9789174637861 by Smakprov Media AB

Jan Olsson This book is a source for inspiration to managers and organization designers. It describes how internal structures of an organization can be designed to enable sustainable success in a constantly changing environment. The book helps the reader to understand how to do the design of an organization. It integrates organizational theories with hands-on and practical approaches in how to get the work done.

This book describes a systematic approach in the development of a Management Systems. It explains how the design of business logic is done in a Management System Architecture. The book then describes how this Architecture is transformed into a practical implementation by using seven Management System Building Blocks. • Purpose • Organization Structure • Process & Rules • Governing • Plans • Records • Deliverables

Jan Olsson Practical Organization Design

Most organizations have a great potential to improve performance and market success if they apply a systematic approach to organization design. Elements in the internal structure have to work together and interact with customers and other external stakeholders. Sustainable efficiency can be achieved if we build effective organizations by the design of a structured Management System.

Practical Organization Design

More info at www.managementsystem.se

www.bod.se

Effective organizations via a structured Management System

PRACTICAL ORGANIZATION DESIGN How to build effective organizations via the design of a structured Management System.

The knowledge to design a Management System is a key asset for any organization.

INTRODUCTION I know why I wrote this book, but why shall you read it? It has long been a dream for me to write a book. I have hoped to one day be able to put my own book in the book shelf. And to proudly show it for family, friends and colleagues. As a kind of footprint of me. Year 2010 I started to write this book. During dark Swedish winter evenings I wrote texts and created pictures. Then came the spring, our garden and house got higher priority, the writing was put on hold. I reopened the book project during the winter months of next year. New spring arrived and I became too busy. Next winter and a new restart. At the end of 2014 I had about 130 pages written but I had never had the time to put together a good structure for the book. Then I got a fantastic opportunity to spend half a year, more or less fully on the book. This made it possible to finalize my book project. My dream came true. I have during my working career constantly tried to find ways to make the Management System more helpful for an organization. I have learnt from others, read books and transformed this knowledge to practical implementations. As the years went by I was more and more convinced that most organizations would gain huge advantages if they used a systems approach when internal ways of working was developed. The way an organization is designed cannot be efficient enough if we isolated develops processes, or if we in isolation replaces organization structures, or adds targets in isolation from other parts of the internal structures, etc. From this need I tried to find guidance and practical approaches. I found good books, real examples and knowledgeable people that gave me parts of the answer. How to do Strategy development, how to do Business Re-engineering, how to create Business Balanced Scorecards, how to build Organizational structures, etc. But I did not find how to design the whole organization using a system approach.

With this insight and with my practical experience of building Management Systems, together with my dream, I decided to write this book. I hope that you will be inspired. I hope you learn something more about organization design and that you get practical guidance to improve your organization. This is why I think you shall read this book.

Malmรถ 10 July 2015

Jan Olsson

The ultimate Management System is designed to enable growth of sustainable business in a constantly changing environment.

Content Part I Introduction – What this book is all about ............................................. 11 1 Why I think this book has a value ....................................................... 11 2 My background ................................................................................... 14 3 The dilemma with the term Organization........................................... 16 4 Technocratic approach to the design of a Management System ....... 17 Part II A design concept of the Management System ...................................... 19 1 Introduction to Part II ......................................................................... 19 2 Fundamentals impacting the design of a Management System ......... 23 The fundamental law behind how to design Management Systems ......23 A stable Management System often becomes an old Management System ............................................................................................25 Stability of constant change ..............................................................26 Make changes sustainable ................................................................28 Why some managers do more instead of adding structures .................31 The Management System in the DNA of the Organization ...................33 3 Reference Model for a Management System ..................................... 36 System approach..............................................................................36 Mental Models.................................................................................38 Reference model overview ...............................................................39 4 Management System Architecture ..................................................... 42 Design Layers in the Architecture ......................................................42 External Environment .......................................................................44 Business Logic ..................................................................................44 Value Creation Chain ........................................................................45 Responsibilities ................................................................................46 Controls ..........................................................................................47 Use “Outside In – Inside Out” thinking in the design approach .............49 5 Management System Building Blocks ................................................. 53 The 7 Building Blocks ........................................................................53 Purpose ...........................................................................................56 Organization Structure .....................................................................66 Process and Rules.............................................................................71 Governing ........................................................................................78 Plans ...............................................................................................83 Records ...........................................................................................85

