One of the problems facing most companies is what I call “the myopia of success.” It is a contagious disease, in which the transmission vectors are social media and news companies and startups. It affects 8 out of 10 businesses and is characterized by an obsession with success … regardless that means different things for each.
It is a sentiment that seems to have established in society, possibly derived from the baleful “culture of the pitch”, and in which it is assumed that there is only one pattern of success with which measure us all, usually collected in monetary units:
“The more money has earned the founder, more ‘success’ has had.”
With this standard of measurement, the “success” of any company is to sell, possibly by an obscene amount of money. Interestingly, no one asks what the other has bought: a profitable, well – managed and with a long – term vision … or a company with vectors user growth and very high customer but with only a company promise of profitability.
Similarly, assuming a successful startup is one that has managed to convince a group of investors to support your idea money. It is certainly an important factor, but:
- What about the companies that prefer the way of bootstrapping? (self – finance company containing costs and growing revenues generated)
- In addition, they have enough with the famous 3F. (Friends, Fools, and Family, or what is the same, have enough funding from their own funds plus its environment).
These are slower than investment, and roads involve sacrifices in wages and lifestyle, but ultimately can potentially be very interesting. As the phrase says:
“Being an entrepreneur is to live a few years and others never would, to try to live the rest of your life as others could never.”
And yet the previous sentence continues to assume that the main parameter measuring success is money, and yet there are many people who believe that success is being able to ride a company that allows them and their families to live comfortably, but especially leaves them free time to enjoy your life. Alternatively, just want to start their own company for them to make decisions, and have the luxury of being wrong … because make no mistake, the alternative is:
For me, the key is to be able to use our own judgment and not let carried away by the widely established on what success is, as we discussed in “to grow is our only strategic choice?”… Because as in that case the ego plays an important role.
In my opinion, we should stop and reflect on what is successful for us, something that will be very close to our values, principles, and requirements… since there are many definitions of “success” and that in some cases are not mutually exclusive:
- Start a business that leaves us free time and quality of life: I start with what is probably the furthest away from the success concept definition, but perhaps on which more should reflect. As we tend to get target money to then we can be happy, then we can spend more time with family … and we forget that happiness is not a goal, it is a state.
- Start a business that changes the world: Sometimes our goal is to change something we think will not work in the world, which is broken into society. Called social entrepreneurs do not measure their success based on profitability but based on if they can solve the problem if they can change the world. Obviously, they must be economically sustainable business, but profit is not an end but the road. Between this extreme and pure profit without purpose, there are thousands of shades … and yes, it is best to change the world a lot of money, but sometimes it is not possible.
- Riding a profitable company with our own funds and grow slowly but surely: One of the least “slowly” but involves choices that although we will not have large sums of capital to invest in growing, fully keep control of our organization, do things our way and no one will bring us hurry. They are typically companies with slower growth vectors that have been financed with its own resources (as we discussed in “The Business Angels are the parents”).
- Getting investment to grow: One of the ways more “fashionable” for any startup … since in some types of business simply is not possible to start or grow with equity. Getting external funding is something great if we need capital to grow, but also has a “dark side” as they lose some control of the company. And has managed investment knows: every dollar you spend on investment costs much more than your own, which together with the fact that we will have to account does not as appealing the process (depends largely on the type of investor and whether it is someone who understands what invests).
- Create a company to sell: It is something that although legitimate, has strong implications from the moment of birth. In such cases, profitability is not the key, but rather a traction and the ability to achieve strong growth every month, showing a dramatic trend. In these situations, it should be clear from the beginning that not only want to sell but to whom, when and why. The speed and growth are the key variables, which makes not going to be comfortable to live in this environment.
All are great reasons to start a business, it is important to know what is the most important for us because it will color each one of the decisions we make. In fact, although we repeat ad nauseam that we must seek scalability in a business model that does not mean that non-scalable an enterprise (a consulting, a fishmonger, a development company …) is not perfectly valid and feasible.
For all this when I start working with a company I ask, “What is a success for you?” Because the definition fully conditions the growth strategy, financing, to market … etc…
Well understood the productivity
It remains sadly common to hear managers who harangue his people saying they must increase their productivity and thus lengthen their working day … or speak of reducing plant ill to improve the productivity of your area.
