New Level in Management Skills:

How to Reach it?

Alexander Abolmasov

Managing Partner

NRG Private Equity

aa@nrgc.com

Problems cannot be solved at the same level of

awareness that created them.

Albert Einstein

Задача фондов прямых инвестиций – понимать и помогать компаниям в улучшении эффективности. Проблема не может быть решена на том же уровне осознанности, где она возникла. Давайте взглянем на проблемы чуть повыше.

The General Motors Management Style (1920s - …)

Strategy

• Centralized operational decisions, but decentralized divisional organization

Financial management

• Control by setting quantitative targets for the divisions and reporting back

performance metrics

• Decision making was based heavily on analysis of reported managerial

accounting data

• ROI is the king

People Motivation

• Performance based bonuses

Effective enough in a growing economy, but less effective in the crowded or

low-growth marketplaces

Для начала давайте посмотрим как управляется большинство российских компаний. В основе управления лежит технология, которая была придумана компанией Дженерал Моторс еще в 20-х годах прошлого века…

What is effective management?

• Effective management system – keeps organization adjusting

to unpredictable, dynamic conditions and satisfying

customers

• Behavioral routine (skill), which helps to handle unpredictable

and uncertain situations with confidence and effective action

– competitive advantage

Эффективный менеджмент позволяет организации реагировать на непредсказуемые и динамические условия, чтобы удовлетворять потребности своих клиентов. Если делать это уверенно и эффективно, то это является конкурентным преимуществом.

Startup management

• Need practices and principles geared to the startup context of

extreme uncertainty

• In a startup, the product and customer are unknowns.

We need a new definition of value for startups: validated

learning about customers

• Case study: Begemot, Sovcombank

Управление стартапом в таких условиях – это реагирование на предельную неопределенность. При этом здесь ничего не говорится о размере или отрасли компании. В нашем портфеле были компании, которые развили свои бизнес-модели через тестирование различных вариантов бизнеса, а потом успешно масштабировали успешную бизнес-модель. У Бегемота – это сеть кэш&керри игрушек, а у Совкомбанка – розничные кредиты в малых городах с фокусом на население 45+.

Traditional model

(centralized functional hierarchy)

New model

(decentralized leadership network)

Changing

leadership and

structure

+ ROI-based decisions

+ Mistrust and control

+ Extrinsic motivation

+ Improvement Kata

+ Employee development

+ Intrinsic motivation

Change to what?

Соответственно мы должны понять как перейти к новой системе, которая включает в себя: 1) децентрализацию принятия решений 2) фокус на постоянных улучшениях 3) эффективную мотивацию сотрудников.

There are two different ways of working on the model – evolution and transformation

Time scale: organization's age

Low degree of decentralization/ empowerment

Differentiation phase

Integration phase

High degree of decentralization/ empowerment

Sustaining and deepening of the decentralized model, through generations

Pioneering phase

Bureaucratization through growing

hierarchy and functional

differentiation

Evolution

within the decentralized

model (culture of

empowerment and trust)

Organizations with

traditional models must

eventually transform

themselves

Transformation through

radical decentralization

of decision-making

Stagnation

within the tayloristic model

Есть примеры компаний, которые сразу от старт-апа попадают в область эффективного менеджмента. Но большинству компаний нужно переходить туда из состояния бюрократической компании.

Foundation

Current

Condition

Challenge

Vision

Toyota Kata Toyota strategy: “Survive long term as a company by improving and

evolving how we make good products for the customer”

Примером такой технологии является Тойота Ката, которая доказала свою эффективность. Достаточно отличается от того, к чему мы привыкли. Начинается все с построения амбициозной цели…

Non-Toyota thinking: normal daily

management + improvement

Toyota thinking: normal daily

management = process improvement

The Improvers

Process

The Improvers

“Everything deteriorates over time”

The second law of thermodynamics

Process

Как говорил Чеширский кот в «Алиса в стране Чудес», чтобы стоять на месте нужно бежать, а чтобы двигаться вперед нужно бежать в два раза быстрее. Поэтому в философии Тойоты основным является фокус на непрерывном улучшении процессов бизнеса.

Success depends on your challenge

Shinichi Sasaki, former Toyota CEO

Toyota’s Vision for Its

Production Operations

Zero defects

100 percent value added

One-piece flow, in sequence, on demand

Security for people (no injuries)

Тойота понимает, что своей амбициозной цели они никогда не достигнут, но это задает правильное направление развития компании.

Как говорил известный персонаж с большими ушами: «Не нужно пытаться. Нужно делать.»

“If you think it can be done or if you think it

can’t be done, you will be right!” – Henry Ford

Challenge

Mindset

“It can be done!”

Why?

Positive line of

argument

Search for solutions

High probability of success

“I told you: it can be done!”

“It cannot be done!”

Why?

Negative line of

argument

Search for problems

Low probability of success

“I told you: it cannot be done!” .

От настроя на самом деле зависит результат.

Brains are learning organs, so they reward us

with joy when we learn (for example by means of serotonin)

Brain activity measured using computed tomography, presented by

Prof. Gerald Hüther at Production Systems 2009

“It cannot be done!”

“It can be done!”

