Business can be looked at as processes, practices, and people. The processes are automated procedures employed to conduct the activities of business. Practices are the belief and knowledge systems that substitute for process when a procedure does not exist. They influence how we design and operate formal processes, and the integrity and fidelity we require of formal processes. People are the gremlins that keep the processes running and the practices performing. They are subject to discontinuous changes and inconsistencies.
I suspect it is in the practices that mitigate between the people and the processes where we will find the conjuring of intelligence. Putting people in systems theory equations sounds like fuzzy-logic-meets-systems-engineering. There is precedent, however.
My minor at university was economics, and the prime text we had to read at the time was called The Theory of the Firm, which assumed perfect markets with perfect information and perfectly rational decision-making. Markets were explained as the emergent result of many firms maximizing their profit potential by observing these supposedly natural laws. The theory of the firm was based on the prediction of rational decisions by the firm, according to market realities. This was economic gospel until 1963, when A Behavioral Theory of the Firm, written by Cyert and March, broke with this conventional thinking. They suspected that the mathematically perfect view was flawed, and set out to observe the actual behavior of firms in decision-making processes. Ample evidence shows that perfect knowledge is not obtained by decision makers, decisions are not particularly rational economically, and conflicts exist within the organization. If these observed realities are at work in the firms’ economic decisions, it is reasonable to expect similar irrationality in decision making throughout.
Last month I described the Intelligent Enterprise Interest Group formed under the aegis of the International Council on Systems Engineering. Co-leader Jack Ring suggested the group might explore and demonstrate the utility of system engineering for evolving Intelligent Enterprises to:
Most interesting is this promise to “determine the interventions and/or environments appropriate for evolving enterprise intelligence.” This is where the real payoff is. Right now I am totally immersed in a major corporate project at Silterra, a semiconductor manufacturer, to help create what Jack’s group might call an “Intelligent Enterprise.” It will all hinge on intervention and environment: confronting and molding a culture.
That an enterprise should be “engineered” is also a front line effort we are wrestling with at Silterra, complete with a proposed office of business engineering at the highest and most strategic level. It is little different than what we preach at lower levels–namely, that there should be a continuous improvement effort in what we do and how we do it, and there should be zero tolerance for recurring problems: a problem is an opportunity to develop an insight that directs a system correction.
If you want to explore participation in this Intelligent Enterprise Interest Group, contact Jack Ring at firstname.lastname@example.org. He is looking for serious players who will share and use ideas in real world projects at for-profit, non-profit, and government organizations.