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Management System


Management System enables success.

Ledningssystem gör framgång möjlig.

Affärslogik, Verksamhetslogik och Verksamhetssystem

Affärslogik är organisationens tankar på hur man tjänar pengar och ger kunder mervärden. Verksamhetslogik är planer på hur tillgångar kan användas för att bygga värde åt kunder. Verksamhetssystemet beskriver hur organisationen leder och samverkar, arbetar och bygger mervärden, följer upp och förbättrar sig själv. Vi kan säga att ett bra verksamhetssystem gör det möjligt att få en lönsam affär när man samtidigt bygger värden åt kund. Allt hör ihop, allt kan gå fel.


Förnuftiga chefer förstår att affärslogik, verksamhetslogik och verksamhetssystem hör ihop. Kloka chefer säkerställer att man har stöd av kunniga medarbetare för att bygga alla delar rätt. Verksamhetssystemet utgörs av byggstenar som fogas samman i enlighet med verksamhetslogiken och blir en praktisk realisering av affärslogiken. Typiska byggstenar är syfte och mål, organisationsstruktur, processtruktur och styrning. I stort och smått skall allt utgöra en del i en helhet. Väl tillpassade byggstenar utgör själva kärnan i en effektiv och långsiktigt framgångsrik organisation.


Med denna insikt förstår alla varför en verksamhet inte automatiskt blir bättre bara genom att ändra organisationen, bara genom att kartlägga processer, bara genom att lansera nya mål eller bara genom att utöva mer kontroll. Tyvärr, eller som tur är, är det inte så enkelt. Det kräver kunskap och eftertanke att göra förbättringar i en verksamhet. Det behövs insikt om hur en framgångsrik affärslogik ser ut, medvetenhet om förutsättningar för bästa verksamhetslogiken och erfarenheter kring hur verksamhetssystem byggs upp. Och det krävs att man bemästrar systemperspektivet i sitt förändringsarbete för att få alla byggstenar att passa ihop. Men som tur är blir ett välbyggt verksamhetssystem en tillgång som inte enkelt låter sig kopieras av konkurrenter.

Högsta ledningen, strategin och ledningssystemet – En skall bort.

Den nya kravstandarden från ISO för 9001 och 14001 lägger stor vikt på högsta ledningens engagemang för frågor som rör ledningssystemet. Som externrevisor möter jag ofta medarbetare och mellanchefer som vittnar om högsta ledningens bristande engagemang för deras ledningssystem. Med mina erfarenheter från att bygga ledningssystem vet jag att detta kan vara en utmaning och måste hanteras. Nyckeln till framgång är naturligtvis att prata med ledningen på ledningens språk och ge ledningen det stöd de behöver.


Alla höga chefer engagerar sig i övergripande frågor. Strategiska val görs av högsta ledningen. Genomförandet av förändringar skall drivas av ledningen, som ställer krav på verksamheten, fördelar ansvar och följer upp resultat. Detta är inget konstigt.


Förändringar av strategin innebär ofta att företag behöver arbeta annorlunda. Verksamhetens processer behöver ses över, ansvarsfördelning justeras, beslutsmöten omformas, nyckeltal etableras och mål förnyas. Kring dessa verksamhetsfrågor finns ett aktivt engagemang från en insiktsfull högsta ledning. Dessa förstår att alla sådana delar av verksamhetens struktur behöver vara väl fungerande och samverka effektivt, som i ett välsmort klockverk, för att generera goda resultat. Processer, organisation och styrning är delar av ett system som skall fungera som en helhet, ett system för verksamheten. Ett verksamhetssystem.


Vi kan tillsammans med högsta ledningen vara överens om att rätt verksamhetssystem realiserar företagets strategier. Därmed kan vi också vara överens om att högsta ledningen skall utarbeta strategin, ställa krav mot verksamhetssystemet, fördela ansvar för olika delar av verksamhetssystemet och följa upp resultaten.


