Soft System Methodology (SSM) was developed as methodology by Peter Checkland and his colleagues working at Lancaster University and Open University in the 1970s. The idea of the SSM is to understand, identify and solve the real world problems.
This paper will start with the history of SSM and its definition. Then it describes the SSM methodology with a practical case study from the real world. The author will look into the main features and benefits SSM. Afterwards the author will present the relationship between the soft systems thinking, knowledge management, intellectual capital and social capital.
Soft Systems Methodology (SSM) is now taught and used around the world. “SSM as an approach to tackling the multi-faceted problems which managers face; in doing this, it also established the now well-recognized distinction between ‘ hard’ and ‘ soft’ systems thinking” (Winter, 2000). Soft Systems Methodology is based on systems thinking. It views the problem domain in a holistic rather than reductionist way, recognising that the component parts are interconnected, so that a change to one part will affect the other parts. “Systems thinking is a framework for seeing interrelationships rather than things, for seeing patterns of change rather than static snapshots” (Frank, 2002). Systems thinking propose flexible language which can expand, shape and change the human being normal way of thinking in regard to complex matters. Wang and Ahmed (2003) argue that soft systems enclose a wide range of soft components including historical, personal, cultural and institutional factors which lays the bases of organisational learning.
Taking a holistic approach requires the ability to distance oneself from day-to-day operational problems and to see how problems and issues are connected to the overall pattern that underlies particular details and events. Senge (1990, cited Bonn, 2001) calls this approach as “systems thinking”. He argues that: “We must look beyond personalities and events. We must look into the underlying structures which shape individual actions and create the conditions where types of events become likely”. SSM is called human activity systems (Brocklesby, 1995).
SSM methodology composes of seven stages and those are : 1. The problem situation unstructured, 2. The problem situation structured, 3. Root definitions of relevant systems, 4. Conceptual models, 5. Comparison of stage 4 and stage 2, 6. Identify feasible and desirable changes & 7. Action to improve the problem situation. These stages are shown below in Figure 1.
Figure 1. Traditional SSM Seven Stages
Stages 1,2,5,6, and 7 are real world activities that involves real people in the problem situation or the real problem that needs to be improved. These activities speak every day language of the particular situation. While stages 3 and 4 are system thinking activities which may or may not involve those in the problem situation depending on the circumstances. It describes what complexity of the system and what and how the system ought to look like. These activities speak the language of the system. Another way to think of these activities are to think of activities 1 and 2 as the phase of finding out about the problem situation, stages 3, 4, and 5 contribute to make up the phase of system thinking, and finally stages 6 and 7 are the phase of taking action.
These seven stages do not represent a single process which can be followed from start to the end in a sequential order and after which a right decision or an answer will be obvious. These stages are stages in a process and this process may have to be repeated many times before a reasonable accommodation or agreement may be reached.
Planning and management is increasingly problematic in the real-world environment of spiraling change and uncertainty. Knowledge is incomplete, values are in dispute and the decisions of others are often unpredictable. Problem structuring methods (PSMs) are now a fundamental management skill. It is the process of retrieving information from long-term memory and external memory and using it to construct the problem space, i.e. to specify goals, operators and evaluation functions etc.
The methods which have come, collectively, to be known as PSMs were developed independently from the mid 1960s onwards. What each PSM offers is a way of representing the situation (that is, a model or models) that will enable participants to clarify their dilemma, converge on a potentially actionable mutual problem or issue within it, and agree commitments that will at least partially resolve it. There are many types of PSMs and the more standard forms of the principal methods may be briefly summarized as follows:
-Strategic options development and analysis (SODA): This is a general problem identification method that uses cognitive mapping as a modelling device for eliciting and recording individuals’ views of a problem situation.
-Soft systems methodology (SSM): This is a general method fro system redesign. Participants build ideal-type conceptual models (CMs), one for each relevant world view.
-Strategic choice approach (SCA): This is a planning approach centred on managing uncertainty in strategic situations.
-Robustness analysis: This is an approach that focuses on maintaining useful flexibility under uncertainty.
-Drama theory: This draws on the two approaches, metagames and hypergames. It is an interactive method of analysing co-operation and conflict among multiple actors.
Sometimes not just one approach is used but several. When developing an IT strategy for a large UK supermarket chain (Sainsbury), they deployed and adapted a wide range of PSMs in combination. Cognitive maps (from the SODA approach) were drawn. The next phase was to examine each possible new IT systems in more detail, for which the task force members learned to use SSM. The evaluation of these possible systems was conducted using the ‘comparing’ mode of the SCA. The final stage involved converting the priority portfolio of systems into a smaller number of larger projects. New systems were developed and introduced over a five year period, and were found to result in substantial, measured benefits.
