Basic categories of an integrated management ~ by Johannes Ruegg-Sturm
A management model is like map designed to achieve particular tasks. It also accounts for all the dynamic interactions brought about by the elements that form the complex systems in organisations. A good model enables a company to react to change adequately.
The St. Gallen management model is used by corporations worldwide to analyse their activities. The ‘activity chain’ demonstrates how the actions of a company are linked. The ‘process control’ assigns level of priority to these activities. There are 6 ‘central descriptive categories’ – environmental spheres, stakeholders, interaction issues, structuring forces, processes and organisational change. The 4 ‘environmental spheres’ are social norms, nature, technology and the economy. The company stakeholders share ‘culture’ or sense of meaning. The company needs to meet it stakeholders’ long term needs to succeed.
The first step to create a model is establishing its purpose. Generally, models:
- represent the elements that really matter in managerial tasks
- depict the cause-and-effect relationships of these elements
- provide direction and focus for the content of communication
- make available common company language and enable quicker responses
The 4 environmental spheres in detail:
Society
- technological developments
- regulations and laws
- competitive environment
- e.g. work force and its age, risk tolerance, innovation, distribution of wealth, political forces, culture and infrastructure, social unrest
Nature
- climate and pollution
- raw materials
- access to waterways
Technology
- dynamic and rapidly growing technological development
Economy
- markets and competitive pressures
- capital
- demand
There are two approaches to model the stakeholders elements:
Strategic stakeholder value – where the best way to maximise shareholder value is to balance the long term needs of all stakeholders from employees to shareholders
Ethically critical stakeholder value – considers all stakeholders’ needs equally
The model will identify the many interactions between the stakeholders and the company: commercial, cultural and political. A company has to decide its ’strategic positioning’ in all these relationships.
The next step would be to create a structuring force by developing a company strategy that states:
- its stakeholders and their needs
- its products and services
- the aspects that it will focus on creating value for
- its core competencies
The ‘outside-in’ approach devises a company strategy by looking at its market and industry. Whilst the ‘inside-out’ approach develops unique capabilities and resources of the company to sustain competitive edge.
Activity modeling examines processes and establishes:
- ‘activity chain’ – connections among activities
- ‘process control’ – the operational priorities
- ‘process development’ – how processes evolve into ‘process architecture’ that involves the company’s suppliers, employees and customers
A company is influenced by two dimensions of change that affect one another: the ‘analytical-technical’ and the ‘cultural-relational’ perspectives. In turn, three elements affect the level of change in the organisation:
- scope – number of people and processes
- scale – fundamental or superficial changes in the view of those who will implement them
- intensity – the speed of the change and if ‘rest period’ is available to employees
Company leaders must weigh the purpose of the organisation against the need for organisational change.
The model was developed in the University of St. Gallen in Switzerland which was once a monastery. The criticism of the model is that it can be too theoretical for the real business world.
