- “When a management team with a reputation for brilliance tackles a business with a reputation for bad economics, it is the reputation of the business that remains intact.”
- “Should you find yourself in a chronically leaking boat, energy devoted to changing vessels is likely to be more productive than energy devoted to patching leaks.”
How do you fix a broken company? Or if the company is fundamentally sound but you want to blow it up into a huge runaway success as fast as possible, without leaving any potential avenue of growth aside, how do you do that?
I was explaining both to my co-workers and then to someone at a major international corporation who just happened to reach out to me, why this sort of business optimisation analysis is just so bloody tricky. No company is the same, no situation is the same. So how do you systematize it so that you get a similar recommended plan of attack regardless of which team or consultant(s) look at the issue?
My assessment is that the first level of difficulty (or ease), is to assess, fix, optimise, etc. your own company.
The second level of difficulty is, as a bright and experienced consultant, go into someone else’s business and poke around. This works … but it would provide inconsistent results. The example I gave is that if I were to evaluate a certain business I might say ‘your product is broken, go figure out what your customer wants and then we’ll talk,’ whereas another consultant might say ‘your product is broken, let’s fix it this way’ and yet another might not even see that the product is broken.
I mean, how do you even tell a product is broken? If no one is buying that’s a big clue … but what if some people are? How do you differentiate a product or service that might be under-performing due to a sales and/or marketing challenge from a product or service that just doesn’t have a strong enough value in the minds of customers for the customers to pay the price you need to charge to cover overheads and grow your business?
Well this is why a Babson MBA costs $50,000, and this is what makes those skills so much in demand.
But I haven’t even gotten to the third level of difficulty which is to systematize the process, so that you can have different people look at the same data and come up with similar recommendations. I had a bit of a breakthrough on Monday when I finally figured out a way to frame things. To make something complex simple, you need to be able to separate the parts and put them back together in a logical way. So now I know where I’m going with it but there’s still a chunk of work involved to get this all down into a diagnostic tool that I can teach to someone else.
In the meantime I’ve been reviewing various bits of management and strategy and valuation academic literature. Which is to say, playing around. Theory gets me off, but not quite so much as application of theory. I found an awesome slide deck from the University of Chicago. Some of it blew my mind because it challenged my existing perceptions but since it logically made sense, I’m now changing my tune. Here’s the cliff notes version (this is almost word for word quotes …. I’ve rephrased a bit for brevity):
- A bad management team doesn’t necessarily kill a good idea (although it can!!) but even a good management team can’t overcome a terrible idea. Radical pivots are rare. This was news to me: I’d always maintained that one should bet on the jockey, not the horse.
- The business plan / market potential matters. Spend marginal due diligence time evaluating the business. Word. Sounds familiar.
- What do VCs say is their biggest mistake? They did not fire management fast enough. Do not say that they picked the wrong business. Must be nice to be able to fire management, huh? How do I get into THAT business? But in all seriousness …. Of course. Good ideas are way easier to evaluate than good people.
- The maxim “If at first you don’t succeed, try, try again” ought perhaps to be revised for VCs into “If at first you don’t succeed: quit, quit at once.” Oooh but there’s that sunk cost cognitive bias to deal with …. Not to mention the loss aversion bias and consistency bias….interesting one though, what this implies to me is that VC firms should have strong, independent, fiercely external non-exec advisory boards who can tell them when they are flipping crazy and throwing good money after bad.
If there is one thing I know to be true from what is now nearly 15 years in business: everything affects everything. The strategy (direction and plan to get there) matters. Who comes up with that? People. The execution matters. Who does that? People.
At COMMON Pitch, Henk was giving some lessons he’d learned from his time starting Skyrove. What do I remember from that? Just one piece of advice: don’t give people too many chances. When the entrepreneurs channel the academic literature, there’s a good chance they are correct.
My management philosophy: find good people, empower them to make their own decisions. Trust but verify, and be clear on the boundaries where they need to ask permission. No one who’s good wants to be micromanaged, and you can’t scale with micromanagement anyway. If people can’t be trusted to make their own decisions within their realms of expertise, replace the people. If people can’t be trusted to do what’s best for the organisation rather than for their little fiefdom, replace the people.
This is actually coming full circle in a way because when Skip Battle took over Ask Jeeves, this was his loudly announced management theory from his many years at Accenture. I remember pooh-poohing it, but the reason for that was, to put it kindly, a difference of opinion about the capabilities of the people he was empowering. I guess we were both wrong. And we were both right. Another classic MBA response: the answer is always ‘it depends.’
But here’s the tricky bit …. How do you find good people? Where are all the A players? The best predictor of future performance is past performance, but how can you tell when someone who’s never done something before is going to be able to do it?
