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This paper will analyse BAJ problems by using system thinking. First, a problem situation will be explained, then metaphors and paradigms, which look at an organization from different aspects will be described. Then it will identify the appropriate system methodology by using SOSM. Lean system will be explained in details to solve problems.
Bank Al-Jazira (BAJ) was established in 1974. Although it is the smallest bank in Saudi Arabia, it has been a leader of Saudi Stock Market over the last 8 years. In 2006, Saudi Arabia Monetary Agency, as a central bank, forced all banks to subsidize investment activities in order to control them under the Capital Market Authority, so competitors started to set up business.
Increasing competitors (from 12 to 100 companies) led BAJ to face a lot of problems in terms of maintaining market share (Figure1). The main issue is a lack of providing good services to attract new customers. The internet trading system (TadawulCom), for example, is the most recognized product in the market and about 35% of BAJ profit comes from TadawulCom in 2007, whereas just about 19% in 2009. This problem is recognized when the customers first come and have to wait for services. Customers demand more services and products in less time, less efforts and at a good price. So, BAJ should understand customers' needs in order to increase efficiency.C:\Users\Majed Al Thagafi\Desktop\Market share.jpg
Metaphors and Paradigms
Flood and Jackson (1991) explained that in order to understand how work works, we should understand metaphors first. As Morgan (1986,p.13) explained why we need that? "We use metaphor whenever we attempt to understand one element of experience in terms of another". Thus, "metaphors are extremely good at allowing us to explore our own world view and to assist with creative thinking" (Jackson,2003,p.33).
Jackson (2003) listed nine metaphors through which we can see our organization, namely, machines, organisms, brains, flux and transformation, cultures political systems, psychic prisons, instruments of domination and carnivals.
This not enough to understand any problems without using paradigms as Jackson (2003,p.38) said "without adding paradigm creativity to metaphor creativity, it would be too easy to choose a set of metaphors that fit well together". Therefore, he pointed out four paradigms that affect our organizations, which are the functionalist, interpretive, emancipatory and postmodern paradigms. The functionalist paradigm is used to understand how each part in the system works by using scientific management in order to reach a high level of efficiency, effectiveness, survival and adaptation, while the interpretive looks for interpretation between people in order to share corporate culture and increase commitment and working life quality. BAJ has problems in the functionalist paradigm, which will be considered in the following paragraphs, including machine, organism and brain metaphors (Figure2).
In the 1910s, Talyorism and bureaucracy emerge, which identified a specific function by using routine and standard activities in order to achieve more efficiency. This efficiency is measured by achieving predetermined goals and is the most highly valued attribute. As Jackson (2003,p.34) said, "It represents organizations as rational instruments designed to achieve the purposes of their owners or controllers".
The main weaknesses are that dealing with fragments gives organization a certain way of seeing the individual rather than the holistic aspect. Applying policies and procedures, through specific communication channels that could make the problems worse are makes the system closed. In addition, this type of organization attempts to identify job descriptions and related responsibilities, which leads employees to think selfishly like "It is not my job to worry about that" or "this is his responsibility, not mine" (Morgan,1986). As result, neglect of individuals is recognized in this organization (Jackson,2003).
There are many indicators that BAJ applies machine metaphor such as:
Annual target is set at the beginning of the year and management takes it the basis of performance measuring.
TadawulCom is straightforward with repetitive procedure.
BAJ is considered as a stable environment because everyone has a clear objective.
Many writers such as Morgan (1986), Jackson (2003) and Flood and Jackson (1991) explain that the organism metaphor looks at the whole organization. It is the idea of an open system whose elements work together in order to survive by adapting to environmental disturbances. Jackson (2003,p.34) says management style "plays close attention to the demand of the environment and ensures that subsystems are meeting the organizations' need". It is related to Human Relations theory, which considers individuals as a driving force for an organization by motivating them in order to work effectively.
However, some criticisms are that individuals and groups may not have the same purposes as the whole organization. The focus on change in order to adapt rather than development can hide conflict between departments. By applying this metaphor in BAJ, We should consider two factors, environment and customer demand. Both factors are important that BAJ should change to survive.
Jackson (2003) highlighted the importance of learning to learn in this metaphor, which emphasises active learning and control. He considered that decision-making, information process and control are the most influential factors. Flood and Jackson (1991) indicated that this type of organization seeks to achieve its goal based on learning with supporting creativity, innovation and group working. This metaphor works in BAJ in some departments such as R&D and to some extent in the customer services department.
As a result, it is clear that there are two aspects which should be covered, increasing efficiency by looking at the organization through the machine metaphor as dominant and meeting customers' demand is illustrated by the organism metaphor, which emphasises aspects of adaptability, as the dependent metaphor.
