Engineering Solutions for a Better Tomorrow

An Engineer working as an IT Project Manager?

2010-09-15T12:29:00.000-07:00

For the past 4 months, I have been working on a new role as a Project Manager in the Information Technology division of my company. My interest in this position evolved naturally after 2 years working as a Senior Business Analyst and 8 months as a Project Consultant.

I am now only 7 months away from obtaining my Professional Engineer provincial designation (P.Eng.). Inevitably, since Industrial/System Engineering is not a common profession in my province, there seems to be a common confusion about what these types of engineers actually do.

An Engineer working as an IT Project Manager? It is a question that people constantly asks me. Please allow me to connect the dots between these two professions:

As defined by the Institute of Industrial Enginners, “Industrial engineers figure out how to do things better. They engineer processes and systems that improve quality and productivity. They work to eliminate waste of time, money, materials, energy and other commodities.” This profession developed quickly after World War two from what was previously know as Operations Management or Management Science. It evolved thanks to the previous efforts by Henry Ford; after figuring out how to mass-produce vehicles in a cost-effective manner; and the subsequent work on industrial efficiency by Frederick Taylor.

Systems engineering is a subspecialty within engineering. It refers to the study of complex systems (not necessarily Information Systems). It is a science with an underlying philosophy known as “Systems Theory”. It allows engineers to identify and manage complexity within a system, understand the life cycles, understand the flow of information and data, the interrelation of its components and the dynamics of such and the system as a whole.

So what does all that has to do with Project Management? (Spoiler alert) Actually, Project Management is a discipline/profession that evolved from Engineering, Industrial Engineering to be more precise. The beginning of modern Project Management was marked by the planning and control techniques introduced by Henry Gantt (yes, the guy of the Gantt chart) and the use of the management functions developed by Henri Fayol (and that are the foundation of the PMBOK). Both were Frederick Taylor’s alums and the three of them are fathers of Management Science/Industrial Engineering. In fact, many other elements of IE are present in PM such as the WBS, resource planning methods, PERT analysis, and more recently the Theory of Constraints (TOC), etc.

So, that might explain why I ended up choosing Project Management as a career. It is actually quite common for engineers to become project managers in different disciples such as construction, aerospace, public infrastructure, manufacturing, etc. For me, Information Technology was the next natural step and an area where I see myself learning and growing the most.

I really enjoy my new gig. I plan to continue to develop my project management skills in the next few years and at the same time find opportunities to incorporate my engineering skills such as:

· Finding better ways and tools to manage a project.
· Incorporate “Theory of Constraints” concepts to better manage the three project constraints: cost, scope and time.
· Exploring the complexities of budgeting and resource optimization.
· Introduce simulation to estimate project outcomes.
· Understand the complexity and interrelationship between projects and within the program.
· Develop long-term sustainable technology plans and strategies.

I will keep you posted with my experiences as I gain knowledge in becoming a Project Manager and obtaining my PMP in three years down the road.

Selecting the Right Performance Metrics

2010-04-03T17:57:00.000-07:00

Part of sustaining a profitable and cost-effective operation is to identify, report and track the key performance metrics that provide business managers with the ability to measure the status quo of their operation and the ability to re-act to variance in a prompt and effective manner. These are not always easy to identify and to "sell" to a client, especially if they have operated over 20 years with the same time-service measure.

A well-thought metric is a powerful tool to understand the interconnections of your resources with work flow and how these variables directly and indirectly affects productivity, service, velocity and quality. If a business has been running for years with only a few performance metrics, but somehow manages to produce a big stack of reports at month- or quarter-end, managers might be making the incorrect mistake of focusing on the complexity of the details as opposed to focus on what is really important to sustain a business - profit growth.

To achieve or sustain profit growth, we need to explode the variables to form your business' profit model. A good and reliable performance metric should be able to provide managers with enough information to be traced back to the most fundamental operations (front-line). A properly design operational balance scorecard and metrics should be read an understood by a manager just as natural as reading your favorite book or magazine.

