Systems Thinking and Operations Processes for Service Models

The Garage:

From the start, there was always a garage. Legend says Bill and Dave used to hang out there, and that’s how Silicon Valley started. I once met an entrepreneur living in Palo Alto and he told me “I have a running path, and that takes me through all that important garages” - what he meant is a 19 kilometers path starting at Addison Avenue and ending in Crist Drive. On his way he passed a couple of garages which became part of Silicon Valley’s history. Apart from the garage which Bill Hewlett and Dave Packard got in 1939, he has probably also passed through the garage which Larry Page and Sergey Brin rented in 1998 and Steve Job’s childhood home, passing also to Facebook’s first real office HQ and PayPal’s early office where Elon Musk, Peter Thiel and Reid Hoffman started.

Google, Facebook, PayPal and Apple all have their own stories to tell, but I had the chance of joining HP in 2007 and ever since the Company never stopped to surprise me. But before I start to tell you about innovation and technology at the company which infused the Silicon Valley DNA, I’d like to bring you to a darker side which started in the early 1990’s. Thanks to Jack Welch and General Electrics, sometime in the 1990s the Full Time Employee (FTE) based performance and workforce management system was standardized, especially in support functions. GE created an FTE Management culture, involving a couple of interesting things thatI will later explain, but just to give you an idea of benchmarking headcount per function (for example Accounts Payable per 10,000 invoices). FTE Productivity became a key process indicator, to justify cost reductions. Internal charging models forced business units (BUs) to pay for shared services using FTE or transaction per volume. Then finally, reassessing redundant FTEs as part of Lean and Sigma process improvements, usually done by Lean Six Sigma Black Belts. Six Sigma is a data-driven methodology developed by Motorola, focused on reducing variation and defects in processes to improve quality and consistency, at least in theory.

Understanding both methodologies and what companies like Hewlett Packard did with that over the last three decades is key, but before we continue, let’s get back to 1939, when Bill Hewlett and Dave Packard were Stanford grads and founded their company in a rented garage, with an initial investment of $538.

The first half-century:

Time is passing differently for big companies. While the 20th century had the first half dealing with the losses and lessons from the first and second world war, Hewlett-Packard started in 1939 and celebrated 50 years in 1989. What happened during this time still has an impact on much of what’s described in these articles.

1939 was a good year for Bill and David. They formally established a company in January, and would get a major commercial sale order for a movie to premiere at the Broadway Theatre in New York City. They created an analog device used for an immersive experience, much like what we see today with Dolby Surround using digital speakers. Walt Disney studios ordered eight audio oscillators to calibrate sound, a technological innovation that would change the way people watched movies and animations in theatres. However for the rest of the world, that same year would bring a much different kind of change.

Adolf Hitler invaded Poland in September, triggering World War II. The Netherlands would be occupied in May 1940, just weeks after animator Paul Driessen was born. Foreign films were banned, and the movie Fantasia would be released internationally in the 1950s and 1960s. It’s reasonable to assume Driessen encountered it as a student or young animator. Abstract storytelling, music-driven rhythm and hand-drawn animation would become a staple over the next decades, and influence generations of animators and filmmakers. On the flip side, Walt Disney’s release of Fantasia in November of 1939 was very challenging. Fantasound was hard to install and used in only 12 theatres. Nearly one year later Pearl Harbour would be attacked, and the United States would join the War. Bill and Dave made significant contributions to the US wartime technology during World War II, shifting from civilian products to military applications like frequency and signal generators. They were vital for the effectiveness of radar, communication, testing and quality control.

Meanwhile, under Nazi regime the four major extermination camps located in occupied Poland saw 3 million people murdered. Millions of non-jewish Poles were also killed, imprisoned or sent to forced labor. The Polish Underground State operated secretly, with its own schools, courts and military organized an uprising in 1944 but were brutally crushed. The atomic bombings of Hiroshima and Nagasaki in August 1945 had 200,000 people dead. Japan’s infrastructure and economy were near-total collapse, and under US occupied territory implemented industrial rebuilding, new constitution, land reforms, and demilitarization. After 1945 Poland remained under Soviet influence until 1989, enduring economic hardship, political repression, and limited freedoms. Both countries would play a part of Hewlett-Packard’s history over the next decades.

Lean Six Sigma:

What Bill and Dave did in the second half of the 20th Century was assembling new products, shipping them, making sure customers were happy with what they got and paying for the products. At a certain point I bet they decided to hire more employees, and some of them remained at HP until they retired. They were using computers to record financial transactions, sourcing new suppliers and partners, ensuring other HP offices were open in their country. At a certain point they opened offices in other countries and had to pay taxes, and behind all that are the processes which today became so engrained in shared services and outsourcing back-office functions. The front office was always the face of the company, the nice men and women selling the products, either in shops or directly to other businesses.