System of System Methodologies (SOSM)
"A system of systems methodologies is developed as the interrelationship between different methodologies is examined along with their relative efficacy in solving problems in various real-world problem contexts" (Jackson and Keys,1984,p.473). So, Jackson (2003) simplified SOSM as an 'ideal-type' for understanding the complexity of systems and diversity of participant who are interested in the problems situation (Table1.0).
The horizontal axis, participants are classified in three types:
Unitary participants have the same values, beliefs and interests. Agree on decisions without arguments.
Pluralist participants have to reach consensus at least temporarily, but after spending ages in debate because of the differences in their values and beliefs.
Coercive participants use power to make a decision because of strong values and beliefs which lead to conflict most of the time.
The vertical axis, systems is divided to two types:
Simple systems have few sub-systems which have stability over time. The integration between departments is low.
Complex systems consist of many parts that are highly integrated.
By applying this analysis to BAJ, it appears the participants are unitary because they share the same values and beliefs in order to achieve their annual target. On the other hand the system in not very complex, especially in TadawulCom, because there are four departments involved in this process. As mentioned above, TadawulCom is the core business in BAJ which will affect the whole organization. Thus, the most useful system to use is the Lean System methodology in order to increase efficiency, which affects the whole organization and achieve customer satisfaction as "LS can yield efficiency gains and improvements in services performance, customer satisfaction and staff morale" (Jackson et al.,2008,p.186).
Lean System Methodology
The lean system translates TOYOTA's approach from manufacturing industry to service companies (Vanguard,2009). Toyota approach was developed to produce vehicles to meet customer needs by understand their ability. Thus, capacity was measured to understand the relation between target and performance by using Ohno's maxim, capacity = work + waste (Gregory,2007). Therefore, the aim of Seddon's approach is to redesign the process in order to achieve better services and lower cost by reducing waste. Gregory (2007,p.1508) emphasised that "Managers need to focus on eradicating failure demand and improving the ability of the system as a whole to enhance the customer experiences".
Lean system is based on the whole system from customer's perspective, which should include end to end process in order to achieve customer satisfaction (Jackson et al., 2008). It consists of three stages, namely, check, plan and do (Figure3).
Lean System Stages
Seddon (2008) explained the importance of this stage as helping managers to get knowledge about "what and why" of current performance of the system from customer's point of view. It takes a long time to observe and understand how the work works. He pointed out five steps that should be implemented to understand "what and why":
Step 1: What is the purpose of the product?
This step is to identify our products from customers' perspective and the current system (Seddon,2008;Jackson et al.,2008). TadawulCom is an Internet trade system that provides the right products, which should be easy and fast trade, to the right customers through a good service as quickly as possible. Three stages can be seen (Figure4) from the whole TadawulCom process (end to end) that start from customers through the request process until the delivery stage.
Step 2: What are the types and frequencies of demand?
Jackson et al. (2008) explained that distinction between 'value demand' and 'failure demand' is essential and Seddon (2008) explained the reasons, which are to understand the cause of variation and to know what makes end to end process take a long time.
Value demand is the core service to customers that BAJ should provide, whereas the failure demand is everything that fails to meet customers' need first time. Two channels are implemented to provide TadawulCom to our customers which are customer services and the internet (on-line). However, call centre is a supporting tool that customers can use for queries or to track their request (Figure5).
It is clear that 40% of our demand is value demand so it is necessary to understand the process and study predicted demand in order to develop a process that fits customer's demand. However, about 60% is failure demand in both channels. More work is required in order to solve these problems such as filling the form, tracking the order and the activation date which should be clear to the customer when he/she signs a contract to reduce waste time. International trade is considered as a predicted demand.
Step 3: How well does the system respond to demand?
In this step, current system response should be assessed by a capability chart (Seddon,2008). Figure 6 shows the variety of our system responses to customers' requests. It was not clear that our response has problems because our target was achieved. In fact, case number 8, for example, was due to the system being down and nobody knowing contingency plan. In addition, competitors imposed pressure to reduce our target to meet customer satisfaction. Gregory (2007,p.1509) emphasised that "the customer should be taken as a system boundary". So, the challenge is to change system capabilities based on customer's demand and competitors in order to reduce variety as possible.
