1. Delegating without delegating too much

Almost all business organizations have superiors and subordinates. Members of an organization (with the exception of the company president) usually have superiors and (with the exception of rank-and-file employees) subordinates. In such hierarchical organizations, superiors inevitably delegate a certain amount of work to their subordinates. Since they have superiors, subordinates are not free to decide all the matters pertaining to their work, but there are definitely matters they can decide on their own. Even if the section manager of a transportation company is involved in determining the goals and quota for the drivers, he/she will naturally delegate specific decisions about their driving operations to them. If the section manager decided everything down to those kinds of details, the drivers might lose their motivation. The section manager, however, would also be concerned about delegating too much. Figuring out how to motivate subordinates to execute the work delegated to them in accordance with company policy is what you could call a never-ending challenge for superiors around the world.

The process by which higher-ranking people in an organization guide the work delegated to lower-ranking people in the desired direction is called management control (hereafter referred to as MC). I think you’ll be able to grasp the significance of MC from the fact that no matter how amazing the strategies the management thinks up are, these strategies will amount to nothing if the members of the organization do not make efforts to implement them. Indeed, many companies take great pains to determine how to perform MC in an appropriate manner.

2. Amoeba Management as a delegation management system

Amoeba Management can be held up as the best-known system that has systematized MC at this point in time. First, let me explain where the name comes from. An amoeba is a microscopic protist about 0.5 mm in size. Amoebas constantly change shape and repeatedly divide in response to changes in their environment. In Amoeba Management, organizational units are called amoebas. Resembling biological amoebas, these are very small units composed of only a few members, whose numbers constantly change. The number of members does not change because of periodic personnel changes. It constantly changes based on the autonomous judgment of the leader of the amoeba in the field. When things get busy, an amoeba may borrow people from other amoebas, and when things slow down, it may lend people out to other amoebas. They truly resemble biological amoebas.

Viewed from a different perspective, the leaders of amoebas are given the authority to borrow and lend out personnel in this way. Their superiors would want them to exercise this authority in such a way that personnel are only borrowed or lent out when needed for as long as they are needed. In Amoeba Management, there are quite a lot of other discretionary powers that are delegated to amoeba leaders as well. So how are leaders guided in this system?

3. Management control through accounting

Amoeba Management has truly impressive MC mechanisms built into it. First, mention must be made of the hourly efficiency goals imposed on every amoeba. To calculate the hourly efficiency of an amoeba, the profit it has earned is calculated by subtracting expenses from sales, and this amount of profit is then divided by the total hours worked by the members of the amoeba. By looking at this figure, you can immediately tell how much money the members of the amoeba generate in an hour. In Amoeba Management, major discretionary powers are handed over to amoeba leaders on the one hand, while on the other, there is a strong emphasis on the achievement of hourly efficiency goals.

Now let’s look at the borrowing and lending of personnel. First, the scope of expenses used in the calculation of hourly efficiency mentioned above does not include labor costs. If they were included, members with higher salaries would rarely be borrowed or lent out (since the costs of an amoeba would increase and profitability would drop when an expensive member joined it), while members with lower salaries would get all the attention, leading to awkward relations among people in the organization. The accounting practice of excluding labor costs from expenses prevents personnel fluidity from declining and communicates the message to employees that people are not a cost, resulting in increased trust in the management.

Moreover, since the hours worked by people who are borrowed are counted as part of the borrowing amoeba’s hours, its hourly efficiency will decline if it borrows more people than are needed. On the other hand, if it can lend out surplus personnel to other amoebas when there is not as much work, it can transfer their hours to the borrowing amoebas, improving its own hourly efficiency as a result. Through accounting practices like these, the management is able to guide amoebas in the desired direction, so that only the needed number of people are borrowed and lent out at the times they are needed.

4. Management control through ideas

These accounting mechanisms, however, are nothing more than pie in the sky if amoeba leaders are not strongly committed to improving hourly efficiency. Notably, you cannot count on increased bonuses in the Amoeba Management System even if you achieve profitability goals. How, then, is commitment generated?

One fundamental keyword that must be mentioned when discussing Amoeba Management is management philosophy. If you take a look at Kyocera’s management philosophy, you’ll find a list of stirring phrases like “group on fire,” “sense of mission,” “unparalleled effort,” “dare to set goals beyond our ability,” and “acute awareness of goals.” At Kyocera, a great deal of time is spent on spreading this philosophy throughout the organization. As a result…it is credited with getting its members to identify with this philosophy and strongly commit themselves to achieving profitability goals.

5. Only half-way there

Despite the foregoing description of Amoeba Management, we still have no idea why it is able to guide people. It is a system that synthesizes features like accounting mechanisms and activities for spreading ideas in a truly remarkable way. However, I imagine many people who read the passage above about management control through ideas are thinking, “Really? Can we get people to commit to goals like that?” I devote every day to research, looking for the answers to those “Really?” questions. I hope to one day reveal the answers here.