What Is Management? Not What You Think
Curt Carlson, Ph.D.
Professor of Practice, Northeastern University and Distinguished Executive in Residence, WPI
The development of productive “mental models” is a core management function
Introduction
A Question:?What is "management," and does it require leadership, entrepreneurship, and other attributes? Is it all these attributes and more? And does the word "manager" describe accurately what must be achieved?
Often regarded as the father of modern management, Peter Drucker defined a company's core purpose as creating and keeping customers. He also described management as: "Management is the function that organizes the efforts of people to achieve goals and objectives using available resources efficiently and effectively" [1].?
In the literature, there are many alternative definitions. The Oxford Dictionary defines management simply as "The process of dealing with or controlling things or people." Another definition from?Mary Parker Follett is?“Management is the?art of getting things done through people" [2]
A Perspective:??These definitions are all useful, but do not capture the nature of the management tasks and challenges I thought about or confronted when I became CEO of SRI International, the company that created HDTV and Siri, now on the iPhone.
The main issue when I became CEO was how to change the mental models of the brilliant staff who had been in a declining company for twenty years and that was near bankruptcy. The mindset had to rapidy change from one of scarcity to one of abundance or it would fail.
Here I look at the task of management from a perspective I found helpful at SRI and in working with hundreds of teams and companies.??That perspective is captured in this definition:
Management is a complex discipline that requires leading the assembly of resources, forming teams with shared mental models, and aligning them to successfully achieve a specific purpose (e.g., create and keep customers).
Management is a complex, multifaceted, and interactive human endeavor. It is a challenging profession that requires a deep understanding of human behavior, organizational dynamics, technical and business knowledge, decision-making with incomplete information, networking, short- and long-term strategic planning, and, ideally, admirable human values.
These attributes and many more are all mental models. Management at its core is a family of mental models in both the management and employees. When those required to achieve a task are assembled and are aligned, they provide the predicate for success.
A customer-centric mindset is the core mental model for successful enterprises. It is the foundation on which all other success factors are built. If a company can get that right, they are well on their way to achieving their goals. The enterprise’s mental models are the beliefs and assumptions that guide how people think about customers and conduct their value creation initiatives. An enterprise has a significant competitive advantage when everyone has a customer-centric mindset [3].
As Drucker noted, the purpose of a company is to create and retain customers. In today's competitive global marketplace, it is increasingly important for companies to provide clearly superior value to their customers. This means understanding their needs and wants, and then, with a viable business model, delivering products and services that delights them.
There are no limits to value creation. It is the responsibility of managers to create an environment where employees can continuously create value for both outside and inside customers. Those contributions may be incremental or transformational, but value creation is a responsibility of all professionals [4]. This means providing employees with the skills and resources they need, and creating the processes and human values that encourage creativity and innovation.
Many factors contribute to employees working productivity, including by having a motivating vision and purpose for the enterprise.??For example, many find addressing the world’s clean energy challenge by creating economic, atomic-fusion electrical power is enormously motivating.??A core role of management is to support these positive mental models and eliminate the destructive ones.??At SRI, proving to employees that it was not a world of scarcity and then proving it could be a world of abundance by working in a more productive way, was job number one when I joined.?
Because of the multiplicity of businesses, economic models, people, and national cultures there can be endless definitions for what managers must do to be successful.??Consider these ten industries:
Industry???????????????? Unique business factor????????????????????Example Company
Each industry has its own unique challenges and requirements for management. There is no one-size-fits-all definition of management that applies to all these industries with such different domain knowledge. However, the elements of management outlined here support success in any industry.
In industries like Apple, which undergo rapid technological change, the executive team must constantly make both incremental improvements to the core business, which is more of a traditional management function, while simultaneously creating transformational opportunities to survive, which is more of a traditional entrepreneurial capability.
Experience shows that few companies succeed at both, even when an excellent CEO is in place. Each requires very different mental models, which can pit one group against another as they compete for resources. ??Consider, for example, the difficulties experienced at RCA, Polaroid, GE, Kodak, Nokia, and Motorola.
