“So much of what we call management consists in making it difficult for people to work.” – Peter Drucker
Here is the most important thing I know about management: There is no one right way to run a business.
I’ve seen successful businesses built and run by all sorts of people practicing all varieties of management styles. In my own industry, the top three businesses are different, one from the other.
1. One is very conservative, very centralized, very button-down and Republican. This business has enjoyed long and impressive growth using a centralized authority structure, lots of rules and regulations, and a hiring policy that pretty much excludes non-Republicans.
2. Another was built around the strength and charisma of a guy who was good at numbers but “didn’t have a clue” about the marketing and creative side of the business. He hired a bunch of MBAs from good schools and directed them by making inspirational speeches, sending them to every possible seminar, and bringing in experts to talk to them.
3. The third — the one I have been involved with — began with a single product idea and has become the largest in its field by hiring smart people from non-business backgrounds and allowing them a great deal of latitude to develop products so long as they have “a good idea” behind them and can be worked into a budget that stands up to scrutiny.
Top-down and centralized management structures tend to work well when the people on top are very good at their game. They weaken and sometimes crumble when those same good people can’t keep up with changes in the marketplace — when the old ways of doing things don’t work anymore.
Charismatic management structures work well so long as the charismatic leader is devoted to the company’s best interests and has a good instinct about what that should be. These companies fail when their leaders’ visions fail. The management style I prefer has the following characteristics:
* a commitment to hiring a lot of smart college graduates with liberal-arts backgrounds
* giving employees a good deal of responsibility and flexibility from the get-go
* providing a modest amount of education and orientation but not wasting too much time on that (since I believe good people — the kind of people you want to keep — don’t need a lot of handholding)
* a strong corporate spinal column consisting of centralized accounting, budgeting, marketing analysis, and information processing
* decentralized profit centers working from yearly budgets that are reviewed by upper management either twice yearly or quarterly
* allowing as much freedom as possible when it comes to how profit-center managers achieve their goals, but making sure they are monitored and regulated by trusted, experienced supervisors
* an overriding business purpose that is worth everyone’s interest and commitment
* making financial targets secondary to the overriding business purpose but, at the same time, treating them as indicators of the validity of such purposes
Fortune magazine recently ran a story on Jim Kilts, the guy who pulled Gillette out of a five-year slump. He did it, the magazine said, by applying a series of “old-school” and “curmudgeonly” management tactics to what had become a disorganized and incomprehensible business system.
Though I’m not sure I agree with the use of the word “curmudgeonly” here, Kilts seems to have used a management system that is similar to the one I’m recommending here — one with a strong central core, serious budgetary goals, regular reviews, and a great deal of freedom when it comes to product development, marketing strategy, and cost cutting.
Kilts, the article said, is a low-key sort of guy. He was not comfortable rallying the troops and making visionary speeches. Neither was he big on sending his people off on mountain climbs or to sensitivity sessions. Instead, he asked his managers to establish long- and medium-term goals for themselves and then to report on their accomplishments via quarterly meetings and weekly memos. Kilts “never forgets a number,” according to Doug Conant, Campbell Soup’s top executive, who worked with Kilts when he led a turnaround for Planters Nuts. “If you tell him you expect to get a 69.6% share three weeks from now, he’ll call you again in three weeks and say ‘I thought you were going to get 69.6%.'”
I’ve seen the mistake in (and lost a lot of money by) not paying attention to the numbers. I’ve seen how businesses will stall — sometimes indefinitely — if you don’t insist on ambitious goals. I’ve also had the happy experience of yielding authority and experience to younger, ambitious people over and over again, however, so I can vouch for the importance of maximizing freedom.
So how does this apply to you?
If you are a manager: Try to understand the underlying “way” your boss works and try to adapt your management practices to this. There is no point in bucking the system. If you implement a program that he won’t stand behind, it won’t last. Remember — your management approach works for you, but other approaches work too. By integrating procedures and protocols you like with an overall management philosophy your boss believes in, you’ll make the most progress. If you own, or plan to own, your own business: Don’t get hung up worrying about management and don’t let anyone you hire tell you how to run things. Figure out what your business goal is (e.g., to produce the best bottle cap in the market) and set your financial objectives (e.g., 12% growth with 20% profits). After that, let your instinct guide you.