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Modes of Management - Shifting Management Gears as Your Company Grows

Modes of ManagementAdjusting Your Managementtime. Every company and situation is
Style To Your Company's StageBy Bobdifferent, so there are literally hundreds of
NortonFrom the moment a new company ispossible "styles" or "management modes." For
founded to its appearance on the Fortune 500practical purposes, it is necessary to create
list, executives must be able to transforma simpler, more workable model, which can be
the way they manage a company - shiftingused to illustrate a company's major plateaus
gears, often dramatically to a differentand organize this infinite spectrum into
management style - to ensure the company'suseful stages. Then we can probe along the
optimum development. I am not referring torequired dimensions for key issues.Only
individual executive style here. What I amexperience at executive levels in large,
talking about is the total adjustment andmedium and small companies can help to
evolution of the context in which majoridentify the pivotal developmental stages
management decisions are made. I call thisthat dramatically affect the context of a
the "Mode of Management", which is verygiven company's decisions. Success comes from
dependent on the company's currentimplementing a management mode that is a
developmental stage.Would you make the samedirect function of the company's current
product development decisions in an identicalstage, industry and market conditions. The
way with one hundred dollars in the bank andrisk is that a company will be run in the
no customers as you would with $50 million insame way as its VPs, managers and/or CEO have
the bank and 1,000 customers? Of course not!always run their past companies or
So why do many managers often run andepartments, irrespective of the important
organization in the same way despite the manyand differing macro variables created by this
gradual and often sudden changes that happenstage of development.What is Different about
between these two extremes? It is humanThis  Philosophy?
nature to continue to do what we have always
done; to simplify and repeat what worked inConduct a search via or the Internet on the
the past, despite vastly differingterm "management" and you will literally find
circumstances. We need a system or contexttens of thousands of books on the subject.
for adjusting and teaching the differentFrom project management to company
"modes of management" as companies evolve.management, lots of authors push their
Some of these changes come naturally, butparticular methods and styles. These range
most are very subtle and linger far longerfrom micromanagement and the One-Minute
than they should. A failure to change can doManager to how to transform "good" into
substantial damage to a company before"great" behavior. What you will not find is
adjustments are made, or even doom themuch discussion in any of these books about
company to flat sales in the long term.A keyan approach that helps you define and
to ensuring corporate success is to let theimplement a management mode that clearly
various stages of a company's developmentcorrelates to your company's current status
determine it's overall management "mode". Itand position in the market. Yes, there are a
is a given that we must use the appropriatefew good books and some successful startups,
management mode for each and every decisionbut, in general, there is little on this
and action we take in a company. Thetopic available in the millions of books in
company's existing condition and/or stage ofprint! I don't know if the lack of discourse
development is always the major determiningis just because authors want to appeal to the
factor or context for almost everybroadest possible audience, or if they are
significant decision.Companies can reapactually naive as to how one must manage
enormous benefits when the style by whichdifferently according to the different stages
they are managed is adjusted quickly toof a company. I am certainly not the first
accommodate the company's shiftingperson to recognize this natural phenomenon.
complexities, stages and sensitivities. InI suspect that authors are addressing the
fact, quickly adjusting this mode ofstage of company they are most familiar with
management can be a huge competitivewithout much thought to the others.
