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The Levers of Control (hereby LOC) Framework is firstly introduced as a Management Control Systems tool
in Simons' "Levers of Control: How managers use innovative control systems to drive strategic renewal"
(1995)[1]. The LOC framework is constituted by four blocks: Belief systems and Interactive Control systems
creating positive forces, and Boundary Control Systems and Diagnostic Control Systems creating negative
forces. It must be noted that positive/negative forces are not considered as good/bad forces but as diverse
types of forces that must be balanced to achieve proper business strategy. The concept of balance or
dynamic tension is central to the proper use of the tool as the later publications took effort on
demonstrating [2]. Even though his theory about opposing forces, the number of citations (over 3000 in Google
Scholar) gives Simons' LOC framework a consolidated position within Management Control Systems
literature. This article intends to give a theoretical basic description of the LOC framework presenting the
different blocks of the framework and then to clarify the concept of what Simons understands
as balance between innovation and creativity coming from the enablement of the employees, and the control
and set of boundaries that have to be implemented by managers, based on literature.Then, since the LOC
is traditionally a business management tool, a relation with Control Systems in Project Management is
proposed taking into account the tool's limitations.
As previously mentioned, the LOC is an analytic tool serving to assess the distinct functions of Management
Control Systems (MCS) within a company or a team. MCS has two main functions: 1) controlling linked with
predictability, efficiency and formality, and 2) enabling linked with innovation, spontaneity and transparency.
Simons distinguishes two different blocks for each one of MCS' functions.
Beliefs Systems
The first one of the four blocks is Beliefs Systems, and it is associated to the core values of a company.
Such core values are usually stated by the mission and the vision of an enterprise, and set the purpose and
the direction in which the objectives should be pointed. Simons himself defines the beliefs as "the explicit
set of organizational definitions that senior managers communicate formally and reinforce systematically to
[1]
provide basic values, purpose and direction for the organization." . In other words: they create positive
forces that inspire.
Boundary Systems
On the other hand, Boundary Systems embody the limitations and constraints within which lower-level
employees creativity is to be contained. Boundary Systems can be associated with codes of conduct, risks
to be avoided or operational guidelines. Simons describes them as "formally stated rules, limits and
proscriptions tied to defined sanctions and credible threat of punishment… to allow individual creativity within
defined limits of freedom." [1]. Therefore, Boundary Systems create negative forces that constraint
individuals' imagination.
The LOC framework's strength as a tool resides in balancing the tensions between positive empowering
forces and negative constraints. Literature is rather vague in describing how to achieve balance and some
authors even propose that different systems and different environments can lead to different balance
situations according to their approach to strategy[2]. For instance, a small system in an entrepreneurial
environment where the focus is on identifying emerging opportunities can achieve balance more easily
emphasizing in interactive control systems, therefore addressing strategy as a pattern. Instead, a big system
in a corporate environment concerned about strategy as a plan, is more likely to achieve balance
emphasizing in boundary control systems to monitor performance. Some even state[3] that different states of
balance between interactive control systems and diagnostic control systems can be used for different
purposes. Simons' idea of balance has some similarities with a stream of organizational research holding
that firms have to be "ambidextrous" with exploration to and exploitation to control respectively strategic
renewal and innovation, and predictable goal achievement. Within this stream of research, some argue that
success requires control simultaneously pursuing exploration and explotation with equal weights[4]. Others
[5]
propose that ambidexterity can be achieved alternating exploration and exploitation phases over time .
Limitations
As previously mentioned, Simons' levers of control despite being an impactful theory in Management Control
Systems and Business Management, is also criticized for being ambiguous, ill-defined, or vaguely defined in
some of its concepts. Some authors have tried to discuss such ambiguities.[7]. The claim in that regard is that
vague of definition of the concepts leads to mixed empirical results that impede the bulding of a unified body
of knowledge. A clear example is the definition of the balance, where infinite possibilities exist depending on
[2]
each case. Despite the fact that some progress has been made, Kruis, Speklé and Widener for example
gathered empirical data about 217 managers belonging to different companies, considered as successful, in
different environments. Such data helped making a series of case studies that allowed them to propose a
series of balance scenarios linked to the companies industries. So far no literature exists on the use of the
LOC framework in a Project Management context, but the limitations are evident aswell since different optimal
balance scenarios can be seen through the different phases of a single project.
Conclusion
This article has presented a description of Simons' Levers of Control framework based the existing literature
in Business Management. It has been described that the framework is formed of four building blocks two of
them creating positive forces that are meant to enable employees, and two of them creating negative forces
that are meant to constrain them. It has also been explained the concept that balance between these positive
and negative forces leads to successful business management according to Simons theory. Once LOC's
blocks were defined and the dynamic tensions have been explained, a proposition on how could that theory
be applied to project management was made. It was stressed that successful balance situations may evolve
and change throughout the project life cycle. Finally a statement was made on the limitations expressed in
literature about the tool and its ambiguities.
Annotated Bibliography
1. Levers of Control: How Managers Use Innovative Control Systems to Drive Strategic Renewal: is
the book in which Simons fully presented his theory about the four levers of control and presents not only the
levers themselves but the concept of balance that is required for successful business management.
2. The Levers of Control Framework: An exploratory analysis of balance: this article provides an
overview of the theory behind Simons' four levers of control. By defining the nature of the four levers and the
reviewing the literature on the concept of balance, the article sets the bases to their further intent of making
an empirical study of how different organizations found a proper balance scenario.
3. Management control systems and strategy: a resource-based perspective: the article presents the
use of diagnostic control systems and interactive control systems in a business management resource-based
context, and argues about different possible combinations of their usage and their effect on dynamic tensions.
6.A guide to the project management body of knowledge: constitutes a common base of knowledge on
project management theory and experiences. The guide is used in the article to find scenarios, cases and
similarities in Project Management with Business Management, in terms of Managing control Systems, that
could benefit from the use of the LOC framework.
7. A conceptual development of Simons’ Levers of Control framework.: reviews the literature on the
LOC, and studies the ambiguities and vague definitions with the intent of shedding some light on it.
References
1. ↑ 1.0 1.1 1.2 1.3 Simons, R. Levers of Control: How Managers Use Innovative Control Systems to Drive
Strategic Renewal. Boston: Harvard Business School Press, 1995.
2. ↑ 2.0 2.1 2.2 Anne-Marie Kruis, Roland F. Speklé, Sally K. Widener(2015). The Levers of Control
Framework: An exploratory analysis of balance. Management Accounting Research 32(2016) 27-
44
3. ↑ Henri, J.F., 2006. Management control systems and strategy: a resource-based perspective.
Account. Organ. Soc. 31, 529–558.
4. ↑ Cao, Q., Gedajlovic, E., Zhang, H., 2009. Unpacking organizational ambidexterity:dimensions,
contingencies, and synergistic effects. Organ. Sci. 20, 781–796.
5. ↑ Gupta, A.K., Smith, K.G., Shalley, C.E., 2006. The interplay between exploration and exploitation.
Acad. Manage. J. 49, 693–706.
6. ↑ 6.0 6.1 6.2 A guide to the project management body of knowledge,5th edition,2013
7. ↑ Sophie Tessiera, David Otleyb, 2012. A conceptual development of Simons’ Levers of Control
framework. Management Accounting Research 23 (2012) 171– 185