Tag Archives: organization

Most Organizations Are a Kludge– Fundamentally Broken And Many Are Just Held Together with Duct Tape…

You hear it daily: Government is dysfunctional, nothing gets done, conflict, confrontation… these are just a few signs that the process of government is broken… But these are also the signs and realization that many corporation, organizations… have the same issues. More often than not organizations are broken in some capacity, e.g.; customers are being ignored, internal processes are running amok, Internet website is a ghost town, productivity is down, expenses are out of control, profits are non-existent, management cannot agree on a strategy… And yet many corporations continue to function… these organizations might be described askludge, clumsy, messy, lack of decisive decision-making… they have ugly structures that more or less deals with issues but in very inefficient way– they are kludges that are held together with duct tape…

Kludge (rhymes with nudge), Oxford English dictionary defines it as; to improvise or put together from an ill-assorted collection of parts…  According to Sheryl King; kludges can also be seen as– innovative allowing an organization to stay-up and running despite its clear need for a more fundamental solution to improve performance… Quick fixes enable organizations to achieve a near-term operational continuity, but at expense of sustained corporate innovation and performance… In a nutshell, the more organizations opt for kludging, the more they are on the road to ultimate failure… However, many organizations become habitual kludgers and muddle forward…

In the article Organizations Are Broken by Greg Satell writes: It’s an era of technology but many organizations are not capable or smart enough to keep pace with the changing disruptive landscape… the changes are ubiquitous but many organization don’t know have to deal with them… Yet much like organizations themselves– the strategic planning process, which is the fundamental tenet of corporate strategy, has become a victim of its own success… In the quest to strive for ever greater efficiency, rather than more innovation– the process is getting more complicated, more granular, cumbersome… and the outcomes are marginal at best…

Management needs to rethink and shift their strategic model from– ‘pushing’ workers to achieve, instead to ‘inspire’ workers to achieve… According to Jack Welch; our planning system was dynamite when we first put it in… thinking was fresh and the actual ‘process’ of planning mattered little– it was the ‘ideas’ that really mattered. We then hired a head of planning and he hired two vice presidents, and then he hired a planner; and the ‘strategy books’ got thicker, and the ‘printing’ got more sophisticated, and the ‘covers got harder’, and the ‘drawings’ got better, but the ‘results’ got poorer… This is a sure sign that the organization is broken…

In the article Top Signs That an Organization Is Broken by Liza Mock writes: Are you and the people you work with happy? Is it easy to get your job done without jumping through hoops? If yes, chances are that your organization is healthy… If not, there is a fundamental flaw in the way your organization is structured… Consider these common mistakes:

  • Structure That’s Out-Of-Touch: An out-of-date organizational structure where the old hierarchy that management embraces remains in place, but it no longer reflects marketplace reality… A ‘stay with the status quo’ strategy keeps the organization from thriving… and it’s a sure sign that the organization is broken…
  • Unclear Roles & Responsibilities: Unclear management roles are one of the biggest sources of conflict within an organization. This leads to confusion, unmet expectations, and ultimately makes people feel demoralized and a common source of organization dysfunction… and it’s a sure sign that an organization is broken…
  • High Attrition Rate: When workers feel powerless they become disengaged and ultimately don’t  care much about work, which in turn leads to high attrition rates… A high turnover rate is a sure sign that an organization is broken…

In the article Fix A Broken Organization by Ben Peterson writes: Have you ever seen what happens when an organization goes bad? Spoiler alert; it’s not good… When you don’t have the right strategy, the right culture, the right talent… then the consequences are disastrous… Overcoming a broken organization is never easy– when you see signs of trouble, or when you are looking to achieve better results, then be prepared to take some difficult steps... Here are a few tips to consider:

  • Rebuild with best principles, not just best practices: This means focusing on principles, not practices. Take time to identify the organization’s DNA… Do an honest organizational assessment; identify its purpose and the things that inspire your customers, employees, management… and clearly define the mission and vision statements… these principles establish a firm foundation for the organization…
  • Be humble and open: Rebuilding an organization is hard, and it requires everyone ‘to be the very best they can be’, beginning with management… and they must show genuine humility and acknowledge the organization’s shortcoming with stated actions to fix them…
  • Rip and replace: When fixing a broken organization you can’t always afford to spend time tweaking failed strategies and initiatives… Find the elements that are not working and simply replace or eliminate them… Dig deep and figure out what exactly motivates the team, the customers, the partners, the suppliers… not just financially, but psychologically as well…
  • Implement values: Defining cultural values for the organization means nothing if they are not integrated into everyday work… Finding the right people and, perhaps equally important, weed out those who don’t share the organization’s common values are key to fixing a broken organization…

Keep your eye on the gauges: All organizations need maintenance to survive and thrive… It’s an ongoing process that requires constant attention and care. It requires honest and continual assessment of all the factors that impact performance of the organization. Hence, always be prepared, at any time, to make any necessary adjustments, within exception, to fix a broken priority in the organization or speed-up the journey to an ultimate goal…

 

Holacracy — Different Management Concept: Imagine– No Titles, No Managers, No Hierarchy, No Boss… Fad or Future…

Holacracy® is a management concept that ditches all traditional ways we look at ‘work’– no job titles, no managers, no organization hierarchy, even no boss… Holacracy® is a total transformation for structuring, governing, running… an organization… and a new way of achieving control by distributing power… it replaces traditional top-down management…

According to Brian Robertson; Holacracy® is management based on the tasks a company needs to accomplish, rather than a standard reporting structure… It’s sort of like a game, e.g.; there are rules, workers are responsible for their own tasks, and there is no micro-management… also, no one has to be stuck doing the same task all the time… it generates organizational clarity… it’s adaptable, quick changing both for work that needs to be done, as well as, how work is being fulfilled…

For some Holacracy® spells end of traditional management, as we know it. But for others, the concept is complete insanity…

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According to Martin Newman; I struggle to see this as a panacea. I see how balance needs to be struck between formal and informal leadership, and greater use of distributed leadership. But, much of Holacracy does not make sense… good managers and leaders know that they simply must talk to people and not defer to a management model that says, they don’t exist. Clearly traditional leaders must adopt and change from managing people to empowering people…

But, leaders (how every defined) are still needed to be responsible for the entire company… also, the role of an enlightened leader is not to dictate; how, when, where… people do their work… but to distribute the power of leadership… It’s a huge cultural shift and it relies on trust– delegating power, joint decision-making, shared sense of purpose… these are the things we’re seeing and discussed more in the workplace… Seen this way, then Holacracy type management does makes a lot more sense…

Who’s in Charge? Is Holacracy® workable model for organizations– The idea of self-directed or self-managed teams is not new… In the mid 80s, a number of manufacturing companies instituted a similar flat hierarchy under belief that workers would be more productive if they were empowered through greater autonomy. A number of large, multi-national companies, such as; Shell, Cummins… adopted the method for a short time, but it failed…

