Modernistic Adaptive Business Management Model
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The Thought and Execution:
Okay, so every business man knows that their are so many good ideas in this world, but not all those ideas are the money makers. I had an opportunity to have an amazing conversation and express and expand my thinking about business management and how they work. In this article we will explore the terminology and jargon of business in a general consensus. I will though, analyse the common business strategies that you can also read up on and explore about.
This model I'm creating is supposed to be an enhancement to previous models by including math into the business management. That way, this model can stand the test of time and work truly for all cases of your business development in any stage you are at. Not only will this article feature that, but I too, in the future want to execute this practise to prove and to show that it works. The only thing stopping me from accomplishing the dreams and goals I want to do is capital. Many companies know the three vital elements to becoming successful companies. I will go over the basics briefly and then my theory (in which adaptive refers to the change of time of context)!
So what does it take to actually have a business? What does it actually mean to own a business? That question or similar does have an answer by the famous Peter Drucker, where he says that the answer may be found from the customer of your company. You shouldn't try to be the company you want it to be, but try to be the company that your customers want it to be, based on their reception of your product or service. Another thing about business is the three vital key elements to surviving as a business for the long-term. A company needs capital, people, and an idea. However, within those three vital elements they also need certain criteria to be met to deliver a strong business presence. In a company, they not only need to have the capital, but that capital must be proportioned out strategically to meet their business goals and meet the needs of their people. Their capital must also try to have a positive revenue income in order to expand. Some of the capital most also be at risk for developing the product or service to become better, and to also be an opportunity to buyout smaller companies to increase and expand their overall potential. Because all companies have a potential limit to what they can do. It is also the same with the strategic planning cycle of a company based off of Henry Mintzberg. Mintzberg lays out a lot of fundamentals for strategic planning, but I couldn't see an adaptive aspect of his reasoning. Now back to the three elements, people are also extremely important. There are many smart people, but have you taken the time to look at how their lifestyle is? You can have a genius on your team that knows everything, but has a very terrible lifestyle and cannot communicate with other people at all. Then you have the excellent people that know how to use rhetoric, but can't come up with a solution to most problems. By combining a team with people that get along, and excel in their respective lifestyles and genius, they will be unstoppable, until their time has come. Finding the right people is difficult though! However, there are many resources to use to help find those people for your business. However, the rarest people can only be found by you actually looking. Because the people that are looking for a job versus people who just live and receive job offers, are actually the people that are more likely to excel at a faster rate. All people can excel in their profession, and I don't disregard anyones capabilities in doing so. However, if time is an issue, you would want to get the people who are already capable of that job and learning more. The last element, which is the idea, also comes with its own subset of plans. An idea can be anything that your company is the sole reason for existing. Look at how Microsoft evolved. Back then the reason for its existence was to bring a personal computer to every living person's home. Now, it's more than just creating personal computers, but it has changed to also expand into delivering services involving technology and not just computers. One of the most important subset plans in an idea though, is the execution. If your company cannot execute the idea well, it won't be received well. Your company will just slowly fall apart until you can somehow change your executing plan to redeliver that product and service under a new name. Look at some companies that have failed at executing their product, such as Zano, or that one company making a portable icebox, and many more. Those three elements are important to know when your building a business.
As a side note, do look out for businesses that follow the pyramid-scheme and MLM (multi-level marketing scheme) because those businesses are the kind that you won't feel proud to work for. They are basically the leeches of capitalism and the economy. How they work is by you selling their non-existant product or service or recruiting others to join and you spend money and make less. Basically, if you join or your a consumer of one, it means you got sucked into a scam. I highly suggest you try to identify and avoid them (or you can mess with them pretty easily). If it sounds too good to be true, stay away from them and the offer.
Companies today follow strategies to overall success and I will quickly add-on to Professor Ellen Earle-Chaffee strategies on how they work. The first one being, a linear strategy where the main focus is centralised across all three elements. There is a no change of course with dealing with external forces and the business is most likely to follow a plan that has no other direction. I think this strategy is more likely to fall apart if your business is seeking long-term financial success, but short-term it could do well.
The second strategy is adaptive strategy. This strategy is moreso the opposite of the linear one, because this strategy takes the external forces into account and incorporates plans that can be changed on the fly. The decisions made by the business are more likely to fit everyone's vision, but may fall apart in the beginning if no revenue is seen short-term.
The third and last strategy Professor Ellen talks about is Interpretive strategy. This is where shareholders and investors have a say in the direction of the company and the company does exactly that. This also gives the customer a position into different insights of how the shareholders and investors value the company. This one is pretty good, but you actually have to present and execute a desirable product or service. Besides those three strategies there are also additional strategies your business can use when nothing else seems to be turning your business around.
