Hack:
FROM TAYLORISM TO AGILE MANAGEMENT The 4 generations of management

 

Opening remarks

 

At the dawn of the twentieth century, Taylor, Weber, and Fayol set the basis for what they called “scientific management”. Actually, it was the first platform of management. It gave authority to a few who relied on bureaucracy and on controls In order to manage unskilled and unsophisticated workers.

 

The second innovation of the management came from Dr. W. E. Deming and from Japanese academics including Professors K. Ishikawa and Y. Akao who developed Total Quality Management (TQM). In order to satisfy the customers, TQM focuses on the efficiency of the organizational  and strategic processes, and on continuous business improvements. It features a vast toolkit that helps the teams to work with ideas, to work in teams, and to work with numbers. TQM is a very substantial improvement over Taylorism. Firstly it has a “total” or systemic approach; secondly it links strategy and operations; thirdly it assigns the work to teams; fourthly it focuses attention to the wants and to the musts of the customers; finally it introduces the concept of continuous improvements. Six Sigma builds on many of the tools and techniques of TQM, but it tends to focus a few teams on just a few vital processes, and to push process efficiencies to their limit.

 

The third innovation of the management is the merit of academics and consultants such as Professors R. Kaplan and B. Lev who called the attention of the business-leaders on the importance of the intangible resources. The importance of the intangible resources is widely recognized, but it is ignored by the conventional accounting. As a result, most organizations continue to plan and to report only on the basis of financial results, and they tend to focus on the short term because it is very difficult to put a fickle future in monetary mathematics.

 

Under the motto “translating strategy into action”, Kaplan Norton introduced in 1996 the Balanced Scorecard. The vision and strategy set the objective, the measures, the targets, and the initiatives for the financial results, for the internal processes, and for 2 intangible resources, namely: the customer satisfaction, and on learning and growth. 

 

Interestingly, the fourth innovation of the management, Agile Management, is not the work of academics as was the case of the previous management innovation, but indirectly of IT programmers who in 2001 published The Agile Manifesto, and laid down principles and practices of agile projects concerning IT programming. Software companies like Microsoft and Internet companies like Amazon have adopted these principles and practices, and spread them company-wide. Several global consultancies regularly publish papers on this new method of management, and some traditional organizations have adopted Agile Management at least for part of their organization.

 

Agile Management 

 

It is still early days, and many traditional organizations hesitate to introduce Agile Management because, unlike TQM, it really revolutionizes the style of the leadership and the structures of the organization. Executive surveys report that changing the corporate culture is a major roadblock on the way to implanting Agile Management. I will show later how to solve this problem. But, also TQM took time to gain wide-ranging recognition, and in the West it was mostly confined to addressing specific quality problems.

 

Let us address, albeit briefly, three issues: (1) Agile Management’s differences (2) why this methodology is a key issue to sustain success in turbulent times (3) how to manage an agile project of management transformation.

 

(1) While Taylorism concentrated the power on very few bosses, Agile Management distributes the power widely to many teams. To that effect, it starts by breaking down strategies into tasks that can be assigned to teams, and that the teams can handle smartly, simply, and swiftly. Then, Agile Management reassembles things so as to optimize the synergies and the creation of value with and for the stakeholders. Often, business models focus on the customer and/or on the shareholders. An advocate of a systemic approach, I urge business-leaders to consider all the significant stakeholders and their interactions.

 

Like TQM, Agile Management is systemic in its strategies, stimulating in dealing with people, and its practices are implemented systematically. Agile Management uses a toolkit based on “Scrum” (*) and on lean management. Like TQM, Agile Management looks for continuous improvements. However, unlike TQM, Agile Management does not afford the time to search for ultimate excellence, things have to move on quickly, and be improved quickly later.

 

TQM includes a participative process of planning called Hoshin Kanri. Agile Management is also highly participative on the 4 vectors of communications – top/down, bottom/up, inside/out, outside/in - and teams participate both in the planning and in the reporting. However, TQM is a fairly cumbersome and time-consuming methodology. Agile Management underscores simplicity and swiftness. So, in my new book - “The Platform of Agile Management and the Program to Implement It” - I retain some of the principles of Hoshin Planning, but not its practices. (*) Unlike TQM, Agile Management requires a deep transformation of the management. This transformation can start in some of the units of the enterprise before being expanded company-wide.

