Tuesday, May 19, 2009

Management and implementation philoso...

Management and implementation philosophy for your life - how it started out

My professional background is as a control engineer. In addition to engineering, I have an interest in business management and how we can organize our lives to ensure happiness. In periods, especially in university, I have felt stressed about fulfilling my own expectations. I have been worried I would not be able of achieving my goals. Towards the end of my Master's degree in control engineering, I found it more challenging to determine how to stay in control of my life and my own happiness, than to solve the technical problems related to my research. Unfortunately, the research did not look good, most likely because of my stressed out state of mind. I had to deal with my inability to focus on what's important. I had to lay out a system. 

Deep down, as I was, in the theories of control engineering and performance of industrial machines under uncertainty, the natural approach for me was to take inspiration from process control when setting up a self management and motivation system. In a typical industrial process, there are several layers of decisions, separated by time (how often decisions must be made). First I explain how this system works, then how we can adapt it to less technical problems. 

At the top level in managing an industrial process is economics. Economics can be translated into a profit function, and we seek answer to the question: "how should I set up my production to maximize profit"? Using a model of the process, we can then calculate how much we should produce of our product per time (say 1000 gallons / day of diamond extract) and at what quality we should do so. This doesn't say how to do it.

An industrial process may have certain elements that are unstable. Before anything else is done, these elements should be stabilized. This is usually done using automatic control. One example of an unstable element is a tank with a drain. If we do not control the level in the tank by adding more contents, it will eventually go empty. To remedy this, in industry, we measure the level in the tank and adjust addition of more diamond extract accordingly, to ensure the tank level is within acceptable limits. 

After stabilizing all unstable elements we need to start thinking about out true goal: profit. We know how to set all decision variables (feed rates, temperatures within process equipment, etc.) to achieve optimal profit for an assumed set of conditions. Reality is, however, very uncertain. Making a plan once is not enough. Unforeseen events are going to hit our production machinery, and the question is, what to do then? Such unforeseen things can be change in the ambient temperature which can give more or less heat loss, a change in the feedstock to the process, making it necessary to add more cryptonite to get the diamond extract, et cetera. The point is, when external things change, so does the process. And the optimal way of making profit. 

There are two fundamentally different ways of looking at this:

a) we can try to estimate what all of these conditions truly are and optimize again, and then implement the new plant. Then we wait a while and repeat. In industry, this is commonly done and is known as model predictive control. It requires good understanding of the connection between our actions and their outcomes.

b) An alternative we can try, is to find things to measure that do not change much in their optimal values when the environment changes. We find something to hold constant, and when we do so, the inputs (flow rates and so on) will automatically take on their new optimal values, or at least, almost so. This strategy is often used by businesses. They call such measured variables key performance indicators (KPI).

We are going with the KPI approach. We thus have three layers; 

Optimal planning --> Adjustment based on KPI values --> Stabilization

Let us consider how we can apply this to managing how we live. Our optimal performance is most certainly related to profit, but not profit alone. The overall optimum is happiness. However, it is very hard to see the relationship between our daily decisions, and our long-term, overall happiness. We therefore divide the problem into separate problems that we hope to work with independently. When I first started thinking about happiness, I came up with a few categories that seemed important to me. Those were: 

- Love (I did have a girlfriend)

- Money (being poor is tough)

- My Master's thesis

- How others see me

I have kept all of those, and added a few more. Let us stick to those four and see how we can apply the management philosophy of industrial process to them. Let us start with the bottom one; building a reputation and adjusting your branding strategy when the social climate changes. This will be the task of our next posting. Hope to have the post ready shortly.

No comments:

Post a Comment