Simply Management: Effective Methods to Plan, Manage, and Improve Businesses
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About this ebook
Set out clearly and concisely are simple fundamentals of business-knowledge:
- how to devise competitive strategy
- understanding markets
- constructing meaningful management accounts
- how to identify and apply vital ratios
- other important financial information
- key elements of leadership and management practise
Throughout, the author supports his advice with fascinating actual examples drawn from his extensive international business experience in a broad range of enterprises, giving life and credence to the text to ensure it is an easy and enjoyable pathway to gain vital management knowledge.
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Book preview
Simply Management - Warwick J Thompson
2009.
PREFACE
This book should have been written many times previously.
But each time I was being urged to, I thought it presumptuous of me to propound my own ideas about management, or at the least, pretentious. Many others are far better qualified than I, with eminent academic qualifications, extensive business management experience far greater than mine in both depth and breadth, and who also have practised the art with more exemplary skill. And so the occasion would pass, I would put the suggestion aside and the book would not be written.
Although there is a paucity of letters after my name, I can however, lay claim to having managed manufacturing enterprises, and been a CEO in the diverse sectors of industrial consumables, fast moving packaged goods, and services. I’ve held senior international executive positions with multinationals, started up electronics businesses, managed large projects, given advice to a wide range of businesses including food, beverage, marine-industry, engineering, and professional services. I’ve also held directorships in many companies from cheese to women’s under-fashions. That experience has been gained in Australasia, Asia, North and South America and in Europe.
In recent years I have been surprised to find Business School graduates freshly placed in positions of substantial responsibility and rapidly promoted to their level of obvious incompetence who - while strong on buzzwords and bullshit - display a remarkable lack of knowledge of the basics of management and organization. I’ve also been asked to advise a number of businesses in difficulty or struggling with growth opportunities, only to find a rudimentary knowledge of basic management understanding to be mostly missing.
Even worse, I’ve watched substantial businesses with strong histories plunge into receivership with their directors and management apparently unable to provide the direction and skill to avert collapse - or even worse - seemingly unaware of the precarious state of their business. At the same time, enthusiastic hardworking individuals have courageously started an exciting business in their garage or whatever and then because of lack of knowledge of management fundamentals find themselves struggling to take the next big steps forward.
I’ve had the occasional opportunity in several countries and cultures to put a number of intelligent capable young people with evident talent into positions of management responsibility. Then after being given basic instruction, ongoing nurturing and mentoring, they have grown and blossomed into confident and successful leaders and managers. Seeing their achievements and the realization of their potential has given me some of the greatest satisfaction of my working life.
So now, when once again I have been urged to put these thoughts into writing, the motivation is finally there to do so. In fact, when I told the U.K. executive doing the latest urging that I would write a small book about management, he responded: "Only a small book? Warwick, from what I am seeing take place in business today, it needs to be a very large book!"
Well, I don’t know enough about management to fill a large book – only a small book. Besides, I’m of the view that concise, practical and succinct advice is more easily understood and absorbed than tedious long discourses of management theory and practise.
This is the Information Age and what I have written just adds to the overwhelming volume of information swirling around us like so many snowflakes in a blizzard. I therefore urge the reader to remember this – the first of my many ‘management maxims’: The value of any information is the use that is made of it.
I hope that those who read this little book will find something of value in it and then have the determination to make good use of it.
INTRODUCTION
Where should a small book about management begin?
It should commence the same way that I think approaching managing a business itself should begin – strategize, then organize. Therefore this book begins with a discussion about Strategy and then follows with Organization & Management.
The reason for this is that the first task in any business, business venture or operating sector of a business is to devise a viable strategy. Then having devised strategy, we organize the business so as to implement it.
All too frequently, these two tasks are put back to front and we rush to organize, before we have a clear, cogent and viable strategy in place.
Why does this happen?
Devising strategy is difficult. It is ethereal and abstract. Our brains are wired to prefer thinking in the concrete rather than the abstract. It requires hard thinking. There are generally no clear paths to follow, no list of steps to tick off mechanically. Usually there is nobody to help us. It can be like trying to find gold, in a fog, when we don’t even have a clear idea of what gold is or even what it looks like.
So we plunge into business pursuing some general or vague ideas of what we will try and do and we proceed to organize ourselves.
Organizing is fun. Organizing is doing. It’s usually constructive - we see something tangible for our efforts. We get lots of support. There are always plenty of people climbing over each other to help us; they want to provide us with their products and services and they want to take our money. We get satisfaction from seeing things taking shape, being put in place; it creates and reinforces a strong sense that we are achieving something. But that is a delusion.
We wouldn’t sensibly hire a team of accountants if the intended focus of our business endeavour was marketing & sales. We wouldn’t commit to leasing a warehouse if our business intention was the writing of software. Yet all too often, we put strategy and organizing back to front.
In most other aspects of our personal daily lives, we get the sequence right. We think about the meal we’ll prepare before we go and buy the ingredients. We conceive the idea to go somewhere and how best to get there, before we catch the plane or take the car. Most times, we have a vision of what we would like to become in life before we begin the training or study required to achieve that objective.
But generally, all those aspects of our private lives where we get it right, don’t involve any competition, (unless it’s for a place in the class or secure a new job). The ‘strategy’ part has no competitive element to it.
Business strategy is competitive. It is a competition with others in ideas and methods, or a competition of positivity with negativity, or progress and change with the status quo. It can mean conflict. So it is difficult and our human nature prefers to avoid the difficult and thus we would rather organize and feel more comfortable we are doing something constructive, instead.
What follows in this little book therefore follows another of my Management Maxims: First devise the strategy – then organize to implement it.
STRATEGY
What is a strategy? There are as many definitions as there are authors.
I define strategy as the creation of competitive advantage and the strategic process is knowing how you will create competitive advantage and how to achieve it.
Just knowing what it is you want to achieve and how to get there, is not a strategy, it’s an objective. It lacks having a competitive advantage.
Competitive advantage creates the opportunity for profit and business security. The strategy of any business is to find ways of building competitive advantage over other participants. The stronger the competitive advantages and the more sustainable they are, the better the opportunity for higher profits and for longer-term survival of the business.
Strategies should not be confused with success factors.
1. SUCCESS FACTORS
Success factors are those fundamental aspects and actions of the business which must be present and be done well, just to qualify for entry into the family of competitors. Those fundamentals must be present in a business just for it to be a participant in that particular business sector.
When all the participants attend to those same basic fundamentals in the same way, no one participant enjoys any competitive advantage over any other. They just display the primary factors necessary for success in their industry or sector. They are therefore not strategies, but often get mistaken for being so.
Yet it is surprising how often a business is set up that doesn’t even address the fundamental success factors required just to be a participant in its industry, let alone to create any competitive advantage.
As an example, I recently viewed a failing tourism business. The owners had purchased a large old home in a remote rural area (because it was available). They totally refurbished, redecorated and lavishly furnished the many rooms, adding numerous ensuites in the process. They remodelled the old tennis court, built a swimming pool and recreated a beautiful garden. All their remaining funds were spent on an attractive website, stylish brochures and extensive print advertising to attract wealthy tourists to their ‘exclusive’ lodge. Nobody came.
Though they had attended to a number of the success factors required for their participation in their industry segment, they had ignored many that were vital for participation in their chosen market. For example...
The venue had no unique character. The recreation opportunities were ho-hum. The location and surrounding area had no significant scenic value. It was not in a recognised tourist region nor anywhere near a normal route for air or road transport; it was in a backwater general farming district. The nearest large town was a low-decile city, off the tourist trajectory and with limited industry and commerce, so that even a subsequent effort to attract business or conference