TECHNOLOGY TECHNOLOGY MANAGEMENT 8: MANAGEMENT 8: MANAGEMENT CONCEPTS 4MANAGEMENT CONCEPTS 4A Model of the EnterpriseA Model of the Enterprise

CP BeukmanCP Beukman

Engineering Management ProgrammeEngineering Management Programme

University of CanterburyUniversity of Canterbury

Issue 1.0 Feb 1999Issue 1.0 Feb 1999

Technology definedTechnology defined

The complex of knowledge and skills The complex of knowledge and skills that people may employ to create, that people may employ to create, use, and maintain items of utilityuse, and maintain items of utility

Note:Note:• createcreate• useuse• maintainmaintain

CORE COMPETENCE

&ABILITIES

CREATES

PRODUCTS AND

SERVICES

WHICH THE MARKET BUYS AND PAYS FOR

SELECTIVEFLOW

TECHNOLOGY:SKILL, KNOWLEDGE

(KNOW-HOW)

SELECTIVE FLOW INNOVATION

THEENTERPRISE

ScopeScope

What is an enterprise?What is an enterprise?

What does it do?What does it do?

How does it work?How does it work?

Purpose of an EnterprisePurpose of an Enterprise

The purpose of an enterprise is to The purpose of an enterprise is to help its stakeholders pursue the help its stakeholders pursue the enterprise’s mission.enterprise’s mission.

Vehicle analogyVehicle analogy

VehicleVehicle

navigationnavigation

guidanceguidance

controlcontrol

EnterpriseEnterprise

strategic planningstrategic planning

operational operational managementmanagement

engineering/ engineering/ administrationadministration

Vehicle analogy cont...Vehicle analogy cont...

All enterprises would be better if they All enterprises would be better if they viewed themselves not as institutions viewed themselves not as institutions but as vehicles for accomplishing but as vehicles for accomplishing missions.missions.

In this way, the design of the vehicle or In this way, the design of the vehicle or enterprise will be determined by its enterprise will be determined by its mission.mission.

The preservation of the institution, per The preservation of the institution, per se, will no longer be an overriding goal.se, will no longer be an overriding goal.

OPERATIONALMANAGEMENT(Guidance)

A MODEL OF THE ENTERPRISE

ENGINEERING/ADMINISTRATION(Control)

STRATEGICPLANNING(Navigation)

PATH(S)

STATE(S)

ROUTE(S)

DESTINATION(S)

PATH(S)FEEDBACK

Destinations and MissionsDestinations and Missions

Destinations are usually chosen Destinations are usually chosen before embarking on tripsbefore embarking on trips

The enterprise’s mission is where it The enterprise’s mission is where it is headedis headed• Who are the enterprise’s customers?Who are the enterprise’s customers?• Where they are, what market sectors?Where they are, what market sectors?• What benefits they are providedWhat benefits they are provided• How these benefits are providedHow these benefits are provided

Destinations and Missions Destinations and Missions cont…cont…

Very general and vague mission Very general and vague mission statements are of no value.statements are of no value.

A chosen mission statement can be a A chosen mission statement can be a good choice or a poor choice, but it good choice or a poor choice, but it cannot be right or wrong.cannot be right or wrong.

Choosing a mission is a matter of Choosing a mission is a matter of simply deciding what you want and simply deciding what you want and what benefits you want to provide.what benefits you want to provide.

Destinations and Missions Destinations and Missions cont…cont…

The question then becomes one of The question then becomes one of deciding whether or or not you can deciding whether or or not you can provide these benefits in a manner provide these benefits in a manner that will be worth your while.that will be worth your while.

This requires development of This requires development of strategies for pursuing the chosen strategies for pursuing the chosen missionmission

Strategic PlanningStrategic Planning

Strategic planning is the process of Strategic planning is the process of translating destinations into routes -translating destinations into routes -

Translate the enterprise’s mission into Translate the enterprise’s mission into goals, strategies and strategic plans.goals, strategies and strategic plans.

Technology-based enterprises should (as Technology-based enterprises should (as will be indicated) express goals in terms will be indicated) express goals in terms of core product technologies and product of core product technologies and product families.families.

STRATEGIC PLANNING (ANNUALLY)

INPUT* Mission

OUTPUT* Goals* Strategies* Strategic Plans

FORCES* Trends* Events

FEEDBACK* Enterprise trends (sales, profit, staff)* Market trends (share, penetration, size)* Technology trends (position, adoption)* Returns (ROA, ROE, ROS)

Trends and eventsTrends and events

An important part of strategic planning An important part of strategic planning involves assessing the implications of involves assessing the implications of trends and events.trends and events.• Market penetration is a critical indication for Market penetration is a critical indication for

startup ventures and for new directionsstartup ventures and for new directions• Market size reflects the number of Market size reflects the number of

opportunities to sell a product or systemopportunities to sell a product or system• Technology trends include both the Technology trends include both the

enterprise’s position in key technologies and enterprise’s position in key technologies and the market’s adoption of those technologiesthe market’s adoption of those technologies

Trends and events cont...Trends and events cont...