Deliverables..................................................................................... 86 6 How to use the Management System Reference Model.....................89 Understand what you need ..............................................................89 Key design rules for the Management System .................................... 92 Get organized and build knowledge................................................. 100 Part III How to establish a Management System............................................107 1 Introduction to Part III .......................................................................107 2 Benefits from having a described Management System ...................110 The library ..................................................................................... 110 Secure fulfillment of external requirements ..................................... 112 One Management System ..............................................................112 3 Build the Framework .........................................................................114 Document Management ................................................................. 114 Business Manual ............................................................................124 Content of a Business Manual ......................................................... 127 Content of the Building Blocks ........................................................136 Additional content in the Business Manual ...................................... 140 4 Build the Management System .........................................................141 Define the work ............................................................................. 141 Build the content ...........................................................................148 Deploy ..........................................................................................172 Monitor compliance .......................................................................177 Part IV Improve internal performance ...........................................................185 1 Introduction to Part IV.......................................................................185 2 Measure performance.......................................................................189 Necessity to measure ..................................................................... 189 Management by Objectives ............................................................191 Lagging and Leading Indicators .......................................................192 Business Balanced Scorecard and Strategy Map ............................... 193 Operational performance ...............................................................195 Change project performance ..........................................................197 Do not overdo the measurements ...................................................199 3 Design Organization Structures .........................................................201 Key elements in an Organization Structure....................................... 201 Role of Organizational Entity Manager............................................. 205 Design the Organization Structure ...................................................206 Responsibility Assignment Matrix ....................................................218

Design Process Structures................................................................. 221 Key elements in a Process Structure ................................................221 Role of a Process Owner .................................................................223 Design the Process Structure ...........................................................224 Process Management .....................................................................233 5 Design Meeting Structure ................................................................. 240 6 Change Programs .............................................................................. 244 Part V Make strategy happen ........................................................................ 249 1 Introduction to Part V ....................................................................... 249 2 Strategy and Management system ................................................... 251 3 Transforming Strategy to Management System Design ................... 254 Business Logic ................................................................................255 Value Creation Chain ......................................................................258 Responsibilities ..............................................................................261 Controls ........................................................................................263 Part VI References.......................................................................................... 267 1 Literature and web............................................................................ 267 2 Design Rules & Document Outlines .................................................. 269 Design Rules ..................................................................................269 Document outlines .........................................................................269 3 Index ................................................................................................. 270 4 Jan Olsson â&#x20AC;&#x201C; The Author ................................................................... 273

Part I

Introduction â&#x20AC;&#x201C; What this book is all about

Why I think this book has a value

A Management System is a structured way to control activities within a company, or any other type of organization. Often people think of international ISO standards, certifications and audits when one discuss a Management System. Too often the discussion is about the burden the Management System may be to the people in the organization, documentation needs, reporting and even bureaucracy. At the same time, the same people having problem with a Management System, often search for knowledge and practical example of how to improve performance in their own organization, how to improve business results, how to decrease costs, etc. These people, often managers but not only, read books, undertake trainings, attend seminars and conferences and ask knowledgeable consultancy firms to do analyses and propose changes. This is not seen as burden to organizations, rather as opportunities to improve performance. What is the difference between a Management System and the different concepts like Business Model Canvas, Lean, Agile, Business Balanced Scorecard, Business Process re-engineering, etc.? How come people find values from these concepts but think of Management System as a dull burden? My believe is that the Management System indent to cover the full business, all parts of the organization, and for this reason can be too complex. The above exemplified concepts covers different aspects of the full system. If it is too complex we need to find tools and we need to simplify. But if we, by doing this, excludes perspectives of the full design, we may sub-optimize or create design solutions that does not fit together in all parts. If the aim is to implement a Management System there is a risk then to move towards

