Conference Track 11: Globalization in the value chain

th
Paper prepared for IFSAM VIII World Congress 2006, hosted by VHB:
Enhancing managerial responsiveness to global challenges.
September 28–30, 2006 | Berlin, Germany

FROM UP-STREAM CONTROL

TO UP-STREAM ANALYSIS

Abstract

Among the guide lines of the total quality management, there is the up-stream
control. It is necessary in order to discover the factors that influence the process and have
them under control. Once entered in the outline of the economic knowledge of the total
quality, Ontopsychology goes on with the research. Japanese people had discovered
where to search, that is, toward the source (up stream), but they didn’t manage to
understand it, to explain it; remains afterwards always a non-coordinated part for the
efficiency of the business. Here it is where Ontopsychology continues the research,
“analysing it” from the root what slip out of control. And it can do it because it has the
trinacria of the three discoveries which allow the knowledge “from inside” and therefore it is
able to explain the whole internal dynamic which is acting in the company, in the firm (be it
of individual, people or capital). FOIL transforms up-stream control into up-stream
analysis. In practice, up-stream analysis is the ring of conjugation among the whole
economic theory and the advance of the ontopsychological research applied in economy
and business (up stream analysis).

Keywords: total quality management, managerial psychology, up-stream analysis.

 INTRODUCTION

The management techniques known as total quality management and continuous

quality improvement were developed in Japan. They are centred on the strategic

importance of quality, and thus support the introduction of generalized learning processes,

which are supposed to lead to optimal individual and business performance. Corporations

in the Western world are devoting increasing attention to the improvement of quality.

Initially the term quality meant conformity to technical specifications, but with time the

concept has broadened, and now indicates the excellence of businesses on the market.

Quality becomes a transversal system of direction and integration of activities and

functions, and at the same time a stimulus to verify the business’s strengths and

weaknesses and to improve it (quality control and quality assurance).

Client satisfaction was the pivot point in K. Ishikawa’s quality system. We can say

that his quality-based strategy is typically Japanese: while he did take his theoretical basis

from US research on statistical control, he did not merely imitate it, but developed it and

adapted it to the Japanese situation.

Ishikawa realized the fundamental contribution of the firm’s top management, which

in fact constituted the key of the whole corporate strategy: it is impossible to make

significant changes in the management system without complete support from the higher

ranks of the firm.

Ishikawa claimed that, in order for total quality management to be operative within

the firm, it was necessary for the staff to internalize some fundamental concepts, which

constitute the aspects of the new mentality of company-wide quality control. These points

are explained in what follows.

1. Respect for human beings.

2
 2. Quality first.

3. Market-in.

4. Considering downstream departments as clients (preventing organizational

barriers).

5. Analyze facts and talk on the basis of data.

6. Concentrating on few important things.

7. In-process control.

8. Upstream control. Taking into consideration what happens in a given process

is not enough to control efficiently the process itself. It is necessary to “look upstream” to

find the factors that influence the process, to keep these factors under control. This means

asking oneself the question of why certain problems arise. By means of illustration,

imagine that a machine has ceased to function.

− Why does it not work? A fuse has blown.

− Why has it blown? Because of an overload.

− What caused the overload? The fact that the bearings were not lubricated

enough.

− Why? Because the oil pump was not working properly.

− Why was the pump not working properly? Because the axle of the pump was

worn.

− Why was it worn? Because some mud had entered the pump.

In this case, the mud in the pump is the upstream cause of the damage. Repeatedly

asking why some undesirable effect occurs reveals the real cause, and hence also the real

solution – in the previous example, applying a filter to the oil pump. If we do not pursue this

kind of analysis, we are likely to stop at an intermediate solution, such as replacing the

fuse. An intermediate solution is not sufficient to operate effectively. It is necessary to

3
verify the upstream causes, that is, finding and controlling the factors that influence the

process.

9. Avoiding laying the blame on others..

Upstream Control

1.

When something happens to us and we do not exactly understand why, it means that

there are upstream causes that act (and indeed lead our own actions) despite or before

our volition.

