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BOOK
SYNOPSIS
"Action
Management for your Company"
(about the Author: Dr
John Troughton)
This book is provided
as an educational introduction to the Action
Management Systems methodology.
It
is NOT the "how to" documentation of our
unique 5-step Action Management program but the book was
written to broadly explain the logical rationale for our
Action Management approach.
An outline of the
specific program objectives, the critical success criteria,
and the implementation process are all either contained on
this website or can be downloaded from the "Contents of
website" page. |
SYNOPSIS OF CHAPTERS
1. Introduction Manage Dynamic Enterprises
2. Conversion of Vision to
Value
3. Specifying Each
Action
4.
Integrating the
Actions
5. Assigning
Responsibilities to Staff
6. Providing
Support Systems
7. Optimising
Value Dynamically
8. Challenging
the Value Engine
9. Linking the
Knowledge
10. Reporting
Results
11. Forecasting the
Future
12. Communicating to
All
13. Measuring the Value
Created
14. Managing
Risk
15. Innovate
Continually
16. “Show Me” then
“Doing It, Right”
17. Case Study
Chapter #1: MANAGING DYNAMIC
ENTERPRISES
Management is primarily about people.
Business, institutions and families are all about people. All these
enterprises are run:
For
‘People’- customers, the family, the community, shareholders,
bankers
By
‘People’- staff, suppliers, managers, parents,
volunteers
Each
‘people’ category has their own expectations of what the enterprise
will deliver for them, or what they will deliver for the enterprise.
Indeed each individual has his or her own individual expectations.
The issue for any enterprise is how to satisfy the differing needs
of ‘people’ in terms of how the resources in the enterprise should
be “optimised” to satisfy all the ‘people’, all the time and create
value. This is the purpose of the enterprise. Management-the art of
directing with a degree of skill so as to alter the system for a
purpose- provides the means to achieve this. Directors are
responsible for managing the enterprise and often assign
responsibility to others to create an organisational structure to
facilitate actions.
The
multiple outputs of an enterprise are the consequence of hundreds of
actions by diverse resources, in diverse sites, that integrate in a
degree of unison and order to deliver the goods, services or money
to satisfy a need or demand. This complex of actions and their
interactions is the System. Value is created when the parties are
satisfied, although it is well known that the expectations of people
are constantly changing and therefore ‘the value’ is dynamic; the
enterprise has to be continually changed to align the deliverable to
the needs of the recipient. The management has to be dynamic and the
tools to assist the manager have to dynamically and continually
optimise the system to generate value. The Value Proposition is
critical.
Chapter #2: CONVERTING VISION TO
VALUE
A vision
(idea) is often the spark that motivates new action and a fresh
outpouring of energy, in an existing enterprise or a new one. It is
the stuff of entrepreneurs. A vision is required to manage any
enterprise whether it currently exists or is a concept in the mind
of an individual. It is used to create the value proposition, which
is the focus of all subsequent analysis and testing. Creating Value
is the goal for all the participants in the vision, on a Win/Win
basis.
The
primary vision has to be big and broad. It has to extend beyond the
legal definition of the ultimate or existing enterprise. For a
business it has to include the customers, future customers, staff,
community, suppliers and others, irrespective of who owns them. It
will cover the extended family or business.
The
vision must create a solution that will ensure harmony across all
the different groups of people, knowing that the natural tendency in
Western culture is for individuality, especially individual choice.
As enterprises globalise, the cultures of individuality have to be
combined with the culture of interdependence. The vision has to
create individual choice as one motivator but also the culture of
interdependence that will stabilise a business or family.
Visions,
or proposals, or business plans and their value propositions should
be tested before they are acted on. The proposition will have to
meet a lot of rules and regulations, which constrain the
performance. Converting the proposition into a model of the business
will allow the concept to be tested at minimal cost and at minimal
risk. To fully test a vision by implementing it (without simulating
it in advance) is a privilege that only large business with strong
cash flows can contemplate, and do. It is a high-risk strategy.
Testing the proposal using simulation techniques reduces the risk.
It is a low risk strategy.
