Businesses go down the rabbit holes of ruin because their leaders get the basics wrong
By Jon Foster-Pedley
Dean & Director - Henley South Africa
Far too often in business, we get it wrong. We focus on the wrong issues; we waste time and we waste money.
When people don’t know what to do, they default to that which feels most comfortable, creating work to create the illusion of work.
The business of business is actually quite simple, but far too often we over-complicate it for ourselves — and in the process, we lose the plot, the cash flow and ultimately the company. All any manager needs to do is manage three things: standards, priorities and planning. It is simpler said than done though.
Business is about having an idea to produce or sell something that someone wants because there is a value to that product. The product also has to be different from similar products to make it more desirable. You then make an operational machine — people, systems, processes and equipment, to keep on making this thing of value. This is why it is so important to set standards, because when you slip off your creative value, you slip out.
It’s trite, but all businesses die for the same reason; they run out of cash. For most businesses there is no anti-gravity machine or skyhook in the form of a benevolent big brother that can pull them out of a financial morass, they have to generate revenues and watch their costs. The purpose of business has to be to make money and to create a surplus which can then be reinvested into the broader machine that makes the money — not waste it through financial incontinence.
This then comes down to setting priorities, focussing on those things that keep the machine running optimally, whether it be money or time spent. But far too often we get it wrong. We focus on the wrong issues; we waste time and we waste money.
When people don’t know what to do, they default to that which feels most comfortable, creating work to create the illusion of work. When they are scared, they shift to procedures because it makes them feel safe but it really doesn’t, in fact it is actually very dangerous.