How Not to Manage a Business: 11 errors made by Founders & Managers who fail to take strategic action, who fail to compete, and who fail to lead.

How Not to Manage a Business:  

 

#1

Management Error Number One:  

Do not take action, do not attack

 

           In war, business, or sport, action is the essence of competition. 

           Taking action is the essence of surviving – and winning. 

           And the essence of action is the attack, seizing or showing initiative, taking the offensive. 

           What happens to companies who do not go on the offensive?  

           Why do we have to fight for the initiative, gambling our company’s future with long term capital investment into R&D or into developing a new market, -- a new territory or (like an Amazon Books) a new marketing channel, embarking on an uncertain, unproved future in which every new product, every new plant, every new market we enter could result in vulnerability to challengers, loss of key customers, alienation of  allies, exclusion from markets (just ask Facebook about that in India, or Google in China), and financial disaster?

            Why fight for the initiative, entering treacherous positions in which any major step can bring about disaster?  Why pursue frantic efforts in troubled waters?   Why would Xerox do that, gambling on its core offering, the 914?  Why would an Intel do that, banking the company on one initiative?  Why would Intel gamble on the integrated chip?  Why would Sony gamble on the transistor?  

            Why not just maintain their position, staying in tranquil waters, predictable outcomes, and relative security? 

           Because you either take the chance to seize the initiative -- or yield it to a competitor.  Everywhere, there is competition for customers, for markets, for funds, for key employees, technology, and resources.  The day a company loses the initiative, is the day it loses.  The moment it loses the initiative, it loses its ability to call the plays  – like a Hayes Modems, or a Saba Scanners, or an Osborne Computers, or an Aero  – and in most cases, finds itself on its irreversible fall to defeat.  And you can only coast one way:  downhill.   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

#2

Management Error Number Two: 

 

           Do Not have a Strategy.

           Because it is not the competitor with the best people that wins, it’s the firm with the best strategy. 

            This holds for strategy on the corporate level or the business-unit level.   And it holds for strategy on the brand level or the product level. 

           “It all starts with a strategy.  You have to have a strategy about how you are going to dominate the market.” –Sergio Zyman, “Se?or Aya-Cola,” who ran marketing at Coca-Cola.

           Finding the correct idea is the basis of strategy.  Business is a battle of ideas. 

            Yet the epiphany of a brilliant new idea is half that battle.  The other part is knowing when to use it. 

           A good move is one that creates value now.   But the better move is the one that creates value now and lays stake to the future.

           You don’t win by not making bad moves, you win by making good ones. 

               The important thing is to act, to make moves, not just wait for the perfect move.  As Harold Geneen, ITT’s entrepreneurial CEO would say, you make something happen, you don’t study it to death while opportunities pass you by.

             A move is no good if it does not threaten something.

 

           If a boxer just punches the air -- where’s the threat in that?  Or imagine a quarterback who throws the ball where’s no receiver.   How is that going to score? 

            And you don’t make just one move, but the first of a linked sequence of moves.   It’s not finding the right next move that matters, but finding the right plan, the right sequence of coordinated moves.

            A move can change the power relationship between competitors.       

           Creating a strategy is not so much about finding the answers to questions, as it is finding the right questions to answer.  

           The basis of strategy is finding the correct idea to improve your position. 

            And freedom of action is the basis of all positional action.

 

 

 

 

 

 

 

 

 

 

 

3 

 

 

#3

Management Error Number Three:

 

            Do not jostle for position,  do not displace industry leaders, do not position your brand.  Do not -- although Jack Welch would prescribe doing it -- do not de-commoditize your core brand.  Do not invade new territories -- do not fight for time -- or space.  Do not re-deploy your forces. Do not build support points for your sales troops.

 

 

 

 

 

 

 

 

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#4

Management Error Number Four:

 

           Do not compete for the future of your market space.   Do not -- as hockey great Wayne Gretzky would say -- do not skate to where the puck is going to be.  Do not innovate like an NEC -- do not stay relevant.  

           It is not enough to come up with a comprehensive positioning strategy -- as the two-hundred year old Saturday Evening Post did -- you must stay relevant, and ride the future -- make time your strategic ally, not your threat, not an inevitable source of market-share erosion and decay.

           You play for the future of the position. 

            When Phil Knight originally moved to displace Adidas by repositioning Nike,  Nike gained clout and visibility with college athletic programs, professional teams, and high-profile athletes.  It completely shifted the power relationship between Nike and (former) arch-rivals Avia and Reebok. 

            An accurate, positional move changes the power relationship between competitors.   So each move is a treasure to be invested.  A good, attacking move can gain the initiative, helping to challenge and displace a rival.             

 

 

  

 

 5

 

 

#5

Management Error Number Five:  

 

           Do not maintain a credible threat.  

           As a competitor -- if you are to be taken seriously as a competitor -- you must be perceived to have a threat; you must have a threat -- you must be a threat.  Unlike the Q&A app Jelly, the passive retailer Montgomery Ward, or the under-capitalized Laker Airways.

  

 

 

 

 6

 

 

#6

Management Error Number Six:  

 

           DO NOT INNOVATE.  