Helpful Tips to Select the Right Metrics

Start from scratch - Do not try to incorporate the old metrics if these do not provide managers with the information needed to sustain a cost-effective operation.
Keep it simple - Do not incorporate dozens of metrics that do not provide additional information or that present duplicate information in a different format.
Go one level up and one level down - Include metrics that become increasingly significant to different levels of management, especially if these metrics will be shared/reviewed vertically. Consider this as "translating" the metric to a different level of decision-maker.
If you are a cost centre, focus on cost - Remember that your most fundamental role is to support the operation in a cost-effective manner, that is, producing the highest level of throughput with a minimal level of resources. A productivity metric such as parts per paid hour will tell middle managers how much they are getting for their buck.
If you are a profit centre, focus on profit - Design a metric that describes profit as percentage of sales expenses, sales force, territory, market share, etc.
Be creative - This is your opportunity to play with data and come up with ratios or values that can only be significant in that particular situation and that actually means something. What the heck! Create your own units of measure and call it after you. "Sr., this quarter we have performed 25% over our targeted requirement of 0.25 Saldivarians".
Keep them dynamic - In these times of rapid change, it might not make sense to "lock in" a metric for decades. Re-evaluate your metrics as soon as they start to lose significance. Re-design them and setup new targets. However, keep in mind that changing them all the time might mean that you will not be able to compare historical trends.
Try to add metrics for all four quadrants of business performance - quality, velocity, service and productivity. However, do not force it. If you do not have a proper quality program and measurement system, adding a quality metric might not be a priority at this point.
If data does not exist - Re-design your information systems to incorporate they new required fields. Sometimes just by adding a couple of fields and investing in a proper system enhancement will make a huge difference in decision-making abilities.
Ensure data integrity - If your data source is not reliable you might want to evaluate what level of clean-up does your data require. If your data integrity is a major issue and requires a significant investment, consider interim solutions such as small databases that you can use until you feel comfortable to make a decision in regards to your data.

I hope you find this information useful. Performance metrics provide managers with the power of prompt information, tools to perform variance analysis, identify weaknesses on their operation and take corrective action.

My process re-engineering career has officially started.

2010-01-02T18:37:00.000-08:00

I am currently embarking on a new role within my company: a project leader for a process re-engineering initiative within our Head Office operation. We are working with external consultants to analyze our internal operations and implement changes that will guarantee a staged cost-effective sustainability and reduce operational expenses.

This complicates the answer to the question “What do you do for a living?” On a nutshell, and based on what I have experienced so far, the answer would be:

I analyze business processes by mapping them out and identifying weaknesses in the form of delays, bottlenecks, redundant processes or inappropriate flow of information and resources. We do this to identify potential areas of opportunity that will be later translated in financial terms.

I then analyze the activities performed by employees by using time studies. Time studies will allow me to identify which activities add value to the client and which activities don’t. This way we can quantify the level of value for each role and eliminate lost time. This is aligned with lean manufacturing methodology with the exception that the service industry comprises a higher level of complexity. This complexity can be attributed to the human factor that is present in every process.

The time studies also serve the purpose to collect statistical data that will be used in combination with entity volumes and frequencies to estimate the workload for each employee. Then we can translate this into a utilization factor that usually oscillates between 70%-85%. With this factor we can assist manager with making decisions in terms of staff resources needed to operate on an efficient and cost-effective manner.

Once I identify process changes from the activity and process analysis, we come up with suggestions on how to reduce the non-value added activities, increase the utilization factor of employees and ensure that each functional area has performance metrics that they can use to track and monitor their service, productivity and quality.

This is really a fulfilling role which I am greatly enjoying. In the next few months, I will share my personal experiences and thoughts on process re-engineering. Its advantages, pitfalls and required factors that will ensure that these type of initiatives are sustained throughout a company’s lifetime.

Stay tuned…

Happy New Year!

Thoughts on Complexity

2009-11-11T09:26:00.000-08:00

As a System Theorist, I view complexity as the intrinsic force that governs our universe by weaving intangible and intricate network systems that, if deciphered, would provide an encyclopaedia of how our world operates.

Understanding complexity is an ability that is obtained through years of studying interrelationships, co-factors, correlations, cause-effect, and structural behaviour. As P. Senge described in the Fifth Discipline, behaviour is based on the systems’ structure and people that belong to that system are bound to be ruled by behavioural factors that would not allow them to understand their own complexity.

In organizations, complexity is ruled by:
a) the laws of probability;
b) information flow between departments or areas;
c) the structure of processes;
d) staff behaviour, which is itself ruled by the structure of processes;
e) human nature and their interaction in a professional environment;
f) the organization’s principles and philosophy and how it affects the above;

It takes a trained mind to understand all the cause-effect relationships and feedback loops within a sub-system. An easy way to start to engage your staff in understanding the complexity of your department or area is to use graphical methods and allow the staff member’s participation in a brainstorming session to understand how their actions/decisions affect other areas, the client, the industry or even the economy. Try it out, buy a large piece of brown paper and hang it on an empty office or cubicle. Engage staff in completing your complexity masterpiece. This will be a first step to providing them with a solid framework to understand direct and indirect relationships and how they actions impact the organization’s interaction with clients, competitors, distributors and the entire industry.

