Some Management Theories and Concepts- A review


By

Prof. R.K. Gupta
BE Hons MBA FIE
Professor & Consultant
Aravali Institute of Management
Jodhpur
E-mail: rkgupta@rkgupta.in / cityju@rediffmail.com
 


The paper attempts to review critically some existing and traditional concepts about management practices and some lesser known but potent theories relevant to management.

Vision, Mission & Values

All corporations write down Vision and Mission Plans. On face of it, it is inevitable to do so, to get focused on what organization's priorities and long term goals are. This unfortunately assumes that environmental factors can be predicted well and will remain stable. And that any organization can pursue its vision and mission on their own choice and plans. The developments in last two decades in India and in US alike don't support such assumptions. Mostly those organizations that are not having strong R&D track record act only reactively to environmental changes-mainly the two –competitors' activities and technology drivers. Rising petroleum prices have forced auto makers to come out with electric 2 wheeler scooters. Now this is a third force (environment or rise in operating cost) acting on organizations and rapidly. The sudden demise of scooters in India, however could be easily predicted with Japanese two wheeler manufacturers making inroads in India in late 80s onwards having smart 'mo-bikes' as their only product. But our 4 companies in this line failed to notice and manage change. Three scooter manufacturers went out of business and one (Bajaj Auto) switched almost at its end to motorbikes and emerged back into competition.

Vision broadly is- what organization wishes to be or known to be like, after a few years. Mission is broadly the purpose of being in business. Business is a bundle of processes to fulfill some problems of society/customers with responsibility to people around, ethics and environment concerns for sustainable growth.

A mission statement is not 'to be leader in a sector' but what company aims to do and how it will achieve these aims. Today, employees and customer focus is essential part of any successful and durable mission statement.

The Brand promise, used more as slogans by companies and their adv. companies, in most cases is a confusing statement, which leaves one with hardly any understanding of values and promise hidden in Brand and clear benefits to users/clients. Using high sounding and technical words make the task more complex.

As a rule- Vision, mission and value statements should be of moderately short length, point wise and clear and crisp, for targeted audience to understand without applying much brain. They should serve as dominant and visible beacons to guide corporate and its associates including customers very quickly and clearly. They need to be imbibed in all key executives as a habit. Mostly employees are cynical about these.

'GARBAGE CAN' THEORY:

The Garbage Can theory, or model, attempts to explain some organizational decision-making anomalies-in particular, decision making by "organized anarchies" where preferences are not clear, technology is not clear, or participation is fluid. It disconnects problems, solutions and decision makers from each other, unlike traditional decision theory. Specific decisions do not follow an orderly process from problem to solution, but are outcomes of several relatively independent streams of events within the organization." (Richard L.Daft; 1982)

Problems, solutions, and decision makers move from one choice to another depending on the mix of recognized problems, the choices available, the mix of solutions available for problems, and outside influences on the decision makers. In short, problems are uncoupled from choices giving an image of "rummaging around" inside a garbage can. Problems are addressed based on a solution choice, but choices are made based on shifting combinations of problems, solutions, and decision makers. In this sense, decision-making appears "pathological" instead of rational. If this were so, do leaders and CEOs in Corporations really contribute much towards organizational decision making?

The Garbage Can theory allows problems to be addressed and choices to be made, but does not necessarily following a rational process. Poorly understood and addressed problems can drift into and out of the garbage can process, depending on the situation and factors.

The Garbage Can model of organizational theory was developed in 1972 by Michael D. Cohen, James G. March and Johan P. Olsen.

It was developed in reference to "ambiguous behaviors", i.e. explanations/interpretations of behaviors which at least appear to contradict classical theory. The Garbage Can Model was greatly influenced by the realization that extreme cases of aggregate uncertainty in decision environments would trigger behavioral responses which, at least from a distance, appear "irrational" or at least not in compliance with the total/global rationality of "economic man" (e.g. "act first, think later"). The Garbage Can Model was originally formulated in the context of the operation of universities and their many inter-departmental communications problems.

Streams of events within the Garbage Can Model

Four of those streams were identified in Cohen, March & Olsen's original conceptualization: 1. Problems
2. Solutions 3. Choice opportunities : organization man needs occasional "decision opportunities" for reasons unrelated to the decision itself and, 4. Participants: They come and go; participation varies between problems and solutions. Participation may vary depending on the other time demands of participants (independent from the particular "decision" situation under study). Participants may have favorite problems or favorite solutions which they carry around with them...

