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  • Zachary Collier

Effective Management Requires Effective Modeling

Recently, I have been exploring topics on planning and control, which are relevant to business because effectively running and managing a business requires planning for the future and controlling processes, finances, personnel, infrastructure, communications, etc.


To be able to effectively manage and control an organization, you need to have a good model of the organization itself.



This idea was described in a classic paper on systems theory, which concluded that “every good regulator of a system must be a model of that system”. (1) That might sounds fairly abstract, so the best way to think about it is with an example.


When it is your first day on the job, you don’t understand how things work in your new organization. How do you submit requests for time off? Who do you call when the copy machine is broken? Where do they keep the extra staplers and note pads? Your first few months at a new job are spent largely trying to piece together the day-to-day processes of how to do your job. Slowly you begin to assemble in your mind a picture of the organization – how processes work (or sometimes don’t work), who reports to who, even the floor plan and who sits where, and so forth… In other words, you slowly begin to build a model of your workplace in your mind. As you keep learning and gaining new experience, your model improves.


Now imagine that you are the boss – your job is to make sure the organization runs smoothly and achieves its objectives. It stands to reason that as the quality of the model of the organization improves, so too will be your ability to drive results. After all, how could you run an organization that you know nothing about? But if you have a good model (e.g., you know the important internal business processes, your supply chain, who are your customers and what is the plan to acquire and retain them, which employees don’t get along with each other), you will be able to have better control and influence over the processes and people who make up the organization.


What exactly is a model, anyway?


“Models are ideas about the world—how it might be organized and how it might work. Models describe relationships: parts that make up wholes; structures that bind them; and how parts behave in relation to one another.” (2)


Importantly, without a frame of reference of how things should work, we have no idea whether current performance is good or bad. Once we build a model of how things ought to be, we can recognize that there are problems when the observed system is operating differently than expected. Models help us to fix problems, and control or regulate processes such that (ideally) everything goes according to plan. Our models are critical to help us to understand and orient ourselves within the world and within our organizations.


Building models of your organization takes the knowledge of those people who are familiar with the various processes and procedures, as well as data on the performance of processes over time. Having good data is critical for monitoring and management.


Moreover, different models with different levels of resolution are appropriate for different roles within an organization. The people in HR might model the organization as an org-chart, whereas the operations people might model the organization as a process flow diagram, and the finance team will model the organization as various financial statements. Each model is fit for the specific purpose of the user, and helps them to regulate the performance associated with their functional specialty.


So every good regulator of a system must be a model of that system. What this means for your company is that before you can be effective at managing, you need to develop a good model of how things work. Moreover, the better your model, the better you’ll be able to manage.


Do you need help building a model? At Collier Research Systems, we can help you build the models and analyze the data you have in order to understand your organization, and come up with a plan to improve performance. Learn more at www.collierresearchsystems.com.


References:

(1) Conant RC, Ashby WR. “Every Good Regulator of a System Must Be a Model of That System.” Int. J. Systems Sci., 1970, Vol. 1, No. 2, pp. 89-97.

(2) Dubberly, H. “Models of Models”. ACM Interactions, 2009, Vol. 16, No. 3, pp. 54-60.