Drucker’s classic model of the firm

“Management is about doing things right and leadership is about doing the right things” according to Peter Drucker, the man who is widely regarded as the grandfather of all modern business management ideas. If you want to go back further than the 1930s you’ll find that a lot of business management logic has been derived from military systems. In traditional businesses the discipline, the people management and the structures have largely been borrowed from the army. Why? Because it’s been proven that it works!

A mini renaissance began in the 1970s and, by the 1990s, the emergence of “the flexible firm” demonstrated that Drucker’s approach to business management is not the only one that works. Nonetheless, you’re not going to be able to implement “the flexible firm” until you’ve reached a certain critical mass, and it could be argued that you’d need between 100 and 200 employees before venturing beyond the proven traditional structure. Even at the 100 level it is often the case that businesses are just becoming settled with things like a dedicated HR manager or IT manager.

The keys to moving forward and moving upward are to recognise that a fully functioning business has multiple facets and to plan accordingly. That means that you need to build a plan to expand in a proportionate way, and to have clear objectives in mind.

Traditional businesses have three divisions . . . Operations, Finance and Marketing. Drucker’s classic business model also includes the CEO (a visionary) and the Managing Director (a strategist). Then in the 1970s some business gurus came up with the idea of a fourth division which they called Soft Systems, and which we now call HR.

More recently Soft Systems has morphed into two divisions, HR and IT, and we now have seven divisions in total.

Even though CEO and MD are not really divisions in the true sense, they do command special attention when it comes to organisational structure. And where is the detail about your organisational structure? In your Operations Manual.

The Operations Manual is divided into these seven divisions and it sets out what they do and how they do it. As explained elsewhere in this blog, the biggest reason that people don’t do things is that they don’t know how. Having an Operations Manual is the most important thing you can do in order to ensure that none of your staff have the “don’t know how” problem.

Even a sole trader benefits from having an Operations Manual.

By setting out what is done, and how it is done, a business of any size can ensure that there is consistency in its operations. All customers receive the same level of service. All customers receive a product which is equally as good as that of any other customer. Credit control procedures follow the same pattern and favouritism and neglect are reduced. Most importantly the business owner, by following the Operations Manual, sets aside some time to focus on the strategic management of the business.

Occasionally, you need to get on the bridge and command the ship. If you spend all your time in the boiler room stoking the boiler you may end up discovering that your ship is operating at full steam ahead . . . in the wrong direction. You can’t afford to spend 99% of your time on production. Get on the bridge sometimes, work on the plan, because management is about doing things right and leadership is about doing the right things.

Do you have an Operations Manual? Does it work for you? Does it put you “in the zone”?

What is the biggest reason that people don’t do things?

Members of parliament, small children, the driver two cars in front of you, some of your work colleagues. What is the biggest reason that people don’t do things? And, even you. Sometimes you don’t do what you want! Why not?

What is the biggest reason? The short answer is “they don’t know how”.

And there are two principal ways to fix this. The first one is probably everything you need if you’re trying to design a personal plan. The second one is the one which will be of particular help to anybody who needs to put the fundamentals of a business into place. That means a sound business plan, and that will lead to a sound business. Whether you’re reading this for personal reasons or for business reasons, everybody needs to start with 7 habits.

This blog has no affiliation with either of the two authors mentioned below. Nor is any commission received for these two recommendations. They are simply two brilliant books, and that’s why this blog is devoting attention to them.

The ones in the photo are old editions. Both have been read and re-read a number of times. When you’re a business coach it pays to reinforce the basics, regularly. The clients always want to start with the basics!

Stephen Covey – The 7 Habits of Highly Effective People

One thing that you need to understand at the outset is that when highly effective people read the book “The 7 Habits of Highly Effective People” they follow it carefully and they do exactly what is says. That means using a pen and paper exactly as directed. It means looking at the correct pages at exactly the right time. No cheating! There are no shortcuts to becoming highly effective!

Moreover, there is no advantage to be gained in skipping things. Quite the reverse actually! The book must be read in the order it’s laid out, and in the manner it prescribes. Highly effective people will secure great benefits by doing this just right.

Pay particular attention when (early in the book) you’re asked to do the funeral exercise. Do exactly what it says. Then persevere and read everything . . . properly . . . and later (in the second half) the story about the sand, the stones and the rocks will help all your plans fall into place.

Of course, if you don’t want to follow this advice then you don’t have to. But then again, you may not become as highly effective as you would like to. And we’re back to the title of this blogpost “what is the biggest reason that people don’t do things”? You can’t claim that you don’t know how to read a book properly!

There’s an old African proverb “give advice, if people don’t listen, let adversity teach them”.

Kevin Duncan – Running Your Own Business

When you’re trying to build your first business plan this book is a great place to start. It quickly cuts through the fog of unhelpful bank style business plans and instead focuses on what you need for your business. And that’s a business plan that works for you. Your plan will probably start off as a couple of pages and that’s enough. Highly refined, deeply purposeful, incisive and above all, meaningful.

