Schlagwort-Archive: Coordination

The VSM provides, what everybody needs

For a very long time, the horizontal and vertical division of labor was the basis for the breakdown of economic endeavors. The lack of availability and the slow flow of information required many handover points to propagate the intentions of the management and to create transparency of the business. At the same time, the tasks, authorities and responsibilities were designed in such a way that the actual value creators could fulfill their tasks without understanding the big picture. With the introduction of computers and their interconnectedness nowadays, all parties involved can reach the relevant information wherever and whenever, without the need for additional coordination expenditure. Since the companies reached the end of the one-way street of reducing costs, they are looking for new approaches, e.g. Holocracy, Platforms, Agility, Connected Company, etc. Although, there is already an approach available for a long time that fits perfectly with today’s requirements – the VSM.

The Viable System Model (VSM) describes the setup of a viable distribution of tasks. Stafford Beer introduced this model as early as 1959 in his book Cybernetics and Management. The VSM is part of a new view that has been developed for decades under the term System Thinking in the shadow of classical organizational theory. In this article we start looking at the model in general. Henceforth there will be more blog posts on this.

  • System 1 – Value creation (S1)
    In this area subsystems generate the deliverables. The products are manufactured respectively the services are executed. There is a direct contact with the environment, for example with the customers, the suppliers, and partners. This is where the value-adding activities take place. Each of these units is by itself a VSM with the corresponding components. In the new approaches these would be the sub-circles, the producers, the agile teams or the pods.
  • System 2 – Harmonization (S2)
    The value creation takes place in a small „company” (S1a) that behaves autonomously and self-organized. So that the individual subsystems interact, it is necessary to agree on the scope, the functionality and the interfaces. The vague exchange of information of the new approaches is made more specific in the VSM.
  • System 3 – Coordination (S3)
    Even though the everyday interaction in the S2 is harmonized, there is still a need in the here and now to focus on the big picture. For this purpose, the means to be used, the responsibilities and decisions are here made and disseminated in the operational units. Besides S3, an independent unit (S3*) is available in order to collect information that reflects the current state of the value creation as unspoilt as possible. The new approaches coordinate with, for example, backlog refinements and daily scrums, interaction platforms and governance.
  • System 4 – Alignment (S4)
    The company is constantly on the move in a direction that should be determined. This adjustment is influenced by the opportunities that arise in the environment. The direction of the company is determined by the leadership based on the new technical solutions that will be incorporated into future deliverables and on market opportunities that emerge. The insights will then be digested into a strategy and the associated planning that have an impact on all areas, including the development of employees and executives. In the new approaches, the alignment is left to the acting people.
  • System 5 – Final instance (S5)
    The areas of tension between the present (S3) and the future (S4) as well as between the company and the environment can not be resolved in Systems 1- 4. The last authority for such dilemmas makes the decisions that prevent the company from being damaged by its different internal interests. In contrast, the new approaches are based on a natural resolution of disputes through transparency and open exchange of positions.

Bottom line: Companies can not avoid putting themselves in a position that serves their purpose. The division of labor that eventually has a henchman performing simple activities dissolves. These same processes can nowadays be performed by machines and robots. The cascade for the distribution of information is also no longer needed due to the pervasive availability. As a result of the increasing digitization, there is a need to re-position the own company. The VSM provides, what everybody needs, since it allows realizing the bundling of tasks, authority and responsibility in one hand at the point of action as well as the agilization of lumbering companies.

The conductor does not only set the beat

The Berlin Philharmonics consist of more than one hundred twenty musicians, who are led by Sir Simon Rattle. This is an enormous manager-to-staff span compared to business managers. Even if you divide the symphony orchestra in 16 instrument groups with the respective concertmasters, still the conductor has to lead each and every musician directly within the rehearsals and concerts. At the latest, when we think about Igor Stravinsky, we will recognize that the conductor makes more, than setting the beat.

Leadership02

Executives should also not only be limited to the beat. The following aspects have an important role in leadership, independently of the leadership style that one exerts.

