Open systems model
To successful deal with problems, organizations should be indoctrinated in what is called problem-solving behavior. This basically means the ability to be able to see the problem from all the angles and all the sides. What this problem-solving behavior means is that spotlight is shone on the area or field that is problematic in an organization. But does not mean in any way the problem-area is looked at in isolation. It is all about looking at the structure of the whole first. (Accel-Team, 2008). When this is done we are able discover a new and deeper structural view of the circumstance. By not looking at an organizational problem through the solution of a single problem we are able to achieve two things. First we get an overall picture of the situation taking shape and secondly we are best placed to diagnose what or how the whole is going to affect certain part or parts in the organization.
Organizations are systems in active interaction with their environment and this is the reason why dealings with both the internal and external groupings will impact on how successful it is solves a problem. This is how the open systems model works (Senior and Flemming, 2006). Organizations are complex no matter their sizes or their functions. And you know they don’t come any bigger or more complex than Lufthansa. They have interrelated and interdependent divisions. There are also the outside bits that impact on the organizations and vice versa. The general wellbeing, so to speak, of one part of the organization influences in no small manner the overall workings of the entire organization. Open systems model if applied to the latter enables a management to steer organizations towards the intended goals as can be seen with the Lufthansa case.
Every management operates in difficult, tentative and ever changing environment. The management should expect nothing but such complexities all the time. It is this constant flux that brings s out the best in management. Those who can not hack it are best advised steer clear of the management profession.
Open systems model is a tried and tested formula that enables managers to make seemingly impossible problems simpler, help reverse situations and break down the problem to forms that are easy to understand. But this does not imply an oversimplification of problems. The management of any organization cannot delude itself on the nature of the problem and the solutions it has find for it. The solutions should at all times be realistic and compatible to the situation at hand.
Today the global economy is growing at unprecedented levels and the businesses are becoming complex all the time and interconnecting. At this rate only the most advanced managerial skills is required for one’s company to stay afloat. This is the very sort of approach management personnel at Lufthansa had to reach for when in 1992 it was reported that the company was on the brink of bankruptcy.
The plan that Lufthansa rolled out on the path to reclaiming its position as the world leader in the airline business bore all the markings of the open systems model. If the success of Lufthansa is anything to go by then it can be said that open systems model works. The systems approach has been found to be effective when examining problems and determining optimal solutions-no more so than in the world of business. (Accel-Team, 2008)
To best understand how open system works we need to define concepts used in this program. Open systems defines a firm as an independent economic unit, whose aim is to make profit by offering goods and services for sale to society. (Accel-Team,2008).
The firm is a physical or conceptual entity with interrelated and interacting parts (departments, people, machines, etc.). The firm also should exist in an environment with which interacts and it has the preferred state, which means it has been set to for the purposes of generating profit. The above show that the firm, in a nutshell, is a system. The proponents of the open system model thought it more beneficial if the firm were studied as a system complete with its environment.
The fundamentals of the open systems model states that every time we approach a problem, a procedure should be adopted. The procedure involves defining the boundary of the system so that becomes easier to pinpoint the exact problem and the correct analysis can be done before a remedy is provided. The trick here is to try to find a balance as what exactly is the right size of the boundary because sometimes we may end being too broad and sometimes we can be too narrow. The right boundary is of absolute importance because it is only through this that the right analysis will be applied.
What constitutes a boundary is defined by the extent of the problem at hand itself. The
The definition of the boundary is often guided by the scope of the problem itself as the Accel-Team writes in Open systems Approach:
The scope can vary from problem to problem. Sometimes an entire industry will be placed within the boundary, at other times an entire firm. Narrowing our focus, we could even define our boundary as being a single department or even person in the organization. It is often necessary to redefine the boundary as the analysis proceeds. In very complex situations, the situation may have to be broken down into several systems interacting with one another
Once this has been done the trouble shooting team should then proceed to identify the parts of the system and once again they should use their discretion to find out what constitutes the part of the system. As soon as this is over the matter of identifying the environment comes next. Next find out how the systems themselves interract.
This should be painstakingly done as you have to determine the interactions between the systems and the interactions between the systems and the environment.
As soon as the team has achieved this then they are good to go. The problem-solving can now commence. As always we should try to solve problems with a view of the future. Take a forward looking approach but look back at the trends that have passed and use them to make future predictions.
Open systems approach has proved effective in forestalling the problem of neglect. It has been found that most of the problems do crop up because someone forgot to do his/her job.
One should however be warned that the first time the open systems approach is used it can be a wearisome affair but with time one should be able to start finding joy in using it and soon start reaping the benefits.
How did Lufthansa use the open systems approach to achieve success?
As is reported in Lufthansa 2003: Energizing a Decade of Change, in 1992 Lufthansa, the then Federal Republic of German national carrier was headed for bankruptcy. As it turns out the colossal state-owned airline company was operating below par and churning out losses.
The drop in the number of air traffic due to the Gulf War 1992 almost brought Lufthansa down on its knees but it was also to be the turning point in the airline company’s history. This was the time a new CEO, Jurgen Weber was installed to foresee the operations at Lufthansa. In retrospect Jurgen Weber may have be the best thing that has ever happened to Lufthansa.
Jurgen Weber engineered series of changes that were able to turn back the company into the ways of profitability and surpassed so many other expectations.
