FEATURE – A bad management system generates distortions that represent the root cause of many of the problems experienced by organizations.

Words: Flávio Battaglia and Luciana Gomes

Have you noticed that the only reason sophisticated and complex “things” work is because they operate as systems? Take the human body as an example: we have the respiratory system, the cardiovascular system, the immune system, and so on... On Earth, we have different ecosystems coexisting, from forests to deserts, mountains to cities... And even the Milky Way, the galaxy we live in, includes our Solar System and many others. When these systems function in a balanced and efficient manner, everything tends to go well. When they don’t, trouble ensues.

If we draw a comparison with the reality of a company, we can find many parallels. There are numerous “systems” within an organization. However, in this article, we will talk about the so-called “management system”.

In summary, it refers to how the work of management is organized and how it takes place daily within the organization. A management system entails the structuring of all management activities in what we could call the “corporate ecosystem”: communication of the strategy and objectives of the various areas, goal setting, management routines, problem solving, feedback, performance evaluations, and so on. In short, all management-related processes associated with the different levels of the organization fall under the management system.

If we turn once more to the analogy with a living organism – something many thinkers have done - the management system would be the skeleton that provides support and structure to the organs and vital tissues.

An initial, very important realization is that it is impossible not to have some kind of management system operating. It is always there (not always as efficient as we’d like it to be): indeed, if a company is functioning, inevitably a management system already exists, even though it might be hiding in plain sight. Perhaps this is the first major challenge: to see it.

If we are not able to “see” our management system, we will never be able to identify the gaps and improve it. Why is this? Because, if the management system is not carefully and consciously thought out, designed, and organized, it will be nothing more than a random collection of disconnected individual practices that will cause a lot of damage.

We see this happening in companies every day. An example is when important decisions are made late and reactively, due to truncated communication and lack of transparency about real performance. The combination of mistaken, insufficient information and decision-making taking place “in the heat of the moment”, primarily inspired by the personal vision of those in power, is incredibly dangerous.

Another example is when problems are “solved” by the wrong hierarchical levels, with inappropriate resources and inadequate people. Or when the “vacuum” generated by the lack of scalable and well-designed communication processes is immediately filled by the “grapevine”, the conversations over coffee that turn gossip into absolute truths.

Indeed, there are several distortions caused by the absence of a good management system. Not being aware of this may just be the most basic root cause of many of the problems and instabilities experienced by companies and their leadership teams – like information and communication not flowing, problems being identified too late, customers being affected and then drifting away, and poor results that can no longer be reversed.

In a company with a poorly designed and inefficient management system, people often feel lost. They have difficulty understanding the real purpose of their roles and how they will be evaluated. They work following bureaucracy, at best. And leaders spend most of their time putting out fires or trying to schedule meetings with other managers, equally overloaded.

Even worse is the common problem of “personalization”: when a leader takes over a department or even the entire company and then redesigns the system to their liking, establishing new routines, indicators, and forms of evaluation, without following any scientific or technical criteria. In doing so, they can even discard years of experience and learning from managers who previously held that position.

When this happens, management begins to generate noise, create useless work, and circulate unnecessary or contradictory information, causing confusion at the front line, when they should support value-creating processes instead. This typically causes the company to become stiff, sometimes paralyzed. This, in turn, will encourage people to collect dubious data and hold unproductive meetings, while the work that creates value flows randomly and problems are solved impulsively and inefficiently.

With each new change, more and more psychological insecurity, wear and tear, setbacks, and losses are generated: meeting formats are changed, reports are exchanged, indicators are “recycled”, and evaluations are redone, but problems persist and grow bigger.

This is a complex subject that requires much more reflection. The intent of this brief is not to exhaust the topic, but to generate some reflections. Below, we list what we consider to be the fundamental elements of an efficient management system, from the lean perspective.

A lean management system needs to connect the entire company, both in macro and micro dimensions, at different hierarchical levels, in different functional areas and processes, all the way down to the individual. It must focus on the relentless exposure of problems, preferably when they have just been raised, interrupting bad processes so that they are rethought and improved, with the support of higher hierarchical levels when necessary. For this, a management system needs to promote and facilitate scientific thinking.

It must be based on management standards that help maintain stability in processes and front-line work, but at the same time, expose problems, allowing for continuous improvement. It needs to be based on simple, didactic, and easy-to-understand visual management that accompanies critical indicators, showing the expected versus the actual state, to promote transparency about the process and performance. And that actively encourages respect for people, promoting psychological safety so that everyone can flag up problems and improve their daily work to the best of their ability and based on their authority.

Well-designed management systems optimize everyone’s time within the organization. They create daily opportunities for horizontal and vertical alignment. They open space for constructive interactions with the team at the gemba, promoting the development of people and the evolution of processes. They ensure communication and the flow of the right information, at the right time, to the right people, ensuring that problems are found and resolved as quickly as possible.

In summary, from a lean perspective, a management system must be designed for the company to constantly evolve and performance to reach new levels. For this to happen, one cannot depend on the “manager on duty”: the organization of the management work must be carefully thought out and structured so that the living organism that is the company can have a healthy, long, and prosperous life.

_THE AUTHORS

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