Ethics Hot Lines

In some companies, when employees are troubled about some ethical issue but may be reluctant to raise it with their immediate supervisor, they can place a call on the company’s ethics hot line. These hot lines have become more common.

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.

Small Business: Causes of Failure

• Plunging in without first testing the waters on a small scale.
• Underpricing or overpricing goods or services.
• Underestimating how much time it will take to build a market.
• Starting with too little capital.
• Starting with too much capital and being careless in its use.
• Going into business with little or no experience and without first learning something about it.
• Borrowing money without planning just how and when to pay it back.
• Attempting to do much business with too little capital.
• Not allowing for setbacks and unexpected expenses.
• Buying too much on credit.
• Extending credit too freely.
• Expanding credit too rapidly.
• Failing to complete, accurate records, so that the owners drift into trouble without realizing it.
• Carrying habit of personal extravagance into the business.
• Mistaking the freedom of being in business for oneself, for liberty to work or not according to whim.

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.

Corporate Social Strategy

Doing business in international settings presents many challenges to managers. There is no magic solution to meeting these issues as they arise. Companies can prepare for the types of challenges by designing a corporate social strategy that matches and balances the company’s economic strategy. These questions are a good place to start the process:

• Are we being socially responsible in what we do? Do we meet the expectations of our host country as well as our home country? Would stakeholders in either country question our behavior?
• Are we responsible to the stakeholders in each country where we do business? Do we treat employees, customers, suppliers, local communities, and others in a fair and just way?
• Do we recognize emerging issues, as well as, immediate social issues, in the countries and communities where we operate? Are we anticipating change rather than just reacting to it?
• Do we abide by the host government’s regulations and policies? Do we have good systems for ensuring that our employees and the agents who represent us follow or corporate policies?
• Do we conduct business in ways that respect the values, customs, and moral principles of each society? Do we recognize that there may be times when they conflict with principles of other societies? Are we ready to address these conflicts in thoughtful, positive ways?

Companies that address these questions before trouble strikes are better prepared to meet global challenges to corporate responsibility. They are better prepared to prevent crises, anticipate change, and avoid situations that compromise the values and principles for which the company stands. A corporate social strategy helps managers achieve both the economic and the social goals of the company.

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.

Managerial Accounting

Managerial accounting refers to the internal use of accounting statements by managers in planning and directing the organization’s activities. Perhaps management’s greatest single concern is cash flow, the movement of money through an organization over a daily, weekly, monthly, or yearly basis. Obviously, for any business to succeed, it needs to generate enough cash to pay its bills as they fall due. However, it is not at all unusual for highly successful and rapidly growing companies to struggle to make payments to employees, suppliers, and lenders because of an adequate cash flow. One common reason for a so-called “cash crunch” or short fall is poor managerial planning.

Managerial accounting is the backbone of an organization’s budget, an internal financial plan that forecasts expenses and income over a set period of time. It is not unusual for an organization to prepare separate daily, weekly, monthly, and yearly budgets. Think of a budget as a financial map, showing how the company expects to move from Point A to Point B over a specific period of time. While most companies prepare master budgets for the entire firm, many also prepare budgets for smaller segments of the organization such as divisions, departments, product lines, or projects. “Top-down” master budgets begin at the top and filter down to the individual department level, while “bottom-up” budgets start at the departments or project level and are combined at the chief executive’s office. Generally, the larger and more rapidly growing an organization, the greater will be the likelihood that it will build its master budget from the ground up.

Regardless of focus, the major value of a budget lies in its breakdown of cash inflows and outflows. Expected operating expenses (cash outflows such as wages, materials costs, and taxes) and operating revenues (cash inflows in the form of payments from customers and stock sales) over a set period of time are carefully forecast and subsequently compared with actual results. Deviations between the two serve as a “trip wire” or “feedback loop” to launch more detailed financial analysis in an effort to pinpoint trouble spots and opportunities.

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.

