Management Techniques for Managing the Organization
The environment in which organizations are working is changing very fast. The current environment of globalization, rapid technological advances and economic turbulence has increased the challenges which the management of today faces and, hence, they need the right techniques to meet those challenges. To do this successfully, management is to have more knowledgeable than ever as they sort through the options and select the right management techniques. The selection process itself is complicated as there are various varieties of issues which are required to be solved by the management.
Management is requires to choose the techniques which best help it to make the decisions that lead to enhanced processes, products and services as well as deliver superior performance and profits. Successful use of such techniques requires an understanding of the strengths and weaknesses of each technique, as well as an ability to creatively integrate the right techniques, in the right way, at the right time. The secret is not in discovering one simple solution, but in learning which techniques to use, and how and when to use them.
In the present day environment, it is necessary for the managers to understand the application of the management techniques and to have the capability to identify, select, implement and integrate the optimal techniques to improve the performance of the organization.
A large number of management techniques are available to the management for the solving of the organizational issues. Some of the key techniques which the management of today is required to know and use are described in an alphabetical order below.
Balanced scorecard
Balanced scorecard defines the performance of the organization and measures whether management is achieving the desired results. It translates ‘mission and vision statements’ of the organization into a comprehensive set of objectives and performance measures which can be quantified and appraised. These measures typically include (i) financial performance (revenues, earnings, return on capital, and cash flow etc.), (ii) customer value performance (market share, customer satisfaction and loyalty measures etc.), (iii) performance of internal processes (productivity rates, quality measures, and timeliness etc.), (iv) innovation performance (percentage of revenue from new products, employees’ suggestions, and rate of improvement index etc.), and (v) employees’ performance (morale, knowledge, turnover, use of best demonstrated practices etc.) and several others.
For constructing and implementing a ‘balanced scorecard’, management is to (i) articulate the organizational vision and strategy, (ii) identify the performance categories which link best the vision and strategy to its results, (iii) establish objectives that support the vision and strategy, (iv) develop effective measures and meaningful standards by establishing both short term milestones and long term targets, (v) ensure organization wide acceptance of the measures, (vi) create appropriate budgeting, tracking, communication and reward systems, (vii) collect and analyze performance data and compare actual results with desired performance, and (viii) take action to close unfavourable gaps.
Benchmarking
Benchmarking improves organizational performance by identifying and applying to best demonstrated practices to various operations of the organization. Management compares the performance of the products or the processes externally with those of competitors and best-in-class organizations, and internally with other areas/departments in the organization which perform similar activities in the organization. The objective of ‘benchmarking’ is to find examples of superior performances and understand the processes and practices driving those performances. The organization then improves its performance by tailoring and incorporating these best practices into its own operations normally not by imitating, but by innovating.
The steps involved in the ‘benchmarking’ technique are (i) selection of a product, service or process to benchmark, (ii) identifying of the key performance metrics, (iii) choosing organizations or internal areas/departments to benchmark. (iv) collection of data on performance and practices, (v) analysis of the data and identification of the opportunities for improvement, and (vi) adaption and implementation of the best practices, setting of the reasonable goals and ensuring of the organization wide acceptance.
Business process reengineering
Business process reengineering involves the radical redesign of core business processes to achieve dramatic improvements in productivity, cycle times and quality. In ‘business process reengineering’, organization starts with a blank sheet of paper and rethink existing processes to deliver more value to the customer. The organization typically adopts a new value system that places increased emphasis on customer needs. The organization reduces organizational layers and eliminates unproductive activities in two key areas. In the first area, it redesigns its functional structures into cross-functional teams. In the second area, it uses technology to improve data dissemination and decision making.
Business process reengineering is a dramatic change initiative that contains five major steps that management of the organization is to take. These are (i) refocus organizational values on customer needs, (ii) redesign core processes, often using information technology to enable improvements, (iii) reorganize a business into cross-functional teams with end-to-end responsibility for a process, (iv) rethink basic organizational and people issues, and (v) improve internal processes across the organization.
