within a greater ecosystem. New studies show the best way to manage an organization in the face of risk is to build resiliency—the ability to withstand, recover from, and maintain function through a crisis. But in order to manage risk effectively, resiliency must be built into the entire interrelated system of an organization.
In the MIT Sloan research paper, “Uncertainty and Risk in Global Supply Chains,” MIT Sloan Professor Donald Lessard states that “risk management requires systematic management of risks that are generated within each link in the chain and, more importantly, in the interfaces among links in order to limit disruptions and their propagation throughout the system.” Effective management of risk, therefore, requires a systems thinking approach—understanding how systems influence one another within a whole.
Many people today buy their household telecommunications services—house landlines, Internet access, and digital TV—in bundles. Yet go to the average telecommunications services provider’s website and you have to select which product you are inquiring about or need fixed.
From an organization’s perspective, this makes complete sense. There’s a division for phone service, a division for Internet service, and a division for television. Specialists and technicians exist in each department to help you with whatever you need. But you get one bill each month, so why can’t the company recognize you as one customer with multiple products, instead of three separate customers?
Smart machines are everywhere we go. They’re on the plant floor manufacturing our cars, and they are in our grocery stores scanning our purchases. In the case of the iPhone and Siri, they are even in our pockets.
And that means that smart machines and robots will be taking more and more jobs. As Erik Brynjolfsson, Professor of Information Technology at MIT Sloan School of Management said on CBS’ 60 Minutes, “There are lots of examples of routine, middle-skilled jobs that are being eliminated the fastest. Those kinds of jobs are easier for our friends in the artificial intelligence community to design robots to handle them.”
But some of the developments we’ve seen in recent years indicate robots—or smart machines—will be taking not just manual jobs, but also intellectual jobs. Just take a look at Watson, IBM’s computer that played on—and won—Jeopardy! Over the course of the tournament, Watson not only came up with correct answers, but also learned why his incorrect answers are wrong. It improved at a rate faster than any human could.
Many global business organizations develop and manage complex systems with multiple interacting parts. In an effort to become more effective, efficient, and profitable in the face of growing complexity, businesses seek process innovations that help them streamline their systems. Perhaps that’s why the design structure matrix (DSM), originally developed in the 1970s to model design problems and used at MIT since the 1990s to research system complexity, has become a powerful tool for developing products and systems.
In their recent book, Design Structure Matrix Methods and Applications, Steven Eppinger, Professor of Management Science and Engineering Systems at MIT Sloan School of Management, and co-author Tyson Browning, show how DSM analysis helps companies streamline the process of product and system design.
“Engineering work can be procedural and systematic,” says Eppinger. “People think of engineering as a matter of always developing something new, unlike business operations, where you do something over and over again. But we’ve learned that while you may repeat engineering work five or 20 times in your career instead of 100 times a day, there’s a process there. And if you can capture that process, you can improve it.”
Guest Blogger: Doña Keating is President and CEO of Professional Options, a prominent innovator in the leadership, policy and management consulting industry which provides solutions for businesses, organizations and governmental agencies.
I am officially addicted to EmTechMIT. Since returning to the left coast from last week’s event, every neuron in my body is firing from a reconnection to one of the ultimate “Climates of Yes.”