The Writing on the Wall E-Book

Terence Sheppard

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Sprache: Englisch

Seitenzahl: 329

Veröffentlichungsjahr: 2012

Beschreibung

Thousands of businesses, large and small, fail every year. According to The Writing on the Wall most instances of business failure begin with early warning signs of trouble, which are clearly discernible, provided we know where to look and what to look for. Targeted at managers and business owners who want to avoid the mistakes made by many businesses, this book highlights the common pitfalls that lead to business failure, and aims to assist readers to identify where their business may be off track and provide advice on what they can do about it before it\'s too late. Author Dr Terence Sheppard is a management consultant with over 25 years experience in lecturing, consulting and business management.

Leseprobe

Contents

About the author

Acknowledgements

Foreword

Introduction

Part I: A tale of four companies

Chapter 1: Winners and losers

GM and Toyota

How much just to take it?

Coles and Woolworths

Fish rot from the head first

An Australian corporate pantomime

A litany of failure

What went wrong?

Chapter 2: Bad habits

For some reason they don’t do it

The power of habit

Two cost cultures

Not as safe as they could be

The power of culture

Part II: The writing on the wall

Chapter 3: Where’s the customer?

Working for Mrs Jones

Who’s driving the bus?

Is your ‘worst’ customer your best customer?

Do you check customer ‘use by’ dates?

Do you swim downstream?

Do you swim upstream as well?

How much does a $500 000 IT system cost?

Chapter 4: It’s all about me!

What does your belly button look like?

Do you have fountains in the foyer?

Do you work for a bottle-top organisation?

Implementing change at Coles and GM

Do you have a BBQ statement?

Chapter 5: Corporate junkies

Is your company a secret junkie?

Do you use discounting as a substitute for thinking?

Rules for discounting

Are you training customers to devalue your brand?

Chapter 6: Mending broken windows

Do you mend your broken windows?

Broken windows at work

Applying zero tolerance

Creating a culture of voluntary compliance

Treating performance management seriously

Why won’t it work in my company?

Chapter 7: People really are important

Is your staff working in economy class?

Are people really your most important asset?

Where does senior management work?

The dangers of executive perks and privileges

Do you waste time motivating staff?

What motivates your staff?

Common errors managers make when motivating staff

Solving the ‘problem’ of motivation

Is your company a volunteer organisation?

Creating a volunteer organisation

Part III: What do we do now?

Chapter 8: Too much to do, too little time

The Candidate

How do you spend your day?

How much can you remember?

How do you start your day?

Is it all in your head?

Can you fail successfully?

Do you work too hard to be successful?

Twice the results for half the effort!

Are you a 3-D manager?

Do you suffer from delephobia?

Chapter 9: What successful managers do

What does an elephant look like?

What makes a team?

Value creation

How do managers create value?

How do managers create value through people?

How to build a great place to work

Self-management — it all starts with you!

The power of positive reinforcement

Do people leave managers or companies?

How do managers use performance management effectively?

Part IV: The four paths to superior value

Chapter 10: Making things happen

Should you be sacked or promoted?

Good is never good enough

Lowering costs — the royal road to value creation

Three management virtues

Can you double your profits in a year?

Risky business

Companies behaving badly

Asking the paradigm question

Loyal no longer

Chapter 11: Achieving sustainable success

Which coffee do you drink?

Four dimensions of value

Price-cutting your way to nowhere

Why do some customers focus exclusively on price?

Creating competitive advantage

Achieving market leadership

Conclusion

Appendix: The five success habits of best-practice organisations

Index

First published 2007 by Wrightbooks

an imprint of John Wiley & Sons Australia, Ltd

42 McDougall Street, Milton, Qld 4064

Office also in Melbourne

Typeset in Berkeley LT 11/13.6pt

© Terence Sheppard 2007

The moral rights of the author have been asserted

Sheppard, Terence.

The writing on the wall: reading the signs of business success and failure.

Includes index.

ISBN 9780731406005 (pbk.).

1. Executive ability. 2. Success in business. 3. Business failures. 4. Business - Management. I. Title.

658.4094

All rights reserved. Except as permitted under the Australian Copyright Act 1968 (for example, a fair dealing for the purposes of study, research, criticism or review), no part of this book may be reproduced, stored in a retrieval system, communicated or transmitted in any form or by any means without prior written permission. All inquiries should be made to the publisher at the address above.

