“A great many people think they are thinking when they are merely rearranging their prejudices” – says William James. Interesting thought, although gives the impression that to get rid of them is rather difficult. We all are coming from somewhere, meaning a kind of cultural, moral, physical, mental, etc. determination. We try to open up our minds, to absorb different approaches, views, patterns, understand the world, other people, our environment, and we try to find our place and contribute.
When it comes to business and entrepreneurship, creating a vision, strategy, plan, or performing management, leadership, we often hear, and – to be honest – often advise such things as: “be yourself”, “think outside the box”, “do not care about how others judge you”, “follow your instinct, intuition, belief”, etc. These might look much better on paper or in a presentation, after which we can receive applause, compliments, and would feel great. But going to work, keeping business operable and providing inspiration, encouragement for the people who surround us, such as keeping employees committed, feels a bit different.
This paper has been inspired by some recently experienced management buy outs (MBO), where those, finding themselves in a new environment with the old determinations, have to have a long and difficult way to go. Of course, all industries, markets, and organisations are unique, nevertheless, issues the owners and the management have to face might be very similar in a particular way.
The box. When reading about ‘outside the box thinking’, or ‘boxing’ certain ideas and initiations, the term ‘box’ receives a rather negative connotation. It starts to be associated with something limiting, obstructing, hard-to-bear feeling. Simplifications are helpful when making problems more visible or easier to understand, however, beware of oversimplification which might be detrimental. They might give the impression of sorting things as either good or bad, black or white, as exclusive terms. This might be the case with the ‘box’ association, if we tend to agree with thinking ‘in the box’ is somewhat negative, while ‘outside the box’ is positive.
Normally, companies, enterprises have a structure, certain well-established procedures, processes and authorities, or simply an acknowledged logic according to which they operate and perform their activities. So, they have, or they are a box, that contains internal rules, procedures, processes and authorities. It is their structure.
We do not say, in parallel, that this box shall be the one and only, without critics and shall be accepted without comments. Thinking outside the box principle has also to apply, simply to provide the opportunity to look at the box from the outside, and see the possible shortcomings, or those areas where some fixing might be necessary to keep it competitive and successful. Easy to agree with it, is not it?
Fixing or replacing the box. When we leave theory behind and try to apply those things we believe in, the difficulties start to appear. It is even more true when it comes to a management buyout, where there has been an original context, and almost the same content shifts to a different context. Review these statements one by one. What do we mean by almost the same content’? And what by a different context?
Take the box analogy, a company with its structure, procedures, processes and authorities. It has been under a particular ownership who had their approach towards this asset. The ownership changes. This new ownership might have a different structure itself (have either less or more puzzled voting rights), determining the dynamics of decision-making, not to mention more. Dynamics means not only the pace, the directions, but also the opportunities and possibilities generated or acquired. While the box is the same.
You realise that there is a lot to do and face lots of challenges. The old wisdom says: do not change too many things at the same time. Be pragmatic. Decide on fixing or replacing the box. Not easy, especially if you used to be the part of that box. Probably, this latter fact itself is the main reason – besides the deep-rooted determinations of yours – why certain problems, difficulties, even if they are not necessarily detrimental or deadly, result in unnecessary hard times and sleepless nights.
Trust, understanding and reputation. When entering into new, at least slightly newer, territories, we tend to rely on those people, expertise, reputation we associate positive results with. We tend to trust things we know, those people, who we trust, know, or well-reputed people know. But let us see where it goes when you find yourselves in that very different situation. You are the new owners, who used to be the management, valued the participation higher than the previous owners – otherwise would not buy out – and you need to exploit the benefits now. Who do you rely on? Instinctively, on those you had close connections with, those they recommend, or people you find well-reputed. Unfortunately, it has a high chance to either reproduce all those internal affairs that characterised the old context, or get lost in details when trying to find or create a new one.
Vision, strategy and plans. Without digging into the deep, just try to play with these words and sentences: same vision with a different strategy, different vision supported by the same strategy, same strategy translated to different plans. Some sound weird, some quite eligible. Take a look at the context. And do not forget to think also outside the box. Different people have different dreams, different visions, and different determinations. Thus, might end up in different conclusions with different results.
