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Friday, August 16, 2013

Running a successful business is common sense


Running a successful company is not rocket science; it is more common sense than complex business jargon!
 
 
On the 30th June 2013 the Sunday Nation Newspaper published a pull out titled, “Transformative CEOs with Golden hands”. The pullout featured 37 CEOs and the businesses they lead. The report covered 30 men and 7 women. Eight of these CEOs held doctorate (PhD) degrees while the organizations ranged from billion dollar corporations to SMEs and successful startups in both the public and private sector. Industry categories included Public service (4), Retail (1), Property (1), Education (5), Finance (11), Technology (3), Regulatory authorities (3), Manufacturing (6), NGO (1) Agriculture (1) and Insurance (1). Our study showed that successful business leadership is more common sense than complex business jargon.

 
This study covered 37 corporate profiles, written by different authors. The word study counted the frequency of transformative words used in the reported profiles to describe the success of each CEO and their organizations. Our objective was to identify the key concepts that led to the celebrated success of the CEOs and their organizations.  Out of a list of 60 transformative words, the top word was “business” while at the bottom of the list was “loan”. While important words like mission, profit and capital did not rank as highly as expected, the words that made the top twelve contained more pedestrian words than complex business jargon. The words, independent of industry bias, reflect the thinking and common approach used by CEOs to ensure the success of their enterprises. Business leaders should focus on the following twelve words to facilitate their own and company success.
 
RANK
WORD
FREQ.
1.       
Business
186
2.       
Service
172
3.       
Develop
147
4.       
Lead
139
5.       
Work
137
6.       
Manage
132
7.       
Team
127
8.       
Market
117
9.       
Organization
117
10.   
Vision
115
11.   
Finance
101
12.   
People
101
 
1.       BUSINESS
 
Apparently, the most important competence of running a successful business is to understand the business! This sounds like common sense, but is that sense really common? We all assume we know what business is, but do we? We think we understand its purpose and know how to run it, but do we? Do we actually understand the businesses we run? Many an entrepreneur will tell you that in the beginning, they ran the business but once a business becomes established, it takes on a life of its own. At the start, the entrepreneur is the driver, but once the business grows, other forces take over like customers, weather, cash flow and other powerful business factors. Only those who can master the business have any hope of leading it to success. Successful business leadership requires specific, not generic, business mastery. However, CEOs are often hired, more for their previous success than, for their understanding of the new business and thus fail to make a transformative impact. A successful cricket coach may not succeed in the game of tennis. To transform an organization or successfully lead a business you must understand the business in entirety; its origins, purpose, management and politics. After all business is the nature of the “beast”.

 2.       SERVICE
“Service” and “business” are nearly equal. Presumably the two may be very much the same thing or very much of the same thing. It seems one should not exist without the other. If you like, service justifies business. This thinking supports the concept of “servant” leadership. Successful CEOs seek to serve and ensure their organizations do the same. Jim Collins observes this kind of leadership that elevates a business from average to greatness. A business that serves the public is a business that leads the market. If you want to be great, you must be the servant of many. However, we must consider why service outranks profit as the object of enterprise.  Service implies other (customer) benefit rather than company benefit. An organization must not “tax” customers but serve them and then be rewarded for that service. This is a hard lesson for the profit driven, hard-nosed, bottom line business executive, but service is the key to greatness.

3.       DEVELOP
The free dictionary defines “develop” as, “To bring from latency to or toward fulfillment:” Transformative organizations are not static but in constant search mode. They maintain a state of searching out, digging up, exploiting and realizing their potential. Transformative organizations are in the business of mining and extracting the value of their potential in a continuous state of growth. These organizations are more concerned with exploring latent gifts, talents and potential than harping about past success. Transformative organizations are concerned with organic growth rather than physical expansion. They exploit the corporate DNA. Successful CEOs concentrate on making the organization what it could be than what it is. The way to do that is to extract and install its full potential.

4.       LEADERSHIP
Leadership is the “facilitator in chief” of a business. The role of leadership as the custodian of corporate success is to make sense out of the business, its service delivery and realize its potential. The leader’s role is to strategize for success. Dr. Ridgley talks of strategy as imposing order over chaos or entropy. He argues from the third law of dynamics that the natural order of things is entropy unless a “strategos” or army general (business leader) makes sense of what is going on. Much as one would like to glorify the leader for the success of a campaign, leaders are usually very keen to share the glory with their leadership teams. Effective Leadership teams are carefully selected, deployed and directed. It is not the number of leaders an organization has that matters it is their quality that brings success. The finger of success points to the quality of an organizations leadership.

5.       WORK
It is amazing how often the simple word “work” appears whenever business discussions and success stories are told. However, the word is far from simple. Work is at the complex core of business success. A loose comparison to work is productivity. However, productivity measures the output of initiative in spite of the effort put in. Work on the other hand incorporates effort, initiative, creativity, innovation, attitude, discipline and courage. Work is much more than results. Results are only part of the outcome of work. In successful organizations, work creates far more value than the same work produces in non-transformative organizations. Successful leaders and CEOs find ways to maximize the outcome of work efforts, they do not just measure performance, they also do not waste effort or initiative. Successful CEOs find ways to ensure the smallest amount of work amounts to great corporate value. Efficient and effective work habits are good things, but these in themselves do not achieve success. All work must be a multiplier to leverage and achieve the strategic intent of the business. Successful organizations may not work harder than other businesses, but they are certainly able to produce greater value than the average business.
 
