# Fundamentals of Management for Beginning Managers and Businessmen
## Introduction
Hello, dear colleagues! My name is Sergey “Systems Engineer” Pavlenko, and I am glad to welcome you to the pages of this article. Today we will talk about the basics of management – a topic that is critically important for anyone who wants to become a successful manager or entrepreneur. In the modern world, successful business management requires not only intuition, but also deep knowledge and skills. The purpose of this article is to help you, aspiring managers and businessmen, master key concepts and approaches in management that will help you effectively manage your teams and projects.
My career path began over 30 years ago when I first encountered management challenges in our small business with friends. Over the years, I have risen from a securities specialist to the head of a large division in a corporation, working in various industries and companies. Important moments in my career include successful project management for the completion of the Boguchanskaya HPP, the implementation of innovative solutions in offshore shipbuilding, as well as training and development of teams, which allowed me to accumulate a wealth of experience and knowledge in the field of management.
## Basic concepts of management
### What is management?
Management is the art and science of directing work and resources to achieve organizational goals. It includes four basic functions:
1. Planning: defining goals and strategies for achieving them.
2. Organization: structuring work and distributing resources.
3. Leadership: motivating and directing employees.
4. Control: evaluation of results and correction of actions.
### What you have to manage in management
In his work, the manager deals with two types of systems:
1. Natural systems: people, groups, collectives, communities, target audiences.
2. Work systems (activities): processes, mechanisms, structures.
These systems form the entire diversity of human collective activity. This approach is defined in Activity Theory. The manager acts in physical (4-dimensional) and mental (also 4-dimensional) spaces, which in total gives eight dimensions in the manager's work space.
### Natural systems in management
The elementary unit of the natural system is the human organism – a cyber-physical system that unites a physical object (the body) and an intellectual “machine” (the brain).
Key aspects to consider when managing natural systems:
– Psyche and psychology
– Emotions and feelings
– The unconscious and consciousness
– Spirituality
– The body and its health
– Sociality
It is important to remember that the main goal of a natural system is survival and reproduction. The goals that are set within the framework of management may not be a priority for humans as biological beings.
### Who can be an effective manager?
An effective manager must have the following qualities:
– Ability to design work.
– Emotional intelligence
– Ability to think strategically
– Communication skills
– Leadership qualities
– Ability to work in a team
But the most important skill is the ability to see and build work systems.
In addition, a successful manager must have a good understanding of the psychology of the individual and the group, and understand the role of the team in the success of management.
## Systems of work and their structure
The work system is a key element in management, representing a complex system of actions aimed at achieving certain goals. For effective management, it is necessary to consider the work system in four interrelated aspects:
1. Function (why the work is done):
– Defines the purpose and meaning of the existence of the work system.
– Answers the question “Why is this work important?”
– Links the work system with the overall goals of the organization.
– Example: the function of the sales system is to ensure the influx of customers and income for the company.
2. Process (how the work is done):
– Describes the sequence of actions to achieve a goal.
– Includes methodologies, tools and techniques for performing work.
– Defines stages, deadlines and key performance indicators (KPIs).
– Example: The sales process may include lead generation, product presentation, negotiations and closing.
3. Structure (what the work consists of):
– Defines the components and elements of the work system.
– Describes the relationships between different parts of the system.
– Includes organizational structure, roles and responsibilities of participants.
– Example: the structure of the sales system may include a marketing department, a sales team, and a customer support service.
4. The executing mechanism (who/what does the work):
– Identifies the resources needed to complete the work.
– Includes people, equipment, technology and other means of production.
– Takes into account the competencies, skills and experience of the performers.
– Example: the executive mechanism in the sales system may include sales managers, a CRM system, and telephony for communication with clients.
It is important to understand that all four aspects of the work system are closely interrelated and influence each other. A change in one aspect inevitably leads to changes in the others. For example, the introduction of a new technology (executive mechanism) may require changes in the work process and team structure.