The adoption of a Holacracy type concept saw an exodus of many senior management talents, and companies soon realized that experienced managers would rather leave the company than lose their titles. In fact, according to Jan Klein; the experiment was doomed from the start… people just don’t self-regulate as well as the companies had hoped… Teams are not good at self-disciplining themselves…

Only one company made Holocracy last long-term; it was a small, rural factory where everyone knew everyone. It was, in essence, an extended family business model supported by a strong community foundation… There is something intriguing about the notion of truly democratic business culture. But, hard to imagine corporate leadership embracing an idea that essentially eliminate their authority…

According to Sanjay Srivastava; people are social animals who travel in packs and care about two things: First, who is dominant? Second, who likes them? They say humans subconsciously rely on visible cues like attractive physical features or extroverted personalities to assign status in a group, which has no labels to indicate otherwise… In a company devoid of bosses, these perceptions of status will take hold to establish a pecking order… Add, the fact that people naturally strive to attain higher status in the form of admiration, respect… from peers and those perceived as more powerful.

In Holacracy®, people’s instinctive inclination to climb up the ranks at work finds no reward when there is no boss to offer feedback or pat on the back… That’s because status is as important to us as breathing… Research shows that perceptions of social status– of ourselves and others– and our overall standing in social hierarchies affect how we make decisions, how altruistic we are, as well as, our overall mental and physical health…  Some workers will therefore naturally converge around a perceived leader, leaving others feeling insecure. Since our brains are hardwired to tune in to threats over rewards, people tend to act more defensively when they feel their status is at stake…

In Holacracy® the titles disappear, but human dynamics won’t. In an environment where everyone is leader, some other mechanism needs to be put in place to ensure that everyone can maintain and optimize the tenets of fairness, trust, transparency… so the entire organization can move forward…

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In the article Should Your Business Embrace Holacracy®? by openview writes: What is Holacracy, exactly? And, is it right for your company? Imagine walking in to work one day to discover that you no longer had a boss or manager to report to. Instead, you are your own boss, and you work in self-organized teams– rather than hierarchy squad of managers, executives… in addition, now you are also responsible for influencing the company’s purpose…

Sound a little far-fetched or utopic? At Zappos, a company that employs about 1,500 people, this management approach is reality and it’s got a name; Holacracy®. According to John Bunch; one of the core principles of Holacracy® is people taking accountability for their work, and it’s not leaderless– there are people who hold a bigger scope of purpose for the organization than others– but, leadership is distributed into each role– everyone is expected to lead and be an entrepreneur in their own roles…

At a high level, Holacracy® is about authority, leadership… In a holacratic environment, no one has the power to tell anyone else what to do, and there are no organization chart that dictates specific responsibilities for each role in the company… Instead, authority is distributed among all members and meetings are held to establish responsibilities and focus on company’s key issues… Although while stripping a company of all management structure might sound like perfect way to induce uncontrollable chaos; Holacracy’s  supporters suggest that it often has opposite effect…

Ultimately, there are a few key arguments in favor of holacratic structure, e.g.; gives everyone a voice… brings clarity… highly adjustable, adaptable… Yes, there are plenty of potential pitfalls, for example; without any one person, i.e., the boss, truly in charge of the organization… how exactly will a growing company deal with the inevitable business challenges, e.g.; scaling, risk, hiring, firing, corporate governance, financial matters…

According to William Tincup; Holacracy has a few potential issues with that might prevent it from being effective in large organizations, e.g.; size and complexity… retaining talent… corporate governance… transition from hierarchic to holacratic… While Holacracy has been around for a few years, there are good reasons why few large corporations have adopted it…

The reality is that it’s virtually impossible to determine with certainty whether Holacracy® will work in a company until you actually try it. And while it might be a wildly successful transition that makes the company significantly more streamlined, innovative, and efficient, it could also send the company down a slippery slope…

In the article Making Sense Of Holacracy by Steve Denning writes: Holacracy® is essentially a set of inward-looking hierarchical mechanisms… Each is required to be run democratic and open, with exhaustively detailed procedures on how things like– meetings are to be managed, how decisions are to be made… But more important, the word ‘customer’ or a reference to any feedback mechanism from customers don’t appear even once in the Holacracy® Constitution

In addition, there may be no one person with the formal title of ‘manager’, but certainly there are ‘roles’ that are in every respect– managers, except for the formal title of ‘manager’. The fact that the accountability of the role is changed in accordance with governing rules, does not make him or her any less of a manager, in the normal sense of that word…

In fact the responsibility of the ‘core roles’ are spelled out in exhaustive detail…  And, to suggest that there are no managers is absurd… Notice that in the media the hue and cry  about Holacracy is: Whatever happened to the managers? But, the more pertinent question should be: Whatever happened to the customer?

There are no explicit feedback mechanisms from the customer, i.e. the people for whom the work is being done… When so much time and effort is spent on the micro-details of the internal decision-making mechanisms and absolutely no attention given to external feedback mechanisms, one could easily get the idea that internal mechanisms are supremely important, while the customer is irrelevant.

Unless and until this ‘gap’ is rectified, Holacracy® risks being a distraction from the central business challenge, namely– how to make organizations better able to add value to customers through continuous innovation… Nevertheless, even in firms having intense, even obsessive, focus on adding value to customers, something along lines of Holacracy® has possibilities…

Holacracy offers one approach to revolutionizing the process of management– it’s democratic, but it’s heavy… For most organizations, particularly large organizations, the important issues are growth, profitability… delighting customers through  innovation… and not, in most cases, its internal administrivia… Hence, Holacracy® in current form is not very helpful; but, this is not to say that it cannot evolve to become more useful…

In the article Holes in Holacracy® by The Economist writes: Every so often a company emerges from herd to be lauded as embodiment of leading-edge management thinking: Think of Toyota and its lean manufacturing system, or GE and its Six Sigma excellence… The latest candidate for apotheosis is Zappos (owned by Amazon) that believes that happy workers breed happy customers. Tony Hsieh, its boss, said that he is turning the company into a Holacracy… and replacing its current hierarchy with more democratic system of overlapping, self-organizing teams. Until Zappos embraced it, no large company had taken Holacracy seriously…

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According to Julian Birkinshaw; nine-tenths of the approximately 100 branded management ideas I’ve studied lost their popularity within a decade or so… Among the latest cast-offs, it seems, is– Google’s much admired– 20% time, in which workers got a day a week to work on their own projects; the company is reported to be quietly side-lining it… Other, generally more timid, forms of democratic decision-making are being tried at long-established technology companies, whose bosses worry that their rigid hierarchies put them at a disadvantage to nimbler, less regimented young rivals…

Some management experts regard the whole idea of stripping away hierarchy as wishful thinking… According to Jeffrey Pfeffer; hierarchy is a fundamental principle of all organisational systems... According to Evan Williams; it’s not about discarding hierarchy altogether as making it more fluid… This type of management seems to work fine for smaller companies, e.g.; companies that relatively small, fast-growing, full of creative people who shun a more conformist workplace…

According to Stephanie Taylor Christensen; the goal of Holacracy is to produce results through complete transparency and realistic alignment of roles and responsibilities. For small-businesses owners, making everyone on the payroll accountable for the company’s success may in fact be the structure’s most appealing aspect… Because employees can hold varying degrees of responsibility in any number of circles in Holacracy– and those circles change, evolve with business needs at any given time– Holacracy may be the answer to maximizing the productivity of teams, particularly as business needs ebb and flow…

However, people must be willing to share power, this management style leaves no room for an- I’m the boss- mentality, despite the fact that they may be the most financially vested person in the business… every employee is essentially an owner of the business, and they are empowered to make real contributions to the business.