Juan Saldivar

Process Simulation in the Service Industry

2009-10-27T17:10:00.000-07:00

Systems simulation has been around for several decades and has proven successful in mainly manufacturing environments and other applications such as military weaponry tactics. In the last decades it has also been proven successful in healthcare systems around to world to test different triage procedures and reduce patient waiting times. This powerful tool provides analysts with the ability to look into the future and evaluate status quo at any given point in time and using variances as estimators instead of deterministic “rule-of-thumb’ indicators such as historical averages. This strategic ability is the basis for making important decisions in terms of capital investment, process re-engineering and marketing policies.

But how can you sell the idea of investing on this tool in white-collar/service industries? If you are familiar with simulation you know that the textbook example of using simulation in a service industry is banking. However, there are many service industries with different business processes and functions. Simulation is not a tool that can be used in every industry. An easy way to determine if simulation can be used in your workplace is to determine if your company has the following (not an inclusive list):

a) A service or deliverable that is transformed and where value is added during the process. b) Quantifiable goals such as targeted sales volume, service turnaround targets, etc. c) Basic information technology resources to track input, throughput, and output data. d) Different resources (human, technological) with defined tasks and responsibilities and that add value to the entity. These resources should follow structured activities each with an estimated processing time.
e) Traceable costs that can be associated to the entity.
Possibly, the hardest part of using simulation in a service industry is the human factor. Machines are programmed to perform at a specified rate of time. Humans, on the other hand, act based on multiple stochastic factors and have independent decision-making abilities. This makes humans very hard to predict in terms of decisions and processing times. Therefore, we can only estimate human activity by using:
a) Conditional probability, which allows the analyst to estimate decision making based on a series of co-factors and based on the historical response of the resource.
b) Historical data, to use the statistical variance as the allowable human error margin. c) Triangular distribution parameters, when data is not available to estimate the historical probability distribution based on the worst, most likely and best case scenario. This methodology can be used in both process and project simulations (PERT) and it is quite useful. Another approach is to replace the Triangular for the Beta distribution for a more accurate approach as per Law and Kelton (1991).

In a recent simulation project I worked on, I had the chance to test Process Simulator 2009 by ProModel. I found this application quite useful and user-friendly. It uses MS Visio as a liaison to import process models and add simulation properties to them. One attribute that I found quite appropriate for service industries is the use of hierarchical modeling. This allows breaking the process into sub models to allow for a more detailed study.

Process simulator has other features that are useful for service industry studies. These include a scheduling tool for staff resources, cost accumulation properties for entities, multiple scenario management, workflow animation and pre-formatted output metrics and charts. The software allows exporting data for further independent analysis. However, the pre-formatted output metrics and charts are quite useful to analyze resource utilization, entities’ average states, cycle times, throughput volume, etc.

So how can we effectively use this output data to make business decisions in the service industry? First of all, remember that the indicators you are looking for are aligned with your corporate strategies and KPI’s. Examples of output analysis include:

a) Sensitivity Analysis: This encompasses evaluating different scenarios. The “Scenarios” tool of Process Simulator makes sensitivity analysis easier. It is important to identify how the system responds to these different scenarios so that a proper risk assessment and management principles are established. Sensitivity analysis will provide the analyst with an insight of the system’s resilience and will help determine the factors of a failing system. When performing these ‘what if’ scenarios, be wary to identify what are the effects of these scenarios in terms of cost, resource utilization, cycle time and volume.
b) Resource Management: Simulation will allow the analysis of current of future re-sourcing strategies, evaluate their utilization and identify possible bottleneck or excess idle situation. Using the scenario properties of the application, the simulation can be run for different resource settings and average resource usage cost can be estimated.
c) Costing and Pricing: Simulation will aid the analyst with determining or tracing the cost amount of an entity (service or similar deliverable). This can be used for budgeting purposes, to complement managerial accounting estimates, or as a base to price a service provided.
d) ROI - Capital Investments: One of the most important selling points of simulation is to replace costly pilot implementations of capital investments (in particular when investing in information technology solutions). Simulation can provide the estimated impact of a pilot implementation; however it has the downfall that appropriate feedback is not collected. Therefore, it might not be suggested to use simulation for iterative technology design methods.
e) Budgeting: By analyzing throughput volumes and average unit costs, simulation can be a complementary tool for budgeting.
f) Long term strategic planning. By using all of the above examples, simulation can be a powerful tool to look into the long term operation and simulate the effects of price increases or inflation, scarcity of resources, and different marketing strategies (aggressive sales, niche market, etc). That broad perspective of comparing costs/benefits, resource needs, assessing feasibility, properly managing the risk identified, identifying feedback loops (cause/effect), and steering the organization’s operation into the established vision/mission will be greatly incremented by using simulation as a complementary strategic management tool.

