The aim of the course is to provide you with a comprehensive framework for understanding both the traditional principles of management inside companies today as well as the alternative principles that are becoming increasingly important. It provides both theoretical and practical perspectives on the nature of management in today’s organisations.
2.1 Defining your management model
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From the course by University of London
Managing the Company of the Future
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From the lesson
Week 2
Welcome to Week 2 of 'Managing the Company of the Future'. This week, we'll be learning about traditional and alternative approaches to coordination and decision making, and how you can experiment with some of the new alternative ideas in your own company.
Meet the Instructors
Julian BirkinshawProfessor of Strategy & Entrepreneurship
London Business School
[MUSIC]
Welcome to Managing the Company of the Future, Module two.
In the previous module,
we talked a lot about some of the changes that are happening in the business world.
And a little bit about what this means for you as an individual.
What we're going to do in this module is really home in on
exactly what we mean by this term management model.
This word is going to be important in this course because it really gets at
the heart of our old and our new approaches to management.
And the best way to get into that is just to show you on this slide
three of the famous old, old men of, of management thinking.
First of all, Henri Fayol, who was a Frenchman writing about 100 years ago,
obviously long since dead.
The second, Peter Drucker.
Probably the biggest guru management has ever had.
He died about five years ago.
And then third, Henry Mintzberg, very much alive and
still involved in writing and thinking about management.
And each of these three people in their eras came up with a view on
what exactly we mean by management.
What we mean by the concept of management.
And as I said in the first module,
management is getting work done through others.
But not only underneath that headline.
Of course, you're going to say to yourself well what are the things that
are involved in getting work done through others.
So, Henri Fayol came up with these four concepts for casting and
planning, organizing, commanding, and controlling.
And of course, if you think about that for
a second that's a very traditional kind of top down approach to what managing is.
And that doesn't surprise anybody who thinks about the way that the world
worked 100 years ago.
You go to Peter Drucker, who was writing in the 70s and the 80s.
And he came up with five categories of what management involves.
Setting objectives, organizing, motivating and
communicating with the people around you, measurement, and development.
Development means management development,
getting people more able to do the work of management.
And of course, that is a bit of a blend of, shall we say,
top down and bottom up thinking.
And then finally, you've got Henry Mintzberg.
And he's got these four categories, framing and scheduling.
In other words, essentially managing the kind of the, the, the timing and, and
the context of management.
Communicating and controlling, a very traditional top-down approach.
Leading and linking which is about how the manager connects to
other people in other parts of the organization, outside.
And then finally doing and dealing.
Which is the hand manager getting his or her hands dirty and
actually negotiating and things like that.
So those are the three models that I've chosen to pick up on.
Obviously there could be more out there.
But if you take those three and you kind of compress them and
you say, what are the common links between these three?
What you end up with is a view of management which I'm going to, I,
I'll ultimately boil down to four very specific dimensions.
Now before we get into the details of this,
we've also gotta make one further distinction.
Between the concepts of a management model and the concept of a business model.
Now what do I mean by these terms?
I think most of you intuitively know this term business model.
These days in the, in the kind of the,
the general vernacular of business we talk about a company's business model.
So we take a very classical example, you take the airline industry.
And a big traditional airline like a British Airways or
United Airlines or a KLM.
They have a traditional business model where all of the parts fit together.
They fly to all destinations.
They have business class, they have economy class,
they have frequent flier points, they have business lounges, they have hub airports.
A completely different business model to a low frills
airline like a Southwest Airlines or a Ryanair.
And they're competing for
the same customers, but with completely different models.
So when you say what is a business model?
For me, it is the formula you use for making money.
It's the choices you make around your revenues.
Around your cost structure.
About what you make versus what you buy.
The partners you use.
And of course, a business model, as I say is well understood.
And is linked then to your management model.
Now what is a management model?
I'll give you a formal definition.
Your management model is the choices your company makes about how it
does the work of management.
Now, I told you in the previous,
slide that there are four dimensions to management.
And now I'm going to be very explicit about what those four dimensions are.
And here with this slide,
I'm going to identify these four dimensions in a very, very specific way.
This is going to be a messy slide, I apologize for that.
But it turns out that this is a very important slide because it ends up being
the, kind of the structure for not just this module, but also the next module.
So let me take you through this slide, because as I said,
it's got a lot of moving parts on it.
On the left hand side, we have the four traditional principles of management.
And on the right hand side, we've got the four alternative principles of management.
