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The 95% Solution

Organizations don’t need structured management systems. Hard work, knowledge and experience will make organizations work effectively. In the old days we never had all of these systems and procedures and instructions and we got the job done.

This is true. If your objective is to do things right 95% of the time. But what about the other 5%?

Management systems are created and designed to deal with the 5%. Often as an auditor I was confronted with people who didn’t see the need for structured systems. Inevitably they made the statement, “We get things right without systems. Well most of the time anyway.”

Consider for a moment an organization where there are 20 steps from the receipt of an order to the delivery. If each step works independently at 95% effectiveness – the correct product is made in the correct way and in the correct time frame 95% of the time – at the first step they would experience 5 defects. Therefore to create 100 good products they would have to make 105.

At the second step if it were 95% effective the organization would experience 5 more. Now in order to ship 100 they would have needed to produce 110 at the first stage. After 20 steps the organization would have experienced 100 defects. In order to deliver 100 effectively, they would have had to start with 200. And that is if the processes are actually working at 95%.

Obviously 95% – while a great result in school – is not nearly good enough in the work of organizations.

Therefore we have management systems which are designed to create an environment where 99.999% success is achievable. And, if your management systems are not creating that environment then the problem is with the management system.

To steal the essence of another saying – “It’s the System Stupid.”