It is important to remember that simulation is undertaken on a fully ideal or ‘vacuum’ environment. Therefore it is critical to establish the goal, scope, assumptions, constraints and limitations of every simulation study. After all, simulation is nothing else more than an “estimate”. Be wary of focusing too much on the details of the simulation and try to keep a holistic mindset. Always keep the ‘Big Picture’ in mind as suggested by P.Senge. My advise, have fun while you simulate. Think of simulation as your own RPG videogame where you get to be the master of your universe (sort of as in SimCity). Check out the free trial of Process Simulator 2009 and assess if simulation is appropriate for your workplace. Discuss the benefits of simulation with your management.

Good Luck!

(r) ProModel Corporation

My System Simulation Experience

2009-10-05T19:26:00.000-07:00

I recently worked on a process improvement initiative using system simulation at my workplace. Some interesting results were obtained from using such tool in a white-collar service industry. Stay tuned ...

More music to share

2009-08-29T10:37:00.000-07:00

Also my other cousin, Hoss, has released a couple of new tracks on his my space site. You've gotta check it out too..

http://www.myspace.com/theblurrededges

Rabbit & Pumpkin - New EP

2009-08-29T10:26:00.000-07:00

Check out my cousin's new EP that was just released. You definetely have to listen to this while at work to let those ideas flow....

http://www.rabbitandpumpkin.blogspot.com/

Listen to a couple of tracks at http://www.myspace.com/rabbitandpumpkin

An Outlook on 21st Century Healthcare Systems Requirements

2009-07-30T16:52:00.000-07:00

The topic of Universal versus Private healthcare systems remains quite active especially in North America amid healthcare reform initiatives undertaken by President Obama. The fact that Canada has a developed universal healthcare system has U.S. liberal leaders urging for arguments to transform U.S. healthcare into a “healthcare for all” system.

However, the Canadian system has one well-known major fault: it cannot handle the current capacity and waiting times are long which can be the difference between life or death (especially at emergency rooms). This has become an opportunity for some niche insurance industry players such as the providers of “wait-time” insurance. This type of insurance provides the Canadian citizen with the option to use the no-waiting, high-quality U.S. healthcare system at a high (extremely high) deductible and premium basis. This might attract mostly the high-income spectrum as an alternative to waiting for care in their own country. However, for the majority of the population that cannot afford premium insurance for out-of-country care, the only viable option seems suffering through waiting rooms.

The U.S. on the other hand relies on a high-quality system that costs American people billions of dollars a year (and that costs the uninsured a little bit more) where the insurance companies and hospitals are the main benefactors. The average American has to struggle with continuous premium increases, pre-existing conditions and contractual limitations to obtain care that ultimately should be a de facto human right.

So how can we amalgamate the best of both worlds? How can a society provide with a system that provides free universal, yet quality and prompt care?
Unfortunately, there is no easy answer. Otherwise I would be running for Parliament. However, if I had to advise on this issue, I’d start by:

1. Analyzing current and future capacity. It is evident that the Canadian healthcare capacity is falling short of current healthcare needs. This is mainly due to:

Doctor-(or nurse)-to-population ratio: In some areas, the small number of doctors for every thousand habitants of the country is at blame for the long waiting times. It is now, when general practitioners are needed the most, that most Medicine students prefer to become specialists due to most attractive income outlook (especially if they practice in the U.S.). Therefore, it would be recommended to provide provincial tax incentives to general practitioners that setup their practice in their corresponding provinces and other career-oriented incentives (which is already done to some extent in some provinces).
Uneven distribution of healthcare facilities: It would be interesting to assess the availability of facilities based on population density and analyze the capacity of these in decades to come based on local population growth trends. If these facilities cannot handle the forecasted capacity, an expanding infrastructure plan should be developed and accounted for in future budgets.

2. Implementing changes to increase efficiency and triage procedures. This is when simulation comes handy. It should be a government requirement to have hospital triage procedures and resource utilization under the scrutiny of the simulation analysis. It would be crucial to identify how patients arrive to an emergency room, what the average waiting times are, at what percentage are resources busy or idle, what is the average time spent by a patient in the hospital, and what the cost per patient is. These indicators should be the basis of implementing changes to minimize the cost per patient and waiting times. These consulting services should be out-sourced from the private sector, so that a new niche business advisory industry could actively participate in the healthcare system.

3. Change performance indicators for hospitals. It has been previously discussed in media outlets that in the U.S., doctors and hospital managers are assessed for performance based on the money spent per patient, amounts of tests and equipment utilized, etc. In a universal system, performance should be assessed based on the health of patients – both by practicing preventing and corrective health (see below point).

