Archive for the ‘Thoughts on Management’ category

Getting control of your business

October 11, 2009

Step 1: Define what your customers need from you.

An effective business provides products that customers demand at a price they are willing to pay.  It’s important for a business to have a good handle on what products and services they provide within their target market.

Products and services are defined in terms of features and grades.  For example, a company might sell different kinds of wheel barrows with different features and specifications.  These product and service definitions will drive the business in quality and focus.

Step 2: Define what your business needs to produce its products and services.

A business transforms resources into products and services.  The transformation can be viewed as a one-step process with resource inputs and product/service outputs.  Step 1 tells us what we will deliver to our customers, now we need to identify all the resources required to make those products and services.  Several types of resources combine in the transformation:  people (skills, personalities, aptitudes, training), materials, money, customer input.  What resources are needed to produce your products?

Step 3: Define the high-level business processes, roles and responsibilities that turn resources into sales.

Now we break the one-step transformation from step two into major business processes.  The business processes tie the function of the business together as one cohesive whole.  Candidate processes are sales, marketing, product development, supply chain (purchasing, manufacturing, distribution), account management/customer support.  Candidate roles are a combination of external entities and internal roles defined by the business processes.  The most obvious role is the customer.  The important information to capture here is how the major processes interrelate to each other and how various entities interact with the business processes.

Processes have three aspects:  interface, internal procedures and internal inventory (physical and electronic).  The most important aspect is the interface, because it determines how the process fits with its peers and other entities.  The best interfaces are optimized based on the attributes of the consumer.

As processes are developed, internal customer/supplier relationships are developed.  Because all of the processes involve two-way relationships with the other processes, the customer/supplier relationships involve all combinations of business processes.  Recognizing this situation will highlight the interdependence of all groups in the company and will foster collaboration between them.

Step 4: Define the culture of the business.

It is relatively easy for a small business to establish a culture and virtually impossible for a large business to change, so it makes sense to be deliberate in establishing a culture as soon as possible.  Generally, culture can only be defined by a single person that has the majority of control in the company, a situation that exists when a company is small and diminishes over time.

Various aspects of culture are important to address:  work intensity, hours per week, compensation, decision making processes, delegation of responsibility, team work, etc.  By establishing an effective culture, the company can build a cohesive group of people that will work toward company goals.  The success of most companies can be copied from a superficial point of view, however any company advantage due to people resources is nearly impossible to copy.

The most important cultural ideal should  be collaboration, which requires communication and commitment.  In a culture of collaboration, no group will feel superior to another and all groups will be viewed as essential to the success of the business.  The biggest driver for collaborative behavior is consistency of rewards across the company relative to the company’s overall success.

Step 5: Establish an expectation for quality.

Quality is a boolean.  A product or service is either good enough for the consumer or it isn’t.  The easy target for quality is measuring products and services that are delivered to the customer, however due to the internal supplier/customer relationships, quality is an issue for the breadth and depth of activities of the business.  Whenever a supplier delivers a product or service, reasonable effort should be made to ensure a high level of quality.

Quality involves collaboration between suppliers and customers.  As customers interact with suppliers, they learn what works and what could be better.  When a collaborative effort exists, customers will be able to communicate with suppliers to help reach mutually beneficial changes in the interaction.

Step 6: Establish expectations for improvement

Improvement happens on two levels:  small improvements at the lower process levels and large improvements that involve major components of the business.  Focusing on both of these levels is essential for a business to become more efficient over time.

The primary source for improvement ideas is the people performing the work.  It is important to develop a culture and processes where peoples’ ideas are capture, vetted and processed through an improvement process.

Step 7: Establish goals

Goals are important for a company to move forward and can address quality, efficiency and sales.  The goals need to be reasonable and based on the phase of the company in its life cycle.  For a mature company, the focus might be on efficiency and looking at untapped related markets.  For a new company, sales might be the primary focus.

It is good to separate goal achievement from compensation because goal-based motivation often induces behavior that is not beneficial to the overall success of the company.  For example, a bonus based on a sales goal may lead to a salesperson to meet the goal but not exceed it.  Goals should provide a company-wide focus on success.  Tieing compensation to company success rather than goals is much more effective for motivating the right behaviors.

Step 8: Execute

All the planning in the world is pointless without execution.  To that end, a company needs to have mature project management skills to keep focus on moving forward.  Project management involves understanding what the business needs to change in order to be more successful.  Possibilities are prioritized, planned and executed according to the needs of the business.

The first priority should be to make changes required to conform to the decisions from steps one through seven.  Once these changes are made, then the company enters the continuous improvement mode where further changes are designed and executed.

