Management Engineering

Management engineering is the task of making management and leadership work together towards integrated business success.

 

A recent seminar on management started with the age-old comparison of leadership vs management. It is as if the participants had stepped back to the late eighties when the debate was topical and being actively fought in the corridors of schools across the then unconnected world.

 

Ideas such as the learning organization, strategy execution, balanced scorecards, intrapreneurship, conscious competence and purpose driven performance should have taken care of the debate and we should have been able to say that there is now a generation of people that can both lead and manage and flit between the two disciplines.

 

There was a recent HBR article stating that leadership and management are still in conflict and that both leaders and managers are getting it wrong. While ideas such as the leadership pipeline gives an evolutionary path for leadership development – it still seems that managers and leaders are cut from different cloth.

 

Leaders fail to manage and managers fail to lead. We tend to promote managers to become leaders and we are surprised that they fail to take risks and open new markets. On the other hand, leaders do not build up sufficient technocratic ability to guide organizations accurately and get into trouble when their organizations drop balls.

 

It may be partly a reflection on the size and complexity of society. It has become really intense to manage larger and growing organizations with a million priorities. It is practically impossible for one or two people to head up – and keep track of the massive scales at which organizations get deployed. With a global move towards accountability to shareholders and the constant profit chase, in the context of a globalized market that it is almost as we are at a crossroads in which management and leadership needs to rethink itself fundamentally, again… Additionally the availability of information (and the surprising lack of it sometimes) makes management a lot more daunting.

 

Both managers and leaders could draw from a model of society that was fairly static and predictable. This model is now a lot more dynamic, involves potentially 7 billion people and every customer can turn into an advocate or a nightmare.

 

The combination of technology, people and process with management – as the fundamental execution mantra needs a new direction. Leadership was the “quick fix” as it inspired these disciplines to do more. So we created a Chief Technology Officer, Strategic HRM and BPR, Six Sigma and Lean to drive efficiencies.

 

More fundamentally we need to get to a level where we engineer management and leadership into states where both have to consider strategy and execution at every level and really to fundamentally manage the business models of the organization.

 

Business models are the language where management and leadership meet and where the common ground of strategy and execution can be thought through.

 

When asked to design a business model there is a couple of very key questions that need to be answered

 

  • What are we selling? (Product, Revenue Streams)
  • Who is the customer? (Markets)
  • Why would they buy this product? (Value proposition)
  • What type of relationship do we want with the customer (Marketing, Customer Relationship Management)
  • Who will sell this? (Channels)
  • How will it be made? (Cost, Suppliers)
  • What support needs to be in place for this to work (Legal, Capital, Technology, Human Resources)
  • What do we need to do and how is this structured? (Cost, Processes, Delivery)
  • How will this be managed and led (Management, Leadership, Governance)

 

 

This gives a short list of things to consider

  • Value proposition
  • Product Design
  • Markets
  • Marketing
  • Customer relationship management
  • Channels
  • Cost
  • Suppliers
  • Legal
  • Technology
  • Human Resources
  • Processes
  • Delivery
  • Capital
  • Revenue Streams
  • Cost
  • Management
  • Leadership
  • Governance

 

Once this set of factors have been combined it forms the basis for writing a business plan and strategy that have been thought through.

 

Even for major organizations it must be that we need to get back to basics and really ask the big business process questions in our major markets. It may be tempting to think of an organization as a diversified conglomerate of options – but at its core the business models still need to be correct by design.

 

Strategy sessions must also focus on reviewing the key aspects of the business rather than being long drawn out discussions around direction that does not consider the practical implications of what is being said.

 

What most people do not realize is that each of these areas i.e. Product Design, Markets etc. is only a starting point. You need to build maturity in each of these areas.

 

The capability maturity model is a useful way to look at this.

 

Level 1 – Initial (Chaotic)

It is characteristic of processes at this level that they are (typically) undocumented and in a state of dynamic change, tending to be driven in an ad hoc, uncontrolled and reactive manner by users or events. This provides a chaotic or unstable environment for the processes.

 

Level 2 – Repeatable

It is characteristic of processes at this level that some processes are repeatable, possibly with consistent results. Process discipline is unlikely to be rigorous, but where it exists it may help to ensure that existing processes are maintained during times of stress.

 

Level 3 – Defined

It is characteristic of processes at this level that there are sets of defined and documented standard processes established and subject to some degree of improvement over time. These standard processes are in place (i.e., they are the AS-IS processes) and used to establish consistency of process performance across the organization.

 

Level 4 – Managed

It is characteristic of processes at this level that, using process metrics, management can effectively control the AS-IS process. In particular, management can identify ways to adjust and adapt the process to particular projects without measurable losses of quality or deviations from specifications. Process Capability is established from this level.

 

Level 5 – Optimizing

It is a characteristic of processes at this level that the focus is on continually improving process performance through both incremental and innovative technological changes/improvements.

 

Level 6 – Integrated

The area is well disciplined and robust and creates value while dynamically being able to innovate and naturally adds value to other areas of the whole.

 

What frustrates many leaders is that they do not realize that you cannot get to level 6 without some evolution. What frustrates most managers is that leaders expect them to do so, often from day 1. What frustrates staff is both of the above.

 

Management engineering is in part a way to look at the intersection between maturity and the major business disciplines and to look at how to accelerate the evolution towards Optimizing and Integrated type of behaviors. It also may also start answers the question of why we are doing what we are doing.

 

These objectives then need to be captured in scorecards, operational plans and need to be reviewed against the business model. Where leaders and managers can find common ground is that they are delivering against a business model and that they actions will impact it fundamentally.

 

Peter Senge said that the task of the leader is as designer. The highest level of management is organizational design. When we start designing our organizations more effectively they will start operating more effectively.