I probably told this story before but one time when I was a kid my mother had brought in a bunch of zucchinis from the garden. I volunteered to grate them and about halfway through the first one I got bored and said I was stopping. My mother, of course, wasn’t having any of this. This was the first lesson I can recall in DWYSYWD (do what you said you would do). But part of the way through I realised I was actually enjoying myself again. I can enjoy whatever I’m doing as long as I can feel that it has a purpose and I’m making a difference. I can be designing a business plan or painting a wall or lifting some heavy weights.
Our French marketing virtuoso intern this week had a throwaway comment that marketing is just about being smarter than the competition (and by marketing we mean the lifecycle from product design through to delivery not just ‘advertising’ or ‘social media’). To the degree that this is true, that is why I consider myself a product person (as opposed to a sales person or operations person). You solve a customer’s problem and you can do it well, you have a business. You can’t, you don’t.
I’m competitive. I like to win because I can. To the degree that business success is about outsmarting, out thinking, out manoeuvring, always being one step of the competition … that excites me. The flip side is also true: even more than I like to win do I hate to lose when I think I should have won. You will NEVER see me struggling harder than to pull victory from the jaws of defeat. When things are too easy or when loss is assured, I coast or sulk (or both), but when it counts, I’m there.
I’m impatient. But this can be a good thing. Apparently eBay was coded in a weekend. I’ve said this a zillion times but have failed to practice it to its full potential but set high goals and fall a bit short. It’s a hell of a lot better than sandbagging. As a manager if someone always hits all their targets, something is VERY wrong. It’s too good to be true, but not in the way you think.
I’m crazy. Apparently this is either a good thing or not excessively bad when combined with everything else.
OK an unusual post. Guess you can tell where my focus has been recently. What can I say? Unscheduled rest week combined with coming down with disease on Sunday has left me working pretty much non-stop. It turns out when you are not training 2x a day half the days of the week you have a lot more time in your day!
I did have some dinner with Tammy & Matt Friday night in Camps Bay, combined with some very non-paleo wine & chocolate.
Saturday … market then to the martial arts studio (nothing strenuous), then to watch the Springbok test match vs Argentina at Fireman’s Arms with Justin, one of the CrossFit boys, who is moving to Joburg to take up a better job. Sounds like a cool opportunity; I’m happy for him!! I was feeling sufficiently not great that I went home and to bed in pretty good order.
I thought the hangover was a bit extreme given what I drank; turns out I was probably just getting sick. How awesome for this to happen on my rest week I must say! So I mostly stayed in bed planning, reading, researching, formulating questions. I guess learning is a bit like training: it’s stimulating. Then I roasted a chicken. Yep, that’s about as interesting as it got on Sunday.
Monday … work; very flattering Skype call with the UK, and a chance to eat my own dogfood. Can’t complain. Tried to take a Skype call from home but the internet didn’t cooperate so I had a 90 minute call sitting on the floor of one of the changing rooms at CCF. I’m sure the cold was good for my cold. Then I did mobility; it felt GREAT to be moving and actually the various aches and strains are doing well by the rest. Then I did a pullup and remembered I’m not bulletproof.
Tuesday … left work early, went to the doctor, who said I have a virus but I do have a minor eye infection. I LOVE how you can just call the doctor, go in two hours later, and when the pharmacy doesn’t have something you need they will deliver it to your door that day, for free. I know in real terms the private medical care in this country is quite expensive but by U.S. standards it’s laughably awesome. Then I ran some errands, one of which took me into the building I had up to this point avoided; the Cape Town police building. I haven’t been creeped out like that since Tuol Sleng. Makes sense I suppose. Then I ran into Adin, Nathan, and Lushwill at TRUTH. But I prefer the coffee at Deluxe. Unfortunately, when I’m running a slight fever no amount of caffeine can get me back to zero. Meant to go to the gym for more mobility but didn’t have time before qigong. By didn’t have time, I guess I mean I decided rather to send Mike a selection of South African music rather than motivate. Oops.
Now … time for bed.
- “Marketing is just about being smarter than your competition.” – Michaël
- “Normal is a terrible thing.” – Jeff
- “I don’t know if the tunnel’s begun yet.” – Jeff
- “Yeah, well, I’m not like most people.” – Ellie
- “I don’t actually read minds. Just so you know.” – Ellie
- “I’m sorry …. WHAT is paleo about what we’re eating right now?” – Ellie
- “Everything affects everything.” – Amanda
- “A broken product is worse than broken sales, because you might not be able to fix your broken product. ” – Ellie
- “Nothing wrong with a bit of craziness.” – Michael
- “You don’t want mediocre success, you want great success. Mediocre success isn’t going to suit anyone.” – Michael
- “It’s a pure execution play. It’s all about leadership.” – Michael
- “You are not impatient. You are a realist.” – Michael
- “You mean, you must first have three drinks?” – Mike
- “I can’t stand it any more!” – Kim (I swear, I’ve never heard a boy complain this much about something he can’t control)