SGMM summary - Zusammenfassung The St. Gallen Management Model PDF

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Nicholas Frattini

University of St. Gallen

The St. Gallen Management Model The SGMM – effectively articulating the concept of management Chapter 0

It does not understand management primarily as an institution or as activities of managers, but rather as reflexive design praxis – that is, a process whereby the design of organizations is actively approached in a way that is iterative and mindful of the continuous interactivity of cause and effect. The key area of management is organizational value creation within the interaction between the organization and its environment. 0.1 Management – opening a controversial black box Management is ubiquitous (onnipresente) as well as controversial. In many respects, management has proven to be a “black box”. The notion of it implies terms (such as management, organization, communication, decision, strategy) whose multitude of premises and heterogeneity of meanings remain hidden in everyday language. This means that, when such terms are used, it is tacitly assumed that their meanings are clear and unproblematic. All the more important in this context is a reflexive and, in a positive sense, critical examination of management. This is the point at which the 4° generation SGMM comes into play. It focuses on management as reflexive design praxis and orients itself around important management challenges while remaining thoroughly rooted in the latest management research. The SGMM is a working tool for an in-depth examination of management; to discover and take advantage of newly found room to maneuver for organizational value creation. 0.2 Understanding management as reflexive design praxis Management usually has 2 meanings in everyday language: - It is understood to be institutional; we speak of management of an organization and mean a group of people assigned a particular importance or special responsibility within the organization. - It is also associated with the individual actions of individual managers. Management is then what managers do. The effectiveness of management is accordingly defined by specific leadership qualities, attitudes, virtues, knowledge, and skills and by the correct use of leadership tools.

Nicholas Frattini

University of St. Gallen

In both approaches, management is considered individualistically, in terms of people, their reasoning and actions. 4 aspects need to be considered: 1. Individualistic approaches overvalue the impact of an individual 2. From a systemic point of view, a distinction must be made between the impact of a person and the communicative attribution of a certain impact to this person 3. Individualistic approaches reduce the effectiveness and responsibility of management to personality traits and individual skills 4. This individualistic understanding of management tends to describe management tautologically In the 4° generation, management is conceived as reflexive design praxis: - Key points of reference of this reflexive design praxis frame a relationship between the organization for which individuals are responsible and the environment that is relevant to its existence and also the organizational value creation for this environment. - Praxis is not meant as the individual activities of individual managers but rather the communicative function performed by manager communities. - Management as reflexive design praxis is institutionally anchored in the sense of a specific differentiated function for systematic reflexivity related to important events and developments. - The SGMM design concept is based on the notion of management as enabling collaborative communicative reflexivity and the translation of the resulting findings into concrete interventions. Ba enactment we mean an interactive, feedback-intensive, iteratively progressive creation and implementation process of new things. Such an understanding of management does not in any way imply that the skills, experience, and commitment managers bring to this reflexive design practice are irrelevant. From a systemic perspective, the effectiveness of management is determined by the shared interaction of the multitude of premises that grow and develop over time. Organizations and their management praxis may be understood as the result of human action, but not necessarily of human design. Shared reflexivity is seen as a premise for responsible interventions in the organizational stream of actions. This influence aims to create conducive conditions. Management as reflexive design praxis cannot “heroically” determine or predefine the development of an organization in its environment. Management as praxis is only in a position to collaboratively co-design the organization for which they have responsibility. Management develops through a repertoire o more or less proven, interrelated management practices.

Nicholas Frattini

University of St. Gallen

Management is always characterized by uncertainty. Uncertainty is to be seen as premise for the opportunity to design the shape of business; uncertainty forms a key resource for management praxis by pointing out that an organization and its existence-relevant environment should not only be seen as they currently manifest themselves, but that it is important to also have a view as to how they could potentially be in the future. 0.3 Highlighting value creation as the design focus of management The central design focus of management as a praxis is organizational value creation – that is, the creation of products, services, or general impacts that are considered to have value in an organization’s existence-relevant environment. This value creation must be continuously developed and rendered over and over again in the open, coordinated interaction between an organization and its environment. We see organizational value creation as impacts and results in the form of products and services that are seen as distinct and create a differentiating added value from the perspective of specific target groups. This is the organization’s primary value creation. It is related to an organization’s fundamental purpose, i.e. to its core function. At the same time, organizations provide a variety of goods and services that go beyond this primary value creation and therefore represent supplementary value creation (create jobs, pay taxes, …). Modern organizations represent stabilizing institutions in a society that is open to development. The primary value creation embodies a bundle of possibilities for a target group. It must then be translated by these target groups into a specific benefit. Products and services are the collaboratively rendered result of a highly complex, cooperative value-creation process that integrates a multitude of intermediate products and services. Value-creation processes can be schematically presented as a value-creation chain or a valuecreation network. The core task of an individual organization is to reliably provide specific forms of collaborative, cooperative value creation in accordance with the expectations of the respective target groups. An organization must be regarded as a processual value-creation system that requires creation, design, and ongoing dynamic stabilization. Inextricably linked to value creation is the enactment (representation) of a specific environment, which is understood as the existence-relevant space of possibilities and survival for an organization. An organization transforms, through a series of enabling actions, opportunities in its environment inti an organization-specific configuration of resources. In turn, the structure and the further development of this configuration of resources form the foundation for organizational value creation.