Change management
Change management enables the organization to control the installation of new processes to improve the realization of operational benefits. It involves devising change initiatives, generating organizational buy-in, implementing the initiatives as seamlessly as possible, and generating a repeatable model for ensuring continued success in future change efforts. The ‘change management’ process allows management to help employees succeed, showing where and when trouble is likely to occur, and laying out a strategy for mitigating risks and monitoring progress.
Change management requires management to focus on results and to maintain a goal-oriented mindset by establishing clear, non-negotiable goals and designing incentives to ensure these goals are met. It makes management to overcome barriers to change by identifying those employees who are most affected and also to work by predicting, measuring and managing the risk of change. During the change management process, the management needs to communicate repeatedly simple, powerful messages to the employees. Also during the times of change, management is required to alter communication frequency and the methods to manage how a shaken workforce perceives and reacts to information by ensuring sponsorship throughout the organization. It is necessary that the sponsorship is allowed to reach all levels of the organization by enlisting multiple sponsors to provide all individual employees with access to and the influence of a sponsor. During the time of change, management is also to reorganize around decision making. It is to develop a system for identifying, making and executing the most important decisions. Further for change management, management is required to continuously monitor the progress. They are to follow through and monitor the progress of each change initiative to see if it is following the intended path or veering off course.
Contingency planning
Contingency planning allows the organization to explore and prepare for several alternative futures. It examines the outcomes the organization can expect under a variety of operating strategies and economic conditions. Contingency planning assesses what effect sudden market changes or business disruptions can have on the organization and devises strategies to deal with them. Contingency plans avoid the dangers of simplistic, single dimensional or linear thinking. By raising and testing various ‘what-if’ scenarios, management can brainstorm together and challenge the assumptions in a non-threatening, hypothetical environment before it decides on a certain course of action. Contingency planning allows management to pressure test plans and forecasts, and equips the organization to handle the unexpected.
Key steps in ‘contingency planning’ process are (i) to choose a time frame to explore, (ii) to identify the current assumptions and thought processes of key decision makers, (iii) to create diverse, yet credible, scenarios, (iv) to test the impact of key variables in each scenario, (v) to develop action plans based on either the most promising solutions or the most desirable outcome which the organization seeks, (vi) to monitor events as they unfold to test the organization’s strategic direction, and (vii) to be prepared to change course if necessary.
Complexity reduction
Complexity reduction helps the organization to simplify its strategy, organization, products, processes and information technology. Reduction in any of these areas opens up opportunities for simplification in others. Unmanageable complexity often results from unplanned expansions or bureaucracies that unnecessarily complicate the organization’s operating practices, leading to sluggish growth, higher costs and poor returns. Complexity reduction finds inflection points where products or services fully meet customer needs at the lowest costs. By streamlining product lines the organization is able to simplify organizational structures and the decision making process to serve the core customers better while at the same time reducing demands on operating processes and information systems.
Complexity reduction requires management (i) to understand the sources of complexity and to examine trade-offs between operations and variety or customization for customers, (ii) to identify opportunities to simplify products, organization structures, operating processes and information systems to save costs while strengthening core capabilities and increasing the focus on customers, (iii) to take steps to stop the return of complexity by reexamining the hurdle rates for new products and other expansion activities, and (iv) to simplify decision making by clarifying roles and processes. Complexity reduction helps the organization to reveal hidden costs. It allows the organization to determine which products are making money, what customers really value and which organizational or process bottlenecks are getting in the way of effective actions, setting the stage for greater growth and increased profit.
Core competencies
Core competencies are deep proficiencies which enable the organization to deliver unique value to its customers. They represent the organization’s collective learning, particularly of how to coordinate diverse production skills and integrate multiple technologies. Core competencies create sustainable competitive advantage for the organization and help it branch into a wide variety of related markets. Core competencies also contribute substantially to the benefits the organizational products offer to the customers. The litmus test for a ‘core competency’ is that it is hard for competitors to copy or procure it.
