Introducing essential management

For the past 20 years or so I’ve been a passionate student of management. Its history as well as its possible future, its greatest thinkers and practitioners, its tools, frameworks and methods. Its great successes and dismal failures.

I learned as much from reading, attending conferences and discussing with fellow management geeks, as I did from practicing management myself and from helping clients improve their own management in my consulting work.

Management is a complex beast which can quickly overwhelm student and practitioner alike. And the more I learned, the more I yearned for a powerful, yet simple and easy to use model of management.

A model which would pay tribute to the inherent complexity of managerial work but at the same time capable of offering simple, practical guidance for the practicing manager. One that would be flexible enough to be useful in a variety of circumstances and at the same time be stable enough to provide direction irrespective of circumstances. One that could continue to evolve as we learn more how to organise work in the 21st century. One that nonetheless rests on a few timeless truths but does not prescribe specific practices and can work across cultures. One that could provide a common language in which to have meaningful conversations about management.

It’s probably this last point that matters most: having a common language. Time and again I stumbled over the fact that people not only use the word ‘management’ to mean widely different things — but also that they hold very strong opinions about what to think about management when it would often be more fruitful to discuss how to think about management.

Needless to say I also stumbled upon my own inability to succinctly explain what I mean when I use the word ‘management’.

The model I am proposing here is an attempt to change that. It aims to be comprehensive but also as simple as possible. Aiming for simplicity, I tried to focus only on what’s truly essential for great management. Hence I call it The Essential Management Model©.

It is meant to make a contribution to how we talk and think about management in organisations. As a consequence, my hope is that it may also make a contribution to improving the actual practice of management in organisations.

After all, there is so much untapped potential for making organisations better. Better places to work for humans. Creators of better products and services for customers. And more meaningful contributors to a healthy society.

This is only a first step. My hope is that the model will evolve and improve over time based on your feedback. Its also only an overview, more detail on individual elements of the model will follow. Finally, it’s only a description of the model, the what, so to say. How to use it will also follow.

I’m curious to learn what you think. What’s missing from the model? What should not be included? What questions do you have? What doesn’t make sense? How might we simplify it?

Thank you for sharing your thoughts in the comments section! And of course for hitting the little heart at the end if you like this piece.

Essential Management Model© Overview

Most people hold a fundamental misconception about management: that it’s about business. This comes in two flavours.

First, that management is all about the product, and as a consequence also about markets, technology and financials. They confuse management with business administration and believe getting an MBA prepares them to be good managers. But management is not about the product, it is about people and bringing them together to build and run the organisation that creates and markets the product. Great managers don’t innovate the product. They innovate the organisation and how they run it.

Second and closely related, that management is relevant in the business enterprise only. Yet if management is about people and building and running organisations, then it is equally relevant in government, public services and non-profit organisations. They might differ from a business in terms of their purpose and their definition of desirable results — but they cannot be successful without competent management.

So how can we think about management?

The Essential Management Model© captures the essence of management by first describing its purpose. It then looks at how a carefully designed management system spanning nine essential disciplines guides managers in achieving that purpose. And finally how five essential principles and three essential enablers facilitate the design of the management system and the writing of its playbook.

It is important to note that the model describes the management function in terms of what it needs to achieve and what it needs to consider. It does not say who is charged with that work, or how it is to be performed. The model is thus perfectly compatible with traditional, top-down command and control systems as well as modern, responsive and self-organising systems. That both these extremes exist (and in which contexts they can be successful), is part of the knowledge required to inform great management system designs.

So here’s the model, starting with the purpose of management.

The purpose of management

The purpose of management is human accomplishment.

Management is what enables human beings to work together in pursuit of a goal which lies beyond any individual’s reach.

As Peter Drucker has observed:

Management brings human effort from all disciplines together in a single organisation and therefore has become a new social function. As such, the discipline and practice of management is important to the effectiveness of all of society’s institutions.

Without management, organisations could not exist. Management is what makes an organisation function.

Management’s ultimate test is performance. And performance is accounted for in terms of results outside the organisation.

That results exist only outside the organisation cannot be overstated. Again Peter Drucker:

The single most important thing to remember about any enterprise is that results exists only on the outside. The result of a business is a satisfied customer. The result of a hospital is a healed patient. The result of a school is student who has learned something and puts it to work ten years later. Inside an enterprise there are only costs.

Results come in two flavours: business results (the results an organisations explicitly aims to achieve) and social impact (often times a consequence of the organisation’s activities). Some times business results and social impact overlap, sometimes an organisation explicitly aims for results in both categories. But in any case, whether intended or not, management is responsible for both.

