An Introduction to Management Studies

1.3 Development of the St. Gallen Management Models

The latest version of the SGMM (introduced here) continues a 50-year tradition of systematically developing management at the University of St. Gallen. This began with the aspiration to create an “empty” framework in which to create meaning (Ulrich & Krieg, 1972). This framework (or “scaffold”) as such provides a structure for classifying problems and thus facilitates discussion. Like every model, it is a simplified representation of reality that needs to be concretized for the corresponding purpose.

1.3.1 First-Generation SGMM

[23] Already the first-generation SGMM, developed in the early 1970s, was guided by the idea of an open-minded approach to problems rather than a recipe-like imparting of knowledge (Ulrich & Krieg, 1972, p. 9). The model was based on systems-oriented business studies, which conceptualized companies as systems. The authors described systems thinking as holistic, process-oriented, interdisciplinary, analytical, synthetic, and pragmatic thinking (Ulrich & Krieg, 1972). Their approach took integrative thinking into account, while facilitating a cross-functional and cross-subdisciplinary approach to practical issues.

Figure 1-3: First-Generation SGMM: Management Model, Environmental Model, Company Model

Source: Ulrich and Krieg (1972, pp. 20, 27, 31)

[24] The first-generation SGMM has three parts: the company model, the environmental model, and the management model (Figure 1-3). The aim was to support management by representing the enterprise both as a productive and as a technical system, and by providing a tool for its analysis.

In the company model, the following five approaches were analyzed in more detail (Ulrich & Krieg, 1972):

– The company’s environment (stakeholders, environmental spheres)

– Markets and market performance (procurement and sales markets, resources and market performance)

– Functional areas (execution area, supply area, management area)

– Design levels (technological, economic, social)

– Structuring of tasks: repetitive and innovative tasks (preservation and renewal).

The environmental model with the environmental spheres and stakeholders is still part of the current SGMM.

In the field of corporate management (management model), three classification criteria were used (Ulrich & Krieg, 1972):

– Management levels (corporate politics, planning, disposition)

– Management phases (goals, means, processes)

– Management functions (deciding, initiating, controlling)

These structuring approaches recurred similarly in the subsequent generations of the SGMM. Over time, the model was repeatedly adapted to current findings in business studies and to management challenges.

1.3.2 Second-Generation SGMM

Bleicher (1991) titled the second-generation SGMM “The Concept of Integrated Management.” He highlighted Ulrich and Krieg’s (1972) holistic approach and explicitly addressed integrated management. The second-generation SGMM thus claimed to meet the requirements of a paradigm shift toward an understanding of management that consciously deals with increased complexity and the dynamics involved (Bleicher, 1991, p. 147). In the early 1990s, a new world order became foreseeable, following the collapse of the former Soviet system and [25] of centrally planned economies, as well as important technological innovations, for example, in the IT sector. Thus, the second-generation SGMM introduced the system levels discussed at that time (Schwaninger, 1988): the normative, strategic, and operational dimensions (Figure 1-4).

Figure 1-4: Second-Generation SGMM: Normative, Strategic, Operational Levels of the Organization

Source: Bleicher (1991)

1.3.3 Third-Generation SGMM

Rüegg-Stürm (2003) developed the third-generation SGMM as part of a curriculum redesign of business studies at the University of St. Gallen. His model served as the basis for an introductory textbook on business studies (Dubs, Euler, & Rüegg-Stürm, 2004, p. 8). Essentially, the key topics corresponded to the dimensions identified in the first-generation SGMM (Figure 1-5):

– [26] Environmental spheres

– Stakeholders

– Interaction issues (resources, norms, values, concerns, and interests)

– Structuring forces (strategy, structure, culture)

– Development modes (optimization, renewal)

In line with recent findings in business studies (see also Porter, 1985; Osterloh & Frost, 1996), these dimensions were supplemented by a process-oriented view. This replaced the functional view and distinguished business processes, management processes, and support processes, as well emphasized the importance of communication for performing management tasks.

