Streamline Training & Documentation: The Management Model Matters

Wednesday, January 21, 2009

The Management Model Matters

In a number of previous posts, I've discussed how companies can create and assess business models. In this post, I'd like to call attention to what Julian Birkinshaw and Jules Goddard have to say in the Winter 2009 issue of the MIT Sloan Management Review about how companies can and should make conscious decisions concerning what management model they use.¹

Birkinshaw and Goddard define management models — ways of getting work done through others — in terms of how management:

defines objectives

motivates employees

coordinates activities

allocates resources

The first two dimensions are ends, the second two are means.

On each of the dimensions, any particular company falls somewhere between two poles, one the "tight" extreme, the other the "loose" extreme. Specifically,

Objectives can be set as specific goals, e.g., achieving a minimum profit rate (tight), or as higher-order goals, e.g., delighting customers (loose).

Motivators for employees can be extrinsic, e.g., salaries and wages (tight), or intrinsic, e.g., the inherent attractions of the work (loose).

Activities can be coordinated via formal policies and procedures, i.e., bureaucratically, in a neutral sense of the word (tight), or they can be coordinated informally in what Birkinshaw and Goddard call "emergent" fashion — "spontaneous coordination through the self-interested behaviors of independent actors" (loose).

Decisions on resource allocation can be made by managers in a hierarchy (tight), or these decisions are made via a collective intelligence process (loose).

Birkinshaw and Goddard use the above dimensions to define four general types of management model:

Planning model — tightly defined ends and means.

Most suitable for:
- Mature business, operating in a stable, predictable industry
- Turnaround or crisis situation, where clear rules are needed
- Leaders most comfortable acting as master architects or controllers

Quest model — tightly defined ends, loosely defined means.

Most suitable for:
- Established and growing business, with a defined competitive arena
- Market conditions that are dynamic and competitive
- Leaders emphasize strategy and tactics, often using sports or military metaphors; winning is everything

Scientific model — loosely defined ends, tightly defined means.

Most suitable for:
- Human-capital-intensive business, such as professional services or research and development organizations
- Benign market conditions with plenty of opportunities, often in multiple domains
- Leaders are understated, first among equals, looking to enable others

Discovery model — loosely defined ends and means.

Most suitable for:
- Early-stage business operating in highly uncertain, fast-changing environment; or established business seeking to rejuvenate itself
- Competitive arena is ambiguous
- Leaders are experimenters, open to improvisation, conversation, and mutual engagement

A key point that bears repeating is the importance of making a conscious choice of the company's management model, based on intelligent analysis of the company's circumstances. This is as opposed to moving along with unexamined assumptions concerning what management practices are optimal for the company in its current circumstances.

With conscious understanding of the company's mnagement model, it is possible to make purposive adjustments in order to strengthen the company's competitive position.

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¹ Julian Birkinshaw is a professor of strategic and international management at the London Business School. Jules Goddard is a fellow of the school's Centre for Management Development.

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Labels: Collaboration, Decision-making, Innovation, Management practices, Motivation, Organizational culture, Rewards and recognition, Systems thinking

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