EVOLUTION OF MANAGEMENT SYSTEMS

MANAGEMENT SYSTEM
'A management system is the framework of processes and procedures used to ensure that an
organization can fulfill all tasks required to achieve its objectives.
After World War II, the reigning paradigm of product-oriented mass production had reached
its peak. Examples of management systems at that time are linear assembly lines,
organizational hierarchies of command, product quality control and mass consumption.
Soon afterwards, the Deming-Juran process-quality teachings spearheaded a new quality
orientation (later referred to as Total quality management) and propelled Japan directly to the
post-war process focus (process quality control, just-in-time, continuous improvement). The
US responded by a painful and prolonged product-to-process transformation, ultimately
leveling the playing field again by the mid 1980s.
At the end of the 1980s, business process reengineering focused on the radical redesign of the
production process through the reintegration of task, labor and knowledge. As a result, lean,
flexible and streamlined production processes were created, capable of fast response and
internet-based integration necessary for the upcoming phase of supply chains - business-tobusiness (B2B) as well as demand chains business-to-customer (B2C).
In the above three stages of Evolution of Management Systems, the competitive advantage
was derived almost exclusively from the internal resources of the firm. At the end of the
1980s, a radical fourth shift has occurred: the competitive advantage became increasingly
derived from the external resources of the firm through the extended networks of suppliers
and customers.

Fig:1 Basic scheme: product, process, external networks

Above figure refers to the basic scheme of production and service delivery process. It
represents the traditional linear input-process-output management system. This system has
been fixed and unchanging for centuries. The only change has been in terms of changing
focus on individual components of the system, emphasizing different parts of this basic
scheme.
Although the scheme itself (inputs process outputs) remains mostly unchallenged, there
are some indications that this business model will undergo major restructurings in the future
(in the emerging stages of Evolution of Management Systems). It will become disaggregated
and distributed, subjected to non-linear modularity and bringing forth new ways of making
things and delivering services. Then it will become reintegrated again, tying together globally
distributed components into a unified recycling whole.
EARLY STAGES
All early stages are characterized by changing focus of attention within the unchanging,
invariant scheme of Figure 1. The management system has typically focused on:
FINAL PRODUCT
The final product is a primary focus, the production process is considered secondary. Its
operations and their sequences are technologically fixed or given. Product quality is
inspected in, mostly at the end of the process. Statistical quality control, inventory control,
cost minimization, mass production, assembly line, work specialization, hierarchies of
command, mass consumption, statistical mass markets and forecasting are among the
defining characteristics of this stage.
PARTITIONED PROCESS
It is the high-quality process that assures the high-quality product. The main focus was on
improving of process operations. Quality of the process was understood as the quality of its
operations. Powerful new concepts of Total Quality Management (TQM), Continuous
Improvement Process (Kaizen) and Just-In-Time (JIT) systems have characterized this stage.
Although the operations were being improved, the process architecture and structural
sequencing were kept intact and remained technologically given.
INTEGRATED PROCESS
The focus of attention shifted from operations (circles) to linkages (arrows) thus changing
the process architecture itself. The reengineering of the process, re-integrating individual
components into effective, more autonomous and even self-manageable wholes, has
characterized this stage. The production process became a business process and therefore
subject to qualitative redesign and reengineering (BPR). Discontinuous improvement and
process innovation replaced the piecemeal continuous improvement. Traditional vertical
hierarchies of command have flattened out into more horizontal, process-oriented networks.

Mass customization, disintermediation, knowledge management and autonomous teams have

