Consequently, these organizations have different identities, rationality criteria, and performance measures with regard to gauging and evaluating appropriate, meaningful, legitimate, reasonable, and desirable action (Schedler & Rüegg-Stürm, 2014).
2.6 Organizational Value Creation as Management Focus
Every organizational value creation first needs to “settle down” (i.e., find its place) in a complex world, in order to occur with a certain self-evidence. Changes in an organization’s environment and new opportunities mean that its value creation also needs to be constantly scrutinized, reflected on, and further developed. Precisely this is the responsibility of management. Accordingly, the SGMM defines management as a reflective design practice.
This demand – to reflectively design organizational value creation – must include management itself and is crucial for two reasons: Not only is management becoming more important from a societal viewpoint, but also ever more demanding and controversial. Thus, organizations and scholarship need to develop a differentiated understanding of what constitutes effective and responsible management.
The SGMM addresses this pressing need by describing the multifaceted nature of management and its manifold prerequisites both linguistically and visually. Our aim is to enable managers to carefully reflect on their own management practice.
3 The St. Gallen Management Model (SGMM)
3.1 What are Models for?
Models are created if interrelations are either not obvious or very complex, and if no robust understanding of a subject can be taken for granted, but instead calls for explicit collaborative reflection and orientation. Models serve to better understand complex interconnections and to simulate future possibilities. They support anticipating or reconstructing possible developments through purposeful abstraction and simplification, and thus help strengthen our imagination. [28]
For instance, terrain models help gauge a new highway’s acoustic and traffic impacts prior to construction. Architectural models serve to assess a building’s aesthetic and functional qualities in advance. The same applies to aircraft models. Formal econometric models help assess the impact of economic policy measures before implementation. Chemical and physical models are used to estimate the functionality and dynamics of novel substances before production and usage.
Thus, models help collaboratively develop a better understanding of complex interrelations. At the same time, they involve simplification and abstraction so as to clarify important relationships and dependencies. The SGMM also needs to be understood in this sense. It represents a frame of reference that includes helpful descriptive categories, a “Leerstellengerüst für Sinnvolles” (Ulrich & Krieg, 1972). The SGMM aims to open up the interplay of management practice and organizational value creation for a dynamic environment to close scrutiny, be it in management practice (by managers) or in teaching (by teachers and students).
3.2 What does the SGMM achieve?
The SGMM does not represent an idealized corporate reality. It endeavors, instead, to strengthen the collective imagination of those facing management challenges. We intend the SGMM to help actors jointly recognize new impact dynamics and possibilities, by enabling careful reflection and by anticipating cause-and-effect relations hard to fathom. Thus, the SGMM contributes to focusing attention on how management becomes effective. It does so through conscious selection and simplification. In this sense, the SGMM cannot be “implemented.” Rather, it needs to be understood as a perspective and as a way of thinking that helps organizations shape and develop themselves.
We also see the SGMM as a language that facilitates understanding and (collaborative) reflection. As such, it helps to understand the complex nature of management and to practice it responsibly – both in general and in very specific situations.
The SGMM describes fundamental aspects of management. It spells out perspectives on management in context and provides corresponding visual illustrations. It enables actors to carefully consider their experiences of management practice. This makes the SGMM one of the few management models to explicitly subject management as such to reflection. The SGMM understands such reflection as an essential prerequisite for effectively and responsibly designing organizational value creation. [29]
Thus, the SGMM has two key functions: description and reflection / design. We intend the SGMM to enable critically and constructively reflecting on and advancing management practice. Our aim is that the model will as such effectively and responsibly expand not only an organization’s entrepreneurial repertoire of possibilities for action and development but also the management practice responsible for creating those possibilities.
3.3 Overview of the SGMM
The SGMM holds that the key point of reference for management is to design and advance organizational value creation. Value creation, so the SGMM, occurs through an organization’s interaction (co-evolution) with its environment – including avoiding unwanted side effects (e.g., stress or environmental burdens). Depending on its history, environmental embeddedness and value creation, an organization requires a very specific management practice to design and advance its organizational value creation.
The SGMM distinguishes two perspectives on organizational value creation: a task perspective and a practice perspective. This distinction pertains to the historical development of business administration, i.e., management science.
The task perspective assumes that an organization’s core – task-centered, labor-division-based human interaction, between individuals with different qualifications, educational and professional backgrounds – quite simply functions. Further, this perspective assumes that organizational value creation and its development can be influenced, unproblematically, from the outside. The founder of German-language business administration, Erich Gutenberg, formulated this idea in his groundbreaking postdoctoral thesis (Gutenberg, 1929: 26; our translation and emphasis):
“Hence, the enterprise as an object of business administration cannot directly be the empirical enterprise. The assumption must be made that the organization of the enterprise functions perfectly. This assumption eliminates the organization as a source of its own problems and removes it from its scientifically and practically significant position to the extent that it can no longer create difficulties for theoretical deliberations.”
Many business models, concepts, and frameworks are dominated by an economic approach to organizations. As such, they emphasize efficiency, i.e., cost-benefit considerations. [30]
From a task perspective, organizations are clearly identifiable entities consisting of tasks and problems capable of being systematically captured analytically and processed rationally. This perspective also suggests that concepts and “instruments,” such as the marketing mix, five-forces analysis or financial ratio analyses, if correctly understood and applied by the responsible employees, contribute to good decisions and thus sustain an organization’s success. Hence, the task perspective relies on the unproblematic possibility of organizations being rationally designable and controllable. The blind spot of this perspective is the demanding preconditions for management to become effective.
However, already Gutenberg realized the shortcomings of this perspective (Gutenberg, 1929: 26; our translation and emphasis):
“Assuming such a perfectly functioning organization, which ensures smoothly executing the basic business processes, does not mean negating, but only neutralizing the organization’s problems. The stance presented here will give rise to a wealth of arguments that privileges research questions about the organization.”