PRACTICAL ORGANIZATION DESIGN

compliance thinking, not performance thinking. Due to lack of understanding of the possibilities of a Management System, we settled with target to comply with one of the ISO standards for Management System. And this can be done even though we have a really bad design1. This may frame our minds from the possibilities to embrace relevant concept and methods to build a structured system design on how to manage activities within an organization to reach objectives. If we on the other hand understand the potential of a structured design of our Management System, it becomes hard to get good help when we want to build it. It is important to acknowledge the Management System as an open system that interact with the surrounding environment. It contains a set of elements like Targets, Organization Structures, Processes, Measurements, etc. And in order to design an efficient Management System, we cannot simply focus on some parts, do that good and hope to achieve excellence. As an example, we all understand that a good Organization Structure is important for any organization. But we also understand that this is not the full picture. There are more parts important to gain efficiency. For those who has done some type of technical design work, we understand that a system design need to optimize a number of, sometimes contra dictionary requirements, in order to achieve the performance from the system we need. To do this we need to understand all building blocks of the design and balance the design of each building block towards the performance need for the full system. I have two reasons to write this book. Firstly, it has been a dream for me to one day write a book. To do this gives me the pleasure of writing and explaining things in which I have long experience. It is as well challenging and it develops my competence. We all know that when you have to explain things it often requires that you think once again to really understand what you tries to explain. Secondly, I have not yet found a book that cover how to do a full design of a Management System. A book that describes all of the building blocks needed to design a Management System, with the purpose to improve effectiveness and efficiency. A book that combines practical experience with theories. A book that covers how business logic impacts value This is like doing a control of the car that it fulfill governmental regulations to ensure safety. It can be a really bad car even though it is approved to use. 1

PRACTICAL ORGANIZATION DESIGN

creation chains, how it calls for specific logic in the design of internal processes, ways to find an optimal Organization Structure and how to monitor execution. All structured in a coherent design we call a Management System. My hope is that you, the reader, find this book valuable if you want to understand:  What is a Management System and how does it support an organization?  How do I build a Management System?  How do I improve internal performance using a Management System?  How do I use a Management System to transform Strategies in to result?

I truly believe that most organizations has a great improvement potential and possibilities to achieve sustainable market successes via a true system approach in the design of its internal structures.

PRACTICAL ORGANIZATION DESIGN

My background

Back in the mid 80’s I became interested in Quality. I remember the structure of IEEE’s2 Quality Assurance Plan explained in a training course. For me this was like the truth had been given to me. The structure of this Quality Assurance Plan explained what you need to do in order to achieve Quality in product development. In those days I was a System Engineer and Project Leader for development of software solutions and products for petrol stations. I was working for a successful mid-size company. But as a consequence of the success it had growth-problems in the development department. The structure of the IEEE Quality Assurance Plan gave me a Reference Model for product development. I took the knowledge back home and started to implement all parts of this Reference Model in hour development organization. We learnt a language, we collected our ways of working in a common structure, and we shared experience, planned and executed development projects according to the content of our Reference Model. We called it the SW Quality Assurance Plan. Today, 30 years later, I still work with implementation of a Reference Model for organizations. But today I have the scope of a full Company. I am no longer a System Engineer for SW development project but rather a “System Engineer” for development of Organization Architecture or Organizations Design. Over the year I have worked with all between small (5 persons) to big (600+ persons) product development projects. I have worked with business organizations in Production Industries, Service Industries, Governmental societies, Telecommunication Industry. I have worked with local companies and companies with operations spread over the world in different time zones. The leading star for my professional carrier has been to bring order and efficiency in the ways of working. Similar to the experience from the IEEE Quality Assurance Plan I have over the years developed a structure of Building Blocks for any type of Organization. It is obvious, thinking of it, that efficiency in an organization cannot be fully achieved only working with definition of 2

IEEE = Institute of Electrical and Electronics Engineers

PRACTICAL ORGANIZATION DESIGN

Jan Olsson Practical Organization Design

Practical Organization Design

More info at www.managementsystem.se

www.bod.se

Effective organizations via a structured Management System