  • Self management
    The largest task before you lead others is to steer yourself. A natural bias makes the neutral look at the own mental states and actions difficult. Only considering the own roles and the associated aspects, like convictions, abilities and actions, enable you to demand and promote the employees.
  • Conception
    The idea that leadership is a task independent of contents does not fit any longer into current times. The leader has to take care of the development of new approaches. The efficacy of the employees is determined by the basic conditions, like consistent goals and the clear description of the tasks. For this purpose it is critical that the executives have a content-related mental map of their field.
  • Coordination
    Leadership that reduces itself to practicing a given power does not fit any longer into today’s business reality. The actual control of organizations takes place through a positive harmonization of the interests of the involved people. Besides the applied mechanisms (e.g. agreements, result orientation, Linking pin) a structured change management and a lean control system (Governance) determine success or failure of the initiatives. Coordination works best at eye level.
  • Communication
    The dissemination and the mutual exchange of information within the nervous system of the organization are the basis for a viable and flexible business. This is where you can experience the real communication culture – the speed and preciseness of the information flow. Knowledge that is power, does not exist any more in an open information society, since the employees can get more information, than bosses could ever stockpile for their personal advantage.
  • Cooperation
    The biggest effect leaders achieve with the design of the internal and cross-functional cooperation. It becomes especially crucial, when the dedication of many people is needed, in order to achieve a joint target. Workshops are the framework for developing integrated strategies and business models as well as improving the culture of the enterprise. Without an appropriate infrastructure (e.g. meeting corners, beamers, whiteboards, on-line forums, video conferences) the breeding area for the work is missing.

The additional aspects of leadership, like the performance review, the employee interview, and the job description also have to be fulfilled. The classical HR instruments set the beat. However, effective leadership needs more (see above).

Bottom line: The current dynamics and the fast pace require more than the application of the classical controls. The appropriate self-awareness, paired with a level of conceptual imagination, the employment of the right coordination mechanisms and a reasonable openness in communications create the perfect place for business. It is crucial that the conductor does not only set the beat.

What do I do?

Enterprises should actually be able to describe, what they do. Corporate areas and departments, which supply internal customers, often do not even have the idea to describe their business – let alone individuals. It is ever more important to explain oneself comprehensively, because when the business model (BM) is tangible, it is far more easy for customers and partners as well as employees and colleagues to fulfill their contribution. It does not matter whether one is working in a large or small company, a unit or a department, as employee or an executive, employed or self-employed, commercially or honorary. But how does an outline looks like for what I do?

The BM is an outline for explaining your activities. You have the following advantages. It

  • clarifies the different aspects of the activities,
  • supports the specification of procedures,
  • shows double work,
  • makes decisions easier,
  • identifies synergies and
  • helps saving money and time.

machen

It focusses on the following content-wise elements.

  • Deliverable concept
    The deliverable concept consists of five segments. There is an idea behind each activity. It is the basis of the undertaking and concretizes the solutions and the desired market with its sales opportunities. The better the preferred value discipline is specified (i.e best process, best product or customer intimacy), the better you can align the activities with it. The clear descriptions of the advantages motivate partners and customers to do their best. The description of the proposed results is the most important aspect. These can be products or services. Be aware, in which state of the life cycle your deliverables are.
  • Earning model
    You receive wage, salary or other kinds of remuneration for your core business based on the individual contracts. They are mostly of physical nature, e.g. money or assets. Sometimes it can be additionally non-material advantages, like reputation or personal satisfaction. The look outside the box extracts additional earning sources from the context, e.g. through the network that comes from a honorary activity.
  • Value creation
    The creation of value happens along the value chain. It starts from the moment, when the value-add rises for the first time and ends, when no further value increase occurs. Some parts we produce by ourselves and others are created by others. The smart allocation of tasks to the steps of the value creation offers opportunities for improvement.
  • Relationships
    The exact image of the partners and the customers facilitates the joint work. This contains not only the list of the relations, but also the description of tasks, authorities and responsibilities as well as a verbal characterization.
  • Resources
    Most of the activities need resources, i.e., financial means, qualified capacities, and an intact infrastructure. They should be clearly specified and available at the right time. Restrictions on resources obstruct the performance. Plentiful means extend the possibilities.
  • Communication and Coordination
    As soon as people cooperate, the exchange of the information and the controlling of the involved ones becomes important. Open channels between the target audience and oneself ensure a good flow of information. This provides clarity about the intentions, the current situation and the mental states of the people and organizations concerned. With appropriate mechanisms for coordination you manage the co-operation.

The more people work together, the more important is it to convey the business model.

Bottom line: Today the companies, organizations, teams and individuals need a clear comprehension of their business model. This is also valid, if it is not concerned a business per se, but an activity that is not focused on profits. By describing it with the aspects specified above, you create a meaningful representation of your own field of work.

Same series:

Who am I?

Where do I want to go?

