Blog of Strategic,General and Financial Management (English/Spanish)

Strategycorner is now expanding its content to include posts about General Management, Financial Management, Finance Transformation, Marketing and HR Management. Posts will be published in English or Spanish.

At the end of the blog there are different charts about Strategic Management in Spanish. In the archive area you could find a lot of posts about strategy and its execution in English/Spanish.

Jesús Peral
Executive MBA IE Business School, Madrid,Spain

Master in Strategic Management
IDE-CESEM Business School, Madrid, Spain

Find at the end of blog all charts related to Strategic Management topics commented in the posts

Mapa Estratégico Genérico/Strategy Map

Mapa Estratégico Genérico/Strategy Map
Mapa Estratégico Completo

Modelo de Dirección Estratégica/Strategic Management Model

Modelo de Dirección Estratégica/Strategic Management Model
Modelo desarrollado en las entradas 1 a 100. Ver archivo del blog
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lunes, 20 de junio de 2016

Delegating, is it really simple ?

You can’t do everything yourself so you have to delegate. At first sight delegation looks simple. Just tell someone what you want him to do and then let him do it. But there is more than that.

It may be you would wish to delegate everything except what your collaborator cannot do. But you cannot then withdraw. You have arranged for someone else to do the job but have not passed on the responsibility for it. You are always accountable to your superior for what your collaborator does. Hence, something very important and frequently forgotten, you can’t delegate responsibility.

Delegation is really difficult. It is perhaps the hardest thing that managers have to do. The problem is getting the balance right between delegating too much or too little and between over or under supervision. When you give someone something to do you have to make sure that it gets done. And you have to do that without breathing down his neck, wasting your time and his, and getting in the way. There has to be trust as well as guidance and supervision.

But, what are the real advantages of delegation? I will outline just a few, well-known between experienced managers and directors:

·         It relieves you of routine and less critical tasks

·         It frees you for more important work, for example, planning, organizing, motivating or controlling.

·         It extends your capacity to manage

·         It reduces delay in decision making as long as authority is delegated close to the point of action

·         It allows decision to be taken at the level where the details are known

·         It develops that capacity of your team to make decisions, get things done and take responsibility. This is a very important one in my personal view as it builds, normally, a strong team.

Based on the above the next questions would be: when to delegate, how to delegate and what to delegate. 

In my experience, you should delegate when you have more work than you can effectively carry out yourself, when you cannot allocate sufficient time to your priority tasks and if you want to develop your collaborators. And finally, when the job can be done adequately by you collaborator.

When you delegate you have to decide what to delegate. To whom you delegate, for example, choosing who does the work. You also need to decide how to inform or brief your collaborator, guiding him and monitor his performance.

You delegate tasks you don’t need to do yourself. You are not just ridding yourself on the difficult, tedious or unrewarding tasks. Neither are you trying to win for yourself an easier life. Delegation will, in fact, make your life more difficult, but also more rewarding.

Clearly you delegate routine and repetitive tasks which you cannot reasonably expected to do yourself as long as you use the time you have won productively.

You also delegate specialist tasks to those who have the skills and know-how to do them. You cannot do it all yourself. Nor you can be expected to know it all yourself. You have to know how to select and use expertise. There will be no problem as long as you make it clear what you want from the experts and ask them to present it to you in a usable way. As a manager you must know what specialists can do for you and you should be knowledgeable enough about the subject to understand whether or not what they product is worth having.

Ideally, the person you choose to do the work should have the knowledge, skills, motivation and time needed to get it done to your complete satisfaction. Frequently, however, you will have to use someone who has less than ideal experience, knowledge or skills. In my opinion in these cases you should try to select an individual who has the intelligence, attitude and above all the willingness to learn how to do the job with help and guidance. This is how people develop and the development of your team should be your conscious aim whenever you delegate. You are looking for someone you can trust. You don’t want to over supervise so you have to believe that person you select will get on with it and have the sense to come to you if he/she is stuck or before he/she makes a bad mistake.

So the final question is, how do you know whom you can trust? The best way, in my experience, is to try people out first on smaller and less important tasks, increasingly giving them more scope so that they learn how far they can go and you can observe how they do it. If they get on well their sense of responsibility and powers of judgement will increase and improve and you will be able to trust them with more demanding and responsible tasks.