           Do not divert funds from strong P&L's into R&D and long-term capital investment.  At least that has been the "strategy" for consumer products at bankrupt companies like Eastman Kodak.   Or at any of those aerospace companies that would reward VPs with cash bonuses each year for slashing expenses -- yes, R&D is booked as an expense -- meaning, in a 10-year design-to-build process for a new airplane, in 10 years the manufacturer -- like a McDonnell Douglas --  would have no competitive products.   Hence, no McDonnell Douglas.  

           Quite the graveyard:

              

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7

 

#7

Management Error Number Seven:

  

            Don’t deploy your products like weapons on a battlefield, but like passive furniture arranged in a living room.  Don’t treat your people as if they could contribute value to brand equity.  Don’t even believe that a 3-M employee invented its Post-It notes, a Continental Baking employee created its Twinkies, Microsoft programmers developed its Windows line.  

            Yet, value can be created.  Assets yield value, and people create value.

            Skype dominated the market Vonage pursued, Netflix eclipsed Blockbuster, and Apple's iPad crunched Fusion Garage's joojoo (in speed, in connectivity, operating system, touch screen, weight, controls, video playback, design, and price).  

          And people can destroy value.   A&P initially took out Bohack’s, IBM took out PC manufacturers (Dell, in turn, eclipsed IBM), Microsoft’s Explorer targeted the location of the Netscape browser, and Levitz Furniture took out its competitors -- with each using the strategy of value destruction.

You measure the value of a maneuver by its power and promise.  

         You measure the value of an undeployed asset by its potential force. 

            You measure the value of a deployed asset by its yield. 

            The power of a firm arises from the power of its product or service, not its organization, nor its commitment to a marketing channel.  Coca-Cola is Coca-Cola because of Coke, Xerox became Xerox because of the Xerox 914.  Apple derived its strength over the last decade in the iPhone and the iPad. 

            Leaders get eclipsed by smaller challengers when the leader behaves as if the power of its product draws on the strength of the corporation.  But it’s the other way around. 

           You make products because they are competitive weapons. 

 

 

            Even the name of the product is not only an intangible asset, but a weapon for the offense when positioned in the buyer’s mind.   

            Products made or services rendered provide the power to compete and win.  They can be powerful weapons in a company’s competitive arsenal. 

           Power is worthless if it cannot be converted into an attack.

             You bring a product to market because it fights for strategic territory.

 

 

 

 

 

 

 8.

 

 

#8

Management Error Number Eight:

 

           Do not have a game plan, do not have a sequence of targets (and a target is not something you meet, a target is something that you shoot at), do not have a realistic, scalable, and workable game plan dependent on your efforts not those of allies in a pipe dream (and that was the fate of Goodmail Systems).  Control your destiny.

           Examples:  

 

 

 

 

9.

 

-the French protect the interior of the Cathedral at Amiens during World War II.  This is Protection -- Not defense.

 

 -Seeing the unseen danger:  this was the tip of the Iceberg that sunk the Titanic.

 

#9

Management Error Number Nine:

 

           Do not attack on defense.  Defend your moat, your customer base, sure.  But defend it passively.  

-"Attack on defense." -Coach Jimmy Johnson.   Passive defense is worthless.  

 

 

10.

 

 

 

 

#10

Management Error Number Ten:

 

          Don't release the latent energy of the position, keep to the static structure as if dynamics do not beat statics.  (Dynamics do beat statics-- look at the fate of Colliers Magazine -- "The Nation's Weekly," and the iconic Saturday Evening Post,  and IBM's own PC.)   

           The bottom line:  you only coast one way:  downhill.  

 

 

 

 

 

 

           Dynamics beat statics.  

            And one dynamic found in every conflict is its moral dimension. . . 

          

 11.

 

 

 

 

#11

Management Error Number Eleven:

 

           Do not harness the moral dimension of competition.  

           Do not address or embrace sustainability, greenness, social responsibility, issues of child labor, environmental destruction, clear-cutting, destruction of fisheries, money-laundering, corruption, and fair trade.

 

           “In war, the moral is to the material as three to one.” –Napoleon

            “Moral forces exert a greater influence on the nature and outcome of war than do physical forces.” -- General A. M. Gray, Commandant of the U.S. Marine Corps

The bottom line is:    

            If you seriously want to win, you harness the moral dimension.    

            For example, following its success pioneering the personal computer market, Apple Computers came under attack by IBM.  IBM entered the PC market with its own product, the IBM PC. 

            Apple CEO Steve Jobs responded, harnessing forces of moral and emotional commitment. 

            He recruited a separate team of fifty, gave them freedom and autonomy, housed them in their own building, hoisted a pirate flag on top of the building, and gave them full freedom to create.  He spent more of his time with them than with the rest of his company,  He shared his vision that they were on a grand vision not only to change the world, but to save everyone on the planet from the evil IBM. 

           They came up with the Macintosh.   

           It was the first mass-market personal computer with a mouse, and with a graphical user interface -- and became the foundation for the iMac, iPod, iPhone, iPad.  It became the foundation for the future.

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