Organizations tend to produce many "solutions" which are discarded due to a lack of appropriate problems. However problems may eventually arise for which a search of the garbage might yield fitting solutions.

Organizations operate on the basis of inconsistent and ill-defined preferences; their own processes are not understood by their members; they operate by trial and error; their boundaries are uncertain and changing; decision-makers for any particular choice change capriciously. To understand organizational processes, one can view choice opportunities as garbage cans into which various kinds of problems and solutions are dumped. The mix of garbage depends on the mix of labeled cans available, on what garbage is currently produced and the speed with which garbage and garbage cans are removed.

Chaos Theory

The name "chaos theory" comes from the fact that the systems that the theory describes are apparently disordered, but chaos theory is really about finding the underlying order in apparently random data.

The first true experimenter in chaos was a meteorologist, named Edward Lorenz. In 1960, he was working on the problem of weather prediction. One day in 1961, he wanted to see a particular sequence again. To save paper, he only had it print out three decimal places. In the original sequence, the number was .506127 , and he had only typed the first three digits, .506.

By all conventional ideas of the time, it should have worked. He should have gotten a sequence very close to the original sequence. A scientist considers him-self lucky if he can get measurements with accuracy to three decimal places. Surely the fourth and fifth, impossible to measure using reasonable methods, can't have a huge effect on the outcome of the experiment. Lorenz proved this idea wrong.

This effect came to be known as the butterfly effect. The amount of difference in the starting points of the two curves is so small that it is comparable to a butterfly flapping its wings.

The flapping of a single butterfly's wing today produces a tiny change in the state of the atmosphere. Over a period of time, what the atmosphere actually does diverges from what it would have done. So, in a month's time, a tornado that would have devastated the Indonesian coast doesn't happen. Or maybe one that wasn't going to happen does. (Ian Stewart, Does God Play Dice? The Mathematics of Chaos, pg. 141)

This phenomenon, common to chaos theory, is also known as sensitive dependence on initial conditions. Just a small change in the initial conditions can drastically change the long-term behavior of a system (Can be organizations). Such a small amount of difference in a measurement might be considered experimental noise or background noise. From this idea, Lorenz stated that it is impossible to predict the weather accurately. However, this discovery led Lorenz on to other aspects of what eventually
came to be known as chaos theory.

Another system in which sensitive dependence on initial conditions is evident is the flip of a coin. There are two variables in a flipping coin: how soon it hits the ground, and how fast it is flipping. Theoretically, it should be possible to control these variables entirely and control how the coin will end up. In practice, it is impossible to control exactly how fast the coin flips and how high it flips. It is possible to put the variables into a certain range, but it is impossible to control it enough to know the final results of the coin toss.

One biologist, Robert May, decided to see what would happen to the biological population equation as the growth rate value changes.

As the growth rate parameter in his analysis was changed and rose further, the graph line bifurcated (doubled) again and again .The bifurcations came faster and faster until suddenly, chaos appeared. Past a certain growth rate, it becomes impossible to predict the behavior of the equation. However, upon closer inspection, it is possible to see white strips. Looking closer at these strips reveals little windows of order, where the equation goes through the bifurcations again before returning to chaos. This self-similarity, the fact that the graph has an exact copy of itself hidden deep inside, came to be an important aspect of chaos.

An employee of IBM, Benoit Mandelbrot was a mathematician studying this self-similarity. One of the areas he was studying was cotton price fluctuations. No matter how the data on cotton prices was analyzed, the results did not fit the normal distribution. Mandelbrot eventually obtained all of the available data on cotton prices, dating back to 1900. When he analyzed the data with IBM's computers, he noticed an astonishing fact:

The numbers that produced aberrations from the point of view of normal distribution produced symmetry from the point of view of scaling. Each particular price change was random and unpredictable. But the sequence of changes was independent on scale: curves for daily price changes and monthly price changes matched perfectly. Incredibly, analyzed Mandelbrot's way, the degree of variation had remained constant over a tumultuous sixty-year period that saw two World Wars and a depression. (James Gleick, Chaos - Making a New Science, pg. 86)