Så långt är väl allt väl. Inget konstigt alls. Så vart vill jag då komma med detta resonemang? Jo, vi som gillar ISO’s ledningssystem kan inte prata ISO språk med högsta ledningen för då tappar vi deras engagemang. Alltså ”Högsta ledningen, strategi, ledningssystem – En skall bort”; Ledningssystem.


Däremot kan vi hämta mycket stöd av de nya ISO standarderna 9001:2015 och 14001:2015. Men prata strategi och verksamhetssystem tillsammans med ledningen så upptäcker du vilket engagemang det finns för att bygga ett verksamhetssystem som ger goda resultat för organisationen

Use multi-dimensional organization structures wisely

In today complex business we have to use multi-dimensional organization structures to be able to design effective Organizations. The simple organization have one product, one customer and all employees belong to one legal entity. Requirements on such Organization Design is fairly simple and we can design all lines of reporting within one single dimension. The legal company structure would be the single organization dimension.


But what if the Organization act on multiple markets, have several product offerings and have its workforce scattered around the globe. The requirements on the organization design is then quite complex and single organization dimensions are no longer possible. The organization structures has to be design in a legal dimension, possibly a business area dimension, a project dimension and possibly a market dimension. If the organization design work is done properly, accountability and efficiency will be the result. But if the Organization Designers fail to create clarity via the design, individuals will suffer from ambiguous organization structures and business will suffer from organization inertia.

The fundamental law behind how to design management systems

Every organization is a complex system of activities. An efficient organization has the ability to create values for customers, and at the same time satisfy the owners. Successful and sustainable organizations have the ability to maintain a positive level of satisfaction among all stakeholders. Not all organizations are in such a positive situation and there are a number of different methods and scientific studies available to help managers improve efficiency and effectiveness. From the early years of the 20th century when Taylor wrote about Scientific Management, over Juran’s Quality Control and later Total Quality Management, Business Process Re-engineering, Lean and lately the popular Agile approaches.


Behind all of these methods and approaches there exist a fundamental law on how to design effective and efficient organizations. An Organization is a complex system of infinite number of queue systems. Work is ongoing, work is waiting and variations in the work pile up delays. This is true for each individual as well as for the full organization. The optimal design of an organization has to balance Lead Time, Resource Utilization and Variations to achieve wanted performance.


It is impossible to maximize all three of above at the same time. Assume you are able to use all available resources 100% at the same time as all customers are served as soon as they enter into the organization. The customers are happy, and the flow of customers increases. The system will then become overloaded and Lead Time will increase dramatically. Customers will become very dissatisfied.


How has different organization design approaches tried to manage this fundamental law? Scientific Management argued that all activities shall be identified and standardized. This approach tries to minimize process variation and by that achieve efficiency. Business Process Re-engineering focus lead time by identifying unnecessary activities and simplify process flow. Agile work methods tries to balance according to the law. Agile manage utilization of resources by the use of backlog planning, it standardizes work tasks in sprints and minimize lead time by waiting to start sprints until there is a customer order.


How can we use the knowledge of this fundamental law? When you design the business model of a company and designs the Management System Architecture you have to identify key performance requirements and optimize the high level design based on this. If cost is critical, resource utilization should be maximized and long lead times can be the result. If flexibility is important you may have to have some amount of resources available for work. If lead time has to be short, 100% resource utilization will not support success unless you have full control of customers input and process variations.

Why run fast if decisions move slowly

What if we run like h… very fast, and every time there is need for a decision, things stops. We have to line up in the queue to get decisions, wait, and when the stars are in the right position, management will approve next step. No matter if we have applied business re-engineering and have eliminated every unnecessary step in execution, if we have created fast procedures, developed supportive tools and have trained the staff to be as fast and accurate as ever possible. The result of all these efforts will have little impact on total speed, if the decision process is left unchanged and slow.


When you design your Management System, do not forget to design an efficient decision process.

