What is a management system?

Have you ever noticed that sophisticated, complex and important things only work because they operate as  “systems”?

For example, in the human body: we have the respiratory, cardiovascular and immune systems... Or the Earth's biome, which brings together different ecosystems, the forests... And even the Milky Way, the galaxy we live in, which includes our Solar System and so many others, on which we often depend without realizing it. When these systems work in a balanced and efficient way, everything tends to go well. Otherwise...

Making due allowances, there are abundant parallels within a company. There are countless “systems” within an organization. Here, however, we are specifically referring to what we call the “management system.”

In short, it is the way managers' work is organized and actually happens in the organization's day-to-day life. This involves the entire structuring of the management activities of this, let's say, “corporate ecosystem”: communicating the strategy and objectives of the various areas, setting targets, management routines, problem solving, feedback, performance evaluations... In short, all processes of an eminently managerial nature, associated with the different levels of the organization.

Drawing an analogy with a living being – and quite a few thinkers compare companies to “living organisms” –, the management system would be the “skeleton” that gives support and structure to the vital “organs” and “tissues” .

A first important observation about this is that it is impossible for there not to be some kind of “management system” operating. It always exists. It may be efficient or anomalous, but if the company is running, it is inevitably already there, making itself present, sometimes invisibly. And perhaps this is the first big challenge: seeing it.

If we are not able to “see” our management systems, we will never be able to identify gaps and improve them. If it is not carefully thought out, designed and consciously organized, the management system will be a random collection of disconnected individual practices, capable of causing various undesirable losses.

Many situations show us this every day inside companies. For example, when important decisions are made late and reactively, because of garbled communication and a lack of transparency about actual performance. The fatal combination of mistaken and insufficient information and decisions made “in the heat of the moment,” inspired primarily by the personal view of whoever holds power.

Also when problems are “solved” by the wrong hierarchical levels, with the wrong resources and the wrong people. Or when the “vacuum” created by the lack of well-designed, tiered communication processes is immediately filled by the “grapevine,” the coffee-break conversations that turn gossip into absolute truths. There are many distortions caused by the absence of a good management system.

Companies and their leaders who lack this awareness do not realize that, in fact, this may be the most basic root cause of a good part of their problems and instabilities. For example, when information and communication don't flow through the organization. When problems are noticed too late. When customers are concretely affected, complain and walk away. And when poor results can no longer be easily 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 “adrift,” at most following the bureaucracy. And leaders spend most of their time “putting out fires” or trying to schedule meetings with other managers who are equally overloaded.

Even worse is when the classic “personalization” occurs. When a leader takes over a department or even the whole company. And then redesigns the system the way he or she “likes,” establishing new routines, new indicators, new forms of evaluation, but without scientific or technical criteria. And, of course, sometimes throwing “in the trash” years of experience and learning of the managers who previously held that position.

When this happens, management, instead of supporting value-creating processes, starts generating noise, creating useless work and circulating unnecessary or contradictory information, causing confusion on the front line. Often the company becomes rigid, sometimes paralyzed. And then, as a reaction, people are encouraged to gather dubious data and hold unproductive meetings, while value-creating work flows randomly, and problems are solved impulsively, erratically and inefficiently.

And with each new change, more and more psychological insecurity, wear and tear, setbacks and losses are generated: meeting formats are changed, reports are swapped, indicators are “recycled,” evaluations are redone. However, the problems persist, grow stronger and are reborn.

This is a vast subject that demands in-depth study. This brief article is not intended to exhaust the topic, but to prompt some reflection. 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 its macro and micro dimensions and across the different hierarchical levels, functional areas, processes and individuals. It should center on the relentless pursuit of exposing problems, preferably while they are still close to their “source,” stopping bad processes so that they can be rethought and improved, with the support of higher hierarchical levels if necessary. For this, the system needs to promote and facilitate scientific thinking.

It must be grounded in management standards that help maintain the stability of processes and of front-line work but that, at the same time, expose problems, enabling continuous improvement. It needs to be based on simple, instructive, easy-to-understand visual management that tracks critical indicators, showing expected versus actual, to promote transparency about the process and performance. And it should actively encourage respect for people, promoting psychological safety so that they can reveal problems and improve their respective work every day, according to their level of capability and authority.

Well-designed management systems optimize everyone's time within the organization. They create everyday opportunities for horizontal and vertical alignment. They open up space for constructive interactions with the team at the gemba, promoting people development and process evolution. They ensure communication and the flow of the right information, at the right time, to the right people, among other advantages, ensuring that problems are noticed and solved as close as possible to their source.

In short, from the lean perspective, a management system must be designed so that the company evolves and performance reaches new levels. For this to happen, you cannot depend on the “manager on duty.” The organization of management work must be carefully thought out and structured so that “living organisms” can have a healthy, long and prosperous life.