Chapter 4: The Socio-Economic Approach to Management Control¹

The chapter sheds light on the ability of SEAM to develop an innovative management control system for improving change and human potential management as well as creating tangible value. We have called this ability the socio-economic approach to management control (SEAMC). The first part of the chapter focuses on how SEAMC may appear as an innovative platform for change and human potential development. The next two sections then explain how SEAMC, through its change and tools axes, fosters economic performance.

In this first section we look at the other side of the strategy coin dealing with how management control systems can facilitate organizational adaptation to change occurring in both the internal and external environments. In this regard, the empirical record is not good. Organizational transformation initiatives often fail (Kotter, 1996) and the vast majority of firms, including large firms, survive relatively short periods (Stubbart & Knight, 2006). In fact, it is now conventional wisdom that attackers from the outside are considered to have an advantage when a new business model threatens an existing market or technological regime (Schoemaker, 2008).