One alternative to this contradiction is to either completely separate the functions or have an entrepreneurial CEO delegate operational functions to someone with those skills, as exemplified at Apple by Steve Jobs and Tim Cook, and now how Elon Musk managers his ventures.
If an executive has not proven they have the needed core mental models, there is little time to develop them once CEO. For example, company boards make the mistake of hiring an otherwise excellent manager when a proven innovator is required. If boards better understood the significance of mental models, some of those mistakes would be avoided.
Now, without Steve Jobs, how long will Apple, even with a superb operations professional like Tim Cook in charge, succeed? History suggests not long. A test is what Apple will do with AI, because it is both an unprecedented opportunity and an existential threat.
Another Name? Given that long list of company types and all the skills and methods managers can possess, perhaps a different name is required for what "managers" do. Often, management is described as a static function to preserve the status quo. Anther extreme is entrepreneurship, which often means only developing transformational innovations. And, finally, leadership often sounds hierarchical and suggests someone like General George Patton.
Because management is complex, with many non-linear interacting elements, there is no one-size-fits-all definition of management. The skills and methods required vary depending on the type of company, its business model, the type of industry, and its location in the world.
In nature, we imagine birds as flying, and there are over 7,500 different species that do. But not all birds fly. There are over 60, like penguins, ostriches, and kiwis, that don't.??Some "managers" seem more like the birds who don't fly, like Musk.
Because management is a complex activity, systems thinking is a powerful way to identify the key factors that produce the emergent behaviors essential for success [5].??We must start from first principles and ask, given a complex business ecosystem, what is the purpose we want to achieve and what is the best way to achieve it?
Complicated Versus Complex
Complicated:?Complicated problems are difficult to understand or solve because they involve many different steps or procedures. They may have clear answers but are challenging to address because of the large number of steps involved. They are like putting together a 1,000-piece picture puzzle. There is a solution, although it might take enormous skill and a long time.??
Here are examples of complicated problems:
Complex:? Complex problems are difficult to understand or solve because they involve many interacting elements. They often have no easy answers and may require multiple approaches to solve [5].??
Here are examples of complex problems:
Critically, complex systems can exhibit emergent behavior, where properties or behaviors arise that are not present in any of the system's individual components. These properties or behaviors arise from the interactions between the elements, and they cannot be predicted or explained by simply looking at the individual elements.
An example of emergent behavior is flocking behavior by birds or fish. When fish swim together in a flock, they sometimes exhibit a pattern of movement independent of any individual fish. The movement pattern emerges from the interactions between the fish. No individual fish can predict or control it.?
Simple Rules:?Surprisingly, the emergent behavior of flocking birds or fish is primarily the result of only three rules: 1) follow the fish in front, 2) keep a fixed distance apart, and 3) avoid objects and predators [5]. Other examples of emergent behavior include ant colonies, traffic jams, and weather.??
In teams, emergent behavior can occur when a person says something indiscreet to a teammate that results in the team breaking up. In a company, emergent behavior can occur when a solution suddenly becomes possible when several forms of unique knowledge are combined.?Most significant innovations are emergent.
The main difference between complicated and complex problems is how the elements interact. Complicated problems involve many steps that must be followed in a specific order, like cooking a meal using a proven recipe. Complex problems, on the other hand, involve many factors that interact in non-linear, hard-to-understand and often unpredictable ways.
Systems Thinking:? Because management is a complex activity, it helps to analysize it in terms of systems thinking, where the objective is to identify the key factors that can produce desired emergent behaviors, like the flocking fish example described above. That is, what are the few management actions, if focused on, would make desired results almost inevitable? It is how I thought about "managing" SRI when I was CEO, as outlined below.
All management activities are complex because employees are always complex, even if the major task is complicated. Ultimately, effectively all businesses are complex because the economic environment constantly changes. As a result, an inability to adapt will, at some point, lead to failure. The discipline of management is to continuously adapt mental models by focusing on the few critical variables so that employees are better matched to the new situation.
