By Prof. Vicente Falconi, founding partner of FALCONI
Every company has some weak sports that, when dealt with by specialists, may generate improvements to its results in the short run. Everybody wants this. However, few of us have been working with determination and obstinacy in order to assure that our companies obtain extraordinary results for a long time. There are three important elements that, if addressed continuously, can assure these results: leadership, technical knowledge and method.
One of these elements is leadership. Leadership does not only mean leaders, but also everything that refers to people I like to call “leadership content”. Recruiting, assessing and selecting the best people available for the kind of work your company carries out means building a basis for the future edification of excellent performance. Search for the best with a magnifying glass. Educate and train these people, always selecting for promotion always the best candidates, based on meritocracy.
If you do this continuously throughout the years, always promoting those who “reach their goals, along with their team and in an ethical way”, you will have implemented a true factory of competent and ethical leaders who will assure the future of your organization and extraordinary results. Meritocracy is a concept that everyone supports because it is politically correct; however, when you promote someone who does not deserve because they are your friend, fellow countryman or relative, you will be betraying people’s trust for good, thus losing, in the medium run, their best values. It is like breaking a crystal glass: there is no way to put it back together.
Someone unprepared and without the talent deemed necessary to occupy a leadership position costs a lot to any organization, not because of that person’s salary, but for the resulting losses throughout the years. In summary: make it a constant, eternal and annual activity to assemble an extraordinary team. Some of the most extraordinary leaders I know dedicate at least half of their time to this topic!
Another important element is technical knowledge. Each position at your organization, from operators to president, demands different technical knowledge. If you work in marketing, you need to find out all about the subject. If you operate a machine, then be the best operator for that machine in the world. If you work in finance, find out all about this topic.
Technical knowledge is acquired through education and training, by acquiring experience in the position or by bringing in an expert in the subject to assist. This technical knowledge has some interesting characteristics. One of these characteristics is that you may acquire such knowledge for free or acquire it anywhere in the world. Always look for the best out there.
If you need to improve an area in your company, find out what contents are necessary and search for it, anywhere in the world. Another characteristic is that this knowledge may be kept. There is a part of this knowledge, called explicit knowledge, which may be written in guidelines or manuals, to be taught to other people. Another part, named tacit knowledge (how to ride a bike, for instance), which cannot be written down, is kept within people’s minds. This leads us to the conclusion that there must be a perfect standardization at the company, as well as a continuous effort to reduce personnel turnover levels to a minimum.
When someone leaves your company, this is the equivalent of a knowledge leak. Another characteristic of technical knowledge is its cumulative nature. The longer someone works at your company, the more they know about the business. A high personnel turnover level may be very damaging to your organization.
Lastly, the final major element is managerial knowledge, that is, the method. The word method means a path towards a goal. This means a series of techniques and systems that assures that everyone works by following the same path and speaking the same language. It is a collection of procedures that must be learned by everyone and put into practice by everyone with full discipline.
For instance: how to determine opportunities for earnings, hot to set goals, how to conduct information analysis processes, hot to set up an action plan, how to assure the plan will be executed, how to establish guidelines, how to change the standardization system, how to manage projects, how to establish a future path for the company, how to run operations, among other topics. We call all of this managing. Managing means achieving goals or solving problems.
The main hindrance here is that a lot of people believe that they already know how to manage, which prevents them from learning simple things that may substantially change their company for the better. People who are not humble do not learn. Once, I was trying to sell a project to a large-sized company, and the director who was negotiating with me wanted to reduce the scope of the project in order to reduce its price. He told me that, among other reasons, he did not need our consultants to teach his team how to elaborate an action plan, because this was simple and everyone knew how to do it. I asked him if he would allow me to talk to some employees to find out if that was true (I can tell if someone knows how to do it or not with two or three questions). I concluded that 70% of the employees had never made an action plan in their lives!
This is the main difficulty: people think they can do something, but they have never actually done it. Fight for having the most competence practice for the method at your company. Do not settle for less. Invest. Companies that work with the method for longer have a high cash flow generation rate, far superior than the average for the segment they operate in.
Text published on 5/3/2016 in Super Varejo magazine.