The Seven Deadly Diseases of Management


  Teach people business

“If you want to build a ship, don't drum up people together to collect wood and don't assign them tasks and work, but rather teach them to long for the endless immensity of the sea.”

[Antoine de Saint-Exupéry]

    Commerce is the result of a number of interconnected and interdependent actions. In order to act in the best interest of the business and organization, in addition to a product and service that solves a need, we need to make good decisions. In turn, decisions rely on various bodies of knowledge.

    This is an over simplification of the process, of course. But it's sufficient to see the role and importance of having different kinds of people in a company people who have deep experience and skill in a domain, for example, engineers, scientists, underwriters; and people who have broad enough experience to put the pieces together.

    Entrepreneurs know all too well how difficult it is to work in the business and work on the business at the same time. Creating the product, delivering a service, often also getting the word out and developing customers are a full job already. Yet we also need to take some time to step back and look at the big picture — where is the business going? What opportunities might we miss because we simply don't see them?

    Working on the business is critical for making it sustainable. The small business administration shows that for the years 2009-2010 in the United States more than 500,000 entrepreneurs opened their doors for the first time. But nearly 600,000 shut down theirs for the last time with thousands of other business struggling to get by.

    The organizations that do make it through the rough patches do so because they figure out a way to make decisions that impact the interconnected and interdependent nature of the business. They do more of the things that matter. A stronger sense of purpose, great execution alone are not enough, we also need to be more aggressive at seeking feedback, both quantitative and qualitative.

    It looks more like this:

  • strong sense of purpose
  • great execution
  • more money coming in than going out
  • ability to make sound decisions with imperfect information
  • while at the same time seeking and distilling feedback as a habit
  • ability to delegate some of the non core work through partnerships, virtual teams, etc.
  • knowing when to scale up teams and when to hire whom is critical
  • while knowing when product reaches maturity, service needs expanding are part of it
  • and more

    Our ability to create, think, and act for the short, mid, and long-er term is the result of constancy, determination, and preparation. Which means entrepreneurs are highly motivated people who get to a point (could be how they start, too) when they say:

Well, I'm tired of seeing all of my good ideas being dropped on the floor by the corporate types. I also think I've learned enough about running a business that I'm ready to try my hand.”

    Those who make it are not straight-line strugglers, they get that it takes a lot of tacking, but they see it differently than everyone else. Because they're able to do more things that matter, they come to orchestrate tacking as steps on a staircase rather than a random series of starts and stops in different directions.

    When organizations grow in size beyond what small teams of three or five can handle across the board, it becomes the job of some people to put the pieces together. Hence the manager, who more than anyone else has responsibility for helping the company work on the business by aligning resources, making decisions, and all the other good things that help it grow.

    “By adopting appropriate principles of management, organizations can increase quality and simultaneously reduce costs (by reducing waste, rework, staff attrition and litigation while increasing customer loyalty),” says William Edwards Deming, American statistician, professor, author, lecturer, and consultant.

    Deming believed that to deliver on their job description, all managers need to have what he called a System of Profound Knowledge. This included the understanding the overall processes involving suppliers, producers, and customers of goods and services, knowledge of variation in quality and the ability to use statistics in measurements.

    Managers should also understand people and appreciate of the limits of what can be known. Sometimes it's easier to see things in the negative, when they're missing. To Deming, management's “Seven Deadly Diseases” are:

1. Lack of constancy of purpose to plan product and service that will have a market and keep the company in business, and provide jobs it's a chain reaction from the purpose to the jobs, all interdependent and interconnected.

2. Emphasis on short-term profits: short-term thinking (just the opposite from constancy of purpose to stay in business), fed by fear of unfriendly takeover, and by push from bankers and owners for dividends.

3. Evaluation by performance, merit rating, or annual review of performance — when asked about this point, Dr. Deming would mention Peter Scholtes thoughts on why performance appraisals were bad management. In Abolishing Performance Appraisals, Scholtes suggests alternatives. Scholtes et al say that even the recently-become-sacred 360-degree appraisals can be fatally flawed, if what they are about is judgment and evaluation, rather than helpful feedback. Quality feedback mechanisms including coaching and support structures are a strong alternative.

4. Mobility of top management (too much turnover causes numerous problems).

5. Running a company only by visible figures, with little or no consideration of figures that are unknown or unknowable — this is an obvious statement that runs counter to what some incorrectly claim Deming taught, that you can only manage what you measure. Deming did not believe this and if fact saw it as a deadly disease of management.

6. Excessive medical costs — this is more US-focused than the others.

7. Excessive costs of liability, swelled by lawyers that work on contingency fees — also more US-focused.

    Lack of constancy of purpose, emphasis on short-term, little or no consideration of figures or data that is unknowable or not visible plague our thinking and prevent us from doing better, internally and on the customer experience end. Excessive executive pay could be added as another disease — it cripples (especially US) companies, in many markets they're not competitive.

    In an evidence-free environment it becomes quite hard to make decisions on next steps. Feedback is the useful bit when working with others. Everything else can get mixed up in confusing ways.

    Successful entrepreneurs have a set of beliefs that can help managers:

  • The moment you blame, you lose: Jonathan Fields
  • The little things matter. Do them: Chris Guillebeau
  • Your business is worthless if it depends on you: John Jantsch
  • You can have both your soul and success for your business: Sonia Simone
  • Don't wait to get it perfect, get it going: Stu McLaren

    Still curious? More on Deming's plan, do, study, act system of learning and improvement.

 

P.S. It takes someone who's sees the world like entrepreneurs to become fanatical about feedback in a good way.

 

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