Management

Prof. Dr. oec. habil. Fredmund Malik is a pioneer of management in complex systems. As such, he advocates the need for a complete change in approach, 180-degree turn: from the false doctrines and theories of the past to a nature, system, and brain-friendly conception. As a scientist, author, consultant, and management coach, Professor Malik has been teaching, advising, and influencing the thinking of executives and managers across all levels, organizations, and industries.For decades, the St. Gallen based professor has been an entrepreneur in his own right. He is the owner of Malik Management and the employer of around 250 people in St. Gallen, Zurich, Vienna, Berlin, London, Shanghai, and Toronto. He is also a member of several supervisory, administrative, and foundation boards.Fredmund Malik stands for the unparalleled integration of practice and science. His latest publication with Campus was the new edition of his best seller Managing, Performing, Living. Effective Management for a New Era.

Author's Preface tothe English Edition 2010In this book I am presenting a new kind of management for a new kind of world. It is my concept of right and good management for functioning organizations in functioning societies of exceeding complexity.The need for such a concept arises because conventional management - by which, basically, I mean the US-type management theory and practice now applied worldwide - has come to its very limits as it is unable to deal with the consequences of its own success. The result of its tremendous achievements is a world of inextricably interrelated dynamic systems which are incomprehensibly complex. This has largely been ignored by the dominating US management approach because it was never designed for such conditions. It now fails exactly for this reason, thereby causing the present crisis. I have actually been predicting this for years in many of my publications, including the German version of this book which was first published in 2005.The fact that success almost inevitably breeds its own failure is often overlooked, although it is well known in many fields and in particular in those that accept complexity explicitly as their research subject such as biology or ecology. Albert Einstein already remarked that one cannot solve problems with the same methods which produced them.Failure to manage complexity as the major causeof the worldcrisisWhat, at present, a majority - at least in the West - considers to be a mere financial crisis can probably be much better understood if it is looked at from an altogether different perspective: the failure to understand and manage complexity.Business and society seem to be undergoing one of the most fundamental transformations in history. Only on the surface, and only if perceived in conventional categories, do present changes appear to be financial and economic in nature.What is happening might better be understood as an Old World dying because a New World is being born. There will hardly be any bridges back to the old state of affairs. Perhaps the most practical premise to navigate by is that whatever can change will change.If so, we are witnessing no less than the almost complete collapse of the formerly so efficient US management approach, which was developed mainly in the context of business administration and taught in business schools as the ultimate wisdom with regard to the running of corporations in a world where its premises applied to an ever lesser degree. Its realities have already been changing for quite some time but this went largely unnoticed because most people tend to see only the old familiar patterns in the new realities.We are experiencing in particular the failure of the US-type of corporate governance and the kind of top management which is dominated almost exclusively by financial variables only. We see the collapse of the shareholder value approach, which due to its short term profit orientation is largely ignoring the customer and is hostile to future-oriented investing and innovating, thereby systematically misdirecting the allocation of societal resources. The failure of the US-approach is, among other aspects, the consequence of mistaking financial investment for real investment, thereby undermining the former strengths of the US-economy, of confusing mountains of bad debts with sustainable wealth, and of failing to distinguish between healthy and pathological growth.Ironically, what collapsed first was the financial system which appeared to be the most highly developed and sophisticated system ever designed. It was believed to be free of systemic risk by most experts and run by the world's most excellent executives educated in what were thought to be the best universities and business schools worldwide.However, complex systems have properties and laws of their own. Their driving forces - if systematically ignored - make them inevitably go out of control. Such systems are incomputable and unpredictable

Contents
Author's Preface to the English Edition 2010 11

Preface to the New German Edition 2007 15

Concept and Logic of the Series
"Management: Mastering Complexity" 18

Introduction 20

Central Propositions 21

A Word on the Terms Used 22
Part I
What Management Is and What It Is Not 25

1.What Management Is Not 27
Management Is Not Status, Rank, and Privileges 28
Management Is Not Business Administration 28
Management Is Not Limited to Commercial Enterprises 29
Management Is Not Management of People 30
Management Is Not Doing Business 32
Management Is Not Entrepreneurship 32
Management Is Not Only Top Management 33
Management Is Not Identical with U.S. Management 34
Management Is Not Identical with MBA programs 35
Management Is Not Identical with Operational Tasks 36
Management Is Not Leadership 37

2.What Management Is 39
From Resources to Value 39
What Further Sharpens the View on Management 40
What Does "Craft" Mean? 42
From an Art to a Profession 43
Management is Dealing with Complexity 44
What Is Cybernetics? 46
Simple and Complex Systems 48
The Dominance of Reductionism 49
Management - Control of High-Variety Systems 51
The Law of Requisite Variety 53
New Role Models 55

3.Why Management Is Important 57
Management Is the Most Important Societal Function 57
Management Is the Social Code of the Ability to Master Life 58

4.Right Management Is Universally Valid 60
Two Differentiations so Far Overlooked 60
A Solution to Time-Honored Pseudo-Problems 62
Everybody Makes Their Own Mistakes 63
Business Model and Management Are Different Things 64
Important and Unpleasant Consequences 64
The Courage to Be Normative 65
Part II
Effectiveness: Managing People Managing a Business 67

5.Managing People: The Standard Model of Right
and Good Management 69
Logic of the Model 69
What Every Manager Needs 72
Expansion of the Model 89
Management Tasks and Operational Tasks:
A Much-Neglected Distinction 89
Specifics of Application 92
Five Fields of Application in Practice 94

6.Managing a Business:
The Integrated Management System (IMS®)98
Function of the IMS®: From Corporate Purpose to Results 101
The Result-Producing Unit as a Basic Element of Management 101
Dimensions of Integration 102
Overview 103
Logic and Elements of the IMS® 104
What Else Must Be Considered ... 110
Part III
The General Management Functions 115

7.The Basic Model of General Management 117

8.The Organization's Environment 120
Model Categories for the Environment 121
Understanding Economic Aspects 122
Neoliberal Misconceptions 123
New Economic Understanding Needed? 126
Want or Must? Debt Pressure as a Driver of Economic Activity 127
The Myth of the U.S. Economy's Superiority 133
An Alternative Scenario 138

9.Corporate Policy and Corporate Governance 142
Errors of Corporate Governance 145
Business Mission: The Basis of Right Governance 163
The Six Central Performance Controls (CPCs)
of a Healthy Company - the Real Balanced Scorecard 172

10.Strategy 176
The Pioneers 177
A Cybernetic Concept 179
Integral Business Navigation With Compelling Logic 181
What Matters Most? 183
Strategic Principles 191
The High Art of Strategy: PIMS - Profit Impact
of Market Strategy 195

11.Structure 205
Organizing 206
Basic Functional Prerequisites 209
Top Management Structure 213

12.Culture 228
Cultural Change 229
Values 230
The Unity of Management Knowledge 232
The Strongest Signals: Staffing Decisions 233
Critical Incidents 235
Questions of Motivation 237
Culture and Meaning 241

13.Executives 244
Does Management Need a Concept of Man? 245
New Qualifications and Requirements 246
Major Tasks Ahead for HR Management 251
Money: Managers' Compensation 257

14.Innovation and Change 262
False Doctrines and Misconceptions 263
The Guidelines 265
Part IV
Management is Getting Things Done 273

15.Implementation 275
Concentrate on a Few Things 275

Epilog - Manage