Where’s the Value?
My passion is: “The effective management of IT, and IT related services”. This passion allows me to engage with people with the word “manager” in their job title. Some are Project Managers, Operations Managers, Service Managers, Financial Managers, Sales Managers, and more.
I’ve had the privilege to do my work across the English speaking world, over the past 20 years. It allows me to observe management in action in different countries, and several industries.
I’ve witnessed successful management by outstanding managers. Unfortunately, as is the case with any “doctor”or worthwhile consultant, the majority of my work takes me to situations where management is not so outstanding.
In the past year I’ve become aware of some fundamental shifts in management. It is so fundamental that I have no choice but to call it out. This Blog entry, after a hiatus of almost three years is doing just that.
For the purpose of this discussion, I refer to management in some instances as the people that manage. In other instances it refers to the practice of management. Simply put: Managers manage. I will look at what the task entails. I will also investigate the qualities that makes a person a good manager in today’s business. Because, IT Service Management is my immediate domain of expertise, this will largely be the context for my observations and recommendations.
When I am engaged as Management Consultant, it gives me the chance to help my clients improve their management (people and practices). I educate and coach managers on the desired disciplines and behaviours of success management.
The results in most cases are better, desired, and more predictable business outcomes. Some examples include: Putting a project or program of work back on track. Laying the foundation for improved IT Service delivery. Helping a manager structure their department, choosing the best management system, and reaching objectives. Many engagements require a change. Some changes are incremental. Most are fundamental.
We are standing on the eve of another fundamental change in management.
Over time, as a keen observer and scholar of the principles and practices of effective management, the experience helped me to recognize repeating patterns in management. Some of these patterns inevitably result in predictable failure. With the right patterns and behaviours, success is almost guaranteed.
Why write about management?
Recently, I am more and more perplexed by a deterioration in the practice of management. It is practiced by those claiming to be managers, with almost no resemblances of the disciplines required. People in management roles somehow achieve their responsibility, with very little to no understanding of what it takes to be a good manager. They simply do not manage well, if at all.
Managers are the chief creators of value in our organizations, and ultimately in our societies. Together with great thinkers, they are charged with realizing ideas. A great idea, service or product is not inherently valuable. It is the application of management to solve our day-to-day problems that unlocks the value.
In free and capitalist societies, it takes the form of successful businesses. Because of bad management, our organizations are not able to maximise their value and contribution to stakeholders. Our businesses suffer, and our society is worse off for it. People lose jobs. Incomes decrease, and companies go out of business. Bad management is only eclipsed by bad government. When management doesn’t live up to its responsibility, it is replaced by bureaucracy. Value is destroyed and ideas die.
I will go as far as saying that at present, most of our society is suffering as a result of bad management. Bad management destroys value.
If one is able to raise the profile and discipline, of management, our companies will be better off. Our workers will be allowed to do what they do best. Technology will be used to automate and scale our businesses. Ideas will blossom. And, value and wealth will be created for all involved.
What evidence do I have that shows management is deteriorating?
- Management Defined: Management is a specialty discipline, not a reward for loyalty.
- Management Practiced: There is a general lack of understanding of the principles of the practice of management.
- Management Evolved: Management is not adept in the new frameworks for value. The automation and scaling lifecycle made possible by information and other technology impress new economics on managers. It demands a fresh look at the approach for value. The management of people is no longer the chief domain of management. It is overtaken by the management of practices and technology.
In a sense, this conversation should take us back to the roots of management. It should also take us forward to a new perspective for management.
Thanks to Wikipedia we know that: “Management in all business and organizational activities is the act of coordinating the efforts of people to accomplish desired goals and objectives using available resources efficiently and effectively. Management comprises planning, organizing, staffing, leading or directing, and controlling an organization (a group of one or more people or entities) or effort for the purpose of accomplishing a goal.”
While the topic of management can easily be articulated in two sentences as above, it has taken decades for it to reach this level of simplicity. Some will argue it has been a process that has taken millennia, if the origins of management is traced back to ancient military texts and books on governance. Societies rose and fell because of it. Still, some may argue, we have not entirely cracked the “code” of management altogether, as our organizations, and our society continues to evolve, placing new demands on management.
A particular challenge with simplicity, is that it sometimes distracts from an underlying complexity. Assigning a title to a person with the words “manager” in it, in no means can begin to encapsulate the skills and understanding required to do justice to such a significant and old discipline. A title does not make a manager.
