Maybe. Ben Stein worries. (Yes – the Ben Stein from Ferris Beuller’s Day Off – he’s a legitimate economist). Check out this article.

I came across this in a letter by Jim Womack, author of Lean Thinking and, to hear him tell it, one of the developers of the Toyota Way. The graphics are mine – which is why I’m not a graphic designer.

All value created in any organization is the end result of a lengthy sequence of steps – a value stream.

These steps must be conducted properly in the proper sequence at the proper time.

The flow of value toward the customer is horizontal, across the organization.

All organizations … are organized vertically by department … because this is the best way to create and store knowledge and the most practical way to channel careers.

He goes on to say that managers are judged by metrics that apply within their departments. But no one is actually responsible for the horizontal flow of value [toward the customer]. This is the problem big companies face.

So why are small companies better than big ones?
Because you have your hand in everything. YOU (the owner/founder/entrepreneur) are responsible for the horizontal flow of value.

So why are small companies worse than big ones?
Because you have your hand in everything. When the company grows to the point where some organization by department is useful, the owner/founder/entrepreneur is better at building the product than building the company. So emergencies, inefficiencies, and other stuff happens which takes you away from managing the value flow. So you end up with the worst of both worlds. No departmental support and a poorly managed value flow.

Takeaway:

• As your company grows, either learn to become a manager/CEO or hire one.
• Lean Thinking by James P. Womack and Daniel T. Jones is a good read. More of their stuff is here

[tags]Lean Thinking, Small Business, Entrepreneur, Management, CEO Skills[/tags]

Sounds like an ad you’d see on late night TV for some dubious and expensive dietary supplement. But, according to this article it’s actually the difference in how the US spends its health care money compared to Canada. We’re getting ripped off! They spend $3k less per year per person and the average life expectancy is 3 years longer (plus infant mortality kills 3 babies per 1,000 births more in the US).

Are Health Care Costs a Problem for Your Business?
What the article doesn’t mention is how this problem affects business. I see several effects. One is that companies who can locate across the border will. A car plant in Ontario has significantly lower health costs than one in Michigan. Along with those jobs go all the business it sends to sub contractors etc.

Another is that it forces companies to compete on performance – not if their work force has too many pre-existing conditions which could raise your costs or lower that of your competition.

A third is that having healthier customers who live longer and don’t spend as much on health care is probably a benefit to more companies.

Takeaways:

• This is a problem with a political solution. I know it won’t be easy since it cuts across many deeply held beliefs. But sometimes the facts need to win out over the comfort of a deeply held belief.

[Note: My policy in this blog is only to discuss politics in the context of how it affects business.]

I agree with Peter Drucker that this one is overrated when running a company. Skill in management is much more important. Nevertheless, leadership can be a useful skill, and it’s much simpler than you’d believe by reading or listening to the folks who make a living teaching courses in it.

Leadership is the ability to get folks to follow you to a place they wouldn’t go on their own. That’s it. It happens to people with all manner of personalities – from the charismatic to those as boring as wallpaper paste. There is evidence to suggest that less charismatic leaders actually produce better results for their companies over the long term.

Leadership skill involves two things: Vision and Communication.

Vision means you can see where you want the company to be. Someplace different from where it is right now. If you can’t see something different, stop now. You’ve arrived and don’t need to lead anyone anywhere. If you can see something different, describe it.

Communication means telling people where you see the company headed. Tell them how they play a part in taking it there. In the simplest and most concrete terms you can find. This won’t happen automatically. They won’t just “get it” and the right words that are simple and concrete won’t just “come to you.” Spend some time (perhaps with a language coach like Isabel Parlett) describing your vision properly. Then tell your vision to everyone you work with over and over and over and over again. And again. When you start to get bored hearing it tell them again.

Takeaway:

• Constant communication of a simple vision is what all leaders have in common.

[tags]Leadership, Small Business, Entrepreneur, Management, How to be CEO,CEO Skills[/tags]