General mistake might be to jump on a “good opportunity” when deciding on the MBO, without having a different vision and/or strategy, only the perception of underestimating the investment on the other (seller) side. It would not be excluded that it is true, though puts the new ownership to the position to define or redefine the vision and the strategy, anyway, just stemming from the fact that they are new. Whichever is the case, to have a better view on the old box or envisioning a different one, the task is the same: a proper vision is necessary with an adequate strategy to achieve it. You, the former management, are there behind the wheel, and the same people in the organisation. You might have a clear vision, have trusted people around you who might have a clear vision, or you are very much high time to create one.
Take the example of a specialised bikestore and a bike factory. In the former you have brilliant, professional sales personnel to sell the proper bike to the respective client. In the latter, you have experts who can put together a proper bike from the essential parts collected in a basket. In the former case, if the box changes and the task is no more to sell the bikes, they might not even be able to recognise the particulars of one in that basket. In the reverse case, where mechanics are expected to sell the bikes, the detailed knowledge on physics and almost lack of it regarding the customer needs, may not result in a successful deal…
You do need different people, with different skills, or at least a properly adjusted encouragement system in place, for different strategies… It hardly happens that people with their established routines and customised compensations and benefits systems just turn around and start to behave differently, not to mention the discrepancies in the skills and capabilities…
As a summary, do not take it easy to try to recast the vision and the strategy, with the same people in the organisation and also do not turn to people, who were socialised in the exact same environment to make a turnaround.
Key personnel is key. There are some rules of thumb for recognising the key people in an organisation. Continuing with the examples of the bikes, in the specialised store an experienced sales team with good knowledge on bikes is surely essential, so considered to be key. In the factory, physics and mechanical engineering is the priority, so expected to find these experts amongst the key people. If market environment, the competition, customer needs change, the key people can be trained, and/or their encouragement systems adjusted. Using the box analogy, some fixing on the box. As long as the core activities are similar.
It might not be the case, when an MBO triggers a different vision setting, a corresponding strategy recast and all the consequential changes in the organisation. Different directions need different people with different skills and/or a different encouragement system to comply with the novelties. In such a case, human resource professionals become the very part of the key personnel. If you make the right choice, they can help you the best with finding the right people with the right skills to perform what you are looking for and to develop the corresponding compensations and benefits scheme. The new box.
General mistake is to turn to the old acquaintances, who are good and reliable people, although they might not be experienced in that situation you are just facing… With such a decision, you can not only cause sleepless nights for yourself because of the company, but also because of the former good relationship. Not to mention the reputation issue for that relationship of yours, who might associate a possible damage with you.
Procedures, processes and authorities. The elements that connect the pieces of the box and fill it with lively interactions, to form a structure. The larger and or diversified the company, the more complex the procedures, processes and authorisations tend to be. Important to note here, that making structures as simple as possible seems to be a general tendency, which is stemming from the recognition of management and administration costs of their operation. It is something, again, that is easier to be said than done. One of the reasons why is that in order to decide on giving up an existing set of procedures, processes and authorities, you have to understand them very well to the very details and have to have a sharply clear idea about how to adjust the structure to the new circumstances, or replace them with completely new ones. Sounds challenging, does not it?
Following up on recent transactions, it is painful to see companies with a really promising perspective to be slowed down or even paralysed by wrongly set, overcomplicated or simply inadequate procedures, processes and/or authorisations. Loss of opportunities, market share, key people, etc. is really a pity.
The sooner the better. After an MBO, you are wasting your own time and own money. It is a double pain, to be honest. You were once very determined and saw the values of the buyout. You went for it and completed the deal. Now, it is high time to go for the benefits of it. Do not you think?
Please put away your prejudices, step over your determinations, old routines, and take a distant look at your box. Being your judgement either that you need to fix the old box, or to establish a new one, optimise your efforts. You have to share it between keeping the activity and operation running and working on the fixing the old or elaboration of the new box in order to have a better future. Save time for yourself and find a professional. Do not forget, that “criticism may not be agreeable, but it is necessary. It fulfils the same function as pain in the human body. It calls attention to an unhealthy state of things.” (Winston Churchill). Get that box you have worked for.