Through frequent practice more electrical impulses

are fired and synapses are ‘trained’ to perform better

Untrained synapse Trained synapse

High electrical

resistance

Low electrical

resistance

changeable

chemical bond

Regular Kata practice and coaching can change a conservative

mindset into an open, ‘explorative’ attitude

Certainty Certainty

Explorative attitude

of a kata novice

Conservative attitude

(the norm)

Certainty

Explorative attitude

of an experienced

kata practitioner

“I avoid it!”

“I’m OK with it!”

“I like it!”

Тренировки приводят к тому, что изучение новых вещей становится зоной комфорта. А стабильность становится терпимой, но недостаточной для комфорта.

We are what we repeatedly do.

Excellence, then, is not an act but a habit.

Aristoteles

Как говорил Аристотель, если постоянно чем-то заниматься, то совершенство становится привычкой, а не геройством.

Financial management

Все это должно поддерживаться финансовым блоком.

Traditional Budgeting Has Many

Weaknesses....

Promotes centralization of decisions and responsibility

Motivates gaming the system

• Conflicting purposes − target setting versus financial forecasting

• Not only a ceiling − also a floor for costs

Ineffective

• Inflexible to changes in planning assumptions

• Absorbs significant resources across the organization

• Tends to make financial control an annual autumn event

Традиционное бюджетирование воспроизводит централизованную систему и мотивирует сотрудников манипулировать системой.

We Have Separated Performance

Measurement From Financial Forecasting

Broader Performance Measurement

Balanced Scorecard

- Financial KPI’s

- Non-financial KPI’s

+

Rolling Financial

Forecast

- Rolling 5 quarters

- High level, few

details

Better forecasting with less resources

Financial

Budgeting To From

We Can Achieve What the Budget Did in a Simpler Way

The budget was used for: We achieve the same through:

High level financial and tax planning

Target-setting

Controlling fixed costs

Prioritising and allocating

investment/project

resources

Delegation of authority

Rolling financial forecasts

Balanced Scorecard

Trend reporting

Cost targets where and when needed

Activity approach

Small projects - trend reporting

Medium - Varying hurdle rates

Major strategic projects - Case by case, the

budget was never a tool ....

Use existing mandates/authority schedules

The New Tools Cover What the Budget Did, but Also a Lot More

Controlling fixed costs

- Activity accounting and

product costing

- Improved cost understanding

- Product and customer costing

- Annual outlook

Balanced scorecard

- Non-financial targets

& measurements

- Link to strategy - Financial targets relative to

market

- Financial targets

& measurement

- Limited cost understanding

- Annual plan

BUDGET

Rolling Financial Forecast

- Quarterly update - Rolling 5 quarters outlook

- Annual outlook

Investment management

- Trend reporting & 5 quarter

outlook

- Decentralised decisions - Frames if needed

How Does the Manager’s Job Change ?

High degree of freedom in how to achieve

challenging relative targets No detailed

pre-approval of costs through a budget

Cost reports focusing on trends, projects and

total cost levels. Less focus on the calendar year

as reporting period

Increased measurement of non-financial

indicators supporting our strategy

No heavy budget process in the autumn, but

more focus on costs and performance throughout

the year

Increased responsibility and decision-making

More relevant cost

information

Better but also tougher performance measurement

Better use of your

time !

Motivation

Казалось бы, что теперь осталось настроить систему бонусирования к новым показателям и все готово. Но не все так просто.

1. Rewards Punish Incentives are Manipulative

Punishment and Rewards are Two Sides of the Same

Coin

2. Rewards Rupture Relationships Forces People to Compete For Rewards

Damages Relationships Between Managers and

Employees

3. Rewards Ignore Reason Incentives Are Easy Fix for Problems – Band Aid

4. Rewards Undermine Interest Limits Creativity Intrinsic Vs. Extrinsic Motivation Pay-For-Performance Lowers Enthusiasm

Rewards Punish. Punishment blocks creativity.

Награда эквивалентна наказанию. Наказание блокирует взаимодействие и обмен информацией внутри мозга – включаются архаические моменты. Человеку не до креативности. Упрощенно: внешняя награда побуждает в человеке его животные инстинкты.

What do you enjoy about work?

Typical answers given during brainstorming sessions: - Overcoming challenges

- Learning

- Variety, trying new things

- Team spirit, constructive exchange of ideas, sense of belonging

- Recognition and praise, celebrating successes

- Seeing progress, improving, making a difference

- Helping other people in their work

- Scope for development, personal responsibility

- Etc.

Pay Is Not A Motivator Employees Value Pay Less Than Most Expect

Paying More Does Not Mean Better Work

There is no combination of outcome metrics and incentive systems

that by themselves will generate continuous improvement and

adaptation.

And how could it? The people trying to achieve the quantitative

targets are not taught or guided by any sort of improvement kata.

Mike Rother, author of Toyota Kata

Круг замыкается и возвращаемся к эффективному менеджменту.

READING RECOMMENDATIONS

http://www.flickr.com/photos/sfupamr/4579103337/

"Learning should be a joy

and full of excitement. It is life's greatest adventure;

it is an illustrated excursion into the minds of

noble and learned men." Taylor Caldwell

wonder

http://www.archives.gov.on.ca/english/on-line-exhibits/education/pics/4_11_one_rm_school_520.jpg