Key Problems in Corporate Management

As we stated earlier, any model is only as good as it helps us to explain, predict and control the subject matter in question. In this case, to identify key problems in corporate management that prevent organizations from operating at highest possible efficiency (maximizing their aggregate performance). In this section we will demonstrate – beyond the reasonable doubt – that the ‘aircraft paradigm’ does the job and does it well (better than any other).

1.        Missing corporate objects. If an important component is missing, an aircraft does not fly well and often does not take off at all. Likewise, if a valuable object is missing (product, employee, competency, document, asset, etc.), an organization operates well below its top performance.

2.        Excessive corporate objects. Like in an airplane, excessive corporate objects (employees, departments, assets, etc.) consume valuable resources and thus prevent an organization from maximizing its performance.

3.        Poorly performing corporate objects.  If one or more aircraft components does not work properly, the efficiency of the efficiency of the whole airplane can suffer greatly. When one or more corporate objects does not perform well (and it happens all the time), the aggregate corporate performance goes south.

4.        Poor synergy between corporate objects. If components of an aircraft do not fit well, it will not fly well – and quite possible will not even take off. In the same way, if objects within an organization have imperfect synergy, it will operate well below its maximum possible performance.

5.        Inefficient corporate processes.  If an aircraft has an inefficient fuel supply process, for example, it will have serious difficulty flying (or even taking off). For the same reason, if key corporate processes in an organization are inefficient, the company as a whole will be highly inefficient as well, operating at a fraction of its maximum possible performance.

6.        Information overload. If a pilot is constantly bombarded by data and information from sources all over the place without any means to structure and filter the knowledge needed to make and execute the right decisions, getting the plane to its destination (and even keeping it in the air) becomes very difficult. But it is exactly what corporate managers and specialists in every organization face every day. This information overload significantly reduces the quality of corporate decisions and severely hampers the corporate performance.

7.        Lack of knowledge about objects and processes (internal and external). It is common knowledge that you can manage only what you can measure and you can measure only what you can see. If the pilot has no idea about weather conditions ahead or how well engine is working or the fuel situation, the flight will very likely end in disaster. Unfortunately, these ‘information lacunas’ is exactly what corporate managers and specialists encounter all the time (many crucial internal and external objects are simply invisible due to low corporate transparency). As the result, managers have to make decisions using insufficient information which greatly reduces the quality of corporate decisions and severely hampers the corporate performance.

8.        Poor coordination of actions (both horizontal and vertical) in an organization. If a group of fighter (or bomber) aircraft does not coordinate their actions, they not only will not be able to achieve the objectives of their sortie, but may very well lose some (if not all) their aircraft. Unfortunately, this is exactly what happens in practically every organization which results in often dramatically low corporate performance.

9.        The ‘Babylon effect’. Imagine what would happen if one pilot in a group of fighter plane speaks only German; another one – only French, etc. But this is exactly what happens in every organization where managers and professionals from different functional areas (marketing, finance, IT, legal, etc.) speak often totally different ‘languages’. Hence, a lot of time and effort is wasted to make them understand each other which severely reduces aggregate corporate performance.