Build a management system you love

Do you love your management system?

Do you look forward to seeing it again? Does the relationship improve after a few days apart?

No? That does not surprise me. You are missing out on something. We all deserve to see how everything connects with everything else. To see how information flows freely, how tasks dance between checklists, and how resistance gradually disappears.

In a bad relationship, the management system is the place where good ideas go to die. You feel beaten down and cannot bring yourself to suggest anything. — He just says no anyway. You just want to lie on the sofa and preferably not do anything new.

In a good relationship, the management system introduces structure where it is needed. It protects creativity where that is needed. It creates safe spaces where you are not allowed to say no, or but, or never. Where control comes afterwards and idea creation comes first.

And then there is the value chain. The dear value chain. The value chain is the heart of the business. What we are actually doing. What we actually care about and are here to deliver. The value chain is your guiding star, the thing that keeps you on course through choppy waters and difficult terrain.

The value chain is what makes you understand why you should bother with procurement processes, budget processes, and management reviews. What allows you to create value for customers, even when the meeting is about whether we actually meet all the requirements in the machinery regulations. What turns meetings about employee equipment into a meeting about customer satisfaction.

The quality profession has had control of the management system for too long. The management system is an important tool for you as a managing director to motivate and rally the troops. It is your business — it is not something you can delegate to others. It is the organisation's digital twin.

ISO certification is not the goal; an efficient and productive working day is the goal.

Building a management system you love means building it through four to five distinct parts. It is not a purchase or a task to delegate. It is your responsibility.

What actually is a management system?

Many Norwegian definitions of a management system come from a law or a regulation. One example is from the Regulations on Management and Quality Improvement in the Health and Care Sector:

We argue that too many management systems have taken heavy inspiration from this and focus on describing how and whether something is done in compliance with requirements and legislation. This is what we are trying to shift towards something more proactive, positive, and value-creating.

Sintef's summary of what their management system should be is somewhat more in our spirit:

It can also be useful to define what a management system is not. It is not necessarily a software product. It should not be a bible that employees can hit each other over the head with. It should not be a place where you get the answer to everything about the company.

That said, we proceed on the basis that a management system is a collection of policies, processes, and requirements as proposed by Sintef. Processes are, as we know, a collection of tasks put into a system. These must also include a description of the roles that carry out the tasks. Processes also come in different variants as we have already discussed. In the next sections, the different parts of a management system are described in detail.

It is also our claim that the result of these policies, requirements, processes, and roles must be part of the system. That we manage to carry out tasks safely and efficiently, and that they help us achieve our goals and create good results. A discussion of these results therefore follows after our description of the components.

But it has become dry enough for now. We are, after all, going to build a management system we love, not just one we like or accept!

Management processes

The simplest place to start is management processes. They usually come first and are typically considered the ones who call the shots in a company. This is where money is distributed, areas of responsibility defined, and strategy set. Management reviews are here, and so are the decision-making processes.

But in a management system you love, these do not come first. Because they should no longer control everything. It is the value chain that controls things. The management processes must follow and create a governance structure that lets the value chain flourish.

If you sell a product you can iterate on quickly — without lengthy testing — you need to design fast and effective decision-making processes. If quality assurance is paramount and you rarely or never make changes, it may be right to have slow decision-making processes. Processes that require the organisation to spend more time on documentation. You can apply the same considerations to the market situation you are in, the regulatory framework you are subject to, and the life stage the company is at.

If the market changes slowly, it takes time to make course corrections, and investors demand a high degree of predictability, then perhaps the budget processes should span several years with only annual revisions. If you are launching into a market that does not yet exist and everything is in flux, you might want to go for a no-budget model. Which school you choose depends entirely on your value chain, your market, and your company. Because when you are building a management system, the processes do not need to be comprehensive, heavy, and complicated. They can be lightweight and tailored, and still meet all requirements and regulations.

And speaking of laws and rules — those things have their own section in this system, which we will describe shortly. Relevant laws and regulations, statutory instruments, policies, and other overarching documents belong in that part of the management system. How you meet them usually comes in the value chain, and that is when you turn them into competitive advantages! Do not let that opportunity slip through your fingers.

Internal audit also belongs here among the management processes, as does the management review. What has previously been a chore — a mandatory task that someone else nags you about doing — should now become something you look forward to. An opportunity for reflection and improvement, an opportunity for growth. Right next to it you might find project portfolio management and capital strategy governance. That is your choice.

If your value chain can involve a risk of harm to life, health, and the environment, you will usually need to bring the internal HSE processes in here as well. These processes are then so prescriptive and tailored to your business that they cannot be placed in the support processes, which often should not be specially adapted for your business.