started emerging.
EXTENDED PROCESS

Fig: 2 Extended process and Customer Intervention Point

Figure refers to the paradigmatic shift from internal processes expanded into the extended
process including supplier networks and alliances as well as customer self-service, mass
customization and disintermediation as the increasingly external sources of competitive
advantage.
In this recently peaked stage, networks of suppliers and communities of customers have
extended the internal process into a functional and competitive whole. Both internal and
external sources of knowledge and competitiveness have formed new core competencies.
Supply and demand chains management have emerged, in dependence on shifting CIP
(Customer Intervention Point). Intranets and extranets have provided a communication
medium for B2B and B2C exchanges. Quality has become bundled together with cost, speed
and reliability.
Today, powerful processes of global sourcing bring forth and foster a new set of relationships
with customers and suppliers. The firm starts disaggregating its production processes,
transferring, leasing or selling selected pieces off to a higher-added value operator or
coordinator. Any firm can be only as good as is the network of which it is a part.
Consequently, the firm has disaggregated and became a network.
DISTRIBUTED PROCESS
This emerging stage represents the most radical business refocusing so far. Through the
global sourcing, sections and components of the internal process are being outsourced to
external providers and contractors in search of the highest added value contribution. Longterm alliances are formed and companies are transforming themselves into networks.

Network cooperation is replacing corporate competition: coopetition emerges. The majority

of companies (also the educational and training institutions) could still be the leading global
players in this incessant and accelerating paradigm shifting. Globally distributed process
ushers in new forms of organization, coordination and modular integration.

Fig: 3 Distributed process and Outsourcing

Different parts of the extended process are geographically distributed and often spatially
remote. In above Figure , this distribution is represented by sections OS of the process which
have been outsourced to higher added-value providers.
Although the Stage 5 (Figure) represents the most radical business refocusing emerging so
far, still rapidly emerging kernels of the next stage (Figure) is taking shape. The evolutionary
process, driven by relentless global search for maximum added value, is clearly accelerating.
Management systems paradigm or business model, after a century of relative invariance, is
becoming a new dynamic source of competitive advantage. Radically distributed supply and
demand chains of Stage 5 will clearly have to be coordinated and reintegrated on a global
scale. Reintegration processes are proceeding under increasing environmental pressures. The
search for added value, after exploring traditional global resources, is now turning towards
reuse, recycling, recovery and remanufacturing as new sources of maximizing added value.
Innovation in business models will become a norm.

RECYCLED PROCESS

Fig: 4 Recycled Process and Global Sourcing

During the process of utilizing added value, the asset-recovery practices expand quickly to a
majority of products and services (Dell, IBM, Xerox). New products are being designed for
extended life spans and multiple profit cycles. Reverse logistics and reverse logistics
management (RLM) are adding new loops to the traditionally unidirectional processes of
supply chains. Old supply chains have become demand chains and now reverse value chains,
demonstrating that value can be added in both directions: through the forward pass of
production as well as through the backward pass of recovery and remanufacture. Concepts of
easy disassembly, durability, reuse and recycling are built in into equipment design.
Figure 4 refers to closed-loop management system and it represents the Stage 6 of the
Evolution of Management Systems. The new loops in the figure are not just traditional
information feedback loops, but real business processes of collection, disassembly,
reprocessing and reassembly activities (operations). The conventional open-ended linear
processes are being redesigned towards closure.
New loops of recycled products and materials, energy recovery and knowledge renewal are
being created within global-sourcing (GS) networks. Product reuse/remanufacture relies on a
high residual value which gives a good head start for added value maximization. The system
becomes organizationally closed and potentially long-term sustainable or even transgenerations self-sustainable. The "openness" and customization of the product design,
upgradeable products, flexible product platforms, mutability and waste-free strategies are
being implemented. However, in this latest stage, new employee skills and managerial
knowledge, as well as essential mass customization mindset are yet to be produced,

maintained and renewed. Eliminating non-value added resources is still necessary. Integrating
production system elements and work functions still needs time to evolve.
EVOLUTIONARY SPIRAL

Fig: 5 The evolutionary spiral of Six Management Systems (SMS)

Evolutionary spiral of the six management systems (SMS) are indicated in Figure 5.
It is appropriate to notice that six-management-system evolution is progressing in an
accelerated fashion, the periods of stasis are getting shorter and revolutions are occurring
faster. Individual management systems are beginning to overlap and their boundaries are
getting blurred. An era of continuous change in business models and management systems
emerges: the search for competitive advantage (one over the other) becomes relentless,
strenuous and resources depleting. Cooperation networks have to merge into larger entities,
reducing competition and expanding collaboration. The search for collaborative advantage
(for both jointly) will become the new mode of economic behaviour.