4. Investing in preventive health and wellness. In addition to the goal of reducing healthcare costs, provincial governments and practitioners should encourage patients to actively change their lifestyle to encourage health and wellness. Government programs should be made available to the population to both educate people to live a healthy lifestyle and how to do so in a cost-effective and tax-effective manner.

5. Using top-up private insurance to offset healthcare costs in a tax-effective manner: Private health insurance “top-ups” or also known as extended health insurance is made available to most people through their employer, union or other associations to an affordable cost. These are great means to enhance preventive health and wellness, however some people are hesitant to use their coverage due to the expense related to deductible and premium increases. There is tax-effective ways to offset or minimize those costs, an example is the healthcare spending accounts that are eligible to most employees and are a smart way to offset healthcare costs with pre-tax dollars. People can use these resources to offset the cost of deductibles and use these expenses to obtain healthcare tax refunds.

6. Adding private sector into the mix. There is nothing unconstitutional about having the private sector profit from areas where the healthcare system is hemorrhaging funds or cannot operate in a cost-effective manner. An example could be leasing medical equipment from private third-parties instead of buying and maintaining equipment. Also, maybe using third-party labs to perform tests and other research.

Looking forward, the healthcare system should be a reliable, robust yet efficient mechanism to enhance the health of individuals, use taxpayer’s dollars in the most efficient manner, provide an attractive career path for doctors and nurses (and any other healthcare careers), and expand private niche industries that rely on the system to profit.

Using WIKI in the Organization as a Knowledge Management System

2009-06-19T15:05:00.000-07:00

Tired of keeping documentation up to date? You are not the only one. Years of useless and outdated documentation can easily stockpile in the shared server drives of your organization.

If this happens in your workplace you will know that it is not uncommon to have to review several documents just to find what you are looking for. That is of course, if you find what you are looking for. Search tools will usually yield anything but what you are looking for and confusion increases when you have to decide between versions 1.0, 2.0, 2.0 revised, or 2.0 revised 2007. Do you ever get that feeling when scrolling down through a document and thinking “why on earth am I even going through this”?

That is the reality with having static documentation as a basis of Knowledge Management. Just like buying a brand new car, documentation’s value starts depreciating the second after it is released. Process changes, staff rotation and changes in technology and information can make documentation worthless. The worst part is that it takes a large amount of time and effort to create and update documentation that it is usually unrealistic to have staff constantly updating it.

A solution to this is to have a Wiki application in your organization as a knowledge-base system. This application would allow authorized users (assuming that proper information security protocols are applied) to edit and maintain documents on an ongoing basis as changes in procedures, information or technology occur. The benefits of replacing static documentation with Wiki in an organization are:

Updating is a team effort: In large organizations it is almost impossible to keep up to date with all the changes in process, staff and technology that occur. Having multiple users in different functional areas will ensure the information is always relevant.
Monitoring the ripple effect: Process changes usually affect other functional tasks or areas. The proper use of links in documentation can be useful for identifying other documents that might need to be revised.
Easy access and navigation: Having a centralized application for all documents and useful search tools will ensure that information is only a click away.

However, Wiki applications have been known for having the following weakness: Trustworthiness. By having multiple editors, it could be quite easy to transform a relevant document to a useless one. To avoid this and ensure your organization’s knowledge-base is always significant I recommend to:

Properly separate the read-only/editor/administrator functions: Ensure you provide the editor function only to staff that is knowledgeable with a specific processes or functions. The admin function should also be provided to team leaders or assigned staff so that they can ensure documentation guidelines are being followed.
Engage long-term commitment: Ensure editors understand the importance of dynamic documentation and that are fully committed to maintaining their functional process’ documents.
Create document guidelines: The guidelines can also be available on Wiki. These guidelines should encourage staff to keep documents at a proper length (try avoiding lengthy documents and use links to create sub-documents), use organization’s standard nomenclature and provide contact information if further clarification is needed. Although mostly updated documents should be maintained, historical documents can also be kept if there is a proper mechanism of identifying them as such.

If you think you are interested in introducing a Wiki application in your organization as your Knowledge Management tool, please refer to the below list of Wiki applications available in the market:http://en.wikipedia.org/wiki/List_of_wiki_software

PART 3 of 3: The Nation’s roadmap from “Developing” to “Developed”.

2009-06-05T15:22:00.000-07:00

Translating the design phase into action will require leaders that cannot only “talk the talk but walk the walk”. Commitment is key. The strategist has to bear in mind the following set-back on the implementation phase:

- “Behavior will grow worse before it gets better” AND “Cause and effect are not closely related in space or time”: It will take years even maybe decades before the changes in policy yield tangible results. Until then, bureaucratic resistance will inevitable grow in direct proportion with skepticism, impatience and other necessary evils. A prudent Change Management & Communication plan is absolutely necessary to inform leaders at all levels of government institutions that we’re walking the walk, how long we have walked and how long before we are there yet.

