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Setting Up Systems

Maverick Management

Innovative management systems can radically transform the way organisations perform.

Greg Fisher

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MaverickManagement

I recently did some research to try and get a snapshot of the entrepreneurial landscape in South Africa. In surveying over 100 South Africa entrepreneurs who had all started their businesses in the last 12 years, one question I asked was: “If you were to do it all again, what would you do differently?” By far the most common response to this question centred on the management of people: “I would invest more in training”, “I would put incentives in place to motivate employees”, “I would do more to make this an attractive place to work”. These responses reinforce the basic principle that business success is about people and if you can manage in such a way that people are motivated, inspired and energised, then your business is likely to fly.

But, for many, management has become such a mundane term, when one thinks of management one thinks of budgets and controls and targets. Yet management can also be an exciting domain, an area of a business in which one can really innovate to make the organisation an exciting place to work, to get the best out of employees and to make a big difference in the day to day lives of others.

Innovative Management

One of the people who has done a superb job in implementing innovative management practices is Ricardo Semler. He is the majority shareholder of a Brazilian industrial company called Semco. Semco used to a be a company that was not too different from most other manufacturing companies. It had a tight organisational chart, an annual planning cycle, a strict multi-layered hierarchy and it was very vulnerable to swings in the volatile Brazilian economy. Semler was put in charge at the early age of 21, when he and his dad had different views on the way forward for the company. For four years he set targets, cut costs and drove the workforce, the management and himself really hard to make the company profitable.

At the early age of 25, Semler collapsed in one of the plants due to acute stress. It was this event that caused him to realise that although he had turned the company around, it had become an unhappy place to work, and he had exhausted himself and his employees in the process. He looked for a different way. “If only I could break the structure apart a bit, I thought to myself, I might see what was alienating so many of our people. I couldn’t help thinking that Semco could be run differently, without counting everything, without regulating everyone, without keeping track of whether people were late, without all those numbers and all those rules. What if we could strip away all the artificial nonsense, all the managerial mumbo jumbo? What if we could run the business in a simpler way, a more natural way?” he thought to himself.

It was in looking for answers to these questions that he began to toy with the idea of participative management.
The notion of participative management is built on the premise that ordinary people don’t have to be managed with the “carrots and sticks” of incentives and controls. Instead, people are naturally capable of self-direction and self-control, even in a corporate or bureaucratic setting, if they’re committed to the organisation’s goal and if they are treated as mature adults who can learn from their actions and errors.

Semler toyed with these ideas and concepts and then took the bold step of implementing some of them in the plant. He started small; first he fixed the canteen, a source of endless complaints. He asked employees for help in improving it, and wound up turning over food service management to a group of the workers themselves. The complaints stopped. Then he got the employees to decide on uniforms and colours for the factory walls. To overcome traffic challenges in Sao Paulo he empowered the employees to devise a system of flexi-time so that they could travel in during non-peak times, a concept that would be very attractive to employees in many South African cities. The system continued to open up under his leadership and eventually employees were deciding on remuneration levels and they had full access to all the information in the organisation.

Participative Management

This participative and open system enabled the organisation to weather some terrible storms in the early 1990s. In 1990 the Brazilian finance minister seized 80% of all the available cash and introduced a period of economic bedlam in an effort to curb inflation. Employers could not make payroll, consumer spending vanished, business spending disappeared and bankruptcies soared. Semco had a few months of zero sales and did everything it could to cut costs and reorganise the workforce but it was not enough. Ultimately everyone decided they had to cut the workforce, but instead of sending employees off with nothing, they encouraged them to leave the payroll and to set up their own satellite enterprises doing work for Semco and others in time.

They provided seed capital, leased machinery and taught the ex-employees skills in cost control, maintenance, finance and inventory management. This enabled Semco to cut wages and inventory costs and as the economy started to pick up, all parties benefited. Three years later, over half of the work that was done inside Semco was now done by satellite enterprises and many ex-Semco employees were thriving entrepreneurs.