SSM has advantages and those are: the ability to solve soft problems where hard techniques fails; takes social, political, and power distribution issues into consideration through the application of cultural stream analysis; Support different viewpoints through rich pictures; can be used for learning in addition to solving problems; can be used in system where there is ill-situation but there is no specific goals and objectives; allows for new and imaginative solutions to be discovered; very useful in the beginning of solving a problem to find out about the problem situation and understands requirements. SSM has disadvantages and those are used to solve some ill-parts of the system but it doesn’t build a whole system; it does not tell you how to build the system; the power handling part seems fancy where the managers always have the upper hand; management are not so happy about the nature of open ended SSM; heavy weight and time consuming process; limited in the design of a new system.
Executives in successful organisations consistently search for ways to improve the performance of their organisations. This motivates management of such organisations, to obtain new understandings of some of the underlying but complex mechanisms, e.g. Knowledge, that govern the enterprise effectiveness. Increasingly, the knowledge being captured and used by organisations is seen as the basis for the firm’s competitive advantage. Offsey (1997) asserts “As the pace of global competition quickens, executives realize that their edge lies in more efficiently transferring knowledge across their organisations”.
On the other hand Inkpen (1996) argues that ‘Increasingly, the creation of new organisational knowledge is becoming a managerial priority…..A failure to create knowledge and manage it as a critical organisational asset may account for the declining performance of many well-established firms”. Such considerations from organisations led to the emergence of a new movement known as Knowledge Management (KM). Knowledge management is a cyclic learning process where SSM adds value in motivation on continuous and effective learning (Gao, Li and Nakamori, 2002).
Many researchers view the concept of KM as about people and not technology. Quinn (1992, cited Soliman and Spooner, 2000) believes that the economic and producing power of a modern corporation lies in its intellectual and service capabilities instead of its hard assets. Sarvary (1999, cited Alvesson and Karreman, 2001) goes ‘There is much more to knowledge management than technology alone. Knowledge management in a business process”. Davenport and Prusak (1998) define knowledge as “a fluid mix of framed experience, values, contextual information, and expert insight that provides a framework for evaluating and incorporating new experiences and information. It originates and is applied in the minds of knowers. In organisations, it often becomes embedded not only in documents or repositories but also in organisational routines, processes, practices and norms”.
Nonaka (1991) suggests that there are two types of knowledge: tacit, which is embedded in the human brain and cannot be expressed easily; and explicit knowledge, which can be easily codified. Researchers argue about the importance of the above two types of knowledge. While some focuses on managing explicit knowledge, others argue that more emphasis is to be given to managing the tacit knowledge. Mintzberg (1989, cited Soliman and Spooner, 2000) argues “The strategic data bank of the organisation is not in the memory of its computers but in the minds of its managers”.
In order to transform the above two types of knowledge within the firm into a valuable asset, knowledge, experience, and expertise must undergo some KM Processes that may include formalization, distribution, sharing, and application of knowledge. Von Krogh et al. (2000a,b) identified a six step KM process that starts with creation and progresses to knowledge capture and storage, knowledge refinement, knowledge distribution, knowledge use, and monitoring of the entire process.
Theories such as: Theory Y (McGregor, 1960), Management by Objectives (Drucker, 1965), strategic planning by Mintzberg and Porter (1970s), Total Quality
Management by number of quality gurus such as (Deming, 1986; Juran and Gryna, 1993; Crosby, 1979; Feigenbaum, 1991), and Learning Organization (Senge, 1990), are all representing the development in the tools and practices in the management field during the 20th and 21st century. As a result of the continuous effort of seeking the competitive advantage, new concept of management has emerged, emphasising on the importance of managing systematically and explicitly the organizational intellectual asset. “As a result the management community has come to realize that what an organization and its employees know is at the heart of how the organization functions” (Davenport, Prusak, 2000).
Drucker (cited in DeTienne & Jackson, 2001) supports the same view and mentioned that “We know that the source of wealth is something human: knowledge. If we apply knowledge to tasks we already know how to do, we call it productivity. If we apply knowledge to tasks that are new and different, we call it innovation. Only knowledge allows us to achieve these two goals”. The value of the organisation’s knowledge should be recognised, so that knowledge is managed as an asset (Rowley, 1999). Kannan and Aulbur (2004) argue that intellectual capital, knowledge management and intangible assets are important factors in determining the value of an organization, as reflected in the growth of the knowledge management industry. Intangible assets such as goodwill, patents, trademarks, intellectual capital and customer lists are becoming key assets in many of today’s corporations, especially in the technology industry. With the growing influence of intangible assets, their assessment is becoming more important and the criteria for their assessment should also continue to develop to help eliminate any irregularities that may arise. This is essential in protecting the credibility of accountants and the shareholders of corporations.
“Intellectual capital can be defined as intellectual resources that have been “formalized, captured and leveraged” to create assets of higher value” (Prusak, 1998 cited Kannan and Aulbur, 2004). Rastogi (2002) defines IC as “A firm’s holistic prowess and potential for creating value”. IC refers to intellectual material such as intellectual property, knowledge, information and experience that can be used to create wealth. Intangible assets are innately difficult to measure and include a large number of organizational and individual variable (Kannan and Aulbur, 2004).
