Saturday, September 25, 2004

Management Powertools

I just finished reading the executive book summary of Harry Onsman's Management Powertools: A Guide to 20 of the Most Powerful Management Tools and Techniques Ever Invented. With such a title, you might guess that this book goes a little bit back to the basics in the dealing with the subject -- which is fine -- a good refresher never hurts anyone -- but I disagree with the opening premise of the book: "Management is an art, not a science." I think management is a science. I think leadership is more of an art. (But this is just me getting hung up on the differences between management and leadership -- I realize that some will use these words synonymously.) This executive book summary, is part 1 of 2 parts -- this first part summarizes the 10 tools that apply to managing organizations, while the second part summarizes the 10 tools that apply to managing people. So, the 10 tools for managing organizations -- and yes there are more out there, but these are considered the basics that every manager needs in her toolkit.
  • Vision -- strategic intent of an organization is defined by the high level statements of purpose, such as vision, mission and value statements. They're intended to keep an organization grounded and focused, and can be especially important to have in times of change. Without these statements and an understanding of them, organizations can become splintered -- losing focus, drifting and falling prey to irrelevance and competition.
  • Porter's Five Forces Model -- from most Management 101 courses, Michael Porter's model identifies five competitive forces that shape every market and industry.
    - The threat of entry of new competitors (new entrants)
    - The threat of substitutes
    - The bargaining power of buyers
    - The bargaining power of suppliers
    - The degree of rivalry between existing competitors
    Porter also defined three generic strategies for gaining competitive advantage -- asserting that the key to being successful is to have a 'sustainable competitive advantage' -- specifically via product differentiation or cost leadership.
  • Metrics -- Key Performance Indicators (KPIs) and the Balanced Scorecard are two measurement systems used widely in business today. KPIs can sometimes be narrowly focused -- specifically measuring a few or grouped performance indicators that are linked to the business strategy -- the Balanced Scorecard on the other hand, was developed to look at an organization holistically -- balancing between internal and external measures; objective and subjective measures; and, performance results and the drivers of future results. Metrics are great -- but unfortunately, a lot of business either confuse measurements for performance -- ie., they spend too much time navel gazing that the running of their business is forgotten.
  • Scenario Planning -- this deals with looking out to the future in order to prepare an organization for what is to come. Scenario planning is not a forecast of what is to happen, but a view into the possibilities that may come.
  • Competing Values Framework [PDF] -- the premise for an organization's culture is that it is a result of competing values within the organization. Every organization has four culture types within it that compete -- with one or two being the dominant. The culture types are:
    - Clan Culture (Collaborate or Human Relations model) -- emphasis is placed on shared beliefs, teamwork and mutual support.
    - Adhocratic Culture (Create or Open System model) -- emphasis is placed on freedom, initiative and creativity.
    - Hierarchical Culture (Control or Internal Process model) -- emphasis is placed on efficiency, predictability and structure.
    - Market Culture (Compete or Rational Goal model) -- emphasis is placed on goal achievement, competitiveness and performance.
  • Product Portfolio Analysis -- this tool was developed by the consulting industry to help organizations decide on what portfolio of products or services they would offer. Being from a consulting group, you know this has to be a matrix! It separates products/services into high or low market growth potential, and high or low market share.
    - Those that fall into the high market share/high growth quadrant are labeled 'stars' and should be nurtured.
    - Those that fall into the low market share/low growth quadrant are labeled 'dogs' and should be dropped.
    - Those that fall into the low growth/high market share quadrant are labeled 'cash cows' and should be protected.
    - Those that fall into the low market share/high growth quadrant are 'question marks' since they may become 'stars.'
  • The 7 Ps of Marketing -- identifies the elements that influence successful sales in a market. They are:
    - Product -- offering customers the right product/service
    - Price -- this is linked to the customers perception of value
    - Place -- how the product/service gets to market; which channels are used and the logistics involved
    - Promotion -- communicating with the customers
    - Participants -- the employees of the organization and the customers
    - Physical Evidence -- the environment in which the product/service is delivered to the customers
    - Process -- the procedures, mechanisms and activities the organization uses to deliver the product/service to the customers
  • SERVQUAL Customer Surveys -- is a tool used to measure the perceptions and expectations of customers in the delivery of quality service. It is very useful to track how an organization performs over time. It focuses on three areas: 1) customers expectations of the industry; 2) customers expectations of the organization in question, and; 3) customers weight of different aspects of the industry.
  • Process Mapping [PDF] -- there are a range of specific tools designed for process mapping, but they all operate under the same premise: if you know what you're doing, you then have an opportunity to improve on it -- from continuous improvement to grand scale reengineering efforts. There are four types of interrelated process maps:
    - Process Description -- describing the current state process
    - Process Verification -- verifying each part of the process described by observation
    - Process Improvement -- taking the verification maps and after analysis, determining where processes can be improved
    - Process Redesign -- this represents the ideal process
  • Pareto Analysis -- this is a quick tool to help you delve through the clutter to get to the few that really matter. It's also known as the 80/20 rule, and suggests that 80% of the effort will be spent to achieve 20% of the value. Pareto analysis doesn't lead to solutions to problems, rather, it points to where the greatest impact can be realized.

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