In the introduction of this paper, I dealt with quality systems, and the nine points

coined by Ishikawa to form the general mentality within a quality system. Upstream control

was one of these nine points.

But it is more appropriate to speak of upstream analysis, since we are dealing with

the analysis of what comes before, of the causes. We mentioned that this method

envisages asking the question of why certain things happen the way they do (in our

example, the malfunctioning of a machine), and to approach the root of any problem.

Repeatedly asking why some undesirable effect occurs reveals the real cause, and

hence also the real solution – in the previous example, applying a filter to the oil pump. If

we do not pursue this kind of analysis, we are likely to stop at an intermediate solution,

such as replacing the fuse. An intermediate solution is not sufficient to operate effectively.

It is necessary to verify the upstream causes, that is, finding and controlling the factors that

influence the process.

This kind of control is not confined to any particular sector, but applied extensively to

all business processes. This means also that we do not have a particular professional or

department in charge of this task; rather, it applies to all professionals and departments.

4
According to the quality system, the application of this technique is indispensable for a

revival of the industry to occur, and for the workers and managers to put into practice

Ishikawa’s “mental revolution.”

This control system is considered as the supporting framework of all managerial

techniques; without it, any technique – sophisticated as it may be – would be completely

useless.

The extensive application of control encompasses:

− activities that are directly linked to the product or service;

− activities that are indirectly linked to it;

− the management of the firm as a whole.

Upstream control also has the aim of eliminating all forms of “waste” in the firm, and

hence all elements that do not add value to the produced goods. Quality control enables

us to classify the nature of such waste and to find ways to eliminate it.

By asking the question why something happens (Ishikawa claims that the real cause

is always at least four whys away) we are gradually “pruning” factors that hide the real

cause of the problem. Thus we manage not only to find the problem at the root, but also to

gather the real picture of the situation, based on which we can then take steps for

investment, expansion, etc – something that was not possible before pruning.

There are many ways in which this method could be applied successfully to our daily

lives as well, particularly the idea of upstream control. How can we find, identify the

upstream causes? In other words, we need a method to find the causes of the effects that

we suffer.

Now, there is a small detail… About 80% of our mind escapes our rational and

conscious control, and yet it acts and conditions our behaviour and daily actions. That is,

our consciousness lacks the means to go beyond – say, optimistically – 20% of the causes

of the reality we are experiencing at a given moment. If upstream control is to encompass

5
the remaining factors, it must pass through the Ontopsychological method, which offers

the instruments for investigating, understanding and analyzing the causes residing in the

remaining 80%.

Upstream Analysis and Ontopsychology

1.

Even official culture has recognized the objectivity of the unconscious: our

functioning in business is proportionate to our logical conscious ego, which only accounts

for 20-30% of our potential. Traditional upstream control is limited to this area. The

remaining 70-80% escapes our control and is uncoordinated with our efficiency. By

combining the method of upstream control with the integral analysis of the psychodynamic

causality that we refer to as the unconscious (and the Ontopsychological methodology

makes this analysis possible), we can turn the remaining 80% of our potential into a force

working toward economic results.

I would like to stress the extraordinary power of the Ontopsychological method in

making knowledge practically available.

In any professional and existential situation, one of the questions that we need to ask

ourselves is: how do I earn my living? It is fundamental. If you are not satisfied with the

way business goes, you need to apply upstream analysis, and this is precisely the

Ontopsychological approach.

There is one paramount factor, in the long sequence of whys: how coherent is the

operator in his activity? and, does he have the rational premises, the elementary norms for

making business?

6
 I worked for some time in the selection process of managers to be hired by North-

American firms. It was fundamental to know whether the psychical traits of the candidate in

question showed a certain level of constancy. Who is he? what are his habits? how is his

sexual life? what are his loves, his memories, his political preferences? that is, is he able

to go beyond his emotions and his stereotypes in order to make a profit? Shareholders do

not care about his loves, wife, children, political credo, etc; they care about the dollars they

invested.

2.

