When first looking at a business I want to know who is accountable for the three pillars of enterprise: making it (operations/production), flogging it (marketing/sales) and counting the beans (finance/reporting). It is essential, whether planning a new company or reviewing established ones for acquisition or turnaround.
Every business, or division of a business, needs accountable direction and management for making it, flogging it and counting the beans. The trio must be covered at Board and management/supervisory levels.
In smaller enterprises a few individuals may hold several accountabilities – but it is important to appreciate that being ‘a bit accountable’ is like being ‘a bit pregnant’. In the case of micro-businesses, a sole trader needs to be disciplined about splitting their time between these activities. When they are, they are not ‘sole’ for long.
Making it, flogging it and counting the beans do not take care of themselves. Sales can sometimes appear to do so if loyal customers and their referrals generate trade but such a passive approach to business development is vulnerable to more driven competitors.
Directors, Managers and Operatives
Directors deliver vision, ensure availability of resources and set out the end to end business process with its metrics. Parts of the process, with metrics, are delegated to managers and they in turn task their teams with smaller parts of the process, with metrics. If everybody meets their metrics, the directives should be achieved. The roots of all directives are directors.
Whilst it is a common belief that there is a promotion path from the shop floor to the board room, the roles of operatives (task-specific skills), managers (organisational skills) and directors (leadership skills) are distinct from one another.
So: directors direct, managers manage and operatives operate. Operatives need management and managers need directing. Obvious? Well, one might like to think so…
Missing, Inaction
Here is a summary of an organisation which comprised 70 people and generated annual revenues of £4 million. The enterprise was losing money and for sale.
At its heart was a manufacturing operation with subsidiaries offering hire, maintenance and training related to the core activity. There were further subsidiary operations mentioned that were basically departments of the manufacturing facility liberated to trade their spare capacity independently. In total nine ‘businesses’, none of them performing. One could see problems to solve left, right and centre but it is important to not be blinded by glaring faults.
I created my standard matrix of accountabilities: three rows (making, flogging and counting) and nine columns (each of the ‘businesses’) – a total of 27 boxes to populate. The Board comprised two people: Managing Director and Finance Director. Bucks stop with the MD so by default his name filled the 18 boxes of making it and flogging it, the FD the remainder for counting the beans.
My next matrix looked at management/supervision: same three rows and nine columns. While there were a few names added in this second chart, by default the MD and FD names filled the remaining gaps. This was news to them: ‘whoever was doing it’, sometimes nobody, was apparently accountable.
Headless Chicken
There was no specific representation for making it or flogging it for any of the ‘businesses’ at Board level. No vision, no resource allocation, no process. While the list of things-to-do could run from John O’Groats to Lands End, what it really boiled down to was no direction.
You will rightly wonder how it functioned at all. Much of the workforce had been there long enough to ‘know what they were doing’ …so they kept on doing it for a diminishing audience of customers. And that’s what the managers managed. Tongue in cheek, the business might be described as ‘customer driven’. Or in a nutshell: headless chicken – the illusion of life being no more than the pre-programming of its neural network.
There are more headless chicken businesses than you might imagine. Have a look around!
One Pingback