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Modes of Management - Shifting Management Gears as Your Company Grows

Modes of ManagementAdjusting Your spectrum into useful stages. Then we can
Management Style To Your Company's probe along the required dimensions for
StageBy Bob NortonFrom the moment a new key issues.Only experience at executive
company is founded to its appearance on levels in large, medium and small
the Fortune 500 list, executives must be companies can help to identify the
able to transform the way they manage a pivotal developmental stages that
company - shifting gears, often dramatically affect the context of a
dramatically to a different management given company's decisions. Success comes
style - to ensure the company's optimum from implementing a management mode that
development. I am not referring to is a direct function of the company's
individual executive style here. What I current stage, industry and market
am talking about is the total adjustment conditions. The risk is that a company
and evolution of the context in which will be run in the same way as its VPs,
major management decisions are made. I managers and/or CEO have always run their
call this the "Mode of Management", which past companies or departments,
is very dependent on the company's irrespective of the important and
current developmental stage.Would you differing macro variables created by this
make the same product development stage of development.What is Different
decisions in an identical way with one about This Philosophy?
hundred dollars in the bank and no Conduct a search via or the Internet on
customers as you would with $50 million the term "management" and you will
in the bank and 1,000 customers? Of literally find tens of thousands of books
course not! So why do many managers often on the subject. From project management
run an organization in the same way to company management, lots of authors
despite the many gradual and often sudden push their particular methods and styles.
changes that happen between these two These range from micromanagement and the
extremes? It is human nature to continue One-Minute Manager to how to transform
to do what we have always done; to "good" into "great" behavior. What you
simplify and repeat what worked in the will not find is much discussion in any
past, despite vastly differing of these books about an approach that
circumstances. We need a system or helps you define and implement a
context for adjusting and teaching the management mode that clearly correlates
different "modes of management" as to your company's current status and
companies evolve. Some of these changes position in the market. Yes, there are a
come naturally, but most are very subtle few good books and some successful
and linger far longer than they should. A startups, but, in general, there is
failure to change can do substantial little on this topic available in the
damage to a company before adjustments millions of books in print! I don't know
are made, or even doom the company to if the lack of discourse is just because
flat sales in the long term.A key to authors want to appeal to the broadest
ensuring corporate success is to let the possible audience, or if they are
various stages of a company's development actually naive as to how one must manage
determine it's overall management "mode". differently according to the different
It is a given that we must use the stages of a company. I am certainly not
appropriate management mode for each and the first person to recognize this
every decision and action we take in a natural phenomenon. I suspect that
company. The company's existing condition authors are addressing the stage of
and/or stage of development is always the company they are most familiar with
major determining factor or context for without much thought to the others.
almost every significant Unfortunately, for the bulk of their
decision.Companies can reap enormous readers, this can make the majority of
benefits when the style by which they are their recommendations and advice wrong,
managed is adjusted quickly to which is of little help. When making a
accommodate the company's shifting major decision, too little credence is
complexities, stages and sensitivities. given to the enormous number of variables
In fact, quickly adjusting this mode of that make every corporate situation
management can be a huge competitive unique.Actually, I have seen very
advantage since most companies fail to successful executives with significant
adjust quickly enough. Just about every experience in large company environments
company exhibits often-overlooked, but give perfectly good talks on management
critical, stress points that signal the that are 100 percent true for large
need for decisive action or gradual companies - and almost 100 percent wrong
reorganization. Recognizing these signs and potentially fatal if followed by
during a company's gradual metamorphosis, smaller companies. They are talking about
and responding to them appropriately, may steering an oil tanker when their
mean the difference between bankruptcy audience consists of nothing but little
and survival, or at least will help avoid speedboat captains. These executives must
stagnation.Any good manager knows an have little experience and perspective
adjustment in style and tone is warranted beyond that large company perch, and they
for different individuals and situations. often wind up preaching to a crowd of
People have different motivations and entrepreneurs about things they must do,
often respond differently to the exact when in fact, following that advice could
same circumstance. This is natural; kill their companies. The problem is that
people react to other people's tone and there was no context defined for the
body language in very individual ways. We lecture and no language or thinking in
receive immediate feedback in the form of the advice about a company's current
facial expression, body language and stage. If it had been qualified as advice
actions, and adjust our reactions for companies over $70 million in sales,
accordingly. However, a company, which is for example, it would not have been a
a much more complex organism that potentially lethal lecture for the many
consists of many individuals interacting startups and entrepreneurs in attendance
with complex outside market conditions, that day. It seems we pay little heed to
provides little immediate feedback. the simple fact that what can be right
Therefore, it is very difficult to use for a small company can be totally
direct feedback to fine-tune your disastrous for a larger company and vice
management mode. Only years of experience versa.Of course, the opposite situation
can build enough data to form theories can also be true, wherein entrepreneurs,
and adjust management modes.Why We more often than not, fail to change their
Simplify Too MuchMillions of years of company's and personal management styles
evolution have taught us to run from from raw startup mode to the next level.
