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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viernes, 21 de octubre de 2016

How things go wrong and how to put them right

It is likely that a lot of professionals in the different areas of the finance function have experienced the stress when things go wrong. Things go wrong because people do less than they are capable of, misuse their resources or choose an inappropriate time or place in which to do it and normally the situation is misjudged and the wrong action taken.

In this post I would like, again, to share some experiences and suggestions to cope with the situations some people might face in their daily professional activities and even in their personal lives.

First of all, let me remember the well-known and so called Peter´s principle. Dr. Peter suggested that in a hierarchy, individuals tend to rise to the level of their own incompetence. In his experience system encourages this to happen because people are told that if they are doing their current job efficiently and with ease, the job has no challenge and therefore they should be promoted. It is also true, in my view, that this principle has only been accepted as common manner of speaking as it reflects a fundamental problem when assessing potential. We know or we think we know that someone is good at his present job. But does this predicate success in the next move up? Perhaps yes, perhaps no. However we cannot be sure because the skills needed by, for example, a scientist are quite different from those required by a leader of the research team. In other words, technical competence does not necessarily indicate managerial competence.

First thought, can we beat the Peter´s principle for us? The answer, in my opinion, is yes. But with difficulty, of course. Why? Because people don’t usually refuse promotion!! If they do, they become suspect. When you read this post probably you will remember your own experience, your friend or your colleagues, being in the same situation. Am I right? However it is perfectly reasonable to check on what is involved if you are promoted. You should get precise answers to questions on what you will be expected to achieve and more importantly the resources you will be given to achieve it and the problem you will face. If you think these demands are unreasonable discuss the job to see if they can be modified.

In my view, don’t take a job unless you are satisfied that you can do it or at least that you can learn how to do it within an acceptable period of time. And don’t forget to find out if your predecessor failed and if so, you can ask what went wrong so that you can avoid making the same mistakes.

Second thought, can we beat the Peter´s principle for others?  Well, if you are in a position of offering a promotion or a new job, you have to take into account the Peter´s principle and how to avoid it.  You need to match the capacities of the candidate to the demands of the job. So you need to analysis the skills required. For example, managerial, analytical, technical, communications etc. And then, measure the candidate against each of these criteria. This matching process should identify any potential weaknesses.

A lot of readers will know very well the typical sources of incompetence and it is likely they have seen some typical situations as follows:

·         Conservatism, for example, the typical “that’s the way it always worked. We have been market leaders for the last 10 years, why change? Familiar with this?

·         Rejecting information, what did you say about our losing market share? I don´t believe. The market research surveys are always inaccurate.

·         Indecisiveness, we need to think a bit more about this. We need more information. Let´s call a meeting next week to look at the pros and cons. Familiar right?

·         Obstinate persistence, don’t confuse me with the facts. That’s the way is going to be.

·         Scapegoating, it´s not us, it´s the rate of exchange. The government policies are killing us.

·         Suppression of news, don’t tell them about how well we are doing. They only ask for more money.

·         A belief in “mystical” forces, I just feel in my bones we must do this thing. From a CEO I worked with many years ago.

Hence see below my summary about why things go wrong (normally):

·         Inability to learn from mistakes

·         Pure incompetence through over promotion

·         Poor selection, inadequate training

·         Over confidence

·         Under confidence

·         Laziness

·         Lack of foresight

Every reader will have their own experiences, anecdotes and clear view about why things go wrong for them or for the companies they work but I am almost sure that some will coincide with the above mentioned. If not, let me know.


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