What Management Systems Are Required? Building Infrastructure for Strategic Execution
The Fifth Strategic Question
In Playing to Win, A.G. Lafley and Roger L. Martin identify "What management systems are required?" as the fifth and final critical question in strategic planning. This question addresses the organizational infrastructure, processes, and systems needed to support and execute the strategic choices.
Systems as Strategic Enablers
According to Lafley and Martin, even the best strategy will fail without the right management systems to support it. Management systems include the processes, structures, metrics, and culture that enable organizations to execute their strategies effectively.
Types of Management Systems
1. Planning and Review Systems
Systems for setting goals, tracking progress, and reviewing performance. These include annual planning processes, quarterly business reviews, and performance dashboards.
2. Resource Allocation Systems
Processes for allocating budget, people, and other resources to strategic priorities. This ensures that resources are aligned with strategic choices.
3. Talent Management Systems
Systems for recruiting, developing, and retaining the talent needed to execute the strategy. This includes performance management, career development, and compensation systems.
4. Information Systems
Systems for collecting, analyzing, and sharing information needed for decision-making. This includes data analytics, reporting, and communication systems.
5. Innovation Systems
Processes for generating, evaluating, and implementing new ideas. This includes R&D processes, innovation pipelines, and experimentation frameworks.
Examples from Playing to Win
P&G's Innovation System
P&G developed a systematic approach to innovation that included:
- Connect and Develop: A system for sourcing innovation from external partners
- Stage-Gate Process: A structured process for evaluating and developing new products
- Innovation Metrics: Metrics to track innovation pipeline and success rates
Strategic Review Process
P&G implemented regular strategic review processes where business units presented their strategic choices using the five-question framework. This created accountability and ensured strategic alignment.
Application in Product Development
For Product Teams
Product teams need management systems for:
- Product Planning: Roadmap planning and prioritization processes
- User Research: Systems for collecting and analyzing user feedback
- Metrics and Analytics: Systems for tracking product performance
- Cross-Functional Collaboration: Processes for working with engineering, design, and business teams
For Engineering Teams
Engineering teams require management systems for:
- Development Processes: Agile methodologies, sprint planning, and retrospectives
- Quality Assurance: Testing processes and quality metrics
- DevOps: CI/CD pipelines and deployment processes
- Technical Debt Management: Processes for tracking and addressing technical debt
- Knowledge Sharing: Systems for documentation and knowledge transfer
Key Management System Components
1. Clear Processes
Well-defined processes that guide how work gets done. These processes should be documented, understood, and consistently applied.
2. Metrics and KPIs
Key performance indicators that measure progress toward strategic goals. These metrics should align with the winning strategy and be regularly reviewed.
3. Decision-Making Authority
Clear decision-making structures that enable timely and effective decisions. This includes defining who has authority to make which decisions.
4. Communication Systems
Systems for sharing information, aligning teams, and ensuring everyone understands the strategy and their role in executing it.
5. Learning and Adaptation
Systems for learning from experience, adapting strategies, and continuously improving. This includes retrospectives, post-mortems, and feedback loops.
Building Effective Management Systems
1. Align Systems with Strategy
Ensure that management systems support the strategic choices you've made. Systems should reinforce, not undermine, strategic priorities.
2. Keep Systems Simple
Avoid over-engineering management systems. Simple, effective systems are better than complex ones that are difficult to use.
3. Measure What Matters
Focus metrics on what matters for winning, not just what's easy to measure. Avoid metrics that drive the wrong behaviors.
4. Continuously Improve
Regularly review and improve management systems. What worked yesterday may not work tomorrow as strategy and context evolve.
Common Mistakes
- Misaligned Systems: Management systems that don't support strategic choices
- Over-Complexity: Systems that are too complex to use effectively
- Wrong Metrics: Measuring things that don't matter for winning
- Lack of Systems: Failing to build systems to support strategy execution
Best Practices
- Explicitly design management systems to support strategic choices
- Keep systems simple and practical
- Align metrics with strategic goals
- Ensure systems enable, not hinder, execution
- Regularly review and improve systems
- Involve teams in system design and improvement
Conclusion
The question "What management systems are required?" ensures that organizations have the infrastructure needed to execute their strategies. As Lafley and Martin emphasize in Playing to Win, strategy without supporting systems is just a plan. By explicitly designing and implementing management systems that support strategic choices, organizations can ensure effective strategy execution and continuous improvement.
Reference
Lafley, A.G., & Martin, R.L. (2013). Playing to Win: How Strategy Really Works. Harvard Business Review Press.