Chapter 40 Managers and Management Science
Double-entry bookkeeping remains the only truly universally-applied "management science", the only tool of systematic analysis used by every enterprise and every institution on a daily basis.
Management should become strict, scientific and quantitative. Pioneered by operations research, these new tools will replace guesswork with certainty, knowledge instead of judgment, and “hard facts” instead of experience.
Managers must first understand what management science is trying to do and what it is supposed to do. Second, he must know what management science can contribute. To date, very few managers have the skills to enable management science to contribute to management, and very few managers have made this new tool work effectively.
Why Management Science Fails to Achieve Success
Much of what has been done so far has only been a modification of the tools already used by various technical functions, such as quality control or inventory control. But the effect of a local improvement is not necessarily beneficial in the overall view.
So what explains the underutilization—or misuse—of such a powerful tool?
Perhaps the first reason lies in the origins of management science. Other disciplines begin by trying to roughly define what they study. It then develops the concepts and tools for its research. But management science begins by applying concepts and tools from many other disciplines. As a result, much of the work in management science is off-topic.
Management science has yet to do the work in this disciplined science area. If it does the job, then everything done so far will come to fruition. Therefore, if management science is to make a contribution, its first task is to identify the special properties of its research objects.
Management science starts from the understanding of the research object, and then it should establish its basic assumptions and principles. It may first include the fact that every enterprise exists in the economy and society. Even the strongest businesses must obey the environment. But even the tiniest businesses don't just adapt to their environment, they also influence and shape economies and societies. In other words, industrial and commercial enterprises exist in a very complex economic and social ecological environment.
The basic principles may also include the following ideas:
1. What industrial and commercial enterprises produce is neither goods nor ideas, but values determined by people. No matter how beautifully designed a machine is, until it is useful to a customer, it is just a pile of scrap metal.
2. The means of measurement in industrial and commercial enterprises are so complex that some symbols with philosophical implications, such as currency, are both highly abstract and extremely specific.
3. Economic activity necessarily uses existing resources for an unknown and uncertain future—in other words, for expectations rather than facts. Its essence is risk. The basic function of an enterprise is to create and take risks. And it is not only the general manager who bears the risk, but everyone in the entire enterprise. This risk is very different from the probability risk of a statistician. It is the risk of a unique event that will irrevocably and qualitatively disrupt its pattern.
Fourth, irreversible changes often take place inside and outside industrial and commercial enterprises. In fact, industrial and commercial enterprises exist as a kind of change agent in industrial society. It must both consciously evolve to adapt to new conditions and consciously innovate to change objective conditions.
These fundamental principles should be an integral part of how management science can help people understand business, let alone become a "science." Of course we need to quantify. We need the scientific method. We also need careful, meticulous research work. But above all, we need to recognize the peculiar nature of business enterprise and the unique principles necessary to study it. We must have this vision.
Concerns about taking
risks A second reason for the shortcomings of management science is that the ultimate goal of "risk minimization" runs through the entire research effort. Attempting to eliminate risk is unlikely to be effective. Investing existing resources in future expectations entails risks.
The primary goal of management science must be to enable the enterprise to take appropriate risks. It does this by: providing knowledge and understanding of other risks and expectations; identifying the resources and efforts required to achieve the desired results; mobilizing the contributing forces; measuring against the desired goals results in order to provide the means to correct erroneous or inappropriate decisions in a timely manner.
Risk minimization in the management science literature creates a hostile attitude towards risk taking and risk taking. Much of the rhetoric in the management science literature sounds the same as the rhetoric of a previous generation of technocrats. Because it wants to subordinate business to technology and seems to see economic activity as a realm of physical determination rather than the exercise of responsible freedom and decision-making. This is worse than a bug.
What managers must know
The most typical complaint of management scientists to managers is nonsense. They complain that managers don't learn management science and therefore don't know anything about it. Requiring the user of the tool to understand the construction of the tool shows the incompetence of the tool maker.
In general, managers lack managerial responsibilities for management science and management scientists. They ignore the fact that management scientists depend on managers to give them direction and efficiency. They allow management science to be unmanageable—and thus they are largely responsible for management science's degeneration into methods that answer many nonexistent "managerial responses."
The most typical complaint of management scientists to managers is nonsense. They complain that managers don't learn management science and therefore don't know anything about it. Requiring the user of the tool to understand the construction of the tool shows the incompetence of the tool maker.
In general, managers lack managerial responsibilities for management science and management scientists. They ignore the fact that management scientists depend on managers to give them direction and efficiency. They allow management science to be unmanageable—and thus they are largely responsible for management science's degeneration into methods that answer many nonexistent "managerial responses."
What should or can management science contribute?
We generally know what managers need: to systematically provide businesses with the systematic knowledge needed to create and take risks in complex and rapidly changing technologies, economies, and societies. They need some tools to measure expectations and actual results: a common vision and a means of information exchange across many functions. These professionals each have their own knowledge, their own logic, their own language. But in order to make the right business decisions, make those decisions effective and deliver results, they must work together.
Managers need something to teach and learn. Because our world needs a lot of people with managerial skills and can't rely on the intuition of a few "natural" geniuses. Only the generalizations and concepts of a discipline can really be learned and taught.
This becomes clear if we examine the few places where management science has yielded results. In all of these places, the results are due to managers making the right demands and managing the science of management.