To summarize, the critical elements are guidance and development. Delegation not only helps you to get your work done but also it can be to improve your collaborator’s performance and therefore your trust in his/her ability to carry out more responsible work. But don’t forget to give instruction, training and development as part of the process of delegation.

lunes, 6 de junio de 2016

Profit Improvement

Business and managers don’t earn profits they earn money. Profit is an abstraction from the true, underlying movement of cash in and cash out. It could be argued that profit is the result not the objective of an efficient management.

On its own, as shown in a balance sheet, is not necessarily an accurate measure of the success of a business. Profit figures are normally influenced by factors quite distinct from the trading performance of a company. These for example could include how research and development is treated in the accounts, how stocks and work in progress are valued and how the flow of funds resulting from investments and realization of investments are considered.

If we simplify, all you have to do in business is to make some stuff and sell it to someone else for more than you paid for it. Indeed we are in business to make money. Money earned with ethic, integrity and focused on the social responsibility.

Profit improvement is about increasing the flow of money into the business and reducing the flow of money out. It is not about maximizing an abstraction called “profit” subject to many different influences.

So, the question is, which are the most important factors affecting profit improvement? Experts working on managerial roles know very well:  sales, costs and effectiveness.

The maximization of sales revenue depends first on good marketing. There are two approaches to marketing. One is to assess the market in terms of what existing and potential customers will buy. This means an analysis of the existing wants and buying patterns along with possible future needs. The other is to assess the scope for creating wants which does not exists at the moment, by developing, for example, new product or services. Good marketing also ensures that prices match what customers can be persuaded to pay with the objective of maximizing contribution to profits and direct overheads. Maximizing profit means getting the right balance between high margins and high sales volume.

The second factor is the cost. Cost, after all, does not exist by itself. It is always incurred. What matters therefore is not the absolute cost level but the rates between efforts and their results.

The approach to cost reduction should therefore be to distinguish between those which are producing results and those which are not. Indiscriminate focus and attack to all costs might be counter-productive. On a selective basis it may be better to cut something out in one go and not series of marginal cost reductions. Why trying to do something cheaply if actually it should not be done at all.

On the third factor just to say the objective should be effectiveness rather than just efficiency. To do the right things rather than merely to do things right. This is something which is well-known.

But what would be the areas to be focused on? On my view, as follows:
·   Productivity- getting more for less, for example, return on investment, or manpower, output per head.
·         Finance- tightening credit policies, cracking down bad debts, controlling quantity and settlement discounts, optimizing cash holdings etc. But most importantly the management team has to work as a real team in all finance areas that might affect the business before taking any decisión.
·         Inventory, very typical- keeping the amount tied up in working capital to the minimum consistent with the need to satisfy customer demand.
·         Buying-ensuring competitive bids are obtained for all new or renew contracts, specifying to buyers how they should do to get good terms, resisting the temptation to over-order and having clearly laid down policies on mark-ups.
Profit improvement should be a continuous exercise. It should not be left until crisis forces you to think about it. Start with an analysis of your current situation by doing a typical checklist. Look at the whole product range for each market and assess the relative profitability and potential of all products and markets. Use, for example, 80/20 rule to suggest the 20 percent of your product/markets which generate 80 percent of your profits. Concentrate on maximizing the effectiveness of the 20 percent of areas where the impact will be greatest.
Identify those factors within the business which are restraining its potential and, very well-know as well, convert into opportunity what everybody considers dangers. So build on strengths rather than weaknesses.  Then look ahead. Project trends, anticipate problems and, where needed, innovate so that your company can challenge the future rather than being overwhelmed by it.
Your checklist should include:
·         corporate analysis
·         strategic plans
·         marketing
·         product mix and development
·         sales
·         distribution
·         production
·         buying
·         inventory
·         productivity
·         people
·         finance
Finally remember, the best business survivors are, (honestly I don’t think this view will be changed in the near future), first, those which can deliver their products at the lowest cost and/or second, those which have the highest differentiated position therefore having the product which the customers perceive most clearly as being different from the competition to satisfy their needs.




Nuevas entradas/New posts in the blog

Dear followers, I will start publishing new posts more regularly from now on. These new posts will be published mainly in English. You can use the translator to read them in your preferred language.

The scope of the blog is now broader including different managerial topics apart from the strategic management which remains the main subject.

Hope you enjoy it and the posts are helpful for your area of interest.

Many thanks for your loyalty over the past 5 years

Best regards