Management, is a vocation. It requires 10,000 hours of dedication, scholarly learning and apprenticeship under a valued mentor. Contrary to popular believe, it is not something you can pick up through a PMP certification. It is not something you pick up as you go along, by observing your boss. A University qualification is merely the beginning of a long journey to become qualified as an able professional manager.
With this in mind, it should be no surprise that there is a significant lack in the market, of those that has the vocation of manager. Good and capable managers are hard, if not near impossible to find. Good and successful businesses usually have them. In easy times, people easily become managers. Harder times call for more dedication. The motive for becoming a manager is: The unquestionable commitment to creating value.
Unfortunately, due to either this lack of understanding, or desperation, corporations have resorted to promoting subject matter expertise to management roles as “reward” for achievement or loyalty. In poorly performing organizations, becoming a manager is viewed by many staff in an advanced career state, as the halfway house where you can sit back, rest on your laurels, and reflect on your contribution. Use what you’ve learned. Meet with other managers. It is the time in middle career where one can wander from meeting to meeting, email to email and do “management”. Be busy being busy. The heavy lifting is for the underlings. The “manager” has paid his dues. Now he is a “manager”.
It is easy to find evidence of this problem: Usually, the company is performing poorly. Management turnover is rampant. In some businesses there simply are too many people called managers. For instance: There is no real motivation why a business must have a Junior Manager, Middle Manager, Senior Manager, Executive Manager, Assistant Vice President, Vice President, Senior Vice President, etc. There is also no real scientific motivation that says a manager can only manage around 15 staff as some companies’ policies claim.
Experience has taught me that a company with too many managers, is a company where managers are too busy with each other. Removing the majority of these managers easily helps to focus management attention back to the task of management, with the ultimate objective of creating value. Managers being busy with managers create all kinds of unnatural opportunities for politicking and positional jostling.
If management holds the key promise of value creation, then it is time for our progressive companies to take a much more serious look at who and what they anoint as manager. It is such an important role. If the knowledge is unquestionable that management is a specialized discipline, that it is ultimately the role that determines the degree of success of a business, then one should seek out the professional manager. Without a question, the company should hire the best managers they can find.
There are two ways how companies have good managers. They attract good managers by making it possible for managers to succeed in their organizations, and they allow these managers to share in the value that they create.
Alternatively, companies can develop good managers. This is a much more significant and longer commitment from both parties. It requires the selection of an appropriate candidate early, and a fair amount of candidate dedication, schooling, coaching and mentoring over several years. Keeping these managers is the hardest task, considering the demand for good management all over, by successful businesses.
What is it managers do? Let’s look at some opinions:
Chinese general Sun Tzu in the 6th century BC, in The Art of War, recommended being aware of, and acting on strengths and weaknesses of both a manager's organization, and a foe's. Management practice in this context is underlined by a value drive for successful conquest.
One particularly recognized, and more recent expert that captured it well over 50 years ago, was Peter Drucker. He articulated a more industrious approach as:
- Managers Set Objectives: The manager sets goals for the group, and decides what work needs to be done to meet those goals.
- Managers Organize: The manager divides the work into manageable activities, and selects people to accomplish the tasks that need to be done.
- Managers Motivate and Communicate. The manager creates a team out of his people, through decisions on pay, placement, promotion, and through his communications with the team.
- Managers Measure. The manager establishes appropriate targets and yardsticks, and analyzes, appraises and interprets performance.
- Managers Develop People. With the rise of the knowledge worker, this task has taken on added importance. In a knowledge economy, people are the company’s most important asset, and it is up to the manager to develop that asset.
Over the last two decades the definitions of management have taken a particular slant towards the effective engagement and motivation of the workforce. The following example from the UK Management Advisory Service clearly illustrates the point: “Good Management: A key to successful management is the relationship between the manager and his or her staff. It’s the manner in which managers manage people that separates the ordinary from the good and the exceptional. Good relationships are based on trust, commitment and engagement, and a good manager’s essential role is to build these relationships for the benefit of the organisation, so that the tasks that are set are completed with enthusiasm, effectively, on time and with the energy to do more.”
The above cannot be upheld as definitive examples, accurate descriptions, nor legitimate observations about trends in the practice of management. As stated earlier. Management is a subject that continues to evolve with society. (For the record: It is by no means a science either.)