Because they’re encouraged to put their creativity and skills to use to solve problems and seek ways to constantly improve existing processes (even beyond scope of what they were technically ‘hired’ to do), as well as finding greater fulfillment in their jobs… But is Holacracy® really worth the total disruption of an organization? Well, it just depends…

Power of Purpose-Driven…Business, Leadership, Management: Focus on– Reason to Exist, Vision, Mission– It Really Matters…

Purpose (purpose-driven) is the single most distinguishing reason for the existence of an organization, and the impact it seeks to make on the world… Once uncovered, like flip of light switch, purpose illuminates everything in its path.

Purpose defines and drives all organizational activities– innovation, creativity, policy, structure, culture, communication, processes… Purpose aligns stakeholders and the organizational mission, strategy, ideals… it’s the essential that impacts both top and bottom line performance, growth, change…

Purpose empowers  organizations to make a difference in people’s lives… Only purpose-driven businesses can give a well articulated– reason, mission, vision… for their existence; beyond the traditional– profits, shareholder value…

Purpose must be clearly defined, authentic and aligned with business strategy, which enables a meaningful engagement with stakeholders; employees, customers, communities… 

The predominant characteristics of an organization with purpose are; focus, clarity, motivation, fulfillment… However, many businesses today resemble boats lost at sea, and the few that are successful follow the light coming from a singularly bright idea… According to Craig Ballantyne; purpose breeds trust, speeds decision-making, engages team members and customers, develops leaders, helps branding and promotes company change… Simply ask the question: Why is my company in business? What would the world lose if we were to disappear?

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Visionary companies have purpose beyond profit as fundamental reason for existence… According to Roshan Thiran; if doctors were asked what the central purpose of their profession is, they would answer: To save lives. If scientists were asked the same question, they would respond: To make new discoveries or  to better the world. Ask teachers and they would respond: To educate the next generation…

But, what happens when the same question is asked of business people? While, a CEO might say it’s the pursuit of profit… others say it’s about maximizing shareholder value… Unlike other professions, many business leaders simply don’t have an over-arching purpose of why they do what they do… According to Simon Sinek; leaders who want to succeed should straight forwardly communicate what they believe in and why they’re so passionate about their cause…

Most people know what they do and how they do it, but few communicate why they’re doing it. People don’t buy what you do; they buy into why you do it… You cannot gain a foothold in someone’s brain by leading with ‘what’ you want them to do. You must first communicate ‘why’ it’s important… Strive to be like the leaders who never lose sight of ‘why’ they do what they do and ‘why’ people should care. Only then will you inspire people and attain sustainable success…

In the article Purpose-driven Leadership by Di Worrall writes: Far from being touchy-feely concepts touted by motivational speakers– purpose and values are key drivers of high-performing organizations…

In their book ‘Built to Last’, James Collins and Jerry Porras reveal– that purpose and value driven organizations outperformed the general market and comparison companies by 15:1 and 6:1, respectively...

In their book ‘Corporate Culture and Performance’, John Kotter and James Heskett found that firms with shared-values–based cultures enjoyed 400% higher revenues, 700% greater job growth, 1,200% higher stock prices and significantly faster profit performance, as compared to companies in similar industries…

In his book ‘It’s Not What You Sell, It’s What You Stand for’, Roy M. Spence Jr. found that leaders who have a clearly articulated purpose and are driven to make a difference can inspire people to overcome great odds… There’s an enormous satisfaction in seeing the cultural transformation that happens when an organization is turned on to ‘purpose’.

According to Colleen Barrett; don’t ever take a job; but join a crusade! Find a cause that you can believe in and give yourself to it completely… In a company without purpose, people have only a vague idea of what they’re supposed to do. There’s always activity and busyness, but it’s often frenetic, disorganized and focused solely on short-term goals. There’s a lack of direction and commitment to purpose…

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People enjoy being engaged in meaningful work. Humans, by nature, are a passionate species, and most of us seek out stimulating experiences. Companies that recognize this and actively cultivate and communicate a worthwhile corporate purpose are employers of choice…

A major Gallup research study identified 12 critical elements for creating highly engaged employees. About half deal with employees’ sense of belonging. One of the key criteria is captured in the following statement: The mission or purpose of my company makes me feel my job is important… After basic needs are fulfilled, an employee searches for meaning in a job. People seek a higher purpose, something in which to believe. If, in your role as leader, you aren’t articulating what you care about and how you plan to make a difference, then you probably aren’t inspiring full engagement.

To tap into full engagement, leaders must clearly identify and articulate what truly matters to the company: Why are we in business? What difference are we making in the world? What’s our most important purpose? According to John Mackey; employees can get very excited and inspired by a business that has an important business purpose… A company purpose starts with its leaders and works its way through the organization. It shows up in products, services, and employee and customer experiences…

According to Seth Godin; mission statements used to have a purpose. The purpose was to force management to make hard decisions about what the company stood for. A hard decision means giving up one thing to get another… When a mission statement is well written, it serves as a declaration of purpose. But corporate mission statements are often little more than a descriptive sentence about products, aspirations or desired public perceptions. They’re more powerful when they clearly and specifically articulate the difference your business strives to make in the world.

