Posts Tagged conflict management

Attack Never Defend: An Entrepreneur’s Key to Success


Entrepreneurs do best in the face of uncertain conditions, but mature firms have a hard time with uncertain conditions because they plan for what is certain and has worked for them in the past. Entrepreneurs can succeed by doing what they do best and creating uncertain conditions for mature competitors.

ImproMed is one such company that has made “attack never defend” its mantra. Ron Detjen, ImproMed’s founder and president, says his company continues to grow and add employees because it keeps a competitive attitude. Detjen argues companies that go on the defensive can never grow as fast as companies that go on the offensive. Detjen encourages his employees to go on the offensive by finding something they excel at and keep working on it (Anonymous, 2011). What an excellent approach!

ImproMed is a company that helps veterinary practices deal with complex recordkeeping needs and has developed the world’s leader software products for both the business and medical needs of veterinary practices. ImproMed stresses a consultative approach for its employees is the key to its extraordinary growth (Anonymous, 2011).

A company that focuses on what its employees do well wins. Employees are critical to a small company because they are responsible for how the company performs. Encouraging employees to focus on strengths puts competitors at a distinct disadvantage because they do not know what to expect. A good entrepreneur works from his or her strengths and not weaknesses.

How does your company attack? I would love to hear your comments. If you want to know more about how you can design a way to attack using strengths you can learn more here.

References

Anonymous. (2011). 2011 Winners small business success stories Corporate Report Wisconsin, 26(7), 30-35. Retrieved from http://search.proquest.com/docview/864104598?accountid=35812

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Qualities of a Successful Entrepreneur


The story of Tariq Farid provides some insight on the qualities one needs to become a successful entrepreneur. Tariq is a Pakistani American who emigrated to the United States at age 11 with his family. By the age of 17 Tariq owned a flower shop with the support and encouragement of his family. Two years later Tariq successfully operated four stores. Making a better experience for his customers thrust Tariq’s drive that led to him to create point of sale software for the floral industry. Tariq later founded and led NetSolace, Inc., which provides franchise management solution software. In 1999, Tariq’s thirst for starting new businesses propelled him to start Edible Arrangements®, a franchise organization providing fruit bouquets, which grew to over 1,100 stores worldwide (Crowley, 2012).

Tariq developed his leadership style from the values instilled by his family while growing up. These values included honesty, integrity, and passion. Tariq believed in preserving these values and always returns to these basic values. For example, Tariq responded to an interview explaining how his drive comes from keeping honest with the consumer and himself. Tariq said he believe a true entrepreneur has a focus not so much on making money, but on keeping a social consciousness and providing for long-term profitability. According to Tariq the successful entrepreneur strives to do better and take care of the customer. Passion is the main motivation of the true entrepreneur not making money (Crowley, 2012).

Another striking characteristic of the successful entrepreneur is to embrace change because people enjoy new and unique products. Tariq believes in rethinking everything to stay on cusp. Tariq likes to employ people who embrace new ideas and who serve as change agents to customize products to people’s evolving needs (Crowley, 2012).

One other idea Tariq’s parents instilled in him is to work hard and go after the American dream. Success does not come easy. A person must work hard to become successful. Tariq realized he must work hard to confront risks and overcome them. Successful entrepreneurs must pay their dues and embrace a willingness to make mistakes (Crowley, 2012).

In short, genuine entrepreneurs are ” leaders who lead with purpose, values, and integrity; leaders who build enduring organizations, motivate their employees to provide superior customer service, and create long-term value for shareholders” (Crowley, 2012; George & Sims, 2003, p. 3).  Tariq Farid provides an example of an authentic entrepreneurial leader. Do you have what it takes to become an authentic entrepreneurial leader? Do you want to learn more?

References

Crowley, K. (2012). CEO perspective: Entrepreneurship with a point of view. South Asian Journal of Global Business Research, 1(2), 177-182. doi: 10.1108/20454451211252714

George, W., & Sims, P. (2003). Authentic Leadership: Rediscovering the Secrets to Creating Lasting Value. San Francisco, CA: Jossey-Bass.