Mental Models
Importance:?One of management’s tasks for systematically achieving desired outcomes is to develop in employees shared mental models. A mental model is a representation of how something works or how to do something. It is a common understanding of how to achieve a specific task.??
For example, on a farm the staff and family members typically share mental models for growing crops. In a venture capital firm, the partners will share mental models for concepts like the value proposition. In an orchestra, all players will have shared mental models for musical scales and how to play them on their instruments. The mental models in all these disciplines are different, but proficiency typically requires mastering hundreds of them clustered around the specific tasks to be accomplished.??
For example, mental models on a farm would typically include those for planting, fertilizing, watering, harvesting, marketing, machine maintenance, and dozens of others for livestock care.??Successful farming requires great expertise. As anyone who has ever tried to grow anything knows, incorrectly watering a plant can kill it.
Why is creating shared mental models essential? They:
Tesla's manufacturing plant is an example of how shared mental models can lead to a competitive advantage. The plant's employees have a shared understanding of the company's goals and objectives, as well as the processes and procedures needed to achieve them. ?Operations are tied together with real time computer applications and tools.? This allows teams to work independently and effectively, without the need for constant supervision. As a result, Tesla achieves excellent manufacturing performance and continuous improvement. This gives them a significant advantage over their competitors?[7].
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Consider a previous case. In 1984 Toyota created a shared facillity in Fremont CA with GM called NUMMI to build cars. At the time Toyota wanted access to the US market and GM wanted to learn the Toyota Manufacturing System (TMS), which was profoundly better than GM's practices. This seemed surprising since TMS was Toyota's competitive advantage. But what Toyota understood was that it would be hard for GM employees to unlearn their inferior practices and then learn the superior Toyota practices. Thus it would take GM decades and likely never keep up. Similiarly today, Tesla's manufacturing system is a major advance over TMS and will be equally hard for others to replicate.
Mental models are essential for every enterprise function.?They must be concise, fundamental, and memorable. Complicated mental models cannot be learned or followed. For example, at SRI, our core human values were respect for others and integrity. These two concepts are easily understood and cover 99% of the issues that arise. Most companies have long lists of desired human behaviors that no one can remember. They may provide leagal cover in a dispute, but they are not effective management practices.??Complicated systems destroy the potential benefits from the use of concise mental models.?
Culture: Shared mental models are what becomes known as an enterprise's “culture.” However, this culture is only achieved by employees repeatedly using, testing, and understanding the enterprise’s mental models. Culture is not what people say or demand, it is a family of repeated behaviors. I never mentioned culture or culture change at SRI [9].
Elon Musk is a master at creating and promoting effective mental models. At the highest level it is a version of "Make the right thing happen -- now!"
The lack of essential mental models explains much of the enormous waste and failure we see. Systematic success is impossible if employees don't agree on basic concepts, like those for customer value and the value proposition. For example, I have asked thousands of managers and executives for their definitions of “innovation.” Remarkably, only one has remembered to add the requirement for a viable business model. Being new or novel is not enough. People must want it, it must be available, and there must be a viable business model, or it goes away.
Without shared mental models, an enterprise is like a Tower of Babel. It was a warning then and it still is. The same fate may await an enterprise with this issue today.
Complexity:?As noted, complexity is the rule in management.?First, because people all have different mental models of the world and how it works. Our experiences, education, and culture shape these mental models. As a result, people start with different understandings of how to achieve specific tasks. Because everyone comes from a different starting point, their mental models may be helpful or not. A complicating factor is that most mental models are unconscious.??This can make it difficult to understand others and ourselves. It can also lead to issues.?
Because mental models are mostly unconscious, misunderstandings can and do occur.? Because of this, when I was CEO of SRI International, with a globally diverse staff, I tried to be careful with the words I used. For example, many people say, "We must fail fast to succeed early." However, some of my colleagues told me that this comment was dispiriting for cultural reasons. I asked if an acceptable alternative was "We must learn fast to succeed early" and they agreed. This framing eliminated a distructive mental model and replaced it with the one required for systematic success at value creation.