The too tightly held egg breaks

Every time I take an egg in my hand, I pay attention that it does not slip out and breaks on the ground. At the same time, I avoid making a too strong grasp, so that I do not break it. I am aware that the shell is stable, but nevertheless the careless pressure could crack it.
Aren’t executives not in a similar situation? They lead the employees and ensure that they adhere to the sets of rules that result from the laws, the corporate guidelines, contracts and other arrangements. As with the egg, the leaders have to create the balance between a too loose and a too tight guidance. If results are missing or the employees withdraw their respect, then the leader forfeits his authority. If the manager controls too pedantic, then he risks the staff commitment and loses employees through fluctuation in the mid-term. In any case the danger exists that the basis for cooperation will be broken.

Eibroken

In the past executives could grow into their tasks by accompanying experienced superiors. Today, after graduating, a few internships and some short professional experiences, one can already get assigned to an executive position. This trend is amplified by HR policies in large companies, which rely more and more on assessments in artificial „lab conditions “. We can recognize these bosses from their work style. They are characterized by their Micro Management, the taking over of project functions and thereby missing out the leading.

The following leadership tasks are crucial, in order to accomplish the guiding role.

  • Communication
    The regular exchange of thoughts, opinions and facts is particularly important and at the same time very time-consuming in groups. The more employees are directly assigned, the more time is needed for the exchange of thoughts and the less time is available for each employee. It takes time for personal talks as well as for different forms of conversation (e.g. fireside chats, coffee talks, powwows). Besides personal discussions the comprehension of the employees is increased by publishing regularly important topics as emails, newsletters or a personal intranet page.
  • Coordination
    The skimpiest alternative of coordination is the command chain with their order and obedience. It is actually clear for most people that this model is no longer workable. Who would like to be led in such a manner! For this reason there are today further mechanisms for coordination, e.g. agreements, targets or the Linking pins. This naturally requires more time, than simply issuing an order. In the long run, however, the involved people learn to act autonomously. Then the remaining effort happens particularly in the information exchange.
  • Cooperation
    Also executives are forced to work together with others. For this purpose an environment should be created, that facilitates teamwork. Apart from the necessary equipment with spaces and media, workshops offer a setting outside of everyday life. In these work groups people coordinate the direction of the area and business models as well as the culture.

In all cases it is crucial to find the right balance between demanding and promoting. It is not a matter of not being able to exert pressure, but to create with the right leadership results AND to keep the acceptance, motivation and commitment of the employees.

Bottom line: Leadership is a critical task, since it has a large influence on the economic well-being of the company. It is an important contribution, in order to keep the teams on track and to provide them with sufficient hold. The same way as the too loosely or too firmly held egg breaks, the efficiency of a team stands and falls with too little or too much leadership.

See also: Out of the liability

Penniless managers are worth nothing

After the ghost of planned economy collapsed, large-scale enterprises evolve to huge centralistic administrative bodies. After years of lean management, culture, hierarchies rigidify, which undermine their intended claim for a flat structure with the subordination of equal levels. The return to functional organizations covers the inability to base the organization on processes. The cross charging of deliverables create an internal market in which specific amounts are negotiated and paid with the transfer of budgets – wooden nickels from the left to the right pocket. The degree of bureaucratization can be seen via the necessary reports and guidelines. More and more employees serve an overhead of project, planning and budget reports. At the same time, the guidelines evolve to one entanglement of regulations that cannot be conveyed or obeyed anymore. The crucial error is however the new approach to realize savings, namely to decide right at the top any outward cash flow. Yet it is forgotten that leaders are worth nothing without financial means.

Mittellosemanager01

What do doers need in order to fulfill their tasks?

  • Apart from the personal characteristics that constitute leaders, like integrity, decisiveness and customer focus, the following tasks should be fulfilled: Self-management, conception, coordination, communication and cooperation.
  • The tasks, authority and responsibility specify the scope of action. The tasks describe the activities that are to be mastered. The authority determines the decision, directive and action powers. The responsibility obligates the superior on the decided approach and the goals. On this basis the personal evaluation and remuneration are done.
  • The allocation of a cost center and the equipment with sufficient budget is an important part of the authority. Like the fuel tank of a car, the available funds limit the scope that a decision maker can cover. Penniless leaders have actually no chance to contribute value-adding results.
  • Bosses as entrepreneurs in the enterprise need a comprehensible business model. Within the business idea, the target audiences, the deliverable portfolio and the clearly outlined scopes are specified.
  • An important function of the executive is the indication towards a positive future and the measures for reaching it. The strategy should provide the employees a seizable framework for the realization.

As soon as these components are missing, the leaders are worth nothing and it remains noting else than eliminating these positions.

Bottom line: The leadership tasks require a large spectrum of abilities, in order to be able to perform a task meaningfully. However, as soon as the leader is guided on a short leash, without budget, even the best characteristics go pop, because penniless managers are worth anything.

