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Nature of Management

1. Universality: Management is an universal phenomenon in the sense that it is common and

essential element in all enterprises. Managers perform more or less the same functions
irrespective of their position or nature of the organization. The basic principles of management
can be applied in all managerial situations regardless of the size, nature and location of the
organization. Universality of managerial tasks and principles also implies that managerial skills
are transferable and managers can be trained and developed.
2. Purposeful: Management is always aimed at achieving organizational goals and purposes.
The success of management is measured by the extent to which the desired objectives are
attained. In both economic and non-economic enterprises, the tasks of management are directed
towards effectiveness (i.e., attainment of organizational goals) and efficiency (i.e., goal
attainment with economy of resource use).
3. Social process: Management essentially involves managing people organized in work
groups. It includes retaining, Developing and motivating people at work, as well as taking care of
their satisfaction as social beings. All these interpersonal relations and interactions makes the
management as asocial process.
4. Coordinating force: Management coordinates the efforts of organization members through
orderly arrangement of inter-related activities so as to avoid duplication and overlapping.
Management reconciles the individual goals with the organizational goals and integrates human
and physical resources.
5. Intangible: Management is intangible. It is an unseen force. Its presence can be felt
everywhere by the results of its effort which comes in the form of orderliness, adequate work
output, satisfactory working climate, employees satisfaction etc.
6. Continuous process: Management is a dynamic and an on-going process. The cycle of
management continues to operate so long as there is organised action for the achievement of
group goals.
7. Composite process: Functions of management cannot be undertaken sequentially,
independent of each other. Management is a composite process made up of individual
ingredients. All the functions are performed by involving several ingredients. Therefore, the whole
process is integrative and performed in a network fashion.
8. Creative organ: Management creates energetics effect by producing results which are more
than the sum of individual efforts of the group members. It provides sequence to operations,

matches jobs to goals, connects work to physical and financial resources. It provides creative
ideas, new imaginations and visions to group efforts. It is not a passive force adopting to external
environment but a dynamic life giving element in every organization.


We often come across the word management referring to people who run enterprises organized
as either sole-trading or partnership firms. These organizations are either owner-manager or
managed by professional managers. But in the current situation require professionally trained
people to manage the business. The extent of success these managers achieve depends on
their knowledge of management theory and its skillful application. In the transition from ownermanaged enterprises to professional-managed enterprises, profit is no longer the sole indicator
of success. The management is obliged to put up performance in areas which are concerns of
groups other than owners.
Concept of Management
Management is essential at all levels of an organization. But the word management has been
given different interpretations. It is used as a noun, a process, and a separate discipline.
Management as a noun
In general and popular usage, management refers to a distinct group of people who direct the
activities of other people and material resources toward the attainment of predetermined goals.
Giving a Broader meaning to it, one can look at management as a resource, a system of
authority, and a class of elite.
1. Management as an economic resource: The economist's view of management is that it is a
factor of production just like entrepreneurship, capital and loabour. The managerial resource, to a
large extent, determines organizational effectiveness and efficiency. Hence in a dynamic
environment managerial development is more important and its use must be more intensive.
2. Management as a system of authority: Management is a system of authority in the sense
that it consists of a team of managers who are responsible for making decisions and supervising
the work of others. Managers at different levels possess varying degree of authority. Higher level
managers manage managers at middle levels. Middle and lower level managers supervise and
control their subordinate managers and workers.

3. Management as a class of elite: Sociologists view management as a class and status

system. Increasing complexity of management in the modern complex organization has led to
managers being regarded as a distinct class in society, who possess knowledge and skill of
higher order. Access to managerial positions is based on achievement criteria, rather than on
ascriptive criteria (ie. on family and social origins). This development is viewed by some as
managerial revolution in which the managerial class threatens to become autonomous groups
with increasing amount of power. Others view this development not with alarm because increase
in power of managers attracts more of them, which prevents managerial autocracy.
Management as a process
Interpreted as a process, Management consists of a series of inter-related managerial activities
classified into various functions with a systematic approach, so as to integrate physical and
human resource into an effective operating unit. Management is thus, regarded as the process
by which a co-operative group directs action towards common goals.
Management as a discipline
Another connotation of management is that it is a separate discipline having a systematized body
of knowledge which managers use in performing their jobs. As a separate field of study,
management includes the principles and practice of general management as well as of the
various functions of management. It has developed its own techniques and approaches. The
theoretical foundations of management have evolved on the basis of experience, observation
and scientific investigations.