6.       MANAGE
To “manage” is clearly related to leadership, but to manage is to “follow through”.  Successful leaders are always supported by good managers. While leaders work out the goal, managers have to work out how to best to achieve that goal. Managers manage performance, process, and solve problems to achieve the goal. Collin Powell says,   “Leadership is the art of accomplishing more than the science of management says is possible.” Management is essentially a science, the science of achievement. The power of science is its ability to improve the quality of our lives by discovery, research and constant development of new ways of doing things.  The duty of management is to, “always, relentlessly push forward the frontiers of possibility and bring about new reality”.

7.       TEAM
The “Teams is a significant corporate investment quite apart from equipment and technology. staff, personnel or people did not achieve as high ranking as the word “team”. This shows that a team is an independent and unique powerful organization quality. Virtually all CEOs give credit to their teams and not necessarily “staff”. Unfortunately, team or “teamness” does not seem to have any academic qualification that easily measures its availability. However all games team coaches demand it and spectators know it when they see it. The essence seems to be in the assembly of the persons making the team and not the persons themselves. The great teams the CEOs refer to suggest a sense of literal joy in sacrificing for success.  Team members consider it a privilege to share in the business of success. The only reward is the success of the team. It is possible to have people on the team that do not share in the success of the team. Successful organizations have people (teams) that serve beyond the call of duty. Teamwork cannot be achieved by people who do only what they are supposed or  paid to do.

 8.       Market
The market holds a magic wand and a guillotine to the head of every business. The market responds with gratitude, embrace and reward when a business meets a market need or a market yearning. However, the market can ruthlessly cut off the life of a business even though the service may be sorely needed. Organizations that focus on organization improvement at the expense of the market will not be rewarded. The market rewards organizations that facilitate the transformation of the market. Your product may be good but the market must agree to do business with you. Markets govern business success. The lesson here is that transformative businesses and successful CEOs look for market nooks, needs, niches that need to be satisfied. Finding these market openings is like striking oil. All transformative organizations seem to have struck oil. Unsuccessful leaders tend to antagonize the market rather than satisfy it. Worse still, poor leaders exploit and destroy the market that feeds the business. A business without a market is unsustainable.  

9.       ORGANIZATION
This word has three forms; organic nature, noun sense and verb use. Successful organizations are organic. They evolve, and set goals to transform themselves every year. Transformative businesses are comfortable with change, look forward to change and create change. In the Noun sense, successful business has a “name”, a clear sense of identity or brand. The name is a label of integrity worn with pride.  The verb sense of the word indicates that a transformative business is known by its action and activity and vocation. A successful organization is a dynamic hive of activity. A dormant organization cannot be transformative. An organization is a culture, a process, a way of doing things that is unique. The lesson from CEOs is that a successful organization must live up to its name. A successful business is organized to fulfill its promises.

10.   VISION
Vision is said to be very important in leadership theory, but this study shows that other mundane elements like “work” and “service” far out rank “vision”.  The question we may ask is who is, to whom is the vision important? Vision may be important for the leader and perhaps the leadership team, but not necessarily to everyone else. It is possible for an organization to function without a vision or worse still ignore the vision all together. However, all such business will eventually fail.  Though the vision is critical to the leader, it is more important for the people to know what they should do in the short term, than whether they believe in the long-term vision and goals of a business or not. The leader needs vision in order to help him steer the ship. Nevertheless, the leader must also have the ability to break that vision down into individual tasks that enable the people to participate in the vision. Vision is like the North Star, way up in the sky, that successful leaders use to guide the ship to shore. However, everyone else on board the ship is happy to do all they need to do to keep the ship afloat as long as the captain promises to get them to shore. The lesson for the successful CEO is “break it down” into things people can do like “work” and “service” rather than what they should see like the “goal”.    

11.   FINANCE
In this study, Finance is ranked far higher than capital, profits, funds or money. This shows that finance is more of an instrument rather than a resource. Finance it important for pursing and progressing ideas and plans. However, finance may limit the scope of implementation of an idea but it does not limit the idea or the essence of the plan. The strategic use of resources is more important than the availability of resources. There are organizations that have abundant resources but lack the strategic foresight to achieve success. Finance is therefore not the money, but the ability to marshal resources to fund a specific idea. The lesson for organizations is that success is not in the accumulation of funds, talent and resources, but rather in the strategic use of those resources to ensure the success of the business.  

12.   PEOPLE
 
“People” rank ahead of human, skill, passion, commitment, education, training, staff shareholder, society and customer all of which derive their value from “people”. This ranking may reveal that people in successful organization are first treated as PEOPLE. “People” is such a vast entity and yet such an easily accessible quantity, that it is easy to overlook the power people contribute to the success of a business. The question then is, "what is the value of people?" For the answer, we have to travel to Gettysburg.  Abraham Lincoln (CEO) entrusted the government (organization) to the people when he said, “a government of the people, by the people and for the people shall not perish from the earth”. Lincoln knew that if the people were behind an enterprise it cannot fail. People have the power to sustain a dream they believe in. Lincoln’s statement gives business leaders a clear sense as to where the success of any enterprise lies. If the business is owned by the people, driven by the people and works for the people, there is no way it can fail.

©Allan Bukusi, 2013.

Allan is the CEO of the Management Decision Information and author of How to lead corporate transformation

 

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