Wiley bicentennial logo: Richard J Pacifico

Cover images © Photodisc and Digital Vision

Internal images © Photodisc

Disclaimer

The material in this publication is of the nature of general comment only, and neither purports nor intends to be advice. Readers should not act on the basis of any matter in this publication without considering (and if appropriate taking) professional advice with due regard to their own particular circumstances. The author and publisher expressly disclaim all and any liability to any person, whether a purchaser of this publication or not, in respect of anything and of the consequences of anything done or omitted to be done by any such person in reliance, whether in whole or part, upon the whole or any part of the contents of this publication.

For Margaret, Hugh, Rory and Megan

About the author

Dr Terence Sheppard is a business consultant with more than twenty years’ experience in assisting managers all over the world to create more successful organisations. Prior to becoming a consultant, he was a university lecturer and practising psychologist.

In 1984 he founded Sheppard Consulting Group, which he built into a major consultancy that employed more than fifty staff members and had offices in Adelaide, Sydney and Hong Kong.

Dr Sheppard holds degrees in economics, psychology and education, and teaches regularly at executive-education programs. He is married with three children, and lives in Adelaide, South Australia.

Acknowledgements

It has been my privilege to spend many hours during the past twenty years discussing the challenge of building successful businesses with hundreds of managers, from chief executives to front-line supervisors. Their ideas and insights form the foundation of this book and it is a pleasure to acknowledge the generosity with which they shared their knowledge and experience.

I have also been fortunate to have many colleagues for whom the application of theory to the practical business of management consulting is a passion rather than an occupation. The countless professional discussions I have enjoyed with them have been invaluable in assisting me develop my own ideas. In particular, I would like to thank Cheryl Walmsley, who originally encouraged me to write this book and remained supportive even after reading the first draft, and Richard Branford, who has been an important interlocutor for me for many years, and who reviewed later drafts. I have also received valuable support from Chris Tankey (who first introduced me to the concept of the ‘volunteer’ organisation) and Dr Brian Thomas, who both generously shared confidential research findings with me.

In addition, Jenifer Varzaly has been a patient and painstaking research assistant, and the team at John Wiley & Sons has been an invaluable source of both good ideas and encouragement.

Finally, to my wife and family, thank you for your love and support during my preoccupation with ‘the book’.

Foreword

Management literature is replete with descriptions of dazzling successes and dramatic failures — organisations that have become market leaders as well as those that have crashed spectacularly. These stories can be exciting to read, but they don’t tell us how we can achieve success for our own business while avoiding failure.

In The Writing on the Wall: Reading the Signs of Business Success and Failure, author, psychologist and management consultant Dr Terence Sheppard clearly explains why some businesses flourish and others don’t — and, in particular, why industry ‘stars’ can quickly lose their way.

One of the challenges for busy executives is finding books that are easy to read and offer practical advice about how to generate and sustain business success. Fortunately, The Writing on the Wall is one such book.

The book’s strength is its focus on the early indicators of future success and failure — enabling readers to assess the health of their business as they read. Moreover, Dr Sheppard offers essential advice about what managers should be doing today to ensure success for their business tomorrow.

In summary, this book is the first of its kind to concentrate on lead indicators that will assist in diagnosing corporate health. This is in contrast to most business books, which spend too much time analysing lag indicators, which, in reality, merely record a history of failure after it is too late too respond!

Backed by real-life case studies and insightful analysis, The Writing on the Wall appealed to me as a guide to building successful organisations and, most importantly, keeping them that way.

John Ellice-Flint

Chief Executive Officer, Santos Ltd

Medindie, South Australia

June 2007

Introduction

Why do some businesses succeed while others fail? In particular, why are some businesses wildly successful while others, which offer essentially the same products and services to a similar group of customers, struggle to survive? This is one of the enduring mysteries of commercial life — and one that this book aims to understand.