Understanding of the ‘core competencies’ allows the organization to invest in the strengths which differentiate it and to set strategies that unify the entire organization.
For the development of the ‘core competencies’ the organization is required (i) to isolate its key abilities and sharpen them into organization wide strengths, (ii) to compare itself with other organizations with the same skills to ensure that it is developing unique capabilities, (iii) to develop an understanding of what capabilities its customers truly value, and invest accordingly to develop and sustain valued strengths, (iv) to create an organizational road map that sets goals for competence building, (v) to pursue alliances, acquisitions and licensing arrangements which further build the strengths of the organization in core areas, (vi) to encourage communication and involvement in core capability development across the organization, (vii) to preserve core strengths even as the organization expands and redefines its products and services, and (viii) to outsource or divest non-core capabilities to free up resources that can be used to deepen core capabilities.
Customer relationship management
Organizations use to understand their customer groups and respond quickly and sometimes, instantly to shifting customer desires. Customer relationship management (CRM) process allows the organization to collect and manage large amounts of customer data and then carry out strategies based on that information. Data collected through focused CRM initiatives helps the organization to solve specific problems throughout the customer relationship cycle representing the chain of activities from the initial targeting of customers to efforts to win them back for more. CRM data also provides the organization with important new insights into customers’ needs and behaviours, allowing it to tailor products to targeted customer segments. Information gathered through CRM activities often generates solutions to problems outside the organization’s marketing functions, such as ‘supply chain management’ and new product development.
CRM requires management (i) to start by defining strategic ‘pain points’ in the customer relationship cycle which have a large impact on customer satisfaction and loyalty, where solutions lead to superior financial rewards and competitive advantage, (ii) to evaluate whether and what kind of CRM data can fix those pain points by calculating the value that such information can bring the organization, (iii) to select the appropriate technology platform, and to calculate the cost of implementing it and training employees to use it, (iv) to assess whether the benefits of the CRM information outweigh the expense involved, and (v) to design incentive programs to ensure that employees are encouraged to participate in the CRM program.
Many organizations have discovered that realigning the organization away from product groups and toward a customer centered structure improves the success of CRM. It is essential for the organization to measure CRM progress and impact and to aggressively monitor participation of key employees in the CRM process. In addition, the management needs to put measurement systems in place to track the improvement in customer profitability with the use of CRM. Once the data is collected, the information is required to share widely with the employees to encourage further participation in the program.
Customer segmentation
Customer segmentation is the subdivision of a market into discrete customer groups that share similar characteristics. Customer segmentation can be a powerful means to identify unmet customer needs. Organizations which identify underserved segments can then outperform the competition by developing uniquely appealing products and services. Customer segmentation is effective maximum when the organization tailors offerings to segments which are the most profitable and serves them with distinct competitive advantages. This prioritization helps the organization to develop marketing campaigns and pricing strategies to extract maximum value from both high profit and low profit customers. The organization can use ‘customer segmentation’ as the principal basis for allocating resources to product development, marketing, service and delivery programs.
Customer segmentation requires management (i) to divide the market into meaningful and measurable segments according to customers’ needs, their past behaviours or their demographic profiles, (ii) to determine the profit potential of each segment by analyzing the revenue and cost impacts of serving each segment, (iii) to target segments according to their profit potential and the organization’s ability to serve them in a proprietary way, (iv) to invest resources to tailor product, service, marketing and distribution programs to match the needs of each target segment, and (v) to measure performance of each segment and adjust the segmentation approach over time as market conditions change decision making throughout the organization.