Nicholas Frattini

University of St. Gallen

Organizational value creation as the design focus of management In management praxis, it is necessary to build up a deeper understanding of the specific multitude of premises for certain processes of organizational value creation in order to be able to redesign promising value-creation systems. The effectiveness of management significantly depends on how the topic of an organization as a value-creation system can be brought up and carefully reflected upon in management praxis. The functioning’ of an organization is based on a multitude of premises It is even more surprising that organizations are frequently treated as black boxes, not only in everyday life, but also in scientific contexts and in the management literature. The 1° generation of the SGMM deemed (riteneva) organization and organizational value creation a key area of relevance for management by conceptualizing an enterprise as a purpose-oriented, productive social system. The 1° generation systematically worked out that, due to its complex embeddedness, organizational value creation may not only be oriented toward notions of economic success but must also be responsive to a variety of challenges and dynamics of different environmental spheres. The external and internal integration of an enterprise is therefore a main area of design focus from the point of view of this model. Externally, an enterprise must be able to adjust to dynamic problem developments in relevant environmental spheres. Internally, the enterprise must be able to translate the heterogeneous dynamics and conflicting expectations from the environmental spheres into coherent objectives. The status of an organization as a complex system was (and sometimes still is) lost in business administration. Thanks to the first generation, this status of the enterprise as a complex organization, in systematic relation with its existence-relevant environment, was finally regained. This complexity must be made the focal point of the examination of environment, organization and management. “An enterprise develops resources from the procurement markets in order to then transform them into goods and services for the target markets.”

Nicholas Frattini Differences 1° and 4° generations:

University of St. Gallen

Nicholas Frattini

University of St. Gallen

0.4 Modeling management in words and images In the everyday life of an organization, there are no actions, interactions and communications that can be, by their very nature, labeled as “management”. Models are developed wherever connections are very complex or not obvious, and where a robust understanding cannot simply be assumed but rather is intended to be the subject of an explicit collaborative, reflexivity, orientation or examination. Models are not ends in themselves; they’re used for simulation and to gain a better understanding of reality. Models are concerned with handling complex relationships; helping to bring to our attention essential issues, through conscious selection and simplification, while also considering the limits of attention; this is done in 3 ways: 1. By using simplifications, which in practice shift the focus to that which is relevant 2. By using a visualization of the links that illustrate important relationships 3. By using a form of language and thought that enhances the collaborative capacity for reflexivity Simplification requires a selection of everything that needs to be emphasized as important. The SGMM selects in a way that shifts the focus to those aspects of environment, organization and management. Simplification in relation to a model implies abstraction. The SGMM as a process model instead serves to interrelate events, decisions and developments in their organizational-specific context. It should contribute to making sense of value creation in terms of the interaction between environment and organization. The SGMM sees sensemaking as communicative processes of the everyday constitution of meaning. A model should be able to contribute to sensemaking as a form of language and thought and thus promote a collective sense of orientation for collaborative work. Modeling management in word and images – an example A model cannot be directly “introduced” into an organization. Instead, it serves to inspires the collaborative development of a unique, organization-specific management model. A management model cannot simply be “applied”. Instead, management models must be contextualized for a specific organization and its management praxis.