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Entrepreneurial Lessons Learned: Twinkie, Twinkie, Little Cake How I Wonder What’s Your Fate


As the song goes the bankruptcy of the Hostess Brands, Inc. brings to mind how many companies today rest on their laurels. Many companies have forgotten how to compete because rapid growth has gotten in the way. Kalson (2012) noted how the Hostess company blamed the company’s problems on its unions and dispelled the idea bad corporate decisions, financial shenanigans, outdated strategy, and inept management could have caused the problems.

The Hostess brand emerged from a troubled history at Continental Bakeries. Interstate Bakeries later bought Continental pursuing its strategy of growth by acquisition and mergers. Interstate had a history of run ins with its workers and focused on rapid growth instead of its products and people. For example, in 1982 Interstate Bakeries raided an over funded pension fund to pay off debt on its inefficient plants (“Hostess Brands, Inc.,” 2012).

The Continental merger brought new enzyme technology to the company allowing its products to have a longer shelf life, lowering delivery costs, and improving profitability. Continental like Interstate engaged in an acquisition strategy. Similarly, the company had disputes with its workers and in 2000  lost a suit in San Francisco brought by 19 black workers claiming racial discrimination (“Hostess Brands, Inc.,” 2012).

Again in 2004 the government probed the company’s worker’s compensation reserves and problems with a new financial system the company installed. In 2004 the company filed for bankruptcy still under investigation for how it set its worker’s compensation reserves. In 2009 the company emerged from bankruptcy and relocated to Kansas City only to file for bankruptcy again in 2012 (“Hostess Brands, Inc.,” 2012).

The lesson learned is growth through acquisitions often is a poor strategy leading to financial difficulty if not managed carefully. An entrepreneur would do better by focusing on products and people to grow organically. Entrepreneurs should learn from the Hostess story, acquisitions and mergers often leads to discord between workers and management, and financial problems. Duplication of duties is costly without a plan to remove these costs. A company’s business strategy can become blurred, and the company can lose its focus on its vision and how it best serves its customers.

Kalson (2012) noted how Hostess sold its soul to private equity firms, hedge funds,  and investors while amassing over $1 billion dollars of debt. Acquisitions seemingly erase the competition, but can also serve as the deathbed of a company. Entrepreneurs should think about losing their Twinkies before entering such a strategy.

Entrepreneurs should understand both sides of this strategy before committing to it. If you want to know more about the pros and cons of different strategies contact us to learn more.

References

Hostess Brands, Inc. (2012). Hoovers Academic. Retrieved from http://subscriber.hoovers.com.ezproxy.apollolibrary.com/H/company360/history.html?companyId=15324000000000

Kalson, S. (2012). When all else fails, blame the union hostess gives the twinkie defense a whole new meaning Pittsburgh Post – Gazette. Retrieved from http://search.proquest.com/docview/1220357399?accountid=35812

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The Entrepreneurial Journey


Errico (2010) shared the following story about the Great Hill:

