In today’s business world, most businesses are run by very competent people who are not necessarily the world’s best leaders. Most leaders are not Ghandi or Nelson Mandela but in my years of experience as a business consultant, I have observed that successful businesses seem to have a leadership team that as a group exhibits all the characteristics of a great leader. Very rarely do we find these characteristics in one person.
I recently read an article on leadership that I think could help further explain the leadership challenge. In his recent HBR article titled Management is Still Not Leadership, Dr. John Kotter, Konusuke Matshushita Professor at Harvard, explains that leadership and management are two different things, and that the obvious confusion around these terms usually cause misunderstandings and hinder businesses to achieve success.
With this emphasis, Dr. Kotter defines “management” as a set of well-known processes which helps an organization to predictably do what it knows how to do well. Examples of such processes are planning, budgeting, staffing, problem solving, etc. On the other hand, leadership is a completely different thing. Leadership is about vision. It is about taking an organization into the future and finding the right opportunities to exploit for success. In simpler terms, leadership is about behavior while management is about processes.
Dr. Kotter highlights the mistakes we usually make in interchanging one term for the other and how these impact a business:
Mistake #1: People use the terms “management” and “leadership” interchangeably. This shows that they don’t see the crucial difference between the two and the vital functions that each role plays.
Mistake #2:: People use the term “leadership” to refer to the people at the very top of hierarchies. They then call the people in the layers below them in the organization “management.” And then all the rest are workers, specialists, and individual contributors. This is also a mistake and very misleading.
Mistake #3:: People often think of “leadership” in terms of personality characteristics, usually as something they call charisma. Since few people have great charisma, this leads logically to the conclusion that few people can provide leadership, which gets us into increasing trouble.
My experience is that it is crucial for business leaders to understand the difference between management and leadership, and to also focus on the latter, not only the former, so that wecan better prepare and position our businesses for success.This is summarized in this great quote from Kotter.
“Leadership is associated with taking an organization into the future, finding opportunities that are coming at it faster and faster and successfully exploiting those opportunities. Leadership is about vision, about people buying in, about empowerment and most of all, about producing useful change. Leadership is not about attributes, it’s about behavior. And in an ever-faster-moving world, leadership is increasingly needed from more and more people, no matter where they are in a hierarchy. The notion that a few extraordinary people at the top can provide all the leadership needed today is ridiculous and it’s a recipe for failure.”Dr John Kotter. 2012
This quote by Kotter (taken from his HBR article) clearly defines what leadership should be. Aiming to create a few brilliant individual leaders to “carry the rest” is where many focus their efforts, however the “real change” happens by having good leaders throughout the different levels of your business.
My experience is that good business leadership is often about having a team with clear, shared goals and a common language and toolkit for planning, problem solving and decision making. In organisations where we have focused on improving these skillsets there has been a massive payback in terms of sales, profits and employee satisfaction.
Give your team the tools and the language to make great leadership decisions and act on them – and you can’t go wrong.
The message: Don’t build a mediocre team led by a brilliant leader. BUILD A STRONG TEAM OF GOOD LEADERS.
At the end of 2012, Mindshop (www.mindshop.com) conducted a global survey of business leaders involved in various business programs and groups across the Mindshop network in Australia, NZ, UK and the USA.
The survey highlighted that for many business leaders, managing growth is the critical issue for 2013. This was followed closely by maintaining profitability and ensuring that strategy implementation is effective.
The key insights gleaned from the survey are:
1. Understanding emerging customer trends is critical to business growth
The biggest opportunity for Business Leaders in 2013 is growing existing and new markets. Having a clear understanding of emerging customer trends, reshaping products and services and having an engaged team to help drive new strategy will help in growing your business. Leaders also need to review their business models and ensure that their model is capable of addressing these new opportunities.
2. ‘Change’ is the new normal for business
These days, the ‘new normal’ for businesses is that change is constant. Therefore, this requires a different mindset as a leader to focus on the things you can change (internal locus of control) and not be distracted by the things you cannot (external locus of control).
At the same time, many businesses are becoming “change weary” and this needs to be managed. Ensuring Project Teams are adequately resourced and that Leaders have the time and energy to juggle competing priorities is critical.
3. Don’t put more business through an incapable system
Growth is a great opportunity, but too many leaders try and push “more“ through an incapable system. This is a recipe for disaster that leads to lower profits, poor quality and service and an unhappy team and shareholders.
As economic conditions continue to stabilize it’s important to focus on continuous improvement and driving efficiency. Completing an annual ‘waste audit’ on the business (or your division/department) will ensure a healthy focus on profit improvement and efficiency.
While as a business leader, creating a simple ‘stop doing’ list can help to re-prioritise and focus your activities. For actions that you must “stop doing” there are 4 generic options:
A. delegate (internal),
B. outsource (external),
C. cease the action or,
D. re-engineer it to be much more efficient (and take less of your time)
4. Adapting to a changing business environment
The current business environment is rapidly changing. There are massive movements in: demand, technology, consumer behaviors, marketing, products, services and business models.
Most businesses are still locked into long term (5 Year) planning cycles, when in reality plans should be reviewed on a regular basis (at least annually) and the business leadership should be involved in regular “Blue Sky” Planning Days to evaluate changing trends and map an appropriate response, if required.