Data analysis
Data analysis enables the rapid extraction, transformation, loading, search, analysis and sharing of massive data generated during the operations of the organization. By analyzing a large, integrated, real-time database rather than smaller, independent, batch-processed data sets, management seeks to quickly identify previously unseen correlations and patterns to improve the decision making process. Data analysis helps the organization in better measuring and managing the most critical functions of the operations. The organization starts by identifying significant opportunities which need to be enhanced by superior data and then determine whether data analysis solutions are needed. If they are, the organization needs to develop the hardware, software and talent required to capitalize on the ‘data analysis.’ This frequently requires employees who are skilled in asking the right questions, identifying cost-effective information sources, finding true patterns of causality and translating analytic insights into actionable information.
To apply data analysis, the organization is to (i) select a pilot (a department or functional group) with meaningful opportunities to capitalize on data analysis, (ii) establish a leadership group and team of employees with the skills and resources necessary to drive the effort successfully, (iii) identify specific decisions and actions that can be improved, (iv) determine the most appropriate hardware and software solutions for the targeted decisions, (v) establish guiding principles such as data privacy and security policies, (vi) test, learn, share and refine, and (vii) develop repeatable models and expand applications to additional areas.
Decision making process
Decision making process helps the organization to organize the decision making and execution by setting clear roles and accountabilities and by giving all those involved a sense of ownership of decisions such as when to provide input, which are to be followed through and what is beyond the scope. The decision making process make the organization to have a clear delegation of power which allows the organization to cut through the complexity, often clouded by the organizational structure, by ensuring that the critical decisions are made promptly and well and result in effective actions. Each employee involved in the decision making process is normally assigned one of the following five decision making roles (Fig 1).
Input – The employees who provide the inputs combine facts and judgment to provide input into a recommendation.
Recommend – The employees recommending gather and assess the relevant facts, obtaining input from appropriate parties, and then recommend a decision or action.
Agree – The employees agreeing formally approve a recommendation and can delay it if more work is required.
Perform – The employees who perform are accountable for making a decision happen once it is been made.
Decide – The employees who decide make the ultimate decision and commit the organization to action.
Fig 1 Decision making process roles
These assignments need to factor (i) each decision is to have only one employee who decides with single point accountability, (ii) each decision has one individual employee who leads the process to develop a recommendation, factoring in all relevant input, (iii) the role of agreeing is to be used sparingly, typically only in extraordinary circumstances (e.g., regulatory issues), otherwise they undermine speed and authority, (iv) the input roles is to be assigned only to those with knowledge, experience or access to resources which are so important for a good decision that it would be irresponsible for the decision maker not to seek their input, and (v) the decision maker often considers soliciting input from those with ‘perform’ roles in order to engage early, identify implementation issues and enable upfront planning.
Digitization process
Digitization process integrates digital technologies into the organizational strategy and operations. Focusing of the entire organization on opportunities to merge the best of both digital and physical processes, ‘digitization process’ examines each link in the customer experience chain, explores new technology links that can boost the base operation and weave them into holistic systems that create superior customer experiences. The process aims to profoundly extend competitive advantages and accelerate profitable growth.
Management begins by determining whether they are to prepare for ‘digital disruption’ or ‘the digitization process.’ Digital disruption ultimately destroys and replaces physical operations with purely digital solutions. Management’s primary task, therefore, is to change the mix of operations to compete effectively in a purely digital world. Digitization process, on the other hand, merges the best of digital and physical worlds into digital innovations that create wholly new sources of value. Digitization process requires that management changes not only the mix of the operations but also the capabilities of the employees in and around those operations. The following actions of the management help to maximize the chances for the digitization process to succeed.
To understand the degree of digitization in the current environment and assess future threats
To develop a vision for how to engage the customer and achieve profitable growth using digital technology
To design a plan to tap the best sources of value from digitization, adding links and strengthening linkages in the customer experience chain.
To mobilize the organization to win and to transform the approach to innovation.
To develop appropriate operating practices and to build a leadership team digital with know-how.