 

Agile Management fosters innovation, and consequently it attaches a lot of importance to the development of the intangible resources, and in particular to the different types of talents that interact to galvanize the collective creativity of teams and of their networks.

 

In my new book, I propose several original models and methods in order to facilitate the installation of Agile Management, namely: the breakdown of the intangible resources, the breakdown of the value-chains, and the breakdown of the controls.  I will briefly revert to them under (3)

 

(2) Many traditional organizations remain trapped in some of the traditional tenets and techniques. Taylorism is over 100 years old, but its ABCs, i.e. authority-bureaucracy-controls, are still widely applied. Actually, they are hard to dislodge because some people crave personal power, and there are as many power obsessed people in business as in politics. However, technologies have amplified and accelerated changes. Overweight organizations have no chance against nimble and nifty enterprises that, regardless of size, operate like start-ups. Business-leaders should bear in mind that the life of S+P 500 has shrunk to 14 years, and that it will continue to swoon. Only strategically and organizationally agile companies will take full advantage of our turbulent times.

 

(3) In the bibliography, I mention three books that can help business-leaders to understand and to implant Agile Management. As mentioned earlier, I present hereafter - albeit very succinctly - three additional breakdown, namely: the breakdown of the intangible resources, the breakdown of the value-chains, and the breakdown of the planning and of the controls. Then, I will add a few lines on the program of agile organizational transformation.

 

-a- The <business-value>

 

Value is created/destroyed in the business on 5 corporate capitals, namely: the <organizational capital>, the <market capital>, the <talent capital>, the <life and time cycles>, and the <financial capital>. The latter is a tangible asset, while the other 4 are intangible resources. Most importantly, the teams on the front lines cannot manage generalities and broad titles, so I have broken down each of the 5 corporate capitals in 5 capital components. I refer readers to my book mentioned in the bibliography.

 

Each network and each team selects the few tangible and intangible resources that are the vital enablers of achieving results on their task. These enablers are planned and the results are reported. Firstly, internally everybody can see the distribution of the tasks, of the enablers, and then of the results. Secondly, reporting not only the results on the financial capital components but also the result on the intangible capital components enables the teams and the management to spread the acquired intelligence, and to continuously improve.

 

-b- The 5  value-chains

 

In 1985, Prof. M.E. Porter introduced the notion of the value-chains to help business-leaders concentrate on the links where they could achieve a competitive advantage. He featured a chain of the primary activities, and a second chain of the support activities. I have added a third internal value-chain, the corporate value-chain, which encompasses the business breakthrough and the special projects that involve the corporate staff in their management, and the corporate services such as legal, financial, corporate brand, etc. It would be negligent to omit planning and reviewing the role of  the corporate value-chain on the other internal and external value-chains.

 

Several global consultants call the attention of the business-leaders on “the customer journey”. So, in my model, the 3 aforementioned internal value-chains collectively collaborate to optimize the management of the 2 external value-chains, namely: the customers’ and the suppliers’ value-chains.

 

Typically, the organizational design of the Agile Management features the teams, the networks that coordinate a number of teams on the same value-chain, and the leader of each of the 3 internal value-chains. The aforementioned leaders gather in the council of the value-chain leaders, and they report individually and collectively to the CEO. At the same level of the council and also reporting to the CEO we have the alert & innovation committee, the CFO, and a team that helps the CEO.

 

-c- The planning and the controls

 

I have broken down the planning process in 4 <steering processes>, namely:  1. The <check and challenge> where the senior and the operations management review past results, and spreads the learning. 2. The <alert and innovation> where the senior management receives the reports of the alert & innovation committee on the future opportunities and threats 3. The <planning and synergizing> where the senior and the operations management work out the strategies concerning the business breakthrough, the evolutionary innovations, and the continuous business improvements, and together work out their distribution to the 5 value-chains 4. The <process of strategic and organizational deployment> where the value-chain leaders deploy the targets and the means down to the networks and to the teams. Following the principle of Hoshin Planning, the teams, the networks, and the value-chain leader can feed back comments to the senior management or request changes to the plans that the senior management has to consider, discuss, and then finalize.

