There’s an assumption that management’s easy. Managers just learn their trade and make money for their firm.
Whilst much of the technical part of the business, building houses, writing insurance or shipping knitwear, may indeed be straightforward, management of people and finance is anything but. Management involves taking daily decisions about change.
We can perhaps agree that management is purposeful. Managers seek to make decisions that further the business. They seek to find improvements on a present situation.
The trouble is that managers employ people, and people are fickle. Even getting consensus in a six-man senior team is difficult. And choosing what technology to invest in may seem like betting at the roulette wheel. There’s often no rational process along which a CEO can guide their senior team to reach a reasoned conclusion.
Many in such circumstances resort to general, unstructured discussion and gut-feel decisions.
But it doesn’t have to be that way. Management science has a solution when management gets messy. It’s called the ‘soft systems methodology’ or SSM.
At its heart, SSM treats the firm as a system, or more correctly, a system of systems within an environment (the market, the industry and stakeholders). A system comprises linked parts that function together to achieve a purpose. Ultimately the firm is a system that processes raw materials and human effort into turnover, cash and profit. The firm as a system can be thought of as multiple sub-systems for example marketing, sales and operations. There are maybe eight or ten sub-systems within the system of a typical firm.
This way of thinking is important because systems and sub-systems can be modelled. A model is just an abstracted version of the reality of the firm. It’s not the firm, but it is a way of discussing the firm in meaningful terms.
SSM also crucially recognises that differing worldviews or perspectives exist within the firm. A production operative will view the problems, systems and processes very differently from a senior manager. And senior team members will each have their own distinct view of reality, often built around their perception of power and control.
Systems and differing worldviews combine. A form of model can be built and explored for every worldview. And these models can be exercised and discussed. Suddenly a messy situation, with no clear common platform for discussion, is clarified. Platforms can be built. Points of view can be explored and consensus reached on what to do. Messy problems may still not have clear solutions but improvements can be identified and plans laid.
Practically, there are many types of model that can be used. The simplest model is the firm’s management statement – profit & loss account, cash flow projection and balance sheet. In a complex firm, several different types of model may be needed to get an adequate understanding of the problematical situation that the CEO wants to address.
The most common is the activity model or function model. The power of this model is discussed elsewhere on the TimelessTime web site. In essence the activity model charts discrete human and machine effort as activities.
One difficulty experienced by CEOs is that they and their managers are involved, part of the problematical situation and part also of the solution or improvement. The way round this, allowing each senior team member to participate more openly and objectively is to use a consultant as facilitator. A consultant, familiar with SSM and the construction of models, can guide the team through the modelling and discussion to identify improvements.
Once agreed, these improvements can be put on the firm’s balanced scorecard or other method of charting strategic change. Owners can be identified and projects planned. Realisation is then back in the hands of the CEO with the confidence that everyone has had their say.
The soft systems methodology for organisational development has its origins in the 50s and 60s when managers sought better ways of making business decisions. It is a mature approach to management decision-making that recognises the messiness of modern problematical situations in firms.
TimelessTime has developed a methodology for management decision-making based on our discussions here. Many TimelessTime clients have benefited from a full understanding of their organisation model, and subsequently are then able to resolve issues. Many have been able to restructure painlessly. Many have been able to take the next steps in growth. If you want to discuss how TimelessTime can help you please get in touch.