1. Principles of Management are Universal

a. Management principles are applicable to all kinds of organizations - business
& non business.
b. They are applicable to all levels of management.
c. Every organization must make best possible use by the use of management
d. Therefore, they are universal or all pervasive.
2. Principles of Management are Flexible
a. Management principles are dynamic guidelines and not static rules.

b. There is sufficient room for managerial discretion i.e. they can be modified as
per the requirements of the situation.
c. Modification & improvement is a continuous phenomenon in case of
principles of management.
3. Principles of Management have a Cause & Effect Relationship
a. Principles of management indicate cause and effect relationship between
related variables.
b. They indicate what will be the consequence or result of certain actions.
Therefore, if one is known, the other can be traced.
4. Principles of Management - Aims at Influencing Human Behavior
a. Human behavior is complex and unpredictable.
b. Management principles are directed towards regulating human behavior so
that people can give their best to the organization.
c. Management is concerned with integrating efforts and harmonizing them
towards a goal.
d. But in certain situations even these principles fail to understand human
5. Principles of Management are of Equal Importance
a. All management principles are equally important.
b. No particular principle has greater importance than the other.
c. They are all required together for the achievement of organizational goals.

Following are the main importance of the Principles of Management.

1. Improves Understanding.
2. Direction for Training of Managers.
3. Role of Management.
4. Guide to Research in Management.

1. Improves Understanding - From the knowledge of principles managers get

indication on how to manage an organization. The principles enable managers to
decide what should be done to accomplish given tasks and to handle situations which
may arise in management. These principles make managers more efficient.
2. Direction for Training of Managers - Principles of management provide
understanding of management process what managers would do to accomplish what.
Thus, these are helpful in identifying the areas of management in which existing &
future managers should be trained.
3. Role of Management - Management principles makes the role of managers concrete.
Therefore these principles act as ready reference to the managers to check whether
their decisions are appropriate. Besides these principles define managerial activities in
practical terms. They tell what a manager is expected to do in specific situation.
4. Guide to Research in Management - The body of management principles indicate
lines along which research should be undertaken to make management practical and
more effective. The principles guide managers in decision making and action. The
researchers can examine whether the guidelines are useful or not. Anything which
makes management research more exact & pointed will help improve management

Management as a Science

Science is a systematic body of knowledge pertaining to a specific field of study that contains
general facts which explains a phenomenon. It establishes cause and effect relationship
between two or more variables and underlines the principles governing their relationship.
These principles are developed through scientific method of observation and verification
through testing.
Science is characterized by following main features:
1. Universally acceptance principles - Scientific principles represents basic truth about
a particular field of enquiry. These principles may be applied in all situations, at all
time & at all places. E.g. - law of gravitation which can be applied in all countries
irrespective of the time.
Management also contains some fundamental principles which can be applied
universally like the Principle of Unity of Command i.e. one man, one boss. This
principle is applicable to all type of organization - business or non business.

2. Experimentation & Observation - Scientific principles are derived through

scientific investigation & researching i.e. they are based on logic. E.g. the principle
that earth goes round the sun has been scientifically proved.
Management principles are also based on scientific enquiry & observation and not
only on the opinion of Henry Fayol. They have been developed through experiments
& practical experiences of large no. of managers. E.g. it is observed that fair
remuneration to personal helps in creating a satisfied work force.
3. Cause & Effect Relationship - Principles of science lay down cause and effect
relationship between various variables. E.g. when metals are heated, they are
expanded. The cause is heating & result is expansion.
The same is true for management, therefore it also establishes cause and effect
relationship. E.g. lack of parity (balance) between authority & responsibility will lead
to ineffectiveness. If you know the cause i.e. lack of balance, the effect can be
ascertained easily i.e. in effectiveness. Similarly if workers are given bonuses, fair
wages they will work hard but when not treated in fair and just manner, reduces
productivity of organization.
4. Test of Validity & Predictability - Validity of scientific principles can be tested at
any time or any number of times i.e. they stand the test of time. Each time these tests
will give same result. Moreover future events can be predicted with reasonable
accuracy by using scientific principles. E.g. H2 & O2 will always give H2O.
Principles of management can also be tested for validity. E.g. principle of unity of
command can be tested by comparing two persons - one having single boss and one
having 2 bosses. The performance of 1st person will be better than 2nd.
It cannot be denied that management has a systematic body of knowledge but it is not as
exact as that of other physical sciences like biology, physics, and chemistry etc. The main
reason for the inexactness of science of management is that it deals with human beings and it
is very difficult to predict their behavior accurately. Since it is a social process, therefore it
falls in the area of social sciences. It is a flexible science & that is why its theories and
principles may produce different results at different times and therefore it is a behavior
science. Ernest Dale has called it as a Soft Science.

