True power E-Book

Vicente Falconi Campos

• Herausgeber: Falconi Editora
• Kategorie: Fachliteratur
• Sprache: Englisch

Seitenzahl: 208

Veröffentlichungsjahr: 2010

Beschreibung

True Power is consultant and administrator Vicente Falconi's great gift to leaders. This work relates cases in which the author was directly involved and addresses all the issues that are important for the development and growth of companies and projects. In an instructive manner, it points out the success factors underlying sound growth and the recovery of great companies and government institutions. In brief, Vicente Falconi reveals the secret for achieving results. An easy, pleasant read, the book tells of the author's experiences between 1997 and 2009, a period during which he served as Board Member to great corporations such as Ambev and Sadia, in addition to doing intensive work on municipal, state, and federal management projects, in association with INDG's cadre of consultants.

Leseprobe

VICENTE FALCONI

True Power

FALCONI Consultores de Resultado*

Rua Senador Milton Campos, 35, 7º andar Vale do Sereno | Nova Lima | Minas Gerais | Brasil | 34000-000 Tel.: [phone] | Fax: [phone]www.falconi.com

Original title: O Verdadeiro Poder

Translated by João Moreira Coelho

Catalog Card

F182t

Falconi, Vicente

     True Power / Vicente Falconi; translated by João Moreira Coelho - Nova Lima: Editora FALCONI, 2010.

     Tradução de: O Verdadeiro Poder

     Inclui bibliografia

     ISBN: 978-85-98254-44-9

     1. Administração. 2. Organizações. 3. Consultores de Resultado. I. FALCONI Consultores de Resultado. II. Título.

CDD: 658.3

CDU: 658

Cataloguing at the source: Neusa Machado. CRB6/1533

Cover: Rodrigo Hamam - HXR Brandhouse / www.hxr.com.br

Electronic Editing: Editora FALCONI

English Edition Revised by: Sarah Davis

Production eBook: Schäffer Editorial

Copyright © 2010 by VICENTE FALCONI CAMPOS

WORDS OF APPRECIATION

I wish to thank all those who have helped me undertake the task of writing this book, from those who have taught me all that I present here to those who helped me with its preparation, layout, sale, and delivery.

Special thanks are due to:

ANA CRISTINA VIEIRA BELÉM (Master Black Belt, Statistics and Method specialist), Cia. Vale, a dear person, who with profound dedication revised the draft version, helped me substantially improve item 6.4, and gave me assurance early on that the book was on the right track.

I thank my friends and partners at the FALCONI Consultores de Resultado for their corrections and technical inputs:

ALOYSIO A. PEIXOTO DE CARVALHO (Organization, Processes, and Work Analysis specialist);

CARLOS ALBERTO SCAPIN (Systems Engineering specialist);

MÁRCIA DAYRELL FARINHA RODRIGUES (Master Black Belt, Statistics and Method specialist); and

SÉRGIO HONÓRIO DE FREITAS (Organizations and Processes Project specialist).

I also thank my friends among entrepreneurs, executives, and professors who, although very busy owing to the nature of their positions, greatly helped me by encouraging me to focus on the most important material and improving some parts to make a real difference. The book has undergone major surgery and been substantially improved thanks to them:

ANTONIO MACIEL NETO, CEO, Suzano Papel e Celulose; CARLOS ALBERTO SICUPIRA, AB-InBev Board of Directors; CARLOS BRITO, CEO, AB-InBev;

CAROLINA SANCHEZ DA COSTA, Insper, São Paulo; EDSON BUENO, AMIL Board of Directors;

EDUARDO BARTOLOMEO, Director, Cia. Vale; FERSEN LAMBRANHO, GP Investimentos; GILBERTO TOMAZONI, CEO, Sadia;

JORGE GERDAU JOHANNPETER, Board of Directors, Gerdau Group; JUAN M. VERGARA, Galícia Investimentos;

MARIO LONGHI, CEO, Gerdau Ameristeel;

PEDRO MOREIRA SALLES, Board of Directors, Itaú-Unibanco; and

ROBERT MAX MANGELS, CEO, Mangels Industrial.

I was able to measure my revisers' contribution. The book's 10 chapters totaled 100 pages in the manuscript of the Portuguese version. The final version has 126 pages. My revisers' contribution totaled 26 percent in volume but much more in terms of quality, as they introduced corrections, figures, and text at some vital points. Even the cover was chosen by them in a vote. This book is not mine. It is OURS.