Developing Mental Models
There are several ways to create shared mental models. These include:
The last point is critical. It is called “learning in the flow of work.” It is the best and only practical way to obtain enough experience to deeply learn and internalize a new mental model in business. ?Malcolm Gladwell suggested it takes 10,000 hours to become an expert. Although this is an estimate, it communicates the magnitude of effort required.
I played the violin when I was younger, and becoming a professional violinist took me that level of effort. Indeed, it takes at least as much effort to become an accomplished manager or value creator as a professional musician.??Although Elon Musk is a singular exception, he works 15 hours a day, every day, to deeply understand what must be accomplished.
In a company, to be effective at building productive mental models, the learning cycles must be rapid, continuous, and based on the best learning methods from the educational sciences. Thus, the best strategy is to use all the methods listed above, which is a feature of the?i4i methodology we teach [9,10].?
When I was CEO of SRI, all newly hired researchers, innovators, and professionals immediately took a three-day workshop to learn and apply the value creation fundamentals while working in their teams on their projects. This first workshop was essential and immediately improved performance. But what made them accomplished value creators was using those fundamentals when performing all subsequent work. Over roughly three to five years, SRI employees became capable value creators; and over a career many became master value creators who could create world-changing ventures, like Siri.
A common management failure is not providing employees training in value creation. It is the single biggest gain in effectiveness a company can made at almost no cost, especially if it is part of on-boarding while working on their job with teammates. Building LEGO block bridges to learn "teamwork" is a profound misunderstanding of how to develop productive staff.
Creativity:??The mental models that managers create and promote must be specific enough to address the problems faced but with enough latitude to allow appropriate creativity and value creation. Critically, complicated frameworks, like the Business Model Canvas (BMC), are too complicated to be effective mental models.??They are checklists, like a spreadsheet, and not mindsets.?
The Sweet Spot:??The chart below illustrates the challenge. Without shared mental models, collaboration is chaotic, and failure is inevitable.??This is often what happens in universities with interdisciplinary initiativies, because there is no agreement on core value creation concepts.??It is often literally a Tower of Babel.
At the other extreme, if everyone has the same precise mental models, performance on task can be superb, but value creation can stop and eventually result in failure.??This happened to many U.S. manufacturing companies in the 1960s-1980s after Japanese companies pioneered and mastered Total Quality Management (TQM).
The "Sweet Spot" is somewhere in between, depending on the nature of the business and the specific tasks performed.?It seems Tesla under Musk has achieved an excellent balance.
At SRI we were more on the left side of the figure, where our purpose was creating world-changing innovations. In effect we tolerated more ambiguity to gain new, transformative insights.??We were not trying to mass produce cars. Nevertheless, our success was due to a small number of fundamental value creation mental models that everyone understood.??Without them we would have failed [9].
Consider, as other extreme, a world-class orchestra, where all the players have invested 10,000 plus hours mastering their craft, and have many shared mental models.??This is because an orchestra must achieve impressive alignment to create stunning performances.??Nevertheless, even though they play written notes and have a conductor, the structure of music and their mental models enables impressive creativity. If it did not, music from masters like Mozart would not last for over 200 years.
As a piece of music moves forward, leadership is passed from soloist to soloist who helps lead the performance while adding creative contributions.??There are times when music can come together to produce a stunning performance. It is a form of emergent behavior that cannot be predicted or that is do to a single musician. Anyone who has heard a brilliant performance of Handel’s Messiah where this happened will likely never forget it.??
In companies, we have discovered that value creation practices are almost always on the left side of the figure – the teams have many non-productive mental models, few positive ones, and depressingly few for value creation.
Critically these mental models are not "rules." They are framworks for basic concepts to be used for performing the function. For example, the initial mental model when conducting value creation is to identify an unmet customer need.??Most teams start with a problem and then jump to a solution and that solution is almost always wrong.??