Nobody ever shouted from the rooftops about the value of the plan that their bank demanded! If, later on, you need more finance and have to go to the bank to get it, then you’ll probably have to do a “business plan” for them as well. It’s not the same thing!

For a start, Duncan tells you to be “brutally honest” with yourself. Would you ever want to be “brutally honest” with your bank? You can see how Duncan’s mind works – this is for your benefit and nobody else’s!

Like Covey, Duncan is also an advocate of pen and paper. When he tells you to do a pen and paper exercise just do it. Don’t hang around looking for inspiration. If you wait around for the clouds to part and a bolt of lightning to strike you in the brain, you are not going to get much done.

All the best ideas come out of the process, they come out of the work itself. Things occur to you as you write your plan and by the time you finish you’ll be so glad you adopted the “just do it” approach. Inspiration is absolutely unnecessary and somehow deceptive. You may feel like you need this great idea before you can get down to work, though in real life that is almost never the case.

This book will help demystify what a business plan really is. It’s a marketing plan! OK, it has a bit about finance, and a bit about operations, but essentially it’s a “get more business” plan. So that means it’s just a glorified marketing plan!

The modern Chinese proverb about effective marketing says “man who stand on top of hill with mouth wide open wait long time for aromatic duck to fly in”.

Cost Benefit Analysis

Have you logged onto Amazon and bought these two books yet? The worst thing that can happen if you buy them (and don’t value them) is that your bank balance will be about £20 lower. The best thing that can happen is that you read them, understand them, adopt all the best bits, implement all the best bits, and increase your bank balance immeasurably!

You’re welcome! All business coaches offer a bit of free advice like this!

So the short answer to the original question “why” is that “they don’t know how”. By highlighting the short answer, and by outlining two practical steps that you can take, this blogpost has attempted to help you overcome the question “why”.

The long answer to the original question “why” is an “operations manual”. That’s merely a logical next step from a business plan. The two words “operations manual” are innocuous in themselves when they’re stated simply. However, this exercise may involve a bit more effort. In a regular business the “operations manual” may run to 30 pages, or 300 pages, or more. Are you willing to take that step?

The best laid plans

Where would a business end up if it didn’t have a plan? More than 50% of businesses cease trading before they reach their 3rd anniversary. And it’s reasonable to assume that the ones which fail quickly either didn’t have a plan, or didn’t follow one.

It’s unfortunate that most early stage businesses are working without a plan, or with a plan which is inside the head of the founder. Only 5% of UK businesses have ever committed their plan to writing, and they are the ones that are most likely to succeed.

So, if you want to elevate your business into the top 5% of UK businesses, then all you need to do is write down your plan!

On paper or in a digital document, but write it down. And then revisit it regularly. Your business plan should set out how you’re going to keep moving things in the right direction, and hence part of your plan will be how “the plan” forms an important element in the process.

Nobody writes a business plan to fail: “securing orders in our first year will be tough – and we’ll be living hand to mouth – the second year will start like the first – and then it’ll go downhill rapidly – leading to a really bad year 3 where we won’t be able to pay our creditors and the business will cease abruptly”!

Quite the reverse really. Everybody writes a plan (meaning the ones who actually write it down) which says – struggle in year 1 – then get better in year 2 – then really take off in year 3! So, if you really want to succeed in business, all you need to do is follow your own plan. The one you wrote down. The one which says things will always be getting better.

Sounds easy doesn’t it? Then why is it so hard to persuade people to write down a plan? As any business coach will tell you “implementation is everything”. That’s what business coaches do – write their own plans – implement their own plans – whilst using various techniques to try to guide, motivate, incentivise, cajole and persuade their clients to do exactly the same. Write it! Implement it!

If your business needs a bit of a boost, then take this advice, plan the work and work the plan. But you must get it down in writing!

A Stirling University Photo Essay

This blogpost is an example of a photo essay as recommended elsewhere on this site in the How To Write A Photo Essay article. This is a brief demonstration of the photo essay principles. This is not supposed to be a literary masterpiece! And first, you may want to read the How To report in order to fully understand the structure of this piece.

A Stirling University Photo Essay

When I was young I lived just outside Swindon. I liked to travel. I visited many places including London, Oxford, Sheffield and Stirling. I didn’t know at the time that one day I would apply to study Japanese at London, Oxford, Sheffield and Stirling. They were the only four universities in the UK which offered Japanese & Business Studies.

The Campus at Stirling University

I received offers of places only from Sheffield and from Stirling and I chose Stirling, a very new, immature university, reputed to have the most beautiful campus in the UK. I hadn’t realised that Sheffield had the better reputation and would have been a wiser career choice. I had based my decision on the territory. Not only was Sheffield an ugly place back then, it had hills throughout the city, and you needed muscly legs to walk up and down them. By contrast, Stirling was clean tidy place, surrounded by beautiful countryside. It was a charming small town. And parking my car in Stirling was a lot less trouble than parking it in Sheffield!