Chapter #3: SPECIFYING EACH
ACTION
The
starting point for new staff or for any project or new business is
to provide specifications or directions as to what has to be done to
make the concept or business work. It is little different than
providing directions about how to get to from place A to B, or from
home to work. For example to get to work there may be several
options but the directions will be specific, from address A to
address B.
One scenario, by car, may consist of seven
actions (the fact of
doing):
1 Get
into Car
2 Go
along Home Street to Main
Street.
3 Then
to Next Street.
4 Turn right into Work
Street.
5
Find number 100.
6 Park in Car
Park.
7 Walk to
office
This
is a specification or list of the actions required to get to work.
Alternative ways to get work include, by foot, by train or taxi and
there would be a different list of actions for each one. Thus there
can be several “scenarios” for getting to work.
Most
people in a city pride themselves in that they know “a better way to
get from A to B”. Most people will think of different ways to get
there and will suggest that the proposed route may be the most
direct, but it may not be the quickest. One saves fuel, the other
saves time. Most people will “optimise” the best way to get to work
to take into account factors such as the means, the convenience, the
time and the cost.
Everyone knows a shortcut or a better way of doing
work. This information could be built into agreed actions to
undertake the work. This optimisation can also take into account
numerous unforeseen events that will occur along the way, such as
accidents and road works. The optimisation has to be “dynamic” and
take into account events as they happen.
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Chapter #4: INTEGRATE THE
ACTIONS
The
actions that are listed do not occur at random. They occur in
a defined order; in just the same way as “going to work” is
done in a definite sequence. If you don’t follow the order in
which the directions (or specifications) are listed you may
never find the workplace. The fourth step in the progress
toward a Meta-Model is to describe how the actions are
arranged. This includes both the sequence and the pathway. In
the case of “getting to work”, there were four possible
pathways, by foot, by car, by train and by taxi. Not only was
it necessary to state the three pathways and how the actions
for each one was different, but also indicate quantitatively
what percentage of the time each pathway used on average over
the year. The description therefore includes the “statistics”
of the business, the probability that 60% of the time the car
will be used, 30% the train, 10% the taxi and 0% by
foot.
Chapter #5: ASSIGN
RESPONSIBILITIES
Each action has assigned to it
the person responsible for that action, and because
performance data is also linked to that action, the individual
is responsible for the performance of that action. There are
two steps, assign responsibility or accountability and then
define performance (and therefore non-conformance) for each
and all actions.
In
business, as in life, what gets done, people do. The action is
the “fact of doing”. It denotes action and is best described
by a doing word, a verb. Who does it? The next step is to
assign responsibility for each action to an individual. This
will provide a clear definition of the job (“Job
Specification”) to the staff member. It may be a role e.g.
secretary, but where possible it should be allocated to an
individual. The individual then takes responsibility for the
action that has previously been described in detail. This will
be further information for the job specification and lead into
the performance statement.
Chapter #6: PROVIDE
SUPPORT SYSTEMS
Staffs need support to conduct
the actions that they are responsible for. Staff performance
depends on the support systems provided by Management. These
will include accounting systems, job specifications,
operational health and safety measures, tools, machines,
training, information technology, reports, reviews, rewards,
quality systems, etc.
The
major support systems are:
* Human Resources. Training,
recruitment, development
* Means to get customers (and
thereby orders),
* Materials, either in a raw or finished
state,
* Delivery to and from multiple locations,
*
Technology. To provide leverage on the individuals capability,
* Systems to communicate, report, and record actions and
transactions,
* Rewards.
It would be possible
in the “get to work” example to walk to work, but the
provision of technology to assist the process is decidedly
beneficial (and an air-conditioned car or train even better),
even if it is at a cost. The optimisation of the individual’s
capability with the technology now becomes a major issue for
the business.
Chapter #7: OPTIMISE
VALUE DYNAMICALLY
Everyone with a concept or a
vision should first of all create a Value Engine to simulate
how the enterprise, as a dynamic system, would operate in real
life, without actually doing it. Do this before a cent is
spent on rearranging the furniture, buying a building, buying
new machines, or wasting your own or other people’s time and
money on the business. It has to be a dynamic simulation. Does
the idea work? The question also has to be, “does the proposal
create or destroy value?” If the proposal does not create
profits and value it will be reworked.