Support processes

Where management processes are almost always considered the most important, support processes enter as the underdogs. It is our claim that support processes should be humble door-openers. They should hold the door open for those who want to get through and get something done. At the same time, they can act as careful control functions. They cannot let just anyone in, mind you, but they should decline with an explanatory smile. — Take a lap around zero and come back after a coffee.

Among the support processes you also find all the hygiene factors in a company. Everything that simply must be in place but does not qualify as a competitive advantage. Everything everyone expects to work and few care about until it does not. Payroll processing, for example. Or office cleaning.

Support processes are the ones that are often the same from company to company, from organisation to organisation. Here you should pick and choose between different frameworks that suit you best. ITIL for IT operations. Prince2 for project delivery. NO GAAP or IFRS for accounting. This is not where you spend the entire organisation's time creating processes. You can usefully buy your way out.

This is, however, where you need to watch out for too many petty fiefdoms and too many control functions. This is often where checklists start to multiply. It is tempting to describe even more details, to add a few extra control steps, and to just have a very simple little checklist. This is where functions start to shift from being door-openers to becoming bouncers. From serving the value chain to starting to control it.

You must not let this happen. It is almost as important as letting the value chain steer the design of the management processes. One trick might actually be to not describe certain processes at all. Legal can simply stand as a box, without content. Describing all the facility management processes for a company with just one office rarely adds value and the steps in them are usually only followed by a very small number of people anyway. They can simply be placed among the support processes as an undescribed box, safely positioned with its role made visible — without letting it take over the governance of things it should not govern.

Accounting, on the other hand, might well deserve to be elaborated on a bit. There are often multiple parties across several different departments involved. One department might post an invoice without understanding that the analysis department uses the account string to build product accounts. In such cases, a process diagram can be enormously useful and yield great returns. The same applies to personnel-related processes, where employees often want to understand how the performance review connects to the employee survey. Why the company chooses to run regular one-to-ones and what actually happens with suggestions sent to the suggestion box.

In this part of the management system, HSE and quality processes often appear, and procurement processes usually do too. Everything comes together here to make the value chain as effective and well-functioning as possible. To enable what we are actually doing, what creates value, and what fulfils the company's purpose. Our beloved value chain!

The value chain

And then we finally reach the value chain — your gold. What you are actually doing. What creates value for your target audience. You do not copy this from others. This is what makes you unique, this is what produces what you are going to sell, and this is what governs your customer dialogue.

Here you must design with a gentle hand. Some steps require a light touch, an invisible hand, and very limited structure. Creativity should flourish and freedom should be ample.

Other steps require complex structures to ensure quality, customer satisfaction, and your good name and reputation.

Some steps need to systematise curiosity and humility to ensure the customer is heard in a busy working day — while others need to set limits so that you actually make money.

If there is one place you should involve everyone, it is here. If there is one step you should iterate many times to reach version 0.9, it is this one.

This is where you find the love.

Most value chains begin by capturing or generating an idea, a need, or an opportunity. Someone has to imagine something they either want themselves — or believe others will want. Defining the right entry point will often be liberating for someone who has started a business. Not because you will come up with something revolutionary, but because something that has been a bit fuzzy becomes crystal clear. For most people, this area will be the beginning of a funnel — an area with little structure and a lot of freedom.

What you do need structure around is data capture. This is where you lay the foundation for becoming a data-driven business. This is where things need to be created in an IT system — CRM or ERP, idea capture or a ticketing system. You just need to make sure it gets registered and followed up somewhere. For every step that passes, it becomes increasingly difficult to make that first registration, and there will be fewer and fewer registrations.

The next step will often vary quite a bit between companies. Some will go straight to creating something, while others will go through some assessments and prioritisations. The common thread is probably that this is roughly where companies feel they go from words to action. This is when things start to happen.

In well-thought-out value chains, it is often around here that you start thinking about operations. How can this be maintained and repaired? How should it be documented and signed off? How should customer service be trained and how should customers get help? You can often draw on support processes here. In the value chain, we keep the focus on what ultimately creates value.

As time goes on, you start to approach something that can be sold. For early-stage companies, this should usually come earlier than the founder is comfortable with. For quarterly-managed companies, it is often the opposite. What is right for you is something only you know. Either way, you now enter the sales process. Sales, after all, is just a process too. A set of predefined activities that will lead to a result — a yes or a no, a maybe or a call me in a month. Either way, it is absolutely necessary to build this process so that it fits your product, your customers, and your market. Here too you must remember to build the process so that it forces data support from the very first moment. This is where you lay the foundation for a magical CRM that is not just something salespeople see as a chore to fill in after the fact.