Disruptive innovation laboratories
Disruptive innovation laboratories foster disruptive innovations usually of high risk, high-return breakthroughs that often start at the bottom of a market but eventually displace established competitors. Organizations often set up separate facilities for this purpose, since it is difficult to pursue disruptive innovations within core operations.
Disruptive innovations require different time frames, processes, performance metrics, people and skills than incremental (or ‘sustaining’) innovations. The evidence shows that ‘disruptive innovation laboratories’ work better when separated from core business operations. Primary benefits of separation include (i) the ability to acquire and retain exceptional talent, (ii) specialized facilities, (iii) freedom to challenge conventional wisdom, (iv) reduced bureaucracy and increased flexibility, and (v) more entrepreneurial cultures and incentives.
Research also shows that ‘disruptive innovation laboratories’ benefit from ‘soft integration’ methods, such as social integration of senior teams, job rotations, collaborative planning, shared knowledge networks, and cross-functional teams and task forces. These methods help to focus the laboratory’s efforts on real-world problems. They also reduce conflict, leverage existing assets and economies of scale, and encourage adoption and deployment of breakthroughs.
Most management teams aspire to innovation ‘ambidexterity’ – the ability to fully exploit existing assets while simultaneously exploring new capabilities required for future success. Disruptive innovation laboratories push the organization beyond incremental improvements. They are often deployed in three situations namely (i) when the organization faces new forms of competition which are stealing market share or reducing profitability, (ii) when traditional innovation methods are failing to deliver the required results, and (iii) when management senses that the organization is growing complacent and needs concrete examples of bold innovations to raise its vision and transform the culture.
Employee satisfaction survey
Employee satisfaction surveys measure whether employees are fully involved and enthusiastic about their work and the organization. Intellectually and emotionally engaged employees help to create satisfied, more loyal customers and improved organizational performance. Employee satisfaction surveys gauge the degree of employees’ attachment to their jobs, colleagues and organization, helping to determine their willingness to go beyond the basic parameters of their job. They can also be used to understand what factors have the greatest impact on satisfying employees and to predict employee retention. Employee satisfaction surveys are closely linked to customer satisfaction surveys and are measured in similar ways.
Employee satisfaction survey helps the organization to identify and build on the strengths and talents of their employees to gain a competitive edge. Management needs to do the following.
To evaluate a variety of data sources to understand key drivers of satisfaction. Key data sources often include anonymous surveys, employee suggestions, predictive modeling based on previous surveys, in-depth discussions with employees at all levels and social media. Satisfaction motivators usually include employee satisfaction with the impact of their work, rewards, relationships, values, mission, sustainability and working environment.
To translate key satisfaction motivators into a short survey that respects employees’ time and yields the most important insights.
To conduct the surveys frequently enough to generate a steady stream of information about satisfaction levels and ideas for improvement.
To make sure employee satisfaction is a top priority for frontline managers and employees themselves, with reliable procedures for quickly responding to feedback and developing solutions to key issues.
Mergers and Acquisitions
Over the past decade, Mergers and Acquisitions (M&As) have reached unprecedented levels as organizations use corporate financing strategies to maximize shareholder value and create a competitive advantage. Acquisitions occur when a larger organization takes over a smaller one while a merger typically involves two relative equals joining forces and creating a new organization. Most Mergers and Acquisitions are friendly, but a hostile takeover occurs when the acquirer bypasses the board of the targeted organization and purchases a majority of the organization’s stock in the open market.
A merger is considered a success if it increases shareholder value faster than if the organizations had remained separate. Since corporate takeovers and mergers can reduce competition, they are heavily regulated, often requiring regulatory approval. To increase the chances of a deal’s success, acquirers need to perform rigorous due diligence (a review of the targeted organization’s assets and performance history) before the purchase to verify the organization’s standalone value and unmask problems which can jeopardize the outcome.