danger and created a mind that adheres to They cannot "let go" and delegate to
simple "rules" that have worked for us in others. This is why entrepreneurs are
the past. Our mind wants basic rules we often replaced by "professional
can reuse and has been designed to use management" or people with specific
these learned shortcuts again and again. experience in that stage of company
For example, we all know that fire is development. It is also a major reason
hot, don't touch it. The more pain why most companies stagnate at a certain
(failure) or pleasure (success) that level, which is ultimately the maximum
results from a lesson, the deeper these level or size at which a controlling
rules are ingrained. This is why people entrepreneur can be effective or remain
who experience a single, huge success in their comfort zone. A Board of
often have a tougher time changing or Directors of any company with more than a
accepting input from outside sources. single shareholder has a fiduciary
They take this success as proof that they responsibility to replace such a CEO as
are "always" right and begin to repeat soon as there are signs the entrepreneur
what has worked for them before. If they is not evolving with the company so as to
use their one learned mode in a different ensure that stockholder value continues
context then they are very likely to to grow. I believe a solid, well
fail.Unfortunately, the world is much thought-out system can allow many
more complex, and changes much more entrepreneurs to make this evolutionary
rapidly, than ever before. In fact, this transition as their company
trend is accelerating because human grows.Adjusting to the Best Management
knowledge is now doubling every few ModeMy goal is to shine a light on this
years. One hundred years ago, most people failure to preach in context and to
still used horses to get around and create a methodology to qualify these
technology of any kind was primitive by recommendations and comments and adjust
today's standards. Because life is our mode of management. This needs a
currently so much more complex, we need system of definitions, models and
these mental simplifications more than language. To be successful, we must also
ever. Yet now, we must overcome these have some guidelines for management modes
past evolutionary behaviors and that are appropriate for certain stages
discipline ourselves to take hundreds of and situations in a company's life. This
variables into account for complex and would allow us to benchmark our
unique decisions we may never again make management mode and proactively evolve it
under the same circumstances.Overcoming as a company grows.Unfortunately, there
evolution can be difficult, but it is are not many people who have experience
simply an exercise in conscious thinking and perspective in various different size
that can be facilitated by some simple companies and can speak to these vast
methodologies that force us to review differences. Academia cannot properly
important circumstances. The challenge as recognize and study this problem without
an executive is to force ourselves to first establishing a framework by someone
think through all the variables of a with experience across most stages of a
given situation and make a decision in company's development. After all, this is
the proper, current context, not simply not so much a theoretical problem as a
by referring to past experiences or rules real world experiential learning issue
of thumb.Cognitive dissonance, the mind's and therefore it is hard to define and
tendency to see only those factors that bound properly.Each decision we make is
reinforce what we are expecting to see, highly context-sensitive to many macro
greatly aggravates this problem. We tend factors. Sometimes, these macro factors
to distinguish only those things that are developed or institutionalized over
reinforce our beliefs and actively avoid time. For example, IBM would never go
or explain away those things that after a very small market because doing
disprove these beliefs. At the extreme, so would distract management and
this can become the proverbial ostrich resources from bigger market
with its head in the sand - the "What I opportunities that would better serve its
don't know can't hurt me" pose. Of corporate size, overhead and growth
course, this statement couldn't be needs. Everyone at IBM knows this and,
further from the truth. Any company that accordingly, would not present a plan to
fails to adjust to rapidly changing the IBM corporate machinery for a product
world, economic, and market conditions is with a very small market opportunity.