If ten new businesses with the same resources start out in the same market and offer similar products and services, it would be reasonable to expect that over time they would each achieve similar levels of success. Yet, as we are well aware, this is never the case. Despite the fact that they would all have started from roughly the same position, slowly but surely a favoured few will draw away from the rest and ultimately dominate their markets. Within a few short years, most of the businesses will have disappeared, while the remainder will struggle along, enjoying modest success at best. As Al Ries and Jack Trout point out, sooner or later every market evolves into a two-horse race; for example, Coke and Pepsi lead in soft drinks, and Hertz and Avis compete in the rental-car industry.1

Business decline and failure is also a reality for large established firms. Large companies may appear impressive from the outside, but only a minority last very long; for example, of the one hundred–largest US businesses in 1974, only half were still around in 2000.2

Only a tiny minority of businesses — new or old — ever achieve their true potential. Of course some new businesses are earmarked for failure from the beginning, usually because they are either chronically under-funded or lack even the most basic technical and management competencies required for success. In addition, some businesses — such as HIH Insurance, WorldCom and Enron — can be destroyed by corrupt managers, but these are a minority.

Why do so many businesses that, on paper, have the necessary management and technical capacity to succeed, fail to do so? An even more intriguing question is why do the successful ones thrive? As you shall see, the answers to these questions do not lie in the markets that these organisations compete in — because some businesses flourish even in extremely competitive markets. Nor can the quandary be explained by looking at the economic conditions prevailing at the time — because companies succeed and fail in boom times just as they do in recessions. As an Economist article on the 2001 recession points out, every recession has ‘winners as well as losers’3.

The case study below contrasts the collapse of Ansett airlines and the concurrent success of Virgin Blue airlines to show how similar businesses can fare differently under the same market conditions.

Case study

Ansett crashes while Virgin Blue soars — part 1

When Ansett airlines collapsed in September 2001 after sixty-six years in business, it was the end of an era in Australian aviation. It was also extremely traumatic for the more than 15 000 employees who lost their jobs, forty of whom subsequently committed suicide.4 Several attempts to resurrect the business eventually failed because the Australian government refused to underwrite a new airline with taxpayer money.

The most serious rescue attempt, mounted by businessmen Solomon Lew and Lindsay Fox, collapsed when the government of the day declined to subsidise them to the tune of $1 billion per year. Obviously these experienced business operators believed that a new domestic airline in Australia could not succeed at that time without massive government support. It’s easy to understand why considering that the airline industry was struggling with the effects of a global recession that had been exacerbated by the 9/11 terrorist attacks of 2001.

However, somebody forgot to tell Sir Richard Branson that business was tough when he founded his Australian domestic airline, Virgin Blue, in 2000. Starting from scratch, and using a no-frills operating model, Virgin Blue immediately began to take business away from both Qantas and Ansett, the two established Australian domestic airlines. It achieved this without any government funding, and despite heavy discounting from both incumbents.

By 2002 Virgin Blue had nearly 10 per cent of the market and was beginning to eat the big boys’ lunch. Ansett’s collapse catapulted Virgin Blue into the number two spot, with 30 per cent of the market.

On the surface at least, many outstanding businesses appear to be like their less successful competitors. They may have similar resources, employ the same type of people, use identical technologies and be confronted with similar market opportunities and challenges, so why do some make it and some don’t?

The answer to this question will not be found either in the competition these businesses face or the broader economic conditions within which they operate. The real answer lies closer to home — within the businesses themselves, and in particular, how they are managed.

The early indicators of future success and failure — the writing on the wall — are there for all to see

For every business, the early indicators of future success and failure — the writing on the wall — are there for all to see, well before the organisation emerges as either a market leader or a market loser.

Learning to read these signs can make all the difference to your business as well as to your future as a manager or an entrepreneur — but you have to know where to look!

How to read this book

The Writing on the Wall: Reading the Signs of Business Success and Failure is not a management textbook. It is a practical handbook for working managers that is designed to help you improve your professional performance and increase your business success at the same time. It is not based on the latest management fads or theories, but the thousands of discussions I’ve had with managers all over the world who are faced with the daily challenges of running their organisations. Like any handbook, this book will be most useful if you refer to it regularly, rather than reading it once and then putting it back on the bookshelf.

The title of this book — The Writing on the Wall — refers to the collective behaviour of managers, which ultimately determines corporate performance. Carefully observing the behaviour of any management team will reveal the writing on the wall — the early signs of future business success or failure.