Applications in Management Practice: Management Concepts and Chaos

Modernist management writers such as Taylor and Fayol based their analyses on an understanding of organizations as logical machines which requires systematic maintenance and fine tuning. Management was seen as a rational science in which improvements in efficiency could be produced by right changes to structure and processes. The classical management theorists drew to some extent on principles which came from Military and engineering thinking and saw management in terms of "planning, organization, command, coordination and control (Morgan: 1997)

In stark contrasts the current researchers, such as Stacy (1992) prefer to argue that chaos theory is more appropriate conceptual framework with which to understand the management dynamics because there is little real scope for predicting how managers and organizations will behave. In this view there is always both disorder and order existing side by side and organizational success is seen to come from an ability to manage the chaotic edge between disintegration and ossification. Some writers on management informed by "chaos and complexity' approach, argue that only an understanding of ambiguity and paradox has the potential to unleash creativity. There is now noticeable lack of confidence amongst management theorists as earlier modern , rational paradigms of controlled organized activity has gradually given way to views which place heavy emphasis on uncertainty ,rapid change  and an absence of measurable objective practice.

Various Views about Management 

Enablement and participation:

Functional view: getting work done by best means available

Facilitation rather than command and control and act as centre point of small or large teams of focused achievements within the overall goals and canvass or blue print.

Bossism vs. leadership: The latter is not exactly like the former. it is much more than that.

Proactive and reactive management- A proactive management needs predictive ability and data and tools and strategic planning

Small things matter a lot. Lorenz-chaos theory or butterfly effect as discussed about initial conditions.

Garbage can theory: organization's solutions searching for problems.

Other Management Challenges:

The loosening of organization structure and campus less organizations require management and use of information technology to become a cohesive force for various components of work strewn all over the world.

Data management & data mining from gigantic explosion of data and information  and the recycled garbage of information from one book to other, one journal to other and one magazine to other. Sifting through information on technology, processes and scientific principles and real time information about people within and out side organization, particularly competitors and customers is vital.

Developmental management and Indian management

The western models of commercial organization management don't hold much water in third world countries and where most NGO work is done and hence a third sector (Other than Government and Private commercial organizations) management approach is to be developed keeping needs of developmental management for such NGOs.

The Theory of Bullshit This theory states:

90% of the stuff that prevents your organization from achieving wild success is due to personal, individual bullshit that everybody believes is real, but which is not. Eliminate the bullshit by clear thinking and eliminate those things that prevent your success. CEO's role is important in this.

Theory of Constraints

The Theory of Constraints (TOC) is a philosophy of management and improvement originally developed by Eliyahu M. Goldratt and introduced in his book, The Goal. It is based on the fact that, like a chain with its weakest link, in any complex system at any point in time, there is most often only one aspect of that system that is limiting its ability to achieve more of its goal. For that system to attain any significant improvement that constraint must be identified and the whole system must be managed with it in mind.

The body of knowledge and analytical tools (the TOC Thinking Processes) that give power to TOC come from experience in the "accurate sciences" and are based on rigorous, but easily understood, cause-and-effect logic. These tools also provide the ability to support the development of breakthrough solutions through the premise that in the real world, all systemic conflicts that inhibit action are the result of unexamined assumptions that can be identified and corrected for true win-win solutions.

The TOC Thinking Processes, taken as a whole, provides an integrated problem-solving methodology that addresses not only the construction of solutions, but also the need for communication and collaboration that successful implementation requires. They have been used to create powerful generic, "starting-point" solutions for various business functions, including: Production, Project Management, Distribution, Supplier Relations, Marketing and to provide the route to customizing these generic solutions for specific environments (focusedperformance.com)

Taken individually, the Thinking Processes can also be used to enhance communication and day-to-day effectiveness through such skills as: Win-win conflict resolution, Idea evaluation and feedback   Team-building, Empowerment and delegation.

More often than not the CEO himself may be an upper limit or constraint to creativity and progress within organizations.

Same way while benchmarking may be beneficial it also puts constraints and obfuscates the logical independent thinking to achieve higher levels of quality and efficiency. One gets typed into stale over the period accumulated practices that organizations fear to challenge and disturb (very commonly we listen- I am running this company since 10 years. We are doing this way for last 20 years and I have been working in US MNC, this is tested method for years)

Ethics, Values and Organizational synergies:

If vision statement is a vivid future picture of the organization about itself and a goal to reach, is it also a definition of values that organization (read the owners) will stand for or are these two separate things? Yes, these are separate. Values do change from time and place and in different societies. So do ethics-contrary to general perception about ethics.

