4 Levers of organizational control

Summary

The video script explores the four levers of control developed by Robert Simmons to empower managers in balancing value creation and control within organizations. The levers include belief systems for guiding employees with core values, boundary systems for setting limits, diagnostic controls for ensuring goal achievement, and interactive control for strategic focus. Enterprise architects play a key role in implementing these levers by codifying principles and rules, creating data maps, and developing models that link resources to strategic outcomes, thus fostering innovation without compromising control.

Takeaways

• 😲 The fundamental problem for managers is balancing adequate control with the need for flexibility, innovation, and creativity in organizations.
• 📈 Initiative by employees is crucial for organizational growth, but it must be managed to prevent control failures, such as the Wells Fargo scandal and Amazon's feedback tool misuse.
• 🛠 Robert Simons' Four Levers of Control model offers a framework for managing the tension between value creation and control in organizations.
• 💡 Belief systems are the first lever, aiming to provide employees with a sense of purpose and direction through core values and mission statements.
• 🚧 Boundary systems are the second lever, setting clear rules and limits to guide individual creativity while maintaining organizational integrity.
• 📊 Diagnostic control systems, the third lever, help managers ensure efficient and effective achievement of important goals through resource allocation and goal definition.
• 🔄 Interactive control systems, the fourth lever, allow for a proactive approach to strategic uncertainties and the emergence of new initiatives.
• 🏛️ Enterprise architects can support belief systems by developing architecture principles that align with organizational beliefs.
• 📝 For boundary systems, enterprise architects can codify business rules and provide clear limits without dictating how tasks should be performed.
• 🗺️ In the case of diagnostic control systems, architects can create data maps to facilitate information sharing and reduce barriers.
• 🔍 Interactive control systems benefit from architects developing models that link resources and information to strategic outcomes and goal achievement.
• 👥 Effective managers use the Four Levers of Control to empower their organizations, trusting in the potential of employees to innovate while maintaining control.

Q & A

What is the fundamental problem facing managers in organizations that require flexibility, innovation, and creativity?

The fundamental problem is how to exercise adequate control in organizations that depend on employee initiative to seek opportunities and respond to customer needs, without leaving such initiative unchecked.

What was the issue with Wells Fargo in 2019 regarding employee accounts?

Thousands of Wells Fargo employees opened approximately 2 million bank and credit card accounts for customers without their permission or knowledge due to a poorly conceived incentive program created by the CEO.

What was Amazon's 'anytime feedback tool' intended to achieve, and what was the unintended consequence?

The tool was intended to provide timely feedback to improve culture, productivity, and increase engaged employees. However, it led to employees plotting against each other and not providing positive feedback.

How can organizational managers protect their organizations from control failures when employees are empowered?

Managers can protect their organizations by applying control through the four levers of control model, which helps manage the tension between value creation and control.

What are the four levers of control as developed by Robert Simons?

The four levers of control are belief systems, boundary systems, diagnostic control systems, and interactive control systems.

How do belief systems empower employees in an organization?

Belief systems provide momentum and guidance towards mission statements, vision statements, and core values, enabling employees to contribute by removing uncertainty about the organization's purpose.

What is the purpose of boundary systems in an organization?

Boundary systems establish the rules of the game, allowing individual creativity within defined limits of freedom and helping employees to do the right thing by avoiding pressure or temptation.

What role can enterprise architects play in developing belief systems within an organization?

Enterprise architects can contribute by codifying and developing architecture principles that incorporate organizational beliefs to guide and inform value creation.

How do diagnostic control systems help managers ensure important goals are achieved efficiently and effectively?

Diagnostic control systems help by ensuring effective resource allocation and clear goal definition, allowing managers to measure progress against plans and guarantee the predictable achievement of goals.

What is the objective of interactive control systems in an organization?

The objective of interactive control systems is to focus organizational attention on strategic uncertainties, provoke the emergence of new initiatives, and ensure that business practices closely relate to changes in customer needs.

How can enterprise architects contribute to the development of interactive control systems?

Enterprise architects can contribute by codifying and developing line of sight and business motivation models that link resources and information to strategic outcomes and goal achievement.

What is the significance of the four levers of control for effective managers?

The four levers of control are powerful tools that reinforce one another, helping managers to empower their organizations by believing in the innate potential of people to innovate and add value, without compromising control.