Untangling Complexity

Untangling Complexity

Untangling complexity In complex asset intensive ecosystems, alignment to a common vision and set of outcomes is crucial to realising the benefits of asset management best practice. Here, PA Consultings Tom Crofts, Allan Boardman and Jennifer de Vries explain why The terms asset intensive organisation and asset management best practice still mean different things to different people. Partly, this is because of the breadth of the ecosystem of the organisation or organisations contained within the scope of the asset management system. Sometimes, one organisation is the asset owner, asset operator/delivery partners, end user and governing body where the application of best practice is under full control of that particular organisation and the ecosystem is quite simple. For others, the asset owner and operator can be different parties under a single governing body. A third case may see all elements undertaken by different parties. In the most complex ecosystems, there are multiples of each element. This is where the application of best practice becomes more tricky, as its definition can vary greatly. You cant find best practice in a textbook Parts of more complex asset ecosystems are demonstrating greater awareness of asset management and have a growing desire to drive efficiencies through the implementation of best practice. But operating models between different parties vary significantly and therefore the application of best practice is nuanced; it needs to be adaptable to fit a particular ecosystem. In other words, you cannot follow the textbook written for simple organisations if you are a complex ecosystem. Since these usually consist of more than one organisation, and may or may not have a single governing body, the different and potentially conflicting objectives/agendas need to pull together to achieve a strategic collective goal. The greater the number of stakeholders/organisations in the ecosystem, the greater the challenge in implementing asset management best practice, and subsequently it becomes more difficult to realise benefits. Often good progress is undone by different progress elsewhere in the system. Through the myriad of processes and methodologies, it is easy to lose your way and get bogged down in inconsequential or duplicated work that will not aid you in adopting best practice. So where should complex ecosystems begin when looking to develop asset management best practice? Invest in understanding the ecosystem Before any work in adopting best practice, it is paramount to take time to understand the organisation, or different organisations that are intertwined in the asset management system to understand the goals, identify synergies and find the common ground upon which asset management best practice can be built. This also requires an understanding of the relative maturity of the organisation(s). At one end of the scale, an organisation is considered as simple when the asset owner, operator, and user are the same under a common governance. An example would be a heavily regulated utility, such as a water or electricity network, where the goals are clear and there is a common control across the functions of the asset management system. At the other end of the scale, a complex ecosystem may be characterised as such with the following criteria: multiple asset owners, multiple operators or users with varying priorities and goals, and/or an unclear governance arrangement. For example, a large defence ecosystem with multiple independent organisations owning and/or sharing a plethora of disparate assets to achieve different or conflicting priorities. Depending on where an organisation lies on this scale determines the level of activity required to drive towards asset management best practice to realise the benefits that brings, including: greater ability to manage risk; improved financial performance; greater efficiency and asset effectiveness; and improved outputs. In the diagram, we show where different levels of complexity and maturity can position asset management systems on a scale across four quadrants requiring slight differences in approach to achieve best practice. Asset organisation maturity High maturity, single asset owner org High maturity, multiple asset owner org 1. Understands value across asset. 2. Uses digital, but has the foundations to build upon. 3. Specified intent and requirements. 4. Shares best practice and language commonality within organisation. 5. No blame culture, all pulling together. 6. Constantly assessing and seeking ways to improve asset management maturity. Low maturity, single asset owner org 1. Has clear understanding of value across multiple assets within organisation. 2. Uses digital, but has the foundations to build upon. 3. Senior leadership team give clear intent and settles disputes based upon alignment to strategy. 4. Shares best practice and language commonality within organisation. 5. No blame culture, all pulling together. 6. Constantly assessing and seeking asset improvement across organisation. Low maturity, multiple asset owner org 1. Does not understand value across multiple assets. 2. Distracted by digital. 3. Has no specified intent from senior leadership team. 4. Low knowledge transfer and lack of common language. 5. Uncoordinated activity within organisation, them and us mindset. 6. No honest assessment of current maturity. 1. Does not understand value across asset. 2. Distracted by digital. 3. Has no specified intent from senior leadership team. 4. Low knowledge transfer and lack of common language. 5. Uncoordinated activity within organisation, them and us mindset. 6. No honest assessment of current maturity. Asset ownership complexity An organisation (or parts of it) may move up and down the y-axis but is unable to move across the x-axis. If you are a complex ecosystem, it is imperative that you do not consider yourself as simple. The result of this would be expensive with no tangible results you will always be chasing your tail. This is reflected in simple organisations considering themselves as complex where unnecessary time and effort will essentially be wasted. Five steps to developing your asset management maturity We believe there are five key steps to aid the development of your asset management maturity within a complex ecosystem. 