 

It is essential that all the levels and disciplines of management participate in planning process and that they weigh in on it. Participation in the planning will enable teams on the front lines to take initiatives, and to understand the impact of emerging changes on the strategies and to report smartly, simply, and swiftly.

 

The controls are distributed bottom/up. The teams have frequent reviews, normally every 1-3 weeks in well prepared, pleasant, and highly productive meetings or stand-up meetings, where the members review what has been achieved, what remains to be done, and what if any improvements should be considered. The reports are consolidated bottom/up first at the level of the network, and then at the level of the value-chain.  The council of the value-chain leaders reviews the results and the synergies. Its report feeds into the check & challenge <steering process>.

 

-d- The program of agile organizational transformation

 

Agile Management requires a deep organizational transformation. As previously mentioned, changing the corporate culture is a major roadblock on the way to implanting an organizational and strategic agility. Prof. J.P. Kotter published his approach on the subject in 1996, and he emphasized the urgency of completing the 8 steps of the program he advocates. I follow suit, and the 5 steps of the program that I propose in my new book must be completed smartly, simply, and swiftly. Let us not forget that according to surveys conducted by global consultants a vast majority of change-management programs result in partial or total failure. The first reason may be that the transformation program is left to drag on, and that fatigue will choke the program to death. The second reason is that a majority of such programs merely look to solve an immediate problem, just focus on some of the issues, and never touch the core of the management system. A third reason is that many programs are carried out in the good old way, the senior management appoints a swat team to implement top/down prescribed changes, and it does not really involve the lifeforces of the organization.

 

The <program of agile management innovation> described in my book follows the following steps.

 

1. The senior management studies and documents the need for the organization to adopt Agile Management, it articulates the <why>, the <who>, and the <how> of the program, and it chooses the way to do it, and it organizes the internal and external resources needed. The senior management should inform some of the stakeholders of the program it will launch.
2. The senior management eliminates the strategic and organizational constraints firstly to eradicate these traps, and then to show to lifeforces of the organization that it is really involved in the innovation of the management system.
3. The deployment starts with a program of short, small group, interactive seminars where people at different levels and functions explain the <why>, the <who>, and the <how> of the program, and thusly build strong support. A separate program should be envisaged for managers that need to switch from the traditional command, control, and chastise to steering, sharing, and supporting the teams. Social technologies, IT, and other means will be available to facilitate, to expedite, the work of the teams and to help the communications internally and externally.
4. As I explained in my previous paper “Can we change corporate culture?”,  no need to talk about culture. We just put people in the new setting, the team and its task – which normally is not that different from what these people were doing before - and we show the team how it will interact with other teams on the same value-chain and on other value-chains. There will be coaching and support on the job as needed. Senior managers will participate in some of the team-reviews, and they will support the activities, give early recognitions, and spread the learning.
5. Initially, the <program of agile management innovation> may only be applied to some business-units, normally the ones that will be most receptive and/or the ones that need it most. Then, the program will be reviewed, improved on, and extended. Some of the external partners may be offered to share the learning.

 

As mentioned, once people are put in the new setting, get all the help and recognition they need, and enjoy being their own bosses, they will be implementing a new culture, it will be the new way we do things around here.

 

Unlike traditional approaches, the <program of agile management innovation> does not leave the work to the few members of a swat team; it gets all the lifeforces of the organization involved, they are the ones who leverage and life the changes. Moreover the <program of agile management innovation> is not a one-time chore; it is the engine of continuous improvements on the management system.

 

 

Closing remarks

 

Digitization, mobility, and also globalization although with its ups and downs, have created a new environment, which needs a new approach. Innovation is now the name of the game, and innovations cannot be limited to products and processes. The time has come for many enterprises to innovate their management.

 

Changes do not come easy, particularly when they upset people’s positions, and when they change the value of attitudes and of aptitudes. “Where there is a will there is a way”, but if you show the way you will raise the resolve.

 

Bibliography

 

Willy A. Sussland “The Platform of Agile Management and the Program to Install It” Routledge 2017

J. and J.J. Sutherland “Scrum” Crown Business 2014

L. Morris, M. Ma, P.C. Wu “Agile Innovation” Wiley 2014