Chernyak's Methodology

Given the enormous and essentially unlimited variety of problems solved by systems analysis methods, it would be difficult to expect the development of a single set of tools suitable for all cases. At different stages of research — which progresses from an intuitive and rather loosely formulated statement of the problem to the selection of optimal solutions using rigorous mathematical methods — a highly diverse scientific toolkit is naturally employed. It therefore seems advisable to first establish the fundamental sequence of stages in systems analysis.

An analysis of methods proposed by various authors leads to the conclusion that there is a fundamental unity in the sequence of conducting systems analysis, regardless of the goal or the object under study. Nevertheless, we do not consider an eclectic approach sufficiently acceptable in this case and propose a new classification of the stages of systems analysis. It takes into account all the principal stages of various classifications , following the principle of logical sequence and linked to the fundamental propositions of systems theory that underlie systems analysis. The suitability and convenience of the proposed classification have been verified in a series of systems studies at all major levels of management.

The fundamental sequence of stages and tasks in systems analysis

1. Problem analysis.
2. System definition.
3. Analysis of the system's structure.
4. Formulation of the overall goal and system criterion.
5. Goal decomposition, identification of resource and process requirements.
6. Identification of resources and processes; bottom-up goal synthesis.
7. Forecasting and analysis of future conditions.
8. Evaluation of goals and means.
9. Selection of alternatives.
10. Diagnosis of the existing system.
11. Construction of a comprehensive development program.
12. Designing an organization for goal achievement.

Description of stages

Stage 1. Problem analysis

• Does the problem exist?
• Precise formulation of the problem.
• Analysis of the logical structure of the problem.
• Development of the problem in the past and future.
• External connections of the problem with other problems.
• Fundamental solvability of the problem.

The question of whether a problem actually exists is of paramount importance, since the application of enormous effort to solving non-existent problems is by no means an exception but rather a quite typical case. Correct and precise formulation of the problem is the first and necessary stage of any systems study. As is well known, a successful formulation of the problem can be equivalent to half the solution.

Stage 2. System definition

• Task specification.
• Determination of the observer's position.
• Object definition.
• Identification of elements (determining the boundaries of system decomposition).
• Identification of subsystems.
• Definition of the environment.

To construct a system, the problem must be decomposed into a set of clearly formulated tasks. In the case of a large system, these tasks form a hierarchy; in a complex system, they form a spectrum — meaning that entirely different tasks in different languages will be solved in relation to a single object. The observer's position fundamentally determines the criterion for solving the problem. Defining the object is only at first glance an easy task; in some cases, it constitutes the greatest difficulty of the study.

Stage 3. Analysis of the system's structure

• Determination of levels of hierarchy (in large systems).
• Determination of aspects and languages (in complex systems).
• Determination of processes and functions (in dynamic systems).
• Identification and specification of management processes and information channels.
• Specification of subsystems.
• Specification of routine processes (current operations) and development processes (goal-oriented).

Arbitrary identification of subsystems and their associated processes inevitably dooms a systems study to failure. While in technical systems — at least in their material part — the structure of subsystems is clearly discernible, in systems of economic management all structural relationships are not only non-obvious but also strongly concealed behind relationships of administrative subordination. When solving current problems of economic management, both objectively — in terms of the quantitative distribution of effort — and subjectively — in the minds of organizational personnel — routine procedures obscure the goals and processes of development. Identifying and distinguishing these goals and processes from routine operations requires not only rigorous logical analysis but also effective communication with management personnel.

Stage 4. Formulation of the overall goal and system criterion

• Identifying the goals imposed by the supersystem.
• Identifying environmental goals and constraints.
• Formulating the overall goal.
• Determining the criterion.
• Decomposing goals and criteria across subsystems.
• Synthesizing the overall criterion from subsystem criteria.

The formulation of the overall goal of an organization and especially the construction of a criterion for the system's effectiveness is in no way possible through polling public opinion; it represents a complex logical procedure within the framework of systems theory concepts, one that nevertheless requires a subtle knowledge of the specific economics and technology of the object under study.

Stage 5. Goal decomposition, identification of resource and process requirements

• Formulation of top-rank goals.
• Formulation of goals for current processes.
• Formulation of efficiency goals.
• Formulation of development goals.
• Formulation of external goals and constraints.
• Identification of resource and process requirements.

In large and complex economic entities (and it is precisely with such entities that systems analysis deals), the overall goal of the system is so far removed from the specific means of achieving it that the selection of a solution requires extensive, labor-intensive work to link the goal with the means of its implementation through goal decomposition. This important and labor-intensive work is, as a rule, central to systems analysis. It gave rise to the goal tree method, which is the principal — if not the only — instrumental achievement of systems analysis.

Stage 6. Identification of resources and processes; bottom-up goal synthesis

• Assessment of existing technology and capacity.
• Assessment of the current state of resources.
• Assessment of projects being implemented and planned.
• Assessment of possibilities for interaction with other systems.
• Assessment of social factors.
• Bottom-up goal synthesis.

In a considerable number of cases, especially when dealing with non-productive and particularly non-economic systems (healthcare, education, and a whole range of others), it is not possible to express the goal and the criterion of development effectiveness explicitly through logical reasoning. The path of analysis from "natural human needs" is unacceptable for the researcher due to their continuous development and change. In such cases, one must proceed in a certain measure along the traditional path: from an analysis of the current situation and the level achieved, through sequential forecasting.