Part I describes some notable business successes and failures. It should be read in its entirety as it sets the scene for the remainder of the book. It contains several case studies that demonstrate that the real causes of business success and failure lie inside an organisation — not in the external environment that it operates in.

Part II identifies the major reasons some businesses flourish while others, with the same opportunities and advantages, falter and lose their way. It is the cumulative impact of management behaviour, comprising the collective habits of managers, that ultimately determines the future of a business. Some management habits sustain and nourish organisational growth, while others have the opposite effect. In part II I identify the five primary ‘success habits’ (see the appendix for a quick guide to these) displayed by all best-practice organisations, as well as those habits that promote failure. Unfortunately, because many habits are unconscious it is quite possible for an organisation to act against its own best interests, sometimes for long enough to guarantee its own demise.

Because many habits are unconscious, it is quite possible for an organisation to act against its own best interests

Part II also identifies particular aspects of organisational behaviour and discusses their relevance to achieving business success. Each section includes a checklist of questions that you can use as tools to critically analyse the performance of your organisation and, in particular, the performance of your management team. If management behaviour ultimately determines corporate success or failure, an honest appraisal of your management team will provide a clear indication of what the future holds for your business and where the business may need to change before it’s too late. The questions raise important issues that may take some time to resolve. You will probably find it easier to work on one checklist at a time — starting with the one that is most relevant to you.

Part III addresses the question, what is a manager’s role? It explores how effective managers work with staff to create a successful business, and focus their limited time and effort on the critical activities that make a genuine difference to corporate performance.

Part III also examines particular aspects of management behaviour and includes checklists of questions to encourage self-analysis. Just as part II can be used as a manual to troubleshoot and finetune aspects of your business, so too does part III enable you to assess your performance as a professional manager.

Part IV uses the definition of management in part III to explore the four ways effective managers create superior value for their business.

Once you have finished reading this book, you will be aware that the causes of corporate success and failure are invariably located inside an organisation — specifically, in the way managers habitually behave. You will also understand why businesses that start out with similar opportunities and resources often end up in quite different places. You will know why companies with significant advantages over their smaller rivals can stumble and fall if their management teams have not developed the daily habits that drive corporate success. More importantly, you will be able to analyse your organisation — and your competitors — to identify the management practices that threaten the future of your business and those that create lasting value.

Finally, you will understand the role of effective managers in modern organisations — how they apply their skills to build a business that succeeds today as well as tomorrow. In short, you will have learned how to read the writing on the wall!

It is the cumulative impact of management behaviour — what managers do and don’t do on a daily basis — that ultimately determines whether their business succeeds or not. How managers plan and implement strategy, interact with customers, and manage themselves and their staff provides them with an infallible guide to where their business is headed. How managers behave dictates how staff members behave, and how both behave determines the future of their organisation.

By closely observing the behaviour of a management team, you can predict whether its company is heading for the winner’s circle or the knacker’s yard. This is good news because it means your future success as a manager is in your hands — and not at the mercy of the market or the economy. In other words, market and broader economic conditions provide businesses with a playing field, but they do not determine their fate. The causes of success and failure lie inside an organisation — not outside it — and, more specifically, inside its managers.

Notes

1 Al Ries and Jack Trout, The 22 immutable laws of marketing, New York, HarperCollins, 1994, p. 47.

2 ‘Masters of the universe’, The Economist, 5 October 2006, viewed 20 April 2007, www.economist.com.

3 ‘How was it for you?’, The Economist, 7 March 2002, viewed 20 April 2007, www.economist.com.

4 William Birnbauer, ‘Hidden toll of Ansett’s collapse’, The Age, 14 November 2004, viewed 20 April 2007, www.theage.com.au.

Part I

A tale of four companies

Chapter 1

Winners and losers

An important theme of The Writing on the Wall is that it is how an organisation is run by its management team that determines its fate, rather than the events in its external environment. Chapter 1 of this book illustrates this by analysing a number of notable corporate successes and failures from the past twenty years. In particular, it contrasts the success and failure of Toyota and General Motors (GM), in the global automotive industry, and Woolworths and Coles, two major Australian retailers.