Intellectual capital may be both the end result of a knowledge transformation process or the knowledge itself that is transformed into intellectual assets of the firm (Dzinkowski, 2000). Three additional forms of capital have became popular concepts in the new economy of the past score years: market capital, intellectual capital, and knowledge capital (Tymon and Stumpf, 2003). Management is important in organising, fostering and enhancing intellectual capital to make it productive. There is some inconsistency and confusion between the terms KM and IC. There is an abundance of literature on both, each dealing with the same issue that the value of knowledge as an organizational asset (Egbu, 2004).
Intellectual Capital consist of Social Capital: Relationships within and outside the organisation; Human Capital: The people within the organisation; Structural Capital: The process and operations of the organisation; Customer Capital: Value of external relationships.
Organization such as Skandia describes intellectual capital through measurement of new indicators. A balance scorecard for measuring performance on financial capital and various intellectual capital dimensions is presented to Skandia management (Bucklew, 1999). Bucklew (1999) argues that intellectual capital increases company value and makes business operations more efficient. Beside that he arguers that the sharing of competencies requires management of information which indicates that both information management and intellectual capital are related. The Intangible Asset Monitor was developed by Karl Erik Sveiby as a presentation format that displays indicators for internal management information purposes (Sveiby, 1997).
Success in the twenty-first century will be more social and relational than it has been since clans were the predominant social structure of society. Tymon and Stumpf (2003) argue that social capital is the stock of accumulated resources that one can access based on the relationships that can aid or be leveraged in accomplishing an end or furthering a pursuit. The stock of accumulated resources that can be accessed via these relationships is what we define as social capital. “These resources include information, ideas, leads, business opportunities, financial capital, power, emotional support, goodwill, trust, and cooperation” (Baker, 2000).
Social capital can be defined as the actual and potential resources embedded within, available through, and derived from the network of relationships possessed by an individual or social unit. In this definition, social capital comprises both the network and the assets, which may be mobilized through that network. Since intellectual capital is generally created through a process of combining the knowledge and experience of different parties, it is dependent upon exchange between these parties. (Nahpiet, 1997).
The worker is further alienated from other people, since capitalism transforms social relations into market relations, and people are judged by their position in the market rather than by their human qualities. People come to regard each other as reifications – as worker or as capitals – rather than as individuals. In the author opinion, the social relations of capital that arise are between those who own the means of production, and those who must work. This entails a relation not only of property, but also of power. The relations are characterized in class struggles which leads to exploitation, by extracting surplus labour, and hence to alienation of the worker.
It is the potential of social capital to lead to new insights (intellectual capital) through the interactions among a diverse group of trusted others in dealing with an issue. Knowledge workers skilled in the use of social capital recognize this synergistic potential. Much of the evidence of the relationship between social capital and intellectual capital highlights the significance of the relational dimension of social capital. In particular, research identifies many ways in which facets of relationships influence the motivation of parties to engage in knowledge creation through exchange and combination.
“It is both prescriptive and descriptive in nature in an attempt to consider the entire knowledge cycle. The framework is prescriptive in that is prescribes specific KM procedures (or tasks), and it is descriptive in that it identifies attributes of KM that influence its success or failure organizational culture, learning, strategy, knowledge classifications” (Rubenstein – Montano, Liebowitz, Buchwalter, McCaw, Newman and Rebeck, 2001)
According to several researchers, social capital can influence professional success; help workers in the job search process and create a better portfolio of employees for the organization; facilitate the exchange of resources between units; estimulate innovation, intellectual capital creation and the efficiency of multidisciplinary teams; reduce the rotation of employees and support the creation of start-ups; and strengthen relations with suppliers, regional network production and inter-organizational learning.
There is one important and critical aspect, which contributes to the effectiveness of the transfer of knowledge within any firm, which is the culture of the organisation. Goh (2002) argues that “one cultural dimension critical to knowledge transfer is co-operation and collaboration…The existing of a strong co-operative and collaborative culture is an important prerequisite for knowledge transfer between individuals and groups”. Developing a culture that encourages sharing and transferring of knowledge is a very important role of the management of any organisation.
A culture that should be built on trust and transparency between all individuals within the organisation, a culture that will reward individuals who shares their knowledge and transfer it to their peers within the organisation, a culture that encourages learning of different competences required by the firm, and a culture that encourage horizontal communication flows through the establishing cross-functional teams within the organisation, should be encouraged. Such cultures would be achieved through the leadership commitment of the organisation, and through paying attention, as suggested by Devanport and Prusak (1998), to the amateur knowledge workers who perform the different knowledge work, and also by the creation of a Chief Learning officer position within the company.
In conclusion, the SSM plays important role in assessing the design a system to conduct knowledge management which is the intellectual capital of the firm. Firm’s culture and organisation structure from the leadership point of the view are the key factors for exchanging and sharing the knowledge which is the intellectual capital and treated as an assets.
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