Operational and strategic decision-making

Table of Contents

List of abbreviations

I. Introduction

II. Main part
1. Soft Systems Methodology (SSM): Challenges in fundraising at a Yorkshire not-for-profit charity society
1.1 Theory and literature review
1.2 Applying theory to practice
1.3 Analysis and critical evaluation
1.4 Findings
2. Analytical Hierarchy Process (AHP): Ranking of processes for a leading global investment bank
2.1 Theory and literature review
2.2 Applying theory to practice
2.3 Analysis and critical evaluation
2.4 Findings
3. Alexandrian Pattern Analysis (APA): Development of a best practice process for procurement considering Metcalfe’s Law
3.1 Theory and literature review
3.2 Applying theory to practice
3.3 Analysis and critical evaluation
3.4 Findings

III. Conclusion / Prospects
Appendix
1. Soft Systems Methodology (SSM)
2. Analytical Hierarchy Process (AHP)
3. Alexandrian Pattern Analysis (APA) and Metcalfe’s Law
References

Table of Figures

Figure 1 - SSM: Rich Picture

Figure 2 - SSM: CATWOE

Figure 3 - SSM: Conceptual Model

Figure 4 - SSM: comparison of model to real world

Figure 5 - SSM: road map for implementation

Figure 6 - AHP: Problem Hierarchy

Figure 7 - AHP: Stages 2-8

Figure 8 - APA: pattern for bidding process

Figure 9 - SSM: Problem situation expressed

List of abbreviations

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I. Introduction

This report refers to the MBA course module “decision and information analysis” and is divided in three parts, depending on each given situation.

In doing so, the author refers to three different practical situations, all of them referring to different theories and techniques, namely (1) Soft Systems Methodology (SSM), (2) Analytical Hierarchy Process (AHP) and (3) Alexandrian Pattern Analysis (APA) applied to Metcalfe’s law. All assumptions are stated and reasoned in the appendix.

This report aims to give an insight into how these theoretical methods can be applied to practical challenges, demonstrating a critical analysis of the respective issues.

For each situation, relevant theories are explained and applied to practice, prior to critically analysing and evaluating them. The author concludes with the findings on each of the three issues by the means of review and perspectives.

II. Main part

The main part of this report is divided in three sub-categories, based on each practical situation and the underlying theories.

1. Soft Systems Methodology (SSM): Challenges in fundraising at a Yorkshire not-for-profit charity society

This part of the report focuses on the Soft Systems Methodology (SSM). After a brief introduction to this technique and literature review in general, the author applies it to practice by demonstrating the various steps at the example of a not-for profit organisation, located in the UK. He concludes with an analysis and the findings.

1.1 Theory and literature review

Peter Checkland and Brian Wilson at Lancaster University have developed the “seven-stage-model” or “Checkland methodology”, nowadays known as “Soft Systems Methodology (SSM) technique”, almost 40 years ago. Therefore, when using the approach, users are less innovators but rather the late majority (Rogers, Everett’s S-Curve model, quoted in: Goodwin, P & Wright, G (2004), p. 46). However, the methodology still offers sophisticated opportunities.

SSM is an approach to process modelling by the means of better capturing and structuring problem situations in order to achieve more effective and efficient outcomes. It specifically aims at tackling multi-faceted problems faced by managers. It combines approaches coming from the field of Systems Thinking, Human Activity Systems and Information Systems and is nowadays considered to be part of Critical Systems Thinking and complementary to Traditional Systems Thinking. Its primary use is in change management and problem solving with a focus on analysis of complex problem situations. Therefore, it is commonly used in consultancy work.

Whereas in the past, the term “problem” only referred to a single problem, SSM refers to the “problem situation”, thus taking into account structures, processes, interactions and even external influences that might affect the system – a complex whole. Thus, it facilitates structuring unstructured situations, e.g. situations with unclear or multiple objectives. It takes into account methods from various fields of study to have the broadest possible repertoire of tools – which might not always be possible to combine. This leads to the development of more varied definitions and thus resulting conceptual models for developing innovative solutions to overcome the initial problem situation. This variety forms a challenge, as the selection of the proper conceptual models is difficult and often subjective (Goodwin, P & Wright, G (2004), p. 15-25; Ho, KKJ & Sculli, D (1994), p. 47-59; Reisman, A & Muhittin, O (2005), p. 164-178; Winter, M (2000), p. 181-193).

Over the past years, Checkland and Wilson’s approach has often been applied to practice. Whereas Checkland has focused on the philosophical aspects, Wilson has focused on practical applications, thus including role analysis, where he forms groups in terms of responsibilities, and the “Maltese Cross” analysis tool. Wilson argues that the generic methodology needs to be adapted to each situation. Thus, based on the experience by Wilson and others, SSM has been adapted slightly, and new adapted theories developed (Platt, A & Warwick, S (1995), p. 19-21; Driver, J & Louvieris, P (1998), p. 296-440). However, they are neglected, as they did not improve the model significantly and in the end, they all come back to the raw model.