Lufthansa was slow in discerning the impending crisis which was reflected by global air traffic decline because of the Gulf War. By the time the reality of the situation sank in for Lufthansa, the company was surviving by the skin of its teeth. Lufthansa 2003: Energizing a Decade of Change ( 2003) writes:
In 1992 with only fourteen days of operating cash requirement in hand, Weber to all the major German banks and asked for money to pay the employee salaries…
Only one state-owned institution, Kreditanstalt fur Wiederaufbau, was willing to listen to Weber and lent him the money. The rest of the financial institutions thought Lufthansa was going down for real. This was a grim reality and everyone at Lufthansa soon understood the gravity of the situation.
For Jurgen Weber now it was all systems go. The company needed saving and he was at hand to provide direction. This is about the time it can be said the open system model came was rolled out.
The internal changes started with a four-week redevelopment workshop. Though the problem afflicting the airline was largely external it was important that everyone at Lufthansa gets know the full extent of the problem and in so doing be able to assist the company in way to beat the odds in any way they could.
The workshop was meant to instill elemental redevelopment skills and such 26 managers were invited for what was dubbed a “mental change” meeting at Seeheim. The meeting’s name would later be changed to “crisis management” meeting in view of the urgency of the matter at hand.
At the Seeheim meeting the seed of urgency was planted and the managers were asked to go back to their departments and report the same message to the people under them. The managers set ambitious goals. This meeting produced 131 projects and some of the results included the following: staff cuts which were as high as 8000, lower non-personnel costs – that included reduction in the overall number, and increasing revenues. All these results saved Lufthansa billions of money in Euros.
After this an OPS – Operations Team- was set up. The OPS team was also able to jumpstart 93 projects that yielded further success for the company.
With all these special projects going on it was important that every one in the company be kept abreast all the latest developments. A policy of openness and transparency was cultivated. Jurgen Weber saw to this himself. In open systems model communication in an organization plays a very important. As Weber explains himself “…openness to employees was the turnaround. It enabled us to develop common goals between employees, management, work councils, and unions…”
The importance and the effective of good communication as espoused by the open methods system can be seen in the above statement.
In November 1993 Lufthansa had successfully weathered 18 months of crisis and was ready to announce its success to the public. But even of Jurgen Weber and his team knew that there still a lot to be done. And the next step of the job was the privatization of Lufthansa.
While privatization agenda was in the works, Lufthansa started another one of its ambitious projects and this was the separation of the finance, personnel, maintenance, marketing, sales and flight operations departments into differently operating entities. This was brought about because it would improve efficiency and it did. The six departments were separated into six legally autonomous entities. They all became subsidiaries. They are Lufthansa German airline and CityLine, LH Cargo AG, LH Technik AG among others.
Once the internal operations had been harmonized and seemed to be running smoothly, Lufthansa embarked on another project and this was to take care of external competition. Under the philosophy: “growth through partnership”, Lufthansa sought to build partnerships with other airline companies. This way the Star Alliance was formed.
Star Alliance proved to be a boon not only for Lufthansa but also all the other airlines in the network.
Through the open systems model we can see how Lufthansa was able to reach out to external entities, in this case their competitors and turn them into useful and formidable partners.
The turnaround witnessed at Lufthansa goes to show that well executed business decisions can completely overhaul a firm that is faced with complex problems and turn it back on the road of success. It is not possible to show all the successes that Lufthansa was able to achieve in the ten years the open systems model was applied either knowingly or unknowingly in their management.
Remember in the businesses of running a firm it is not smooth sailing all the time but open systems model should be able to provide the direction required in times of uncertainties. (DFID, 2008). This exactly how Lufthansa operated in the in ten years starting from 1993 to 2003.
Steps taken to mitigate resistance to change
Resistance to change is human nature. If this element is not checked there are bound to be problems especially in a world where the only constant is change.
Today organizations can incur great losses if the methods used and leadership governing it is not dynamic enough to able to make changes to adopt new methods in the ever changing global business.
When Jurgen Weber took over the reigns at Lufthansa and his radical changes had not been met with the attitude of cooperation like it happened, from the staff, failure would have been the cards for him.
In cases of extreme resistance to change a few theories have been put in place to help make people accept change easily. Two such change theories are the Lewin’s change theory and Bridges theory. Lewin’s change theory was formulated by Kurt Lewin and his contemporary Richard Beckhard through their experimentations with change way back in the mid ‘60s.
What Lewin and Beckhard found out in that their experiments could be used by organizations where there is a possibility for a resistance to change.
The Lewin’s theory of change can easily be applied by Lufthansa to forestall any future resistance to change. Lewin’s theory of change shows that for this program to be successful workers must be involved in a real project. It also states that one of the most powerful sources of motivation is for them to work through all the frustrations they encounter trying to manage change and to have to report regularly on .(2zpsychology.com, 2008)
The participants, in this case Lufthansa workers, are required to make progress reports and share out their frustrations with fellow workers. The workers could be put together in teams and made to meet regularly to compare notes on their progress or lack of it. To initiate this change theory the criteria should include choosing something that personally matters to the workers. The other thing is that it should be about something that will make real contribution to Lufthansa and lastly, it should involve something that is realistic, that it is, it can be done within an allocated period of time (Senior and Flemming, 2006).
Accel-Team 2007: Open Systems Approach. Last retrieved from the World Wide Web on 18 April 2008 at www.accel-team.com
a2zpsychology (2006). Kurt Lewin’s Change Theory. Last retrieved from the World Wide Web on 18 April 2008 at www.2zpsychology.com
Promoting Institutional and Organizational Development (2008). Open Systems Model. Last retrieved from the World Wide Web on 18 April 2008 at www.dfid.org.uk
Senior, B. and Flemming, J.(2006). Organizational Change. (Third Edition) New Jersey:
University of St. Gallen Lufthansa Business School (2003). Lufthansa 2003: Energizing a Decade of Change. UK: University of St. Gallen