4Ms of Business Foundation series – Part 2: Managing Start-ups today
Welcome to the second instalment of the 4M series on business foundations for small business and start-ups today. The series kicked off with the post that examined Business Models (structure) for Today’s Start-ups, last month. You can see that part 1 post HERE. We ended part 1 recommending that today’s start-ups and small businesses should adopt lean/flat business structures.
Anyone can be a good manager, right? After all, we have all had managers, right? Wrong. This post examines the right approach and qualities for managing modern small businesses in the digital age (the conditions apply equally to big companies as well). I give you eight characteristics that every manager must have.
Importance of good managers
Larry Alton sums up the importance of having good management in every part of businesses as follows:
“Businesses demand consistent, high-quality leadership from beginning to end. They need a strong CEO at the top, well-informed executives and talented managers working together to establish direction, make decisions and inspire the team to stay aligned.
One gap in this network is all it takes to create a rupture in an otherwise stable organization. For example, one manager that dissents from the prime directive can veer the business away from its course -- and of course, a strange or alienating direction from the CEO can ruin the impressions of hundreds of otherwise loyal brand followers.”
As a marketer, the effect of managers on customers (brand followers) and the service they receive from a business is my primary concern here. Great managers display appropriate behaviour, qualities and interpersonal skills that enable staff to focus on customers above all else. Great managers lay foundations for many of the necessary ingredients required to ‘market’ a brand – they facilitate the development of high-quality products and services as well as exceptional customer service which brings positive brand reputation, glowing reviews and feedback, customer advocacy and employee advocacy.
It is infinitely easier to get people to buy from businesses with these elements than those without them!
State of management approaches
Ben Lobel reports that a damning “analysis of UK-wide data on small and medium-sized enterprises (SMEs) that reveals nearly half (44 per cent) of businesses founded in the UK in 2011 had failed by 2014, with incompetence and bad management to blame for 56 percent of these business failures. The lack of professional management skills is also holding back UK productivity and employment growth, with only 16 percent of all new SMEs found to be fast-growing. Just two-fifths (42 percent) of small businesses were found to have provided management training in the previous 12 months, compared with 89 percent of firms with 250+ staff”.
These findings highlight the misconception that we instinctively know how to be good managers. An extension of this mistake is the common practice of promoting people to management roles based on good performance in their specialism. For example, it is not uncommon for a high-achieving accountant to suddenly find himself or herself managing the Finance Team.
I have used the example of the Accountant deliberately (It could apply equally to any profession) because it is not uncommon for people in this business to be absolute ‘number-nuts’. Many dislike social situations, in fact. So it should come as little surprise that thrusting them into management roles ends in failure. Management roles demand excellent communication and social interaction skills to get team members to work together to achieve shared goals.
Like any work role, good managers must have the right skills to perform the role well. Management training, development and support can be highly beneficial, even for owner/managers because the skills take some time to learn. How can modern entrepreneurs implement the right management structures for small businesses and start-ups? Read on to find out approaches and qualities that are fit for businesses in today’s digital age.
Management approaches
Most businesses have managers and people with authority (simply because we humans like to feel a sense of power). However, the modern manager is no longer the expert, all-knowing authoritarian God, who incessantly barks orders at the team. In fact, good managers now surround themselves with smarter and more able people than themselves.
That said we have all seen industries where the know-it-all manager persona prevails. Admittedly, the sight of Gordon Ramsey, swearing and aggressively criticising participants on Hell's Kitchen can be entertaining for viewers.
The building trade in which I was a Labourer a few years ago is also another obvious example. In the construction sector, the ‘trades’ (for example, bricklayers, plumbers and electricians) still feel it acceptable to act like a ‘Duracell bunny on acid’ when an apprentice or labourer does anything that is not to exact specification. The transgressions could include, cement or plaster that is not to the right consistency, wood sawed to the wrong size, wiring done incorrectly and leaking water or gas piping.
Many of us are guilty of believing the trade’s reaction is understandable because they may be working on our property and these errors could potentially lead to a loss of our life. At the very least they could be very costly to put right later on.
My recent experience in a Local Authority sadly also proves the point. In that case, this local Council was placed on Special Measures having just failed an Ofsted inspection . The management team was almost immediate replaced by Department for Education-appointed trouble-shooters.
The new Chief Executive regularly displayed Napoleon syndrome, which resulted in him openly embarrassing and abusing anyone who dared to disagree with him, fail to live up to his expectations or have an alternative point of view. Staff morale plummeted unsurprisingly and many people left their jobs.
In a real business today, everyone in the team is an expert in their own right because even the 16-year-old Apprentice can teach the older team members something. They know first-hand young people’s preferences/trends, use of new technology, language use, fashion, etc.
Management models
The Authoritarian management style has had its day. As I have alluded to above, it is essentially used in search of maintaining specific standards.