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In the article Purpose-driven Business: Mission Matters by Jan Bruce writes: Success as a leader, visionary, executive… isn’t just the sum of all you do in any given day or even in a given year– excellence isn’t a list of to-do’s. The way to excel in business is the degree to which you are purpose-driven: The ‘why’ matters more than just the ‘what’…

According to Tony Tjan; there are many ways to make a billion dollars: real estate, investing, gaming and entertainment, retail, technology, and good old-fashioned inheritance. But the most interesting (and most respected) businesses and personalities are also the ones with the strongest and most authentic purposes behind them…

Purpose, isn’t a lofty thing, not some luxury that only billionaires can afford. In fact, if you want to grow and grow big, you can’t do it without a strong mission to get you there... However,  purpose is no guarantee you’ll be a billionaire (of course), but you can’t build something powerful and meaningful without it… According to Lisa Earle McLeod; this idea that emotions don’t belong in the workplace is total bunk… people want an emotional connection with their work. In fact, I’ll take it a step further; people are desperate to be part of something bigger than themselves… We know that the higher level of connection with a purpose the greater the resilience…

Purpose is the thing that will keep you afloat, and if you have it, you can get through just about anything… The purpose of leadership is to create that– noble mission-purpose, then embed it and embody it in the organization’s culture… It’s not enough to print it up on a symbolic ‘mug’– you must make it real. Nothing will disillusion employees, customer… like an organization that only pays lip service to an ideal without doing the work to make it true…

According to Lisa Earle McLeod; people want to make money, but they also want to make a difference… creating a culture of purpose is how you do both… According to some experts; employees can engagement in their organization at three levels:

  • Level 1: Most basic and least involved: You’re there for pay and benefits. End of story.
  • Level 2: You’re there because you enjoy the work and the people you work with. It’s a good place to be and you don’t hate being there. For some, that’s as good as it gets.
  • Level 3: You’re there because you believe you are contributing to something important. You’re aligned with a mission, and your actions, your hard work, has a purpose.

In the article Purpose-Driven Leadership – Focus on What Matters by Dr. Maynard Brusman writes: People strive to be engaged in meaningful work, and humans, by nature, are a passionate species and most of us seek out stimulating experiences. Companies that recognize this behavior and actively cultivate and communicate a worthwhile corporate purpose; become employers of choice…

According to Helen Keller; many persons have a wrong idea of what constitutes happiness… it’s not attained through self-gratification but through fidelity to a worthy purpose… You cannot gain a foothold in someone’s brain by leading with ‘what’ you want them to do… You must first communicate ‘why’ it’s important… Strive to be like the leaders who never lose sight of ‘why’ they do what they do and ‘why’ people should care. Only then will you inspire your people to attain sustainable success.

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Simply put, the purpose-driven concept is based on the principal– when given a purpose the employees strive to do more for the company because they feel more valued. According to Rich Karlgaard; purpose-driven companies have a huge competitive advantage… Employees and customers are hungry for purpose. Yes, employees want jobs. Yes, customers want deals. But even in a recession, we all want more than that. We want to feel that our lives have a deeper meaning that goes beyond paychecks and discount shopping… we want purpose…

According to Charles Prabakar; strategy without purpose is like kicking the ball to the goal post without knowing where the goal post is. In other words, if strategy is the compass, then purpose is the guiding light. At best, strategy is just a set of smart paths to a destination, whereas purpose is the journey in it by itself. Purpose is something that we need as part of our DNA; purpose is what drives us, ignites our passion and gives us the hope and reason for our existence. Strategies are about the means and they cannot be an end in itself.

The challenge today is that many corporations are not lacking strategies, they lack a reason for existence– they lack ‘purpose’. The sooner you understand the difference between the vanilla business models and purpose models and the importance of a purpose-driven strategic mindset, the better strategic decisions you will make to move the business from good to great– statistics shows purpose-driven businesses have always outgrown the ones who don’t have a formal purpose agenda…

According to W. Clement Stone; when you discover your mission you feel its demands  and it fills you with enthusiasm and burning desire to get to work on it… 

Office of the Future– Inside the Deskless, Paperless, Wallless Office Space: Starbucks Doesn’t Really Do It– Alternatives…

Office of the future: The main concept behind the office of the future is to make it as paperless as possible with a heavy reliance on digital technology… Technology is reshaping the workplace, changing how and where we conduct business… As a result, flexibility and adaptability is the sought-after attributes for employees at all levels…

According to Jason Lewis; technology allows companies to be more paperless and work from a single smart communicating-computing device… and with cloud-based systems… work, information is more accessed from anywhere, anytime… and it’s more easily shared– Workers no longer have to be tethered to an office to be productive. According to Stephen Siena; technology is very much at the heart of office transformation, although there is also a change in the business culture going on, as well– the desire for more collaboration…

According to Kay Sargent; to find the best office design, companies need to understand their end goal and what works best for their teams by thinking about the demographics of the majority of their staff, the culture implemented, whether collaboration or focus work is needed, and the power structure at their organizations... According to Edward Danyo; we found that only 35% of work activity… actually takes place in offices and cubes, yet we dedicate 85% of our space to those… It’s about creating environments so people can do their best work, and we’ve seen a 45% increase in the speed of decision-making… The forward-looking office design also saves money by saving space.

In the office of the future cubicles are a thing of the past, it’s an open floor plan with floor-to-ceiling windows and features angled tables and shared workstations for collaboration. There are glass-walled rooms for ad hoc meetings, special no-talking zones and employees get lockers for personal possessions… According to Gareth Jones; business is changing– the way we do business is changing, the structure of the organization is changing, and the way we use office space is changing– we need more fluid space where employees can interact in whichever way suits them best…

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In the article What Is the Office of the Future? by Lana Bortolot  writes; Once upon a time, a person asked to envision the workspace of the future might have detailed the trappings of a space-age utopia: robots, flying pods and out-of-this-world architecture. But ask today’s architects about tomorrow’s office, and the conversation is more likely to include touch-points such as; communication, collaboration, integration…

Instead of being out of this world, the next wave of offices is down to earth, and designed around the employees’ needs and specific company cultures… According to Barry Svigals; office design is a great leveraging tools companies have at their behest– it’s not just furniture… Increasingly, there’s a branding aspect that’s important to innovative companies. It’s not only for the outside world but for them; it reminds them of who they are…

The formalities between customers and companies have relaxed, as have corporate hierarchies– the corner office is isolating, not coveted, cubicles are relics, and walls have come down. Instead of impressive conference room, the must-haves for new offices are communal multi-purpose spaces designed to stimulate conversation, cooperation, inspiration… So what will shape the office of the future? Unanimously, designers say transparency is the No. 1 driver of office design… Open space, experts say, cultivates open minds…

According to Brad Pease; the office is a collaboration room and that extends to the customer spaces such as; reception areas, conference rooms… Whereas they once telegraphed authority, such staid spaces convey detachment and concealment in the now and future office.  A formalized lobby with a reception desk is a space that is not generating any ideas… we consider those  dead spaces– what customers’ value is access to ideas… According to James G. Phillips; employees should not be hidden away behind a reception area… the corporate culture is right there, front and center, and it’s about people more than anything…

Increasingly, the office of the future communicates a company’s culture-values, and taking a page from the hospitality industry– from cafe spaces that host collaboration-conferencing to dedicated respite areas for employees. Everything that’s physical must support the company mission. According to Collins; more than a showcase, the office combines hospitality and branding in a space that displays not just what the company’s team does, but who they are… It’s a customer space, but it connects employees to what their customers are doing and connect to the brand… It’s a light-bulb moment that gives them context…

According to Thomas Bercy; people want two things; complete openness– no more of the ’70s or ’80s kind of office, and they want space for one-on-one meeting... Another clear trend in office design is creating an environment that will appeal to the up-and-coming ‘Gen Y’ work force.

