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How to Manage Anything

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A recent article in the Harvard Business Review (November, 2012; p. 76) stated that most mid-sized manufacturing companies are poorly managed. Ouch! In their study, "Examples of bad management were all too easy to find." Only 15% (US) and 5% (international) were truly well managed by their straightforward criteria.  As the HBR article concluded, what "may sound prosaic...is actually quite radical." Strong language indeed! So how does one go about managing an operation in a much better way?

We suggest a six-step process that combines strategy and culture, the only two handles a CEO really has. Tape this list to your refrigerator.

Define the critical issue

Don’t pick ten issues, or even five. Pick three at the very most, but preferably one. Stay away from end results such as low profitability, low growth or competitive encroachment. Laser onto an issue that you can get your hands on directly, an issue that lives in the bowels of your organization and that has a huge impact on the results. Think about the key log in a logjam. Examples may include: low creativity of our engineers; inadequate face time with key customers; destructive bickering among top staff. Defining the key issue actually requires hard thinking and often an outside pair of eyes to see it, because it's sitting right there in front of you every day.

Above all, avoid "this year's top 20 issues." Such lists try to make everyone happy, but they're an on-ramp to really bad management. Don't do it!

Sometimes critical issues are chain-linked. If so, pick one or two for this year, and save the rest for later. Have the vision and fortitude to hang on until they're all addressed in multiple years, but don't compulsively attack them all at once.

 

Define the critical metrics

Define, monitor, and track metrics that tell you how you are doing on your critical issue. You already track revenue and profit; so add a few metrics tied to your critical issue. Think very carefully about how to measure what's going on. Be alert for unintended consequences. And above all, don't have too many metrics! Did we say that already?

In certain situations, Dow-Jones type metrics are ok: arithmetic combinations of other, more fundamental metrics. One risk is that, if somebody's bonus is tied to a Dow-like metric, she may throw up her hands and scream. The HBR article mentioned exactly that situation. Also, some people are very good at “gaming” such metrics to make them look good without substantial progress.

Show the key metrics as a visually attractive set of graphs, immediately graspable by everybody. Hang them by the water cooler.

 

Set goals

You knew that already. But maybe you forgot, or maybe you didn't focus on the critical issue, or maybe you set too many. Evidently, the majority of companies doesn’t get this right, or even do it at all.

Your goals must be simple, understandable, and reachable. They are framed directly in your metrics. We're not big fans of "stretch goals." Life is already challenging enough as it is. The competition is smart, and the playing field changes every week all by itself. Let's not make ourselves miserable by laying out goals we can't achieve.

Publish the goal-framing metrics every month, talk about them at all-hands meetings, and make a big deal of them. They are tied directly to your critical issue. You want your entire organization to focus here; this is your Normandy beachhead.

 

Craft coherent initiatives

Launching the right initiatives is the heartland of strategy. Formulate a handful of initiatives your organization can mount that will achieve your goals. The key to great initiatives is coherency. Coherency means that the initiatives support each other and work together, they're synergistic. Coherency is the genius of strategy. Make it happen.

And please note that there are many things you're not going to do, many objectives not addressed, many roads not taken. Strategy development is not a popularity contest, and you're not trying to include everybody's pet objective. You must make a choice. If you don't experience the pain of that choice, you're doing it wrong.

Keep the language of these initiatives simple and compelling. Don't use a two dollar word when a ten cent word will do. Obey the bumper sticker: "Eschew Obfuscation."

Base your initiatives on native organizational strengths. Aim those strengths against competitive or marketplace weaknesses. Use your strength against weakness or opportunity. Plan to win. Plan to drive a cascade of favorable outcomes. These concepts are simple...but oh so rarely practiced!

 

Cultivate a culture that supports the strategy

We have observed that "Culture Trumps Strategy", meaning that you can dream up a great strategy, but if your folks aren't committed and enthusiastic, if they hog the ball and won't play as a team, if they're constantly leaving the organization, then you can't pull off your strategy. So spend a lot of attention and energy creating a great culture. Examples of companies with famously great strategies and the cultures to back them include Zappos, Southwest Airlines, and the original Hewlett-Packard.

We're substituting the concept of culture for the older idea of "incentives." Purely monetary incentives are fine, and they're great in certain non-creative situations. But in the information economy, they fall far short. You may have cultural issues bubbling in your organization such as needless bickering, mistreated customers, high turnover, or indifference. If so, do something about them! They'll hobble your strategy.

 

Oversee a detailed plan

There is no magic; you'll need to figure out how to implement your coherent, interlocking initiatives. Our advice is to delegate this job, then be an active player and coordinator. Push ownership into the organization. Look for a cascade of actions and results, with named individuals responsible. This responsibility is not news to them, because they contributed to your thinking in the earlier stages.

This kind of planning and execution is project management at its best, including clear objectives, work breakdown structure, resources, Gantt Charts, and milestones. You know how to do this.

As the HBR authors said, all this sounds a little prosaic. But looking back at business school, we don't remember getting it this clear and simple. Evidently we're not alone in that regard.

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