Simple management

Words: 425
Reading Time: 1 min. 25 sec.s

What actions yield the best financial results when dealing with an economic downturn?

That’s something we would all like to know – always assuming that an economic downturn calls for actions different to those at any other time.

Bruce Tulgan of RainmakerThinking, Inc.® reports finding that cost cutting, innovation and increased supervision were the three strategies that yielded the strongest financial results in 2009.

Well, that’s wonderful! If that’s all we have to do to get great financial results then all our problems are solved. Or are they?

Bruce’s results are drawn from a survey of more than 1,000 managers selected from participants in RainmakerThinking, Inc.’s ® intensive two-day management seminars.

Managers that implemented these actions were found to be the most likely to report that their bottom line financial results (at the level closest to the manager’s control) in 2009 were “good,” “very good,” “better than expected,” or “much better than expected.”

There seems to be a number of weaknesses here:
1) The survey was only of managers, not of workers or financial analysts;
2) All those managers had been trained by RainmakerThinking, Inc.®;
3) Other actions taken by managers who were not participants in RainmakerThinking were not examined;
4) The assessments of financial results were entirely subjective; none were quantified;
5) Corporate benefits or detriments other than financial ones were not looked at;
6) The organization conducting the survey had a direct interest in its outcome.

Besides which, cost cutting and innovation should be high priorities in any company, irrespective of the state of the economy. Had these managers helped create the crisis in their companies by their lack of effectiveness when times were better?

And managers reported that it was their supervision that made a difference – not actions and dedication by a neglected workforce concerned about continued employment that would have happened anyway, without the managers.

No surprises there then. It’s the usual error – we always think we have had a disproportionate effect (hubris) when it’s everybody else that has made the major difference. The higher the individual is in the organization or social grouping, the more marked is this effect as a general rule.

Business suggestions:
1) Start from a position of scepticism;
2) Beware of too much simplification;
3) Ask, “Who says?”;
4) How much interest has the researcher in the outcome of the research;
5) Check for what’s missing;
6) What else could have caused this?
7) Look for a control group comparison;
8) Everything should be as simple as possible, but not simpler (Einstein);
9) Nobody has all the answers;

10) Bosses need the workers; the reverse is not always true.

Take a Reality Check

I don’t know exactly how your business is going, but there is one thing of which I can be certain: it could do be doing a whole lot better. And, when you finally pause for a moment of quiet reflection, you will realise the same thing. It should come as no surprise. It applies to all of us.

What stops us improving our performance? Quite simply, we know too much.

We are the experts in our business. We spend most of our waking hours either working in it, working on it, or thinking about it.

We may even spend our sleeping hours dreaming about it.

The consequence is that when we need to get unstuck; when we need more options to choose from; when we need to stay on track, knowing so much means we either recite all the reasons why not, or we end up being overly complex and abstract.

When we want to clarify our thinking, identify the real issues and reach a better solution an external reality check is always useful. Working on the immediate issues with someone who is not so closely involve, who can take a more utilitarian approach, can do wonders.

They can usefully cut through all the moonshine and ask the sort of intensely rational, down-to-earth questions that clears the fog of self-obsession, like: “Yes, but what are you actually going to do and when?

A young engineering graduate fresh out of Cambridge was being interviewed recently. As the end of the job interview approached, the HR Director asked, "And what starting salary were you looking for?"

The engineer said, "In the neighbourhood of £140,000 a year - but depending on the benefits package."

The HR Director said, "Well, what would you say to a package of 6 weeks paid holidays, full medical and dental cover, a two-thirds final salary pension scheme and a FX company car renewed every 2 years starting with…say…a red sports Mercedes?"

The Engineer sat up straight and said, "Wow! Are you kidding?"

And the Director replied, "Yeah, but you started it."