A laisser-faire management style is equally outdated and has no place in the modern economy unless you are leading a team of subject experts. The laisser-faire manager essentially abdicates their responsibilities, which often results in a chaotic, free-for-all-anything-goes company. The team has no point of contact, structure or guidance to achieve the business’ objectives.
Lean organisations are by definition flat, with horizontal lines of authority and working relationships. A lean structure enables members of the team to talk to anyone else in the company to get things done.
A flat business structure is most likely to work for small firms and start-ups especially as “A flat structure results in better project quality and faster turnaround times”.
A collaborative and participative management style is required to build on individual insights, foster commitment and motivation that will ensure everyone is working towards the same goal. It is worth emphasising here that the goal is not necessarily profits for the business. The real goal of successful businesses today is to exceed the needs and expectations of customers – this ultimately leads to more sales and profits.
I will examine the components of this style of management in the digital economy later on. Let's look briefly at some left-field management structures first.
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Alternative management structures
Businesses have been experimenting with different management approaches over history to be as efficient as possible. Innovation has been the driver of the evolution of management styles, structures and systems you see in literature as well as management development courses.
Admittedly some of ‘new’ approaches turn out to be nothing more than fads while others that have lasted the test of time become the features we recognise in businesses.
The evolution of management structures continues apace today with modern businesses experimenting with alternative management structures. Belle Beth Cooper describes three modern implementation of control with initiatives that range from a different approach to 1:1 meetings to a full restructuring of a company. Let’s look at these now.
The idea of Holacracy is to distribute power and decision-making throughout the organization and empower employees to act with more autonomy (For example, Medium). According to Holacracy.org, "The work is actually more structured than in a conventional company, just differently so”.
Each team is made up of a "hierarchy of circles". Circles of people focus on different areas and are nested within each other. Each circle is made up of roles determined and assigned by The "Lead Link" determines and assigns the roles in each circle. Employees can take more than one role depending on what they can handle. This approach lets employees work in different, though related areas, as required by the overall goals their circle has, rather than being pigeonholed by a single job title.
This approach also allows for organic expansion: if a role becomes too big for one person to handle, it can evolve into a circle of its own.
- Product teams
The Product team structure splits the company into various product groups (For example, Buffer). Each team sets its own goals and schedule, and makes its decisions based on four important questions:
- Growth: What are our intriguing numbers we can pursue to grow the business?
- Research: What are our customers’ biggest problems (in the area of our intriguing numbers)?
- Product: How can we solve this problem in the most efficient and useful way?
- Technology: How can we implement this solution efficiently and successfully for our customers?
While just one person makes the final decision in each of these four areas, the entire process to bring a product improvement or new feature to life is a group effort.
A product team approach places particular emphasis on asking for advice when making decisions, to ensure this autonomy for decision-makers doesn't endanger the quality of decisions made. Simply put, the bigger the decision you are making, the more advice you are required to seek out. This is radically different to the past where your word as a manager might have been the sure way to go; it is now only one piece of the decision-making framework.
- Non-hierarchical (flat) approach
A company structure that operates without managers (For example, Basecamp). When groups require structure, they manage themselves. A team can take turns being the chief each week. This way there is structure and leadership without a hierarchy. Each week, a new leader sketches out the agenda, writes up the notes about problems and performance, and steps up to handle any customer experience issues.
This approach lets everyone feel what it is like to be both managers and managed. Everyone is more empathetic toward one another as management duties are rotated weekly. Another benefit is that when you know you will be management soon, you respect management more.
The rotating management approach also means the company focuses on promoting employees horizontally, rather than vertically, facilitating everyone working together in an environment in which everyone has a chance to move proudly and thoroughly sideways.
- Internal recruitment approach
Another company structure with no managers (For example, Treehouse). The process for getting things done involves projects, which team members propose that are completed by recruiting other employees to help get them done.
Anyone can have an idea and propose a Project. Projects do not have to relate to the core expertise for which you were hired. Example: A Designer could submit a plan to teach a course. The project proposal is abandoned if there is insufficient interest to get a full team together.
Team members can work on various projects at the same time. However, each individual is responsible for ensuring they are not over-committing themselves and letting project teams down.
Each project team decides how they want to work. They can elect a leader if they want to, or allow a leader to emerge naturally, or work collaboratively without any leader. Together, project team members are in charge of ensuring their work is up to standards before it is sold/delivered, and for maintaining their project once it starts.
This new approach improves the efficiency of work as a direct result of people owning the projects they create.
“The common thread throughout the alternative setups of these companies is their willingness to experiment. Although experimenting with new structures or processes can be nerve-racking, each of these companies is a great example of why it's worth trying new things…finding out what doesn't work for your company may be the only way to know what does” (Belle Beth Cooper).
In the next section of this post, I will outline some of the key skills and qualities modern managers must possess to get maximum performance from their teams.
To Read the remainder of this post, please head over to the blog post @ https://bit.ly/1WdD3YL