Successful Experiment

The Semco experiment has been a massive success. The company has grown profitably at 27% per annum for the last 15 years, a record of success that is almost unheard of in the volatile Brazilian economy. Semler attributes the success of Semco directly to the participative management style that he champions.

Implementation

Thinking out the box is easy; acting out the box is difficult. Ricardo Semler has done an amazing job of implementing his out the box management practices at Semco. In doing so he has made the business an amazing place to work and has rewarded shareholders with excellent growth in an unstable economy. He has also written a number of best selling books, including Maverick and The Seven Day Weekend. On 10 July he will be appearing in South Africa.

Core Principles

Semler was the catalyst who enabled a management system that is built on three core principles:

  • Employee participation
  • Profit sharing
  • Open information systems

Greg Fisher, PhD, is an Assistant Professor in the Management & Entrepreneurship Department at the Kelley School of Business, Indiana University. He teaches courses on Strategy, Entrepreneurship, and Turnaround Management. He has a PhD in Strategy and Entrepreneurship from the Foster School of Business at the University of Washington in Seattle and an MBA from the Gordon Institute of Business Science (GIBS). He is also a visiting lecturer at GIBS.

Setting Up Systems

Create An Operational Plan

You probably have a business plan, but you need an operational plan to define your business’s day-to-day operations.

Alison Job

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Woman writing and planning business strategy

An operational plan forms part of the business’s strategic plan and is important for effective business leadership. It describes how the work will be done, the workflow from input to end results, including the resources that will be used along the way, all of which are required for success.

Streamlined business systems also defines how you will deal with risks, and how you will ensure sustainability of the project’s achievements.

An operational plan also explains how, or what portion of, a strategic plan will be put into operation during a given operational period.

What is an Operational Plan?

While strategic planning provides the vision, direction and goals for the business, operational planning translates that into the everyday workflow of the business that will hopefully produce the outcomes defined by the strategy.

Simply put, operational planning is the conversion of strategic goals into managed execution.

It deals specifically with the internal operations and resources necessary to produce your company’s product or service.

Operational Plan: 4 Steps to Success

An operational plan addresses four questions:

  1. Where are we now?
  2. Where do we want to be?
  3. How do we get there?
  4. How do we measure our progress?

The key components of a complete operational plan include:

  1. Human capital. The staff and skills required to implement your project, as well as current and potential sources of these resources.
  2. Financial requirements. The funding required to implement your project, your current and potential sources of these funds.
  3. Risk assessment. What risks exist and how they can be addressed.
  4. Estimate of project lifespan, sustainability and exit strategy. How long your project will last, when and how you will exit your project, and how you will ensure sustainability of your project’s achievements.

Operational plans should contain:

  • Clear objectives
  • Activities to be delivered
  • Quality standards
  • Desired outcomes
  • Staffing and resource requirements
  • Implementation timetables
  • A process for monitoring progress.

Related: Free Action Plan Template Download

Why have an operational plan?

operational-planning

An operational plan is important because it helps your team to:

  • Be clear about where you will get the necessary resources
  • Use those resources efficiently
  • Clearly define the most critical resource requirements.
    • Reduce risks where possible, and prepare contingency plans where necessary.
    • Think about the long-term future of the project, including its sustainability.

Who should prepare an operational plan?

Operational plans should be prepared by the people who will be involved in the implementation. There is often a need for cross-departmental dialogue as plans created by one part of the organisation inevitably have implications for other parts.

  • A project administrator or finance manager should be involved in defining financial requirements
  • Human resources should be involved in assessing HR and capacity needs
  • HR, IT or operations staff should be engaged in discussions of processes, procedures and systems.

Efficient operational planning and implementation calls for ongoing open communication between the project team and these other staff.

Related: How To Implement Systems for Success

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Company Posts

Why Skype When You Can Video Conference?

Why purchase a video conferencing system to expand my empire when I can get Skype for free?

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Vital Stats

If you’re looking to put an end to time-consuming, expensive and exhausting business travel or just considering the next step to boost your business’ productivity, you’re likely to be faced with the ‘Skype vs video conferencing’ dilemma. Why purchase a video conferencing system to expand my empire when I can get Skype for free?