Figure 1-5: Key Visualization of the Third-Generation SGMM

Source: Rüegg-Stürm (2003, p. 22)

1.3.4 Fourth-Generation SGMM

[27] Rüegg-Stürm and Grand (2017) conceived the fourth-generation SGMM as a renewed attempt to develop a language for reflecting on, discussing, and dealing with the complexity facing management practice (Rüegg-Stürm & Grand, 2017, p. 2). They defined management as a reflective design practice aimed at supporting entrepreneurial tasks and challenges. The fourth-generation SGMM complements the third generation’s process orientation by highlighting systematic reflection and ongoing enactment as core management tasks. The main reason for this emphasis is the increasing complexity, uncertainty, and dynamics of today’s world. These factors require organizations and their managers to incorporate the expected consequences of their own actions into their decision-making, which is subject to great uncertainty today.

The fourth-generation SGMM (Rüegg-Stürm & Grand, 2017), introduced briefly above (Section 1.2), has been operationalized since 2019 by adding a working tool (see Rüegg-Stürm & Grand, 2020). Its “task perspective” (Figure 1-1) comprises the same six key categories as the third-generation SGMM (environmental spheres, stakeholders, interaction issues, processes, structuring forces, and development modes). Its “practice perspective” contains four categories:

– Value creation (differentiation, resource configuration, value creation processes, decision-making practice, relationship culture)

– Orientation framework (operational, strategic, and normative orientation)

– Management practices (managerial communities, design platforms, design practices, language of reflection).

– Environment (environmental spheres, stakeholders, conditions for existence)

This latest edition of the current SGMM (Rüegg-Stürm & Grand, 2020) is intended to supplement to the basic textbook (Rüegg-Stürm & Grand, 2017) in the sense of a didactic working tool and as a means of reflecting more in-depth on management.

1.4 Integrative Management

[28] The St. Gallen tradition has consistently understood management as integrative. Integrative management can be defined as the design and steering of an organization as a purpose-oriented socio-technical system that consciously and responsibly handles significant force fields and conflicting goals (Bieger et al., 2021). These force fields and conflicting goals include the different perspectives of the individual corporate functions, but also different stakeholder expectations, or the deliberation between short-term, operational, and long-term strategic views, and, in particular, an integrated execution of all management tasks (analysis, planning, control). Management models, as simplified representations of a complex reality, are intended to support managers in performing these tasks.

1.4.1 Origins of Integrative Approaches to Management

Developing a new product requires the interaction of various factors: marketing (incorporation of customer needs), development, production, finance and controlling (securing the necessary investments), and compliance (with rules and legislation). In contrast, preparing a company takeover requires finance and compliance specialists to provide valuations and due diligence (careful examination of the acquisition object), to draft contracts (legal competence), and to support internal and external communications (communication competence). These two examples show that an integrative view is necessary for solving management tasks at every level of the organization. This principle applies not only to the required competencies and the associated corporate functional areas, but also to assessing how one’s own actions impact the various environments and stakeholders. Actors must also take into account the short- and long-term consequences of their actions — which points to the three dimensions (functions, stakeholders, time horizons) of integrative thinking.

Accordingly, various exponents of classical management research (e.g., Peter Drucker and Henry Mintzberg) followed an integrative approach. For example, in Concept of the Corporation (first published in 1946), Drucker described management as “a specific organ doing specific kind of work and having specific responsibilities” (Drucker, 1993). In his view, the rise of management as a discipline is probably the most important development in the 20th century: “In this century, [29] society has become a society of organizations. Every major social task in this society is being performed in and through large, managed institutions” (Drucker, 1973, p. 545). Other scholars have also highlighted that management is a decision-making and acting organ, i.e., actor. For instance, Henry Mintzberg’s remarkable Mintzberg on Management (1991) describes how managers cope with various tasks at the same time. Based on an observational study, he concludes that managers briefly hold problems in their hands like a juggler, before processing and sending them back into “orbit” for further processing (Mintzberg, 1991, p. 33).

St. Gallen management research has also explored the needs and requirements of management as an acting organ. Thus, Ulrich, Krieg, and Malik (1976) observed that “the purpose of business studies is to provide actors with the knowledge needed in specific problem situations” (p. 135).