Step 4: Studying flowC:\Users\Majed Al Thagafi\Desktop\Capability chart.jpg
Mapping is very important at this stage. Seddon (2008) explains it is a mistake for managers to go straight to mapping without studying demand and performance. The current flow (Figure7) shows why BAJ tends to take steps that affect performance indirectly by adding waste. It illustrates how customers request flow through the system which clears that function and the procedures that take place in this process. There are three categories that customers could go through (Table2). Most database customers are those who ask for fee reductions whereas 32% go directly through the smooth steps, but the capability chart (Figure6) shows the mean as 1.5 days, whereas the target is 45 minutes. Therefore, the core system should give value to customers and the rest is considered as waste. The main purpose of the system is to get TadawulCom to the right customers but we can see the fee reduction process delays the process.
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C:\Users\Majed Al Thagafi\Desktop\Process flow chart Print V.jpg
Step 5: Understanding system conditions
By understanding our system conditions, such as measures, roles, procedure and so on, the activities should be divided into four categories to identify the waste the systems creates (Jackson et al., 2008; ODPM,2005) (Table3).
BAJ's managers believe in the target as the best way of measurement. However, if they need to improve the system, they should "ignore the reality that the target and other measures might be the very causes of sub-optimisation" (Seddon,2008,p.81).
Redesign Stage: "Plan and Do":
'Plan' and 'Do' are two separate stages in the cycle of lean system, but both are considered as redesign stages (Jackson and Gregory,2008). ODPM report (2005,p.37) introduced the aim of this stage: "The purpose of the system is revised following check and potential changes to meet the revised purpose are identified, tested and implemented."
Rethinking is essential part because it will "enact change and measure performance" (Jackson et al. ,2008,p.191). Thus, our new purpose is 'Not just selling the right product that adds value to customer, from first time, but to create a strong commitment with customer in long term in order to achieve customer's loyalty'.
Principle of redesign
"This is guidance to future change" (Jackson et al.,2008,p.191) which includes points supporting the new vision such as:
Redesigning TadawulCom in order to meet customer demand on the one hand and competitors on the other.
Doing the value work and minimizing the waste (Table3).
Keeping customers informed: second call from customer is consider as failure demand.
Using IT and CRM to improve the communication between departments.
By understanding the current situation in the check stage, the purpose of the system in the plan stage is to design appropriate system that focus on the customer's needs (Figure8)
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This Flow chart leads to the following points:
Increase efficiency from 32% targeted customers to 89% targeted customers by reducing fees and giving everyone the same price will leads to reduce complaint calls and overhead work.
Retrieve customer's data from the system rather than asking them to fill a form, which reduces waiting time.
Giving Relationship Manager more authority to deal with customers which increases efficiency by reducing waiting time for branch manager to review.
Generate TadawulCom UserID from system directly without asking customers to create it on the website, thereby reducing enquiry about using website registration.
Activate contingency plan that can provide services manually in case of system down.
Measures are "established to evaluate performance against the revised purpose" (Jackson et al., 2008,p.192). Thus, the Quality Control Department is involved in evaluating whether new system achieves customer satisfaction or not by:
Measure the whole time (end to end)
The number of requests not completed first time.
The purpose of this step is "to discuss issues arising with those doing the work and the customers" (Jackson et al.,2008,p.192). It concerns "whether it works, what problems arise and how the redesign fits with rest of the system" (ODPM,2005,p.40).
Therefore, some issues should be considered as a barriers e.g. increased demand is expected which needs training to reduce misunderstanding and ensure work is done right first time. Working with the legal department is to find a solution for the TadawulCom form.
Redesign - Management's changing role
"Attitudes and expectations of staff not directly involved need to be carefully managed" (Jackson et al., 2008,p.193). So, managers should understand the change and accept it by thinking in a different way and supporting employees to achieve customer satisfaction, "To align the organisation's roles, measures, structures and support processes to the value work identified" (ODPM,2005,p.41).
Criticism Lean System
Many writers such as Seddon (2008), Jackson and Gregory (2008) and Gregory (2007) addressed some criticisms. Firstly, lean system does not cover those customers who have conflicting needs. Second, it pays more attention to functions than studying culture or politics. The system's ability could be reduced by using lean system.
This assignment has explained the metaphors and paradigms related to BAJ problems (losing market share) in order to increase efficiency and improve performance. However, if the BAJ gets bigger, we should take the politics metaphor into account in order to reduce conflict among employees and help them understand each other by using SSM systems.
By using SOSM method, lean system methodology examined BAJ's problem with TadawulCom through three stages 'Check', 'Plan' and 'Do'. It clear that much waste exists in the current performance and lean system eliminates this waste to keep customers satisfied.
: Capability Chart Data:
Range = (Rn+1-Rn)
Average (“ Days /20)
Range Average (“ Range /19)
UP/ Down Range
Upper Control Limit (UCL) = Average + UP/ Down R.
Lower Control Limit (LCL) = Average - UP/ Down R.