While Skype provides a great solution to staying in touch with friends and family abroad at no cost, certain drawbacks, such as limited resolution, high bandwidth usage and the fact that the service is only available to Skype users, make this a less-than-ideal solution in the professional environment.

Until recently, professional video conferencing has been inaccessible to most businesses in SA due to its high cost of ownership but Yealink has changed this by providing professional video conferencing solutions designed for SMEs, offering a perfect balance between high quality, ease-of-use and affordability.

Related: (Video) Video Conference Etiquette for Dummies

Here are some of the key reasons to choose one of Yealink’s video conferencing solutions over a free video conferencing service.

1. Increased reliability

Free video conferencing services do not offer a performance guarantee. You run the risk of poor call quality or dropped calls due to network issues. While this may be a free service, it could cost you your business’s reputation.

Corporate video conferencing solutions (VCS) only require one megabit of bandwidth – half of what is needed for Skype – allowing high-quality video, even under fluctuating network conditions.

2. Improved visual and audio quality

While Skype allows for multi-participant calls, there are limitations in terms of visual and audio quality.

Skype does not have zoom-in and focus camera functionality, allowing only the host of the call to be seen in the corner of the screen during a multi-participant call. Poor audio quality and echoing is also often the result of Skype’s microphone being built into the camera.

Yealink’s VCS support full-HD dual systems to display people and content at one time and, thanks to integrated packet loss, you can be sure of a high quality viewing experience. The system’s Full-HD PTZ, 12x optical zoom PTZ camera allows you zoom in, out and around the room with a clear picture at all times.

The Yealink VCS phone has several built-in microphone arrays and supports 360-degree voice pickup, so you won’t have to shout across the room.

There’s also no need for squishing up to hear other attendees. With an optimal expansion microphone KIT, the voice pick-up range can be extended up to 5 metres and video phones are available for desktop video if you don’t fancy joining the rest of your team in the boardroom.

video-conference-in-south-africa

3. Ease of use

Concerned about complicated VCS equipment setups? Don’t be. Yealink VCS plug-and-play simplicity makes installation quick and fuss-free. And thanks to VCS unique industry-intelligent firewall, there isn’t even a need for firewall configuration. Bonus!

While Skype appears simple to use, its multi-party settings are not as intuitive as those of its one-to-one call functionality.

Related: While Tech Investing Slows These 3 Growing Industries Are Getting Hot

4. Management and support

Unlike Skype, Yealink’s video conferencing solutions offer the peace of mind of top-quality, 24/7 support. Yealink provides scheduling, software updates and reporting over a controlled secure network infrastructure.

5. Unlimited access

While four people can participate in a multi-party Skype call, quality is unreliable whereas Yealink’s VCS allow for eight participants, bridging a client site which allows for a more secure, controlled and reliable VC experience.

Finally, while Skype is limited to 100 hours per month for multi-party calling, you are able to use Yealink’s VCS as many times as you want per month.

Related: From Simple Idea To Sideline Business: How Nkosenhle Hlophe Spotted An Opportunity

Want to learn more or book a VCS demo? Click here to get in touch and we’ll show you why it’s worth investing in one of Yealink’s premium video conferencing solutions.

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Setting Up Systems

3 Ways To Avoid Catastrophic Failure By Streamlining Day-to-Day Processes

Type up “small business failure” on a search engine and you get tons of overwhelmingly depressing results showing various statistics demonstrating that there’s a realistically slim chance that any business will survive past the 15-year mark.

Harald Merckel

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Type up “small business failure” on a search engine and you get tons of overwhelmingly depressing results showing various statistics demonstrating that there’s a realistically slim chance that any business will survive past the 15-year mark.

According to the U.S. Bureau of Labor Statistics, the chances a business founded in 1994 will have survived to this day dips down to 20 percent. There is, of course, the issue of context whenever you’re looking at a cold statistic that does little to paint a picture of how businesses reach such a high failure rate. In addition to that, failure rates vary depending on other circumstances such as industry and political climate.