advantage since most companies fail to adjustUnfortunately, for the bulk of their readers,
quickly enough. Just about every companythis can make the majority of their
exhibits often-overlooked, but critical,recommendations and advice wrong, which is of
stress points that signal the need forlittle help. When making a major decision,
decisive action or gradual reorganization.too little credence is given to the enormous
Recognizing these signs during a company'snumber of variables that make every corporate
gradual metamorphosis, and responding to themsituation unique.Actually, I have seen very
appropriately, may mean the differencesuccessful executives with significant
between bankruptcy and survival, or at leastexperience in large company environments give
will help avoid stagnation.Any good managerperfectly good talks on management that are
knows an adjustment in style and tone is100 percent true for large companies - and
warranted for different individuals andalmost 100 percent wrong and potentially
situations. People have different motivationsfatal if followed by smaller companies. They
and often respond differently to the exactare talking about steering an oil tanker when
same circumstance. This is natural; peopletheir audience consists of nothing but little
react to other people's tone and bodyspeedboat captains. These executives must
language in very individual ways. We receivehave little experience and perspective beyond
immediate feedback in the form of facialthat large company perch, and they often wind
expression, body language and actions, andup preaching to a crowd of entrepreneurs
adjust our reactions accordingly. However, aabout things they must do, when in fact,
company, which is a much more complexfollowing that advice could kill their
organism that consists of many individualscompanies. The problem is that there was no
interacting with complex outside marketcontext defined for the lecture and no
conditions, provides little immediatelanguage or thinking in the advice about a
feedback. Therefore, it is very difficult tocompany's current stage. If it had been
use direct feedback to fine-tune yourqualified as advice for companies over $70
management mode. Only years of experience canmillion in sales, for example, it would not
build enough data to form theories and adjusthave been a potentially lethal lecture for
management modes.Why We Simplify Toothe many startups and entrepreneurs in
MuchMillions of years of evolution haveattendance that day. It seems we pay little
taught us to run from danger and created aheed to the simple fact that what can be
mind that adheres to simple "rules" that haveright for a small company can be totally
worked for us in the past. Our mind wantsdisastrous for a larger company and vice
basic rules we can reuse and has beenversa.Of course, the opposite situation can
designed to use these learned shortcuts againalso be true, wherein entrepreneurs, more
and again. For example, we all know that fireoften than not, fail to change their
is hot, don't touch it. The more paincompany's and personal management styles from
(failure) or pleasure (success) that resultsraw startup mode to the next level. They
from a lesson, the deeper these rules arecannot "let go" and delegate to others. This
ingrained. This is why people who experienceis why entrepreneurs are often replaced by
a single, huge success often have a tougher"professional management" or people with
time changing or accepting input from outsidespecific experience in that stage of company
sources. They take this success as proof thatdevelopment. It is also a major reason why
they are "always" right and begin to repeatmost companies stagnate at a certain level,
what has worked for them before. If they usewhich is ultimately the maximum level or size
their one learned mode in a different contextat which a controlling entrepreneur can be
then they are very likely toeffective or remain in their comfort zone. A
fail.Unfortunately, the world is much moreBoard of Directors of any company with more
complex, and changes much more rapidly, thanthan a single shareholder has a fiduciary
ever before. In fact, this trend isresponsibility to replace such a CEO as soon
accelerating because human knowledge is nowas there are signs the entrepreneur is not
doubling every few years. One hundred yearsevolving with the company so as to ensure
ago, most people still used horses to getthat stockholder value continues to grow. I
around and technology of any kind wasbelieve a solid, well thought-out system can
primitive by today's standards. Because lifeallow many entrepreneurs to make this
is currently so much more complex, we needevolutionary transition as their company
these mental simplifications more than ever.grows.Adjusting to the Best Management ModeMy
Yet now, we must overcome these pastgoal is to shine a light on this failure to
evolutionary behaviors and disciplinepreach in context and to create a methodology
ourselves to take hundreds of variables intoto qualify these recommendations and comments
account for complex and unique decisions weand adjust our mode of management. This needs
may never again make under the samea system of definitions, models and language.