Management as an Art

Art implies application of knowledge & skill to trying about desired results. An art may be
defined as personalized application of general theoretical principles for achieving best
possible results. Art has the following characters 1. Practical Knowledge: Every art requires practical knowledge therefore learning of
theory is not sufficient. It is very important to know practical application of

theoretical principles. E.g. to become a good painter, the person may not only be
knowing different colour and brushes but different designs, dimensions, situations etc
to use them appropriately. A manager can never be successful just by obtaining degree
or diploma in management; he must have also know how to apply various principles
in real situations by functioning in capacity of manager.
2. Personal Skill: Although theoretical base may be same for every artist, but each one
has his own style and approach towards his job. That is why the level of success and
quality of performance differs from one person to another. E.g. there are several
qualified painters but M.F. Hussain is recognized for his style. Similarly management
as an art is also personalized. Every manager has his own way of managing things
based on his knowledge, experience and personality, that is why some managers are
known as good managers (like Aditya Birla, Rahul Bajaj) whereas others as bad.
3. Creativity: Every artist has an element of creativity in line. That is why he aims at
producing something that has never existed before which requires combination of
intelligence & imagination. Management is also creative in nature like any other art. It
combines human and non-human resources in useful way so as to achieve desired
results. It tries to produce sweet music by combining chords in an efficient manner.
4. Perfection through practice: Practice makes a man perfect. Every artist becomes
more and more proficient through constant practice. Similarly managers learn through
an art of trial and error initially but application of management principles over the
years makes them perfect in the job of managing.
5. Goal-Oriented: Every art is result oriented as it seeks to achieve concrete results. In
the same manner, management is also directed towards accomplishment of predetermined goals. Managers use various resources like men, money, material,
machinery & methods to promote growth of an organization.
Thus, we can say that management is an art therefore it requires application of certain
principles rather it is an art of highest order because it deals with moulding the attitude and
behavior of people at work towards desired goals.

Management as both Science and Art

Management is both an art and a science. The above mentioned points clearly reveals that
management combines features of both science as well as art. It is considered as a science
because it has an organized body of knowledge which contains certain universal truth. It is
called an art because managing requires certain skills which are personal possessions of
managers. Science provides the knowledge & art deals with the application of knowledge and
A manager to be successful in his profession must acquire the knowledge of science & the art
of applying it. Therefore management is a judicious blend of science as well as an art because
it proves the principles and the way these principles are applied is a matter of art. Science
teaches to know and art teaches to do. E.g. a person cannot become a good singer unless
he has knowledge about various ragas & he also applies his personal skill in the art of
singing. Same way it is not sufficient for manager to first know the principles but he must
also apply them in solving various managerial problems that is why, science and art are not

mutually exclusive but they are complementary to each other (like tea and biscuit, bread and
butter etc.).
The old saying that Manager are Born has been rejected in favor of Managers are Made.
It has been aptly remarked that management is the oldest of art and youngest of science. To
conclude, we can say that science is the root and art is the fruit.

Levels of Management

The term Levels of Management refers to a line of demarcation between various

managerial positions in an organization. The number of levels in management increases
when the size of the business and work force increases and vice versa. The level of
management determines a chain of command, the amount of authority & status enjoyed by
any managerial position. The levels of management can be classified in three broad
categories: 1. Top level / Administrative level
2. Middle level / Executory
3. Low level / Supervisory / Operative / First-line managers

Managers at all these levels perform different functions. The role of managers at all the three
levels is discussed below:

1. Top Level of Management

It consists of board of directors, chief executive or managing director. The top

management is the ultimate source of authority and it manages goals and policies for
an enterprise. It devotes more time on planning and coordinating functions.
The role of the top management can be summarized as follows -

a. Top management lays down the objectives and broad policies of the
b. It issues necessary instructions for preparation of department
budgets, procedures, schedules etc.
c. It prepares strategic plans & policies for the enterprise.
d. It appoints the executive for middle level i.e. departmental
e. It controls & coordinates the activities of all the departments.

It is also responsible for maintaining a contact with the outside


g. It provides guidance and direction.

h. The top management is also responsible towards the shareholders
for the performance of the enterprise.
2. Middle Level of Management

The branch managers and departmental managers constitute middle level. They are
responsible to the top management for the functioning of their department. They
devote more time to organizational and directional functions. In small organization,
there is only one layer of middle level of management but in big enterprises, there
may be senior and junior middle level management. Their role can be emphasized as a. They execute the plans of the organization in accordance with the
policies and directives of the top management.
b. They make plans for the sub-units of the organization.
c. They participate in employment & training of lower level
d. They interpret and explain policies from top level management to
lower level.
e. They are responsible for coordinating the activities within the
division or department.