The Japanese are pursuing a research on the human behaviourome (a word coined

on the model of words like genome). This direction of research concentrates on fixed

ideas, that is, mental stereotypes. The result is that individuals do not have many ideas: an

average individual has approximately eleven to thirteen stable ideas.1 People generally

believe that imagination is cluttered with hundreds of ideas. Personally, I believe that

human beings have two or three ideas, which are constantly revisited by the reflected

matrix.

Essentially, the behaviourome theory envisages a small number of (yet to be

identified) elements that determine the individual’s social life, private policies, interests and

priorities. Researchers claim that they might soon find the somatic structure of these

precipitates of the psyche.

Ideas would derive from the syncretic interaction of ideas, constituting a sort of

“cognitive DNA”. Thought, decision, choice, imagination derive from the ideas in our

behaviourome. These are the neurological agents that determine the unfolding of the

subject’s entire life, determining the subject into a condition of compulsive repetition,

regardless of the historical or emotive circumstances.

1
This discovery is due to Japanese communication industry giant NTT and its partner DoCoMo, and a
summary has recently appeared on the Italian magazine L’Espresso, 31 Oct. 2002.

7
 Let me make a practical example. On one occasion, I asked two persons from my

audience to read a page of a book. Everyone who was present at the lecture was given a

copy, and I had chosen this particular passage and these two people, with different cultural

backgrounds, quite intentionally. I was aware of the complexes of both individuals, and I

knew that the passage would cause opposing reactions: one particular line would cause

one of them to read: “We cannot admit that love…”, and the other to read “We must admit

that love…”. I asked them to read the passage aloud more than once, saying that one of

them had read erroneously. Each of them probably thought that he was in the right, and

that the copies differed. At this point I asked them to exchange their copies and to read

again, but the situation did not change. This means that man reads, understands and

perceives in relation with how he thinks, in relation with his behaviourome; his perception

is “behaviouromatized”. We are dealing with a material projection on reality: man projects

form and matter where there are no corresponding elements in reality.

Behaviourome researchers are currently trying to identify elementary ideas, which

then specify and structure human attitudes. Why do individuals follow a given political

credo, think about money and about philosophical questions in a given perspective? The

idiomatic DNA determines the answer to any question of this kind.

Although individuals are naturally provided with the senses, the psychical traits

determine organic functionality; that is, the organs of the senses are altered by

behaviouromatic structures: the ear hears according to how otherness has been

internalized during childhood. I was already aware of this reality some thirty years ago, and

I am glad that current research is taking these aspects into its scope. This research is still

at an unofficial, tentative, somewhat hypothetical stage. I know that the basic concepts are

valid, and affirm that an individual has no more than three fundamental ideas, determining

his behavioural traits.

8
 3.

This is the point where up stream analysis comes into play. It proceeds by analyzing

all the processes in the firm, and finally turns its research toward the the person who,

acting at the unconscious level, bears the responsibility of the events.

We have already mentioned the preponderance of the unconscious, by 70-80%.

Human beings do not use the potential that they are naturally, genetically endowed with.

Senility begins, in my opinion, at age six. There are, on the other hand, few individuals

whose neurons continue to augment.

Why are we so ignorant with respect to the unconscious? Why do we limit ourselves

to the logical-historical ego (20%) when we try to grasp something that is much greater

than the logical-historical ego itself?

The most typical character trait shared by all human beings is self-sabotage. If we

analyze failures and bankruptcies, it becomes apparent that in many cases the subject has

been responsible for sabotaging the chances that opened up to him. Up stream analysis

works to remove these mechanisms of unconscious self-sabotage. Hence the importance

of metanoia, radical change and upstream analysis; that is, considering man “at the root”,

“at the source”. When we apply this perspective to businessmen, we find that they are

stereotiped in reading and interacting with the context, prisoners of compulsion in their

repetition of attitudes that leave no space for evolution.

4.

FOIL’s idea of leader in the business area involves the ability of coordinating and

manipulating intuition. This requires freedom from behaviouromatic circuits; intuition is

linked to the human being’s interactive wholeness: he operates totally, holistically.