1.2 Applying theory to practice

In the past years, this approach has been applied to practice, especially within the health sector (Brenton, K (2007), p. 12-16). In this report, the author will apply it to a not-for-profit organisation, located in the UK. To do so, he will apply the seven steps of SSM, namely (1) the problem situation unstructured, (2) the problem situation expressed, (3) root definitions of relevant systems, (4) derivation of conceptual models, (5) comparison of conceptual models with the real world, (6) definition of feasible, desirable changes and (7) taking action. Whereas most of the stages are regarded as working in the real world, stages (3) and (4) are considered to be systems thinking about the real world (Platt, A & Warwick, S (1995), p. 19-21).

The challenge

The aforementioned charity society, based in Yorkshire, faces difficulties in obtaining nominations for its Fundraising and Grants Committee (FGC), whose members are crucial for conducting fundraising activities. Besides that, the organisation lacks funds for administrative tasks. The underlying assumptions are listed in the appendix.

Stage 1: The problem situation unstructured

- How to attract people to join the non-profit organization?
- How to manage administration successfully with limited funds only?
- How to improve internal processes to cut costs?
- How can we evaluate the system performance?
- How to improve marketing? Etc.

Stage 2: The problem situation expressed

To gather the information, the author has conducted structured internal interviews with the people involved, as it is crucial to have different perspectives for the same situation. Results can be obtained from the Appendix. Based on this information, the author has derived the enclosed rich picture, which is used as a way of structuring the problem situation.

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Figure 1 - SSM: Rich Picture

Source: Own Illustration

Stage 3: Root definitions of relevant systems by using CATWOE

A root definition is a transformation process that changes the initial product (input) to a new product (output). To develop and structure the root definitions, the CATWOE mnemonic is considered, to ensure that the root definition is complete. The author realised that there are many aspects being worth looking into them in detail, especially when looking at the problem situation from various points of view. However, in the interest of time and space, he only focuses on two root definitions. Both of them might consist of several sub-CATWOEs.

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Figure 2 - SSM: CATWOE

Source: Own Illustration

- Def. 1: Attracting new members to the charity society:
A system to attract new members to the charity society by using marketing tools in order to achieve higher attraction within society, taking into consideration external constraints such as cost and time.

- Def. 2: Optimising internal processes:
A system to optimise internal processes by reviewing and improving existing processes in order to safe costs, taking into consideration external constraints such as cost, time and know-how.

Stage 4: Conceptual Model

To be considered a conceptual model, some conditions must apply (see appendix). The model itself identifies the key activities within the root definition, which are than expressed in one phrase each, which can be obtained from the below illustration. This system is monitored and controlled regularly, in terms of performance (efficacy, efficiency) and effectiveness. In the interest of time and space, the author only focuses on the first root definition.

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Figure 3 - SSM: Conceptual Model

Source: Own Illustration

Stage 5: Comparison of conceptual model to real world

The author has used the conceptual model as base for comparison with the real world, i.e. the charity organisation. However, it must be emphasised that reality is only assumed at this stage. Enclosed are his results.

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Figure 4 - SSM: comparison of model to real world

Source: Own Illustration

Stage 6: Feasible changes

The intention of the comparison of model and real world is to demonstrate where change is required, whilst considering that change must be both systematically / technically desirable and culturally feasible. In the aforementioned situation, the core activities are almost non-existing; those existing only exist partially. Therefore, there is lots of room for improvement and the organisation should try to implement all activities and improve the already existing ones. As the local school has offered to assist the charity organisation, this offers additional resources in terms of time, costs and innovative ideas.

Stage 7: Action Plan to improve the problem situation

Details of how to implement the ideas can be obtained from the attached roadmap. As a matter of course, measurements of performance are conducted on a regular basis.

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Figure 5 - SSM: road map for implementation

Source: Own Illustration

1.3 Analysis and critical evaluation

As can be obtained from the aforementioned literature review as well as the practical example, the SSM is best used for complex problem situations, especially for soft problems that are difficult to capture. Here, it clearly shows strengths over common tools that only capture the problem, but not the manifold problem situation with all of its interactions.

The rich picture is an excellent possibility to state the situation and make it visible for all parties involved. This is especially important as it involves many different opinions when it is done by means of brainstorming among the core group. This picture can be further developed during additional brainstorming processes and can be used for future discussions – the more ideas, the greater the opportunities. If only a core group performs the brainstorming, it is essential that they try to reflect the problem situation from different perspectives to reflect the various facets. In addition, it must be stated that changes are better accepted when the persons concerned have been involved. Thus, it is an excellent tool to be used for change management and soft problem solving, as these rather “soft” or unknown problem situations are difficult to determine.

However, SSM’s main part is in defining root definitions with the use of CATWOE to develop conceptual models. Even though this might be a strength of the model, this also represents one of the major weaknesses, as the methodology strongly depends on the subjective selection of a root definition by the process owner: If he focuses on less important options, the important ones might be neglected. Consequently, one might focus on building models for less adequate root definitions that are not beneficiary to the problem situation.

It also has to be pointed out that the underlying world view applied for the root definitions varies among the observers – different individuals will perceive one and the same event differently, depending on their experiences, personality, culture and the situation itself, which has a significant impact on the outcome – especially among different cultures.

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