I assure all of them of our appreciation (mine and my readers') for having read the manuscript with such dedication, despite limited time, and for having made extraordinary contributions.

Belo Horizonte, July 30th, 2009

Vicente Falconi

THE DRAWING LOTS METHOD

Working as a management consultant at various organizations, I often noticed that many difficulties encountered in making improvements resulted from the lack of study. It seems to me we do not like reading very much.

To overcome this difficulty, I suggest group studying, a method we call the "Drawing Lots Method." It works this way:

Set up a group of no more than six people (and no fewer than four).

Meet once a week for two hours on the same weekday and at the same hour (for instance, every Wednesday at 4 p.m.).

The room must be provided with equipment for projecting the book's Figures and Tables (all tables and figures can be downloaded at

www.indgtecs.com.br/­download/­Figuras_­e_­Tabelas_­O_­Verdadeiro_­Poder.zip

). There should also be a bowl with slips of paper with the participants' names.

All members should study one chapter per week (in this book's case, it would be convenient to divide Chapter 6 in two parts and devote one week to each part). Lots should be drawn as the group meets to determine who will present the week's chapter to the others. As all participants have studied to make the presentation, discussion is usually very substantive.

If the presenter has not studied the chapter, the meeting should be adjourned. Lots should not be drawn again and no volunteer for the presentation should be accepted. The method relies on the commitment of all participants.

After lots are drawn, the slip of paper with the participant's name is returned to the bowl. Someone who has presented one week may be chosen again the following week.

This method is highly successful. We may not appreciate reading very much, but we enjoy working in a group.

TABLE OF CONTENTS

Preface to the English Edition

Author's foreword

Instructions for reading this book

Part I - FUNDAMENTAL FACTORS IN MANAGEMENT

1. Management Focus

1.1 Why Do We Fail?

1.2 Focusing on the Organization

1.3 Key Financial Performance Indicators

1.4 An Organization's Vital Points

2. Factors that Guarantee Results

2.1 Developing Leadership Content

2.2 Accumulating Technical Knowledge

2.3 Introduction to the Method Concept

2.4 Choosing Managers and Directors

3. Management Method and System

3.1 To Manage Is to Solve Problems

3.2 Management Method

3.3 Systems Thinking

3.4 Management System

3.5 Developing the Management System

4. Organization's Performance

4.1 Performance Levels and Needs

4.2 The Goal Is the Focus of Management

4.3 Every Problem Should be Strategic

4.4 Leadership, Challenge, and Innovation

4.5 How to Establish Goals

(A) Identification of Gaps

(B) Prioritization

(C) Deployment

4.6 Functional and Departmental Management

Part II - THE MANAGEMENT METHOD

5. System Analysis

5.1 Act of Acquiring and Developing Knowledge

5.2 Introduction to the "Target" Concept

5.3 Introduction to the Analysis and Synthesis Concepts

5.4 Target Analysis via Models

5.5 The Planning Process

6. How to Conduct an Analysis

6.1 General Method of Analysis

6.2 Functional Analysis

6.3 Phenomenon Analysis

6.3.1 Stratification - Structural Analysis (vertical characteristics)

6.3.2 Stratification - Process Flow Analysis (horizontal characteristics)

6.4 Process Analysis

6.4.1 Types of Problem Solving

6.4.2 Brainstorming

6.4.3 Hypotheses Testing

6.5 The Value of Experience in Analysis

6.6 Fact-Gathering and Data Collection Project

6.7 The Future of Analysis

7. How to Involve People in the Analysis

7.1 Target-centric Approach

7.2 A Good Presentation: The Difference Between Success and Failure

8. How to Conduct Improvements in the Organization

8.1 Change Is Normal

8.2 Improvement Mechanisms

8.3 Addressing Costs

8.4 Addressing Capital Employed

8.5 Addressing Revenue

8.6 The Importance of Execution

8.7 The Importance of "Checking"

9. How to Operate with Stable Results

9.1 Analogy with the Human Body

9.2 Considerations on Routine Management

9.3 Quality Assurance Standards

9.4 Routine Management Diagnosis

Part III - KNOWLEDGE IN MANAGEMENT

10. Managing the Acquisition of Knowledge in an Organization

10.1 Management and Learning in a Company

10.2 The Learning Process in an Organization

10.3 Knowledge Management

Part IV - FINAL MESSAGE

Part V - APPENDIX - TARGET MODELS

A.1 Types of Models

A.2 Combination of Models

A.3 Types of Models Used in Analysis

A.4 Summary of the Analysis and Synthesis Process

Works Cited

PREFACE TO THE ENGLISH EDITION

True Power is a book about the big "RW" - the Real World. The Real World is the place where we all strive to achieve goals and improve performance.

