Monthly Archives: September 2013

The Business of Management

There are way more managers than entrepreneurs. Management is part of Entrepreneurship but there will be no Management if there are no Entrepreneurs. This post is about Management, especially so Management in a reasonably established and reasonably large enterprise. This is because I have never been an entrepreneur myself, those that starts businesses from scratch. The most part of my working life is spent being an employee, safe from having to burn my own pocket if the business fails and as such cannot really understand the thoughts and decisions that go through an entrepreneur’s mind. Only in the past several years where I begin to have some ownership in a business that these decisions and actions made some sense for me.

But this post is about Management. In my mind, there are two very distinct areas where their failure can be crippling. The first is Human Capital. The second is Growth. The former takes precedence in everything Management and is by far the hardest.

There are many books and courses that talks about that topic, those comes immediately to mind will be Jim Collin’s GOOD TO GREAT (get the right people on the bus), Patrick Lencioni’s THE ADVANTAGE, Marcus Buckingham’s FIRST, BREAK ALL THE RULES, Marc Effron and Miriam Ort’s ONE PAGE TALENT MANAGEMENT, Peter Senge’s THE FIFTH DISCIPLINE, Dave Ulrich’s HR TRANSFORMATION, Jack Welch’s WINNING to name a few pretty good ones.

What I have distilled from these books and courses and from real life experience are as follows:

1. First, you must establish a stable and consistent environment for people to work in. If the company is perpetually in a state of chaos and there exists a sense of uncertainty for the future, it is hard for the company to grow. It is like trying to grow a tree on unstable soil. The tree will never grow to become big and strong.

2. Hand in hand with the above, the people must believe in the future of the company and believe that the company’s future is also their future. The company’s success will be their success. It is important for the leadership team to not only paint the future of the company (many company does this via their mission/vision statements that are sometime so artificial, I believe they do it because of some corporate exercise), but to communicate and live this future. Everyone in the company must be made to know what this future is and how they can contribute to it, and everything the company does, its actions and culture must be aligned to it. The company must walk the talk.

3. Fairness. Animals, not only human beings, have a very strong instinct for fairness. It is ok to suffer together but if it is perceived that some people enjoy and some people suffers, it will turn the company upside down. Compensation and benefits, incentive systems, must be fair. In this sense, fair does not mean same. Fair here means those who works gets fairly rewarded and acknowledged, those who does not contribute are “corrected” or managed out. Rewards and incentives, opportunities to move up the ladder, must be as clear as daylight. Everyone in the company must know what will be rewarded and what will be punished.

4. Candor and transparency. The pre-requisite for fairness is candor and transparency. Without this, no one will believe in the system. This is especially true with the younger generation of employees, the oft-labelled Gen Y. But this is true to all levels of employees, not only Gen Y’s. Candor and transparency is already a pre-requisite before the advent of social media, blogs and such. It is just convenient to blame them. Candor and transparency will bust through gossips, red tapes, fakeness and all those dark evil. Candor and transparency is like the Sun, casting away all evils and vampires.

Contrary to many popular believes, people do not really need a superstar leader. People do not need a rock star CEO. People needs an honest, hardworking CEOs with a vision for the future and the ability to get everyone in the company to work towards that vision of success. People need a CEO or leadership team that they can trust their future on.

Then the Growth Imperative, as coined by Clayton Christensen in his book THE INNOVATOR’S SOLUTION. Philp Kotler’s MARKET YOUR WAY TO GROWTH is another book at sheds valuable insights in this area.

There is no question that growth is important to any company. But really, many company’s problem is not growth itself which in my mind is really a by product. Like money is a by product of great efforts, growth is a by product of great efforts too. Many companies do not grow or even fail because they are stubborn and their execution sucks.

Jim Collin’s GREAT BY CHOICE talks about the 20 Mile March. This disciplined, self-controlled strive towards a set direction and vision, with clear milestone markers really sets those who perform in the long term than those who fails trying too bombastically. It is important to set the company on this path of growth and communicate this clearly downwards. This is true of all execution, from product innovation, mergers and acquisition, entering new markets, business development etc.

There are a few observations that I have made:

1. There are too much emphasis on new products or new product categories. The reality is that improvements in existing products is much more important, and the fact is a lot of sales are still generated by these so-called “old” products. Yes, there may be products that need to be phased out but have you listened to the customers enough? Often, you don’t really need a “wow!” to grow top line revenue. Service, building trust with customers, improving on existing products and service (such as turnaround time), far trumps the birth of “wow!” products or product categories.

2. Once you determine any improvements or new product innovation, your execution must be flawless. If you consistently miss launch times, or when having launch the prototype but takes forever for the product to get out, whether is is mould problems, or tooling problems etc. will diminish a lot of trust from your sales persons (and we are not talking about customers yet because your sales persons are your immediate and first customer!). If your sales people do not believe in you, how would you think they can sell?

3. When entering a new market, you have to be prudent. Many people will advice that you spend big, invest heavily, make a presence. Most often, you will find yourself losing a ton of money before you can even see a cent of return. Making alliances is fine and in many cases the cornerstone of success but you cannot trust them with your farm. You have always to have a watchful eye on their activities with regular reports and most importantly, regular conversations with them and with people in the industry. Stick to your core business. Do what you know. If you open a restaurant, make sure you yourself know how to cook, and cook well. Ultimately, the successful running of a company in a foreign market depends on the strength of your local team. You have got to have a strong local team that is loyal to you and believe in the company. Align their incentives as such. Make them co-owners. No company can be strong if they do not have a strong local team.

Ok, enough ranting in this post. Time to go out and play some Go. In future posts, I may talk about my thoughts on operations and their many practices, e.g. Lean and such but no such initiative is possible if the company does not meet some criteria and no book says it better than Karen Martin’s THE OUTSTANDING ORGANIZATION.


Books mentioned in this post:


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