Successful integration requires understanding how to make trade-offs between speed and careful planning and involves these steps namely (i) To set integration priorities based on the merger’s strategic rationale and goals, (ii) To articulate and communicate the deal’s vision by merger leaders, (iii) To design the new organization and operating plan, (iv) To customize the integration plan to address specific challenges such as to act quickly to capture economies of scale while redefining a business model and to sacrifice speed to get the model right, such as understanding brand positioning and product growth opportunities, (v) to aggressively implement the integration plan such as within a quarter year, the merged organization is operating and contributing value.
Mission and Vision statements
A ‘Mission’ statement defines the organization’s operations, its objectives and approach to reach those objectives. A ‘Vision’ statement describes the desired future position of the organization. Elements of Mission and Vision statements are often combined to provide a statement of the organization’s purposes, goals and values. However, sometimes the two terms are used interchangeably. Typically, management writes the organization’s overall Mission and Vision statements. Managers at different levels may write statements for their particular divisions or departments.
The development process requires management (i) to clearly identify the organizational culture, values, strategy and view of the future by interviewing employees, suppliers and customers, (ii) to address the commitment the organization has to its key stakeholders, including customers, employees, shareholders and communities, (iii) to ensure that the objectives are measurable, the approach is actionable and the vision is achievable, (iv) to communicate the message in clear, simple and precise language, and (v) to develop buy-in and support throughout the organization.
Outsourcing
By ‘outsourcing’, the organization uses third parties to perform noncore activities of the organization. Contracting third parties enables the organization to focus its efforts on its core competencies. Third parties that specialize in an activity are likely to be lower cost and more effective, given their focus and scale. Through ‘outsourcing’, the organization can access the state of the art in all of its operational activities without having to master each one internally.
When ‘outsourcing’ certain activities, the organization is to take the certain steps as given below.
To determine whether the activity to outsource is a ‘core competency’. In most cases, it is unwise to outsource something that creates a unique competitive advantage.
To evaluate the financial impact of ‘outsourcing’. Outsourcing likely offers cost advantages if a vendor can realize economies of scale. A complete financial analysis is to include the impact of increased flexibility and productivity or decreased time to market.
To assess the nonfinancial costs and advantages of ‘outsourcing’. Management also likes to qualitatively assess the benefits and risks of ‘outsourcing’. Benefits include the ability to leverage the outside expertise of a specialized outsourcer and the freeing up of resources devoted to non-core business activities. A key risk is the growing dependence the organization might place on an outsourcer, thus limiting future flexibility.
To choose an outsourcing partner and contract the relationship. Candidates are to be qualified and selected according to both their demonstrated effectiveness and their ability to work collaboratively. The contract is to include clearly established performance guidelines and measures.
Price optimization process
Price optimization process is the mathematical program which calculates how demand varies at different price levels then combines that data with information on costs and inventory levels to recommend prices that will improve profits. The process allows organizations to use pricing as a powerful profit lever, which often is underdeveloped. Price optimization process is used to tailor pricing for customer segments by simulating how targeted customers respond to price changes with data driven scenarios.
Given the complexity of pricing thousands of items in highly dynamic market conditions, the results and insights obtained through the price optimization process help to forecast demand, develop pricing and promotion strategies, control inventory levels and improve customer satisfaction.
Price optimization process is to factor in three critical pricing elements namely (i) pricing strategy, (ii) the value of the product to both buyer and seller, and (iii) tactics that manage all elements affecting profitability. The organization using the ‘pricing optimization process’ is (i) to select the preferred optimization process, and determine desired outputs and required inputs, (ii) to collect historical data, including product volumes, the organization’s prices and promotions, competitors’ prices, economic conditions, product availability, seasonal conditions, and fixed and variable cost details, (iii) to clarify the organization’s value proposition and set strategic rules to guide the process, (iv) to test and revise the process, (v) to establish decision-making processes that incorporate process results without alienating key decision makers, and (vi) to monitor results and upgrade data input to continuously improve the process accuracy.