1. A ck co no mp le 2. S e t a comm o n c u l t u r e r u o y p o l e v e e l d o m D g . n i 4 rat e p o 5. Se ro e dg le w ity x l a t i g i d p a a t m d a 3. Defi ne your value Admit you are complex In conclusion, complex ecosystems can achieve best practice starting with a simple admission that they are complex. The benefits of using asset management best practice are absolutely accessible to more complex ecosystems as long as the foundations are put in place first (see the five steps, right). No ecosystem is perfect and as soon as you believe you are a mature asset management organisation that is delivering best practice, then you are at risk of stagnating and missing the value opportunities ahead. Continuous review of your practices is essential to ensure that you grow as an organisation and improve incrementally, flexing, and redefining value as your strategic objectives change. You should regularly reassess your ecosystem from step one and follow our processes to create clarity in your understanding. This should be conducted when you are beginning to feel complacent in your asset management processes, or at least every couple of years, to ensure that you continue to develop best practice and reap the rewards. Contact us at PA Consulting for more information. Hello, I am a complex ecosystem The first step on the path to increased asset management maturity is a simple one being open and honest with yourself and acknowledging that you are a complex ecosystem. It is not a case of simply scaling up a methodology from a simple organisation structure or applying the textbook as this approach does not consider the interdependencies and alignment to common goals, without which you are setting up for failure. You must therefore understand that you cannot treat yourself as a simple organisation if you want to realise the benefits of asset management. Understanding your baseline will pay dividends in the future. Countless organisations fall short in this very first step and will waste money, resource and time trying to operate as a simple asset owner but with the complexity and nuance of a complex one. All for one and one for all! One of the key principles of asset management is alignment, or line of sight from boardroom strategy to spanner. It is important for a complex ecosystem to set the accord, or common culture, right from the start by understanding the line of sight across the entire ecosystem, not within the individual silos of particular asset owners. As an organisation increases in complexity levels for example, a public organisation that encompasses large-scale infrastructure and equipment procurement this alignment must be considered across the supply chain and other areas of the ecosystem. Setting this common culture can be time consuming, but investment early will reap rewards later down the line. This sounds simple; however, a common language must be used initially, ensuring everyone is talking about the same thing in the same way and understands what they are talking about is essential. Ineffective communication will result in loss of time, money and resource without delivering the desired best practice goals. Once you are communicating effectively, you must ensure that everyone can see the bigger picture that the organisation is striving towards. This is where strategy to spanner comes in in other words, those who are operating assets are more effective when they understand why it is needed or how their actions impact the wider ecosystem. A great example is in data capture if those capturing the data do not understand the importance of it or how it is used, then it is highly likely that the captured information is of insufficient quality for the intended purpose. Equally, if the intended purpose of the data to be captured is unclear, why waste time capturing it? These first two key elements are followed by incentivisation and ensuring comprehensive command and control is in place. Value is in the eye of the beholder Value is not simply defined as cost. A complex ecosystem must understand this and move away from over-simplifying value. Instead of defining value as cost, it must move towards the term performance defining value as a balance between the unfortunate acronym of Cost, Risk and Performance (CRaP). Once value is understood, an organisation may define the level of value it is seeking by setting clear asset management objectives that align to the ecosystems wider strategic objectives. Good decisions are based on CRaP. We already have our common language from step 2: now, in step 3, we must use this language to help set a common definition of value. It is important that this is communicated effectively as different parts of this complex ecosystem (and different personalities) will see value differently. We need to be able to define and quantify value in a language that is translatable to not just those involved in infrastructure, you may be competing with other parts of the ecosystem for budget, so clarity and consistency from the outset is key. Remember, real value is realised through aligning to the strategic objectives and working towards collective goals. To boldly go... At this point, we need to develop the vision for how you want your ecosystem to operate, with the understanding of the goals and objectives that you want to achieve. It is important to consider a variety of different elements when developing your vision for the future. In a complex ecosystem, stakeholder engagement early in the development is critical especially as these organisations have likely been in a state of change for some time to little or no clear benefit. This goes back to setting a common culture. Now that you have this culture and you are all talking the same language, its time to talk to each other that way. The vision needs to be business-led and align to the objectives that you have determined as valuable to your organisation or ecosystem. Critically, the vision must consider people. People do not naturally like change, and more importantly, will resist it if they cannot see the benefits or have an active part in the development of it. Change management will help to reassure the people, and bring them on a journey (importantly not a process) to an organisation that delivers asset management best practice. This underpins the development of a digital ecosystem that builds sophistication and consistency into the effective application of asset management best practice. Remember, people are at the heart of a successful asset management system; digital tools are a great enabler but do not remove the human element of a successful organisation.