The pillars of good business
In my book, The 8 Platforms of Business Success, I mentioned that management is the pillar of any successful business or organisation. This fact I came to fully appreciate early in my management consulting career. Management is the executor of the business strategy. The key thing to good management is in executing the strategy practically, timely and qualitatively; but it is also in resolving challenges as they arise which can derail the fulfilment of the businesses objectives.
How to select management
When recruiting or promoting someone to a management position, it is important that the best person be selected who fits into the organisation and who has the capacity to do the best job. Nowadays there is a culture of ‘see the MBA first’ on the CV before you even evaluate a person’s ability to a good job. Which brings me to a question; “is an educational qualification a tool or a product?” If the first criteria before someone evaluates a person’s ability to do a good job is whether they have an MBA, then the qualification is a product and the person applying for the job knows that having that MBA on the CV is a foot in the door. If it’s a tool, then it should just be a reflection of someone’s desire to know more so that they can do a better job. Unfortunately the world-wide trend now is to treat qualifications as a product.
The issue of doing a good job was highlighted to me in discussion with one of my Wise Brother’s managers recently. I asked him how their business was going, and he expressed concern about one of their rivals. He explained that this competitor had access to a lot of cheaper funding than them and could afford to give better terms to customers than they could. I liked the fact that though my Wise Brother’s company is the market leader in their field, they are not resting on their laurels and are consistently keeping an eye on the competition. I thought about his statement for a while, and then asked him how long this competitor had been in business? He replied that they started operations in the same year. I pointed out to him that despite the fact that this competitor had been in business for the same length of time and had better facilities to entice customers, my Wise Brother’s firm still had pole position. Why was that?
The difference was in the management teams. You can have all the tools at hand to be better, but the team that use their tools better, even though limited, will win. Though these two companies are in exactly the same business, my Wise Brother’s management team is more qualitative, efficient and more effective than their competition. This is validated by the market in that despite better terms being offered by the competition, and them having better facilities at their disposal, customers prefer my Wise Brother’s business. In running any organisation successfully, you need a team that delivers on your objectives consistently and to customer satisfaction.
The process of getting your management team right
The management team is a priority and should always be built around long term success. They must fit like a hand in glove and the process below is how to ensure this happens;
1.REASON FOR EXISTENCE 2.CULTURE 3.BUSINESS MODE 4.CRITICAL SUCCESS AREAS 5.STRUCTURE 6.OBJECTIVES 7.MANAGEMENT 8.KEY PERFORMANCE AREAS
1.Reason for existence
Every business should have a purpose that transcends merely making money. If money is the ultimate objective, what would then be the reason to continue to push, innovate and work hard when the business has made money? There would be nothing to look forward and strive for and so the only way would be down. Therefore, every business must set a reason for existence that drives them forward and keeps them sustainable.
Because the business has a reason to ‘live’, in order to remain true to its purpose it must build a personality, a character as it were; and this is established through its cultural norms. These do not happen by accident, they are cultivated by the founders and the business leadership so that it becomes a way of life for all those in the business. For example, if the leadership is not fussy about getting work done on time, then the managers will have the same attitude, which flows to the employees. Customers will get to know this soon enough and their view will be, “you know those guys are never on time.”
There are many ways to skin a cat. Related to the purpose and culture, the model selected to deliver the business objectives must be relatedly suitable. A good example is IBM vs Apple. IBM was established on a structured corporate model, down to the dress code. Apple was founded on hippie principles. More free thinking and passion driven. But both have had huge success in the computer industry. No one size fits all.
4.Critical Success Areas(CSA)
Depending on the model chosen, there are certain areas which need to perform to the highest standards in order for the business to survive and perform to expectations. These areas are never too many. They are the bases upon which the business must rest, or else the model will not work. I believe these should never be more than five. Most other important areas usually fit within the five main areas.
How the business is set up structurally then is dependent on making sure the CSAs are fully addressed. For example, if a business employs thousands of people, the HR function becomes a CSA. Therefore, a strong and competent Human Resource department is critical to the success of that business.
Reason for existence is always the start point, but along the way the business should have targets to aim for. Note though that these targets must align to the reason for existence and not be in conflict. Take a church for example, its reason for existence can be ‘to win as many souls as possible for God’. Two of its objectives might be at one point in time 1.) Establish a church television network and 2.) Plant a church on each and every continent. As you can see, the objectives are still aligned to winning many souls for God.
Each CSA which is covered in the company structure must be overseen by a manager. This manager must fit with the culture of the business and must know;
(i) What the purpose of the business is,
(ii) What are its short, medium and long term objectives are and
(iii) How he/she fits into this overall plan.
This brings alignment to what the business wants to achieve and how it wants to achieve it with the critical element for their success, management.
8.Key Performance Areas(KPA)
To complete alignment of management, each manager must be clear about what their Key Performance Areas are. Like the CSAs, these should not be too many such that the most important bits get lost in the detail.
And finally, for the continuation of a business, the best people to lead a business going forwards should be groomed from the management. If the above process has been done right in that the management is; aligned in purpose, fit with the culture, know the business model, understand what is critical for that model to work, appreciate the reason for the structure, know and are in alignment with the objectives of the business and are fully conversant with what is expected of them through the KPAs and have performed up to standard; then these managers are the best people to take over the running of the business.I recently had a chat with my Wise Brother and he has put in place a succession plan for his business. Virtually all the criteria that I have listed above for good management are present in his business; and so I believe it is well set for long term future success.