Simple management

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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.

The wisdom of making mistakes

We all make mistakes. And fear of making mistakes too often keeps us frozen in indecision and inaction. However, it is rarely the mistake itself that is the real problem. More often it is the consequence we expect, the outcome from the mistake that blocks our moving forward.

That fear is misplaced for four main reasons:

Our fears may be groundless or, at least, exaggerated. Fear is only felt in relation to potential future events. Nobody fears the past since it is already known and experienced. However, potential events are not real events. They may never happen as we anticipate and we cannot know how they will happen until we take action. How often has some dreaded eventuality turned out to be not so bad after all?

Mistakes may be more apparent than real. What we judge to be a mistake in the short term can eventually emerge as a breakthrough. History is replete with such events. Artificial sweeteners, X-rays, microwave ovens and vulcanized rubber are just a few of the inventions that owe their existence to chance.

We learn from our mistakes. It has been said that success teaches us very little, whereas failure carries valuable lessons. Our failures cause us to pause, take stock, work out what went awry and then modify our approach. Success is often taken for granted. We pat ourselves on the back, congratulate ourselves for being so smart and move on. We rarely stop to work out what elements came together to deliver such a great result.

Indecision and inaction is itself a decision – hence the expression ‘damned if you do, and damned if you don’t’. With a decision made and action take you have intention and a degree of control. With indecision and inaction one is subject to the variable winds of fate and fortune, and the decisions and actions of others, never know where one is likely to end up.

Then there are those mistakes that only appear to be foolish, but conceal a deeper wisdom:

One day a beggar appeared in the marketplace. Whenever people showed him both a large note and a smaller note he always chose the small one.

Eventually, a generous man who was tired of seeing everyone laugh at the beggar quietly went over to him and explained that when people offered him two notes, he should choose the larger one. Then he would have more money, and people would not think him a fool.

"You are surely right", replied the beggar. "But if I always choose the larger note, people would stop offering me money, in order to prove that I am a greater fool than they are. And then I would no longer receive enough for my food. There is nothing wrong with appearing to be a fool, if what you are doing is in fact intelligent."