Quality Uncertainty and the Market Mechanism

List the difference between the hard method and the hard method, which method is suitable for the case, why it’s the suitable method?

The purpose of this study is to analyze the soft and hard approaches to problem-solving in the context of an organization and to measure the extent to which the two approaches help in solving institutional challenges. As time goes by, people and technology evolve in one way or the other. Recent technology may not be the same as that of several decades ago. What brings about these changes is a combination of factors such as social, economic, political, cultural, and even religious. The more diverse and complex they become, the more technology needs to metamorphose. Organizations, therefore, need to foresee these evolutionary intricacies and find suitable ways of avoiding or managing them. They could come as a change of preferences among customers, new regulations that are abruptly imposed upon the organizations by industry regulators, and also the need to expand or restructure business processes. One best way to tackle these complexities is to adopt a systematic approach and involve an organized process. This fact helps managers in these organizations to have clear and originative views to tackle these problems holistically.

The systems approach can be used by management in two dimensions. There is a soft system methodology and a hard system methodology. The soft system approach was developed by Peter Checkland in the early 1970s. It involves taking action on a problem situation at a particular time. It was developed using a model of human behavior that was based on rationalized stances and emphasized learning and participation and how to carry out a particular task that could lead to a solution. The hard method is commonly concerned with how an organization can achieve a known objective or goal since its formulation was based the goal-seeking. It also uses prediction, control, and optimization after which a system is designed to achieve these objectives.

The main difference between the hard system and the soft system method is that the hard system views goal-seeking as the most satisfying model of human behavior to solve or eliminate problems. SSM on the other hand involves arguing out real-world problems instead of models of hypothesized problems. This fact culminates in systematic learning of how to solve them, which is a gradual process. HSM believes in finding solutions to problems while SSM involves finding accommodation to issues. The human content in HSM is not existent while in SSM, it is high and important. When it comes to finding solutions to a particular problem, HSM asks “how” the issue is going to be tackled while on the other hand, SSM seeks to find out “what” the problem is and goes further to develop strategies on how to solve it. Furthermore, HSM has well structured and defined problems while SSM deals with ill-structured and poorly defined problems. While SSM uses complexity paradigms, HSM uses simple and systematic prototypes.

The most suitable method in NBKS’s case is the hard approach. This idea was because NBK had a well-defined problem. The existing software (VSS 6.0) could not manage multiple requests at the same time and could not provide continuous improvement of the existing software. The existing process was prone to human error. HSM assumes a scientific approach to problem-solving by enabling automation of virtually all processes thereby avoiding human contacts that lead to errors. NBK’s objective was to find a quick solution to a more effective and computerized system. Using the soft method could only mean making employees learn how to improve the situation on their own. HSM seeks to identify costs and savings, improve methods like the SDLC, and develop user requirements. Adopting SSM meant involving workers leading to a slowing down of the day-to-day activities of the bank and hindering productivity too.

Apply the soft method and the 7 steps of the soft method. Use rich picture diagrams and conceptual mapping. (Please read the question carefully). The rich picture must illustrate tasks and issues

NBK has a huge installation of computerized systems for handling of accounts in all of its branches. There is a growing concern over the efficiency of the current software system (VSS 6.0) and its ability to handle emerging problems brought about by NBK’s need to service its expansive network and plans for future growth. The bank has sought the help of Microsoft Team Foundation Server Solution to work together with its Windows Development Group. WDG is charged with the task of internal development of Windows’ programs within NBK.WDG is also in charge of the management of the software development process within NBK. Unstructured questions in the case of NBK would be how to develop an automated system to simplify the SDLC process and how to do it in a phased approach that would not interfere with the productivity or daily business activities of the bank. To solve these unstructured questions, application soft system methodology would be most appropriate. There are 7 stages in the SSM process. These stages are more inclined towards the real-world situation while some address the conceptual world.

In stages 1 and 2 the situation is defined. These first two stages highlight the problematic situation at hand so that all potential and relevant choices to be evaluated are revealed. At first, the problematic issue is determined. The challenge is not identified here but an evaluation of the scope in which the program exists is affected. NBK’s context was the creation of an effective and efficient software development program that could facilitate progressive changes of the software in use and effect several requests simultaneously. This is an evaluation without a goal and is neither constrained by particular organizational restrictions or definitions. At this point, qualitative and quantitative data is collected through observations, surveys, and measurements.