You will find a vast ocean of pundits attempting to provide their own two cents on why businesses have a high failure rate, and they will tell cite anything from poor management to the lack of a presence online.

After looking through the various reasons, there’s one thing that many have in common and it’s in your control:

Businesses will often lose the momentum they first had because they do not manage to keep up with the demands of running their everyday operations.

They can’t talk to their customers effectively online, their service quality doesn’t match the expectations of a fast-paced fickle market, their inventory is disorganised or the business itself doesn’t differentiate itself enough to make a mark on visitors.

Related: 3 Ways You Can Use Mobile Apps To Improve Your Customer Experience

Businesses that don’t have all of their ducks in a row cannot hope to address these issues. It is only logical that the first thing everyone needs to do before going any further is to face the elephant in the room by streamlining daily business activities in such a way that they are (at the very least) manageable.

Organise the backroom environment

Behind every jar of honey you buy is an army of bees that have traveled thousands of miles to make each spoonful. We know honey is made this way, yet we seldom ever ponder the journey each bee took to making that entire jar that’s now sitting in your cupboard.

Businesses work in much the same way; there are backroom processes that keep the ship afloat each and every day. Although few customers will ever see these mechanisms, their impact on the forward-facing side of a company is on full display.

Having the right software to run your back office will come a long way in helping you to avoid experiencing trouble in these departments. Applications like ProWorkflow do an excellent job of streamlining task management, invoicing, and many other functions that are often overlooked when hunting for inefficiencies that need addressing.

Get social with your online base

business-processes-and-online-presence

One of the things making large corporate entities stand out online right now is their ingenious use of social media. While there are many who see this as a carte blanche to spread a dizzying array of bland boilerplate marketing content in a desperate attempt to be relevant with the “cool” crowd, there are stellar examples of companies like Starbucks, Etsy, Calvin Klein, and McDonald’s using platforms like Twitter to embrace trends and engage directly with customers.

When you look at these brands extending their presence, it’s tempting to think that they have teams of people entirely dedicated to browse social sites and start conversations.

The truth is that much of their social media engagement efforts come from the use of applications that help automate this in an intelligent way, letting them concentrate solely on the parts of social branding that help build engagement and retain it.

Tools like Narrow provide an enormous boost by taking a no-nonsense approach to Twitter interaction, showing you who’s talking about subjects that are relevant to your goals. Other applications like Hootsuite help you schedule posts ahead of time so that you do not have to spend every living moment on social networks.

This will effectively reduce the amount of time you spend on this activity to a couple of hours a week, freeing you from the headache of having yet another front to fight on.

Related: Using An Online Meeting To Talk With Your Subscribers

Keep your inventory in check

The reason that retail giants have no problem opening a gazillion locations is because they were able to keep their ducks in a row when it came to tracking everything they sell and acquire.

Having a systematic approach to inventory simplifies operations to the point that reproducing the model is a simple game of “plug and play”. They do this like every other successful and long-living enterprise still alive in the 21st century does. They use the magic of software.

Without this ingredient, you’ll be spending more time tracking where things are going and who’s paying for what than taking care of any of the other 18 million different things you have to do to keep the lights on.

It’s a not-so-well-guarded secret that there are solutions that even smaller contenders can use to keep themselves in good competition with their much larger counterparts, and one of those solutions is inventory management.

Software like Vend, for example, contains a variety of smaller applications that come together to form one of the most powerful point-of-sale and inventory management suites, even allowing for things like layaways, parked sales, and gift cards.

Related: How To Promote Your Blog By Following Your Passion

Technology may have advanced to a point where it perhaps has a stronger grasp on our daily lives than we’d like, but the game of retaining customers still operates on the same rules it did back when the first street markets began appearing thousands of years ago.

You have to make sure that they don’t find greener pastures elsewhere and one of the main ways you can do that is by showing them that you provide a fluid environment and a dedication to serve.

The difference is that today there are pieces of software that make these things a lot simpler. Take advantage of this and you’ll have a very strong chance of living to see another decade (or ten).

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