Significant economic, financial, social, taxation and political change is occurring, and will continue to do for the foreseen future. The opportunities of the recent past have been suspended as well as the capital of the past 4 to 5 years is gone. Prosperity will no doubt be suspended for the near future. Clearly the funding dynamics and capital options for small business desires to grow has changed at least for the near-term. Change is upon us and those that embrace “Change” and make it an asset will enjoy opportunistic times.
Organizations that will prosper for the near-term have put their stakes in the ground by planning and making the change necessary to succeed. While we are all surrounded by ineffective media and reactionary neighbors, the message is clear: Economic pressures will be severe for a minimum of 12 more months. Therefore we must plan, react and be focused on these new paradigms.
Small Business Management 2.0 Best Practices
Facing extraordinary cost pressures, what is a small business owner to do? The answer, said simply, is to cut, shift, buy/acquire/merge, maneuver and do whatever needs to be done to be profitable and cash flow positive today.
Second, create operating processes now that are scalable so that your firm can add customers or services without adding additional people. Operating scale means every employee being more efficient, productive, and profitable.
Gary Hamel (famous author, consultant, and professor) in the Feb 2009 Harvard Business Review article titled Moon Shots for Management poses the challenges that must be over come to bring about “Management 2.0” which is an academic way of saying Operating Scale.
From the article:
Managers today face a new set of problems, products of a volatile and unforgiving environment:
- How in a age of rapid change do you create organizations that are as adaptable and resilient as they are focused and efficient?
- How in a creative economy where entrepreneurial genius is the secret to success do you inspire employees to bring gifts of initiative, imagination, and passion to work?
- How at a time when the once hidden costs of industrialization have become distressingly apparent do you encourage executives to fulfill their responsibilities to shareholders?
In the article Hamel describes a work environment that is characterized as:
- Free flowing information
- Contentious opinions are freely expressed
- Risk taking is encouraged
- Rely more n peer review and less on top-down supervision
- Leaders as social architects and not decision makers or strategists
- Diversity exploited and expanded
In the article Hamel goes on to describe management’s grand challenges and layouts a framework and I encourage everyone to have their managers read it and discuss the implications for their organization. Moreover, building on the foundation the article presents several small business best practices for creating operating scale:
- Be Economically Efficient. > Create operating measurement and metrics that reinforce daily activity that ties back to the budget and cash flows.
- Create Constituency Alignment. > Post measurement and metrics, communicate and then over-communicate the daily, weekly, monthly, and quarterly metric goals that lead to profitability. If progress is not being made then re-work or re-engineer the process so that they are scalable.
- Implement Workforce Scorecards. > What is not measured cannot be improved. Your human capital, your people are the lifeblood of any small business. Invest in your people to create scale and opportunity in the business.
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