Suddenly things became hard to manage, that’s when Lean Six Sigma (LSS), the combination of methodologies adopted so eagerly by General Electrics in the 80s, became the mainstream philosophy of Shared Service Centers. LSS was used by Technology and IT Companies like HP and IBM. Financial Services and Banks like Credit Suisse used that, not to mention manufacturing companies like 3M where an army of Lean Six Sigma Black Belts appeared. Even Consulting Services and companies like EY used LSS, because it provided a safe way to look at data, to understand trends and analyze them, and even predict the future.

Regardless of the horrors inflicted by the Allies on War, Japan became under close watch of the United States, and had to be rebuilt fast. The collaboration between people like Juran and the experts of Toyota and Motorola pushed further the boundaries of finding more efficient ways to reduce defects and variation, to make processes more efficient.

That’s all connected to my early experiences at Hewlett-Packard when I started in 2007 as an entry-level Purchasing Administrator (PAD) clerk. My work consisted in reviewing purchase requests for HP customers based in Portugal, and if finding anything inconsistent contacting the person that submitted the request (requestor). Sometimes that would require mediation of a buyer, and we as PAD agents had to follow operations manuals and abide by tax regulations in Portugal. We talk about the evolution of roles because of emerging technologies, and that’s a good example. The only reason I was hired was apparently because of my language skills, nobody was interested in my background with digital marketing and at that point I had to give up any hopes of finding a more suitable opportunity, and became the shape-shifter.

PAD agents no longer exist, they are a great example of a process and a role which was replaced with RPA. What happened with those agents is not that they lost jobs, they became specialised in other functions. In my case I developed an application that helped customers to fill in certificates for avoidance of double taxation, using my previous experience. That was a big hit, and my next role would be on a team which received phone calls from customers in Portugal and Spain, so I had to brush up my Spanish. I implemented another improvement project, got certified as a green belt and in a short space of time became team leader. My wife got pregnant, we had twins.

That moment changed everything. Not just in my personal life, but in how I viewed time, flow, and complexity. Other parents told me that kids will do that magic, they challenge your perception of norms and predictability, of control. I thought initially it was an exaggeration but soon began noticing the same process patterns I had in the office. Me and my wife, we were a team facing how our time and energy was spent and we had not only nappies and bottles everywhere but parts where the process would need improvement, dependencies and times where we had to adjust or answer to emergencies, feedback loops and the constant need to improve things. Our routine was nap schedules and feeding cycles, which amusingly I thought was similar to procurement chains and customer queues.

This was when I truly started to understand that every activity with an input and an output has a process. That bike was designed by an engineer, and has the ability of converting human interaction into movement. Processes are living things, not the boring diagrams on PowerPoint slides, but the lived sequence of interactions that make things happen, or stop them from happening. I saw that even the most robust systems are fragile if people aren’t considered, and while life was progressing I started to notice that Lean, Six Sigma, RPA, automation, metrics, all that fall short without empathy and adaptability. A perfectly designed process on paper still needs to be navigated by real people, with real constraints and emotions, and data sometimes become a trap.

By the time my choices got me into leadership roles, I wasn't thinking in terms of what the job descriptions were anymore. Thinking in terms of systems became an area of interest, and people more clever than me started to show me how we could trace, for instance how one failure in communication could ripple across departments. From our team, we could see how poorly designed processes didn’t just delay results but drained morale. We started to advocate for solutions that considered both performance and the experience of the people performing the process. Slowly, we began shaping not just workflows but culture, results and the hidden meaning behind the numbers.

From Human Effort to System Flow:

The garages of Palo Alto where brilliant minds started to shape the technology and new ways to do things borrowed somehow the DNA of adaptability and resilience of the cubicles of a global shared services center in a distant Eastern European Country. That was also a process, teaching me a great deal about people, systems and change.

For business service leaders, digital transformation simply can’t be achieved only through the use of tools or technology. That requires an intentional understanding of how people, processes, and platforms connect from start to end. Process thinking is not about controlling inputs and outputs, but enables visibility, coherence, and adaptability at scale. As organisations introduce AI into operations, the quality of outcomes will depend on the technology, and most important of all on the clarity of the processes it’s built upon. That clarity only comes when we stop treating processes as static instructions and start seeing them as dynamic systems. To gain more excellent insights from our SSO Network, please join us for our upcoming Intelligent Document Processing Virtual Summit.