5. Leveraging your team to implement change effectively
Increased accountability and communication is required internally to help team members stay focused on key priorities. Instead of attempting to engage your entire team, focus on the top 25% of performers. Provide them with common problem solving and strategy development tools so that they can be constantly refining and improving processes while staying on track with the overall direction of the business. Business Leaders need to continuously develop their own skills and have high energy levels to ensure they lead by example. Walk the talk at all times.
2013 will be an exciting time for many business leaders as they grapple with the complex issues of managing growth, maintain profitability and ensuring that strategies are being implemented effectively. There are no surprises here as a number of business leaders have been addressing these challenges over the last few years with great success. The challenge in 2013 is that “growth” has risen to the No. 1 position as post-GFC opportunities start to emerge.
How is your business positioned to take advantage of new opportunities? I look forward to hearing from you.
The start of the year is a great time to develop plans for the coming year and this year, I’ve come up with a few simple steps that will help you get the ball rolling for 2013.
1. It’s important that your Annual Plan for 2013 ties in with your Strategic Goals and Plans for the next 3 to 5 years. 2013 should be a stepping stone along the way.
2. Another great tool to use to develop a quick, yet powerful plan for your business is our Simple Strategy Process. This is great process that moves you quickly across the NOW-WHERE-HOW model and uses our Strategic SWOT tool to help you develop some strategies and actions. For a quick run through, watch the Video.
With these few easy steps, I’m sure you’ll get that push you need to get it going for 2013.
What other processes and tools have you found useful for your planning?
Every New Year brings a fresh start, a new life, a new outlook or perspective. And for most people, the New Year usually brings to mind a bunch of resolutions they would like to accomplish and fulfill. This rings true for businesses too which is why last year, I talked about 10 new year’s resolutions for business owners. But this year, I’ve decided to present a new view for businesspeople to welcome the New Year – instead of resolutions, I’ll talk about New Year’s Affirmations.
Wikipedia defines the term affirmation as a declaration that something is true. If in 2012, you’ve made some amazing changes in your life, on how you view and manage your business, now is the time to look back at these changes and declare and confirm that what you’ve done is part of your goals and that it is right to continue what you’ve done this 2013.
Positive affirmations are very important when you’re a business person. Although these do not guarantee success, they can be a powerful tool to help you change the attitudes, beliefs and thoughts you have that hinder you from growing and achieving success.
So to do that, I recommend creating a series of positive affirmations like, “I manage my time efficiently and do not waste it,” (no more than ten), type them up and place them in a prominent place where you will see them every day (your bathroom mirror or wardrobe door are great places). Read them out loud every day.
Other positive affirmations that I found around the web that you can use to start creating your list are:
1. I believe in myself. 2. I am successful in what I do. 3. My possibilities are endless. 4. I am clear about what I want to do.
As you read your affirmations aloud every day, they will easily become a part of your beliefs and create a new you. Encourage yourself and the people around you, whether it’s your family, friends, and team to take great pride in affirming their accomplishments not only in the past but also to positively look ahead and continue to do great things for 2013.
Note that the power of positive affirmations in our businesses and personal lives is a direct reflection of our attitudes.
The term “Family business ” usually refers to a small or mid-sized company that has a local focus and is plagued with a familiar set of dilemmas such as succession. In spite of that very simple description, family businesses have played a powerful role in the world economy and have included, through the years, big businesses worldwide. Some examples in Australia of successful family businesses are linFox, smorgon group, cooper’s brewery and there are plenty of others.
Most of the time, the key to success of a family business lies in its unique ownership structure that allows them to plan and thrive in the long-term. But other researchers believe that it is also this structure that causes many of them to fall. So what’s really the case?
In a recent article from Harvard Business Review, What You Can Learn from Family Business by Kachaner, Stalk and Bloch, presented a rigorous analysis of how family businesses and non-family controlled businesses differ in management and performance.
And from this article, we’ve derived seven points on how family-run businesses manage for resiliency and how business managers can benefit from these principles.
1.Family business is frugal in good and bad times.
In most cases, family businesses view their money as “the family’s money” which is why they often do a better job of keeping expenses under control. This can be a weakness as often, to save a buck, they invest with shorter timeframes in mind rather than thinking of the long term.
2.a family business keeps their bar high for cAPEX.
Family-run firms have a simple rule when it comes to capital expenditures – they make sure they do not spend more than they earn. They often run “leaner” than their corporate cousins.
3.a family business has little debt.
Family businesses, because of their close-knit and simple structure usually associate debt with fragility and risk, and tend to avoid it. They usually have very strong balance sheets.
4.Family business make few and small acquisitions.
Although an acquisition can transform a company and pay large rewards, it can carry a high risk. And this is why family businesses shy away from large acquisitions and prefer to make few of these deals and only favor companies that are close to the core of their existing businesses.
5.a family business is diversified.
In this day and age, diversification is important to keep a business alive and it is no different with a family-run business. Diversification has become one of the key ways to protect family wealth. In fact, the Smorgon Group in Australia is an example of a diversified family business that went from meat to steel, and paper.
6.a family business is more international.
Contrary to what most people know, family businesses are ambitious about expanding overseas. In fact, they often generate more sales out of the country (USA) than other businesses do.
7.a family business is better at keeping talent.
Businesses that are family-owned prefer to extol the benefits of longer employee tenures thus creating a stronger culture.
With these seven points, we can conclude that despite its small and simple structure, family businesses have shown to be resilient in times of economic uncertainty. I think this is largely driven by a strong sense of ownership of the brand and finances. Yes, they are not without pitfalls, the largest being inter-generational transfer but they survive through the years by focusing more on resilience than performance.