The Pew Research Center describes the Millennial generation as ‘confident, connected and open to change’; companies are designing offices that accommodate this psychographic: Weaned on mobile technology, fluent in social media and networking and immersed in issues such as; climate change and sustainability, Millennials seek work environments that reflect their ideals…

According to Chris Bockstael; the younger generation gives a sense that they want to enjoy the work environment… It doesn’t have to be a stagnant series of rooms where you do one process and then another process, but an environment that promotes collaboration. When an employee walks into a space, they can tell a difference in the places that value people rather than finishes… And that tells you why we’re changing the offices from closed doors to open…

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In the article Office of the Future–2020 by OfficeTeam writes: The future office will be increasingly mobile with technology enabling employees to perform their job from virtually anywhere, anytime… But greater control over where and how people work won’t necessarily translate into more free time. Forty-two percent of executives polled said they believe employees will be working more hours in the next 10 to 15 years…

The trends that were identified are, in fact, a reality today, including; use of multifunctional, wireless technology to conduct business from anyplace at anytime… The OfficeTeam surveyed workers and executives at the nation’s 1,000 largest companies and found the following: Technology will continue to reshape the workplace, changing how and where we conduct business…

In the future office, there will be added pressure to adapt quickly to change, work smarter, increase productivity and perform duties outside of one’s job description… The good news is that emerging technological tools and educational opportunities will better enable professionals to meet these challenges. Among the other findings include:

  • Technology tools to provide even greater flexibility: Miniature wireless devices, WiFi, WiMax and mobile technology will continue to allow a company’s staff to work outside of the office with greater ease. Additionally, virtual environments and web-based conferencing services will provide off-site employees with real-time access to meetings, reducing the need to travel.
  • Telecommuting to rise: Improved wireless connectivity will allow for an increasingly flexible workforce. Eighty-seven percent of executives surveyed believe telecommuting will increase in the next 10 to 15 years. Telecommuting enables employees to work where it’s most convenient, but it also challenges their interpersonal skills. They must build relationships with coworkers while having fewer in-person interactions.
  • Staff to put in more time: Forty-two percent of executives surveyed think that employees will be working more hours in 10 to 15 years. Only 9% said they would be working fewer hours.
  • Workers will stay in touch while on vacation: With the proliferation of wireless technology, staff will be expected to remain in close contact with the office while they’re away. Eighty-six percent of executives surveyed said workers will be more connected to the office while on vacation in the future.
  • Companies/employees take a new view on work/life balance: People may put in more time, but they will do so using tools that provide more control over their schedules and enable them to better balance priorities. There will be an increasingly blurred line between work and other activities; people will need to multitask to meet all of their obligations efficiently.

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In the article Office of the Future by Jennifer LeClaire writes: Office designs can enhance productivity, accommodate collaboration, and help with issues like work-life balance– if they are designed with these objectives in mind… Alternate and adaptable environments are keys for the office of the future. Offices will feel almost club-like in their choice of environments in which employees can spend their day. Offices will be less static in terms of assigned desks– it will be more open, transparent and, of course, media rich, offering; Wi-Fi throughout, ample teleconferencing suites and other immediate access points to remote colleagues and customers around the world…

The office of the future will enhance productivity by fostering employee engagement and connection with brand, company, each other… A more transparent office, by the same token, will enhance productivity by allowing for more collaboration and socialization among employees– seeing is knowing– the better employees know each other the more likely they are to feel comfortable with each other, and work well together…

The office of the future will support a culture of convenience, that is, the office will be designed to foster collaborative experiences in a variety of settings, for example; an expansive and welcoming café style area for lunch, snacks, etc.; seating areas with couches, comfortable chairs-tables scattered throughout the office to encourage and accommodate informal meetings, and conference rooms appropriate for the space. The norm for offices of the future will be collaboration space…

The idea of an ‘extended workplace’ is key to enhancing work-life balance. Creating a workplace that extends employees’ options vis-à-vis time, tools and environment will be critical. What does this mean? The office of the future must include amenities such as; gym, rooms for nursing mothers, on-site cafes offering healthy foods…

Organizations that embrace amenities that give employees options to help them balance their lives will be demonstrating that the health of their workers is a key value. This will become increasingly important when considering rising insurance premiums and proactive health care, as well as, when thinking about employee retention and hiring…

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If you ask 20 different people what the office of the future will look like, you’ll probably get 20 different answers… According to Roger Kahn; technology is providing increased mobility, and increased mobility will result in less of a need for the traditional office. It used to be that you had to go to a bricks-and-sticks office to work– because this is where the files and communications are located, and where we collaborated with colleagues. The virtual office is more compatible with the mobile work style; and the traditional offices are diminishing…

This fundamentally changes the core concept of an office. We no longer will need to ‘go to work’– we just ‘connect to work’– the future is going to be about ‘connected productivity’… According to Adam Stark; I’m not sure that it will look that much different than it does today. Styles and technologies may change, but I believe that people will always be looking for a nice work environment, where they are surrounded by people with whom they interact…

According to Paul Morrell; synchronicity and co-location are being turned on their head by new generations and new technology… People no longer need to be in same place at the same time, every day… We still need the office, but the office will be different as technology and the way we works changes, however, even with hype around social media, cloud… the workplace of tomorrow is likely to be very similar to what it is today…

Blended Management Styles– Changing, Adapting–Take Best of Each: Create a Hybrid That Works for Your Organization…

Management style is an organization’s philosophy about managing people and resources, which reflects its values, beliefs, culture… Management style is about people and levels of trust, priorities, competitiveness… However in today’s globalize organizations, it’s time to move beyond the traditional thinking of management styles, such as; Theory X, Theory Y…

Choices today are considerably more complex than merely deciding between management philosophies/styles, and instead it more about creating, adapting… hybrid, blended styles of management, for example; taking bits-pieces of different styles and combining them into one methodology that works most effective for your organization.

