Podcast: Play in new window | Download
A technology is the application of scientific knowledge for practical purposes. When it comes to management technologies that can be used to guide the overall performance of an organization, new ones appear very rarely. One was introduced in 1911 by an American engineer, Frederick Winslow Taylor. Taylor’s technology (often called ‘Taylorism’) attempted to improve the efficiency of industrial firms. Taylor invented what he called ‘task analysis’ or ‘task management,’ later called ‘Scientific Management’ in his book by the same name. At the time, Taylor’s methods were meant to increase the productivity of unskilled manual workers by improving the efficiency of their tasks (using time and motion studies), thus increasing the efficiency of the firm in the process. Today we know these methods as part of industrial engineering.
The principles of scientific management were extended from industrial firms to other firms of the time by Henri Fayol in 1916. Today, Fayol’s 14 principles of management are widely known, and his 6 elements of management— forecasting, planning, organizing, commanding, coordinating, and controlling — still serve as an underlying core of management practice. While Fayol considered organizations to be largely closed systems, this would have been consistent with the drive for internal efficiency improvements that dominated early management thought. Efficiency is an internal measure which compares the ratio of outputs (such as products and services) to resource inputs.
Over a century has passed since Taylor and Fayol published their works. Looking back over the decades, Peter Drucker credited the management principles of Frederick Winslow Taylor with a 50-fold increase in the productivity of manual work during the 20th Century, an increase upon which rested, he noted, “all of the economic and social gains” of the times. The improved productivity of the manual worker created what is now called a “developed” economy. Taylor’s principles can be seen in the widespread application of equipment in production processes to allow workers to become more efficient and productive. As Taylor was the father of industrial engineering, Taylorism foreshadows and embraces all of the techniques that have served over the years to improve the efficiency of the worker and the quality of the end product. Despite its success, Taylorism focused on internal efficiency improvements alone, and did not focus on how well the organization was serving its external environment (including its customers).
That brings me to the new management technology that I want to focus on today. Unlike Taylorism, this new technology aims to improve the overall effectiveness of the organization rather than its internal efficiency. It deals with how well an organization serves its external environment (including its customers and other stakeholders). Organizational effectiveness has been the missing holy grail of management thought. It was given up for dead and labeled as an unworkable concept by scholars in the mid-1980s. That was because none of the prominent models that described effectiveness at the time could be verified in the field through direct observation.
That situation has potentially changed, however, with the publication of a new book: Become Truly Great: Serve the Common Good through Management by Positive Organizational Effectiveness (2017, by Charles G. Chandler). The book introduces a new model for organizational effectiveness that can be verified in the field by direct observation. It also turns out that Positive Organizational Effectiveness is the engine of greatness.
Let me clear about what I am discussing here. Organizations utilize many different technologies for different purposes within their production processes, but I am limiting my discussion of management technology to that which is used to judge the overall performance of the organization. The question of organizational effectiveness has long been recognized as being at the very center of this issue.
When it comes to judging the overall performance of the organization, current management technology is not reliable. Most organizations use the goal model, wherein the organization is judged to be effective if it achieves its goals. Even advocates of the goal model admit that not all goals are created equal, and few would argue that all goals relate to organizational effectiveness. Often, goal setters are simply admonished to set clear goals, with the emphasis on clarity. Another framework for goal setting calls for SMART goals (Specific, Measurable, Attainable, Relevant, and Timely). But it is not sufficient to set goals based on so-called SMART criteria, as these criteria do not ensure effectiveness.
The problem with organizational effectiveness has always been the need to define the concept in a way that would allow its verification in the field through direct observation. Until now that had proved to be elusive. The new technology I am describing is called Management by Positive Organizational Effectiveness, and it allows organizations to determine their effectiveness through a well-defined process that is verified in the field through direct observation.
The new approach departs from the goal model, which has remained dominant in the daily practice of management around the world, but with limited success. Many people are familiar with Management by Objectives, which is based on the goal model. The goal model serves an aging, and largely top-down, bureaucratic reality. Let’s call it “last century” technology. It is not reliable because it accepts arbitrary goals that may not be related to effectiveness (i.e., profit, shareholder value).
Management by Positive Organizational Effectiveness uses a new model, called the Outcome-focused Model, to determine effectiveness. Within this model, the goal of every organization is the same, that is, to be effective within its environment. Yet effectiveness does not operate here at the level of the organization as a whole; it operates just below that, at the level of its individual offerings to the environment. As such, efforts to improve organizational effectiveness focus on an organization’s portfolio of offerings that serve its environment.
The new management approach defines effectiveness as the conversion of the supply-side intentions of an organization into favorable demand-side responses in the external environment. Results chains are used to describe the linkage between inputs & outputs on the supply side, and outcomes & impacts on the demand side. The strength of expected outcome-level behaviors can be observed directly to verify effectiveness.
The new model focuses the attention of the organization on its external interface with its customers and stakeholders, and is encouraged to be in-tune with the immediate and future needs of these actors. The focus on expected externaloutcomes changes the way that outputs are designed and delivered because internal actors come to realize that outputs of the organization (including its product and service offerings) are simply waste without the achievement of expected outcomes (such as the favorable demand-side behaviors of uptake, adoption or use of those offerings).
Many organizations are still driven by inappropriate objectives that promote efficiency rather than effectiveness. This can lead to false-positive indicators of effectiveness where true effectiveness may not exist. An outcome-focused organization avoids these problems by focusing its objectives on expected external outcomes, that is, on the behavior of external actors who can adopt and use its offerings.
While Taylor’s “scientific management” increased firm performance and manual worker productivity by increasing task efficiency, Management by Positive Organizational Effectiveness converts an organization’s offerings into relevant demand-side responses through the management of benefit exchanges at the supply/demand interface. If you are still using the goal model in business and continue to focus your primary goals on the maximization of profit or shareholder value, you need this new technology. In fact, every organization needs it because it can be applied to government, and nonprofits as well.
This episode has provided a brief explanation of a new technology to manage organizational performance, one that every organization needs. The approach is described in more detail in the book I have mentioned (Become Truly Great), for which there is a link in the show notes (below).
Charles G. Chandler, Ph.D.
[email protected]
Affiliate link to Amazon.com:
