Most businesses consume too much of management effort. By management effort I refer to the following:
1. The number of day-to-day decisions that managers need to make
2. The amount of attention that managers need to invest in understanding non-traditional patterns
3 The amount of emotional energy and will power that managers need to put forth in order to get things done
If you need to think about hiring a new person, that's a decision. If you need to pay attention to a hacking attack happening on your website, that's a decision. If you need to motivate your people to work harder or for lesser salaries, that's expenditure of emotional energy. If you need to launch a new product, that's emotional energy.
The best businesses are those which have reduced the number of decisions that need to be made on a daily basis.
At Mc Donald's managers don't make decisions about business models, positioning, branding, product line, etc. Even franchisees have very limited decisions to make. Most of the core decisions have been made and bridges have been burned (Mc. Donald's will never try to become a full service restaurant chain.) This freeing up of emotional energy (decision energy) frees up managers to focus on a few things such as new locations, fulfillment, quality control, training, etc.
Richard Koch in his earlier book - 'The 80/20 Principle' speaks about Return on Management Effort - the results that are obtained from a given output of management style work. I propose a slightly different measurement method - Return on Decision (or ROD).
Return on Decision refers to the results from each decision that you make:
For example, if you hire a person and you get returns which are equal to the person's lifetime output less the person's lifetime salary. On the other hand if you clearly define what kind of people your company hires and if you are able to pass on the job of hiring to other's then you've created a system that will probably have a higher return on decision made.
Of course, creating systems so that your managers have fewer decisions to make is hard in businesses that are changing significantly. That is why start-ups need to have people who can take on multiple roles, be willing to learn and change their job profiles. This is even more important if your start-up "pivots" into a new business either to stave off a threat or take advantage of a new opportunity.
While the standard way to move towards "decision-free status" is to introduce processes and systems (ISO, CMM, etc.) I believe that most companies fail to focus on the most important element which will reduce the number of decisions that they and their managers will need to make. And this is the company's positioning. If the positioning is right, then managers will have vastly lesser decisions to make. And they'll be able to really focus their emotional energy on the minutiae of the business (the second source of long term competitive advantage after powerful positioning.)
1. The number of day-to-day decisions that managers need to make
2. The amount of attention that managers need to invest in understanding non-traditional patterns
3 The amount of emotional energy and will power that managers need to put forth in order to get things done
If you need to think about hiring a new person, that's a decision. If you need to pay attention to a hacking attack happening on your website, that's a decision. If you need to motivate your people to work harder or for lesser salaries, that's expenditure of emotional energy. If you need to launch a new product, that's emotional energy.
The best businesses are those which have reduced the number of decisions that need to be made on a daily basis.
At Mc Donald's managers don't make decisions about business models, positioning, branding, product line, etc. Even franchisees have very limited decisions to make. Most of the core decisions have been made and bridges have been burned (Mc. Donald's will never try to become a full service restaurant chain.) This freeing up of emotional energy (decision energy) frees up managers to focus on a few things such as new locations, fulfillment, quality control, training, etc.
Richard Koch in his earlier book - 'The 80/20 Principle' speaks about Return on Management Effort - the results that are obtained from a given output of management style work. I propose a slightly different measurement method - Return on Decision (or ROD).
Return on Decision refers to the results from each decision that you make:
For example, if you hire a person and you get returns which are equal to the person's lifetime output less the person's lifetime salary. On the other hand if you clearly define what kind of people your company hires and if you are able to pass on the job of hiring to other's then you've created a system that will probably have a higher return on decision made.
Of course, creating systems so that your managers have fewer decisions to make is hard in businesses that are changing significantly. That is why start-ups need to have people who can take on multiple roles, be willing to learn and change their job profiles. This is even more important if your start-up "pivots" into a new business either to stave off a threat or take advantage of a new opportunity.
While the standard way to move towards "decision-free status" is to introduce processes and systems (ISO, CMM, etc.) I believe that most companies fail to focus on the most important element which will reduce the number of decisions that they and their managers will need to make. And this is the company's positioning. If the positioning is right, then managers will have vastly lesser decisions to make. And they'll be able to really focus their emotional energy on the minutiae of the business (the second source of long term competitive advantage after powerful positioning.)
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