Afterwards comes the process that is most often the hardest to map out. Customer service. After-sales. It is perhaps the most important process that is the easiest to put off — but it is the one that keeps you alive for many many years. It is the one that secures your Net Retained Revenue and the one that saves you from unexpected costs.

It is this process that constantly feeds the first step with new perspectives. It is the one that ensures customers are satisfied and that the product continues to develop. That the early creative processes have something to work with. Something to create value from.

Now you have described your gold. Your machinery. The cogs that inexorably grind your ideas into success. The data that lets you understand what is happening.

But someone has to operate this machinery.

Roles and such

A process is a set of tasks put into a system. A controlled and structured chain reaction. Some of it happens entirely without manual intervention, but for the majority of tasks, people need to know what they should do and who does the other steps. This is what you have roles for.

The tasks described in the management system are carried out by roles — and it is the employees who fill these roles. This is the mental model that has proven to be the fastest way to explain this concept. One employee can have many roles, depending on their skills and capacity. It is rare for roles to appear in job advertisements, since a position is usually a combination of roles.

Positions report to managers and are a structure that cuts across the value chain. Roles report to process owners and follow the value chain. When a task is described in a process and follows the process's built-in prioritisation mechanisms, the employee filling the role should not need to ask their manager for permission to carry out the task.

This is a central point in building a management system you love. It is a way to dismantle petty fiefdoms in your organisation, a way to ensure value-driven prioritisation and to avoid power struggles between department heads.

It is essential not to make this too complicated too early — but it is necessary to understand and respect the principle. Somewhere between fifteen and twenty-five employees, this discussion forces itself to the surface inevitably.

Policies and requirements

The last component is policies and requirements.

Policies are the constitutional laws of the company. Who we are, how we behave, and so on — at the very highest level. As always with constitutional laws, these set the tone for how the rest of the management system looks and behaves. How you work with HSE is one example; another is how you approach data privacy. These documents are usually only three or four paragraphs long and are signed by the highest authority in the company. They then delegate authority and mandate to the rest of the management system to set the details.

For a larger company with greater complexity and several people working on one of the details of the management system, this is important. It gives you a way to ensure that everything hangs reasonably together and a governing document to fall back on if you are unsure what to create, or if two adjacent areas are in conflict with each other.

For younger, less complex companies, it is my view that the policy layer is completely unnecessary and entirely superfluous. Some will argue that without it, the entire management system loses its legitimacy and does not hang together logically. My response to that is that this is a logical gap you simply have to accept. Skip all the policies and engage wholeheartedly in designing the processes.

Requirements are a little harder to skip. They must be included for everyone, always. But not everyone needs to do as much with them. Larger international companies often include rules from headquarters here. Others choose to include ISO standards or other important industry standards. Everyone must include legal requirements. For the youngest companies, my view is again to keep it simple. Include the legal requirements that are specific to your industry and your business. The rest will be reflected in the management system anyway.

To build a management system you love, you need to be careful not to let this part expand. Far too often it is this part that becomes the driving force — entirely without necessity. When that happens, the management system shifts from being value-creating and positive, to being controlling red tape and a cost item. From being a system you love to one you want to break up with.

Relationships

Up until now we have described the cogs in your machine and the people who operate it. We have even described the maintenance routines (the management review, among other things), how you steer the machine, and what needs to be in place to make it function.

What we have not described is the oil that lubricates the machinery. The relationships between your people, the relationship with customers, suppliers, and authorities.

We have described who should call whom when something goes wrong. Who should raise an issue with whom and who escalates when. This is important and right to include. But it is not going to work without the relationships being in place. The management system is not an excuse for not talking to the customer. HR processes are not an excuse for not speaking with employees outside the planned one-to-ones and performance reviews. Procurement processes must not stop you from chatting with suppliers at trade fairs, gatherings, and client evenings.

If anything, a well-functioning management system is a facilitator for spending more time on relationships! Spending more time talking together and finding new opportunities, new thoughts, and new ideas. Building bonds that make it harder to part ways when times get tough, when delivery is under pressure and you most want to blame each other.

A well-functioning management system that you love becomes a positive spiral that both ensures the relationship runs smoothly and makes it possible to build closer bonds — which in turn strengthens the relationship.

In practice

But how do we actually do this in practice? I do not have one answer to that — because finding a practical solution is part of the journey you have to go through. It has to fit you and your people. It has to fit your budget and your capabilities. It has to fit your working day.