Stage 2

The problematic issue is expressed in its full richness using a tool called the rich picture diagram. This is done by drawing inferences from structures, processes, climate, people, issues expressed by people, and conflicts. This picture shows a situation where clients are involved through telephone calls. In the case of NBK, the clients could be Microsoft or regular customers of the bank. The developers can ask whether the problem expressed is very important to initiate corrective action. At the bottom of the rich text, there is the role of society and how they engage with the supporters of that particular process. Supporters on the other hand pass information to leading members of the teams who through training and experience are skilled enough to notice that a problematic situation needs to be corrected and to find out relevant opinions from the clients. There is the assessment of capital available and how they can be used to alleviate the problem and how the current system suppresses or strains the budget. What is evaluated here are the issues expressed by the clients, social reactions, weaknesses of the current system, and how the problem can be expressed in an unstructured form.

Rich Picture of NBK

Stage 3

Involves a root definition. Definitions of relevant systems are made. It represents a shift from the real phenomena to a systematic world. It involves suggestions of relevant root definitions giving an account of activities relevant to the problem issue. At first, there is a need to understand various concepts of perspectives to be drawn from the rich picture, which can also explain real-world activities. The key issues in NBK’s situation could be ensuring clients retain their confidence in the bank through efficient and reliable service and also enhancing the system security to situations where anyone can interfere with the system and undermine its normal business operations. The duty of SSM is to deal with key matters separately, try to measure their impact, and use the results to make decisions for future actions. Particular issues or perspectives can be selected and integrated into a structured and rigorous model like the CATWOE which stands for;

  • Customers- NBK would need to identify the customers who would benefit from this new system.
  • Actors- This is the group that will need to facilitate the transformation and this be leader members in this case.
  • Transformation- This is how the process is going to be carried out. For NBK’s case, it would involve the Team Foundation which would come up with a phased approach.
  • Weltanschauung – This is what makes the system that has been selected meaningful. The system, in this case, would be the Foundation Server Solution which will help to improve software team collaboration and increase individual productivity
  • Owner- This is the person to whom the system is answerable or entitled.
  • Environment- The environment determines the kind of system to be used. The root definition is done to determine the consequences of adopting some of these system elements in the CATWOE.

Stage 4

Iinvolves developing the model. A conceptual model in the root definitions is drawn up. This is basically a chart describing what the system does with regard to the root definitions. NBK’s situation can take the form of this model:

It involves activities used to perform the transformation in the CATWOE, and those that can be done at once indicating dependencies in these activities as well. Developers have to check whether the model clarifies an ongoing purpose, continuity, the process of making decisions, a way of performance assessment, system and environmental boundary, resources, interacting components, and how performance is assessed.

A Conceptual Model of NBK

Stage 5-7 involves going back to the real world. The conceptual model is compared with the real world. This fact helps to avail material for debate about how a change may occur among interested parties to the problem issue. It can be done through unstructured decisions, dynamic modeling, using a matrix approach through structured questioning of the model, or modeling the real world using a structure that is similar to the conceptual model. NBK’s case would look at the conceptual model, the basis of the root definition, and describe what happens in reality.

Stage 6 is where feasible and desirable interventions are developed. This is the stage where changes are supposed to be made to the model by way of accommodating the involved actor’s interests. There are ways of assessing how feasible and desirable these interventions are. The first is to go through the model once again using different model sub-systems, CATWOE, and perspectives. Secondly, undertaking analyses to find out who exactly has the power to take action. Afterward, social systems analyses can be done to see the relationship between beliefs, values, and different roles in the real world and the conceptual model. The analyses of the owner, society, and politics should be done parallel to the whole investigation. The owners in NBK’s case could be the managers, stakeholders, or clients. Social analyses are more concerned with the effect of change in the community and society as a whole (Depken, 2005).