Satisfaction and loyalty management
Loyalty management techniques grow the organization’s revenues and profits by improving retention among its customers, employees and investors. Loyalty programs measure and track the loyalty of those groups to diagnose the root causes of defection among them and develop ways not only to boost their allegiance, but also to turn them into advocates for the organization. Satisfaction and loyalty management quantifiably links financial results to changes in retention rates, maintaining that even small shifts in retention can yield significant changes in organization’s profit performance and growth.
A comprehensive satisfaction and loyalty management program requires the organization to do the following.
To regularly assess current loyalty levels through surveys and behavioural data. The most effective approaches distinguish mere satisfaction from true loyalty. The organization asks current customers- how likely they would be to recommend the organization to a friend or a colleague, and also ask frontline employees whether they believe the organization deserve their loyalty.
To benchmark current loyalty levels against those of competitors.
To identify the few dimensions of performance that matter most to customers and employees, and track them rigorously.
To systematically communicate survey feedback throughout the organization.
To build loyalty and retention targets into the organization’s incentive, planning and budgeting systems.
To develop new programs to reduce customer and employee churn rates.
To revise policies that drive short-term results at the expense of long-term loyalty, such as high service fees and discounts given only to new customers.
To reach out to investors and suppliers to learn what drives their loyalty.
Strategic alliances
Strategic alliances are agreements among organizations in which each organization commits resources to achieve a common set of objectives. Organizations may form ‘strategic alliances’ with a wide variety of players such as customers, suppliers, competitors, educational institutes or government departments. Through ‘strategic alliances’, the organizations improve competitive positioning, gain entry to new markets, supplement critical skills and share the risk or cost of major development projects.
For forming a ‘strategic alliance’, organizations normally (i) define their vision and strategy in order to understand how an alliance fits their objectives, (ii) evaluate and select potential partners based on the level of synergy and the ability of the organizations to work together, (iii) develop a working relationship and mutual recognition of opportunities with the prospective partner, and (iv) negotiate and implement a formal agreement that includes systems to monitor performance.
Strategic planning
Strategic planning is a comprehensive process for determining what the organization should become and how it can best achieve that goal. It appraises the full potential of the organization and explicitly links the organizational objectives to the actions and resources required to achieve them. Strategic planning offers a systematic process to ask and answer the most critical questions confronting the management especially with respect to large, irrevocable resource commitment decisions.
A successful ‘strategic planning process’ normally (i) describe the organization’s mission, vision and fundamental values, (ii) target potential business arenas and explore each market for emerging threats and opportunities, (iii) understand the current and future priorities of targeted customer segments, (iv) analyze the organization’s strengths and weaknesses relative to competitors and determine which elements of the value chain the organization is to make or buy, (v) identify and evaluate alternative strategies, (vi) develop an advantageous operational practice which profitably differentiates the organization from its competitors, (vii) define stakeholder expectations and establish clear and compelling objectives for the organization, (viii) prepare programs, policies and plans to implement the strategy, (ix) establish supportive organizational structures, decision processes, information and control systems, and hiring and training systems, (x) allocate resources to develop critical capabilities, (xi) plan for and respond to contingencies or environmental changes, and (xi) monitor performance.
Supply chain management
Supply chain management synchronizes the efforts of all parties namely suppliers, manufacturers, distributors, dealers, customers and so on, involved in meeting a customer’s needs. The approach often relies on technology to enable seamless exchanges of information, goods and services across the organizational boundaries. It forges much closer relationships among all links in the value chain in order to deliver the right products to the right places at the right times for the right costs. The goal is to establish such strong bonds of communication and trust among all parties that they can effectively function as one unit, fully aligned to streamline organizational processes and achieve total customer satisfaction.
Organizations usually implement ‘supply chain management’ in following four stages.
The first stage seeks to increase the level of trust among vital links in the supply chain. Managers learn to treat former adversaries as valuable partners. This stage often leads to longer commitments with preferred partners.