Now those principles are defined in terms of four dimensions, so
let me just take you through what those four dimensions are.
These are the horizontal parts of the slide.
At the top, we have how do we coordinate our activities.
Then we have how do we make our decisions.
Third, we've got how do we motivate our employees.
And then fourth, we've got how do we set our objectives.
If you go back in your mind to the slide with Henry Mintzberg, and
Peter Drucker and Henri Fayol.
You will see that those four dimensions are directly linked to what they were
talking about.
I mean, it's not 100% correlation.
I've obviously just done a little bit of manipulation to come up
with these four dimensions.
But I think we can quickly agree.
For these four dimensions that I'm going to be focusing on make up a good 80,
90% of the work of management.
And there's one other further point of clarification.
The two at the top, the two dimensions at the top, think of these, if you like,
as the, as the sort of the means by which we get work done.
How do we coordinate?
How do we make decisions.
And the two at the bottom are our motivation and objectives.
These are the ends, this is what we are trying to achieve.
So that is the, the quick overview of this slide.
And as, as I said, we're going to use this slide to really kind of
structure the next two modules of this course.
Now we're going to get shortly into the first of
those dimensions which is how do we coordinate.
But before we do so, let me make four points just to kind of make sure we
understand exactly what the logic behind this, this structure is.
The first point is the following.
Your management show model is about choice.
It is about deciding that you're going to do more of one type of thing and
of another type of thing.
Just as our business model is the choices we make for
example about our sources of revenues and our cost structure.
Your management model is about choices, is about whether we
focus more on the left hand side than on the right hand side of this diagram.
We’re going to go through each of these terms in the next, module or two.
So don’t worry if there are some words here that you don’t fully understand.
Secondly, each of the terms on this slide is a principle.
What do I mean by a principle?
I mean a kind of a deeply held belief or
understanding that is effecting the way we do things.
So we’ll take the top left had one.
bureaucracy.
Now I'm going to define the word bureaucracy for
you specifically in a few minutes in the next segment.
But for now think of bureaucracy as,
as a essentially how we coordinate through standardized rules and procedures.
That is a principle that is an underlying belief.
The effects of how companies create systems and structures.
So when we see a company which has a very, very clearly defined
resource allocation process, and we see the day to day practices.
That they use about putting resources into certain projects.
All of those are sitting on top of an underlying principle of bureaucracy.
Now some people don't even know exactly what they mean by bureaucracy.
The principle is often hidden like in the iceberg metaphor, the principle is
sort of under the water, and the outdated practices are on top of the water.
So the principle guides the day to day processes and practices.
And obviously, what we're going to do in this course is
we're going to focus first on principles.
And then we're going to get into the day-to-day practices.
So my first point was that it's about choice.
The second point is,
is that we're focusing here on principles which drive processes and practices.
The third point here is that as you look at the words on the left and
the right hand side here.
It is tempting to assume that the words on the right hand side somehow are the more
progressive or the more attractive words for today's business world.
And there's some truth to that.
But the point is that there are no right or wrong choices here.
Depending on what you do, depending on the function you sit in,
depending on the industry in which you work.
The appropriate model is going to be more to the left or to the right.
So again, if we take the top one.
And if I work, for example, in a nuclear power plant it's a safe bet
that we're going to have some fairly bureaucratic procedures.
Because we don't want to take the risk of something going wrong.
That is entirely appropriate.
On the other hand, if I work in a, in a media agency or
I work in a R and D lab or if I work in a dot com.
Chances are, we want a much less bureaucratic way of coordinating.
We want to work much more on what I'm going to call the principle of immersions.
So there's no rights or wrongs, you're making choices and
the choices will depend on the situation in which we're working.
The final point is that the changes that we're seeing in the business
environment are indeed pulling us to the right hand side of that diagram.
But, there were also, as we're going to see very clearly in the,
in, in the next modules, forces pulling us to the left.
And so, yes,
we're going to see, broadly speaking, a trend towards the right on balance.
But we're also going to see reasons why many,
many organisations are continuing to focus on the left hand side.
So that's all I want to say in this segment.
As you say, see, there's an awful lot of material here.
If you're a little bit confused, don't worry about that.
Because the whole point of the next two modules is
really to work through each of these pieces of management in detail.
And to understand what each of these terms means.
Once we've done that, once we've kind of broken the model apart,
we can then kind of put that together again.
And work through the implications for
all of that in terms of how organizations are changing.
And becoming more progressive and more relevant to the changing business world.
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