You should open you mindset to new approaches and tools in management, so you could successfully move in a rapid changing environment. This includes understanding strategy, psycology and financial management.
Text of New Level in Management Skills: How to Reach it?
New Level in Management Skills: How to Reach it? Alexander
Abolmasov Managing Partner NRG Private Equity [email protected]
Problems cannot be solved at the same level of awareness that
created them. Albert Einstein . , . .
The General Motors Management Style (1920s - ) Strategy
Centralized operational decisions, but decentralized divisional
organization Financial management Control by setting quantitative
targets for the divisions and reporting back performance metrics
Decision making was based heavily on analysis of reported
managerial accounting data ROI is the king People Motivation
Performance based bonuses Effective enough in a growing economy,
but less effective in the crowded or low-growth marketplaces . ,
What is effective management? Effective management system keeps
organization adjusting to unpredictable, dynamic conditions and
satisfying customers Behavioral routine (skill), which helps to
handle unpredictable and uncertain situations with confidence and
effective action competitive advantage , . , .
Startup management Need practices and principles geared to the
startup context of extreme uncertainty In a startup, the product
and customer are unknowns. We need a new definition of value for
startups: validated learning about customers Case study: Begemot,
Sovcombank . . , - , -. & , 45+.
Traditional model (centralized functional hierarchy) New model
(decentralized leadership network) Changing leadership and
structure + ROI-based decisions + Mistrust and control + Extrinsic
motivation + Improvement Kata + Employee development + Intrinsic
motivation Change to what? , : 1) 2) 3) .
There are two different ways of working on the model evolution
and transformation Time scale: organization's age Low degree of
decentralization/ empowerment Differentiation phase Integration
phase High degree of decentralization/ empowerment Sustaining and
deepening of the decentralized model, through generations
Pioneering phase Bureaucratization through growing hierarchy and
functional differentiation Evolution within the decentralized model
(culture of empowerment and trust) Organizations with traditional
models must eventually transform themselves Transformation through
radical decentralization of decision-making Stagnation within the
tayloristic model , - . . Foundation
Current Condition Challenge Vision Toyota Kata Toyota strategy:
Survive long term as a company by improving and evolving how we
make good products for the customer , . , .
Non-Toyota thinking: normal daily management + improvement
Toyota thinking: normal daily management = process improvement The
Improvers Process The Improvers Everything deteriorates over time
The second law of thermodynamics Process , , . .
Success depends on your challenge Shinichi Sasaki, former
Toyotas Vision for Its Production Operations Zero defects 100
percent value added One-piece flow, in sequence, on demand Security
for people (no injuries) , , .
: . .
If you think it can be done or if you think it cant be done,
you will be right! Henry Ford Challenge Mindset It can be done!
Why? Positive line of argument Search for solutions High
probability of success I told you: it can be done! It cannot be
done! Why? Negative line of argument Search for problems Low
probability of success I told you: it cannot be done! . .
Brains are learning organs, so they reward us with joy when we
learn (for example by means of serotonin) Brain activity measured
using computed tomography, presented by Prof. Gerald Hther at
Production Systems 2009 It cannot be done! It can be done!
Through frequent practice more electrical impulses are fired
and synapses are trained to perform better Untrained synapse
Trained synapse High electrical resistance Low electrical
resistance changeable chemical bond
Regular Kata practice and coaching can change a conservative
mindset into an open, explorative attitude Certainty Certainty
Explorative attitude of a kata novice Conservative attitude (the
norm) Certainty Explorative attitude of an experienced kata
practitioner I avoid it! Im OK with it! I like it! , . , .
We are what we repeatedly do. Excellence, then, is not an act
but a habit. Aristoteles , - , , .
Financial management .
Traditional Budgeting Has Many Weaknesses.... Promotes
centralization of decisions and responsibility Motivates gaming the
system Conflicting purposes target setting versus financial
forecasting Not only a ceiling also a floor for costs Ineffective
Inflexible to changes in planning assumptions Absorbs significant
resources across the organization Tends to make financial control
an annual autumn event .
We Have Separated Performance Measurement From Financial
Forecasting Broader Performance Measurement Balanced Scorecard -
Financial KPIs - Non-financial KPIs + Rolling Financial Forecast -
Rolling 5 quarters - High level, few details Better forecasting
with less resources Financial Budgeting ToFrom
We Can Achieve What the Budget Did in a Simpler Way The budget
was used for: We achieve the same through: High level financial and
tax planning Target-setting Controlling fixed costs Prioritising
and allocating investment/project resources Delegation of authority
Rolling financial forecasts Balanced Scorecard Trend reporting Cost
targets where and when needed Activity approach Small projects -
trend reporting Medium - Varying hurdle rates Major strategic
projects - Case by case, the budget was never a tool .... Use
existing mandates/authority schedules
The New Tools Cover What the Budget Did, but Also a Lot More
Controlling fixed costs - Activity accounting and product costing -
Improved cost understanding - Product and customer costing - Annual
outlook Balanced scorecard - Non-financial targets &
measurements - Link to strategy - Financial targets relative to
market - Financial targets & measurement - Limited cost
understanding - Annual plan BUDGET Rolling Financial Forecast -
Quarterly update - Rolling 5 quarters outlook - Annual outlook
Investment management - Trend reporting & 5 quarter outlook -
Decentralised decisions - Frames if needed
How Does the Managers Job Change ? High degree of freedom in
how to achieve challenging relative targets No detailed
pre-approval of costs through a budget Cost reports focusing on
trends, projects and total cost levels. Less focus on the calendar
year as reporting period Increased measurement of non-financial
indicators supporting our strategy No heavy budget process in the
autumn, but more focus on costs and performance throughout the year
Increased responsibility and decision-making More relevant cost
information Better but also tougher performance measurement Better
use of your time !
Motivation , . .
1. Rewards Punish Incentives are Manipulative Punishment and
Rewards are Two Sides of the Same Coin 2. Rewards Rupture
Relationships Forces People to Compete For Rewards Damages
Relationships Between Managers and Employees 3. Rewards Ignore
Reason Incentives Are Easy Fix for Problems Band Aid 4. Rewards
Undermine Interest Limits Creativity Intrinsic Vs. Extrinsic
Motivation Pay-For-Performance Lowers Enthusiasm Rewards Punish.
Punishment blocks creativity. . . . : .
What do you enjoy about work? Typical answers given during
brainstorming sessions: - Overcoming challenges - Learning -
Variety, trying new things - Team spirit, constructive exchange of
ideas, sense of belonging - Recognition and praise, celebrating
successes - Seeing progress, improving, making a difference -
Helping other people in their work - Scope for development,
personal responsibility - Etc. Pay Is Not A Motivator Employees
Value Pay Less Than Most Expect Paying More Does Not Mean Better
There is no combination of outcome metrics and incentive
systems that by themselves will generate continuous improvement and
adaptation. And how could it? The people trying to achieve the
quantitative targets are not taught or guided by any sort of
improvement kata. Mike Rother, author of Toyota Kata .