Before time was time, there was a Great Hill.
And on the Great Hill there lived the Yolks.
The Yolks spent their entire lives climbing the Great Hill, trying to reach the top.
Some Yolks climbed fast.
Some Yolks climbed slowly.
One Yolk in particular was a very slow climber. He was different than the rest of the Yolks.
When he climbed, all the other Yolks passed him.
It was hard for him to watch them pass by.
He felt like the worst climber in the world.
Some Yolks made fun of him as they passed.
Others didn’t.
Some Yolks wanted to help him climb but he didn’t let them.
It was hard for him to climb. It was even harder when it rained because the ground got slippery. Sometimes it seemed like it was only raining on him.
But it wasn’t.
There were times when he felt like he wasn’t moving at all.
But he was.
Then one day he met another Yolk who climbed even slower than he did.
He helped the slower Yolk climb.
“Thank You,” said the slower Yolk.
“You’re Welcome,” said the slow Yolk, “I can’t be of much help to anyone else since I climb so slowly.”
“Slowly?” asked the slower Yolk.
“Well yes. I watch other Yolks pass me all the time.”
“I do not know if you are slow or fast, but I do know that you helped me, and that you are still climbing.”
The slow Yolk said goodbye to the slower Yolk, and kept climbing.
“Still climbing,” he thought to himself.
“That is true.”
And he smiled.
So the Yolk kept climbing. He climbed when it was nice out, he climbed when it rained, and he even climbed when it snowed.
As he kept climbing he got better and better.
Sometimes he would pass other Yolks and sometimes they would pass him.
He had stopped paying attention.
He also noticed that some Yolks were no longer climbing.
When a yolk stops climbing it stays where it is.
Some Yolks stop climbing because they are happy with how far they have gone.
Others stop climbing because they don’t want to climb anymore.
The Yolks that had stopped climbing did not like to be passed, and they made it harder to get by.
But the Yolk kept climbing, right over them!
There were still times when the Yolk thought he was climbing an impossible hill, but he kept climbing.
Always, always, climbing.
Do you think he made the top ?

The Great Hill story highlights the entrepreneurial journey. Often entrepreneurs climb slowly to get to the top of the hill, but must persist to reach the top. Entrepreneurship is about persistence and keeping focused on the end goal (to reach the top of the hill). Some entrepreneurs climb more slowly than others, but the challenge is in the journey to the top.

Entrepreneurs recognize others want to trounce them and say, “I told you so,” but filter out the negativity and keep moving on the journey despite the odds against them. Few entrepreneurs are on the fast track, but advance at their own pace. Successful entrepreneurs preserve their passion by settling at a comfortable pace instead of racing to the top of the hill.

Most important, successful entrepreneurs do not let the competition intimidate them. Successful entrepreneurs want to help others succeed in their journey. The key is to keep moving toward the top of the hill no matter what position the entrepreneur is in at a given time.

As the entrepreneur approaches the top of the hill he or she notices other entrepreneurs quitting or conceding on their journey. The successful entrepreneur just keeps going no matter what the pace. The successful entrepreneur knows his or her limits and works within them.

Think about the Great Hill story! How do you describe your entrepreneurial journey? Are you working within your limits at a comfortable pace or are you trying to race to the top of the hill? If you want to get to the top of the hill and avoid stalling before getting there, let us help you find a comfortable pace and help you work within your limits. Learn more.

References

Errico, D. (2010, December 7). The great hill. Free Children Stories. Retrieved from http://www.freechildrenstories.com/story_details.php?st_id=156

 

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Small Business Alliances: The Case of Lehman Trikes


During the height of the Great Recession of 2008-2009, Lehman Trikes formed a strategic alliance with Harley-Davidson. Lehman Trikes, a small publicly held company on the TSX Canadian  Venture Exchange, lead the industry in making three-wheeled motorcycles in Spearfish, South Dakota. Harley-Davidson announced it selected Lehman Trikes as its exclusive supplier of its Tri-glide three-wheel motorcycle. Before signing the alliance, Lehman made the three-wheeled motorcycles in the aftermarket. Harley legitimized the three-wheel motorcycle with its announcement bringing it into the established motorcycle market (Looney & Ryerson, 2011).

By the end of the summer of 2010, Harley-Davidson faced difficult times losing half its business. Harley-Davidson did not renew the agreement signed with Lehman Trikes. Harley kept the rights to the Tri-glide brand and granted no residual rights to Lehman Trikes, but in its original agreement clearly laid out its non-renewal rights and terms. Although Lehman feared Harley might not renew the contract, it understood the risks when it signed the original agreement (Looney & Ryerson, 2011).

Do you believe the alliance between Lehman Trikes and  Harley-Davidson met both companies’ goals? Do you believe the alliance had successful results? What benefits did the companies achieve because of the alliance? What risks did the companies face by signing the alliance? Did the alliance benefit Lehman Trikes, the smaller company? Do you believe Harley exercised its rights in a fair and transparent manner? Knowing that ending the agreement would limit its supply of the Tri-glide, did the strategy benefit Harley-Davidson? Did Lehman Trikes have a viable business model or could it have strengthened its model?