Management and society is intertwined. It is a social matter. It may be one of the key inputs defining the evolution of a society. It could also be a clear indication of the state of a society, such as we found in the cases of ancient Egypt, the Roman Empire (some of the best managers), and others.
Our understanding of the practice of management shifts and motivates to serve to create value for the structures and philosophies of the day. Management may have originated in the realms of military and monarchies with focus on command, conquest, and control. Yet, this understanding proved limited at the dawn of industrialization, that called for an expanded perspective in the division of labour, repetition, and scale.
Drucker broke management ground in a society that increasingly became information driven in a service based economy, to be dominated by knowledge workers. A more humanistic view of the practice of management as something that is done for, and with people, serves this view better.
At the dawn of a new era where people are increasingly being replaced with intelligent machines, we are called upon again to reflect on our understanding of the practice of management, and what should be considered “good” management. More about this when we consider the future of management.
In the light of a realization of the fluidity in the subject matter, I am going to be bold and venture a set of simplified principles by which the discipline of management can be defined, regardless of a particular emphasis of circumstances of a society may impose on a particular aspect of the discipline.
Four theoretical principles for the Practice of Management:
- The Definition and Implementation of a System to Realize a Stated set of Objectives or Goals: The practice of management cannot escape its calling to create value for its stakeholders. This is done through a clear perspective of the intended, and mostly imposed outcome for the practice. Defining objectives and goals are not within the realm of management. Making these real, and thereby realizing value, is in the realm of management.
- Outcomes are defined in terms of objectives or goals. It is imperative for any management practice to be crystal clear about the intended outcome, and the evidence that will bear testimony to its successful accomplishment. Without this, no practice can claim to be of value. It is then merely activity for the sake of activity.
- To reach a desired outcome, management practice defines and implements a system that realizes it. Such a system consist of capability (people, practices, tools, information), and motive.
- The maturity and ability of the capability directly impacts the cost and duration of the system to reach its intended purpose. As the subject of management evolves, it pays attention to particular parts of capability. For example: In some instances, the capability or unique talents of the people in the system lends it with a distinctive ability to realize value. In other cases it may be work practices (policies, procedures, know-how) that puts forward a unique and inventive approach to realizing value. More and more, tool-ability in the form of information technology and robotics differentiates the capability of the management system.
- The motive provides the fuel for the capability to continue pursuit of the objectives or goals. For example: In time of war, the motive may be survival. In certain business situations, monetary reward may fuel action. Motive is one of the more delicate items that often undermines the success of a management system. For example: Labour Unions feed on lack of, or confusing motive, to undermine a system. Simon Sinek makes a compelling argument with Daniel Pink on how motive is a fundamental ingredient for people to contribute to the success of an idea (or system). This remains relevant while people remain the key ingredient of a system. However, there may come a day when that is no longer the case, and management systems exist without people.
- Lastly, there can be no perspective of success unless measurement exists to bear testimony to the degree of success the system has in effecting the intended outcome. Therefore, continuous measurement and reporting of key performance metrics help the system to self navigate and correct, as it drives towards visibly tracking progress towards its ultimate purpose of value for its stakeholders.
- The Resolution of Exceptions to the System: Systems are never perfect. Many start out deficient and grow to become more efficient.
- The exceptions are the events where the system’s practice and motivation is not able to self-navigate. It is the opportunity for the manager to correct, improve and supplement the system, so that it is able to resolve the exception in future by itself, or judge to ignore it as insignificant. Think of it as tuning the instrument of the system.
- The number of exceptions is a good indicator of the health of the system. More exceptions is an indication of a system deficiency. Less proves robustness.
- A simple example to demonstrate to managers how efficient their systems are, entails the tracking of the number of “how” questions a manager has to field. The number of “how” questions shows that the procedural collateral of the system (the items that define how the system is to behave) are not available, complete, simple or accurate. The manager has the task to either field these questions ongoingly, thereby risk becoming part of the system, or update the system practice with adequate and accessible practices to eliminate the continued occurrence of “how” questions in their inboxes.
- Other examples of exceptions include a tool failure, or staff not able to perform their duties at the expected level of performance.
- The Successful Integration of the System with Upstream and Downstream Touchpoints: Every system is using value from other systems as inputs for the value it creates for its customers. Complex systems relies on each other. Both these touchpoints are externalities that require a degree of oversight from the manager, because it can change without the system’s knowledge.