According to Susan M. Heathfield; management styles reflect the relationship between management and employees and the degree in which management decides to involve employees in decision-making process. The style of management is fundamental in determining the relative competitiveness of the organization and as such, management style repertoires must be continually reviewed and improved so as to create better decision-making and a more successful work environment…

According to Tannenbaum; there’s an evolving continuum between management and employees, and includes– increasing role for employees and decreasing role of management in decision-making process. The continuum incorporates the traditional styles of management, they include: Tellautocratic management style; represents top down–dictatorial decision-making with little employee input…

Sellsell management style; management makes decisions, then tries to persuade the employees that their decision is correct… Consult consultative management style; management solicits input from employees for decision-making, but retains the authority to make the final decision– key for success with consultative style is informing employees up-front that their input is important, but that management will make the final decision…

Joinjoin management style; management invites employees to join in making decisions, and management and employees are equal partners in decision-making process… Delegatedelegate management style; management turns much of the decision-making over to employees, however, management requires critical path feedback for decisions along designated points in the process…

According to Amanda Webster; the ‘right’ management style must meet the needs of customers, employees, stakeholders… The  management style must be fluid and adaptable to change for most given situations… Over the last decade, styles of management have seen an evolution of sorts due to globalization and dynamism of corporations as entities…

Also, the basic mission of management is evolving from focus just on profitability to also include; employee satisfaction, social responsibility… Bottom-line; the perfect blend of any management style must promote– humanity, best practices, innovation, and profitability for an organization…

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In the article How Management Styles are Changing by justinbarclay  writes: The methods used by management to perform organization activities are questions of style,  management styles have evolved. This evolution in style – and the proliferation of additional nuanced styles – is a result of a combination of advances in technology, forms of organizations, as well as shifts in the prevailing workforce demographic…

Technology has changed the way management works… technology is seen as an enabler that links global and diverse organizations and provides tightly linked transparency that furthers management objectives. Those objectives are no longer just driven by a desire to simply control aggregated activity and profit, but also driven by ‘purpose’.

These trends have given way to written works such as: Hamel’s–The Future of Management; Benko & Anderson’s–The Corporate Lattice; Hallowell’s–Shine; as well as, Pascale, Sternin, & Sternin’s–The Power of Positive Deviance; just to name a few. While these texts describe very different facets of organizational life, they share the common thread of management doing all that’s possible to identify; what’s working in organizations, how best practice can be both identified and spread throughout the organization, and places the focus on the potential of the workforce, rather than upon controlling its activities.

Management styles have thus changed from choosing between varying levels of commanding-controlling resources, to instead choosing between varying levels of interaction with the value chain of an organization and resources associated with that value chain. In essence, management style is now most impacted by considerations for epitasis, where the critical question is how management will choose to leverage their unique talents to influence organization’s ecosystem.

Rather than simply asking– what are the organization’s responsibilities? Now instead, management is asking– what are the organization’s ‘knowledge’ and ‘influence networks’? Since knowledge and responsibility are being widely interspersed through-out the organization…

In the article How to Change Your Management Style by Lou Dubois writes: Assessing an organization’s management style and determining that its time for a change is not an easy task… There is no one size fits all style of management that works, as each organization is different– a management style, more or less, defines an approach to managing people… 

According to Jon Picoult; The most effective way to figure out if a change is needed is to solicit feedback from people you’re managing or partnering with and the environment the business is operating in… One of the defining qualities of good management is they have professional knowledge– they have self-knowledge, in other words, they can look inward to examine their own strengths and weaknesses, and they’re also willing and happy to listen to outside input on how they can grow and change for the better… 

A good management style adapts to its environment, and changes when they’re needed… But, the big challenge is actually effectively changing people’s behavior… The key element is being self-aware: If you’ve taken the first step to recognize that there must be  something different–a better way, then that’s a huge first step. But you also must be really objective; step outside yourself and take a candid look at what you’re doing today and understand what you need to differently. So it’s not an easy task, and it requires somebody who is good at making calculated and informed decisions, without an ego. Once you do that, just follow that path…

In making a management style-organization shift; it’s important to take top-down approach with transparency from a leadership perspective. If you are changing your management style, you must first assess and make changes within yourself… According to Heineman; internally–within organization, it’s always been about clarity, alignment, focus… creating team culture, environment where employees are highly incentivized to come up with ideas, try new things, whether they fail or succeed, empower employees to be upwardly mobile… Externally–outside organization, when changing management styles, it’s important to be up-front and candid with customers, partners, stakeholders…

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In the article New International Style of Management by Garry Emmons writes: There is an ever increasingly international style of management… According to John Quelch; the international management style is an amalgam that’s built atop Western models, which have been borrowed freely from others around the world… the Western models can be very ecumenical, flexible, and open to new ideas and people: It learns from best practices in other countries and adapts accordingly… over time this kind of cross-pollination of a global management style will look less like its Western origin and more like something completely multinational...

According to Rohit Deshpandé; more multinationals strive to achieve certain types of management characteristics and best practice, in order to make themselves globally competitive, even if those desired traits are not necessarily found in, or may be contrary to, the native business culture of the company’s home country. Thus, while the average companies in France, Germany, Japan… may all appear to be quite different from each other, all of these countries’ best-performing multinationals look quite similar…

These findings suggest that excellence in global corporate competition demands certain success enabling management characteristics and best practices, which for top multinationals means that the corporate culture may need to trump the national culture… According to Irina Gaida; in a multicultural environment, management must strive to strike a balance between their own national cultural and being open to other value systems, management styles, and decision-making processes… many companies are finding management and employees are willing to adjust their behavior to facilitate teamwork… This mutual adjustment eventually becomes the norm within an organization...

Management style is one of those phrases bandied about in all workplaces, and it’s a catch-all; when we say it, we have to clarify and add more to better convey what we mean. Our management style can be seen in a good light, for example: He’s very compassionate, and fiercely protective of his team… Or, it can be negatively perceived, for example: She’s a micro-manager and just can’t keep her nose out of my work. The good is often said in gratitude, and the not-so-good as grumbled whisper.

So: What’s your management style like? But, more important question: Would your team agree with you, or say something different? Much of what is important in management at a particular moment has less to do with what you do, than what you have done. The culture you’ve created, the training that you’ve given, the motivation you’ve encouraged and the people who you’ve hired have all laid the groundwork to the response of your team at any given time…

To achieve the level of innovation required for competitive advantage today, we must achieve a better balance of power throughout organizations. Employees need to be more fully engaged in making strategic decisions, and in planning and organizing more of their own work.

To break the stranglehold of ‘organization-as-person metaphor’, employees must share in strategic thinking. Such ownership is the only way to achieve deep engagement; and as a result, management must do less telling and more facilitating, which means doing more asking, as in– What do you think?

 

The Change Curve– Predictable Pattern of Emotion-Reaction While in Change or Transition: Modeling Change Behavior…

The Change Curve: Change has an important impact on people in terms of what they do, how they do it, where they do it or, in some cases, if they will even be needed to do it… the change curve, or transition curve, helps us to understand the emotions that people may go through when changing… When faced with change in the workplace or in their personal lives, most people go through a certain range of reactions.

The concept of the change curve is used to explain the typical order of people’s reaction to change. By observing employees closely, you can tell how far they have progressed along the change curve. Keep in mind that employees may be at different stages of change curve at different times…

The idea of a change curve has been around for a very long time. Everyone goes through it: the highs and lows of dealing with change. However, the change curve is nothing more than human response to change, and it’s based on a combination of psychological models including; Kurt Lewin’s 1952 three-phase model of social change (i.e., Unfreeze–Change–Refreeze) and Elisabeth Kubler-Ross’s Five Stages of Grief model that explains people’s reaction to death. Over years, many organizational and behavioral psychologists explored, expanded, and adapted the change curve to reflect the emotional reactions of people to transitions and change.

