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Sunday, 24 July 2011

Business Getting Too Complicated? Simplify It!

It has become apparent over the years that the whole exercise of business has gained a great deal of complexity and to little advantageous effect.
The remarkable impact of IT on the running of businesses has meant that there is a mass of data available of which a proportion is turned into information and a smaller proportion again becomes intelligence, on which action can be taken.
The problem is which information is relevant and of value, and which intelligence is just “nice to have”.
I recall a Finance Director of my acquaintance whose company had seven or eight subsidiaries.  For each main board meeting he would prepare individual sets of accounts for each company and then consolidate them for the holding company.  The result, of course, was a pack of “information” a couple of inches thick which took ages to prepare.
He decided to send out a marker pen with a set of accounts and asked each Managing Director to mark the information which was important to them.  The upshot was that he reduced the accounts pack to half a dozen pages each month, making the point that if they wanted any more information, then it would always be available.
Business is an essentially simple exercise.  We buy (or make) something, add a little over the total costs, and then sell it.
A CEO of a public company I worked with used to run his company on the basis of half a dozen charts which gave him enough information to decide on any action which was needed.  He could always “drill down” if necessary.
Leaders need to de-clutter in every sense – the intelligence derived from the mass of information available, the mass of detail around, and, most importantly, his/her mind so that there is more clarity about what needs to be done for the future, and not what has happened in the past.
When I worked for Slater Walker in the 1970s, the board meeting financial report from the previous month took no more than ten minutes and the rest of the time was devoted to any resultant actions, and to the future.
As Belbin says, the shaper should shape the business and have completer-finishers and implementers around to take the necessary actions. The leader’s mantra should always be – business is simple, so simplify it.

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To contact us, email to ivan.goldberg@vistage.co.uk

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