Let us know what you think? Do you want to know more about forming strategic alliances? Learn more.

References

Looney, D. C., & Ryerson, A. (2011). Lehman Trikes: A story within a story 17, 35-39. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&db=ent&AN=69927663&site=ehost-live

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Business Culture: Groupthink vs. “Teamthink”


Gibb and Schwartz (1999) argued groupthink paralyzes companies creating a culture that dismisses all social issues as unsuitable for management consideration. Gibb on and Schwartz claimed the best employees in the future will not tolerate a stifling top-down culture because better educated and networked employees will demand more participation. Chen, Lawson, Gordon, and McIntosh (1996) argued good decisions come from leaders who encourage an open decision-making process. Maharaj (2008) argued strict adherence to rules masks open decision-making and evaluation of alternatives and corporate boards should seek diverse skills and avoid groupthink. A well-rounded board leads to improved decision-making that considers its members knowledge and skills instead of perpetuating the good old boys club.

Solomon (2006) challenged the idea that dissent is undesirable and rational deliberation and consensus results in group decision-making. Neck and Manz (1994) explained “teamthink” as an alternative to groupthink as characterized by highly cohesive and conforming groups. “Teamthink” offers encouragement of divergent views, open idea expression, recognizing threats and limitations, valuing unique members’ views, and discussion of doubts. Neck and Manz argued self-managing teams can promote these values to encourage better decision making.

I believe companies still encourage groupthink at top echelons of an organization, but promote “teamthink” at lower levels. I believe this allows an organization to create a double standard to preserve top-down management culture, while promoting improved production from lower levels. The idea is that ultimately “the buck stops here” at the C-level. Does this double standard help or hinder building trust to make the right decisions?

Gibb and Schwartz (1999) suggested without improved participation good employees will leave a company they do not trust and seek employment elsewhere where they can use their education and experience. What do you think? Please leave a comment with your thoughts. If you need help organizing your company more productively I encourage you to learn more.

References

Chen, Z., Lawson, R. B., Gordon, L. R., & McIntosh, B. (1996). Groupthink: Deciding with the leader and the devil. The Psychological Record, 46(4), 581-581. Retrieved from http://search.proquest.com/docview/212668876?accountid=35812

Gibb, B., & Schwartz, P. (1999). When good companies do bad things. New York: John Wiley & Sons.

Maharaj, R. (2008). Corporate governance, groupthink and bullies in the boardroom. International Journal of Disclosure and Governance, 5(1), 68-92. Retrieved from http://search.proquest.com/docview/196323941?accountid=35812 http://linksource.ebsco.com/linking.aspx?genre=article&issn=17413591&volume=5&issue=1&date=2008-02-01&spage=68&title=International+Journal+of+Disclosure+and+Governance&atitle=Corporate+governance%2C+groupthink+and+bullies+in+the+boardroom&au=Maharaj%2C+Rookmin&isbn=&jtitle=International+Journal+of+Disclosure+and+Governance&btitle=

Neck, C. P., & Manz, C. C. (1994). From groupthink to teamthink: Toward the creation of constructive thought patterns in self-managing work teams. Human Relations, 47(8), 929-929. Retrieved from http://search.proquest.com/docview/231490747?accountid=35812

Solomon, M. (2006). Groupthink versus the wisdom of crowds: The social epistemology of deliberation and dissent. The Southern Journal of Philosophy, 44, 28-42. Retrieved from http://search.proquest.com/docview/218152905?accountid=35812

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Human Capital: Are Employees a Small Business’s Most Valuable Asset?


I have heard the words “employees are our most valuable asset” many times, but have rarely seen accountants embrace the idea of capitalizing human capital as an asset on the balance sheet. The theory goes that companies expense wages as employees earn them. If employees are an asset I believe the part of workers’ employment cost that adds value to the organization should appear on the balance sheet.