If
you were to hire a fighter pilot for a $100m fighter jet
plane, how would you train them before the pilot was allowed
to fly the plane? A start would be made in the light aircraft
and build up to jets. No matter how many hours would be spent
in these other aircraft, a critical part of the training
process will be a long period in the simulator. Many, many
hours of simulated flight under all sorts of conditions and
even if the pilot completed the course they may still not be
allowed to fly the fighter. Why are managers allowed to run
Multi Million dollar enterprises without simulator training
and evaluation of their
capability? |
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Chapter #8: CHALLENGE THE VALUE
ENGINE
The
Value Engine exists to be challenged, to find how to do
things better. If an answer can be got from the model in
an hour or a day, what would this delay cost compared
with implementing the wrong solution? Challenge the
Value Engine (and the staff) to constantly do things
differently, but better. Some examples are given here:
Value Proposition
* Is
your business creating or destroying value?
* Do you
have a Value Proposition?
* Can it be used to test if
the Business is creating value?
Cash
Control
* Where is the bottleneck when the supply
line is tightened?
* Plan to grow, but can managing
the projected cash flow cover it?
* Bill as
soon as a project is complete or product shipped. What
do delays cost you?
* What scenarios would see you
through a cash crunch?
* How sensitive is your
product to product or service prices? If the competitor
had a price war how resilient would your current
Meta-Model be?
Positioning and Pricing
Products and Services.
* What level of value do you
expect to gain next year?
* How much can you
realistically sell next year?
* How much will you
charge for your goods or services?
* How much will
it cost to produce your product?
* How much are your
operating expenses?
* Do you need to hire employees?
If so, how many, and how much will you pay them?
*
How many contract staff do you need?
* How much will
you pay yourself?
* How much money do you need to
borrow, and how much will your monthly loan payments
be?
Optimal Staffing
The Value Engine will
assist the optimisation and scheduling of staff.
*
What is the utilisation rate of staff in the current
business?
* What is the right number of staff for the
enterprise?
* Are there fluctuations in the number
month-by-month or week-by-week?
* What do these
fluctuations cost the business?
* What is the optimal
balance of permanent and contract staff?
Managing Outsourcing
Operations.
* Are the measures used in the
outsourcing operations the right ones?
* How
integrated are the outsourced operations with the
business?
* Is there a proper description of the
interface between the two businesses?
* Where the
integrated outsourcing operations modelled before
implementation?
Waste
* What is the
impact of reducing rework by 50%?
* Could waste be
reduced by 50%?
* Could the time wasted be allocated
to positive actions?
The Value Engine will
provide focus for the business and will minimise losses
due to other bad business practices.
Chapter #9: LINK
THE KNOWLEDGE
Each page of the value
engine or each action can be actively linked to
additional information from within the company or
outside. For example the name of the person attached to
an action can also be actively linked to their CV held
somewhere within the company. Anyone observing the
action, e.g. for auditing purposes, can immediately see
the experience and training of the individual and assess
its relevance to the action. Or it may be linked to
complex technical manuals that describe in detail
procedures for maintenance of a machine.
Chapter #10: REPORT
RESULTS
Staff respond to
information; the right information, in the right form,
at the right time, and in the right place (to them). In
addition, the Value Engine has to be interactive with
the staff, allowing staff to have their input into the
description of the business and to suggest improvements.
The Value Engine is static, dynamic and
interactive.
The first information
required by staff is the description of the business and
their role and responsibility in that business. This is
essential if the procedures are to be changed but at all
times it is the benchmark that will be used to audit the
business and individual performance.
If the information is
required on the basis of what happens each hour of each
day, then this is how it should be presented. If detail
is required on the actions that have to be undertaken,
or the resources, that should be supplied. The Value
Engine is used to generate these reports, e.g. this is
for a restaurant and it describes the actions that have
to be undertaken throughout the day. Preparing food,
seating customers, etc. It also includes a quantitative
forecast of how much of each action is
required.
Chapter #11:
FORECAST THE FUTURE
Forecasting is like
preventative maintenance. It warns of potential problems
before they occur and therefore allows pre-emptive
actions to minimise any likely problems. It may not warn
of all problems but it will indicate major ones.
Ignoring the warnings introduces a major risk.
The future is predictable.