The buyout strategy is the most famously used with the fortune 500 companies. This is when they acquire a small company to expand their current products and services. This is a risky move and requires deep research onto the company your big company is acquiring. If you make a bad investment into a small company, you will end up losing more revenue. Sometimes it will take some time until your companies can incorporate their ideas together to create an even better product or service. A good example, is when Nvdia acquired 3dfx Interactive for their intellect on graphic processing. Nvdia was able to enhance their current products and increase their revenue by a lot. A more notable acquisition is Google and YouTube, when it was YouTube versus UTube: when Google bought out YouTube, subsequent video sharing services were shutdown by Google intellectual copyrights. Other recent examples is Facebook acquiring Instagram, which was a very huge investment. So making the right acquisition that fits your current company is important. As a business, you do not want to acquire businesses that do not mesh well into your current business because you will lose more money fixing it.
Besides the buyout strategy, another popular strategy is what I like to call the only price strategy because when you deliver and execute a product or service unique to your competitors, you can increase the value of it because consumers won't be able to compare it to other companies based on its uniqueness. A good example was Intel before AMD started making a come-back. Before the come-back AMD had to totally reconstruct and refinance their business to compete with Intel, who were the only company manufacturing new CPUs for almost a decade (beating AMD CPUs). Intel could set the price for their processors really high and make much more profit than it did to produce a CPU. This strategy only works when you deliver a creative product or service offered by your business that no one else can get anywhere.
All the above strategies are great, but none seems to adapt in a way I think a company should, during certain time frames of their life. When we look at bigger and older companies like Sony or Samsung. You can see that their presence in the modern world has pretty much been nonexistent. I wonder why that is? Maybe they should follow what AMD did to make a come-back or shift their current focuses to more profitable things.
Famous Business Analysis:
This reminds me of Karnaugh maps in a computer engineering course, but the SWOT analysis is pretty interesting. Here is an image below from Wikipedia.
This analysis method is the easiest to understand and you are able to identify how well your company is doing compared to other companies out there. When you are identify each of those areas from your business, you want to get accurate information as possible. The best way to do that, that I think is to give a survey to your team that have questions surrounding those areas. That way you can effectively check if your decision will be the right one. Sometimes your opinion as a leader can be incorrect and you want to always minimalize your errors so that your employees know you deserve that role. This also increase your company morale and the drive for them to do their best in your business with your products or services. The one thing that may be difficult in SWOT analysis for a company to conceive are opportunities. With older CEOs or senior employees, they do not want to make many risks. This is why many opportunities were lost. A great example is the bitcoin revolution. If hedge funds took the risk to invest in it, they would have been more rich. However, the risk of it losing or having no value definitely outweighed the benefits at that time. Identifying an opportunity for your business to grow is not simple. So what can you do? When you seek out people or companies you want to make sure the goals you have are almost the same. Negotiations are the simple types of forming a contract: they are the most effective and time efficient thing to do than working out a specific deal with underlying costs and rules.
When looking for threats, these are companies that are competing in your same sector of products. There are many ways to identify them by in which their site attracts more views, sales, and customers. In order to beat your competitor you need to spend more money to develop something better. As a company you must take care of your employees or they will quit or suicide (in rare cases) and your company will be unattractive to new employees.
For most companies they follow the basic hierarchy of having a CEO and then the following basic four; finance, ops, marketing, and human resources managers. There are already plenty of examples of the basic company structure online, so I will discuss and draw out mine. How I think a business should start is small. When a business grows, of course they will break the core team into divisions to handle expansion. I will draw-out the hierarchy for mine, and subsequent expansions of the hierarchy will just be iterations of it.
Before I get started, I know that many companies have their own way of doing things (different structures with less transparency or less employee involvement, etc.) , but if you want to be a respectable company with a good reputation then that's what this is made for.
So this image below is the top level of the company, where I outline the higher ranked profiling jobs.
My reasoning for having the variable "x" is the proportion (or ratio) to the people you have to have for that constant. I believe that there should be the chairman and the CEO with shared responsibility of the business, and the chairman chooses 3 advisors while the CEO can choose 2 advisors. When a major decision needs to be made, like firing the CEO, then it would include the vote of the chairman, CEO, and the 5 advisors in a majority vote of 5/7 to pass. Subsequent positions will involve a ring vote, in which level 2 and level 3 are combined for important decisions that affect lower management. An example of the ring vote is such as operations and CTO, engineer and service director, and revenue and allocation director want to vote to get rid of a related manager. So the ring vote is also a majority win of 6/9 to pass. Notice that in the below image, there is also red colored rings to denote the different rings.
So the next ring, ring B, to affect lower management, you need a majority vote of 6/9. Then finally, ring C needs a majority vote of 7/11. The reason why I put more importance onto ring C is because those people are critical to maintaining the happiness of your employees. These people are also in charge of house-keeping tasks, food, and basic needs and service of your other employees as well as recruiting people. The next level is level 4 where we have the related managers and employees split into teams of "x". So under ring A, we will have 2 managers with 2 teams of 5, and thus is the same pattern for the other rings. More importance here, on level 4, is stressed under ring B, because marketing is very important for gaining consumers and a loyal fan-base for your product and service. The creative talen is also in this level, where they will come up with campaigns to sell your product or service in the best and optimized way possible.