circumstances.Overcoming evolution can beTo be successful, we must also have some
difficult, but it is simply an exercise inguidelines for management modes that are
conscious thinking that can be facilitated byappropriate for certain stages and situations
some simple methodologies that force us toin a company's life. This would allow us to
review important circumstances. The challengebenchmark our management mode and proactively
as an executive is to force ourselves toevolve it as a company grows.Unfortunately,
think through all the variables of a giventhere are not many people who have experience
situation and make a decision in the proper,and perspective in various different size
current context, not simply by referring tocompanies and can speak to these vast
past experiences or rules of thumb.Cognitivedifferences. Academia cannot properly
dissonance, the mind's tendency to see onlyrecognize and study this problem without
those factors that reinforce what we arefirst establishing a framework by someone
expecting to see, greatly aggravates thiswith experience across most stages of a
problem. We tend to distinguish only thosecompany's development. After all, this is not
things that reinforce our beliefs andso much a theoretical problem as a real world
actively avoid or explain away those thingsexperiential learning issue and therefore it
that disprove these beliefs. At the extreme,is hard to define and bound properly.Each
this can become the proverbial ostrich withdecision we make is highly context-sensitive
its head in the sand - the "What I don't knowto many macro factors. Sometimes, these macro
can't hurt me" pose. Of course, thisfactors are developed or institutionalized
statement couldn't be further from the truth.over time. For example, IBM would never go
Any company that fails to adjust to rapidlyafter a very small market because doing so
changing world, economic, and marketwould distract management and resources from
conditions is doomed. Even great Fortune 500bigger market opportunities that would better
companies are rarely still there 25 yearsserve its corporate size, overhead and growth
later. As managers we have to overcome humanneeds. Everyone at IBM knows this and,
nature and cognitive dissonance in order toaccordingly, would not present a plan to the
make the proper contextual decisions for theIBM corporate machinery for a product with a
benefit of our company.Cognitive Dissonance -very small market opportunity. However at the
The strong tendency to see and acknowledgeother extreme, younger companies have not had
only that which reinforces what you alreadythe time or experience to develop such rules
know and ignore or easily explain away dataor systems, forcing executives of small and
that conflicts with your beliefs. The desiremedium-sized firms to make them up as they go
to avoid dissonance, or inconsistency, thatalong based on the specific circumstances of
would make you rethink things you alreadythe day. People may attempt to adopt their
believe to be true.The 5 Stages of aown "rules of thumb" from their former
Company's Development1) Raw Startup Nocompanies, but the odds that these are also
revenue  (by  definition) 0-50appropriate for their new company are slim
indeed. I have seen many young companies
a)  Innovation  as  a  priorityenter markets that were way too big for them
to be successful in because larger companies
b)  Always  in  flux,  high  riskwill replicate what they do quickly and
because they have not already secured a
c)  More  unknowns  than  knownsbeachhead they can protect before evolving
into the larger market. This classic startup
d) Product or service looking to prove itswithout a market entry strategy is common in
market  existstechnology where technologists do not have
enough experience in building businesses and
e) Everything is fragile2) Early Revenueattaching markets. I cannot possibly count
$100 to $5MM, 5 to 100 employees, Productthe number of companies with a superior
delivered proving some value proposition, butproduct that ultimately failed because they
still no proven sustainable or profitabledid not adjust their market entry strategy to
business  model.the size of their company's resources or
because they managed the company like a large
Most companies slow or stop growing here dueone when it was just in its infancy.An
to organizational and people limits. This isexecutive's ability to shift gears in the
often the hardest leap to make which requiresface of a situation that appears familiar,
the most changes in the smallest period ofbut is actually ALMOST ALWAYS a different
time.3) Established Customer Base $500,000context compared to what they have seen in
to  $20MM in  sales,  20  to  200  employeesthe past, can make or break a company. When a
decision's context is very different due to
a) Profitable or clear path to profits basedthe corporation's current stage, it must be
on  scaling  business.recognized immediately to produce a vibrant,
growing company.So what do you do differently
b) A proven market and value or pricealong the spectrum from a raw startup to a
formula, with profits clearly available in amature company? There is enough information
steady state world when scaled.4) Expansionfor an entire book or at least a long series
Growth Phase $1MM to $1 billion in sales,of articles. It requires many examples and
100  to  1,000  employeesstructural models to aid the decision-context
management. The first step toward success is
Market opportunity is many times larger thanacknowledging the need for a decision-context
the company and there is a desire and abilitymanagement framework and an understanding
for significant market share and/or revenuethat the biggest factor in almost any
growth.5) Mature (or large) $2MM to $100+corporate decision is this framework.
billion  in  sales, 100 to ∞ employeesUpcoming articles will compare and contrast
management modes for a wide range of
a) Slow growth, stagnation of market orcompanies, from small through large.Bob
company, or focused on harvesting pastNorton is the author of four books on
investments.starting and growing companies and
entrepreneurship. He runs the exclusive
b) Slow/little change in market and/orAdvanced Entrepreneurship CEO Boot Camp to
company or commoditization of productshelp CEOs and senior executives cut years off
forcing  a  focus on costs above innovation.their learning curve and coaches CEOs at
growth technology companies from startup to
c) Consolidation of competitors and focus on$150MM in sales. He has been part of eight
finding new distribution and/orstartup companies and grown two of those to
leverage.Companies come in many types, stylesover $100MM in sales. He can be contacted at:
and sizes, and an approach that worksSee: and for his training products for
tremendously well at one company can be aCEOs and entrepreneurs.
miserable failure at a different place and



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