Stage 7. Forecasting and analysis of future conditions

• Analysis of stable trends in system development.
• Forecasting the development and change of the environment.
• Prediction of the emergence of new factors that strongly influence system development.
• Analysis of future resources.
• Comprehensive analysis of the interaction of future development factors.
• Analysis of possible shifts in goals and criteria.

Systems analysis deals, as a rule, with development prospects, sometimes quite distant ones. Therefore, the greatest interest attaches to any information about the future — about future situations, resources, scientific and technical discoveries and inventions that will fundamentally transform economic systems and the processes occurring within them, as well as future systems of social values that will significantly influence changes in the balance and, in a number of cases, the transformation of goals and criteria. For this reason, forecasting — obtaining information about the future using scientific methods — is the most important and undoubtedly the most complex part of systems analysis.

Stage 8. Evaluation of goals and means

• Computation of criterion-based evaluations.
• Assessment of goal interdependencies.
• Assessment of the relative importance of goals.
• Assessment of resource scarcity and cost.
• Assessment of the influence of external factors.
• Computation of comprehensive calculated evaluations.

A whole range of social, political, moral, ethical, and other factors that cannot be disregarded in systems analysis — since they sometimes exert a decisive influence on the formulation of goals and the selection of means for their implementation, as well as on the assessment of resources — cannot, in principle, be measured quantitatively. The only way to account for them is to obtain the subjective assessments of experts and specialists, both on the problem in question and on a broad range of interrelated problems. Since systems analysis, as a rule, deals with unstructured or weakly structured problems — that is, problems lacking quantitative assessments — obtaining expert evaluations and processing them appears to be a necessary stage of systems analysis for most problems.

Stage 9. Selection of alternatives

• Analysis of goals for compatibility.
• Verification of goals for completeness.
• Elimination of redundant goals.
• Planning alternatives for achieving individual goals.
• Evaluation and comparison of alternatives.
• Combining a set of interrelated alternatives.

The discrepancy between needs and the means of satisfying them constitutes a law and the most important stimulus of economic development. Since the concept of a goal is inseparable from the concept of means for achieving it, the central point of decision-making in systems analysis is the pruning of goals — eliminating those goals that are deemed insignificant or that lack the means for achievement — and the selection of specific alternatives for achieving an interconnected set of the most important goals.

In systems studies of the "engineering" type and of relatively small scale, "selection of alternatives" is considered the most important, if not the only, task of systems analysis. In problems of economic management, pruning the goal tree and selecting an interconnected set of alternatives represents an important task, especially given that scientific and technological progress, together with changing environmental conditions, generates an enormous number of alternative measures for achieving a set of economic goals. These measures must fit within resource constraints, since the law of planned development of the national economy dictates strict limits on the distribution of resources to support individual subsystems of the national economy.

Stage 10. Diagnosis of the existing system

• Modeling of the technological and economic process.
• Calculation of potential and actual capacity.
• Analysis of capacity losses.
• Identification of shortcomings in the organization of production and management.
• Identification and analysis of measures for improving organization.

The problems of national economic management that are solved by systems analysis methods do not arise in a vacuum but within actually existing management bodies, usually in their interconnected complexes. The task of systems analysis is, for the most part, not the creation of a new management body but the improvement of existing ones, orienting them toward problem resolution. In such cases, a diagnostic analysis of management bodies is needed to identify their capabilities, shortcomings, and bottlenecks in the collection and processing of information and in decision-making, with the goal of eliminating these shortcomings and better orienting the system.

A new system will be effectively implemented if it facilitates the work of the management body, helps resolve pressing problems, and advances the achievement of immediate goals. Therefore, identifying current management problems and immediate goals is also a subject of diagnostic survey and analysis of management bodies. This survey involves a mass polling of the personnel of the given management body, its counterparts, superior organizations, and subordinate organizations, through which the necessary information is identified and then analyzed. This provides the basis for constructing a well-founded organizational plan for implementing the newly designed system.

Stage 11. Construction of a comprehensive development program

• Formulation of measures, projects, and programs.
• Determination of the priority of goals and measures for their achievement.
• Distribution of areas of activity.
• Distribution of areas of competence.
• Development of a comprehensive plan of measures within resource and time constraints.
• Assignment to responsible organizations, managers, and implementing parties.

As noted earlier, the results of systems analysis are obtained within the framework of systemic concepts, and in order to transition to the practical planning of measures, they must be translated into the language of economic categories. As a result of solving systems analysis problems for major national economic issues — including plans for scientific research, development, capital investment and construction, and the development of industries and territories — comprehensive development programs are created. These programs are distributed over time, assigned to various implementing parties; a management and coordination structure is established, and a system of accountability is created.

Stage 12. Designing an organization for goal achievement

• Definition of organizational goals.
• Formulation of organizational functions.
• Design of the organizational structure.
• Design of information mechanisms.
• Design of operating modes.
• Design of material and moral incentive mechanisms.

In some cases, implementing such comprehensive programs requires the creation of a permanent or temporary management body; in others, the goal of systems analysis is to redesign a given management body. Systems analysis has a range of specific methods and techniques for designing effective management bodies that are goal-oriented — that is, focused on the creation and utilization of a particular system within the national economy.