An effective manager must be able to analyze and optimize all four aspects of the work system:
– Regularly review the function of the work system to ensure that it is in line with current requirements.
### Key components of work according to the IDEF0 model
In the context of the process, the work has 6 key components, which are defined in the IDEF0 (Integration Definition for Function Modeling) methodology of functional modeling. Understanding these components is critical for effective management and optimization of business processes:
1. Input:
– These are the raw materials, data or information that are transformed during a process.
– Inputs can be material (raw materials, components) or intangible (data, information).
– Example: for a car manufacturing process, inputs could be metal, plastic, electronic components.
– The key question is: “What is transformed during the process?”
2. Output:
– This is the result or product of a process, what is obtained after the input is transformed.
– Outputs can also be tangible or intangible.
– The outputs of one process often become inputs to other processes.
– Example: For a car manufacturing process, the output will be a finished car.
– The key question is: “What is the result of the process?”
3. Executing mechanism (Mechanism):
– These are resources that perform work or ensure its performance.
– Includes people, equipment, information systems and other resources.
– Example: for the process of car production, the executing mechanism will be workers, assembly robots, conveyor lines.
– The key question is: “Who or what does the work?”
4. Control actions (Control):
– These are restrictions and instructions that regulate the execution of the process.
– Includes rules, standards, laws, company policies, schedules.
– Control actions determine how and when the work should be performed.
– Example: for the automobile production process, the control actions will be technical standards, production schedule, quality requirements.
– The key question is: “What factors regulate and limit the process?”
5. System Boundary:
– Defines the scope of the process, what is included and what is excluded from consideration.
– Helps to focus attention on a specific process and its interaction with the environment.
– Important for defining responsibilities and areas of control.
– Example: The boundary of a car production system might include all stages from raw material input to finished car output, but exclude design development or marketing.
– The key question is: “Where does the process begin and where does it end?”
6. Process Description:
– This is a detailed description of the sequence of actions that transform the input into the output.
– Includes algorithms, procedures, and methods for performing work.
– Often presented in the form of flow charts, diagrams, or text instructions.
– Example: for car production, this would be a detailed description of all assembly stages, from body welding to final quality control.
– The key question is: “How exactly is the work done?”
Understanding and correctly defining these six components allows managers to:
– Create clear and understandable business process models.
– Identify bottlenecks and inefficiencies in processes.
– Optimize resource usage.
– Improve coordination between different parts of the organization.
– Effectively manage changes in processes.
When analyzing and optimizing processes, it is important to consider all six components in their interrelationships. Changing one component often entails the need to adjust others. For example, introducing new equipment (changing the mechanism) may require changes in the work process, personnel training (control action), and even a revision of the system boundaries.
Effective management of the Core Process, taking into account all six components of IDEF0, is a key skill of a modern manager and an important factor in the success of the organization as a whole.
## Types of product work systems
In management, it is essential to understand that different types of products require different approaches to organizing work systems. Let us consider three main types of work systems, classified by the type of product produced:
1. The system of work for the production of things
2. Work system for producing a solution
3. Work system for production of work system
As different as the types of products are, the processes of operation of these systems are also very different. Let's look at each type in more detail.
### 1. The system of work for the production of things
This type of work system is focused on the creation of material objects or goods.
Characteristics:
– A clearly defined physical result
– Standardized production processes
– High degree of automation is possible
– Product quality is easily measurable
Examples: car manufacturing, furniture making, bread baking
Control features:
– Focus on optimizing production processes
– The importance of supply chain management
– Quality control at every stage of production
– Inventory and logistics management
### 2. Work system for producing a solution
This system of work is aimed at creating intangible products, usually in the form of services or intellectual solutions.
