The Most Important Personal Asset

Obviously the real answer is common sense. But if you don’t have it already, you probably never will, and there’s nothing I can say here that’s going to change that.

Common sense aside, then, the most important asset in business is a sense of humor, an ability to laugh at yourself or the situation.

Laughter is the most potent, constructive force for diffusing business tension, and you want to be the one who controls it. If you can point out what is humorous or absurd about a situation or confrontation, can diffuse the tension by getting the other party to share your feeling, you will be guaranteed the upper hand. There are very few absolutes in business. This is one of them, and it will never fail.

A sense of humor creates one of the most favorable long-term impressions. A single humorous, self-effacing comment can immediately let someone know that you don’t take yourself too seriously, and that is the sort of thing that people remember.

It is also the best way to start a meeting. You don’t need to have them rolling in the aisles, but a mildly pleasant remark at the outset will create the right atmosphere for everything that follows. Humor is what brings back perspective, which, next to profits, is the easiest thing to lose in business.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

Command and Collaborate

The best kind of leadership in a collaborative organization is one that is diffused throughout the organization and is not of the command and control type. This is somewhat an idealistic position, especially when an organization is making a transition from a command and control organization to a collaborative one.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

Markets as Networks

Actual firm relationships must be seen on a spectrum between outright competition at one end and collusion at the other. At the very least, such a self-evident observation raises the issue of the firm (or business unit) as the basic, and often only, unit of analysis: in certain circumstances we might more appropriately consider an information coalition of such firms as the key unit.

Earlier, the border of the company was seen as the dividing line between co-operation and conflict – cooperation within the company and conflict in relation to all external units. The corresponding means for coordination are heirarchy and the market mechanism. The existence of relationships makes this picture more diffuse. There are great opportunities for cooperation with a lot of external units forming, for example, coalitions. Thus, it is often more fruitful to see the company as a part of a network instead of a free and independent actor in an atomistic martket.

However, the recognition that there is a network of relationships is merely the first step. Approaches need to be developed for the analysis of the network.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, Lectures, Line of Sight

Firm Value and National Wealth

The wealth creation process of a nation cannot be seen separately from that taking place at the industry level. Hence, unless a nation is able to unleash the value creating potential of each organization, its over-all progress in this context will be significantly hampered. Incidentally for each firm to maximize its wealth creation potential, the need for private ownership of capital and well defined property rights in all sectors of an economy cannot be over-emphasized. Private sector business organizations will ensure that their managers are held accountable for the way they use the company assets, and the outcome thereof. When the firm level ownership is diffused (as in the cases of public or joint sector companies) and the majority ownership is predominantly with distant and impersonal state, there is no incentive for intra and inter-organizational cooperation for mutual benefit including wealth creation.

Since the wealth creation process of a nation is synonymous with that of its organizations, macro policies of governments of nation states must facilitate evolution and development of organizations that are focused, market driven, efficiency and change seeking, nimble-footed, and also capable of building and leveraging capabilities, all required to create wealth not only for their shareholders, but also for other stakeholders, including the government. For such value creation to take root within an organization, the external context must be right—market economy, healthy competition, transparent regulations, strong institutional frameworks in all public policy areas, clear intellectual and other property rights, freedom to access information and high ethical standards. If a nation is state is not able to put in place the required public policies in these areas and also no effort is made to simultaneously enhance managerial capabilities to create value, its wealth creation effort will always remain sub-optimal.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, Line of Sight

The Era of Fragmentation

Driven by a combination of capital-intensive new technologies, newly emerged mass markets, and global trade based on national competitive advantage, in industrial era production was organized around the idea of division of labor instead of craft specialization. The work formerly done by one artisan was broken down into its component parts, which in turn were mechanized where possible, and semi-skilled workers were hired to do part of the job or to tend the machines. New roles, those of supervisor, middle manager, and production planner, were created to provide the oversight and coordination that were formerly the responsibility of individual journeymen or masters. In brief, authority over the content of jobs was given to people who, themselves, were not actually doing this work. The newly created managerial authority took “from workers the right to define their own job, their own skill level, and their own standards of quality.”

The division of labor, originally intended to create a rapid growth economy based on a low-skill work force, did help assimilate nineteenth century agricultural workers into industry. But once there, it imprisoned them.

Division of labor is an addictive practice. Work breakdown—promoted by those whose authority and careers tend to benefit from it—tends to beget more work breakdown, taking the pressure off the employer or the educational system to continually upgrade employee skills. Once started, the practice tends to be self-reinforcing, producing a de-skilled work force.

By the mid-twentieth century, most corporate organizations were based on the concept of functional specialization. Work that was once whole had become fragmented. The focused skill of an individual was diffused into the skill of an entire factory. The common view was that mechanics check their brains at the gate when they come to work.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, Line of Sight

Increasing Knowledge Intensity

Knowledge (information, intelligence, and expertise) is the basis of technology and application. In the 21^st Century competitive landscape, knowledge is a critical organizational resource  and is increasingly a valuable source of competitive advantage. Because of this, many companies now strive to transmute the accumulated knowledge of individual employees into a corporate asset. Some argue that the value of intangible assets, including knowledge, is growing as a proportion of total shareholder value. The probability of achieving strategic competitiveness in the 21^st Century competitive landscape is enhanced for the firm that realizes that its survival depends on the ability to capture intelligence, transform it into usable knowledge, and diffuse it rapidly throughout the company. Firms that accept this challenge shift their focus from merely obtaining the information to exploiting the information to gain a competitive advantage over rival firms.

 

Conditions in the 21^st Century competitive landscape shows that firms must be able to adapt quickly to achieve strategic competitiveness and earn above average returns. The term strategic flexibility describes a firm’s ability to do this. Strategic flexibility is a set of capabilities firms use to respond to various demands and opportunities that are a part of dynamic and uncertain competitive environments. Firms should develop strategic flexibility in all areas of their operations. Such capabilities in terms of manufacturing allow firms to “switch gears—form, for example, rapid product development to low cost—relatively quickly and with minimum resources.

 

To achieve strategic flexibility, many firms have to develop organizational slack. Slack resources allow the firm some flexibility to respond to environmental changes. When the changes required are large, firms may have to undergo strategic reorientations. Such reorientations can drastically change a firm’s competitive strategy. Strategic reorientations are often the result of a firm’s poor performance. For example, when a firm earns negative returns, its stakeholders are likely to place pressure on the top executives to make major changes. To be strategically flexible on a continuing basis, a firm has to develop the capability to learn. The learning continuously provides the firm with new and current sets of skills. This allows the firm to adapt to its environment as it encounters changes.

 

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please contact www.asifjmir.com, Line of Sight