Key management models: The management tools and

practices that will improve your business

by Steven ten Have, Wouter ten Have and Frans Stevens, with Marcel van der Elst and Fiona Pol-Coyne, FT
Prentice Hall, 2003.
Abstract

This book provides a clear summary of 50 of the key models managers can use to enhance the daily functioning of their
organisations. Each definition suggests where and how the model might be employed. Maslow, Porter, Ansoff, McKinsey,
Belbin, Kotter, BCG, Deming – are all there with many others as tools to be adapted for specific uses.

(Reviewed by Kevin Barham in May 2003)

(These book reviews offer a commentary on some aspects of the contribution the authors are making to management
thinking. Neither Ashridge nor the reviewers necessarily agree with the authors’ views and the authors of the books are not
responsible for any errors that may have crept in.
We aim to give enough information to enable readers to decide whether a book fits their particular concerns and, if so, to
buy it. There is no substitute for reading the whole book and our reviews are no replacement for this. They can give only a
broad indication of the value of a book and inevitably miss much of its richness and depth of argument. Nevertheless, we
aim to open a window on to some of the benefits awaiting readers of management literature.)

Management models have two main purposes, say the authors of this book. The first is to provide a framework for
improving business performance. The second is to help managers get away with murder by intimidating the uninitiated
with buzzwords and acronyms. Whether the latter is true or not, the vast array of management models on offer, ranging
from those that purport to help us understand individual human behaviour at one end of the spectrum to those that deal
with grand corporate strategy at the other, is bewildering for both managers and consultants. This book provides an
introduction for busy managers to 50 of the most influential and helpful management models from activity-based costing
to value chain analysis.

The authors (who are Dutch consultants and business professors) define a model as a tool that can be employed to enable
or enhance the daily functioning of both organisations and the managers within them, or to solve related problems. For
each model considered in the book, the authors provide a brief description of the 'big idea' and suggest where and how it
might be applied. They also ask: in the final analysis, is the model any good - what are its limitations and potential pitfalls?
To select the models, the authors asked 70 managers, consultants and academics around the world which models they had
found the most helpful in their work. The collection reflects those ideas that are considered workable in practice and that
have contributed positively towards solving real organisational problems.

Management models as recipes

The authors say that it's what you do with a model that counts. The authors suggest that there are parallels between the
way managers use management models and the way in which chefs use recipes. To be successful chefs have to be
prepared to unleash their own potential by undertaking a thorough culinary education, working under different masters for
different types of guests, in different types of restaurant. Having become familiar with all the ingredients, techniques and
recipes, they can carry on experimenting with combinations forever.

Chefs never work completely by the book. The same goes for managers who understand the essence of models and have
had a chance to apply them in a variety of situations. They are aware of the limitations but can hold on to the basic
premise or insight of a model. They can judge whether a particular model is appropriate for a given situation and apply it
without making the application a goal in itself. Managers don't have to think up new models but must understand the likely
consequences of using the existing ones. Like a chef, they combine their previous experience and talent to make
adjustments to models that can create tailor-made solutions for their organisations.
Just as a chef must also undertake regular self-evaluation using feedback from customers, colleagues and masters, a
manager must evaluate the way his or her chosen model is working. If it is not producing the desired results, it does not
necessarily have to be rejected but the manager must understand the situation and make the necessary adjustments to
bring things back on track. Managers, like chefs and their recipes, must also understand which models are obsolete and at
the same time be open to new techniques.

The book serves to remind us that many management models were originally developed by researchers in the West. With
globalisation we now recognise that some of them, particularly those concerning human behaviour, are not as universal as
once assumed. Maslow's hierarchy of needs is a case in point. This classic model of human motivation suggests that
people will only seek to fulfil higher needs for social acceptance and self-actualisation once their basic physiological and
security needs are met. Although it has been widely used to understand customer and employee motivation, the authors
warn that the needs hierarchy is based on American and West European norms. The hierarchy may work differently in
other cultures. In Asia, for example, social needs are more important than personal. The authors say that Maslow's
framework remains nonetheless a valuable tool for understanding what motivates people, especially if used in conjunction
with Geert Hofstede's model of cultural differences (which they regard as a useful general introduction to dealing with
foreign cultures rather than as the definitive work on the subject, as is sometimes proposed).
The authors reappraise various other well-established models. For example, they look at the BCG matrix, the Boston
Consulting Group's model for determining priorities in a product portfolio (and which basically says invest in the stars, live
off the cash cows, watch the question marks and get rid of the dogs). According to the authors, the matrix is helpful in
forcing decisions in managing a portfolio of products and deciding where to invest and where to retract. However, throwing
money at a product or service does not by itself make it grow or become profitable. In immature markets, growth figures
and market shares may not have reached a point where the rigorous positive or negative judgement of the BCG matrix can
be applied.
Another strategic model - scenario planning - was developed by Shell in the 1970s to address problems caused by the
unreliability of forecasts in an unstable business environment. By identifying and exploring the predetermined elements of
the future, this approach makes it possible to devote more attention to the uncertain elements - the possible consequences
of the predetermined events. This allows a number of alternative scenarios to be developed and alternative strategies
considered. Scenario planning, say the authors, can help organisations to anticipate and understand risk and can also
illuminate new strategic options. Experience shows, however, that a critical success factor is to make managers question
their assumptions about the way their business world works. Scenario planning is most effective when combined with a
clear strategic vision of what you want your organisation to be and when integrated with option planning. Rather than
being a one-off event, it should be seen as ongoing training in awareness and flexibility.

