“A system is a set of elements or parts that is coherently organized and inter-connected in a pattern or structure that produces a characteristic set of behaviors, often classified as its function or purpose.” (Donella Meadows)
A system consists of interconnected set of elements (sub-systems) that are coherently organized and work in coordination with each other to achieve a desired goal or overall objectives of the whole. These elements derive their strength by means of association and influence with other elements whereby collective contribution of the system is greater aggregate individual elements: this is known as systemic synergy. A system at any point in time consists of 3 critical interrelated elements where their properties determine system performance.
The performance of the system depends on how well the parts fit together, not how well they perform individually and the ‘whole’ system exhibits emergent properties that are not to be found in its parts.
It is important to distinguish between Systemic Performance and System Performance. Systemic Performance is based on the possible potential which sets the limits to what is possible without constraints as dictated by purpose and mission, internal constraints (resources, ways or working, governance) and capabilities within know system environment (element within earth and not the moon). Important to differentiate resource potential and system potential:
- Resource potential is the maximum possible throughput
- While system potential determines overall system potential based on resource, capability and governance framework. System potential determines total useful potential in that if resources are absent, not adequate they can be brought from outside or purchased as a service. (sub-contracting using external facilities and vendors)
System Performance is the possible performance of the established system based on its capabilities, processes and supports systems (resources such as factories machines) towards its stated environment entities.
From a governance efficacy perspective of the defined system, the key focus with respect to operational units is to measure:
- Systemic Performance: is based ratio between actuality (actual performance) and systemic potential identified during scenario planning .
- System Performance: is based ratio between actuality (actual performance) and potentiality of defined system (defined capability, process and support systems). The key governance objective is to maximize performance by focusing on initiatives that maximize potentiality.
- Productivity: is the ratio of actuality and capability
- Latency: is the ratio of capability and potentiality
The variables associated with the above also provide a key indication with respect to adaption, innovation and transformation; furthermore it provides clear indication in the efficacy of Information Technology sub-system in coordinating effectively the operational units.
Potentiality: This is what system should be doing within the boundaries of existing system state (same function, structure, identity, and feedback’s) by developing its existing resources and removing constraints or elevating constraints to maximize throughput , improvements to management control (context) and processes although still operating within the bounds of what is already known to be feasible.
Capability: This is what system should be doing (still right now) with existing resources, under existing constraints, if there is management focus to eliminate waste, increase output resulting in improvements in productivity and efficiency.
Actuality: present way of managing the system, with existing resources, under existing constraints and exiting governance framework
Profitability is the ability of a business to earn a profit. A profit is what is left of the revenue a business generates after it pays all expenses directly related to the generation of the revenue, such as producing a product, and other expenses related to the conduct of the business activities.
Efficiency is the (often measurable) ability to avoid wasting materials, energy, efforts, money, and time in doing something or in producing a desired result. In a more general sense, it is the ability to do things well, successfully, and without waste. In more mathematical or scientific terms, it is a measure of the extent to which input is well used for an intended task or function (output). It often specifically comprises the capability of a specific application of effort to produce a specific outcome with a minimum amount or quantity of waste, expense, or unnecessary effort. Efficiency of course refers to very different inputs and outputs in different fields and industries.
Effectiveness and efficiency are attained through interaction of of the sub-systems in pursuit of the purpose of the system in its environment. The goal of sub-systems is concerned with the purpose of the system and the means of achieving that purpose:
- The human sub-system deals with the people and their management and motivation
- The technical sub-system handles the operations (input-transformation-output) with the aid of human sub-system
- Managerial sub-system co-ordinates and manages each of the others balancing their relationship and attending to environmental relationship to ensure viability.
Being effective is about doing the right things, while being efficient is about doing things right are both fundamental in achieving goals related to potential, potentiality and capability. This is only possible if there is total cohesion by all the sub-systems with respect pursuit of system purpose.