• Sales and profit trendsSales and profit trends• Staff size or numberStaff size or number

FeedbackFeedback

Feedback provides measures to assess Feedback provides measures to assess the well-being of the enterprise from a the well-being of the enterprise from a strategic point of view.strategic point of view.• Return on Assets ROAReturn on Assets ROA• Return on Equity ROEReturn on Equity ROE• Return on Sales ROSReturn on Sales ROS

• Year to year or compare with industry Year to year or compare with industry averageaverage

Operational ManagementOperational Management

Operational management is a process Operational management is a process of guiding the enterprise to translate of guiding the enterprise to translate planned routes to actual pathsplanned routes to actual paths

Translate multi-year strategic plans (ie Translate multi-year strategic plans (ie intended routes) into objectives, intended routes) into objectives, tactics and tactical plans for the tactics and tactical plans for the coming fiscal year.coming fiscal year.

Commonly known as Business PlanningCommonly known as Business Planning

OPERATIONAL MANAGEMENT(QUARTERLY)

INPUT* Strategic plan

OUTPUT* Objectives* Tactics* Tactical Plans

FORCES* Opportunities* Diversions

FEEDBACK* Products/services (sold, delivered, invoiced)* Bookings/Billings/Receivables* Sales, Cash Flow* Technology Developed* Asset Deployment

Beware!Beware!

The most talented people are often The most talented people are often allocated to fighting forest fires allocated to fighting forest fires rather than planting trees.rather than planting trees.

It is difficult to think strategically It is difficult to think strategically and tactically at the same time.and tactically at the same time.

Engineering/Engineering/AdministrationAdministration

The process of translating paths to The process of translating paths to sequences of states.sequences of states.

Involves translating tactical Involves translating tactical (business) plans into schedules (business) plans into schedules and budgets for these plans.and budgets for these plans.

Administration is meant to include Administration is meant to include all nontechnical aspects of all nontechnical aspects of technology-based enterprisestechnology-based enterprises

ENGINEERING/ADMINISTRATION(MONTHLY)

INPUT* Tactical Plans

OUTPUT* Schedules* Budgets* Project/Production Plans

FORCES* Demands* Problems

FEEDBACK* Progress relative to schedules* Milestones Achieved* Expenditures relative to budgets* Marketing/Sales contacts* Quotes/Proposals submitted* Capacity utilization

FeedforwardFeedforward

MissionMission Strategic PlanStrategic Plan Tactical plansTactical plans Project/production plansProject/production plans

The feedforward elements drive the The feedforward elements drive the enterprise modelenterprise model

FeedbackFeedback

Sales, profit, ROI, ROESales, profit, ROI, ROE Milestones achievedMilestones achieved Capacity utilization, etc.Capacity utilization, etc.

These measures are used to These measures are used to determine whether the enterprise determine whether the enterprise is on course.is on course.

Think about this….Think about this….

Sales and profits are not goals, Sales and profits are not goals, they are they are resultsresults that are indicative that are indicative of achieving or not achieving of achieving or not achieving goals.goals.

The goals of an enterprise should The goals of an enterprise should be to provide benefits to its be to provide benefits to its stakeholders.stakeholders.

Think about this…. Cont..Think about this…. Cont..

Keep the horse before the cart -Keep the horse before the cart -

• First establish the enterprise’s missionFirst establish the enterprise’s mission• Develop a strategic plan to pursue this Develop a strategic plan to pursue this

missionmission• Based on the strategic plan, develop tactical Based on the strategic plan, develop tactical

plans.plans.• The likely consequences of these plans are The likely consequences of these plans are

then projected in terms of any of the then projected in terms of any of the feedback measures.feedback measures.

Think about this…. Cont..Think about this…. Cont..

Ask the question then:Ask the question then:

• Are the consequences of our planning Are the consequences of our planning acceptable?acceptable?

• If not, plans are revisited.If not, plans are revisited.• Modifications are made until the Modifications are made until the

projected consequences are projected consequences are acceptable.acceptable.

Strategic goals - in closingStrategic goals - in closing

Goals are set in terms of what is doneGoals are set in terms of what is done• ie. What product to which customer?ie. What product to which customer?• Ie what new marketIe what new market

Plans are developed to achieve these goalsPlans are developed to achieve these goals

Avoid arbitrary goals that solely address Avoid arbitrary goals that solely address feedback elements feedback elements • ie increase sales by x% or profits by y%ie increase sales by x% or profits by y%

OPERATIONALMANAGEMENT(Guidance)

A MODEL OF THE ENTERPRISE

ENGINEERING/ADMINISTRATION(Control)

STRATEGICPLANNING(Navigation)

PATH(S)

STATE(S)

ROUTE(S)

DESTINATION(S)

PATH(S)FEEDBACK