It also sends important reports and other important data to top level

g. They evaluate performance of junior managers.

h. They are also responsible for inspiring lower level managers
towards better performance.
3. Lower Level of Management

Lower level is also known as supervisory / operative level of management. It consists

of supervisors, foreman, section officers, superintendent etc. According to R.C. Davis,
Supervisory management refers to those executives whose work has to be largely
with personal oversight and direction of operative employees. In other words, they
are concerned with direction and controlling function of management. Their activities
include a. Assigning of jobs and tasks to various workers.
b. They guide and instruct workers for day to day activities.
c. They are responsible for the quality as well as quantity of
d. They are also entrusted with the responsibility of maintaining good
relation in the organization.
e. They communicate workers problems, suggestions, and
recommendatory appeals etc to the higher level and higher level
goals and objectives to the workers.

They help to solve the grievances of the workers.

g. They supervise & guide the sub-ordinates.

h. They are responsible for providing training to the workers.

They arrange necessary materials, machines, tools etc for getting

the things done.


They prepare periodical reports about the performance of the


k. They ensure discipline in the enterprise.


They motivate workers.

m. They are the image builders of the enterprise because they are in
direct contact with the workers.

Management as a Discipline

Management as a discipline refers to that branch of knowledge which is connected to study of

principles & practices of basic administration. It specifies certain code of conduct to be
followed by the manager & also various methods for managing resources efficiently.

Management as a discipline specifies certain code of conduct for managers & indicates
various methods of managing an enterprise. Management is a course of study which is now
formally being taught in the institutes and universities after completing a prescribed course or
by obtaining degree or diploma in management, a person can get employment as a manager.
Any branch of knowledge that fulfils following two requirements is known as discipline:
1. There must be scholars & thinkers who communicate relevant knowledge through
research and publications.
2. The knowledge should be formally imparted by education and training programmes.
Since management satisfies both these problems, therefore it qualifies to be a discipline.
Though it is comparatively a new discipline but it is growing at a faster pace.

Management as a Process

As a process, management refers to a series of inter - related functions. It is the process by

which management creates, operates and directs purposive organization through systematic,
coordinated and co-operated human efforts, according to George R. Terry, Management is a
distinct process consisting of planning, organizing, actuating and controlling, performed to
determine and accomplish stated objective by the use of human beings and other resources.
As a process, management consists of three aspects:
1. Management is a social process - Since human factor is most important among the
other factors, therefore management is concerned with developing relationship among
people. It is the duty of management to make interaction between people - productive
and useful for obtaining organizational goals.
2. Management is an integrating process - Management undertakes the job of bringing
together human physical and financial resources so as to achieve organizational
purpose. Therefore, is an important function to bring harmony between various
3. Management is a continuous process - It is a never ending process. It is concerned
with constantly identifying the problem and solving them by taking adequate steps. It
is an on-going process.

"A system is a whole made up of parts. Each part can affect the way other parts work
and the way all parts work together will determine how well the system works. This is a
fundamental challenge to traditional management thinking. Traditionally we have learned
to manage an organization by managing its separate pieces (sales, marketing,
production, logistics, service, etc.). Managing in this way always causes sub-optimization;
parts achieve their goals at the expense of the whole. Only changing the system solves
the problem."

In essence, the systems perspective emphasizes that everything is connected to

everything else and that it's often worthwhile to model businesses and processes in
terms of flows and feedback loops. Systems thinking stresses linkages and relationships
and flows. It emphasizes that any given employee or unit or activity is part of a larger
entity and that ultimately those entities, working together, are justified by the results
they produce.
To effectively, nimbly, and proactively adapt to the demands of a rapidly changing
environment, all system components inputs, processes, outputs, and feedback must
be managed.

Key points:

Organizations are systems

Organizations are processing systems

Organizations are adaptive systems

Organization goals must be aligned with the reality of the organization's supersystem

Primary processes must be aligned to meet customer expectations and

organizational goals

Support processes must be aligned with primary process goals

Functions, jobs, or roles must be aligned to perform the required tasks of the

The human performance system (HPS) components must be aligned individually,

vertically, and horizontally

Management must do the aligning

Rummler-Brache Models

Processing System Hierarchy

Systems Thinking

Organizations must be understood and managed (systems thinking) as systems in order

to understand why an organization performs as it does, rather than as we intended:

How do the many system conditions interact to create patterns of behavior, of

which events are merely instances of those patterns of behavior.

