Effectiveness by integrating planning and budgeting
This is a summary of Chapter Six of The Systems Approach (TSA). It is part of a series of blogging posts, which will cover the whole of Churchman’s The Systems Approach (TSA), a rather well-known book he wrote in 1968, of which I am convinced that it hasn’t lost any of its relevance to the decision-making problems of the world today. You are advised to first read my summaries of the preface and chapters 1, 2, 3, 4 and 5 since I will avoid repetition as much as possible. As usual, the paragraph numbers refer to the numbers in the concept map.
1. Program budgeting … is also known as Program Planning & Budgeting (PPB). It uses an integrated approach that combines planning with budgeting to achieve whole system effectiveness. One of its key methods is to create an overall picture of needs and resources, especially in a situation where multiple entities (departments, sections etc.) are dealing with a single broad issue and where oversight is lost or resources are wasted because of unnecessary competition between entities or undesirable overlap or gaps in their activities. The idea has been applied in the USA↗ as early as in the 1920s by General Motors, during World War II, and again during the ‘heydays’ of the Cold War to control the many costly weapons development programs. It a is currently undergoing a revival in a simplified and scaled-down form as ‘performance budgeting’↗ in low-income countries such as Mali and Ethiopia, but also in high-income countries such as New Zealand, South Africa, and Great Britain.
2. Alcoholism Modern societies have developed multi-faceted government programs to deal with alcoholism as a social problem in ways that avoid prohibition and prevent excess. The problems range from alcohol-related accidents and low worker performance to abuse by alcoholic relatives. Alcohol can also be beneficial – socially, mentally, physically – if taken in moderation. A precise formulation of the problem of alcoholism is not simple, because it could easily lead to the formulation of programs that make the problem worse. It is doubtful that an objective such as ‘reducing the average amount of alcohol in the citizen’s bloodstream’ would be appropriate. The problem is that such a definition “fails to express the real problems that are associated with alcoholism.” (TSA 83). Instead, Churchman phrases the objective of the mission as: “the minimization of social damage caused by alcohol subject to the condition that the opportunity of consumption by safe social drinkers remains the same.” (TSA 85-86)
3. Program activities With this preliminary definition the activities that affect – either positively or negatively – the social damage that is produced by alcoholism can be considered: (1) prevention of alcoholism; (2) remedial activities; (3) control by means of medical, economic, legal, or social activities; (4) research; and (5) administration and general support of alcoholism missions. These five general programs are quite broad and must be broken down in subprograms to be able to analyse them, see the activity matrix in table 1 below (for reasons of compactness and overview I have combined tables 1 and 2). Even at this more detailed level, some overlap and gaps cannot always be avoided. But it must be kept in mind for future planning. Another problem is that of quantification, e.g. in man-hours or money. The best measure is that which most clearly contributes to the overall measure of performance of the system, i.e. the decrease in social damage.
4. Needs and demands Activities by themselves mean nothing. It is also necessary to determine the existing needs and demands for the activities. This is best done by classifying the needs of various kinds of people, the ‘customers’ of the alcoholism mission, and express these as demands made on the various programs and subprograms of the mission (see Table 2).
5. Analysis The situation is now very much as described in chapters 3 and 5 (see esp. the Considerations paragraph), so each subprogram is an activity center or component. The more activity in each center, the higher the overall measure of performance (or key performance indicator, kpi), the less social damage caused by consumption of alcohol. Each activity in principle has a “rate of contribution” to the overall measure, i.e. for each activity there is a coefficient of performance that is roughly estimated from the requirements matrix and the cost of the activity. The optimal design is one that maximizes the overall score by a rational allocation of activities in each subprogram, subject to manpower and funding constraints. In the actual practice of PPB, the requirements matrix is compared with the activities matrix to arrive at a judgment about the costs and benefits of each activity. The mere size of an activity should not be taken as evidence of its true benefit, but most be related to its cost. This is likely to require considerable detailed economic analysis.
6. Concerns about PPB One of the problems is that PPB is not very scientific and objective: wherever serious gaps in knowledge occur, PPB must make judgments, often very subjective and ill-substantiated judgments. Churchman suggests several such situations: (1) an activity can be effective in one setting and ineffective in another, depending on the social psychology or group dynamics and the way in which these are affected by the activity; (2) perhaps it is possible to exclude the part of the population that will never show harmful drinking behaviour from the program activities. This suggests that the research mission could be directed to these problems. A difficulty is that for many administrators of alcoholism programs, “research” means medical research, and not social research. Moreover, this research policy cannot be separated from research into other aspects of society such as education, health, law, the military, space, energy etc. Another difficulty is that social research is conducted in a fragmented way with results “that at best have a mild interest to the reader, and at worst are totally irrelevant for decision-making purposes.” (TSA 102). Moreover, the academic community does not want to be told what research to conduct.
7. The decision-maker paradox The systems approach means looking at each component in terms of its contribution to the larger system. This brings out gaps in the information required to make good decisions. However, the systems approacher has no full decision-making power (control) over the activities needed to produce the necessary information. This suggests that he had better delve more deeply into the role of information in the managing of systems. The question of the benefits of additional information and how to influence research will be discussed in chapter 7.
Churchman, C. West (1968). The systems approach. New York: Delta. Worldcat.
‘The systems approach’ of Churchman is not available online, but some other books, reports and articles are. You may try for instance Churchman, C. W. (1968). Challenge to reason. McGraw-Hill New York. PDF. If you are looking for a more practical systems approach you may try Williams, B., & van ’t Hof, S. (2016). Wicked Solutions: a systems approach to complex problems (v. 1.03). [Lower Hutt]: Bob Williams. Amazon or partial preview.