This book is a practical manual about management, method, and discipline. Over the past 15 years, I have witnessed just how powerful this method can be in consistently achieving results. I embraced this method early on in my career, and I have to say, I have never looked back.

True Power is the summary of Professor Falconi's years of experience with successful companies. It is a must-read for high-performance managers. In essence, the book promotes the idea that managers should constantly strive for "good problems" to solve. Problems are gaps between current performance and that of the next desired level. Once a gap is opened, a target is set, an action plan developed and executed. If results are achieved, do more of the same. If not, the plan needs to be adjusted. Once a gap is closed, a new one is opened. Management is about opening and closing gaps. And True Power is the manual on how to develop and anchor the management process within an organization to create a high-performance culture. It sounds simple and it is, but it requires high doses of discipline and consistency.

Discipline is the element we top managers bring to the equation. Leaders should require and inspire their people to use this method to close gaps efficiently, as opposed to trial and error. Leaders should force discipline throughout the organization so this method becomes a way of life, enabling a virtuous cycle of opening and closing gaps. Professor Falconi's method puts theory and practice together. True Power is a powerful tool for moving companies up to the next level.

I have known Professor Falconi for many years; I call him "Mestre," or Maestro. For he is one of the few to have mastered the ability to distill a seemingly endless supply of management techniques down to their essence-down to the simplest, basic, step-by-step manual of how to hard-wire a high-performance culture in a company. He has always embraced simplicity and effectiveness, and this book is a testimony to his philosophy.

Carlos Brito CEO,

Anheuser-Busch InBev

October, 2009

AUTHOR'S FOREWORD

I have written this book with the earnest intention of providing a report on the major, decisive factors for building a great organization. I have sought to sum up what I have observed and learned in the past fifteen years. As a management-method consultant, I have had the unique opportunity of being a board member of major companies, where I have been able to learn things not dealt with in any books. I have also participated in successful government experiences, such as the management of national crises, which taught me lessons I wish to share with others. I am convinced that entrepreneurial and government leaders will find in this book concepts and ideas that will greatly contribute to their countries' and companies' development.

This work stresses the importance of understanding the meaning of Management Method and System, while seeking to help readers get rid of commercial names ascribed to the Method and to concentrate on the Method proper. There aren't various methods for achieving goals. There is only one: the Cartesian Method, proposed around 1600. A consultant may emphasize one point more than others or may use analysis recourses that may be more or less sophisticated, but this does not mean that the method is different. The same applies to the expression "Management System": Each consulting service may have its own understanding of the term, but since the Management System is based on one method, there is only one such system. Each consultant devises a different model for what he understands to be a management system. The vast majority of these models would fail the test of consistency within the fundamental concept of systems. Few people understand systems.

As a company is made up of people and other resources, it has a learning curve for anything it wants to improve. We must understand and master this learning curve to be able to cultivate exceptional companies. Exceptional companies are made by exceptional people and a high-performance culture.

I have always heard the expression: "Information is power!" I do not put much trust in it. The computers belonging to companies and governments are loaded with information, but management does not know what to do with it. In addition, a huge amount of useful information is available to everyone on the Internet and in other media. I am convinced that true power lies in the knowledge extracted from information through the practice of analysis. Only analysis allows us to know the truth of what can substantially improve decision-making, thereby ensuring excellent results. We might thus say the following: "Analytical capacity and knowledge, coupled with leadership capable of making things happen, is the True Power."

By itself, knowledge does not create value. Value is created when knowledge is used in the designing of action plans whose execution is guaranteed by leadership.

The practice of analysis for management purposes was introduced in Brazil by the Japanese in the 1980s. This was before the Information Revolution. We made use of the "seven tools of quality", which seemed sufficient at that time. The world has undergone such change since then in terms of information that those of us who graduated before 1995 and hold leadership positions in companies do not have the sensibility to grasp all the possibilities of this new world of the Internet, Google, email, enterprise resource planning and statistics software, lowering costs of information storage, broadband, digital TV, cell phones, optical cables, Excel, Wi-Fi, digital photo, and LCD, among other new developments. All of these were introduced between 1995 and 2005. So many of us have yet to master these resources and perceive their reach or what can be accomplished through their integration. Do you know all the resources of Excel? I don't. Young people do. They came of age using these great innovations. Computer science is greatly changing management practices (but not the method!).