The second stage increases the exchange of information. It creates more accurate, up-to-date knowledge of demand forecasts, inventory levels, capacity utilization, production schedules, delivery dates and other data which can help supply chain partners improve performance.
In the third stage efforts are expanded to manage the supply chain as a single overall process rather than dozens of independent functions. It leverages the core competencies of each player, automates information exchange, changes management processes and incentive systems, eliminates unproductive activities, improves forecasting, reduces inventory levels, cuts cycle times and involves customers more deeply in the ‘supply chain management’ process.
The fourth stage identifies and implements radical ideas to transform the supply chain completely and deliver customer value in unprecedented ways.
Time management
Time management views time as a scarce resource that must be invested as effectively as financial resources. Organizations which track the organizational time can measure not just the amount of time that managers spend on various tasks, but with whom they spend time and even their level of engagement during meetings. By bringing the same discipline to time budgets that they apply to capital budgets, organizations can curb time pressure on executives, lower costs and boost productivity. Time management requires managers to set time priorities by considering both the urgency and the importance of all tasks. Organizations may use time-management tracking techniques to analyze time allocations, meeting attendance and organizational behaviours such as parallel processing and double booking.
Personal time management techniques help the process of tracking employees’ time use against actual priorities. Although the techniques require strong safeguards to protect employee privacy, they enable the organization to measure and manage time more effectively. Time management is most powerful when it is combined with analytical techniques such as productivity benchmarking, and it spans and layers analysis. The goal is to eliminate low value activities and use the time saved to redeploy talent or reduce head count. It involves the application of eight related principles namely (i) setting selective agendas, (ii) using a zero based time budget, (iii) requiring an operational case for each initiative, (iv) simplifying the organization, (v) delegating authority for time investments, (vi) standardization of the decision making process, (vii) making time discipline organization-wide, and (viii) using feedback to manage organizational load.
Total quality management
Total quality management (TQM) is a systematic approach to quality improvement that marries product and service specifications to customer performance. TQM then aims to produce these specifications with zero defects. This creates a virtuous cycle of continuous improvement that boosts production, customer satisfaction and profits. In order to succeed, TQM requires management to the following.
Assess customer requirements which include (i) understanding of the present and future customer needs, and (ii) designing of the products and services that cost-effectively meet or exceed those needs
Deliver quality which include (i) identification of the key problem areas in the process and work on them until they approach zero-defect levels, (ii) training of the employees to use the new processes, (iii) development of effective measures of product and service quality, (iv) creation of incentives linked to quality goals, (v) promotion of a zero-defect philosophy across all activities, (vi) encouragement of the management to lead by example, and (vii) development of feedback mechanisms to ensure continuous improvement.
Zero based budgeting
Zero based budgeting is a broad reaching cost transformation effort that takes a ‘blank sheet of paper’ approach to resource planning. It differs from traditional budgeting processes by examining all expenses for each new period, not just incremental expenditures in obvious areas. Zero based budgeting forces management to scrutinize all spending and requires justifying every expense item that need to be kept. It allows the organization to radically redesign its cost structures and boost competitiveness.
Zero based budgeting analyzes which activities are to be performed at what levels and frequency and examines how they can be better performed possibly through streamlining, standardization, outsourcing, offshoring or automation. The process is helpful for aligning resource allocations with strategic goals, although it can be time-consuming and difficult to quantify the returns on some expenditure such as basic research.
For ‘zero based budgeting’, the organization needs to take the following steps.
Re-envision the organization and ask what activities and resources are truly needed to compete under future market conditions, then set a clear strategic vision and cost target
Build a comprehensive fact base of current offerings, functions and expenses
Use a ‘blank sheet of paper’ approach to build the ideal state and identify vital initiatives
Build the future state, bottom up, by justifying which activities are to be performed
Reset budgets and full-time employee levels, redesigning the organization and planning for implementation