Thus, in order to best serve management and managers, researchers often prioritized “relevance” (i.e., whatever serves life and efficiency) over “rigor” (i.e., scientific substantiation) — well, at least until business studies also began developing a stronger scientific approach. For instance, Gulati (2007, p. 776, based on Gorden & Howell, 1959; Pierson, 1958), noted that “The question first arose in the 1950s and 60s with multiple voices suggesting that management research was aspiring to be relevant at the expense of the rigor observed in other social sciences” (see also, e.g., Gordon & Howell, 1959; Pierson, 1959). There was an increasing orientation toward social science principles and theories, for example, from economics or sociology. One example was the development of strategies based on industry economics such as economies of scale, economies of scope, and economies of density. This approach was associated with a differentiation of management research, as evident in various disciplines. More and more, research became oriented toward individual functions and subdisciplines. For example, marketing as a research area differentiated itself as part of business studies; within marketing, other research areas (e.g., customer insight or brand management) emerged as subdisciplines with their own research communities.

[30] While this stronger scientific orientation enabled placing findings more strongly on micro-foundations, it made a deeper problem orientation more difficult (Nickerson & Argyres, 2018). For example, marketing research developed increasingly sophisticated explanations for constructs and theories such as perceived fairness or perceived customer value. However, 1980s heuristics (e.g., the dominance standard model) are still used in practice to tackle essential questions such as designing an integrated marketing mix (cf. Kühn, 1985).

1.4.2 Management as a Profession

This progressive differentiation of management as an independent activity and the specialization of management knowledge are also reflected in management practice. Management is developing into a profession in its own right, one based increasingly on scientific principles. It is also seen more and more as an activity that is not only necessary for companies, but which is also penetrating ever wider areas of business and society. Management methods are increasingly entering public administration, churches, the military, and nongovernmental organizations. Many such organizations long considered management a kind of “art” (Lynn, 1996). In hospitals, for instance, chief physicians or chief medical officers were typically entrusted with running the organization: They were considered best suited to management tasks on account of their personality or life experience (e.g., in the military).

Today, management is a profession in its own right. In Bourdieu’s sense, it possesses characteristics typical of professions: an independent language, independent rituals, and professional values (Bourdieu, 1972). Today, managers are prepared for their duties and responsibilities in management training courses. Managers also switch between different companies, industries, regions, and cultures. Today, not only professional managers move from airlines to pharmaceutical companies, but professional deans move between universities in different countries and cultures.

Combined with the specialization of management research, and because ever-increasing management tasks also demand a division of labor and thus the specialization of management itself (Rüegg-Stürm & Grand, 2019a), an increasing function orientation has also emerged in practice. For functions such as human resource management, [31] marketing, strategy management or financial management, independent research institutes, chairs and education programs have developed in undergraduate and graduate education (Figure 1-6).

Figure 1-6: Chairs at the University of St. Gallen School of Management (2020)

This differentiation is also reflected in the development of university courses. In the 1970s, many universities still offered courses in economics that integrated business studies and economics. These subject areas later became separate programs. Since the introduction of the Bologna system in early 2000, degree programs specializing in certain functions (e.g., strategy, marketing, accounting and controlling) are now offered, especially at the master’s level. In further education, certificate courses are offered, sometimes by professional associations, such as the CFA (Chartered Financial Analyst) or the CMA (Certified Marketing Analyst). Such courses enable further professional specialization. In some countries, they are also a legal prerequisite for holding management positions in companies (e.g., in accounting and finance).

1.4.3 Dealing with Complexity

[32] The demand to overcome functional silos or, in research, subdisciplinary silos has received attention early on (e.g., Aldrich & Herker, 1977). Research, for instance, often faces critique for pursuing increasingly specialized research questions (e.g., consumer behavior in isolated laboratory settings), and for neglecting the integrative issues challenging top managers and demanding a cross-disciplinary perspective. Practice shows that top managers must ultimately “integrate” the increasingly specialized management of individual functions. This, in turn, might overwhelm managers and increase the number of staff functions.

Thus, conflicts may arise between departments: for example, between the marketing function, which demands greater production flexibility in line with customer needs, and production, which wants the greatest possible standardization for reasons of efficiency. If incentive mechanisms (e.g., profit-sharing schemes for executives) are geared toward the success of one’s own department, fighting one’s own corner might take priority. Top management then needs to integrate competing views and optimize the overall system. To do so, it needs information, which in turn must be obtained from management staff.