- The manager therefore, takes a particular interest in the effective integration of the capability of its system with that of other systems, and constantly monitors for improvement opportunities at these touch points. For example: Switching suppliers for better margin, or focussing on specific market segment customers for higher sales.
- There are good examples of industries that integrated their systems in order for an industry to benefit as a whole. For example: The advent of shipping containers revolutionized the logistics and shipping industry. Computer based trading changed the financial markets for ever by integrating key functions of quoting, sale and order fulfillment across participants.
- The Continuous Improvement of All the Above: The manager is the only party that has an end-to-end oversight over the system’s ability to deliver the desired outcome. This oversight is well demonstrated by his required focus in overseeing the integration touch points for the system as mentioned above. Systems evolve and grow. The manager is tasked with instilling a structured innovation or improvement approach, that forms the basis by which everything else in the system can be improved, evolved and grown. This innovation has only one purpose: To maximise value.
- This it does, even if in some circumstances it becomes evident that it requires the system to be sacrificed for the sake of reaching the value goal. Businesses come and go every day that outlived its purpose.
- When a continuous improvement practice is engineered into the system, it becomes an evolving system that has the potential, not only to meet the objectives and deliver the desired outcomes, but it can go beyond this and continues to evolve and maximise the value from its success. For example: The system can continue to improve by reducing cost overhead, reducing cycle time, eliminate failures, scale, and more.
- Only through a continued improvement focus can a manager objectively commit the systems resources to create value. A system that doesn’t have the ability to evolve and continue to add value, is a dead system, a liability, and its existence cannot be justified. Only unaccountable governments have the luxury to sustain such systems.
This is what good managers do: “Good managers deliver value for stakeholders, by meeting their stakeholder’s objectives, through the creation of an ever improving, evolving, efficient, and integrated system, equipped with adequate capability, and driven by a clear motive.
If a manager’s key instrument for creating value is an efficient system, then it is appropriate to consider at least one profound recent trend in the overall management systems domain.
This, the most important observation relates to the increasingly important role tools, and in particular information technology related tools play, and will continue to play in future management thinking: Technology is now a part of every management system, and will continue to overtake the human and practice related components in these system. This it will do as it continues to evolve and eclipse the abilities of the aforementioned in its role within a value creating system.
A recent article by Andrew McAfee and Erik Brynjolfsson: “Investing in IT Makes a Competitive Difference”, highlights how developments in enterprise information systems and their successful continued adoption by certain companies, gave them a competitive advantage over the past two decades. These companies simply outperformed their peers in their industries.
The study inevitably also highlights that while people and practices were the stalwarts of a good management systems of the past. It no longer can stand as the only differentiators for creating outstanding value. Tools in the form of technology, and in particular information technology, is now a key part of successful management systems. Its role will only increase. Companies with managers that embrace this fact, will be better placed to survive, and possibly lead future developments in their respective industries.
Managers have no choice but to have a level of understanding necessary to include these tools, and the best available, within their systems. Information technology is no longer a fad or irritation that something, or someone else does for you, or to you. Managers have a responsibility to their stakeholders to demand and expect a significant increase in the contribution of these tools towards increased value and benefit.
Technology has a far superior ability to humans, to automate and scale standardised defined practices. These abilities now also includes reasoning beyond human capability. Good managers in future, are likely to first be good managers of technology. Managers without this ability is likely to be marginalized and relegated to dying businesses, in otherwise progressive industries.
The above two mentioned authors also authored the book: Race Against the Machine that has a profound insight into changes happening around us, driven by advances in robotics. They highlight that working within the possibilities of technology should position managers to not race against the machines, but with it. More will be possible, than we ever imagined. This will happen only when we as managers realize that to embrace an exponentially advancing set of technologies, will become the key to unimagined degrees and amounts of value to our society.
Where will this leave the IT Managers of today?
I have not hesitated in the past to clearly spell out that IT Managers with a classic command and control mindset, stuck on Microsoft and its peers, are merely in the way. They will be marginalized together with those managers that have no grasp of the profound impact of technology on their discipline. However, those that have an understanding of management, and of technology, with an unwavering commitment to value creation, will be the best positioned to be the managers of tomorrow.
Good managers, with their machines, will own the future.
Hendrik van Wyk.