One of the most famous articles written on the subject is The Death Valley of Change by P. David Elrod II and Donald D. Tippett in 2002, which provides experimental verification of the model, and how leaders can apply it to organizations in transition. There are numerous versions of the change curve in existence but no matter which curve you use the basic principle is the same; people follow predictable patterns of psychological reactions to change over time.

A nuance of the model is that within the change curve, you can have people who view any kind of change either; positively or negatively, depending upon the individual. However, at an aggregate, using the change curve as a guide in transformation planning, organization change, merger and acquisition… it can help to better understand people’s reaction, uncover barriers, recommend actions to overcome resistance fasterThe Kubler-Ross’ original five stages are; denial, anger, bargaining, depression and acceptance– and represented pictorially in graph:

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In the article Stages of the Change Curve by Sidharth Thakur writes: Although there is no dearth of change models, one of the simplest and most practical change model identifies just four stages of the change curve; denial, resistance, exploration, commitment. Despite simplicity, it has gained wide acceptance in the field of change management. Managers and employees find it easier to understand and relate to these simple four stages of the change process…

As soon as a change is proposed the typical reaction is full of stress and negative emotions that rise to a peak before the change can actually get acceptance, and then normalcy is restored. It’s important for management to understand the change curve and reactions that can be seen during the different stages of the change process.

Change is never smooth, easy or quick… and since it involves many uncertainties and turbulence it can only be represented graphically as nonlinear: The change curve is best represented as a type of ‘U’; plotting ‘time’ on X-axis and ’emotional intensity’ on Y-axis. The change process can be very painful, for example; at the peak of the change curve there is a slow down in employee productivity resulting from heightened stress and uncertainty.

But, as team members begins to realize the importance-benefits of proposed change than their acceptance of this new norm– reverses the emotional upheaval, and work productivity gets back on track and aligned with the new normal. The typical graphical representation  of the change curve’s four stages; denial, resistance, exploration, commitment is shown as follows:

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  • Denial: For most people– in denial– change is not easy to accept and they try to ignore thinking and talking about it… Since change is interpreted as uncertainty, people shift their attention to the past and familiar feelings that make them feel secure. This shift causes a dip in morale of team members. At this stage team leaders must help team members to understand the objectives, process, and how it affects them. Keeping the team informed about what is happening helps to build a sense of security.
  • Resistance: Resistance to change begins as people realize that the change is actually taking place and there is no way to avoid it. During this stage of the change curve feelings like; anger, self-doubt, fear and anxiety can build, which can significantly stagger the progress of the change process… In addition, it can cause morale and productivity to take a nosedive and some team members may show their resistance to the change by being uncooperative. In these situations, management leader must be proactive; listen to the concerns and demystify the change…
  • Exploration: This stage of the change curve is the exploration phase where the team members become a part of the change. This is where people start acting and learning new ways so as to constructively contribute towards change. A fresh wave of thinking where people understand the rationality of the change and the importance of their role in the change process. It’s mostly an exploratory stage where people are experimenting with the change to determine their positioning… Leaders must establish meaningful roles for team members so that they can actively participate in the change.
  • Commitment: Commitment is the final stage of the change curve as productivity and emotional normalcy is restored. The team members begin to feel more in control and committed to the new roles and realities– they are engaged, co-operative, and work actively for the new normal. During this phase it’s important that management leaders acknowledge-reward team members for their contributions; keeping them motivated and committed.

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Business can’t change if people don’t changeGetting sustainable business results means changing people’s behavior, actions and attitude to get things done in more effective ways. According to Trilogy; while there’s no magic wand to achieve change, there is a formula for businesses to achieve success; first, start with attitude, since it sets the tone for the entire process.

If you don’t have the right attitude about change, then the business will not achieve sustainable results… Next, multiply attitude by the components of talent, skills, and knowledge, which when combined will reach goals: The result is a positive behavioral change that then leads to sustainable results… 

Change is a common thread that runs thru all businesses regardless of size, industry, age… The world is changing fast and as such, organizations must change quickly too. Organizations that handle change will thrive, whilst those that don’t will struggle to survive. The concept of change is familiar in most businesses, but how they manage it (and how successful they are at it) varies enormously depending on leadership, nature of the change, and people involved in the change…

The change curve illustrates the typical emotions and reactions that people go through during change process. However, when people know that change is a transition to a new normal, it can empower them to be proactive and take control so that the change process is a positive experience and they get a sense of achievement and enhanced self-esteem… The change curve model shows how people can react when they are involved in managing business or personal change, especially when they are not in control of the change or the transition…

The best way to manage change is to create it: undoubtedly it’s the best change model of all. This is all fine and good, but how can I use the change curve? Here are a few pointers:

First, use it to understand that negative emotions during change are normal and, most of the time, they are transient (i.e. they will pass). This is very helpful in supporting yourself or others during change, especially if the change is well outside your comfort zone.

Second, use it to show empathy and communication with people going thru change, for example; some people get stuck in the negative emotions or they feel like a victim and that, in the longer run, will be counter-productive and self-hurting. Whereas by taking control and understanding the change curve process people can be motivated and become proactive in moving quickly to the positive states shown on the change curve.

Third, use it for feedback and learning by checking periodically where people are on the change curve and how they are moving along it (or not). This can help people to develop or maintain their perspective and, to some extent, de-personalize the process they are going through, and thus reduce the intensity of any negative emotions they are feeling. Also, it facilitates the planning of positive actions to accelerate progress for integration of new behavior, habit…

Change is a common thread that runs through all businesses regardless of size, industry… So, two key points: 1. The change curve summaries typical reactions when people change direction or when change is forced upon them. 2. When change is owned and initiated by people it can avoid negative emotions and enjoy positive emotions, which provides a great sense of achievement…

 

Capital Investment– Fuel for Innovation, Engine for Growth, Fixes the Economy: More Investment Means More Prosperity…

Capital investment that companies make today in new product lines, new equipment and other assets… will determine the valuation of the companies in the future… This leads to a very fundamental objective within capital investment management, i.e., maximize value of the company through astute capital investment, which fuels innovation that propels the growth engine, which is good for the economy…

According to Standard & Poor’s (S&P); despite a modest recovery in capital investment following the financial crisis– capital investment slowed again in 2012 and is expected to contract by 2% in real terms in 2013. Initial forecasts for 2014 are for capital investment to continue to slip, falling by 5% year-on-year. A modest post-crisis recovery appears to be stalling before it has really begun. This downward trend is especially prevalent in Western Europe, which has seen its share of global capital investment fall to just 24% in 2012, and its forecasted to remain steady in 2013 before inching up to 25.4% in 2014…

