SHARED PRODUCTION SYSTEM
Organisational boundaries no longer define performance.
Performance is governed through organisations, but increasingly created across them.
Actual Production System
Every organisation has an Actual Production System: the people, processes, decisions, dependencies, coordination mechanisms, and operating behaviours through which strategy is converted into operational performance.
Increasingly, however, this represents only part of the system that creates organisational performance.
Shared Production System
The Shared Production System extends beyond organisational boundaries.
It comprises the network of suppliers, partners, contractors, customers, regulators, technology providers, and other stakeholders whose capabilities, decisions, and coordination collectively determine operational performance.
A commercial aviation operating model illustrates the challenge.
Each participating organisation is governed through:
- contracts;
- service level agreements;
- key performance indicators;
- governance structures;
- and performance reviews.
Each organisation is optimised to achieve its own objectives.
Yet safe, reliable, and efficient operations depend upon capabilities, decisions, and coordination that extend across organisational and contractual boundaries.
Performance crosses organisational boundaries.
Governance usually does not.
The system that creates performance rarely has a single owner.
As work becomes distributed across outsourcing, partnerships, and integrated supply networks, organisations govern contractual relationships.
They do not govern the Shared Production System on which performance depends.
The result is inevitable.
A production system that performs as a system but is not governed as one.
Typically there is:
- no shared system owner;
- no deliberate system design;
- no integrated governance;
- no shared measures of system performance;
- and no executive visibility.
The Shared Production System already exists.
Most organisations simply do not recognise it as a system requiring governance.
Executive Control extends executive understanding across both the Actual Production System and the Shared Production System, because together they create organisational performance.