Q3. Implementation Phase – Getting There.

As a rule of thumb, the Nation’s strengths should offset the weaknesses. The implementation will not only have to be based on that premise but also allow the opportunity to develop new strengths. These opportunities should always be explored and incorporated to the design plan.
A complex system such as a Nation’s government system has the annoying characteristic of changing rapidly through time. The requirements outlined in the Q2 design phase my require adjustments or are not longer relevant. To avoid spending over budget and keep results aligned with the overall goal, the implementation has to be:

A) Flexible. In order to achieve results even with a change of requirements it is necessary to implement a well-though and well-forecasted flexible budget.

B) Iterative. Open feedback implementation will provide with the opportunity to adjust requirements, change existing ones or add new ones. This iterative approach has to be aligned with point A so that it is implemented in a controlled environment.

C) Transparent. Openness to realistic results and continuous audits will ensure that things are being done in the proper manner and that no shortcuts are being taken.

D) Measured. It is important to track policy changes’ effect to ensure they meet expectations. This will help identify gaps that require attention. An external steering committee and audit group are required to satisfy point C and D.

E) Staged. Based on priorities of the design phase, adaptability of the government institutions and commitment of the institution’s leaders.

F) Properly Communicated. As part of the change management plan, staged implementation plans and results have to be communicated to all levels of stakeholders including the general public (advertising campaign).

G) Risk Managed. Assessing risk of delays, possible failure, having a well-structured back-out plan will ensure that the implementation transition is done with well-though preventive measures.

The Implementation Strategy has to be a shared responsibility in an organized team framework including the steering committee, the government institution leaders, the three branches of government, private sector, worker’s unions and associations, and other pressure groups. It is critical to set accountabilities and practices to enforce these.

Information systems are critical in the implementation phase. New IT technology will be required to ensure the changes are system-controlled, tracked, audit-friendly, and provide a solid best-practices. A structured capital investment NPV analysis and long-term plan has to be included in the flexible budget.

Q4. Transitioning to Maintenance – We’re there, now what?

Let’s face it; even the most developed countries of the world have issues such as poverty, deficits, homelessness, crime, etc. However, once the 40 year goal has been partially completed (even if it took longer than 40 years) a transition of responsibility from the steering committee to government institution is required.

To ensure this transition is transparent, responsibilities are well distributed, balance-checks are enforced and a sustainable maintenance plan is available, an independent government agency has to be created for this purpose. These changes have to be political-term-proof to ensure continuity.

The final roadmap will look as follows:

PART 2 of 3: The Nation’s roadmap from “Developing” to “Developed”.

2009-05-21T18:32:00.000-07:00

So, how can a developing country such as Mexico create a strategic roadmap towards becoming a developed nation? I am by no means an Economist, but the below is an example of how a roadmap is used as a tool for long term strategic planning.

First, we will assume four decades are four quarters in a given year.

Q1 – Goal setting phase: Where do we want to be in 40 years?

In 2050, Mexico will be a developed country with:

- Diversified economic landscape;

- Complete socioeconomic equality;

- Renovated and decentralized infrastructure;

- High quality of life;

- Cutting-edge technology, education, health care and communication/transportation systems;

- Sustainable natural resources and strong environmental policies.

The first step in achieving this long-term vision is to carefully analyze Mexico’s economic fundamentals, identify all the strengths and weaknesses that will be used as resources to close the gap between the status quo and the 40-year goal.

1. Identify country’s main strengths: Mexico has relied heavily in oil as major source of revenue during the past decades. As the oil supplies peaked and started to decrease, the country’s economic landscape has diversified. In this scenario the country’s strengths are:
a. Populous and hard-working skilled workers at a relatively low cost.

b. Strategic geographical position and various trading agreements.

c. Extensive natural resources.

d. Developed manufacturing and service sector infrastructure in urban areas.

2. Identify country’s weaknesses: Being a country of contrasts, the most important challenges are:
a. Uneven distribution of wealth – Can be partially attributed to a weak taxation system, out-dated labour and capital ownership laws.
b. Poor rural infrastructure and centralization of economic activities. The industrial/manufacturing activities (and thus, urban areas) are centralized in a limited number of states (mainly the ones surrounding Mexico City) while other states only rely in agriculture and their natural resources to subsist.
c. Insecurity and corruption– Mainly attributed to extensive drug trade activity, poverty (a mean to survive), and inability to design and enforce criminal law.

Q2 – Design Phase – How are we going to get there?

