Operation and management are different.
For many enterprises today, the main energy of the main leaders should be raised to business decision-making, that is, the choice of strategy and the judgment of the situation. This aspect is the main work, and don’t worry about it as in the past. It’s not that management is not important, but management is more important.
What about management? It is enough to move down to the subordinates, and the main thing, the leader has to keep an eye on the changes. In other words, management is “doing the right thing” and management is “doing the right thing”.
I met the former chairman of the German Homeowners’ Association in Germany. He was in his 80s, so I asked him, “Based on your 80-plus years of life experience, what do you think is the most important thing about a business?” He said a few words. The first sentence is that the leader must do the right thing and make the right choice; the second sentence is that the subordinates must do the right thing. For being an effective operator, I propose five core competencies.
1. The right choice
The most important thing in strategy is to set goals, to find what you need, not to do what you have. Set goals first, then look at how to achieve them, research solutions to problems, and finally implement them.
We have to choose both the right business and the right people.
Which is more important, choosing or choosing a business? I said that people first, no matter how good the business is, no one will do it, and the business will not be done well, and it cannot prove whether your business choice is correct.
So selection is very important. What kind of person do you choose? I have two very simple criteria:
First, we must be politically correct, have both ability and political integrity, and put morality first. Why choose someone with a strong personality and virtue? Because only a strong personality can make a career long and an enterprise last.
Second, choose a professional or an obsessive person. When you open your eyes, you think about it, and you still think about it when you fall asleep at night. You are very obsessed. When choosing cadres, don’t choose a panacea-style cadre who knows everything, but choose a very professional person who can understand one thing thoroughly, and do it in a solid way, so that the enterprise can be successful.
2. Effective innovation
Innovation must be effective and purposeful. Purposeful innovation can actually reduce innovation risks by 90%, because everyone knows that innovation is risky. This refers to blind innovation.
Many companies innovate blindly, which has caused a lot of losses. Innovation has risks, and the task of entrepreneurs is to translate these risks and reduce them.
Schumpeter said that entrepreneurs are “innovation + risk-taking”. This was proposed in 1912. In the early industrial age, opportunities were everywhere, and indeed you could take the risk. Like in the early days of China’s reform and opening up, you can take risks and have “courage”.
But by 1985, when Drucker wrote “Innovation and Entrepreneurship”, he found that risk-taking was not enough. He believed that entrepreneurs should innovate and create wealth. The instinct of entrepreneurs is to look for opportunities with purpose. At the same time, the entrepreneur’s ability lies in translation and risk reduction.
The same is true today, what is the entrepreneurial ability of this era? We are all innovating, your innovation fails, mine succeeds, and I become an entrepreneur. That’s why I always talk about effective innovation today, which is a core competency of entrepreneurial operations.
3. Discover value, create value and performance
For today’s entrepreneurs, it is critical that the business must be profitable, or that the business must discover value and create value and performance. You may say, I understand this, to do business is to make money. But how many businesses do you see that don’t make money?
Therefore, discovering value, creating value and performance is actually an uphill battle for entrepreneurs. To measure whether the entrepreneur is good or not, it finally comes back to value and performance. Therefore, this is a core competency of an effective operator.
4. Integrate resources
There is a surplus in almost every industry now. For example, the cement industry has a surplus of 35%. Is it necessary for me to build a huge cement factory?
So, we’re going to integrate it. Almost without exception, the world’s large enterprises are not integrated through mergers and reorganizations. Therefore, today’s test of entrepreneurs is not necessarily the ability to create resources, but the ability to integrate resources.
5. Sharing mechanism
In the past, we ate a big pot of rice and practiced egalitarianism, which resulted in a decrease in efficiency. It was fair but inefficient. We now pay attention to efficiency, but there are issues of fairness. Is there a solution for this? I think at the micro level of the enterprise, we can solve it with the method of mechanism. What is the mechanism? That is the positive correlation between corporate benefits and employee benefits, and this is the mechanism.
Therefore, the human resources we are talking about today are actually capital and should be allocated in the same way as financial capital. This is the principle of the mechanism. With mechanisms in place, wealth can be distributed more scientifically, a large middle class will be created, and polarization will be gradually eliminated. We can all do it, so I advocate that companies should vigorously develop sharing mechanisms today.
What were the goals of the business in the past? To maximize the interests of shareholders. However, in recent years, it has been found that there is a problem with this. Enterprises should take care of the common interests of stakeholders, and the purpose of enterprises should be to make society better.
That is to say, the interests do not necessarily have to be shared by shareholders, but a part should be given to some capable, contributing, and dedicated workers. I think this is very important.
Shanxi merchants, that is, Shanxi merchants in the Qing Dynasty, how were they distributed? When they reach the end of the year, the owner will share 50% of the profit, the other 50% will be divided by the shopkeeper and the accountant 25%, and the guys will share 25%. It’s not wages and bonuses, but the final year-end dividend. Let’s see, in the Qing Dynasty, the mechanism of Shanxi merchants was very good.
Therefore, I think that an effective operator today must also have this advanced distribution mechanism or method and this distribution concept.