Not all of it, but most of it. Not necessarily to the
day or the dollar but sufficiently accurately to prevent
most of the major fallout. The weather in most places on
the earth is “known”, that is you can refer to a map
that will indicate the likely weather at any place. It
will provide a range, ? C or a probability of rain. This
is sufficiently indicative for most purposes, so that
the risk is covered e.g. by taking an umbrella, adequate
clothes or an insurance policy against storms.
Forecasting revenues or profits is equally predictable
within limits that are sufficiently accurate to allow
preventative
actions. | |
Chapter #12: COMMUNICATE TO
ALL
Communication means giving “instant”
access to any individual in the business to all “current”
information (information can be updated and communicated instantly)
that is necessary for them to do their job. The central server and
distributed PC’s make this a physical possibility for any business.
The Meta-Model can be made instantly available to all. It is the
content that now has to be provided and to include the means to
collect new ideas and communicate the results of the analysis i.e.
to be interactive.
The content is:
The current
job structure and responsibilities
The information for each
action
The real dynamic model of the business
The
performance measures
Tapping new staff suggestions and
ideas (Interaction).
Chapter #13: MEASURE THE VALUE
CREATED
Value
will be the measure that determines whether the enterprise has been
successful. It is an output measure, in that the conditions that
contribute to it are long gone and sometimes forgotten. It is too
late to change them to get a better result last quarter. There are
11 ways that a company’s value can be analysed.
Chapter #14: MANAGE RISK AND
ANALYSE RISK UNDER STRESS
Management is about risk. A decision is
“Risk Taking” and the Action Management System is about balancing
‘Risk Taking” and “Risk Control”, as the precursor to creating
value.
Every
action in a business has some element of risk associated with it. A
single minded focus on creating value, any sort, (even shareholder
value) can introduce a culture of taking short cuts, reducing
essentials such as maintenance, or “going for broke”. The business
has to be able to assess risk. Dr W Deming a quality expert made the
judgment that 86% of errors or waste (risk) in business is due to
system faults, not employee mistakes. A review by the British
Bankers Association in 1994 revealed that 67% thought operational
risks (people, processes and technology) were more significant than
market risk or credit risk.
Failure
can occur in any one of hundreds and thousands of sites in the
business but most of these sites can be linked to one or more of the
thousands of actions in the Action Management System and therefore
can be precisely pinpointed.
Chapter #15: INNOVATE
CONTINUALLY
Everyone
can think of different ways of doing things. What they don’t know is
whether the different way is a better way. What they don’t know is
whether the better ways of doing things for themselves is better or
worse for other people in the business, along the value chain. But
what the manager and all the staff know is that if they don’t
continually do things better the business will suffer. It may not
happen this month or this year, but if improvements are not
continually made the company competitive position will gradually
deteriorate.
Each
individual in the business has freedom. It is the right to choose.
Making a choice of how to do things fulfils the goal of being
unique. It is argued, the more choice the better. So what is the
limit? The model can provide individuals with choice of how to do a
job, but also a test as to whether the choice is better for all the
team or the business. Individuals will find greatest motivation in
having freedom of choice when those choices make the team better,
their own job better and brings rewards to all the constituents in
the business.
Chapter #16: “SHOW ME” THEN “DO IT,
RIGHT”.
This book
is about methodologies to “Show Me” how a real enterprise works and
there is a real Value Engine to test any value proposition before it
is implemented. If the Model does meet all the requirements of a
business or project, then “Do It”. Modelling is about action.
Modelling is about having the right data on which to make management
decisions. The Value Engine and the associated information is an
“Operations Directory” which is the guide to “Doing It, Right”.
It does not have to be said, “Doing It,
Right First Time” (Or does it?)
It
does not have to be said, “Doing It, Right Every Time” (Or does
it?)
The result of implementing the approach outlined in this
guide, is a directory, which will describe in detail to anyone, how
to run the business or a part of it and introduces a process that
will ensure continual improvement of the business. The outcome is an
“Operations Directory” which will be unique to each company and the
core to its intellectual assets.
Chapter #17: CASE
STUDY
The guide
has provided the step-by-step approach to better management of any
business big or small. An example is now given of Action Management
as it is applied to a business, in this case a Motor Vehicle
Servicing Centre.
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