HISTORY OF CHANGE MANAGEMENT

The field of change management can be confusing and sometimes complicated to research
and study, especially for new practitioners. Change management is the application of many
different ideas from the engineering, business and psychology fields. As changes in
organizations have become more frequent and a necessity for survival, the body of

knowledge known as change management has also grown to encompass more skills and
knowledge from each of these fields of study.

While this may be a good trend overall, the result for many change leaders is growing
confusion about what change management really means. To bring this into focus and to make
your change management work successful, this tutorial is designed to help explain the history
and evolution of change management, and discuss why it is a required competency for
todays business operations.
THE CONVERGENCE OF TWO FIELDS OF THOUGHT
To understand change management as we know it today, you need to consider two converging
and predominant fields of thought: an engineer's approach to improving business
performance and a psychologist's approach to managing the human-side of change.
First, students of business improvement have been learning and practicing how to make
changes to the operations of a business as a mechanical system since Frederick Taylors work
in the late nineteenth century. This mechanical system perspective focuses on observable,
measurable business elements that can be changed or improved, including business strategy,
processes, systems, organizational structures and job roles.
From this perspective, a business is like a clock where each of the mechanical pieces can be
changed or altered to produce a predictable and desirable solution. The change can be gradual
as seen in continuous process improvement methods such as TQM, or radical, as advocated in
business process reengineering that began with the best selling book, Reengineering the
Corporation by Michael Hammer in the early 1990s.
Historically companies embracing this mechanical approach to business improvement
typically did not embrace change management concepts until their projects encountered
resistance or faced serious problems during implementation. Even after this realization, many
organizations' approach to change management was ad hoc and lacked a solid framework for
actively managing change through the process. The tendency from an engineer's perspective
was to isolate this "people" problem and then eliminate it or design a quick fix for this
perceived obstacle to their improvement initiative.
The other side of the story begins with psychologists. Concerned with how humans react to
their environment, the field of psychology has often focused on how an individual thinks and
behaves in a particular situation. Humans are often exposed to change, hence psychologists
study how humans react to change. With his 1980 publication of Transitions, William Bridges
became a predominant thinker in the field of human adaptation to change and his early text is
frequently cited in Organization Development books on change management. However, only
once or twice in this book does Bridges relate his theory to managing change in the
workplace. It was not until later that Bridges began to write a significant body of work related
to his theories of change and how they relate to workplace change management.

The net result of this evolution is that two schools of thought have emerged. The table below
summaries the key differences and contrasts the two approaches in terms of focus, business
practice, measures of success and perspective on change.
Observers of business changes in real life have realized that the extreme application of either
of these two approaches, in isolation, will be unsuccessful. An exclusively engineering
approach to business issues or opportunities results in effective solutions that are seldom
adequately implemented, while an exclusively psychologist approach results in a business
receptive to new things without an appreciation or understanding for what must change for
the business to succeed.
Not all practitioners have traveled down these two extremes. A few thought leaders in the
change management field were advocating a structured change management process early on.
Jeanenne LaMarsh was actively using her organizational change model in the 1980's with
companies like AT&T Bell Laboratories and later with Ford and Caterpillar. She authored the
book Changing the Way We Change in 1995 and recently introduced the Managed Change
process.
In the book Managing at the Speed of Change, Daryl Conner begins with a emphasis on
understanding the psychology of change and then moves to a structured change process. In
the recent publication by Ackerman and Anderson, change management concepts are
presented in a combined process with business improvement activities. John Kotter, in
Leading Change, presents an 8-step model for leading change initiatives.
Contributions from both the engineering and psychology fields are producing a convergence
of thought that is crucial for successful design and implementation of business change. In
other words, a business must constantly examine its performance, strategy, processes and
systems to understand what changes need to be made. Increasing external and internal factors
have made this strategy essential for survival. However, an organization must also understand
the implications of a new business change on its employees given their culture, values,
history and capacity for change. It is the front-line employees that ultimately execute on the
new day-to-day activities and make the new processes and systems come to life in the
business.
What does this mean for the definition and field of change management? First, that it is
important to recognize that both the engineering and psychological aspects must be
considered for successful change. Second, that business improvement methodologies must
integrate these two disciplines into a comprehensive model for change. Finally, that when you
read or study change management literature, be sure to identify how the term change
management is used so that you can effectively apply that work to your current body of
knowledge.