80-IQ Points: It is rare that a team will initially include all the right people in a team for addressing a hard, interdisciplinary initiative.??The solution is, as issues arises, to add someone with the missing mental model who can address the issue.??As Alan Kay pointed out, adding someone with the right point of view is like adding an extra 80-IQ points to the team. It is remarkable how few teams systematically do this.
Alignment:?Once shared mental models are created, managers must align them to achieve the desired purpose. This means ensuring that everyone on the team is committed to the same goals and objectives. It also means resolving any conflicts that may arise between different mental models. The next section describes the behaviors we put in place for achieving these essential steps.
Three Laws of Value Creation:?Recognizing the complexity of management, at SRI we identified three factors that, when widely implemented, would make the innovative results we desired almost inevitable.??They are the Three-Laws of Value Creation.?If any of these principles, or their equivalents, are missing,we learned that the probability of systematic success was near zero [11]. With them, performance will be generally excellent.
The NABC (Need, Approach, Benefits/costs, Competition) framework provides an essential mental model because it sets the direction for all initiatives of potential value to others.??It satisfied the requirements for being an effective mental model.??It is: 1) concise and memorable, 2) self-consistent, and 3) addressed a crucial value creation concept.?
Creating and maintaining shared mental models is challenging, but it is essential for effective management. Managers need to lead the development of shared mental models by setting a clear vision, providing direction, and creating a positive and supportive environment. Managers can inspire and motivate team members to achieve the common goal by leading the way.
Finally, just as mental models are hard to develop, outdated mental models are hard to eliminate.?This is because mental models are often deeply ingrained in our thinking. As a result, it can be challenging to change them, even if we know they are wrong. Eliminating an incorrect and outdated mental model is likely ten times harder than learning a new one. The accretion of outdated mental models is a main reason that eventually all companies go away.
Despite the challenges, creating and maintaining shared mental models is essential to management. By doing so, managers help their teams achieve their goals and adapt to a changing environment.
Alternative Names for Management
Because of the confusion about management and leadership roles, I rarely used those terms at SRI when CEO. Instead, we asked everyone to be a Champion for their role in an initiative. For example, I was the Champion of the SRI Way.??Although not a perfect mental model, the word champion captures the concepts of teamwork, passion, commitment, hard work, and rewards from success.??
Another potential term from the arts is “producer.”??It again communicates many of the correct values and attributes. Like a champion, a producer implies someone developing things of value to others.??Although a better concept, it doesn’t communicate as many helpful concepts as champion.??Depending on the task other words can be used, like the captain of a ship.??What is your idea?
AI Innovation Amplifiers
The advent of AI will dramatically improve value-creation, accelerating the learning cycle and improving the performance of teams [13].??AI-Tutor frameworks provide teams with core mental models that they can use to iterate on their ideas. This allows teams to learn from their mistakes and improve their products and services more quickly.
Some argue that AI cannot be creative, but this is a misunderstanding.??When used as an iteration partner, AI can add new knowledge and insights, and it can reframe and compare alternatives. These are all fundamental attributes of having a creative colleague.??In three or four years, AI will become even more integrated into our value-creation activities and will have a profound impact on the way we work and the way we create value.
Conclusions
The definition of management given here emphasizes the importance of shared mental models. Shared mental models are representations of how the world works that are shared by a mangement, teams, and enterprises. They allow everyone to understand what needs to be done, why, and how to go about it.?
The importance of shared mental models in management is often overlooked.??But by creating shared mental models, managers help ensure their teams are aligned and work efficiently towards the same goals.
Overall, the definition of management presented here adds another dimension to Drucker's definition. It considers the complexity of management and the importance of shared mental models. It can help managers be more effective in their work by providing them with a framework for understanding and approaching their role.? These are critical factors in the success of any organization because creating and aligning productive mental models amplify the potential of staff, create a more motivating environment, and simplify management.
References
Go here for Linkedin:??https://www.dhirubhai.net/groups/1232507
Go here for Coursera:?https://www.coursera.org/learn/valuecreation