The special thing too, about level two, is that those people will work together. The finance as you noticed is under ring A, so it's the operations and CTO's job to collect how much money the company is gaining, using, or losing from the other rings and levels. Then in level 2, they all report to the chairman and CEO. This is because we want each level to be transparent in exactly how much they are spending without directly affecting the other levels and below. So if there was a miscalculation of financing, then it will only be the fault of ring A. This terminates issues if the income of the company is oddly distributed according to the chairman and CEO's plans.
Based on the above top model, this is also what I think is needed or required to run a small business if the value of "x" was 1. So in total, I think a successful business would need about 80 people. I think the balance of this model would be enough to sustain the employees and the conversations of agreements and disagreements with management. So, if your company has more people and you want to adjust to this model, replace that value of ratio, which is "x" by your current number divided by 80. So if you have 160 people, then you need 4 operations and CTO people. I think by increasing upper-managment, it can be costly. So you may choose not to, but it would help if each person could help the lower levels in acheiving their tasks and goals. Many companies take the risk of only increasing the lower-managment and their workforce employees, but it comes with a more disconnected company and one opinion or so could cause a shake-down in the management of the company and it's employees loyalty to continue working there.
The next part of the model is for lower-management, in which I will discuss at a later time, after some research.
Explaining My Model:
I call my model the "Modernistic Adaptive Business Management Model" because of how it will adapt to time and different situations. As we all know, following the same strategy won't work all the time, and your business will see an end to profits. One common acceptance of that, is that we are slowly seeing the fall of retail stores. Many retails stores are losing business because of e-commerece and companies such as Amazon, eBay, Shopify, and more. However, those retail companies can catch up by shifting their business to being online as well. The difference here is the connections going straight from the manufacturer to the consumer. If your business has specialized products no one can buy elsewhere, then you will of course make profit, but it will be short-term, unless you can build-off that product. An example is social media platform, Twitter. Although Twitter is a success for the consumer, business-wise it has zero growth or direction, because of the lack of a team to monetize the platform. In my model I also will use some basic math so that it can be easily adjusted for current modern eras.
In each level, those people will focus on their key area to sustaining or improving the lower-managment. Incorporated into the lower-managment, their will be a mentor and mentee program so that people can learn and gain experience from the senior people of the company. By having this it also will give importance to your employees and the drive to learn with their seniors in hopefully surpassing them, and turning those employees into loyal long-term workers for your business.
Dealing With Other Problems:
Problems such as racial and gender equality and more will be discussed at another time because it is complex. Dealing with those and problems that correlate to moral beliefs can damage a businesses reputation, employees, and consumers.
A Timely Expansion:
When we look at companies such as Amazon, we wonder to ourselves: "will Amazon stop growing?" and the answer is yes, but not right now. You see, most of their business exist because of other businesses. If those other businesses find a way to do the selling themselves, then Amazon will tank. Most of Amazon's profit comes from using their service as the middle-man between the manufaturer and the consumer. So how does Amazon know when to expand? When they target a sector of products, they want to make sure they secure an audience within each category. When Amazon first started, it was only books at first. Later, they realized they were very profitable in books and expanded slowly, testing different products, before fully investing time and money to a product that is in demand, such as technology. Once Amazon had secured a lot of the retail products they expanded their company to servers, web services, and data. Amazon, will continue to do the same, but it also costs a lot of money to maintain that much power to continue to make more money. We all know, that maintaining your current business, while trying to improve your current business is costly as well. If Amazon suddenly has a slump in their direction, then they will have to start cutting their expansions and possibly products they sell or lay-off employees.
A business should take into account their goals and not overlook on what they hope to do in the future by examining their current management of people. If one person in your business, with high profile is not happy, they will make sure they get what they want, so you should try to speak to them as it could cause problems when you try to expand or restructure.
Taking Losses For Long-Term Success:
Although I need to research more on this, it is evident that sometimes a business will need to take a loss in revenue for a while to have long-term success, which is better than short-term success. An example could be AMD, during their assets sell-off during 2015 to 2017 in order to restructure the focus of the company and their products. They did manage to deliver a better product and are starting to turn a profit. AMD took a loss, but it was only temporarily to regain ground in the computing market for the long-term success. If they didn't take that loss of assets and such, they would have went bankrupt because of keeping up with operating costs. Other companies may have done similar things, but probably on a smaller scale of declaring bankruptcy, in order to clear their business name to be put under new management in order to make revenue again. Sometimes that works out, but if the trend or consumers are looking to different businesses that do what you do better, it may be better to initiate a merge or cease operations.
This article is not finished yet, but I promise to finish the sections and my model after I do more research into business on my own. I hope you enjoyed this article, thank you.
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