The elements of implementation are another critical step in concretizing and finally deploying the strategy.

A management model is the way we do things, interact with each other and shape what is then called culture.

It is a basic set of assumptions and insights within which business models can emerge. These assumptions are often “invisible”, i.e. embedded in the culture of the organization and are rarely discussed or written down. It can be reconstructed from lived practices and habits, processes and strategies. It reflects “how things are done here”.

An operations model is a high-level representation of the HOW, i.e. a description of the processes and procedures.

In contrast, a business model focuses on the WHAT. A business model sets out how an organization creates, delivers and captures value in a particular business situation. It typically includes figures for the costs and benefits of a range of activities and an outline of how this will be done. It usually requires an organization that is able to implement the model.

Last but not least, the changes intended by the models must be communicated, discussed and implemented. To this end, ways and tools must be described that are used for communication and ultimately for implementation. They should also describe how this implementation is understood as a conversation and, in particular, how feedback is incorporated.

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A look at 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-division 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 emerges that sees employees not only as resources
• Spotify 2010: A prime example of an agile company (we’ll leave out the details of the “Spotify model” and the question of whether it even exists as such)
• Haier today: Rendanheyi

Haier? Rendanheyi? Haier is a Chinese conglomerate specializing in household appliances and the inventor of a radical management model based on micro-enterprises and dynamic clusters thereof. The example of Haier is certainly not easily generalized, but it does question many of the conventional practices and can therefore serve as a spotlight.

Source: Corporate Rebels

Rendanheyi: The Haier Business Modell

Some essential prerequisites and practices shape the tangible reality of the management model:

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

Customer orientation

One of the key elements of a management model is the way in which customers are involved. The example of Haier shows how much is decided by this definition:

• Conventional brands (e.g. Mercedes) involve the customer in a single 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. by constantly interacting with users to discover small user wishes that could become a need for all other users as well.

Decisions

Decision-making in the organization has many aspects

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

Learning, cooperation, knowledge transfer

Learning in organizations starts in the team. Beyond that, 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 put oneself at personal risk and thus make oneself vulnerable. Voice behavior is a better term: being able to express criticism and dissent without succumbing to group think, group pressure, sanctions or disadvantages. This makes psychological safety the key factor for the effectiveness and performance of teams and the decisive condition for organizations to avoid or correct mistakes.

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The organizational model typically includes

• organizational model: how the activities in the value chain and the supporting functions are linked.
• information and overarching control: how information flows, processes and activities that transcend the structure of the organization are controlled
• employee model: what kind of employees the organization wants to attract, pay and incentives, responsibility and values.
• Implementation of decision rights: How are decisions (the principles of which are defined in the management model) put into practice?
• Management rhythm: in which meetings and how often are goals, plans and results reviewed?
• Location policy: where are the work and assets located?
• Business partners: Which organizations are more part of the ecosystem, which are transaction suppliers and what do the relationships look like?

Target Operation Model

The Target Operation Model is the target image of the organization at a high level of abstraction.

It allows an overall view of the upcoming changes to be developed.

Budgeting

Beyond Budgeting

Beyond Budgeting is an approach that, in the narrower sense, examines the overcoming of conventional budgeting and, in the broader sense, offers a basis for thinking about how to design modern organizations.

Beyond Budgeting emerged as a management model in the late 1990s and developed from practice in several European and US organizations. It is an alternative to traditional command and control-type management models, which are usually based on budgetary and similar control mechanisms.

The purpose of Beyond Budgeting is not necessarily to abolish budgeting, but to create more agile and humane organizations that can cope not only with more dynamic and unpredictable business environments, but also with the new and different expectations of knowledge workers in terms of leadership and management; BB draws heavily on “Theory X and Theory Y” [McGregor 1960].

On the operational level BB separates three aspects of the budgeting process

• Objectives – what do we want to happen
• Expectations (forecast) – what do we expect to happen
• Resource allocation – what resources do we need to provide to make it happen

This separation makes each individual aspect much more transparent. In particular, there are no longer any conflicts of interest between achieving objectives and meeting expectations, which often turns traditional budget discussions into a nightmare.

Bjarte Borgsnes is considered the founder of the concept, having introduced the model at the Norwegian company Statoil many years ago. The Beyond Budgeting Round Table is a global network based in London.

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Hoshin Kanri

Hoshin Kanri is a lean management method for aligning and implementing a company’s strategy across the entire hierarchy.

The words “hoshin” and “kanri” mean direction and administration, respectively. Together they mean “how do we steer our direction” or “how do we make sure we are going the right way”.
Hoshin Kanri is an essential lean management method to ensure that a company’s strategy is implemented across the entire hierarchy.

Objectives and Key Results

Order tactics and Art of Action

An alternative to Command & Control and a means to better ensure that information and instructions have been correctly communicated to employees. The core is to include one’s motivation as a context in every instruction (e.g. as “, so that …”).

Auftragstaktik was developed by the Prussian General Scharnhorst and his “colleague” Moltke built on it:
Military strategy should be treated as a set of options that need to be explored extensively.

Commands always contain a passage that describes their intent and conveys their purpose.

• “In war, circumstances change very rapidly, and it is rare indeed for orders that extend in many details over a long period of time to be fully carried out.”
• Moltke recommends “not commanding more than is absolutely necessary, and not planning beyond the circumstances that can be foreseen.”
• “the higher the level of command, the shorter and more general the commands should be”

Art of Action is Stephen Bungay’s adaptation of the concept into the organizational world in his book of the same name.

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