Characteristics:
– The result is often unique for each client
– High level of interaction with the client
– Quality can be subjective
– Processes are less standardized
Examples: consulting services, software development, interior design
Control features:
– Focus on knowledge and competency management
– The importance of communication and managing customer expectations
– Flexible work methodologies (for example, Agile)
– Project and deadline management
### 3. Work system for production of work system
This type of work system aims to create new processes, methodologies or organizational structures.
Characteristics:
– High complexity and abstractness of the product
– Long-term results
– Requires a deep understanding of organizational processes
– Often associated with change management
– Can be effectively organized on the basis of Systems Engineering.
Examples: developing a new business model, creating a franchise, reengineering business processes
Control features:
– Strategic thinking and planning
– Organizational change management
– The importance of staff training and development
– Iterative approach to development and implementation
### Comparison and differences
The operating processes of these systems differ significantly:
1. Predictability: Systems for producing things are usually more predictable, while systems for producing decisions and systems for working can be more uncertain.
2. Standardization: The production of things is easier to standardize, while the production of solutions and work systems requires a more flexible approach.
3. Measuring results: The quality of things is easier to measure than the quality of decisions or work systems.
4. Customer interaction: When producing solutions and work systems, customer interaction is usually more intense than when producing things.
5. Time Frames: Manufacturing things often has shorter cycle times, while creating work systems can take a significant amount of time.
### Conclusions for managers
Understanding the differences between these systems of work is critical to effective management:
1. Selecting appropriate management methodologies and tools
2. Proper distribution of resources
3. Adequate assessment of risks and uncertainties
4. Setting realistic expectations for customers and stakeholders
5. Development of appropriate systems of motivation and personnel assessment
An effective manager must be able to adapt his or her approach to the type of work system he or she is dealing with. This requires flexibility of thought, a broad range of management skills, and a deep understanding of the characteristics of each type of work system.
## Types of work systems by roles in the general system of activity (using business as an example)
In modern business, an organization is a complex ecosystem of interconnected work systems. Understanding these systems and their roles is critical to effective management and achieving strategic goals. Let's look at five key work systems that form the overall business system:
1. System of producing utility for customers
2. Client System
3. Control System
4. System of transformation of the Main process
5. The system of people and groups
### 1. System of producing utility for customers
This system is the core of the business, defining its value proposition and competitive advantage.
Key aspects:
– Focus on creating value for the customer
– Optimization of production processes of goods or services
– Continuous improvement of quality and efficiency
Role in business:
– Generates the main income of the company
– Builds reputation and brand
– Defines the market position
Challenges for management:
– Balance between standardization and customization
– Adaptation to changing customer needs
– Integrate new technologies without disrupting current operations
Strategic initiatives:
– Implementation of lean manufacturing methodologies (Lean)
– Developing a culture of continuous innovation
– Creating a customer feedback system to improve the product
### 2. Client System
This system covers all aspects of customer interaction, from acquisition to retention.
Key aspects:
– Understanding customer needs and expectations
– Managing customer experience across all touchpoints
– Collection and analysis of customer behavior data
Role in business:
– Provides an influx of new customers
– Maximizes the lifetime value of clients
– Builds brand loyalty and advocacy
Challenges for management:
– Personalize interactions at scale
– Integration of omnichannel approach
– Balance between automation and human approach
Strategic initiatives:
– Implementation of CRM systems and big data technologies
– Development of loyalty programs and customer service
– Creating a community around the brand
### 3. Control System
This system ensures coordination of all other systems and guides the business towards achieving strategic goals.
Key aspects:
– Strategic planning and decision making
– Coordination and integration of various subsystems
– Performance monitoring and risk management
Role in business:
– Determines the direction of the company's development
– Ensures efficient use of resources
– Adapts the organization to changes in the external environment
Challenges for management:
– Balance between short-term results and long-term sustainability
– Management in conditions of uncertainty and complexity
– Creating a culture of responsibility and innovation
Strategic initiatives:
– Implementation of management systems by objectives (OKR, BSC)
– Development of flexible organizational structures
– Creation of a system of continuous training and development of leaders
### 4. The system of transformation of the Main process
This system is responsible for the continuous improvement and adaptation of key business processes to changing conditions.