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The Idea Funnel: start creative, end focused

September 28, 2009

Principle 4 of my Top 10 Management Principles

There are three concepts that need to be considered when defining a process that involves taking ideas and creating outcomes.  First is understanding creativity, second is understanding personality, and third is how to put together a process that considers the needs of creativity and the needs of business.

To understand creativity, let’s look at three concepts:  creativityintelligence and knowledge.  Knowledge is simply understanding facts and is accumulated in one’s mind in the learning process as one learns new bits of knowledge over time.  Creativity is the ability to combine bits of knowledge in new configurations.  Intelligence is the ability to recognize which configurations of knowledge are useful.  Understanding and combining these concepts will help us to develop a business process to “manage” creativity and produce products.  Let’s look at an example of creativity.

Let’s say Mary invents a three-legged stool and it is very useful, however John finds the stool somewhat uncomfortable.  John decides that lying down is more comfortable, but less useful for work and he tries to come up with a way to combine the ideas of the stool and a bed.  He takes his mattress, leans it against the wall and puts the stool next to it.  Now he can sit in the stool and lean on the bed.  John now has a very comfortable place to read books.  Mary, impressed by John’s idea, goes one step further and adds a back to the stool and calls it a chair.  In this example, the chair was invented by combining two previously-known bits of knowledge.

Now that we understand the creative process, how do we optimize it?  This is where intelligence becomes important, because intelligence is the catalyst for optimizing creativity.  It does so in two ways:  it is the skill required to recognize the relative usefulness of creative ideas, and it speeds up the creative process by leading to more useful solutions quicker.  In the previous example, we have two solutions for making the stool comfortable, but which one is better and how do we know which one is better?  Let’s just say that it’s obvious that Mary’s chair is better than John’s chair, so her chair is the more intelligent solution to making the stool more comfortable.  We might even go as far as to say the Mary is more intelligent than John because she recognized the better solution.

So what is creative genius?  Some would define it as an ability to come up with many widly new ideas without regard to usefulness.  This definition really only addresses the creative side of creative genius.  The genius side involves focusing the creative process to produce “good” ideas.  We can leave the definition of “good” for some other conversation. 

The second part to figuring out how to exploit the creative process is understanding people.  The Myers-Briggs Type Indicatoris one of many personality profile assessments that have been developed to understand how people behave.  These profiles allow us to understand how different people can work together and contribute to a goal.  The key here is that some people are more creative and others are more intelligent.  For now, let’s assume that stereotypes are true:  creative people tend to be unfocused and intelligent people tend to be drivers.  We need to value both types and develop a process that helps them interact in an optimal way.  Such a process must allow phases for each type to contribute in way that maximizes their input.  This process is the idea funnel, which is very similar to the sales funnel.

An idea funnel works like so:  start by generating creative ideas which are new combinations of bits of knowledge, then proceed with selection and elaboration, and finally focus on refining the best ideas and producing an outcome. This process describes how a team of people with various skills and aptitudes can work together to produce exceptional outcomes. 

The first step is essentially brainstorming, which is fairly understood today and occurs at the start of the process.  The input is a general description of the desired outcome.  As we know, brainstorming involves generating many new ideas without regard to usefulness and without much discussion.  The output is a wealth of possibilities that need to be considered and filtered.

The second step can involve any number of techniques that help us model and document ideas and concepts. During selection and elaboration, the goal is to understand each idea to the extent necessary to exclude it from proceeding to the refining step.

After selection is complete, the team has a very good understanding of the nature of the desired outcome.  The team is then ready to refine the selected ideas and reduce them into a practical outcome (product, process, presentation, etc.).  The refining step is where the less creative people will likely be able to drive the outcome with more methodical and rigorous methods.

The idea funnel considers how creativity works, how people work and creates an environment where a group of people can exhibit creative genius.  One of the keys is to separate creativity from refinement, producing two effects:  the creative people on the team will feel that they have an important contribution in the beginning of the process, and few relevant ideas will escape the team.  The other key is to drive the process to a decisive conclusion by selection and refinement where the team can focus on a target date to deliver the required outcome.

Thoughts on Management

September 24, 2009

Today I created a page called Top 10 Management Principles as defined by myself.  In creating this page, I hope to bring clarity to my own ideas on effective management.  It is likely that the page will change quite a bit in the future.

The first principle is the 3 C’s: communication, collaboration and committment.

Communication builds trust and is required for any other principle to succeed.  Trust is often lost through silence.  When we don’t hear from people important in our lives, we often begin to think the worst.  Simply staying in touch is enough to keep trust alive.  Of course, the implication is that the communication is honest and accurate.

Collaboration is working together to some end.  It is a give-and-take interaction where all involved have input.  Collaboration has the effect of getting the best from everyone and at the same time maintains a positive energy environment.

Committment is buy-in to the goal and actions to back up that buy-in.  Committment is needed to adhere to the principles and to reach the finish line.