Helping to uncover Organizational
Intelligence: Understanding the
Structure that drives the Dynamics
of Best Practices.
A theoretical and empirical Approach:
Multiple Cases
October, 2001
Ignacio J. Martinez
Decision and Policy Sciences
Modeling and Simulation Track
System Dynamics Group
University at Albany
Interesting Questions
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Who gets to say what practices are the “best”
practices, when, and how.
How do these practices “make it” to become
in-practice best practices and eventually
“standard” practice.
If a certain practices “evolves” into a best
practice and then into standard practice who
gets to govern it(them) and how? (and
perhaps enforce them if necessary?)
Projects

Best Practices: A
constructivist approach

A Professional
Organization case.
(System Dynamics Society)

Best Practices: An
implementation
approach

A small private health
service case. (Adirondack
Oral & Maxillofacial Surgery)

Best Practices: A
structural approach


Theory building
Best Practices: A
standard making
approach

The establishments of
international standards in
the regulation of financial
markets
General View
Governing Structure
Legislative
Regulatory Committee
Regulatory Agency
Regulatory Area in Org
Regulatory Area in
Financial Institution
Operational Area in Org
Traders
Model Sectors of Best Practices
Model (Knowledge1)
Human Resources
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Novices
Intermediates
Experts
Promotion
Training
Mentoring
Culture
Values
Knowledge
accessibility
to be used in
training and
mentoring
activities
People
with
different levels
of expertise to
work in projects
Projects
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Knowledge
transfer
among
networks
Knowledge
transfer within
networks
Insight generation
Knowledge
Knowledge Management
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Identification
Elicitation
Dissemination
Repositories
Technology
Technical
Knowledge
to be stored
and used
Projects
Networks
Insight
generation
Insights
transfer
Methods
Knowledge
utilization
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Learning
Forgetting
Knowledge
accumulation
Knowledge
obsolescence
<Junior moving to
other fields>
<Intermediate moving
to other fields>
Productivity initial
Junior
productivity loses
Junior
Productivity
Junior
Productivity rate
Intermediate
productivity loses
Intermediate
productivity rate
Intermediate
Productivity
Average Junior
productivity
Intermediate
Junior
<Junior
proportion>
<Average intermediate
Productivity>
<Intermediate
proportion>
<Average Advanced
productivity>
<Advanced
proportioin>
Average
retirement time
Intermediate moving
to other fields
New
practitioners
Growing fraction
Advanced
Junior
promotion
Advanced
retirement
Intermediate
promotion
Intermediate
proportion
Junior proportion
Advanced moving to
other fields
Advanced
proportioin
Total people in
the field
<Average Junior
productivity>
Junior
Contribution
Core to total
knowledge ratio
Total projects
Weight on Core to
total ratio
Normalized
perceived change
Advanced
Contribution
EOIO f
Total insights
Perceived
change of the
field
Time to perceive
Insights per
project
Insight normal
Learning
Operational
Knowledge
Effect over insight
obsolescence
Time to become
obsolete
EKIG f
Avg time to become
obsolete
Effect of people living
over obsolescence time
Obsolescence
EPLOKL f
Effect of Knowledge on
insight generation
ECOM f
Probability of
conflicting approaches
<Core
Knowledge>
SD projects per
people
Normal migration
fraction
Effect of conflict
over migration
<Operational
Knowledge>
Intermediate
Contribution
Advanced
productivity loses
Average Advanced
productivity
Average intermediate
Productivity
Junior moving to
other fields
Advanced
Productivity
Advanced
productivity rate
Fraction of operational
knowledge transferred
<Junior moving to
other fields>
Normalized
Knowledge
Core Knowledge
Best Practices Model
Human resource
rotation index
<Total people in
the field>
<Intermediate moving
to other fields>
<Advanced moving
to other fields>
Importance
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Best Practices
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How are they generated
Who gets to pick them
Why do they pick them and how
How are they implemented
How are they transferred across
organizations and sectors. (public, private,
professional, industrial, services, etc)
A Small Health Care Practice Case:
Adirondack Oral & Maxillofacial Surgery
Modeling the Impact of KnowledgeBased Innovations (Best practices
implementation) in the Health Care
Sector
Stress
Reputation
And
Trust
Workload
Perception
Of
Quality
Motivation
Behavior…
t
Purpose…