The purpose of management

Purpose and results go hand in hand. They are management’s engine (the drive for human accomplishment and performance at the center of the model) and ultimate performance measure (business results and social impact in the model’s outer ring).

What connects them as a kind of transmission mechanism is the organisation’s management system.

The management system

The management system determines how effectively the engine’s raw power is translated into results. Or how fuel efficient it is, with the organisation’s fuel being the energy, talent, skill, knowledge, experience and creativity its people bring to work every day.

The management system

The management system defines how managers practice management. It is the set of tools, practices, processes, frameworks and beliefs managers rely on in their work.

How you build a team is part of your management system. How you select candidates for open positions is part of your management system. As is how you set strategy, define objectives, monitor progress, make decisions, innovate your business model, adjust work processes, reward and develop people and much more.

You can also think of the management system as your organisation’s operating system, similar to a smartphone or computer operating system. It shapes an organisation’s performance in two ways:

1. It defines what an organisation is capable of, just like an operating system defines what a device can do and what kind of apps you can build on it.

2. It defines how easy it easy for people to work, just like an operating system defines how easy it is to use a device and build apps for it.

Every organisation has a management system — but only a few are able to articulate it.

In most organisations, some aspects of the system have been put in place explicitly while others implicitly emerged over the years. Also, it is not uncommon to have several competing management systems in place at the same time. Managers from different backgrounds all have their own perspectives — yet very rarely discuss them in an explicit attempt to bring coherence to management.

Yet if management is to be effective, then organisations need an explicitly designed, holistic management system that is fit for purpose.

A good management systems spans 9 essential disciplines, builds on 5 essential principles and relies on 3 essential enablers.

The essential disciplines

The 9 essential disciplines correspond to the different areas on the playing field of managerial action. Good managers are proficient in these disciplines and their work is guided by a common playbook reflecting a carefully designed management system.

The essential disciplines of management

The disciplines are the same for any organisation — but the playbook is context-specific and in many cases even unique to a particular organisation. It is the design of the management system that ensures the playbook is fit for purpose and context.

Management’s responsibility in all of this is twofold. It needs to work on the system, ie, design the management system and write the playbook. But it also needs to work in the system, ie, to execute plays from the playbook on a daily basis.

If management does its job well, it builds organisations which are good at all of the essential disciplines and excel at some of them.

#1 Purpose
An organisation needs to be crystal clear about why it exists. It is as much about how you define your purpose as it is about how you embed it in your organisation’s DNA. So that it is never forgotten and can guide decision making at all levels.

#2 Strategy, Objectives and Work
An organisation needs a clear idea of how it is going to live up to its purpose, which specific objectives it wants to achieve and what work needs to get done in order to do so. Again it is as much about how you craft strategy, define objectives and prioritise work as it is about how you embed all of that in the daily reality of every team member.

#3 Culture
Culture defines how an organisation operates from a behavioural perspective. Every organisation must nurture a culture which supports its purpose and strategy. It defines an organisation’s values and as a result, which behaviours are expected of its members in support of reaching its goals.

#4 Organisation Design
Organisation design defines how an organisation operates from a process perspective. An organisation must define who is responsible for what, how work gets done and how decisions are made. A good organisation design makes it easy for people to work and clearly supports the organisations purpose and strategy.

#5 Team Effectiveness
No organisation can be effective without effective teamwork. Starting at the top (if there is one in your design) and throughout the organisation. The whole point of organisations is to have its members collaborate and cooperate to achieve common goals.

#6 Human Systems
Humans are everything to an organisation. So it needs to be really good at selecting, rewarding and developing its members. And at letting them go if required.

#7 Information, Controls & Communication
If humans bring the fuel to work, then information is the oxygen required to keep the engine running smoothly. Having the right information, at the right time in the right hands is what guides great decision making, enables learning and controlling and is also the basis for healthy communications within and outside the organisation’s boundaries.

#8 Innovation
Any organisation aspiring to a bright future needs to master innovation. It needs the capability to innovate at many different levels. Products, services and the customer experience are just one part of the story. Equally important is the business model, work and production processes as well as management itself. All need constant innovation if an organisation is to have a prosperous future.

#9 Organisational Development
Successful organisations have a built-in capacity for renewal. They are great at sensing and anticipating the need for change and have the capabilities and confidence to successfully change, sometimes even transform themselves.

The essential principles

The essential principles offer practical guidance for both the design of your management system as well as working with it in daily operations.

The essential principles of management

They embody time-tested, universal principles of effective management and are valid for any organisation, no matter its size or industry. They equally apply to for-profit businesses, public and government institutions, NGOs and non-profit organisations.

Unlike the management playbook and the underlying management system, they are not context-specific.