Porter's five competitive forces

(existing competitors, new entrants, substitutes, buyer's bargaining power, and supplier's command of the industry) is a
business school favourite. This is the most widely used model for strategic analysis but, according to the authors, it has
one major disadvantage. It is a reactive rather than a pro-active model in that it emphasises forces external to the
company and how they can be countered. It ignores the firm's intrinsic strengths and ability to develop its competencies
independently. It is best used, suggest the authors, in combination with an inside-out approach.

The McKinsey 7-S framework, made famous by Tom Peters and Robert Waterman in In Search of Excellence, was
originally developed as a way of thinking about effectively organising a company. The seven Ss combine 'hard' elements
(strategy, structure and systems) with 'soft' elements dimensions: shared values, skills (or organisational competencies),
staff and management style. While it is a useful checklist for analysing organisations, the authors say that the biggest
problem is to make the soft elements specific. All too often the model is used in a limited fashion, considering each
element independently, and ignoring the lessons that might be learned from examining the relations between the Ss or the
conflicts between them. The authors suggest, however, that the 7-S model may have some unforeseen potential in that
many other models could be applied to analyse the individual Ss.
The authors have little good to say about SWOT analysis (used to investigate organisational strengths, weaknesses,
opportunities, and threats). Although it is one of the most familiar techniques used by managers in a wide variety of
situations, the authors warn that it makes strategic analysis appear deceptively simple. Deciding what your organisation's
strengths and weaknesses are and assessing the impact and probability of opportunities and threats is much more
complex. The model does not help to translate the identified SWOT elements into strategic alternatives. There is also an
inherent risk in making incorrect assumptions when assessing the SWOT elements and this often causes managers to
waver between various alternatives, frequently resulting in delays in implementation.
Another familiar model, Belbin's team roles is also examined. Belbin says that every team needs a combination of people
who will play the roles of shaper, implementer, completer/finisher, co-ordinator, team worker, resource investigator,
monitor/evaluator, specialist and 'plant' (the creative team member). The model, say the authors, is useful for
encouraging individuals to take a closer look at themselves and their strengths and weaknesses but fails to address the
importance of interpersonal relationships within a team - many teams that look good on paper fail because the members
do not 'click' with each other.
The authors suggest that some of today's so-called new models are in fact not so new. Igor Ansoff's product/market
grid is an example. The grid is a framework for identifying corporate growth opportunities and selecting strategies from
among market penetration, market development, product development or diversification. Although nearly 50 years old, the
grid is still highly valid, say the authors, and is frequently used by marketing strategists. Revisiting Ansoff's work, say the
authors, makes you realise that some of today's gurus have either reinvented the wheel or stolen it from him.
The book also considers a number of models that may be less familiar to many managers but which they might find worth
pursuing. If you are looking for a model to help you with managing projects, for example, you might take a look at The
Berenschot project management model. This helps to simplify a complex task by identifying a number of aspects to be
considered when carrying out any project - the life cycle; the project hierarchy (understanding the relationships between
the sub-projects); project fundamentals (objectives, means, quality, timeline, etc.); and the management cycle (plan, do,
check and act). It is relatively easy to grasp and apply, though the authors advise to beware the false sense of security it
offers and not to forget the project stakeholders and how they might affect the outcome.
If you are managing a change project, you might find Kotter's eight phases of change helpful in avoiding mistakes that
organisations commonly make in change processes. These include: allowing too much complacency; failing to build a
substantial coalition; underestimating the need for a clear vision and failing to communicate it clearly; not planning for
short-term wins that would reinforce belief in success; declaring victory too soon; and failing to anchor changes in
corporate culture.
The authors also offer their own framework for managing change - the purposive change model. This suggests that
there are four general management processes that together form a distinctive way of organising: direction (formulating a
comprehensive long-term management philosophy, including mission and corporate values); consistency (formulating
company strategy and change objectives and translating them into concrete aims and objectives); coherence (harmonising
operating processes and functional work areas); and feedback (through regular, company-wide measurement and targeted
reward of performances that contribute to company strategy and change objectives). The authors say their model provides