1. A better taxation system. As done in other developed countries, the tax system has to create economic habits in both individuals and corporations. Provide tax incentives to corporations for investing in non-industrialized states such as Chiapas or Oaxaca, or embracing environmentally friendly practices. Providing tax incentives for individuals for investing in mutual funds and retirement plans, getting post-secondary education, or donations to charities.

2. Labour, land and capital laws. As done in Singapore, the country’s government institutions have to steer the economy towards a more controlled developing environment to avoid misuse and exploitation of resources. This might sound like quite a left-wing strategy but it has attested to work in a scenario where it is a continuous practice for more than one political term.

3. Rewrite criminal laws and restructure judicial system. A good idea might be the creation of a government institution solely created for the purpose of investigating corruption in other government agencies and implementing policies to prevent it. Also, the judicial system that has proved inefficient in enforcing the law has to be restructured to ensure that human rights are preserved at all times and ensure everyone is eligible to a fair trial. Criminal activities such as drug trafficking will eventually become less of a threat if we attack the main cause of an individual’s involvement- lack of education and unemployment – instead of fueling a drug war that will eventually lead to more drug trade activity.

4. Utilizing government revenue in a more efficient manner. Government excessive and unnecessary spending and inefficient bureaucratic practices have to be eliminated by prioritizing government spending (education, health, infrastructure and environment policies should be first) and enforcing transparency, internal audits and best practices in government agencies.
But, how is the government going to afford the implementation of these changes? The only way to do so is with a long-term revenue strategy. It is critical to allocate necessary funds for restructuring policies and institutions and set this as a spending priority (below the above mentioned ones). Some will oppose these legislation changes as they do not yield short-term results. Bureaucratic resistance is inevitable. Realistic budgeting is necessary to account for partial results and to revise revenue policies if needed.

To be continued…

The Nation’s Roadmap from “Developing” to “Developed”. A Personal Analysis. PART 1 OF 3.

2009-05-08T15:16:00.000-07:00

From my most recent trip to Mexico City, I realized I see things from a different perspective than when I lived there. I was eager to provide a perfectly reasonable explanation to every socioeconomic event I witnessed during my visit. The most recurrent thought in my mind was: How is a country with the 11th largest annual GDP and population, 14th largest territory, most influential neighbor of the world, and emerging-power member of the G8+5 have all the social problems and inequalities I was forever surrounded by but never quite understood.

Trying to explain Mexico’s (as well as other Latin American countries’) socioeconomic problems can be traced back to the complexity of its history. A country that was: conquered and exploited by Spaniards, forced to convert to Catholicism by unorthodox and strategic means, and ruled post-independence by dictators and “caudillos” that continuously killed each other, has to have some issues.

But how can a country face its own centuries-old demons? Probably the best person to ask that question to would be Lee Kuan Yew, the mastermind behind Singapore’s transformation from a pirate-ruled fishing and trading port to a world-class highly industrialized Asian Tiger country. Some of his accomplishments and methods to do so where:

- Focusing in the countries’ strengths instead of weaknesses – Being a country with partially no natural resources, Lee Kuan Yew focused on the human factor and its strategic geographical positioning by transforming the economic policies towards a trading hub with refining/manufacturing capabilities. Offering this differentiating factor and other attractive tax incentives attracted foreign investment and multinational companies.

- “You can have you cake and eat it too, but not all at once” – Yew implemented well-though corporatism to have a stable and sustainable government control over the country’s assets: land, labour and capital; and to avoid exploitation of workers (as seen in other developing countries).

- Creating a national identity – Embraced and amalgamated the country’s diversity towards the same goal: The economic growth, infrastructure and social development.

- Creating “annoying” but necessary legislation to control the population’s bad habits – The best example is the $500 fine for eating or drinking while using public transportation. These fines might be ridiculous to some but have resulted in Singapore having the lowest crime rates of the world.

So, how can a developing country such as Mexico create a strategic roadmap towards becoming a developed nation?

To be continued…

What came first, the “problem” or the “solution”?

2009-05-01T15:28:00.000-07:00

The good old chicken & egg dilemma that has had philosophers rethinking their theories about the universe has been unknowingly haunting business and organization leaders all around the world.

Basic deterministic and heuristic ways of thinking have preached that the “problem” always comes first and the “solution” is a reactive mechanism to ease the first. However, going back to Peter Senge’s predicament that “today’s problems come from yesterday’s solutions” the chicken & egg dilemma seems the perfect metaphor.

This circular cause and consequence relationship can be traced back to the beginning of the creation of the business: Is the business (solution) created as a consequence of a market demand or opportunity (problem)? Or, will the business’ creation (solution) generate a new demand for the specific product or service (problem)?