In order to understand events and their underlying patterns of behavior, we need

to understand how the patterns of behavior result from system conditions, and
this requires systems thinking.

Systems thinking emphasizes the interactions of system conditions to produce

organizational behavior, as opposed to analysis, which means breaking things into
their constituent parts.

For any improvement intervention to be successful it must take account of interdependency; a change to one system condition is bound to be influenced by, or
have an influence upon, other system conditions.

Systems Laws

The First Law: Every system or process is perfectly designed to achieve exactly
the results it gets. So even though we may not like the results, we knowingly or
unknowingly designed the system or process to achieve those results.

The Second Law: If you put good people in a bad system or process, the system or
process will win every time.

Nine Performance Variables System Model (Rummler-Brache)

Whether an organization is concerned with customer satisfaction, quality, productivity,
cycle time or cost, the underlying issue is performance. In order to improve performance,
it is necessary to understand the variables that influence performance at the
organization, process and individual job/performer levels.
Rummler and Brache, in their book, Improving Performance: How to Manage the White
Space on the Organization Chart, introduced a matrix that identifies nine different
concerns that anyone trying to change processes in an organization must consider. The
Rummler-Brache methodology has helped everyone involved in business process change
to understand the scope of the problem, and it provides the foundation on which all of
todays comprehensive process redesign methodologies are based. (Business Process
Change, Paul Harmon)
All organizations are systems and the Rummler-Brache model describes all of the things
that a mature organization must master.
An organizations strategic and operational effectiveness is the product of three levels of
performance the organizational level, the process level, and the job/performer level. As
a result, every improvement effort must be seen through the lens of the three levels.

Three performance needs must be met at each level: goals, design, and

Failure to manage the nine performance variables is failure to manage the

business holistically.

Cross-functional processes are particularly critical to the customer satisfaction,

quality, productivity, cycle time and cost performance of any business.

Managing people should include addressing the needs of all components of the
human performance system (performance specifications, task support,
consequences, feedback, skills/knowledge, and individual capacity) in which they

At each of the three levels, there are tools that can help in documenting,
analyzing, and improving performance.

Other Rummler-Brache or Performance Design Lab models:

coming soon

Read Dr. Geary Rummler's interview with Gartner Reseach...

Superior organizational performance?

It's All About Alignment.
Of Nine Performance Variables

Needs ->




Organization Goals

-Is the strategy/direction

articulated and communicated?
-Does the strategy make sense, in
terms of external threats and
opportunities and internal
strengths and weaknesses?
-Have the required outputs and
level of performance been set and

-Are all relevant functions in
-All necessary?
-Is flow of inputs and outputs
between functions appropriate?
-Does formal organization
structure support the strategy
and enhance efficiency and
effectiveness of the system?

-Have appropriate
functional goals been
-Is relevant performance
-Are resources
appropriately allocated?
-Are interfaces between
functions aligned and



Process Goals
-Are goals for key processes
aligned with

Job Goals
-Are job outputs aligned with
process requirements, which are
aligned with

Process Design
-Is it the most effective and
efficient process for
accomplishing the process goals?

Job Design
-Are process requirements
reflected in the appropriate jobs?
-Are the job steps in a logical
-Have supportive policies and
procedures been developed?
-Is the job environment
ergonomically sound?

-Have appropriate
process sub-goals been
-Is process performance
-Are sufficient resources
allocated to each
-Are the interfaces
between process steps
being managed?

-Task Support?
-Individual Capacity?

Business Process Management (BPM)

Program or strategy?
BPM refers to how a business organizes and controls processes.
BPM is a mangement discipline focused on improving corporate performance by managing a
company's business processses.
BPM is a set of methods, tools, and technologies used to design, enact, analyze, and control
operational business processes. BPM is a process centric approach for improving
performance that combines information technologies with process and governance
methodologies. BPM is collaboration between business people and information technologists
to foster effective, agile, and transparent business processes. BPM spans people, systems,
functions, businesses, customers, suppliers, and partners. BPMS refers to systems that help
accomplish BPM.
See the Four Waves of Process Management...
See Process Maturity Assessment Tools...

Business or Enterprise Process Architecture

A business or enterprise process architecture is a written or diagrammatic high-level summary of the value chains and
business processes in the organization. A good process architecture shows how value chains and business processes
are related to each other and to the strategic goals of the organization. A process model or process diagram refers to a
single process.