This is a subject I concerns both professionally and personally, because while we begin to properly understand productivity as a whole and know appreciate all the levers that allow us to improve, continue as a country to the tail and having a lousy personal-professional balance.
The first thing I would like is to establish common ground on which to start talking about this issue, and it should find a definition of productivity that satisfies us. Before you approach it from a point of view more macroeconomic, I think we should focus on the business vision. For me one of the clearest definitions is one that says:
“Productivity is the relationship between the resources invested in producing something or provides a service (which technically is called inputs) and the production obtained.”
Production and resources determine the units in which we speak. For example, in the environment technology services, in simplified form (direct resources only) can be considered that resources are the hours spent in providing the service and manufacture the done obtained from the service, bringing annual productivity would be measured in $ billed x time spent, or more generally in annual turnover per person.
(This is what leads to value companies based on what they billed annually and the number of staff employed … a company that bill 50 million dollars with 400 people on staff have an annual productivity of $125,000 x person … the Error comes when two companies that produce just do not compare!)
In the case of a company that manufactured goods, such as washing machines, productivity is the number of washing machines produced between all the elements that are necessary to manufacture it in a given time period (from resources direct , as raw materials, hours employee … etc. even indirect , as commercial enterprise, light and water management pay … etc). However, since the measurement of productivity of assets is complex, in this post we will focus on increasing productivity in the environment of a CIO.
Productivity is not only considered as says Wikipedia, the ability to produce but the degree of utilization of resources used, i.e. the famous value added. As is becoming clear, it is “easy” to act on productivity, since it suffices to modify either side of the equation.
Modify the side “Production”: Producing more elements with the same number of resources. This point is often complex to improve and is usually more associated with business model innovation … although this increase has a limit.
Modify the side “Resources”: Get the same output with fewer resources than before. This is where most policies to improve productivity focus
It is this last point where influence “to the waterline” phrases with which we began…
Make people work longer hours: The “theoretical” objective would be achieved with this is to increase production (queue no productivity!)… Although there are several “perverse” conditions that prevent it actually happens like this… When a person instead working 8 hours a day working 12h steadily, their production does not increase linearly, but in the best case only increases a small percentage (the person is more tired, and often adapt their 8h working to 12h, so it takes more cafes, browse more online … etc.) … and more long-term low productivity and, above all, motivation.
Getting rid of part of the workforce: In this case, somewhat more difficult to evaluate and depends largely on the stage of the company. However, if we are in a stage where it has fallen demand and do not need to produce, it is obvious that mathematics indicate that we must reduce side resources, and if in our case are people undertake the ERE (designed to ensure continuity rest of the squad, not lose perspective). If possible, in the concrete situation of the company, it is better to allocate temporarily idle policy innovation (resources that improve productivity). But without some of the resources should be made taking into account the level of production that are able to provide … and if production needs have not dropped, or have temporarily fact, reduce these costs is a direct impact the ability to produce, therefore future profitability … and above productivity does not increase, as production decreases.
Although not the purpose of this post offer to improve productivity master recipes, I think there are fronts that are more rational where you can work…
Work the hours needed, no more: As we have seen, the productivity of a person working 10 hours is not so higher, but usually lower. Our goal as directors, officers or managers must be that people work full 8 hours (efficiency) in the most necessary objectives and clearer affecting production form, no effectiveness. This is only a problem requires immediate supervisory level more specific and continuous performance management of each person, which is, in the end … that boss we have to work more.
Improve the way we work: The other important variable that can act is the optimal use of resources, i.e. applying methods to improve the time taken to do a task or the necessary materials. In this category, management systems, quality improvement strategies or, generally, any innovation that lie permitted produce more with fewer resources. It is certainly one of the points, where IT plays a key role and often CIOs know not transmit to senior management. Sometimes simply are not heard, eye … a few days ago told me a great CIO who had tried to convey (with clear numbers) the need for an intranet for automating a number of intensive manual processes personal (expense sheets, vacation … etc.) and who had not obtained approval of the proposal. We speak later at length on the subject.
Use all productive resources: Serve this only as a reminder note or a topic I want to address later when we focus productivity from a point of view macroeconomic, but we have excellent professionals in our organizations that are not exploited…