This book seeks to convey the concept that although all of this may continue to change owing to fast-increasing technological developments, the Method has remained unchanged since 1600, and we have no replacement for it in sight. The Management System as it is known today will also be with us for a long time, just as people will continue to be the main lever of an organization's success. It is through people that success will be achieved. As regards these three aspects, nothing has changed.

Lastly, I want to ask the reader to understand that it is not possible to grasp all the concepts and techniques presented here in just one reading. It takes us time to learn. The best way to learn is by practicing.

I apologize for being unable to achieve a greater degree of simplification and beg permission to quote Juan Vergara (a former InBev Director), one of my revisers and friends:

"I remembered numerous meetings at which I heard about Targets, routines, variables, causes, stratification, phenomenon, method, dispersion, etc... and I seemed to understand 'nothing'...I found all this too complicated... 'Things happening out there, and here I am listening to this pile of theoretical verbiage.' In retrospect, my 'rejection' of the method was probably no more than fear of admitting my lack of knowledge. As I finished reading Chapter 6, I realized that I not only understand all that complicated language but also master the method and a great deal of the suggested tools. How did this happen between the first time I heard about these things and today, when I did not stop to study the method in depth? This happened by [intense] practice. With this in mind, I wish to say the following: could the text at times be intimidating? I think it can, when it resorts to that complicated 'language' before having first simplified the issue through simple, practical examples (as it is rightly done in the second half of Chapter 6). If readers are like the Joes of 'the past century' (and many, if not most, are), they must know beforehand that the text may instill 'fear' in them at some [critical] moments. They will fare better by openly and directly dealing with this fear so as to transmute it into a learning engine, not into a barrier."

All earnings from the sale of this book will go to the Social Institute for Motivating, Supporting, and Recognizing Talent - ISMART (www.ismart.org.br), whose mission is to sponsor high-quality education of needy children with great mental potential. I firmly believe in knowledge as an instrument for the liberation of people, organizations, and societies. There is no other way to begin if not with people.

Belo Horizonte, August 1, 2009

Vicente Falconi

INSTRUCTIONS FOR READING THIS BOOK

The Figure below provides a map for reading this book.

Chapter 1 discusses Management Focus, which is not always understood by everyone at the time of practice. The next three chapters offer a conceptual foundation to allow us to explore the method in association with various other factors. We then help the reader to arrive at a deeper understanding of the method, particularly in connection with the analysis of information, a practice that becomes all the more important in the information era in which we live. On the basis of the method, we move on to practice achieving better financial results in an organization, in the understanding that no improvement is possible without the stability ensured by the Daily Work Routine Management taken to the utmost limits. Toward the book's conclusion, we show that the practice of the method leads to the accumulation of knowledge and that this process must be managed to ensure extraordinary results.

Part I

Fundamental Factors in Management

1

Management Focus

Only that which is measurable can be managed.

Kaoru Ishikawa

1.1 Why Do We Fail?

The success of an organization - be it a school, a hospital, a city government, a company, or even a Federal Government - is something we all desire and a great source of joy and satisfaction when it happens. It is common knowledge that the achievement of good results is one of the greatest sources of human satisfaction(4).

If this is true, why do we fail?

We fail for the following reasons:

(a)

We do not set the right goals (or we do not identify our problems correctly);

(b)

We do not devise good Action Plans, either because we are not familiar with the methods of analysis or because we lack access to the necessary information (i.e., we lack technical knowledge);

(c)

We do not fully and timely execute our Action Plans; or

(d)

Circumstances beyond our control may come up.

This work, dedicated to organization leaders, addresses ways to avoid defeat and to achieve success and joy in organizations. It shows how to do what is in our power so as not to fail.

1.2 Focusing on the Organization

Management is by nature focused on the ends and thus on any organization's ultimate mission, which is "the satisfaction of the needs of human beings." Satisfaction of these needs is the objective of any private or public organization. The great problems faced by human organizations lie in our inability to fulfill this mission.