BPTrends Enterprise Architecture Pyramid

In Business Process Change, A Guide for Business Managers and BPM and Six Sigma
Profesionals (2007), Paul Harmon says:
"Companies undrtake process change initiatives for a variety of reasons. Organizations that
are new to process work usually start by deciding to improve a specific business process.
More experienced companies usually have some kind of corporate business process
architecture and a BPM group assigned to consider all possible process change initiatives, to
prioritize interventions, to coordinate efforts, and to document results. Organizations that
have more sophistication usually support a number of ongoing activities that are managed at
the enterprise level. These initiatives include the maintenance of a corporate business
process architecture, the ongoing measurement and analysis of process performance, and
some kind of corporate process management. These activities are not, typically projects, but
ongoing managerial processes performed to support executive decision-making efforts and to
define specific process change opportunities.
At the same time, these organizations normally undertake a variety of specific projects to create, redesign or improve
specific business processes. These projects are usually managed by divisional or department managers. These are
process level concerns.
Allied to the projects at the process level, but at a further remove, are more specific projects undertaken to acquire
and install new software applications or to create new training courses that will actually implement changes defined
at the process level.

One of the major insights weve drawn from studying a wide variety of business process efforts during the past three
years is that it is very useful to distinguish between the various levels of concern. Projects or activities at different
levels require different participants, different methodologies, and different types of support. We illustrate these three
different levels of concern with the business process pyramid.

(Source: Harmon, BPTrends)

What is the State of Business Process Managment?

(Not much has changed in the latest 2009 survey.)
In 2006 BPTrends undertook a survey of its reads to determine what companies were doing to
support business process change. The responses were consistent with lots of other data
about why companies undertake business process projects. In bad times companies seek to
make processes more efficient to save money. In expansive times, companies seek to
redesign processes to make them more competitive, to offer new services, or to get into new
lines of business. Or they acquire companies and have to integrate the processes used at the
two different organizations. In addition, especially during expansive periods, companies look
to see if they can gain a competitive advantage by incorporating a new technology.
The fourth major reason for undertaking business process change is perhaps the most
interesting, and ultimately the most revolutionary. A growing number of leading companies
have begun to believe that a corporate-wide focus provides a superior way of managing the
company. These companies tend to be in industries that are undergoing rapid, extensive
changes. Their senior executives have concluded that they need the insights and the agility
provided by a process-oriented approach to management in order to respond quickly and
effectively. These are the organizations that are making major commitments to develop
enterprise-level business process tools and management systems to assure that they have
aligned all their business resources and functions to their value chains and can manage those
processes in something close to real time.
In the nineties, most organizations were focused on business process redesign or reengineering projects. Leading
companies focused on processes that cut across departmental or functional lines, but most companies concentrated on

redesigning processes within specific departments or functional units. At the same time, Six Sigma was popular in
manufacturing organizations for process improvement efforts. Toward the end of the nineties, standard or off-theshelf software applications (ERP, CRM) became a popular way to standardize processes and reporting systems. In the
past six years, all of these process change strategies have continued to be popular. Today, however, leading companies
are putting more emphasis on developing enterprise-wide business process architectures and corporate performance
management systems. They seek to standardize specific process throughout their divisions and subsidiary
organizations to assure that the same ERP or CRM modules can be used throughout the corporation and they seek to
understand their corporate value chains to assure regulatory compliance. At the same time, there is a major emphasis
on installing new software automation technologies usually termed Business Process Management Systems (BPMS)
to automate the day-to-day control of processes and to provide real-time performance data for senior management.

Changes In Focus at Leading Companies

(adapted from Business Process Change, A Guide for Business Managers and BPM and Six Sigma Profesionals

(Source: Harmon, BPTrends)

Some Key Ideas and Groups that are Part of the BPM Movement
(adapted from Business Process Change, A Guide for Business Managers and BPM and Six Sigma Profesionals
Most of the technologies listed continue to evolve. None of them are confined to a single tradition. For
example, Lean Six Sigma is focused on process improvement but also supports process managment and
process redesign initiatives.