I. Focus on Customer Value
This is based on Peter Drucker’s insight that:

There is only valid definition of business purpose: to create a customer.

Every organisation has to understand who its customers are and how it creates value for them. And it needs to make sure that every activity it engages in contributes to creating that value.

II. Design for Humans
Management needs to work for people and thus needs to be designed for people. Great management lets people thrive and use their full potential instead of getting in their way. A great management system is carefully designed to address human needs and supports people in doing their best work, every day.

III. Ask Questions & Learn from Evidence
Effective management asks great questions and knows it cannot have all the answers. It engages the organisation in finding answers to the most difficult questions as a way of learning and making progress. It seeks to learn based on evidence and emphasises how to think over what to think. The most successful organisations make questioning and learning continuous activities and a key part of their operating system, always looking for ways to improve and to innovate.

IV. Focus on Results and Contributions
Management’s ultimate test is performance in terms of results. Effective management focuses the entire organisation on delivering the specific results it aims to achieve. In particular, it relentlessly asks what contributions people, processes and organisational units make that help the organisation achieve its desired results.

V. Keep a Holistic View and Tailor for Context
Organisations are complex organisms. Their management system is what allows them to function. It is imperative to always keep the whole in mind when making adjustments in one part of the system — so as to keep the whole system balanced and coherent. Similarly, no two organisations are exactly alike. The management system and the plays from the playbook need to be tailored to fit an organisation’s specific context: its industry, size, history, culture, specific objectives and more. There are no textbook solutions. The most successful organisations aim for best fit, not best practice.

The essential enablers

Finally, three essential enablers are required as raw materials from which to design a management system and allow human beings to build and run effective organisations together.

The essential enablers of management

A. Leadership
Leadership is required at all levels and from every member of the organisation, but especially in management. As Peter Drucker has said:

Management requires character.

He could also have said management requires leadership, as there cannot be leadership without character. Leadership ensures the right things get done, the right questions are asked and assumptions are challenged. It ensures an organisation and its members are learning and are capable of renewal. And it enables an organisation to pursue higher order goals beyond its own existence.

B. Design
Design is fundamental for organisations to be successful with their two main stakeholders: customers and team members.

Good design creates products and services that address real customer needs and hence create value for the customer. It also provides them with a great customer experience, increasing customer loyalty and referrals.

Good design also creates management systems and organisations which enable its members to be at their best every day. It creates an unrivalled work experience, increasing engagement and ultimately performance.

Design is an essential enabler, not an afterthought. It is as much about mastering the methods and tools of design as it is about approaching everything with a designer’s mindset. From products and services to management and organisation design. In Steve Job’s words:

Design is not how it looks. It’s how it works.

C. Knowledge
Management of course requires knowledge. It’s the raw material which is used to design management systems and guide every day managerial practice. But what kind of knowledge?

First, about management itself. Management is its own proper discipline with its own body of knowledge. Managers need to be familiar with the timeless wisdom of great management thinkers such as Peter Drucker, Sumantra Ghoshal, Clayton Christensen, Gary Hamel, Roger Martin, Charles Handy or Henry Mintzberg. But as the discipline is evolving, addressing both the needs and technological possibilities of organisations in the 21st century, managers, like any serious professional, also need to stay on top of current thinking in all the essential disciplines. Responsive organisation design, self-organising systems, the lean startup, blue ocean strategy, open innovation, growth hacking, agile thinking or team of teams also need to be familiar territory. As should be today’s great thinkers like Nilofer Merchant, Adam Grant, Amy Edmondson, Zhang Ruimin, Liz Wiseman, Lynda Gratton or Umair Haque, to name just a few.

Yet with the daily flood of new articles, books and case studies coming out of the leadership industry, managers must also be careful to distinguish fad and hot air from important contributions. What is relevant for their work and what is not.

But that’s only the beginning. Peter Drucker observed:

Management deals with people, their values, their growth and their development — and this makes it a humanity.

So managers need to draw on all the knowledge and insights of the humanities and social sciences: psychology, philosophy, economics, history, anthropology, linguistics, communication and political science.

At the same time we must never forget that management is a practice, so all this knowledge must be put to productive use. This is where design comes in again, which is all about making things and addressing human needs. Not in theory, but in practice.

It is both the nature of management as well as the breadth of knowledge it draws on that led Peter Drucker to conclude that:

Management is a liberal art.

Management is a complex beast. But it is also the most important social function in the world. Let’s do our best to live up to that challenge.

Essential Management Model© — 9 disciplines, 5 principles, 3 enablers, 1 goal

Raymond Hofmann is an independent management designer and advisor. He works with clients to identify and remove barriers to high performance and implement better management systems. Find out more: raymondhofmann.com.

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