Japan was in the ascendancy back then, and a joint honours degree in Japanese & Business Studies sounded like the right thing to do. I had already been to Japan on holiday (long before it became a popular choice) and pre-holiday I had spent time learning the language from a book and cassette course. I did that a lot. I had learned Spanish for my Mexico holiday, long before I ever went to Spain.

At Stirling, Business Studies was an odd subject, and I wasn’t keen on the deeply academic discussion and all the essay writing. The modules in year 1 were common to the Business Studies course, the Marketing, and the Management Science courses. By the end of year 1, I had elected to follow the Management Science course instead. It involved more mathematical modelling and computer modelling, alongside a reduced requirement for essay writing. It was also a BSc course whereas Business Studies was a BA.

I elected to study Computer Science as my extra subject for one year. Those were the days of terminals attached to mainframe computers. Desktops like the one in the photo were a dream, this was the era of the first few massive clunky desktop computers with primitive black and white CRT screens.

Unbeknown to me until about two weeks before I arrived in Stirling, I had to do a third subject! Apparently everybody knows that Scottish Universities require year 1 undergrads to study three subjects. I didn’t, nor did a number of other students from schools in England. Perhaps it’s widespread knowledge across Scotland, and if your English school had some wise advisors, you might also have been told about this. I wasn’t! My advisor at my school said “go and study maths, it’s the only thing you’re good at”. Consequently I didn’t hold my advisor in high esteem, and that’s probably why I went to few of those meetings!

Study was a mix of lectures, small group tutorials, some computer lab work, and a lot of regular classroom work with a native speaker Japanese teacher. At the start there were 30 students of Japanese, whereas at the end there were just 6. Japanese and Computer Science were reputedly the two most difficult subjects at Stirling, and I was doing them both. In my year I was one of three with that combination. By year 3 there was nobody doing joint honours in Japanese and Computer Science.

The reason that Scottish Universities require year 1 undergrads to study three subjects is that you have an option to change your degree at the start of year 2. Everybody is required to drop one subject, and it can be any of the three that you originally chose. I stuck to my plan, and dropped my subsidiary subject Computer Science to focus on what I came for, Japanese and Business. I was planning to graduate, to move to Japan and make my fortune in the leading economy that Japan was in those days.

Year 2 started with my modified plan, Japanese and Management Science, and across every subject area, year 2 had a smaller cohort of students than year 1. I had also worked out that I could skip many lectures. I was diligent, I did the required Management Science reading in advance, I learnt nothing new in lectures and realised that they were just snapshots for students who hadn’t bothered to do the reading. I went to all my tutorials and I did well. The time I saved skipping lectures was put into more self study of Japanese. It’s actually like two subjects in one anyway. Anybody can learn to speak the language, but reading and writing was a massive challenge, and I spent hours every week working on that.

The attrition rate in Japanese continued throughout year 2. We were down from the original 30 to 15 in a very short time. People dropped out in all subject areas. I tried to stress this to the new year 1 students. I met many of them through the University’s Japan Society which I chaired throughout year 2. We organised educational, social, and food themed events, and many film nights using an old VHS video player. And a Ceilidh. In Scotland, every society in every Uni has to stage an annual Ceilidh, I think it might be a legal requirement!

University life was always fluid. The staff let on to me that they usually know within 4 weeks of the start of year 1 which students of Japanese would drop out, and when. They kindly said that I would make it to the end.

The only thing that is certain is change. Year after year, not only did we move from halls to rented flats and back, some people simply moved away and never came back. Year 3 meant even fewer classroom lessons than before, a regular calendar of lectures (all of which I skipped) and in my final term all my tutorials fell on a Thursday. I went and got a job! I worked in Glasgow four days a week, and attended Uni on Thursdays.

During one of the sparsely attended Management Science lectures a make shift attendance register was passed around. The tutors had realised that lots of us just didn’t show up. Naturally, I wasn’t there when that happened! Remarkably one of my friends was there and his girlfriend was there, sitting in on that particular lecture for no special reason. Under his direction, she wrote my name on the list, in her hand writing! Year 3 saw me earning good money and earning my degree.

I went to Uni to study Japanese, and I graduated, with a BSc in Japanese! Had I followed the original plan, Japanese & Business Studies (both BA courses) I would have definitely graduated with a BA. By switching to Management Science part way through, and by gaining credits for my Computer Science studies, I ended my time at Uni with more science credits than arts one. Hence I can proudly claim to have a degree in Japanese. And though I rarely use my post nominals, I can now put BSc after my name! In spite of speaking five foreign languages badly with confidence, in my professional work I am still a mathematician and scientist.

Perhaps that’s why I like having a BSc in Japanese!