(Source: Harmon, BPTrends)

(Source: Harmon, BPTrends)

Variety of Solutions
Process improvement refers to relatively minor, specific changes that one makes in an
existing business process. Every manager responsible for a process should always be
considering process improvements. In addition, on occasion, special process
improvement efforts are required to get everyone focused on improving a specific
process. Six Sigma and Lean are popular approaches to process improvement.
Process design or redesign refers to a major effort that is undertaken to significantly
improve an existing process or to create a new business process. Process redesign
consider every aspect of a process and often results in changes in the sequence in which
the process is done, in employee jobs, and in the introduction of automation. Business
Process Reengineering, the BPTrends Process Redesign methodology, and the Supply
Chain Councils SCOT methodology are all good examples of popular approaches to
process redesign.
Process automation refers to the use of computers and software applications to assist
employees or to replace employees in the performance of a business process. The use of
BPMS tools, workflow systems, or XML business process language are ways to
automate the management of processes or activities.
Adapted from BPTrends

Process Migration Strategy

Adapted from Process Renewal Group

A system is commonly defined as a group of interacting units or elements that have a

common purpose. The units or elements of a system can be cogs, wires, people,
computers, and so on. Systems are generally classified as open systems and closed
systems and they can take the form of mechanical, biological, or social systems. Open
systems refer to systems that interact with other systems or the outside environment,
whereas closed systems refer to systems having relatively little interaction with other
systems or the outside environment. For example, living organisms are considered
open systems because they take in substances from their environment such as food
and air and return other substances to their environment. Humans, for example,
inhale oxygen out of the environment and exhale carbon dioxide into the
environment. Similarly, some organizations consume raw materials in the
production of products and emit finished goods and pollution as a result. In contrast,
a watch is an example of a closed system in that it is a relatively self-contained, selfmaintaining unit that has little interacts or exchange with its environment.
All systems have boundaries, a fact that is immediately apparent in mechanical
systems such as the watch, but much less apparent in social systems such as
organizations. The boundaries of open systems, because they interact with other
systems or environments, are more flexible than those of closed systems, which are
rigid and largely impenetrable. A closed-system perspective views organizations as
relatively independent of environmental influences. The closed-system approach
conceives of the organization as a system of management, technology, personnel,
equipment, and materials, but tends to exclude competitors, suppliers, distributors,
and governmental regulators. This approach allows managers and organizational
theorists to analyze problems by examining the internal structure of a business with
little consideration of the external environment. The closed-system perspective
basically views an organization much as a thermostat; limited environmental input
outside of changes in temperature is required for effective operation. Once set,
thermostats require little maintenance in their ongoing, self-reinforcing function.
While the closed-system perspective was dominant through the 1960s, organization
scholarship and research subsequently emphasized the role of the environment. Up
through the 1960s, it was not that managers ignored the outside environment such as
other organizations, markets, government regulations and the like, but that their
strategies and other decision-making processes gave relatively little consideration to

the impact these external forces might have on the internal operations of the
Open-systems theory originated in the natural sciences and subsequently spread to
fields as diverse as computer science, ecology, engineering, management, and
psychotherapy. In contrast to closed-systems, the open-system perspective views an
organization as an entity that takes inputs from the environment, transforms them,
and releases them as outputs in tandem with reciprocal effects on the organization
itself along with the environment in which the organization operates. That is, the
organization becomes part and parcel of the environment in which it is situated.
Returning for a moment to the example of biological systems as open-systems,
billions of individual cells in the human body, themselves composed of thousands of
individual parts and processes, are essential for the viability of the larger body in
which they are a part. In turn, "macro-level" processes such as eating and breathing
make the survival of individual cells contingent on these larger processes. In much
the same way, open-systems of organizations accept that organizations are
contingent on their environments and these environments are also contingent on
As an open-systems approach spread among organizational theorists, managers
began incorporating these views into practice. Two early pioneers in this effort,
Daniel Katz and Robert Kahn, began viewing organizations as open social systems
with specialized and interdependent subsystems and processes of communication,
feedback, and management linking the subsystems. Katz and Kahn argued that the
closed-system approach fails to take into account how organizations are reciprocally
dependent on external environments. For example, environmental forces such as
customers and competitors exert considerable influence on corporations,
highlighting the essential relationship between an organization and its environment
as well as the importance of maintaining external inputs to achieve a stable
Furthermore, the open-system approach serves as a model of business activity; that
is, business as a process of transforming inputs to outputs while realizing that inputs
are taken from the external environment and outputs are placed into this same
environment. Companies use inputs such as labor, funds, equipment, and materials
to produce goods or to provide services and they design their subsystems to attain