This isolated optimization of individual functional areas, and the elaborate overall coordination required at the highest level, also reduces the agility of organizations. Integrative management is needed more than ever in today’s “VUCA age.” VUCA stands for “Volatility, Uncertainty, Complexity and Ambiguity” (Bennett & Lemoine, 2014). Today, developments are volatile because manifold shocks, for instance, in the financial markets, politics, or health, may strike home swiftly and simultaneously across the world. This sheer prospect causes uncertainty. Ever more at least seemingly contradictory goals (e.g., simultaneously achieving low-cost production and environmental protection), or the demand for high-performance teams and achieving work-life balance at the same time, create ambiguities and thus also complexity for management. Management needs to deal with these force fields and to define integrative solutions and approaches.

[33] Various authors have identified management practices and tools for overcoming the boundaries between professional communities and disciplines (Spee & Jarzabkowski, 2009; Levina & Vaast, 2005). Certain practices and tools (e.g., guided future workshops), or working tools (e.g., business planning or management models like the SGMM), have been found to facilitate the integration of diverse views.

Other approaches to promoting a more inclusive view (e.g., in strategy theory) have highlighted the importance of asking the right questions. For example, Nickerson and Argyres (2018) emphasize that avoiding Type III problems requires careful problem formulation. In this categorization, Type III problems involve situations where solutions are developed for the wrong problem (i.e., when the actual problem could not be identified). Integrative management is enabled and stimulated by asking broad, unconventional questions.

Working in groups is also important. These should be as diverse as possible (e.g., company members should represent different functional areas, as well as different cultures, genders, etc.). Groupthink should be avoided (i.e., overly focusing on group needs, especially group harmony). Instead, group members need to exchange ideas about each other’s perspectives on the problem at hand.

1.4.4 The St. Gallen Approach

The systems approach has remained central to St. Gallen management research (Bieger et al., 2021). Together with cybernetics (steering of complex systems), the systems approach was developed in the 1960s, as part of the debate on limited resources (see Meadows, Meadows, Randers, & Behrens, 1972), which ushered in an intensified search for integrative approaches. Important foundations were laid by Beer (1959) and Vester (1968). In St. Gallen, Ulrich (1968) pursued these approaches, which were later followed and further developed by different researchers in different subfields (e.g. Kaspar, 1996, on tourism). Systems thinking (see also Luhmann, 2002) was also treated as a new method, almost as a new paradigm (Kuhn, 1969).

[34] Beer’s (1959) work helped to establish rules for viable (and thus developable) systems based on cybernetic principles. The considerations and laws emerging from this research still shape management practice today, including the need to address organizational survival on different system levels (see e.g., Schwaninger, 1988). The three main management levels (Figure 1-7) — with their respective orientation bases, target categories, reference variables, and time horizons — have been integral to the SGMM since its second generation. Systems thinking continues to shape business studies research and teaching at the University of St. Gallen. Examples include Bleicher’s description of companies as socio-technical systems (Bleicher, 1991) or Gomez’s practical approach to solving management problems using integrated (networked) thinking (Probst & Gomez, 1991).

Figure 1-7: Integral Planning with Orientation Bases, Target Categories, Reference Variables, and Time Horizon

Source: Schwaninger (1988, p. 126)

[35] Another outcome of systemic approaches is Ashby’s Law (Ashby, 1985). This states that a variegated complex system also needs to be governed by an equally variegated and complex control system. For instance, if a team conflict occurs in an R&D department, it is not enough to simply remove the greatest “rebel.” Any team is a complex system, in which social relationships coincide with knowledge relationships, hierarchical dependencies, and project processes. The team as a system is characterized by different interconnected levels. Thus, the social system is strongly influenced by the interactions necessary for project processes, which in turn are influenced by the hierarchical system. Appropriately intervening in these conflicts requires analysis on all three system levels. Measures are also needed on the different levels, such as staff measures on the social level combined with changing project structures and simultaneously adjusting the management culture.