Effective business relies on total quality – total quality according to the parameters of

the customer. Who is the beneficiary of the work? Customers need to trace the business’s

profile. The ability to respond with total quality to the requirements of the client is the key to

9
a successful activity. The essential parameter, the criterion for economic success is the

capacity of responding to customer needs with total quality. There is usually not one

customer, but thousands, depending to the range of action of the entrepreneur/chief

executive, and the needs that he has decided to address through his activity. The

perspective I am outlining has a significant difference with its counterpart in the field of

traditional economics: the “total quality” I am referring to is not an end in itself. Let me

make an example: many people enjoy combining vodka with red pepper. If this is indeed a

widespread demand, then a producer should aim at the best efficiency in the context of

vodka and red pepper, the best performance with respect to that market. The customer is

the determinant, the protagonist of the results reached by the successful businessman.

CONLCUSION

Up stream analysis is therefore fundamental in economy. A leader cannot enter into

economic activity without being an expert reader of his own psychology, the psychology of

those who surround him and the society. He must know all of the languages that an

individual uses while he makes his impact. In a person, it is not just sex, aggressiveness,

money and power that are at work. There is also irrationality, the dark side, and the

illogical. Imagining a coherent, perfect economy means wanting to imagine the world of

economy as if it were a machine. Yet, the determinant is the human element.

To recap, the leader must have wide experience and psychological knowledge,

experience and knowledge of society (with respect) and then (or even before) a constant

metaphysical reference point.

Within a more technical context, a total quality with competitive skill and efficient

monitoring of customer relationships together with upstream control – both applied to the

variable drive of the market – are not yet enough to remain immune to crashes or drops in

10
profit. These are valid points but we need other rational criteria that give the constant

adjustment to keep clear of the danger of crises.

The constant error that I have noted in everyone – captains of industry, managers,

executives, large banks – was never due to an external problem – a sudden market

change, a war, a theft, broken agreements – but to a situation of unconscious self-

sabotage. More than in external historic objectivity, the problem is to be found in the error

of the subject itself.

This is where the simplicity of up stream analysis comes into play. This provides

some criteria that combined with the current methodology provides a balanced rationality

of administration. The Ontopsychological methodology allows for a true selective

perception to implement the solution for one’s own core business in the continuous fractal.

This gives the coordinates of error or self-sabotage, as well as a strategy for organizing

recovery and advantage.

11
 References

Campbell, J.P., Dunnette, M.D., Lawler, E.E. III, and Weick, K.E., Managerial

Behavior, Performance, and Effectiveness, New York: McGraw-Hill, 1970.

Cherrington, D.J., Organizational Behavior, Boston: Allyn and Bacon, 1994

Galgano, A. La qualità totale, il Company-Wide Quality Control come nuovo sistema

manageriale; Il Sole 24 ore, 2002.

Kostranias, E , E. Banchi, Glossario del Project management; D’Anselmi, 1992.

McGregor, D., The Human Side of Enterprise, New York: McGraw-Hill, 1960

Meneghetti, A. (2003) Organizational psychology. Fostering Ontopsychological

Interdisciplinary Leadership skills: Milan.

Meneghetti, A. (2004) The Entrepreneur's Personality. Fostering Ontopsychological

Interdisciplinary Leadership skills: Milan.

Meneghetti, A. (2004) The leader’s psychology. Psicologica Editrice: Rome.

Meneghetti, A. (2002) Economics and politics, Psicologica Ed.: Rome.

Salvemini, S. Le variabili individuali in A. Rugiadini, Organizzazione d’impresa;

Giuffrè, Milano 1979; p 109.

Shumpeter J. A., (1883-1950), Theory of Economic Development: an Investigation on

Profits, Capital, Credit, Interest and the Economic Cycle, SP: Abril Cultural, 1982.

Taylor, F. W., The Principles of Scientific Management; Dover 1998.

Timothy L. O’Brien and Landon Thomas Jr.; New York Times; November 07, 2004.

12