Managing is the task of moving an enterprise toward a defined objective. It sounds simple enough, but in the process of determining where you start, or in most cases restart, the process is one hurdle after another.
After all, you are likely still dealing with a challenging economy and deciphering how to strong-arm your way through the daily process of making your business work.
Your aftermarket business is centered on the chore of reselling. As such, you’ll encounter management decisions within the scope of budgeting, strategic planning, performance monitoring and developing appropriate objectives for your business.
Given the central role that objectives or targets play in most management actions, it is critical that they be set correctly. It may seem trite to point out, but it is nonetheless valid: if inappropriate objectives are set for a business, inappropriate outcomes will occur.
More than Money?
You might ask what constitutes appropriate objectives for a business?
As a business and its management evolve, thinking about what constitutes an appropriate objective evolves as well. Throughout this evolution, there is ongoing tension between financial goals and objectives and non-financial objectives.
If a business exists primarily or solely to make a profit as likened to a highly quantifiable outcome, then relatively simple financial objectives will suffice-or so say many schools of management.
However, others say that business exists to serve simultaneously the needs of various entities such as shareholders, customers, suppliers, employees and the aftermarket community as a whole. The interests of these various legitimate constituencies are not always measured quantifiably, leading to a school of thought that puts greater emphasis on non-financial objectives.
The history of business would suggest that both types of objectives are important.
The irony is that within the brief history of the aftermarket, most businesses were launched as some form of a family enterprise or with few parties involved in the creation. The objectives were quite clear: to provide an ongoing source of income and, where necessary, employment for current and future members of the family or skilled friends.
I’m certain you know of companies who fit this mold. Names such as Edelbrock, Lane and Isky, to name a few, translate to family generations of sons and daughters.
As the technology of management has evolved, ideas about what constitutes the right objective for a business have changed. In his book Concept of the Corporation, first published in 1946 and at the same time hot rodding became a business of sorts, Peter Drucker described the purpose of a corporation as generating the maximum profit achievable from its operations.
He went on to comment on the potential conflict between this purpose and society’s expectation that the job of business was to maximize the production of inexpensive goods and services for consumption. To a modern observer, Drucker’s thinking seems simplistic.
If one takes Drucker’s model to the aftermarket, you are looking at enthusiasts as the consumer and the producer as the manufacturer with like purposes. But the various models of the aftermarket business are quite apparent in that we are also striving for sustainability as we implement newer and more modern links to technology. We are also modeling more of a management style within tier pricing, such as the MAP process and fostering improved education models.
You may wonder why some companies seem to thrive over a very long period of time, while others have a brief moment in the sun and then recede into obscurity. Over the past 10 years, we have seen economic spikes in both directions.
Within the aftermarket there has been somewhat of a stable survival effect, but does the revenue equal the effort?
Factors of Long-Term Success
There are a number of factors that account for this long-term pattern of success. The objective role of any manager is to preplan for the future.
Forecasting objectives may be difficult, but it’s necessary. Reading trends, focusing on your true company mission, asking others for opinions, studying the market trends, and tending the supplier/reseller relationship are only a few of the points for objective management growth.
Other factors within the scope of management include leadership, the quality of management and the dynamics of the overall market of the aftermarket.
James Collins and Jerry Porras in their landmark book, Built to Last, suggest there is one common element. Companies that thrive for a long time all have a non-financial vision of what they are in business to accomplish. When was the last time you viewed your company is such terms?
The 3M company exists to create useful products through innovation. Boeing exists to be at the leading edge of the aeronautics field. Marriott has a mission to make its customers feel as if they have a home away from home and say so as you enter one of its resorts. Johnson & Johnson exists to help alleviate pain and suffering.
All of these companies, and others cited by Collins and Porras, also work hard to make a profit and return value to their owners and stakeholders.
Think of their management objective, the forefront of their mission. Producing profits and generating value for the company was a byproduct of the broader objectives each of these companies sought to pursue.
My reasoning is to look at the broadbased and deep exposure you mastermind. Place your customer at the forefront and the economic vertical spikes will prevail. This may sound as if the customer will drive a path to your door because of your company culture, but take into consideration the reasoning from the companies mentioned.
Why this should be so is actually quite simple. Most people who work for companies need a broader goal than purely a financial one to motivate them to perform at their best. The companies profiled provided their people with just such a broader mission; they treated them as full partners in the pursuit of this broader goal, and as a result realized higher levels of commitment and motivation from them.
The companies then reward this higher level of commitment and loyalty with policies appropriate to maintaining an ongoing partnership.
To be viable and successful, every business must set and work hard to achieve a series of financial goals and objectives. But having financial objectives alone will not produce superior performance in the long term.
Making It Happen
How can a manager at any level of your business decide whether or not the objectives set for the company are sound? There are no firm rules to rely on, but there are some commonsense tests any manager can apply to determine whether the objectives set are:
- Compelling – capable of getting someone’s attention
- Motivating – likely to inspire someone to put in extra effort
- Consistent – able to be met without compromise
- Achievable – reachable with reasonable levels of effort and commitment
- Distinguishing – something that when achieved will set the company or business apart from others
- Competitively superior – difficult enough to attain so that the achievement will produce superior rewards from the markets served and the investing public
- Satisfying – of such a nature that the achievement of the objective will produce a personal sense of satisfaction among those who contributed
- Lasting – likely to pass the test of time
Tests like these are applicable to financial as well as non-financial objectives.
I’m sure you look as at your business model as one that will survive the current challenging economic conditions, grow in the process, improve with time and master the management objectives of your primary goal-to keep and build your customer base.
The reference model within this article is to focus on perhaps a new management style of putting the end-user, middle person and your internal corporate culture in the forefront. Of course the economic pathway is viable, important and critical to success-but so is placing the cart before the horse.
It is my personal intent to guide your decision making and to enable your inner reasoning to gain improved success with sensible learning tools. We hope you enjoy this ongoing series of learning tools-¦ place them in your toolbox for continued reflection and business growth.
Now go take on 2011 with your personal business model and drive it to success.