Although accounting rules forbid capitalizing human capital, they only recognize human capital on the income statement. Despite this oversight, many call accounting the language of business. At least one article admitted the problem and recommended alternatives for capitalizing human capital. Chen and Ku (2004) concluded, “The succession of the human intellect over machines and equipment in the contribution to industrial value makes a financial statement that relegates human capital expenditure to expenses inadequate if not obsolete” (p. 129). If accounting is the language of business why is the value of its most valuable asset excluded from the balance sheet?

This disparity leads one to believe companies’ accounting standards look at employees not as an asset, but as a liabilities. For example, in finance the main goal of the firm is to maximize shareholder wealth and accounting rules treat human capital as a period cost (expense) instead of an asset. In recent years many companies have reconsidered the view shareholders are the only stakeholders in a firm, and have expanded stakeholders to include customers, suppliers, and employees. Even with the coming of triple bottom-line reporting I have not seen accounting rule-making bodies espouse the capitalizing human capital (Elkington, 1994; Slaper & Hall, 2011).

Similarly, Reimers-Hild, Fritz, and King (2007) described human capital as a continuous investment leading to increased earning power. Reimers-Hild et al. further described human capital as responsible for innovation, creativity, and keeping pace with change.  Chen and Ku (2004) developed a theoretical classification framework that would capitalize certain formation and acquisition costs in early stages of development, learning costs in middle stages of development, and replacement costs in final stages. Chen and Ku argued for disclosing these costs as investments if the costs are unique and add value.

Do you believe employees are your greatest asset? I would like to hear your thoughts. Should your greatest asset show on the balance sheet? Please let leave your comments? Click here if you want to understand more about accounting for human capital.

References

Chen, H. M., & Ku, J. M. (2004). The role of human capital cost in accounting. Journal of Intellectual Capital, 5(1), 116-130. doi: 10.1108/14691930410512950

Elkington, J. (1994). Towards the sustainable corporation: Win-win-win business strategies for sustainable development. California Management Review, 36(2), 90-100. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=9410213932&site=ehost-live

Reimers-Hild, C. I., Fritz, S. M., & King, J. W. (2007). Entrepreneurial Career Development: Using Human Capital, Social Capital, and Distance Education to Achieve Success. Advancing Women in Leadership, 24, 1-N_A.

Slaper, T. F., & Hall, T. J. (2011). The triple bottom line: What is it and how does it work? Indiana Business Review, 86(1), 4-8. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=66506015&site=ehost-live

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Lessons in Small Business Organizational Change


About 10 years ago the owner of Bimba Manufacturing Company located in Monee, Illinois decided to sell 90% of his stock to employees through an employee stock ownership plan (ESOP). The company produced aluminum cylinders and had two classes of employees. These classes included the managers who made policies and workers who obeyed the policies and performed the work. Under the ESOP instead of workers just obeying the orders of the managers, the company formed cross-functional teams to address problems and improve quality. The teams decided to meet regularly with customers to consider their needs and improve working relations (Jones, 2004).

The ESOP plan changed the workforce orientation improving working relations, accentuating excellence, and leading to a high quality products. Each cross-functional team hired its own workers and socialized together creating a cooperative new culture in the company. Employees effectively relearned their jobs by actively listening and interacting with each other instead of focusing on managers and workers. Managers acted more like advisers and workers gained a more cooperative spirit. Because of this organizational change the company increased sales 70% and the workforce grew 59% (Jones, 2004).

Although when first starting a business an owner can design a hierarchical organization for expedience, the firm stands to improve performance by reconsidering the organizational form. In my experience, hierarchical organizations in a small business can stymie the growth of the organization. I have personally experienced the difference and realized the benefits of redesigning the organizational form.

A more nimble team orientation can improve performance and cross-functional communication. The organization can respond better to the companies’ customers and better address their needs. The case of Bimba Manufacturing offers a good lesson in organizational change designed to improve worker and customer relations.