Every solution implemented in the organization has a life span. The shorter the life span, the more resources in the short-term are needed to re-solution, but the easier it is to identify the consequences. For solutions that are intended for the long-term, resources should be limited to maintenance, however the complexity of identifying the cause-effect dependency increases. Therefore, it is important for strategists to estimate solutions’ lifecycles and cause-effect relationships in order to have a greater control of the organization’s entropy. The effects, if not identified, will generate more un-controlled problems in areas that were not initially considered.

Cause-effect mental mapping is not a given trait in organization leaders. It is an ability that is acquired through hands-on experience and sensitivity towards the critical variables and areas of leverage. I am still undergoing the process of developing this ability, but the first symptoms of these holistic models have been manifesting on my mind when I analyze a business problem. The ramifications and dependencies appear automatically as I design technology-based solutions. These are some (not all) of my suggestions for developing your strategic holistic mental modeling ability:

1) Start from bottom to top: Identify transaction/data needs without risking process efficiency and minimizing impact to the organization.
2) Analyze management data requirements and match to data available to point 1). Gaps should be investigated. Management data should be aligned with corporate key indicators and overall strategy.
3) Identify horizontal dependencies. This can be obtained through studying covariance in data available or by knowledge in organization’s information flow and processes. Assess any lateral impact when changing/enhancing processes.
4) Study the nature of the change and assess risks, devise a Change Management plan, set limitations, and develop contingency plans.
5) Estimate the length of your solution (short-term, long-term) and set controls for investigating its effects in your area and all dependent areas. Established a realistic maintenance plan.

So, back to the chicken & egg dilemma, the problem & solution dilemma is set to give humanity something to talk about for the next couple of centuries. Until then, people like me will keep creating solutions, that will later become a problem (somewhere and at some different point in time) that needs resolution. People like me will ensure that the future problems arise in a controlled environment for the sake of the sustainability of the organization. The good news is that this will keep us employed for a while.

J. Saldivar, B.Sc. (Hons.)

Is Chrysler the Auto Industry's swine flu?

2009-04-30T15:27:00.000-07:00

Is the swine flu pandemic another method the world’s population is auto-regulating itself? Are we exhausting our natural resources at a rate where our biological systems are taking the toll? Chaos theory enthusiasts might say: Could be. Although a dynamic system that could self-sabotage its growth for the purpose of preserving its resources for sustainability sounds like a science fiction novel, these examples happen everywhere even in today’s businesses and economies. The best example in today’s headlines is Chrysler.

The company that was built on the basis of the American dream has finally paved its way towards the American nightmare - Chapter 11 Bankruptcy Protection that is. Only a forced merger with Fiat could save Chrysler from disappearing from the industry map and become a nostalgia item for post-WWII generations.

But how can the epitome of the American dream money-hemorrhage itself to death amidst the sub-prime-mortgage-caused recession? The answer, in my opinion, is that the company did not evolve with its environment. It failed at considering and adding up the external variables that should’ve played a key role in the company’s long-term strategic plans. One of the basic rules of system thinking has been ignored by Chrysler’s directives for decades – multisystems dependencies and behaviors.

The bankrupt automaker should have been viewed as a subset of a greater system or supra-system. The auto industry and, most importantly, the market for years have been shifting towards more fuel efficient, economical, but value-added vehicles - the differentiation factor being innovation, affordability and sustainability. Chrysler failed to deliver these behavioral features in their vehicles by creating heavy, fuel-squandering nostalgia-driven replicas.

Systems’ behavior dynamically evolves and dictates benchmarks to be followed by the subsets of them. These will eventually ignite conditions in the subsystems that need to be followed for survival. The ability to identify and adapt to these external conditions is not a natural ability, but a trait that will separate good strategists from deterministic ones. It is survival of the fittest at its best! You were right Charles Darwin, only the strongest survives…but only as a variable of time.

So, is Chrysler’s bankruptcy the way the auto-industry is auto-regulating itself? Is Chrysler, the auto influenza? Will Chrysler fall result in the introduction of niche players and eventually resulting in a more sustainable and controlled growth of the industry in North America? Your comments are appreciated.

J. Saldivar, B.Sc. (Hons)

Welcome to the Blog about Engineering Solutions for a Better Tomorrow

2009-04-30T15:05:00.000-07:00

I am a Mexican ex-patriate living in Canada. With a B.Sc. in Industrial and Systems Engineering, I am developing my career in Business and Technology advisory. I hope someday to became a consultant in Strategic Planning for diverse industries. Please join me in sharing views on Systems Thinking, Engineering topics, International Business and Affairs, Finance & Economics, Science and Life.

If you have a small business, ask questions. If you are a collegue or business professional, leave your opinion. This space is reserved for those who believe that their knowledge should be the base of Engineering Solutions for a Better Tomorrow.

J. Saldivar, B.Sc. (Hons)