these goals. These subsystems are thus analogous to cells in the body, the
organization itself is analogous to the body, and external market and regulatory
conditions are analogous to environmental factors such as the quality of housing,
drinking water, air and availability of nourishment.
The production subsystem, for example, focuses on converting inputs into
marketable outputs and often constitutes a primary purpose of a company. The
boundary subsystem's goal is to obtain inputs or resources, such as employees,
materials, equipment, and so forth, from the environment outside of the company,
which are necessary for the production subsystem. This subsystem also is responsible
for providing an organization with information about the environment. This adaptive
subsystem collects and processes information about a company's operations with the
goal of aiding the company's adaptation to external conditions in its environment.
Another subsystem, management, supervises and coordinates the other subsystems
to ensure that each subsystem functions efficiently. The management subsystem
must resolve conflicts, solve problems, allocate resources, and so on.
To simplify the process of evaluating environmental influences, some organizational
theorists use the term "task environment" to refer to aspects of the environment that
are immediately relevant to management decisions related to goal setting and goal
realization. The task environment includes customers, suppliers, competitors,
employees, and regulatory bodies. Furthermore, in contrast to closed-systems, the
open-system perspective does not assume that the environment is static. Instead,
change is the rule rather than the exception. Consequently, investigation of
environmental stability and propensity to change is a key task of a company, making
the activities of an organization contingent on various environmental forces. As an
open system, an organization maintains its stability through feedback, which refers
to information about outputs that a system obtains as an input from its task
environment. The feedback can be positive or negative and can lead to changes in the
way an organization transforms inputs to outputs. Here, the organization acts as a
thermostat, identified previously as an example of a relatively closed-system. The
difference between closed-systems and open-systems, then, is in the complexity of
environmental interactions. Closed-systems assume relatively little complexity; a
thermostat is a simple device dependent mainly on temperature fluctuations.
Conversely, open-system such as the human body and modern organizations are
more intricately dependent on their environments. The point is that closed-systems

versus open-systems do not represent a dichotomy, but rather a continuum along

which organizations are more open or less open to their environments. The key
defining variable governing this degree of openness is the complexity of the
environment in which the organization is situated.
Managers must take into consideration their organization's position along the openclosed continuum. The Linux computer operating system, for instance, is "opensource" and Red Hat, Inc., the corporation selling the bundled revisions-the multiple
inputs from geographically dispersed users-represents an organization that would
cease to exist if it were not for an open-systems perspective. Thus, stable
environments with low complexity are more consistent with a relatively closedsystem or mechanistic management style, while rapidly-changing environments are
more consistent with flexible, decentralized, or "organic" management styles.

A system is defined as a collection of interrelated part forming a synergistic whole that jointly
perform functions that each part by itself cannot perform. The parts of the systems, also
called components or elements, can be thing, or people, or both. Actions of the system
elements including interactions between them constitute the processes of the system. Systems
can be very simple and constitute of only things. For example, a chair is a physical system
that serves the purpose of providing the convenience for sitting. The various components of
the chair like its legs, seat, arms, and the back rest are connected to each other to to provide
necessary shape, strength, rigidity and other characteristics to the chair, which enable the
chair as a whole to serve its purpose. Systems can also be very complex like human body, a
manufacturing plant, or a business organization.
The system as a whole receives inputs from sources outside itself, processes these inputs
within the system, and transfers the outputs or results of these processes to outside itself.
Whatever exists outside the system is described as environment of the system.
System are have boundaries that separate systems from their environment. A system is
influenced by its environment and in turn may be influenced by it, but a system does not have
direct control over the process in the environment.
depending on its relationship with the environment, systems are divided in two broad
categories - open systems and closed systems. An open system interacts with its environment
while a closed system does not. In practical world there are no systems that are absolutely
closed. Systems that have relatively limited interaction wit its environment are, therefore,
considered closed systems while those with substantial interaction are considered open
For example, the R&D department of a company may have much less interaction wit people
outside the department as compared to marketing department. Therefore, we may consider
the R&D department organization as a closed system, and Marketing department organisation
as an open system.

Whether organisation is slectively open or perfectly open is defined by the permable

boundaries.Broadly speaking organisations are divided into 3 levels opreating level, coordinative level and strategic level. Examples.- organisations say Airtel, Vodafone etc allow
external forces to penetrate in to the core level(operating level) as we can talk to each
working executive and customer executives this can be considered as an example of Open
System (near perfect). Now taking example of say TATA Motors at the time of NANO project
it hardly allowed its operating department to intereract and disclose the various technicalities
related to the launch of this new car.Only the Strategic level RATAN TATA and other officials
came to interact with the external environment about the features of NANO car this means
that it only allowed external forces to penetrate uptill strategic level and this can be
considered as an example for Slective open system.
Kindly let me know your thoughts on this one.