Hypergrowth in Companies

Hypergrowth is not just a feature of private companies with a profit motive. The public sector can also undergo hypergrowth, often providing growth opportunities for private companies. In the main, however, the days of big government appear to be over. Current trends for the state to be less of an actual provider of services and more a facilitator and purchaser of them from the private sector.

Companies and corporations welcome hypergrowth because of the perception that they will make more profit and thus be more attractive to investors. This is a reasonable perception provided that the hypergrowth is managed efficiently. If, however, it is poorly managed the company may well end up in trouble despite rapid growth.

It is also true that the larger an organization is the more power it can wield and the more it can dictate to its suppliers in order to obtain the discounts the economies of scale can offer. If a company buys 9 percent of one supplier’s product, the company is highly dependent on that supplier to deliver on time. If it buys 90 percent, it can dictate the terms because of it withdraws its business then the supplier will have a major problem. Many suppliers often express delight at gaining a huge contract with a large corporation only to be dismayed later on as that corporation begins to drive down the price. No organization should ever be completely dependent on another.

Just occasionally there are companies that do not want to grow – their owners are happy with them as they are. The danger is not growing, however, is being a target for acquisition by those who are. Hypergrowth is normally presented as a positive thing. For the individual who has not considered its implications it can be threatening. In a hypergrowth situation, change can occur rapidly and change is often uncomfortable. Senior managers should be aware that hypergrowth may produce fear in employees as well as pleasure and pride.

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 Blue-sky Laws

Government regulation and intervention is very pervasive in our daily lives, especially in business activities. That intervention is both supportive and restrictive. Also, it is constantly changing. The intent of government is generally to provide justice, orderliness, and fairness. A realistic observer may also perceive a governmental desire to play Robin Hood. Some entrepreneurs will find themselves the objects of Robin’s beneficence. Most owner-managers see too much of his ever-present Merry Men.

Entrepreneurs usually don’t concern themselves much with the creation and enforcement of government regulations. Being realistic, they just want to know the rules. They ask how it works and then go on about the business of building their enterprise. Because entrepreneurs need all the help they can get, they will use the rules and regulations that can in any way help the business. If the rules are not helpful they will avoid getting into a position where the rules interfere with the progress of the business. The problem for entrepreneurs is that the regulatory bureaucracy is so massive and complex that they have trouble understanding the rules.

The specialists who devote their professional lives to understanding rules and providing guidance to the rest of us must concentrate on a small segment of the rules to be able to keep up with the changes and the latest nuances in interpretation. This results in the need for many specialists. Despite the burden on time and financial resources, however, it is most prudent to obtain sufficient advice and guidance at least to avoid the wrath and interference of the regulators.

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

Creative Management of Product Design

An emerging area of importance is product/process design. In increasingly competitive, sophisticated markets, attractively designed products or processes sell well; shoddily designed products are left alone on the shelves. Excellent product design requires high orders of essence creativity (novel ideas), elaborative creativity (contextually relevant elaborations of ideas that are unique because of the kinds of components utilized and the way they are fitted together), and expressive creativity (unique aesthetic features). There can be following basic steps for coming up with successful and creative product design:

a)    The designing unit should have members with diverse expertise so that their brainstorms can result in unique product design concepts that are also practical.

b)   It is imperative that the design unit has an in-depth understanding of the client and the market, the technologies needed or involved, and the nature of the problem and the constraints that need to be kept in mind.

c)    The design unit must take the trouble to observe people in real-life situations to identify their needs, difficulties, likes, dislikes, etc. Creative design needs creative observation, that is observation that is not only accurate but also multi-angled so as to yield interesting design possibilities. Innovation begins with eyes. The design unit needs to create a ‘bug-list,’ that is, a list of the problems that presently bug the likely users of the future products.

d)   The design unit needs to visualize a new product concepts and the customers who could be captivated by them. This can involve building several physical models and prototypes, simulations on the computer, and creation of videos that portray high the new product may be used by people well before it comes into existence.