There are four kinds of people who make up the objectives of any organization. They are known as stakeholders: clients, employees, shareholders, and society. Long-term survival depends on the simultaneous satisfaction of all their needs (which may at times be antagonistic). There is a measurement, though, that shows us how efficient we are in fulfilling this mission: the organization's Financial Performance Indicators, which are also measurements of shareholder satisfaction. Financial health is essential; without it, there is no life in an organization. Once these mea surements are ensured, the organization's processes should be geared to the key performance indicators of the satisfaction of clients, employees, and society, as shown in Figure 1.1. In addition, financial indicators allow us to translate all the other objectives into a single measurement unit, which gives us the opportunity to compare them and to identify priorities more clearly.

Figure 1.1: Model of an organization's key performance indicators.

I am convinced that financials are foremost, not only for companies but also for governments and even for churches. Nothing exists without financial resources, which are human labor's means of exchange.

Some in government are used to saying the State's objective is not profit, meaning that financial indicators are not important. Ask any governor if he would not be interested in having more resources to invest. Of course he would. We should thus have a financial indicator such as a "budget percentage available for investment" and work to increase it as much as possible, by reducing costs and tax evasion. This would be equivalent to the EBITDA (See item 1.3) for the public sector.

Another mistaken idea some people have is that governments should not be concerned with productivity. They do not know the definition of productivity is "to accomplish increasingly more with increasingly less." Government is a services organization for the people and must be managed as any company.

Each one of these measurements should be taken into account at all organization levels; i.e., everything that is done must have a financial focus, a client focus, an employee focus, and a society focus. This seldom happens, but it is how it should be done.

Financial Focus: It is very common among an organization's lower management not to take financial indicators into consideration. For instance, people working in a steel mill likely have no idea of the price per kilo of some alloy used in steel manufacturing. They thus fail to perceive the need for precision in its weighing and for care in its storage. This is why all physical indicators should be accompanied by currency value indicators to raise the awareness of both executives and technical teams.

A company had several cost reduction projects going on when a change occurred in the currency exchange rate, which suddenly generated a strong demand for its products. At that point, from a financial standpoint, projects to heighten the equipment's global efficiency to increase production should have been considered. In such a situation, production gains may be more important than cost gains. Each project should be evaluated by the company's comptroller, who should be called upon to act in connection with problems of this kind. Yet I have seen people working very hard on projects to improve manufacturing efficiency (production) in a declining market situation.

The sales area is a minefield. On a more operational level, salespeople are under pressure to improve "sales volume" and "positivation" (percentage of sales made per visit) and end up taking initiatives that harm the company's financial results, such as offering exaggerated discounts or a small drop size (volume to be delivered do the customer) to "positivize" visits (small drop sizes increase logistics costs).

Focus on Clients: Another problem in organizations is the lack of perception of the need to focus on the clients' satisfaction. "A company's true capital is its clients' preference." Yet this is not realized by every organization. People usually repeat this slogan, agree with it, but are incapable of taking initiatives to make it come true.

We were once called upon by a company's president to "implement a Quality Program." This had been recommended under a strategic plan devised shortly before. So I asked the president what the goal was for the Quality Program. He did not know but promised to let me know. After waiting for two weeks, I called him, and he said he still did not know the goal. He then decided to hold a meeting with his directors and some managers of the commercial area. At that meeting, no one "confessed" to have quality problems. The industrial director claimed he had the best quality on the market, "one of the best in the world," and the others followed suit. We continued to talk, and after a while, when time came to talk about commercial practices, one of the managers mentioned that the company granted discounts to be able to sell. I asked whether their competitors did the same and was told that the discount was based on the competitor's price and ranged between 5 percent and 15 percent. I asked if we could think of 10 percent on the average. They agreed. So, taking a risk, I concluded: "As total sales amount to $650 million, we have a loss of $65 million owing to product quality - and we thus have a goal for the quality program!" There was great discomfort at the meeting, and finally we concluded that the best way to start the program would be by taking a survey of the clients to understand the real situation with the company's products. The survey was done and led to the following conclusions, among others:

Of the product's 12 quality characteristics measured by clients, the company measured only one, which ranked only third in importance for the clients. The company was better than its competitor in the characteristic it measured but was worse in all the others!The company's Yearly Products Catalogue was released three months after the competitor's, and as the product line was linked to fashion, its early arrival on the market was essential for the clients.

Several other malfunctions related to the market were also identified, in relation to which goals were set for a genuine "Quality Program."