Leaders have the choice

The more people work together, the more it matters to be aligned to a goal, to obey common rules and to understand each other. Collaboration nowadays not only takes place between functions, but also across the borders of the enterprises and the sectors. Thus, different values and rules collide. Complex structures with mutual relations and dependencies evolve. The coordination is a form of control as part of the leadership tasks *1. The good news is that leaders have the choice, how they coordinate.

Koordination

Out of various possible mechanisms for coordination, the following provides a manageable mix of alternatives for controlling groups.

  • Market
    The introduction of market rules steers indirectly the interplay. Since all activities are connected to expenses, the contest based on supply and demand offers a quasi-automatic regulation of the options. The more alternatives are available, the smaller the costs. The rarer the offer, the higher is the price. With this approach, especially internal services that are providing cross-charged deliverables decrease the expenditures in the mid-term.
  • Agreements
    Anyagreement (e.g. contracts, policies, compliance to standards) determines the type of cooperation. The formal definition of rules guarantees early on that all involved people are clear about what is expected. Since an agreement requires the consent of all contracting parties, the interests of all are considered.
  • Partner selection
    The coordination through a conscious partner selection already defines before the actual cooperation the common rules. The appropriate selection criteria, admission rules and the desired etiquettes have to be visibly documented in advance. Thus, all involved people know what they are in for and whether they want to participate in this collaboration or not.
  • Result orientation
    The results that are agreed in as goals, synchronize all activities. This requires a consistent planning, to which the individual goals refer. The employees receive thereby a clear target and leave them with the freedom of the how-to. The HR systems for the control, the evaluation and the motivation are based on it.
  • Hierarchy
    The classical approach of leadership assigns the tasks, the authority and the responsibility to the participants on different levels. The chain of command that determines the control, the decisions and the escalation procedures is clearly defined. The superordinate level has thereby the right and the obligation to lead.
  • Linking-Pin
    Pro-active coordinators keep the projects continuously moving. The so-called linking-pins assure as overlapping contact partners the mutual exchange through management-by-walking-around. A linking-pin reaches from the driver, to the caretaker, to the supporter of the collaboration. In any case, the linking-pin functions as connection between the involved units. They are able to translate the different requirements in such a way that everybody can understand and obey.
  • Diplomacy
    One of theoldest procedures is surely the negotiating skills of diplomacy. Similar to the linking-pin, it is only activated after there is a need for coordination. In the simplest case, the exchange of ideas begins   between the involved people. However, also negotiations are organized or, in the case of crisis, mediated between the parties. A typical format is the Taskforce.

In principle, the coordination mechanisms can be used separately or arbitrarily mixed, as long as the cooperation and the goal achievement happen in the end. Since the conditions of the business are changing constantly, the hierarchy is surely the most difficult to use, since it needs a long time, in order to be established fruitfully. Linking-pins and diplomats are surely the most practical solutions in times of change and for various cultures.

*1) Additional leadership tasks are the self-management, the conception, the communication and the cooperation

Enough is vague without scale

The business model does not say which, for what, how, with whom or wherewith the undertaking has to be realized. It points out that you have to describe content-wise Which, For what, How, With whom and Wherewith. This is the benchmark for calibrating yourself in the development of a new or the transformation of an existing activity.

Geschäftsmodell

If an enterprise is realized, the following aspects preoccupy normally every executive board, every project and every employee.

WHAT has to be documented on which level of detail?

In the planning, execution and controlling of program, it becomes repeatedly apparent that the list of tasks, the start and end dates, the dependencies as well as the responsibilities facilitate the steering of a project substantially. Currently, structured approaches, like the Businesses Model Canvas and Business model by memecon, are developed for modelling the venture

Isn’t it negligent, if a new firm is only based on numbers that are computed in a spreadsheet analysis? Often they forget the content-wise description of the actual offer, the additional possibilities of income, the entire value creation, the necessary relations and means. Additionally, the ways that are used to keep contact with the involved people and the mechanisms for coordination provide first ideas for steering the undertaking.

The venture is sufficiently outlined, if statements for all aspects are available. The level of detail is defined by the time that can be spent. After at most one fifth of the duration, all relevant aspects should be presented in an agreed way and the question about the feasibility should be answered. Further details are determined in the following steps.

Bottom line: The development of the business model is a structured approach that facilitates the content-wise specification of the elements. The explanations should be prepared as detailed as needed to decide the further development of the business. In the subsequent steps, the individual aspects will be further refined.

Videos:

The self-image in a nutshell: http://ow.ly/wsI4F

Potential application areas: http://ow.ly/wsJ1F