Key aspects:
– Analysis and optimization of business processes
– Implementation of new technologies and methodologies
– Organizational change management
Role in business:
– Ensures long-term competitiveness
– Increases operational efficiency
– Promotes innovative development of the company
Challenges for management:
– Overcoming resistance to change
– Integration of new processes without disrupting current operations
– Measuring and demonstrating ROI from transformation initiatives
Strategic initiatives:
– Implementation of process management methodologies (BPM, Six Sigma)
– Creation of innovation centers and R&D units
– Developing a culture of continuous improvement
### 5. The system of people and groups
This system focuses on the human capital of the organization, including individual and group interactions.
Key aspects:
– Talent management and competency development
– Formation of organizational culture
– Managing team dynamics and conflicts
Role in business:
– Provides the organization with the necessary skills and competencies
– Creates an environment for high productivity and innovation
– Creates a unique competitive advantage through people
Challenges for management:
– Attracting and retaining talent in the context of the “war for talent”
– Diversity and Inclusion Management
– Balance between individual goals and organizational goals
Strategic initiatives:
– Implementation of leadership development and succession programs
– Creation of a system of continuous training and skills development
– Development of well-being and work-life balance practices
### Systems Integration and Synergy
The key to business success lies not only in the effectiveness of each individual system, but also in their harmonious interaction. Managers must understand that:
1. Changes in one system inevitably affect others.
2. Optimization at the level of an individual system can lead to sub-optimization at the level of the entire business
3. Synergy between systems can create a unique competitive advantage
### Conclusions for managers
1. Systems thinking: View business as a single ecosystem of interconnected systems.
2. Balancing priorities: Pay attention to all systems without focusing exclusively on one.
3. Develop cross-functional interactions: create conditions for effective cooperation between different systems.
4. Adaptability: Be prepared to adapt each system to changes in the external and internal environment.
5. Measurement and analysis: Develop KPIs for each system and regularly evaluate their effectiveness.
Understanding and effectively managing these five key operating systems will enable managers to create a resilient, adaptive and competitive business in today's dynamic environment.
## Roles of natural systems in the general system of activity
1. System for ensuring the production of utility for customers:
– It is important to break it down into stages correctly
– Setting up accounting of actions in the process
– Support for publicly available schema description
– Continuous optimization
2. Client System:
– Accounting for the Client's work system (JTBD concept)
– Accounting for the Client's activities as a Natural System
3. Control System:
– Separation of emotional and rational
4. System of transformation of the Main process:
– Efforts to survive, including the financial subsystem
– Differences between a process as a project and a project as a process
– Self-development
5. The system of people and groups:
– Company culture
– Ethics in relationships
– Informal and formal structures
– Recruitment conveyor
## Advice for new managers
1. Definition of organizational culture:
– Learn and adapt to the existing culture
– Create a culture that is aligned with the organization's goals
2. Interaction with important participants (stakeholders):
– Identify key stakeholders
– Take into account their interests and goals
– Develop effective communication skills
3. Psychology and social dynamics:
– Consider psychological aspects in management
– Focus on the main thing, avoiding unnecessary intrigues
– Develop emotional intelligence
## Conclusion
Effective management is a complex but exciting process. The key to success in management is constant self-development, flexible thinking and the ability to learn from your own and other people's mistakes. Remember that each situation is unique and there are no universal solutions for all problems.
My personal approach to achieving success in management is based on three principles:
1. Continuous learning and development
2. Empathy and understanding of people
3. Systems thinking and strategic approach
We discuss management and Archmanagement issues in the telegram channel @upravbiz (you need to copy this nickname and search inside the telegram). Go there, it is comfortable and useful. The link is also in the comment (possibly).
I wish you success on your path to becoming effective leaders and businessmen!