According to S&P; the emerging markets also look fragile, especially Latin America where the region is expected to experience the weakest growth in business investment of all regions in 2013, in part because of its heavy reliance on the energy, materials and utility sectors… North America, however, is one region S&P expects to increase its share of global corporate capital investment from a low of 24%e in 2009, to 35.6% in 2013 and 36% in 2014… Many economists consider capital investment a vital part of the economy, which generally means that the overall mood of business has a considerable impact on the pace of capital investment and thus impacts the trend of economic growth…

The prime objective of making capital investment in any business is to obtain satisfactory return on capital invested. Hence, the return on capital employed is used as the measure of success of a business in realizing this objective. Return on capital employed establishes the relationship between profit and capital employed. It indicates the percentage of return on capital employed in businesses and shows the overall profitability and efficiency of business… in addition, it becomes a key indicator for the health of the economy: When businesses are profitable, growing, innovating, investing… that’s a vital sign for the economy…

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In the article Capital Management: A High-Wire Balancing Act by ATKearney writes: A tightrope walker daringly takes on a task that is magnified by the possibility of a great fall. A small misstep can have disastrous consequences. However, the performer has a secret: Focus on a few basic principles and follow them perfectly to reduce the chances of making a mistake. Managing multibillion-dollar capital investment is also a balancing act where it’s easy to lose sight of the basics.

People often get distracted by the intricacies of the allocation process, the internal politics, or the complexity of the business case. This last distraction is almost always dealt with by quantifying every aspect of the business case, which may give the impression of managing all the details but in reality often results in at least three symptoms of poor capital management:

  • Failure to prioritize: When capital investments are not linked to corporate strategy and financial targets, it’s almost impossible to capture the required level of returns across the portfolio.
  • Loss of accountability: When accountability are not clearly defined, followed, or enforced, and reviews are not conducted (either while in progress or post-implementation), no one owns the outcome.
  • Poor visibility: Without a corporate-wide reporting structure there is limited visibility into spending and even less control of the investment portfolio. As cost overruns mount and projects slow-down, the economics of the original investment case are      often lost.

In the article Managing Capital by ey writes: Capital is the lifeblood of every fast-growth business. As you continue your journey to market leadership, a strong grasp of what we call the capital agenda should inform all of your important business decisions: Should you restructure your business? Is now the time to sell some of its assets? How can you seize the premium acquisition opportunities? The capital agenda model helps to address these type questions and is based on four key dimensions: Preserving, Optimizing, Raising, Investing:

  • Preserving capital: Fast-growth companies needs to preserve capital. So continuously evaluate your balance sheet, strategy and markets. Look for strengths and weaknesses. Seek opportunities, but identify risks and guard against value erosion. Your ability to access liquidity, manage and release cash, control costs and engage with key stakeholders is essential to preserving capital.
  • Optimizing capital: Capital is precious. Fast-growth companies need a tight grip on the drivers of efficient capital allocation. Greater operational efficiency can release excess cash and working capital. More companies are taking an active approach to business asset management. Such rigor can uncover poor capital deployment, leading to better capital preservation and allocation.
  • Raising capital: Fast-growth companies need to keep their capital needs under constant review. Even if your balance sheet appears strong, external shocks can delay your journey to market leadership. Review your business through the lens of the investment and lending communities. Whether you are refinancing debt or planning for an IPO, you can reduce your cost of capital if you understand the ratios and covenants they favor.
  • Investing capital: Use your capital wisely. Potential backers expect fast-growth companies to make investment decisions supported by in-depth and varied scenario      analyses. Show them you have considered the alternative uses of capital. Communicate a compelling value proposition and focus due diligence on the drivers that matter most.

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In the article Investment Is Understated by Edward Conard writes: An increase in investment by one economy relative to another will likely affect their relative rates of discovery (innovation) and implementation. Successful risky investments in innovation will grow the economy faster than less risky investments and that enlarges the existing business capacities. Also, successfully commercializing good ideas is as important as discovering them and, generally, that requires similarly risky investments…

Innovation expands the economy and benefits consumers by providing better value… As risk takers grow increasingly optimistic; asset values rise. This makes investors and consumers grow increasingly willing to take risks. As risk taking grows, the economy expands, increasing the amount of investment and the value of assets relative to the economy…

A fast-growing company with higher profit margins that is pouring more money into investment than its competitors looks much more attractive to investors, and thus garners a higher valuation. Business investment is good for innovation; innovation is good for business investment…

U.S. companies will make capital investment totaling roughly $2 trillion in 2013, according to research by McKinsey. These capital investments are critically important to future of their companies and the economy; over 50% of corporate growth is directly attributable to capital investment. The companies that manage their capital investment well, significantly outperform their rivals…

Booz Allen found that companies that employ best practices in capital investment management earn 25% higher profits than their peers. With respect to capital investment, today’s top performers are focused on the three key dimensions: Accountability, Visibility, Efficiency. Accountability has many dimensions... Yes, the numbers do have to be right. Having a clean electronic audit trail of all approval decisions and demonstrating that proper controls are in place to ensure compliance with corporate policies is critical…

According to David Straden; real measure of performance in capital investment is ROI. It sounds obvious, yet most companies fail to track and report on actual ROI… If you don’t know how you did on the most important capital investment metric, than what are the chances of driving sustained improvement over time? The simple act of announcing that actual ROI will be tracked will often lead project management to be more realistic with their estimation of potential benefits… Formalizing the capital investment process and imposing rigorous methodology over project evaluation is a step in the right direction…

A second key capital investment management dimension is visibility: The only constant in today’s world is change. In a world where everything is moving faster and faster, the best companies use speed as a competitive advantage. Given the long lead times required for larger investment, it’s arguably even more critical to be flexible and responsive managing capital investment. New opportunities continually present themselves, whether from merger and acquisition activity, new product developments or competitor difficulties…

New threats also unfortunately abound, whether it’s diminished liquidity, fluctuating exchange rates, market forces, competition, political upheaval… To move both quickly and intelligently decision makers must have real-time access to the necessary information… The best companies are proactive in establishing process to give themselves informational context and be prepared to adapt quickly to changing circumstances…

An efficient capital investment approval process is the basic building block: The best companies focus on capital investment efficiency. Doing more with less is a key imperative and being lean means putting capital investment to the highest and best use… It’s not about being smarter it’s about having a better process; one that enhances productivity and leads to greater effectiveness…

Start tracking actual ROI on capital investments, year over year.; that’s the ultimate key performance indicator (KPI) to assess progress in improving performance.. Improving efficiency is the ultimate weapon in a challenging world. Having less doesn’t have to mean achieving less. If you institutionalize accountability, increase visibility and enhance productivity, you can do more with less: More growth, higher profits, and better economy are worthy objectives…