Activity VI: INTERNALIZING THE CONCEPTS OF CHAPTERS 1, 2, AND 3

Problem 1: Logic of the Measurement

Input ------> System ------> Output

Productivity is generally measured by

For efforts to be productive, the results achieved must contribute to, or move us closer to, the desired goal. The goal of all for-profit companies is to make a profit. Your measure of productivity should measure how your efforts will increase profits.

Note: You need to divide two numbers to get a productivity measure.

InputOutput

number of patientsrevenue $

costsnumber of patients

number of nursesinfections

number of doctorsreturn patients

work days lost by patients

days in hospital

Financial Ratios: Most financial analysis is also measured as Output/Input

Inputs*Outputs*

cost of goods soldunit sales

raw materialssales $, revenue

finished goods product

work in progressequity

research and developmentcost

plantequipment

assetsplant

liabilities

equity

cost

shares

*not an exhaustive list

Example of Financial Ratios

  • Profit/Equity = ROE
  • Profit/Assets = ROA
  • Investment: ROI
  • Earnings (profit)/share = EPS

Quality

The issue of quality has also led to many different definitions that tried to measure issues such as:

  • customer satisfaction
  • conformance to standards
  • six sigma, number of defects

Similar ratios can be used in quality:

  • infections/patient
  • deaths/operation
  • days in recovery/patient
  • errors in billing/patient

Think of the need for a correct balance between:

Productivity vs. Quality

or Efficiency vs. Effectiveness

Briefly respond to these four questions:

1)Describe your job responsibilities and define three measures of productivity that you feel would best measure your contributions to your organization. Explain your selections. Remember: productivity must contain two measures - the numerator is a measure of the results you desire to achieve, and the denominator is a measure of the efforts/resources you have used to achieve those desired results.

2)Think about how accountants talk about "cash flows" and financial people talk about "Rates of return". How does this relate to measures of productivity?

3)Eliyahu Goldratt in his book "The Goal: A Process of On-Going Improvement" defines productivity as any action that brings an organization closer to its goal. It is implied that the goal of a for-profit organization is to make a profit. Do your measures of productivity demonstrate how your actions will influence the profitability of the organization.

4)Would your response have changed if the question had read ". . . you feel would best measure your contributions to society?"

5)To evaluate your effectiveness at your job, should productivity measures and quality measures be looked at separately or should they always be looked at together? Explain.

Problem 2: Systems Thinking—Looking at the Process

Deming, Senge, and others have challenged us to look more at the system that produced the problem, rather than the problem itself or the people involved.

Deming: We have system problems, not people problems.

Deming is saying that too often the process in which we are "forced" to work causes us to work in a manner that is not effective and/or efficient. This is not the fault of the people doing the work, but of the system.

Respond to these six questions:

1)Briefly describe a situation that you are involved with where the system causes you not to be effective and/or efficient.

2)Why has the system evolved to its present state?

3)Why hasn't someone fixed the system?

4)Will you be able to fix the system? Explain.

5)Think of a situation in which an action that had been taken led to a negative self-reinforcing loop - one in which the situation actually got worse because of the action taken.

Another type of system thinking comes from the basic creed of system thinking:

Everything is connected to everything else.

System Thinkers Understand How Their Actions Affect the Big Picture.

In our decision-making model we indicate that a person who is a system thinker and a leader moves from being a problem solver to becoming a decision maker. They understand how the solution to a problem will affect the system involved. They also understand how their system is interrelated to other systems. One method of trying to better understand the effect of a solution is to look at the opportunity costs of a solution. What opportunities have you passed up by using your resources on this problem?

6)Billions of dollars and millions of hours of brainpower have been invested in organ transplants. Using health care as a "system", argue whether society has benefited more or less in improved health care through these efforts. In your discussion include opportunity costs. Could society have gotten a big health care bang for their healthcare buck if something else had been targeted?

Problem 3: Leaders: Deal with the Me vs. We Issue

In many problems what is best for the group is not always best for all individuals. To be an effective decision maker we must recognize those problems that have a high emotional factor to them.

If we consider a department as the "me" and the organization the department is a part of as the "we", we must recognize that system change is very difficult, since the primary goal of any department is self-preservation. Too often we have local (me) optimization and not global (we) optimization.

1)Describe a situation within the "system" you work where an employee or a department's self preservation would be one of the major stumbling blocks for system's change.

2)Does the “culture of Me” prevent one from being a systems thinker, a “culture of We”?

3) Would Kant have been a Me or We thinker?

Problem 4: Framing: Our View of the Problem Dictates Our Solution

Frame the cause(s) of the problem, not the symptom(s) of the problem.

Our frame of the problem is simply the event that caused us to think that there may be a problem. This event is frequently just a symptom of the problem, not the cause.

What this means in systems thinking is that we concentrate on the output, the symptom.

Input ------> System ------> Output

We must learn to look "upstream" at the system and/or the inputs that generated this "problem" output.

Respond to the following questions:

1)We spend too much money on welfare. Restate this problem in three different frames. For one of the frames perform the "5 Whys" technique: ask "why is this a cause of people needing welfare?". Then, ask why is this answer a cause. Repeat 5 times.

2)Think of a problem you have solved at work. How would it be different if your "frame" of the problem was from the customer’s point of view? Discuss just one problem.

3) Should teachers treat students as customers?

Problem 5: Visible vs. Invisible Numbers

One of Deming's deadly diseases was use of visible figures only. The article below indicates that very few medical research projects have attempted to measure the quality of life of a patient.

"Biomedicine: Quality-of-life scales ignore patients"

A woman in her early seventies suffers a mild heart attack. After a brief hospital stay, she goes home. Her new medication makers her feel better physically, but it seems to make her hair thin. Also, she feels mildly depressed.

Despite her important complaints, she might score high on one of the many tools designed measure quality of life, suggest physicians Thomas M. Gill and Alvan R. Feinstein of Yale University School of Medicine.

To assess how the medical literature measures quality of life, Gill and Feinstein reviewed 75 articles that used one or more quality-of-life questionnaires, they report in the Aug. 24/31 JOURNAL OF THE AMERICAN MEDICAL ASSOCIATION.

In only nine studies did the researchers allow patients to comment on how they felt instead of just answering the questions posed. In only six studies were patients asked to rate the importance of the issues raised. For example, researchers tended to ask patients what symptoms they had and not how much those symptoms bothered them.

Investigators defined the term "quality of life" in only 11 articles, although "little agreement has been attained on what it means," Gill and Feinstein note.

In only about one-third of the studies did the authors say why they chose the quality-of-life measurements they used. Such explanations are useful because they help "reassure readers about the instruments' suitability for the intended task," Gill and Feinstein argue.

No article distinguished overall quality of life - which includes, for example, how a patient is getting along with his family as well as how he feels mentally and physically - from health-related quality of life, the Yale team reports.

"The need to incorporate patients' values and preferences is what distinguishes quality of life from all other measures of health," Gill and Feinstein conclude.

One could picture Deming saying, "What is the effect on the physical and mental health of the family of a patient who is alive but whose quality of life is 'non-existent?'" He would respond, "No one knows, no one knows," but he would also have said that we should at least speculate on this issue.

Question: What are the "costs" to a patient who is treated by a nurse who is dissatisfied with her job?

Answer: No one knows.

Respond to the following questions:

1)What is your definition of "Quality of Life"?

2)Describe two "factors" at work that you are affected by that would fall into the invisible number category.

3)Explain how you would plan to deal with measuring the importance of these "factors."

Activity VI - 1

Spring 2002