Management Quotes

The outside figures will always remain unsatisfactory for the simple reason that the important things that happen outside the business happen at the margin, and so they are not expressed in figures until it’s too late. They are qualitative changes. You can quantify them, but you don’t really understand the relationship quantitatively. I’ve been struggling with this for 40 years, and I’m not the only one. There is basically no solid geometry to early qualitative changes that can tell you whether they are significant or not. You cannot easily convert a qualitative change into quantities.
— Peter Drucker

No Comments » Posted by Administrator / Information and Knowledge

Although I invented the term “profit center” 40 years ago – one of my lesser contributions – a subsidiary of a division is not a profit center, but a cost center. The only profit center is the customer. Until the customer has paid his bill, there are only costs, and until the customer has come back with a repeat order there is no customer.
— Peter Drucker

No Comments » Posted by Administrator / Business Rules and Customer Related

Risk has its place in a calculus of probabilities. It lends itself to quantitative expression – as when we say that the chances of finding a defective part in a batch are two out of 100. In the framework of benefit-cost analysis, the risk of an innovation is how much we stand to lose if we fail, multiplied by the probability of failure.

Uncertainty is quite another matter: a situation is uncertain when it requires action but resists analysis of risks. For example, a gambler takes a risk in an honest game of blackjack when, knowing the odds, he calls for another card. But the same gambler, unsure of the odds or unsure of the honesty of the game, is in a situation of uncertainty.
— Donald A. Schon

No Comments » Posted by Administrator / Risk

Men involved in technical innovation in a corporation confront a situation in which the need for action is clear but the action itself is not…. So long as this situation exists, the corporation cannot function effectively, because it is not designed for uncertainty – a situation in which there are no clear objectives to reach, no measures of accomplishment, and no proper concept of control. A corporation cannot operate in uncertainty, but it is beautifully equipped to handle risk. It is precisely an organization designed to uncover, analyze, evaluate, and operate on risks. Accordingly, the innovative work of a corporation consists in converting uncertainty to risk.
— Donald A. Schon

No Comments » Posted by Administrator / Organizational Behavior and Risk

Business managers are trained for action and speed – hence the “ready, fire, aim” mentality now prevalent in so many organizations. Far too often, thinking is seen as a luxury, and collective thinking as an aberration. The link between shared understanding and effective collective action is not widely understood or recognized. Under these circumstances, asking managers to accelerate shared learning is asking them to unlearn the fundamental behaviors that they have used throughout their careers. This unlearning requires a shift in their basic assumptions.

To accelerate shared learning, there needs to be a shift in managers’ thinking from “I lead” to “we learn.” It is a fundamental shift, from viewing the individual manager as problem solver to seeing the manager as the creator of an accelerated shared learning environment.
— Joan L. Bragar

No Comments » Posted by Administrator / Action and Thought

The race to change the rules of the game in an industry has two distinct legs. First, the company works toward perfection of its complex business system - learning to achieve industry-leading levels of performance, tuning its value proposition and developing a viable economic model. In our sample, the first leg required an average of 4.5 years. That was the time it took FedEx to refocus its business system on next-day delivery of papers. McDonald’s spent an equivalent period developing a replicable model for operating restaurants, learning what sort of franchisees were most desirable and anchoring its economics in royalties and rent overrides from successful outlets.

Once the business system is perfected, a breakout company must run the second leg: explosive growth through replication of the business system.

Sustained growth in earnings in excess of 20 percent per year - typical of companies changing the rules of the game - requires disciplined reproduction of a powerful business system along one of three tracks: acquisitions, geographic expansion, or expansion into new market segments. During this second leg, the business system is extended to include the capability to grow rapidly along the selected track (to acquire and assimilate companies, for example, or to open a large number of new outlets). But to consistently perform at these levels, a company can manage only one of these three growth tracks. When Home Depot departed from its track of opening outlets in new geographies and tried to grow by acquisition, it stumbled. So do most companies that experiment with a second track.
— Charles E. Lucier and Janet D. Torsilieri

No Comments » Posted by Administrator / Best Practices and Strategy

Strategy gurus often assert that winning comes from “thinking out of the box” or “reframing the problem.” They are wrong. Across the 55 industries we studied, only four common ideas accounted for 80 percent of successful breakouts: power retailing (Home Depot, Circuit City); bypassing one or more steps in the value chain (Frito-Lay, Dell Computer); focusing, simplifying and standardizing (McDonald’s, Nucor); and megabranding (Disney).

The big winners weren’t even the originators of the ideas; they were the first to make an existing concept work on a large scale in a new industry.
— Charles E. Lucier and Janet D. Torsilieri

No Comments » Posted by Administrator / Strategy and Trends / Analysis

Show me a [person] who is afraid to look bad, and I’ll show you a [person] you can beat every time.
— Lou Brock

No Comments » Posted by Administrator / Competition and Personality / Behavior

A few decades ago, our lives were centered in places. We had the most in common with our village or city neighbors, with the people geographically closest to us. Place formed our connections to the social groups that mattered most: our tribes, churches, jobs, and schools. The defining politics — and so, defining values — were those rooted in physical communities.

Today, place has lost relevance for most of us in a connected, global world. We reside in places, of course, but that’s basically a lifestyle choice. Rather, Doug Smith writes, “it is in markets, organizations, and networks, and among family and friends that you spend your time, pursue your most pressing purposes, and find meaning in your life.” So “Where do you live?” is an interesting question, but “What do you do?” is more telling.

Smith sees the shift in community from place to “purpose,” as he says, as profound. For while place-based communities historically understood how to make the values-based decisions that shaped society, organizations — especially corporations — are flailing. They have the power to change the future for better or worse, but not the ethical will or know-how.
— Keith H. Hammonds / Doug Smith

No Comments » Posted by Administrator / Culture and Trends / Analysis

Some companies that have lived through the free fall of their market value have learned to reprice with the frequency of a fat man visiting the refrigerator. It’s always defended as a way to keep employees, yet no one ever seems to ask: If they feel entitled to share so lavishly in the upside yet not bear any responsibility for the downside, do you think maybe we’ve got the wrong employees? What seems to be forgotten here is that stock options are by their very nature speculative; if they were meant to be guaranteed, why not hand every new hire a fat, juicy check for deigning to occupy one of your cubicles?

So let’s try some logic, Ms. CEO: Nasdaq tumbles. Your stock goes down. If market conditions are to blame, so does everyone else’s stock. If you’re worried that all the talent will flee, the company across the street is probably worried too. So why not just hire all of its panicky, selfish, greed-motivated employees to replace your own?
— Daniel Okrent

No Comments » Posted by Administrator / Finance and Human Resources