doomed. Even great Fortune 500 companies However at the other extreme, younger
are rarely still there 25 years later. As companies have not had the time or
managers we have to overcome human nature experience to develop such rules or
and cognitive dissonance in order to make systems, forcing executives of small and
the proper contextual decisions for the medium-sized firms to make them up as
benefit of our company.Cognitive they go along based on the specific
Dissonance - The strong tendency to see circumstances of the day. People may
and acknowledge only that which attempt to adopt their own "rules of
reinforces what you already know and thumb" from their former companies, but
ignore or easily explain away data that the odds that these are also appropriate
conflicts with your beliefs. The desire for their new company are slim indeed. I
to avoid dissonance, or inconsistency, have seen many young companies enter
that would make you rethink things you markets that were way too big for them to
already believe to be true.The 5 Stages be successful in because larger companies
of a Company's Development1) Raw Startup will replicate what they do quickly and
No revenue (by definition) 0-50 because they have not already secured a
a) Innovation as a priority beachhead they can protect before
b) Always in flux, high risk evolving into the larger market. This
c) More unknowns than knowns classic startup without a market entry
d) Product or service looking to prove strategy is common in technology where
its market exists technologists do not have enough
e) Everything is fragile2) Early Revenue experience in building businesses and
$100 to $5MM, 5 to 100 employees, attaching markets. I cannot possibly
Product delivered proving some value count the number of companies with a
proposition, but still no proven superior product that ultimately failed
sustainable or profitable business model. because they did not adjust their market
entry strategy to the size of their
Most companies slow or stop growing here company's resources or because they
due to organizational and people limits. managed the company like a large one when
This is often the hardest leap to make it was just in its infancy.An executive's
which requires the most changes in the ability to shift gears in the face of a
smallest period of time.3) Established situation that appears familiar, but is
Customer Base $500,000 to $20MM in actually ALMOST ALWAYS a different
sales, 20 to 200 employees context compared to what they have seen
a) Profitable or clear path to profits in the past, can make or break a company.
based on scaling business. When a decision's context is very
b) A proven market and value or price different due to the corporation's
formula, with profits clearly available current stage, it must be recognized
in a steady state world when scaled.4) immediately to produce a vibrant, growing
Expansion/Growth Phase $1MM to $1 company.So what do you do differently
billion in sales, 100 to 1,000 employees along the spectrum from a raw startup to
Market opportunity is many times larger a mature company? There is enough
than the company and there is a desire information for an entire book or at
and ability for significant market share least a long series of articles. It
and/or revenue growth.5) Mature (or requires many examples and structural
large) $2MM to $100+ billion in sales, models to aid the decision-context
100 to ∞ employees management. The first step toward success
a) Slow growth, stagnation of market or is acknowledging the need for a
company, or focused on harvesting past decision-context management framework and
investments. an understanding that the biggest factor
b) Slow/little change in market and/or in almost any corporate decision is this
company or commoditization of products framework. Upcoming articles will compare
forcing a focus on costs above and contrast management modes for a wide
innovation. range of companies, from small through
c) Consolidation of competitors and large.Bob Norton is the author of four
focus on finding new distribution and/or books on starting and growing companies
leverage.Companies come in many types, and entrepreneurship. He runs the
styles and sizes, and an approach that exclusive Advanced Entrepreneurship CEO
works tremendously well at one company Boot Camp to help CEOs and senior
can be a miserable failure at a different executives cut years off their learning
place and time. Every company and curve and coaches CEOs at growth
situation is different, so there are technology companies from startup to
literally hundreds of possible "styles" $150MM in sales. He has been part of
or "management modes." For practical eight startup companies and grown two of
purposes, it is necessary to create a those to over $100MM in sales. He can be
simpler, more workable model, which can contacted at: See: and for his
be used to illustrate a company's major training products for CEOs and
plateaus and organize this infinite entrepreneurs.




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