Management Model

What is a management model

A management model is the decision of a company's top executives on how to define goals, motivate efforts, coordinate activities, and allocate resources; in other words, how to define the work of management. Inspired by the changing expectations of their employees, new technological opportunities, and the offerings of emerging competitors, some companies are discovering that a distinctive management model can itself be a critical factor in their competitiveness. Here are some examples.

Julian Birkinshaw and Jules Goddard, 2009 Tweet

A review of the prevailing management models serves as a source of the best examples:

  • Ford 1920: Assembly line. Ford’s management model became the most influential at the beginning of the 20th century. It took advantage of the opportunities offered by the assembly line.
  • General Motors 1930: multi-divisional company
  • Toyota 1960: Lean. What is remarkable about Lean is that, in addition to a different way of thinking about optimization, a different view of people is emerging that sees employees not only as resources.
  • Spotify 2010: As a showcase for an Agile company (we’ll leave out the details of the “Spotify model” and whether it even exists as such).
  • Haier today: Rendanheyi
Haier? Rendanheyi? Haier is a Chinese conglomerate around home appliances and the inventor of a radical management model based on micro enterprises and dynamic clusters thereof.
The Haier example is certainly not so easily generalizable, but it does call into question many of the conventional practices and can thus serve as a spotlight

Rendanheyi: The Haier Business Model

Some key assumptions and practices shape the experiential reality of the management model:

  • Ensuring customer relations
  • Decision-making structures and model
  • How are learning, cooperation and knowledge sharing institutionalized?
  • Psychological safety

Customer orientation

One of the key elements of a management model is how customers are involved. You can see from the Haier example how much is decided on this determination:

  • Traditional brands (e.g. Mercedes) engage the customer for a transaction.
  • Platform brands (e.g. Amazon) generate additional value through a continuous stream of interactions
  • Haier focuses on creating an “ecosystem brand” that gains its competitiveness through lifelong users, e.g. through constant dialogue with users, tries to discover small user needs that could also become a need for all other users.

Decisions

Decision making in the organization has many aspects

  • What types of decisions: One can differentiate between business decisions, policy decisions, personnel decisions and compensation decisions and formulate separate rules for each.
  • How does the context (for example, its complexity) affect decision making (see here).
  • Who makes decisions: is decision making more centralized or decentralized. In adaptive organizations, it can be said that decentralized decision making generally speeds up the process. At SAFe, this means: “decisions as low as possible but not lower”. At Haier, this maxim leads to radically decentralized decision-making and thus follows the general logic of the management model.
  • How is conflict resolution organized: an example of a non, classical method is the consent principle: decisions should be made in such a way that no one has “serious objections. This is used in the different variants of sociocracy and holocracy.

Learning, cooperation, knowledge transfer

Organizational learning starts as a team. In addition, an organization needs a strong focus on providing the climate and structures for a learning environment.

Psychological Safety

Psychological safety is the individual security of being able to do and say things that involve personal risk and thus vulnerability. In English, voice behaviour almost sums it up better: being able to express criticism and dissent without succumbing to group think, to peer pressure, without sanctions, without suffering disadvantages. Thus, psychological safety is the key factor for team effectiveness and performance and the crucial condition for organizations to avoid or fix mistakes.