  1. Identify key type of decisions.
    Decisions at a macro level are; what are the key decisions required to achieve business mission and to be efficient? It can be budget decisions, investment decisions, decisions about new products, decisions on new markets, etc. Decisions at a micro level are related to detail level process or procedures. Examples of such decision might be; are we ready to send the product to the customer, shall we add more service for same price to this customer, do we buy a coffee machine, etc.?
  2. Minimize number of formal decisions.
    Which of the identified key decisions do you need to make as formal decisions (following a pre-defined procedure in approval systems or in put them on the agenda in decision meetings)? Ask you self, what happens if….? What is the risk of negative consequences? Is there a risk to break any laws? Can errors be corrected without damage? What happens if we delegate decision power to the ones executing the work?
  3. Re-engineer the decision process
    Ensure the needed formal decision procedures are designed to be as efficient as possible. Make sure to design efficient decision meetings. Decisions has to be taken as fast as possible, measured as lead time. This does not necessary mean to speed up decision meetings as such. Secure that efficient preparation of meeting is done, minimize number of participants in decision meetings, create a schedule for decision meetings to support execution, etc. Ensure that the organization will have approval systems that support high speed in decision process, minimize number of approval layers in approval system, secure that request for approval does not end up in a mailbox that is not checked regularly.
  4. Review and change your organization structure.
    If more speed in decision process is needed, further changes to the organization structure may be needed. The more complex organization you have, the more complex decision process you will get. Gather the power to execute activities in one organization entity, minimize the need to coordinate, co-locate people working in same activities, and simplify the mission for different organization entities.
  5. Trust that employees will make correct decisions.
    If we critically review decision processes, I believe many organizations have added to unnecessary controls and too many formal approvals. People in general want to make the best decisions and will do so if they have the knowledge and the correct information needed.

Why some managers hate structure

To hate something is often related to being afraid. Actually, no managers are afraid of structures, but all are afraid of not delivering results. I have often struggled with the question why some managers do not want to apply structure and control. In my mind, I never understood why improved control is a problem. Why would clear responsibilities, processes, checklist etc. be a risk to the business? We all want better result, right? If we ensure that people follow some procedures based on good practices it cannot be a bad thing, or can it?


But it can be dangerous for an organization to apply structure and control. I do realize this now. It is dangerous for an organization, with the ad hoc cowboy approach, to change its behavior towards more structure and control. If you shoot hundreds of bullets towards a target, by the laws of probabilities, you will certainly hit, eventually. This means ad hoc management generates results.


Being responsible for an organization and its operations is to be accountable for the result and performance. Results are the first to be counted, second to be counted is performance. With no results, you are out as a manager. Good results with bad performance are acceptable as long as you make activities to improve. Please note, I did not say that the manager has to improve, just do activities with the purpose to improve. If the results are not good enough, the manager could be allowed to use more resources and increase actions. In other words. If you are not close enough, shoot more bullets and you will sooner or later hit the target.


In the book “Strategy Maps” by Kaplan & Norton, there is a very good illustration to the business risk of increased structures and controls.

Assume that you have ad hoc management. You will make good result, occasionally. It will be at high costs, but you deliver results. If you then apply structures and controls, your efficiency will increase. When you shoot, your bullets will hit within a much smaller circle. You can control the internal performance.

But what if results now are far from expectations? What if you now continuously miss the target? You gain good internal performance but catastrophic results. As a manager you will kindly be asked to take another job.


I believe we all fully agree that the wanted situation should be the “focused” situation, illustrated by the figure. This is when there exist structure and control in the organization and it delivers expected results. The thing I did not understand, when I struggled with some managers, was the need to demonstrate how to mitigate the risks of not meeting the business results during change. Just applying structure and control is no guarantee to be successful.

INLÄGG

Affärslogik, Verksamhetslogik och Verksamhetssystem

Högsta ledningen, strategin och ledningssystemet – En skall bort.

Use multi-dimensional organization structures wisely

The fundamental law behind how to design management systems

Why run fast if decisions move slowly

Why some managers hate structure

(c)  J O Advisory AB 2020