e)    The design unit needs to evaluate and refine the prototypes/models through several quick iterations, each one involving changes and improvements. Inputs should be secured not only from members of the design unit, but also from experts, the client, and the potential consumers. Exceptional design seldom come right the first time around. Serially generated improvements based on the reactions and suggestions of the product’s stakeholders can quickly get the design unit to an exceptional design.

f)     Effective implementation that leads to the commercial use of the product. This is often a long and tedious process that creative teams frequently neglect. But the planning of milestones, cost cutting and cost control efforts, packaging and so forth are indispensable if a product design is to taste commercial success.

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

Potential Problem Analysis

This process is based on our concern with future events—with what might be and what could happen. We call it Potential Problem Analysis. A potential problem exists when we can foresee possible trouble in a given situation. No one knows for sure that trouble will develop, but no one can guarantee that it will not. This process uses what we know or can safely assume in order to avoid possible negative consequences in the future. It is based on the idea that thinking and acting beforehand to prevent a problem is more efficient than solving a problem that has been allowed to develop. This rational process enables an organization to take an active hand in shaping its future.

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

Use and Misuses of Authority

Most managers believe they must have authority to accomplish their jobs. They believe it is their superior’s responsibility to see that they have adequate authority in the areas for which they are held responsible and accountable. But a manager who either misuses or oversas his authority to get his subordinates to carry out their tasks may be inviting trouble. This is why it is important for the manager to understand the various sources of authority and power and the differences among them.

 Most people who have worked in the business world have seen a situation in which subordinates have “fired” their boss. By dragging their feet on assignments by cauing the organizations to do a relatively poor job, and by directing criticisms to appropriate ears, a unified group of subordinates can cause such trouble that their boss’s superiors may question his ability to handle his work group. Under these conditions the subordinates may sometimes be shown the door; but occasionally the boss is fired. That this can and does happen illustrates that managers are dependent, in part, on their work groups, just as their work groups are dependent, in part, on the managers. Although the manager has formal sanctions to back up his authority, the work group has informal sources of power it can utilize. The manager who relies only on his formal authority to direct the efforts of others may, therefore, not achieve the best results. It is desirable that he also be a leader; in short, he should be able to influence his subordinates as well as give them orders.

 Managers are often “caught in the middle”between the values, orders, and expectations of their superiors and the values, needs, and expectations of their subordinates. The manager usually needs to retain the support of both his superior and his subordinates, and the dilemma he feels when there is conflict between the two can create intensely uncomfortable feelings. The pressure is  compounded when the values and expectations of his peers are also involved, as they frequently are. Different managers resolve these internal dissonances in a variety of ways. Some ignore, or pay less attention to, either the subordinates or the superior, usually the former. Others try to find compromises that satisfy both, at least enough to avoid undue problems. But however thay handle them, most managers experience the discomfort of man-in-the-middle problems.

 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 Emotional

Unless you are more powerful than a locomotive, faster than a speeding bullet, and able to leap tall buildings in a single bound, minding your own business will be emotionally taxing. The mental and physical energy you put into it will at times leave you quite spent. If you don’t know how to refuel and refresh properly you’ll find yourself constantly out of sorts, fuzzy-minded, and ripe for depression. Even when things are on track, if you’re the type who has a prosperity for “borrowing trouble” the mere responsibility of failure is enough to keep you skittish and in knots. Of course, when problems arise matters can become all the worse since the buck both starts and stops with you. If you have only yourself to kick for a problem and lack a healthy sense of self, you could end up abusing yourself. Needless to say, when things go away through no fault of your own, the frustration, if not properly handled, can be devastating. Moreover, until your business begins to pay off you will be susceptible to bouts of doubt and second-guessing that can be debilitating.

 If after having counted all the costs you’re still undaunted about starting a business either immediately or in the near future, then it’s time to get all your ideas and expectations down in black and white by drawing up a comprehensive business plan.

 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