This study is set up to generate an
endogenous dynamic theory of the
behavior of a small health care practice
centered in innovations implementation,
customer value, service quality, and
community relationships.
Questions to be answered
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1.What systemic structure is
conditioning the behavior of the
system?
2.Does the structure that we have right
now can deliver what we want in the
future?
3.What future can we expect if we do
nothing but the same?
Methodological Approach

The health care model will be
approached using SD (System
Dynamics) as the base approach to
generate a dynamic hypothesis of the
behavior and the University at Albany’s
Group Modeling Techniques will be
used.
Overview of the System Dynamics Modeling
Approach [Adapted from (Richardson and Pugh 1981)]
Model Use,
Implementation, and
Dissemination
Understandings of the
problem and the system
Understandings of
the Model
Model Testing and
Evaluation
Model
Formulation
Problem Identification
and Definition
Design of Learning
Strategy / Infrastructure
System
Conceptualization
Products to generate
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1. Structural Understanding of the elements
that causes the behavior of the practice.
2. Dynamic Understanding of the practice.
3. A transitional learning object to connect
efforts across the organization and to
enhance the practice’s strategic planning
capabilities through policy testing.
Operations
Community
• Administrative
and operational
standards
• Patients
• Families, relatives,
and friends
• Capacity
• Referring Doctors
• Quality of
Service
• Resource Load
Balance
Knowledge-Based
Innovation Projects
• Change Programs
Human Factor
• Administrative staff
• Doctors
• Insurance Companies
• Professional Assoc.
• Reputation and
trust
• Brand recognition
• Administrative improvement
• Doctors involvement
• Intensity of projects
• Intelligence generation
Financial
• Skills & Knowledge
• Cash flow
• Stress &
Motivation
• Investments
• Training
• Performance
Measurement System
• Culture
• Profitability
• Sustainability
Model
Cash at hand
+
Potential Investment
in Capacity
Income
Cash out
Cash In
Actual Investment
Variable operating
costs
+
Fixed operating
costs
Total Number of
Procedures/quarter
Capacity
Unhappy patients
Patients
incoming patients
Patients per unit of
capacity
Net Increase in
Referal Base
Refering
Doctors
Total Number of
Patients Served
Completion of
Patients
Reputation and Trust
Normalized
Effect of Reputation
and Trust
Unsatisfied
Patients
word of mouth
bad word of
mouth
Satisfied
Patients
Reputation
and Trust
Net Reputation and
Trust Change
Expectations for the future
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Visually and
emotionally
understand the
interconnectedness
of the system.
Generate a shared
vision of the
structure and
purpose of the
practice.

Express their
perceptions of how
their work affects to
the whole.
Accomplishments
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Employee awareness of their individual
impact has increased.
General impact captured in the first
model.
Behavior generated useful to identify
the important sectors up to now.
Future Directions
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What to explore further? (In group)
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Dynamics (Behavior)
Structure
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Grow the scope
Grow the detail
Data
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Soft. Qualitative assessment
Hard. Quantitative measurements
Projects

Best Practices: A
constructivist approach

A Professional
Organization case.
(System Dynamics Society)

Best Practices: A
standard making
approach


The establishments of
international standards in
the regulation of financial
markets
Best Practices: A
structural approach


Theory building
Best Practices: An
implementation
approach

A small private health
service case. (Adirondack
Oral & Maxillofacial Surgery)
Pieces…


International
Professional
Organization
International
Services
Organization


Theoretical Model
Empirical Model of
Implementation
A possible new approach?
How to uncover Organizational
Intelligence: Understanding the Structure
that drives the transformation of Best
Practices into Standards of Practice. (??)
Assumption: Assuring (through standards) that the
organization practices (doing) the “best” practices
(knowledge) closes the knowing-doing gap and leads to
intelligent behavior influencing successful outcomes.
Another new approach?
Uncovering Organizational
Intelligence:
Understanding the evolutionary
nature of Standards of Practice.