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Strategic Control Systems

Internal Control Systems


Beliefs Systems
Boundary Systems
Diagnostic Control Systems
Interactive Control Systems

Source: Simons, Control in an Age of Empowerment, Harvard Business Review, March-April 1995.

Strategic Control Systems


Internal Control Systems
Plan of organization, procedures and policies designed to
safeguard assets from theft or accidental loss, and ensure
reliable accounting records and financial information systems
Internal control systems rely on
-

standard operating procedures


compliance audits
segregation of duties
documentation
written authorizations
physical security
reliable information systems

Source: Simons, Control in an Age of Empowerment, Harvard Business Review, March-April 1995.

Strategic Control Systems


Beliefs Systems
Explicit set of shared beliefs that define basic values,
purpose, and direction
Beliefs systems are
- created to provide momentum and guidance to
opportunity-seeking behavior
- necessarily vague so opportunity-seeking behavior will
not be unduly restricted
- embodied in mission statements, vision statements,
credos, and statements of purpose
- used to communicate and reinforce core values
Source: Simons, Control in an Age of Empowerment, Harvard Business Review, March-April 1995.

Strategic Control Systems


Boundary Systems
Formally stated limits and rules that must be respected
Boundary systems
- allow individual creativity within defined limits
- bound strategy and behavior
- are implemented through rules and proscriptions in codes of
conduct, strategic planning systems, and asset acquisition
systems
- emphasize risks to be avoided

Source: Simons, Control in an Age of Empowerment, Harvard Business Review, March-April 1995.
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Strategic Control Systems


Diagnostic Control Systems
Feedback systems used to monitor outcomes and correct
deviations from preset performance standards
Diagnostic control systems
- emphasize measurement of critical performance variables
associated with the organizations strategy
- define goals, provide motivation, and establish guidelines
for corrective action
- include profit plans and budgets, goals and objectives
systems, and project monitoring systems
- allow ex post evaluation
Source: Simons, Control in an Age of Empowerment, Harvard Business Review, March-April 1995.
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Strategic Control Systems


Interactive Control Systems
Control systems that managers use to regularly and personally involve themselves
in the decisions of subordinates (managements hot buttons)
Interactive Control Systems
- focus organizational attention on strategic uncertainties
- generate organizational learning and shape emerging strategy
- provoke the emergence of new initiatives and strategies
Diagnostic Systems can be made interactive if management
- ensures that the information generated is a recurring agenda item to discuss
with subordinates
- ensures that the system is a focus of regular attention by operating managers
- participates in face-to-face meetings with subordinates
- continually challenges and debates information, assumptions and plans
Source: Simons, Control in an Age of Empowerment, Harvard Business Review, March-April 1995.

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