Recently I was called upon to prepare a presentation for a group of university business students from Brazil. The presentation was to include Leadership and Strategic Management. In thinking about what would be valuable to convey, I didn’t have to think much about Leadership as that is one of the things we’re know for in our industry but I wanted to find our more about so-called Strategic Management so I did a little research into the subject.
Here is one definition for Strategic Management.
“Strategic Management is all about identification and description of the strategies that managers can carry so as to achieve better performance and a competitive advantage for their organization. An organization is said to have competitive advantage if its profitability is higher than the average profitability for all companies in its industry.”
Now, having been in Business and Management Consulting for about 30 years, I have come to understand that many in my profession have a habit of taking something common, even old, and renaming it as if it were new.
For some reason, not only consultants but Executives and Managers in business seem to delight in creating complexity where it does not need to exist. When operating businesses, there’s really not that much under the sun that is truly new. Now clearly, things like virtual employees, the global nature of business today and technology are new but “business basics” are really not.
So, in looking at one of the latest “new” things to come down the pike, I found Strategic Management not to be new at all. Back around 1960, a gentleman named Eric Gillberg introduced a practice to management known as “Goals and Controls”. This system was based on the Pareto Principle (the 80/20 rule) and was paraphrased to mean “concentrate on the “vital few” and ignore the “trivial many”.
In practice, each supervisor, manager and executives breaks down what they do into a short list of categories that can be easily measured. Each month, results oriented performance goals are set and managed to for these “vital few” areas in the context of the overall business plan. Three months of successful goal accomplishment role up into a successful quarter and four quarters role up into a successful year.
Now without getting too granular here, one quick example. During the course of any month a sales organization will do thousands of things but to measure all that activity would be foolish. What needs to be measured is gross sales and gross margin. Regardless of how “busy” everyone is, if these two categories of goals are missed, the business hurts.
When done throughout all areas of the business, this becomes a precision management system. Now, there are meetings to report progress and formulate corrective actions if someone is off target and a lot of other things that take place but the fundamentals remain the same. There’s nothing wrong with Strategic Management, it’s just nothing new.
So, take some time to analyze the various complexities in your business and determine if they are really necessary. If they exist for legacy reasons, take a hard look at eliminating or changing them.
Sometimes, going back to basics is the most innovative thing you can do.
How’s the complexity in your business?