Ethics (Big talk of management practitioners and companies today) many times are more a matter of convenience. What is ethical has to be legal as law also arises from collective conscience and culture of a society basically to protect its constituents and keep order. Laws may also facilitate development or block it (like in India) but all that is legal may not be ethical. Many a time managers interpret the logic in reverse. Like many companies write vision as mission and mission as vision or both are obfuscated. Do vision and mission statements change with times? Yes they do and they should after some good period of time.

Values represent the core priorities in the organization's culture, including what drives members' priorities and how they truly act in the organization, etc. Values are increasingly important in strategic planning. They often drive the intent and direction for "organic" planners.

The point is the senior and junior executives of organizations both pass across the Vision and Mission statements which are more of forgotten directives and more of decorative signboards hanging in front office of companies where no one looks at except for the bored visitors in dismay and amusement, or even above the lavatory entrances. I suggest these be hung up in lavatories too as a person sure gets a few minutes to focus and concentrate on, without being disturbed.

How to generate energy levels in organizations or at least recognize such synergies (an effect greater than sum of individual effects) (or high energy levels) when they happen and tap them for organization's growth. Some great employees join organization and synergies start to build up, but results are seen after a period of time 6 months to 3 years. The employee leaves by that time (Also a Problem with public administration).

The credit is taken by CEO or promoters but the downfall of energy level starts and noticed only after a couple of months or even after years of employees having left. Because, there is always inertia lag period between events and their tangible effects. Synergies also build up by such events as foreign collaboration or taking a dramatic renovation program in company but majority of CEOs fail to keep the tempo up as they are more keen to self propagate and boost their own ego and benefits rather than giving credit.

Murphy's Law and defensive design:

Murphy's Law is an adage that broadly states that things will go wrong in any given situation, if you give them a chance. "If there's more than one possible outcome of a job or task, and one of those outcomes will result in disaster or an undesirable consequence, then somebody will do it that way." It is most often cited as "Whatever can go wrong, will go wrong" and usually at the most inopportune moment". This is sometimes referred to as Sod's law or Finagle's law.

Regardless of the exact composition and origin of the phrase, its spirit embodies the principle of Defensive design anticipating the mistakes the end-user is likely to make. The defensive design is sometimes referred to as a "Murphy-proofing" procedure.

In most well-designed technology intended for use by the average consumer, incorrect connections are made difficult; this is the concept of Poka-yoke (Japanese Tool) in quality control. For example, the 3.5-inch floppy disk once used in many personal computers will not easily fit into the drive unless it is oriented correctly. The newer CD-ROM and DVD technologies permit one incorrect orientation — the disc may be inserted upside-down, which is harmless to the disc.

A defensive designer knows that if it is possible for the disc to be inserted the wrong way, someone will eventually try it. Fatalists observe that even if it seemingly is not possible to perform something incorrectly, someone will eventually manage it. This is often expressed as "Make something idiot-proof, and they will build a better idiot" or "The trouble with trying to make something idiot proof is that idiots are so smart".

Generally, the spirit of Murphy's Law captures the common tendency to emphasize the negative things that occur in everyday life.

There is a possible reasoning behind Murphy's Law as well. For example, on the hottest day of the year, the air conditioner breaks down. This is because that moment is when the most strain is put on it, which is the reason for it breaking down. Also consider the computer being "slow" when one is in a hurry - it is running at the same speed while one is feeling impatient and therefore feels that the computer is running slower than usual. This is where the "Can go wrong, will go wrong" part of Murphy's Law comes in. So defensive designing is must in any system or its subsystem to stop its misuse or abuse rather than blaming laws of nature.

Hence safety valves should be created in management system (including the public governance models) to not allow affairs to a run-away situation for their worst state as per Murphy's Law.

Acknowledgements

The paper is based on material culled from internet on various websites including Wikipedia as required. The author is grateful to various publishers whose material has been reproduced at various places. The concept and various issues are based on professional experience of Author as Senior Indian corporate Executive and academic.
 


Prof. R.K. Gupta
BE Hons MBA FIE
Professor & Consultant
Aravali Institute of Management
Jodhpur
E-mail: rkgupta@rkgupta.in / cityju@rediffmail.com
 

Source: E-mail February 16, 2008

          

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