Summary: 'Rethink: A Business Manifesto'
By Rolf Dobelli, Chairman, getAbstract
Business architect Ric Merrifield says many executives get hung up on the "hows" of running a firm: the techniques, tactics and technologies their companies use to operate. In the process, they fail to focus on the all-important "whats" of their enterprises, that is, central functions like manufacturing quality products, fulfilling orders, satisfying customers and so on. Lost in superfluous details, these leaders can't see their real priorities. Merrifield says that for many such executives, basic rethinking is in order.
In this book, he explains how to take a fresh look at your business to identify and prioritize your core activities. Although the metaphorical overload of "whats" and "hows" might make you want to ask, "Who's on first?" this is a solid take on leading innovation. getAbstract recommends it to any executives who suspect they may need to refocus or broaden their perspectives about their organizations.
First, Do No Harm
Home Depot built its reputation on having friendly, knowledgeable salespeople who could give customers immediate expert advice on repair and improvement projects. In 2000, Robert L. Nardelli joined Home Depot as its new chairman and CEO. He immediately cut costs, reduced employees' hours and curtailed store managers' independence. Numerous people quit. As he built more stores, revenues increased, but customer satisfaction dropped. Home Depot was no longer differentiating itself from other big-box competitors. Its rival, Lowe's, stepped in with service-oriented staffers. Soon, customer surveys said people liked Lowe's but not Home Depot. Lowe's revenues soared. Home Depot's stock price stagnated. In 2007, its board fired Nardelli.
Nardelli's moves to cut costs and improve operations seemed sensible. His mistake was focusing solely on making Home Depot more efficient by reducing costs. In so doing, he became a victim of the "'how' trap." He forgot the importance of Home Depot's "what": supplying a satisfying shopping experience for do-it-yourselfers. Nardelli made a common mistake and Home Depot suffered as a result. Many executives worry so much about processes and details that they fail to see the "big picture" - what their businesses really do. They need to elevate their thinking and rise above the pesky "hows" so they can focus on the outcomes that matter. This will enable them to develop sensible processes that form a direct path to attaining their firms' primary goals.
Finding the Right Unit of Analysis
Businesspeople give new technology the credit for productivity gains. They forget the importance of operational design theory. In recent decades, companies have increased productivity with total quality management programs and "reengineering initiatives." Firms need another approach that maximizes the worth of their work.
In his 1776 book, The Wealth of Nations, economist Adam Smith explained how the division of labor could make workers more productive. His unit of analysis was the individual task. In the 19th century, Frederick Winslow Taylor made the worker, not the task, the unit of analysis. In the 1960s, as a result of automation, the unit of analysis shifted to "the department." In the 1990s, as computers became more powerful and cheaper, and telecommunication prices fell, the unit of analysis became the cross-functional process, in which managers reorganize work "across departments."
Which "Whats" Come First?
Today, the unit of analysis is the "what" - that is, the company's "desired outcomes": merchandise manufactured, orders filled and products delivered. Focusing on results can help companies adopt a "plug-and-play" approach to their activities and operations. However, identifying the outcomes that are most vital is not easy, particularly for executives who have always dwelt on "hows," such as processes and procedures...
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Posted by: sterlinggo1 | February 22, 2010 11:39 PM
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