Have you reconsidered the organizational design in your firm? I would like to hear your ideas about changes that can benefit the organizational design in your firm. If you need help I urge you to act now and we can start to help you. Learn more.

References

Jones, G. R. (2004). Organizational theory, design, and change (4th ed.). Upper Saddle River, NJ: Prentice Hall.

 

 

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The Multiplier Effect of Small Business Transaction Costs


Jones (2007) defined transaction costs as costs involved in negotiating, overseeing, and controlling costs between people. Organizations need to keep these costs low by managing exchanges between organizations. Jones used the health care industry as an example. According to Jones, 40% of the United States budget for health care has to do with managing exchanges between doctors, health-care providers, government agencies, insurance companies, and other merchants. Imagine if the health-care industry could remove these costs how much less health-care goods and services would cost.

Small businesses also have to manage transaction costs to achieve sustainability. Transaction costs involve many kinds of costs. For example, an organization can experience costs resulting in duplication of effort, power imbalances, intellectual property protection issues, knowledge transfer issues, and preserving alliances. Nooteboom (1993) argued small firms have a particular disadvantage with transaction costs because of scale, scope, learning, and experience. Such costs are bounded by rationality, opportunity, uncertain conditions, and transaction specificity. When many firms add value to products or services each firm adds transaction costs multiplying the cost to the consumer for each firm involved in producing the product. On the other hand, outsourcing parts of the production offers economies of scale to spread the cost among more units. Bureaucracy costs can offset the transaction costs saved by larger organizations because of their capability to deal with scale, scope, learning, and experience issues (Jones, 2007).

Small businesses need to weigh these exchange costs in making their products and services competitive. As in the case of health care 40% is a significant added cost for a customer to bear. Unless a firm has the ability to  deal with transactions costs it can have a significant disadvantage compared with a larger firm that has these skills. Any time a firm can erase these costs or hold them to a minimum the firm will put itself in a better position to achieve competitive advantage.

How do you manage transaction costs? If you have not considered transaction cost management and want to know more I urge you to contact us to learn more.

References

Jones, G. R. (2007). Organizational theory, design, and change (5th ed.). Upper Saddle River, NJ: Prentice Hall.

Nooteboom, B. (1993). Firm size effects on transaction costs. Small Business Economics, 5(4), 283-295. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&db=eoh&AN=0328531&site=ehost-live http://www.springerlink.com/link.asp?id=100338

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The Value and Ethics of Treating People Right


Former Southwest Airlines CEO, Herb Kelleher, gained a competitive advantage over competitors like United, Delta, and Northwest by treating the airline’s employees with dignity and respect. The airlines all had unionized workers, but Kelleher believed Southwest had to dignify its customers by treating its workers right. Kelleher issued 20% of Southwest’s stock to employees to increase their motivation to treat customers well. During Kelleher’s time at the company, United, Delta, and Northwest all experienced damaging strikes by their unions, while Southwest remained profitable. The strikes caused thousands of passengers to miss their flights driving these airlines into bankruptcy (Jones, 2007).

Managing complex relations with pilots, cabin crews, and mechanics affected customer satisfaction for Southwest Airlines (Jones, 2007). Happy workers resulted in happy customers. Southwest Airlines remains one of the most profitable airlines today. Many companies in the airline and other industries today fail to value the importance of building and managing relations with workers.

In my personal experience, I have found managing employee relations can improve performance. I turned around a financially troubled university with a heavily unionized workforce by paying attention to the value of the workers and forging improved relations with them. I fail to grasp why many organizations have such a hard time understanding that happy employees produce happy customers. Happy customers breed new customers and grows the organization.

I would like to hear your thoughts on why building improved relations with workers has become so difficult today. I argue customers and workers are equally if not more important than shareholders. Please let me know your comments or let me know if you want to learn more.

References

Jones, G. R. (2007). Organizational theory, design, and change (5th ed.). Upper Saddle River, NJ: Prentice Hall.

 

 

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