Today, the term change management takes on a variety of meanings. The most practical and
useful definition is:
Change management is the process, tools and techniques to manage the people-side of
business change to achieve the required business outcome, and to realize that business
change effectively within the social infrastructure of the workplace.
This definition allows practitioners to separate change management as a practice area from
business improvement techniques. So whether you are doing Six Sigma, BPR, TQM or some
other technique to improve business performance, change management can be viewed as an
essential competency to overlay and integrate with these methods.
Why is change management a required competency for business today?
In his best selling book Stewardship, Peter Block describes the traditional values that have
been the center piece of traditional, patriarchal organizations: control, consistency and
predictability. These values dictate that decision-making is at the top, leaving the execution
and implementation to the middle and bottom layers of an organization.
Twenty-five years ago, if you wanted something changed as the CEO of a traditional
company, you simply spoke the words. The culture and belief system of the organization was
more akin to a military structure. The predictable behavior in that situation was compliance to
the new business direction. As a leader in that organization, your control was typically not
questioned and employees understood what was expected of them. The values of control,
consistency and predictability created an environment where change was simply a plan to
implement or an adjustment to a mechanical system. Although helpful, change management
was not a required competency in this environment.
A quarter of a century has passed. Business improvement initiatives including Edward
Demings teachings post World-War II, the earliest quality circles from Toyota, Six Sigma
from Motorola, Total Quality Management (TQM) from AT&T and Ford, empowered teams,
and many others initiatives came to the forefront. Business leaders embraced, if at least for
some period of time, one or more of these business initiatives.
Over the course of these 25 years and these improvement strategies, we have impressed new
values and belief systems on employees. The new values include empowerment (make the
right decision for the customer), accountability (take ownership and pride in your work), and
continuous improvement (look for ways to improve everything you do, everyday). A new
culture has evolved in many of todays businesses where a new generation of employees:

take ownership and responsibility for their work

have pride in workmanship and look to improve their work processes
feel empowered to make decisions that improve their product and the level of
customer service

So what is the problem? The evolution from the traditional values of control, predictability
and consistency values that made change relatively simple to implement to the new

values focused on accountability, ownership and empowerment have made the

implementation of business change more difficult. In many ways Peter Blocks advocacy for
this shift has come true. Employees have been taught to question and analyze their day-to-day
activities and are rewarded for doing so. Then why would we expect them not to question and
resist new change initiatives?
The new values of business today require a different approach to the way businesses
change. The response of the employee has shifted from yes, sir to why are we doing
that and the change leader must adapt.
In some cases of large-scale business process change in the early 1990s, the result was
outright failure because business leaders had not shifted their actions to accommodate the
new values. A CEO in the old value structure only had to issue the decree for change and it
happened. But when a CEO tries this same approach today, employees shout back Why?
How does it impact me? If it isnt broken, why are you trying to fix it?
Research with more than 320 projects showed the primary reason for failure in major change
initiatives was lack of change management. In other words, the inability to manage the people
side of a business change in the presence of a new culture and new values is a major
contributor to failed business changes. Failing to manage the human side of change results in
inefficient and unsuccessful change projects and an inability to realize new business
strategies and objectives.
Summary
Recognize that both the engineering and psychological aspects must be considered for
successful business change. While many techniques can be employed to design the solution
to a business problem or opportunity (i.e., the business change), change management is the
process, tools and techniques to manage the people-side of that business change to achieve
the most successful business outcome, and to realize that change effectively within the social
infrastructure of the workplace.
Change management is a required competency in business today. The shift in the core values
of employees to empowerment, ownership, and accountability has created a work force that
will embrace change as long as they are part of the process. With the introduction of todays
new business values, employee resistance should be expected. In the absence of change
management, this resistance can cripple a business change.