A Holistic Approach to Management

augustus 21st, 2012 · by John · Weblog EN

Economic circumstances are becoming more and more severe, and companies have to reconsider their organization to improve profitability and deliver higher quality. Two dangers are lying ahead:

  • - Sub-optimization: we have increased productivity, but we still cannot deliver what our customers are asking for.
  • - Cure worse than disease: we have cut cost and, at least in the short term, increased profitability, but we destroyed our long term growth potential by closing down the R&D department.

In the past, I have worked on various projects to improve the performance of companies. In these years, I have developed and am still developing further, a practical methodology that allows us to take a holistic view on our company and avoid the dangers of sub-optimization and cure being worse than disease. In this web-log, I will give an outline of the methodology, which I have called Aretê. In future blogs I will go into the details of each individual step in this management methodology.

Objective

As Lewis Caroll said, “if you don’t know where you are going to, any road will lead you there”. We therefore need objectives, as they show us where to go. To come to objectives we have to ask an existential question: why does a company, or for that matter any organization exist? As this is an article on management, not on philosophy, we can live with a pragmatic answer: organizations exists to provide benefits for their stakeholders. Alas, this begs three other questions:

  • Who are the stakeholders?
  • What are the benefits they are looking for?
  • What legal, economic or moral right do they have to enforce their objectives?

Once we have acknowledged their rights, we have to harmonize the stakes of the various stakeholders into the mission statement of the organization. The mission statement contains the mission (who are we?), the values (how ought we behave?), the vision (where are we going to?) and the objectives (what do we want to achieve?)

Strategy

The mission statement is the input for an action plan to realize the vision and achieve the objectives. The strategic planning process runs through three phases:

  • (1) Strategic Analysis: A scan of the external environment and the internal organization is summarized into an overview of internal weaknesses and external threats, which we have to address, and external opportunities and internal strengths, which we should make use of.
  • (2) Strategy formulation: Based on the strategic analysis, we need to formulate the strategy. These normally are four to five broad goals of the direction the company want to take in the next years.
  • (3) Strategy implementation: The strategy has to be translated into strategic initiatives. These can be programs, projects or actions which can make us achieve the strategic goals.

Organization

Management can be defined as organizing processes, people and resources to achieve an objective. The goals and objectives have been formulated in the mission statement and strategic plan. We now have to:

  • (1) Organize our processes such that, as efficiently as possible, they reach their desired end result.
  • (2) We have to get the right (number of) people on the right place.
  • (3) We have to acquire resources according to specifications at the lowest possible costs.

Performance Management

We have translated the mission statement into a strategic plan and built an organization that will realize that plan. We now have to ensure that the goals and objectives are achieved. The methodology here is the well know Demig Circle: Plan, Do Check, Act.

Risk Management

Up until now, the methodology may seem to be the ideal solution for setting and realizing objectives. And in a way it is. But we are living in an uncertain world. Events will happen that can hinder us in achieving our objectives. You have to be prepared for that and be ready to mitigate the causes and consequences of these risks.

Using Aretê thus will provide you with the objectives you want to achieve, and will show you how to make plans and build an organization to realize these objectives. Next to that, in the form of performance and risk management it delivers you safeguards to ensure that objectives indeed are achieved and that your are prepared for “everything that can go wrong”.

 

John Greijmans

Leave a Reply

* Copy This Password *

* Type Or Paste Password Here *