An example is a large manufacturer of a wide variety of products that sells directly to the public through thousands of channels such as department stores, discount stores, and hardware stores. Its managers said to their management scientists, "Everyone in our industry knows that selling on credit to wholesalers and retailers is the way to increase sales. The risks offset the benefits of increased sales. Are these the correct assumptions on which we base our sales and credit sales policies?" The management scientist came back six months later and said, "No, these are false assumptions. Each What people think is going to happen is not actually true. The reality is that in our industry, the biggest and best customers who are also credit-reputable are sold on credit, or the smallest and worst customers who are credit-reputable at the same time. Credit sales to the worst customers can increase sales. But credit sales to 'moderate' customers do not." Thanks to this answer from the management scientist, the company made a fundamental change to its policy. It cut credit sales to small households. As a result, while some sales have declined, sales and collections have improved significantly. On the other hand, it expanded credit sales to large, good customers. At present, the amount of credit sales has decreased compared to the previous time when the credit sales policy was very tight. But it gives a reasonable understanding of the relationship between credit, sales, and credit risk.
In order for management science to contribute, all managers need to do is to think carefully about the areas in which the underlying assumptions need to be tested. No one is asking the right questions of management scientists, and managers expect them to provide answers.
What's more, they expect a final answer. However, the greatest strength of management science is the ability to ask questions. The answer must be provided by managers themselves. Because the answer in business is always judgment, a choice among various alternatives.
In order for management scientists to contribute, managers must ask them to identify the right questions to ask.
Managers generally demand that management science can provide one of the best answers. But what management science should be able to contribute is to present options to managers. Each has its own risks and costs. Each can meet at least some of the main requirements. There are no "answers" to the future, only choices between different courses of action.
Finally, managers should expect from management scientists not to provide formulas, but to provide understanding. He should get management scientists to help him understand, that is, have an idea of what a decision really means. What management science can and should contribute to is the understanding that what appears to be a manufacturing decision is actually a marketing decision. It's a decision about what customers want and are willing to pay for. Managers should expect management scientists to say, "Look, you're giving us the wrong question. That's what we should be looking at."
For management science to work well, four requirements and expectations are key to it:
- management scientists must test hypotheses;
- management scientists must determine the right questions to ask;
- they must Present alternatives rather than answers
- they want to focus on understanding rather than formulae.
These four requirements and expectations are based on the assumption that management science is not a method of calculation but a tool of analysis, and the purpose of management science is to help managers make diagnoses. Their mission is to aid insight, not to prescribe, much less to prescribe a panacea.
It is the responsibility of managers to make the possibility of achievement in management science a reality. In order to do this, he must understand what management science is and what it can do. He must understand the peculiar limitations of management science largely due to its origin and history. But above all, he must understand that management science is a tool for managers, not for scientists. It is the responsibility of managers to focus these tools on management tasks and direct them to contribute to management.
Chapter 41: New Needs and New Approaches
We have encountered some new needs in terms of organization. A number of new organizational designs emerged: "task teams", "simulated decentralization", "system" structures. We have learned that organizations do not begin with structure, but with their basic building blocks; there is no single correct organizational design, and each enterprise must revolve around key activities appropriate to its mission and strategy to design; the three different tasks of daily operation management, innovation and top management must be combined in the same organizational structure; the organizational structure must be task-centered on the one hand, and people-centered on the other, and both have a The axis of power, and the axis of responsibility.
Every kind of organization seems to be endlessly changing. The traditional organizational structure can no longer meet the needs of enterprises.
WHAT WE LEARNED
1. Organizational structures do not "evolve spontaneously". The result of spontaneous evolution in an organization can only be chaos, friction, and bad consequences. The right organizational structure doesn't come from "gut feeling" either. Tradition may show where problems and consequences are bad, but they do not help to find solutions. The design and structure of organizations requires thought, analysis, and systematic study.
Second, designing an organizational structure is not the first step, but the last step. The first step is to identify and organize the basic building blocks of an organizational structure, those business activities that must be contained within the final structure and bear the "structural load" of the completed building.
These are, of course, the functions that Fayol analyzes. But the problem is that the functions Fayol proposes are not only applicable to manufacturing companies, but more importantly, Fayol is trying to design his various functions in terms of what those functions do.
We now know that basic building blocks are determined by the kinds of contributions they make. We also know that the traditional categorization of contributions does more harm than good for an organization's understanding.
The basic structural unit of design can be said to be the "engineering phase" of organizational design. It provides the basic "material". Like all materials, these basic building units have special specifications. They belong to different places and are assembled in different ways.
3. Strategy determines the structure. Organizations are organic and unique to every business. To be efficient and sound, the structure must be determined by strategy.
Structure is a means of achieving the goals of an institution. Therefore, any work on structure must proceed from goals and strategies. Some of its most serious mistakes in organizational establishment arise precisely from imposing a mechanical model of an "ideal" or "universal" organization on a living enterprise.
Strategy is the answer to the questions "What is our business, what should it be, what will it be?" It determines the purpose of the organizational structure and thus which activities are the most critical in the enterprise. An effective organizational structure is the organizational design that enables these activities to work and achieve success. These key activities in turn become the "load-bearing elements" of a working organizational structure. Organizational design is or should be primarily concerned with these key activities, and everything else is secondary.
three jobs
It is a misunderstanding to interpret the basic structural unit of an organization as the various jobs. But in every organization, no matter how small and simple, there are different kinds of jobs. 1. The daily operation and management work, that is, to manage, arrange, utilize its potential, and solve its problems of things that already exist and know. 2. Top management work. In terms of its tasks and requirements, it is a different job from day-to-day management. 3. Innovative work