Some industries have industry solutions for most things, others prefer Visio drawings. The large ones often use a full-scale Enterprise Architecture tool while the small ones have decided that is the last thing they will have.

The most common mistake we see is that it is made too complicated too early, or ignored for too long. We have advised several companies at several different stages and have gathered some experience.

If companies have not come up with something on their own during the process of selling in the concept, our recommendation is to start with Visio drawings — and to use BPMN shapes and save the files in BPMN format. Business Process Modelling Notation is a universal format designed exactly for this purpose and can be reused in several other tools. That way there is a good chance you can reuse the drawings directly in whichever tool you end up using. It also lays the groundwork for automating the processes one day in the future through standard RPA tools.

Our advice for the very earliest stage is to have just one drawing at the top level. Creating that drawing makes it infinitely easier to explain your business to others. It makes it easier for the founder to understand what is most important to focus on earliest and who influences what value is created in the company. Do not spend time on policies or roles. Those come later. Figure out which legal requirements apply to you, draw your value chain, and leave it at that. Print out the drawing and hang it on the wall. That is all you need.

When the company has three to ten employees, you should spend a bit more time on roles and management processes so that employees do not get in each other's way. It can also be useful to map out the decision-making process to prevent the board from becoming the actual leadership team. The support processes are usually something the managing director and one other person handle in practice anyway, and how you handle them is constantly changing.

Sometime not long after ten employees, it is starting to be time to take this a bit more seriously. At that point you are no longer only hiring generalists who are interested in everything the company does. You may no longer have time to personally onboard all employees as thoroughly as before and will need material they can use for self-study. This is when you start drawing the processes in a little more detail than before. With a somewhat more precise division of roles than before. Perhaps this is when the first policies appear.

Our advice for those who have come furthest is usually to model the entire business in an enterprise architecture tool or an RPA tool such as Camunda. If you have done it right earlier, you can reuse your drawings in these.

Value

But what now? I have built a management system I love — what do I get out of this investment?

It is a little tempting to say that the journey is the destination. And to a certain extent it is. Simply by creating a constructive and value-creating management system, you will see positive ripple effects for the company. More people will understand the big picture. More people will see their role in the larger context. More people will see how what they do affects others, for better and for worse. More people will understand how decisions are made and why a particular decision is taken.

And that, really, is it. The fact that your employees understand more, communicate better, and collaborate more effectively is the entire gain. The consequences of this, in turn, are many, measurable, and highly profitable.

When more people understand the big picture, their role, and how they affect others, inefficiencies in the company will largely disappear on their own. Employees almost always want to do a good job, and when they understand how that job fits into a system, they will be able to do it better. They can fine-tune their efforts so that they bring out the best in others. They avoid making mistakes because they understand what is expected. They find motivation in tedious tasks because they know they are contributing to creating value. I dare say you will also get a better working environment from this.

The inefficiencies that do not just disappear will get enough attention that they will be more easily handled by the improvement processes built into your system. But here the relationships must come in. The culture. The desire to speak up. The desire to be spoken to. This is where structure and culture rub up against each other and can create magic in good organisations and become a destructive force in bad ones.

Here and in the decision-making process. Because if you have now managed to build a decision-making process that is appropriate for your value chain and you have employees who come with well-founded proposals for decisions. If you and your people understand how one part of the organisation affects another — then you have a far better basis for decision-making than you would otherwise have. Then you only have yourself to blame when you make bad decisions.

And there is a lot of strength in that. Not being able to blame anyone but yourself. Not being able to complain that the conditions were not in place, that you were not set up for success. Taking ownership and responsibility. That shapes culture and breaks down barriers. That is laying the groundwork to win!

And if the data follows the value chain, you also get fast feedback you can trust. Fast feedback that gives you the quickest possible signal as to whether the decision has had the effect you wanted.

At the same time, we must not forget what we discussed at the beginning of this text. We need to do all of this in a safe way. Our claim is that unsafe processes are picked up in the same way as inefficient processes — by looking at them from an overarching perspective, by understanding what happens before and after you, and by having a good and effective way of raising improvements. Because we must not forget that in our requirements there are also requirements for health, environment, and safety. And all processes must be built in a way that meets those requirements.

Conclusion

We have now been through all the components of the system. We have looked at the processes that describe how things are done, the policies that are your constitutional laws, and the requirements that all your processes must meet. We have discussed how to oil this machinery, how to build it, and what value you get out of it.

The most important thing we hope you remember is this:

Once you have thought them through, you can put them into a system. You and your employees will see more clearly what the goal is and how to achieve it. You will more easily avoid doing illegal things and run the business a little more safely.