Stage 7

At this stage, action to improve the situation can now be fully implemented. It involves drawing conclusions and formulation of solutions that are long-term. The system developers can evaluate the extent to which the actual issues match the logic models, the importance of similarities and differences, the impact of social, political, and cultural factors in discovering these similarities and emphasizing the differences together with the consequences thereafter. They can also evaluate the impact of those with authority and power on the situation and their behavior throughout the process and determine what it means for actions in the future.

Soft systems methodology is therefore useful under circumstances that require deep thoughts and insights together with a rigorous process. These could be in the form of multiple goals and entangled systems, different points of view or perspectives, a case where people hold different assumptions and logics, and also where stakeholders are different.

Apply different analyzing methods (“STEP /PEST”, SWOT and Log-frame analysis) and list some recommendations. Quality Uncertainty and the Market Mechanism.

PEST analyses

This kind of analysis looks at the political, economical, social, and technological environments affecting industries and companies. It is important because it keeps the organization aligned in a positive way according to the changes that occur frequently in all the above dimensions. This helps organizations to be successful. It also helps in choosing those projects that are actionable thereby avoiding failure or circumstances that would lead to large losses of money. It helps those companies that have branches in other countries or regions by making sure they adapt to their new environments properly and also make assumptions that are conscious. Some of the factors affecting NBK are more of the technological and economical environment than political and socio-cultural.

The technological environment includes the impact of new technologies, increased remote working, and reduction in communication costs. The economic side of it is the cost of labor and the impact of globalization. Looking at the impact of new technology, it is evident that NBK had to adopt a new system to manage its expanding network of branches to enhance efficiency in its operations. Furthermore, technology can enable remote working to oversee work in these branches, which in effect enhances security. The processes were susceptible to manipulation by humans and were expensive. Automating most services would mean a reduction in labor costs by involving less human activity which is of advantage from the economic perspective.

SWOT analysis

It examines strengths, weaknesses, opportunities, and threats. It helps develop a plan that makes use of existing strengths, amends existing weaknesses, and exploits opportunities, and fights off threats (Coase, 1960). Strengths and weaknesses are internal to the organization while opportunities and threats occur due to the external environment. Strengths could involve identifying the skills and capabilities that the company has, the resources present, and the reputation of the company. NBK could identify skills present within the Windows Development Group which could help provide solutions to the problem as well and assess of resources available to undertake such a project. Weaknesses could be among the management and personnel due to lack of expertise to solve technological problems or outdated equipment. NBK had a technology that was difficult to manage and that was prone to error. A step towards the adoption of Microsoft Team Foundation Server Solution would help it suppress this weakness. An opportunity was the availability of a robust process developed by Microsoft which the bank had to capitalize on since it had a good working relationship with Microsoft. The bank had a threat as well on its systems. They lacked adequate security. Failure to create and integrate a system with a highly customizable security structure would undermine its operations.

Logical framework analysis

The terms refer to an evaluative activity used to assemble and integrate system reports and program concepts. It has two main stages; design and analysis. The design stage involves the analysis of stakeholders and how they would respond to the idea of initiating a change. NBK’s stakeholders are the clients and owners of the bank (Akerlof, 1970). Consequently, the problem has to be analyzed. NBK’s key problem was inefficient software technology. The bank would have then analyzed its objectives, that is, developed software solutions from the problem to enhance SDLC and security. It would then have selected from these solutions the best alternative strategies that would have been manageable. The second stage is the design stage which involves the preparation of a log frame matrix to analyze debate and refine ideas from the analysis. It also involves drawing of work plans and describing the resources required to run the project together with a proper project budget. Using a logical framework, however, has a number of weaknesses. It does not enable monitoring of consequences that were not initially intended. It is also time-consuming and requires active commitment from project partners, team, and stakeholders therefore it would not be advisable for NBK to use it because it would slow down normal business operations.


Akerlof, G A 1970, The Market for Lemons: Quality Uncertainty and the Market Mechanism, The Quarterly Journal of Economics, vol. 15 no. 3, pp. 22-37.

Coase, R H 1960, The Problem of Social Cost, Journal of Law and Economics, vol. 3 no.2, pp.12-23.

Depken, C 2005, Microeconomics Demystified: A Self-Teaching Guide, McGraw-Hill Publishing Co, New York.

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