a way of communicating a direction and setting the wheels in motion for its realisation, although other models need to be
used to establish the content of the direction - the ambition and goals.
Perhaps your firm is moving into a new stage of growth and you need to understand the implications. Greiner's growth
model is reportedly very helpful in understanding growth-related problems. It helps companies to understand why certain
management styles, organisational structures and co-ordination mechanisms work better or worse at different stages in
the development of a company. The five phases move from creativity (the start-up) via direction (functional organisational
structure), delegation (decentralised structure), co-ordination (product groups) to a collaborative phase marked by teams
and matrix structures. A sixth phase may consist of extra-organisational solutions such as mergers and managing
networks of companies. Transitions between phases are driven by crises such as the control crisis that leads from
delegation to co-ordination or the red tape crisis that leads on to collaboration. The authors say that the model is best for
understating the state of the company, rather than deciding which solutions are best.
In addition to the Porter and BCG frameworks, the book describes some other frameworks for analysing the firm's external
environment. MABA analysis, for example, is said to be a powerful model for prioritising new market opportunities. It
compares market attractiveness (including external indicators such as profit margins, market size and growth
expectations, stability, etc.) with business attractiveness (company-related indicators such as the fit with current activities
and position in value chain or supplier and customer networks). Be careful, though in choosing and weighting indicators -
different indicators and weights can give very different results.
The book covers models for other functional issues. Kraljic's purchasing model helps management select the most
appropriate purchasing strategies for different types of products (classified as strategic, leverage, bottleneck and routine
products), optimising the trade-off between cost and risk. It also reminds us that many firms pay more attention to
marketing and sales management and overlook the major impact that purchasing management can have on the financial
result, as well as increasing value delivered to customers as they become more knowledgeable of products and processes.
The capability maturity model analyses the stage of development of maturity of an organisation for software
development. It describes five evolutionary levels in the way that an organisation manages its software - 1. Initial (ad hoc,
chaotic); 2. Repeatable (basic project management processes are established that can repeat earlier successes with similar
applications); 3. Defined - software processes are documented and standardised); 4. Managed - collection of detailed
measures means the software process and product quality are quantitatively understood and controlled; 5. Optimising -
continuous process improvement is enabled by feedback and by piloting innovative ideas and technologies. Predictability,
effectiveness and control of an organisation's software processes improve as the organisation moves up the five levels.
This is an accessible and pragmatic model, say the authors, which can be used not only for evaluating the organisation's
software applications, but also for considering organisational improvements.
At the level of the individual, you may be concerned with better understanding yourself and your colleagues and improving
your personal efficiency and effectiveness. Osman's core quadrants can help you identify and diagnose your core quality
- 'the real you'. This model looks at different perspectives - your major pitfall (too much of your core quality), your biggest
challenge (the opposite of your pitfall), and your 'allergy' to others' core qualities (the opposite of your core quality). Core
quadrants are very useful in increasing mutual understanding and respect for individuals with opposing core qualities (e.g.
'chaotic' versus 'organised' people). They can be used, for instance, to prepare for meetings where people with different
qualities will interact and to avoid unnecessary confrontation. To avoid classifying yourself or someone else wrongly,
however, it is important to involve others in developing the perspectives.

Read this book, the authors say, and you'll never have to admit you don't know your way around risk reward analysis.
That is of course an exaggeration. The book only provides an introduction to the models. (Other frameworks assessed by
the authors include the balanced scorecard, business process redesign, the chaos model, compliance typology, Covey's
seven habits of highly effective people, the Deming cycle, Eisenhower's effective time management, EVA [economic value
added], and overhead value analysis, to name just a few.) If you are interested in applying a particular model in your own
situation, you will have to explore it much more thoroughly - the book provides suggestions for further reading for many of
the models. As the authors say, you don't need to have blind faith in every model. Nor should any of the models be used
purely for their own sake. A model is a tool which, when you combine it with your knowledge and experience, and when
you employ it at the right time, can help an organisation find solutions to its problems. Bon appetit, as a chef might say.