Nicholas Frattini

University of St. Gallen

0.5 Reflexivity about management through zooming-in and zooming-out From the point of view of the SGMM, management praxis must always be viewed in terms of the interaction between an organization and its existence-relevant environment. The key point of reference of management as reflexive design praxis is organizational value creation and its continued development through the co-evolution of organization and environment. The complexity and mutual interrelatedness of environment, organization and management make it possible to simultaneously illustrate all three core elements in their full complexity in one model. That is why the SGMM distinguish multiple levels of resolution. Depending on the challenge, the situation and the interest in reflexivity and knowledge, certain aspects can only be accurately brought into focus if others remain blurred or completely hidden at that moment. There are 3 key categories for the zooming approach of the SGMM: - Environment à space of possibilities - Organization à value-creation system - Management à reflexive design praxis At resolution level II, the focus is on three categories each for describing environment, organization and management in greater detail. Environment: environmental spheres, controversies and stakeholders Organization: value creation, decision-making praxis and frame of reference Management: management praxis, corporate governance and executive management At resolution level III, 3 more aspects are considered in depth for each of these categories. These are, e.g., issues, positions and media for the controversies category. It is important that the 3 key categories and the 3 levels of resolution can be flexibly switched between and linked together at any time. 0.6 Locating the SGMM in research the SGMM is a model that has been characterized by a system-oriented perspective on environment, organization and management. This systemic perspective of environment, organization and management is characteristic of the 4+ generation. From the perspective of this “process turn”, the interplay of the environment, organization and management is only comprehensible as an intertwined (intrecciata) structure of dynamic communication and decision-making processes if careful consideration is given to its historical origin story and situational contingency. What happens is that effects for the future unfold (realizzarsi lentamente) through continuous observations, communicative references and interpretations in a way that is not predictable.

Nicholas Frattini

University of St. Gallen

The specific stream of actions is therefore always contingent, i.e. something different can always develop. Contingency must not be confused with arbitrariness; the term refers to something that is neither necessary nor impossible. A further emphasis of the 4° generation is the great importance assigned to practices and routines. The concept of embeddedness is intended to clarify the fact that our actions always refer to and are influenced by important experiences, ongoing developments, developed convictions, learned forms of interpretation and implicitly effective rules that are assigned great importance and legitimacy without question in the context of the action. In this sense, the “practice turn” in social theory describes how practices arise, how they prestructure our actions, and how practices are stabilized in collaborative praxis. An organization can also be interpreted as a specific repertoire of stabilizing practices that require ongoing reflexive business design. Management as reflexive design praxis is thus always an embedded and creative praxis. The SGMM condenses key perspectives and forms of thought from these research stands into one communication-centered perspective. 0.7 Conceptualizing the SGMM from a communication-centered perspective what connects a systemic, a process-oriented and a practice-interested perspective is a constructivist epistemology. A constructivist epistemology implies not presupposing the world as something that is given but understanding it as result of communicative negotiation processes. A systemic focus on communication and on the conditions of enabling organizational communication, is for a management model. Thinking and acting systematically therefore requires awareness of the communicative constructedness of our own observations and thoughts. The 4° generation of the SGMM embodies a construction in words and images that places communication at the center of the whole argument. The 4° generation is generally based on a communication-centered perspective of organizational value creation in the interplay between environment, organization and management. A communication-centered perspective is characterized by a number of aspects: 1. Communication is seen as a process in which a shared understanding of specific situations and abstract relationships, past events and decisions reached is established as commonly shared reality. Communication represents a mutually related process of reality- constitution in which several actors are involved and a meaningful view of matters is constructed. Communication is a creative activity in which various attributions of meaning and relevance are made that cannot readily be monitored, and whose effect cannot be easily anticipated. 2. Communication is dependent on language. Language should be broadly understood ad the totality of symbolic forms. The SGMM sees itself in this sense as a device for communication in words and images, in particular as a language of reflexivity that seeks to effectively support management as reflexive communication and design praxis.

Nicholas Frattini

University of St. Gallen

3. In accordance with a systemic understanding of communication, information is not seen as a transferable entity; but rather as “a difference which makes a difference”. 4. The notion of information as a definable entity and the assumptions that it can be easy transferred are therefore questioned in a systemic perspective. The processuality and contextualization of communication thus come into play. It is only this that helps us understand why also “non-information”, for example silence or the absence of an expected answer, can represent key information. 5. These concurrent attribution processes differentiate action from communication. Communication only arises if a communicative intention is attributed to an observed action. It is not the subjective intention of agents that is relevant, but rather whether and which communicative intentions are assigned to specific actions. 6. Unlike actions, communication is always a stream of action that arises from the interaction of several actors that is relational, creative and open to further development. 7. Communication is a polycentric stream of action in which, on the one hand, through spatially distributed interplay of various statements, perspectives and assessments, a multitude of meanings emerges. Over time, however, specific points of view and lines of reasoning can often stabilize and collectively become accepted. 8. Organizational communication is a process that faces such an extreme multitude of premises that it is highly improbable that it could be done successfully. • The first improbability arises from the difficulty of even being able to reach the addressees of communication – that is, to mobilize scarce attention • This one arises from the fact that understanding grows out of complex interpretation processes. They cannot be unilaterally managed or controlled, which explains the frequent occurrence of misunderstandings. • This one concerns the desired effectiveness of communication, thus addressing the probability of acceptance. Each form of communication has a performative aspect. 9. From a systemic perspective, observations, thoughts and ideas can only gain org...