Management systems must reflect the form, fit, and function of the organization and can range from a simple collection of "rules of thumb" to a complex and detailed administrative mechanism governing processes, quality standards, regulatory requirements, and other important matters.
It has been normal practice to design management systems based on present or existing requirements. Traditionally, this has been a prudent way to apply resources to address the real issues facing an organization. In the conventional economies of value-added manufacturing, services, or product distribution, this approach has been successful.
But for nontraditional companies, such as start-up information technology companies or reengineered government utilities where limited market opportunities or resource constraints necessitate rapid expansion or contraction, conventional management systems are inadequate. The systems needed to manage these companies must also be capable of expanding and contracting to maintain a fit with the organizations’ form and function.
Surprisingly, there has been little documented research on the proper construction of a management system that is "scaleable," or capable of expanding or contracting without removing the core, fundamental characteristics. As a result, companies (and especially quality managers) often confront these corporate changes on an ad hoc basis, which exposes them to additional business risks—risks that can result in diminished quality, decreased efficiency, lower profitability, and a higher likelihood of product failure resulting in penalties and reduced market performance. To mitigate these risks, those of us involved in designing and implementing management systems should consider how we would respond in the following situations:
- Our workforce was temporarily reduced by 30 to 40 percent.
- Our product line doubled.
- We entered a new industry or market.
- We acquired or merged with an organization and doubled in size.
- Our order volume increased tenfold.
- The organization was segmented into independent subsidiaries.
- Our operating capital was reduced by 70 percent.
These are realistic questions, some of which local high-tech industries are addressing. In any management system, there should always be "gates" or methods to alter processes and patterns in response to extreme circumstances. It is not prudent to continue operating on the same assumptions if your organization has experienced rapid changes in its size, product portfolio, personnel, location, capital availability, or market presence. As the governing assumptions change, the management system should change accordingly.
A valuable management system (e.g., ISO 9001, Occupational Health and Safety, or TQM) reflects the form, fit, and function of your organization. Is it time for your organization to start considering the scaleability of its management system?