Ford also remarked “why is it every time I ask for a pair of hands, they come with a brain attached?” Output may have increased, but so too did conflict between management and staff. Working conditions were poor and businesses ignored the sociological context of work — productivity mattered more than people.

Entrepreneurship is about survival, which nurtures creative thinking. Business is not financial science, it’s about trading — buying and selling.

In the early 1960s hype about the product became more important than quality, and customers grew dissatisfied with empty claims. This, and competition from Japanese manufacturers, had Western companies embracing new form of business thinking: Total Quality Management and Zero Defects management. Quality was seen as the responsibility of the entire company, not just those on the production line. Combining Human Relations thinking and the customer-focused approach of marketing, many companies adopted the Japanese philosophy of kaizen: “continuous improvement of everything, by everyone.” Staff at all levels was tasked with improving processes and products through “quality circles.”

Business, more than any other occupation, is a continual dealing with the future; it is a continual calculation, an instinctive exercise in foresight.

Volvo was first to identify the opportunity for luxury bus sales in India, and has enjoyed healthy sales.

Most businesses start small, and remains small. Few entrepreneurs are willing or know how to take the second step of employing people who are neither family nor previously known friends. This is the start of a move from entrepreneur to leader, and it requires a new set of skills, as new demands are placed on the business founders. Where once energy, ideas, and passion were enough, evolving businesses require the development of formal systems, procedures, and processes. In short, they require management. Founders must develop delegation, communication, and coordination skills, or they must employ people who have them.

When you have to prove the value of your ideas by persuading other people to pay for them, it clears out an awful lot of woolly thinking.

Sustaining a business is a hell of a lot of hard work, and staying hungry is half the battle.

Although competition is a fact of life, it makes business difficult, contributing to an ever-downward pressure on prices, ever-rising costs (such as the funding of new product development and marketing), and an incessant need to outmaneuver and outsmart rivals. In contrast, the benefits of finding a market gap — a small niche segment of a market that is unfettered by competition — are obvious: greater control over prices, lower costs, and improved profits.

You can learn all you need to know about the competition’s operation by looking in his garbage cans.

Weihrich develops the TOWS matrix which uses the threats to a company as the starting point for formulating strategy.

The key to strategic fit is to make sure that the company’s internal and external environments match: its internal strengths must be aligned with the external opportunities. Any internal weaknesses should be addressed so as to minimize the extent of external threat.

Senior managers may have a full view of the company, but their perspective needs to be informed by alternative views from all levels of the organization.

As with all business tools, the factor that governs the success of SWOT analysis is whether or not it leads to action. Even the most comprehensive analysis is useless unless its findings are translated into well-conceived plans, new processes, and better performance.

The secret to business is to know something that nobody else knows.

By definition, not all products can be unique. Differentiation is costly, time consuming, and difficult to achieve, and functional differences are quickly copied — “me-too” strategies are commonplace. Differentiation often does not remain a point of difference for long.

The challenge for Superdry, like all companies, is to protect its uniqueness while also expanding its reach — to stand out from the crowd, while welcoming those crowds into its stores.

A recent example of how important first-mover advantage remains are the “patent wars” contested between most of the leading smartphone makers. Patents help a company to defend technological advantage.

First-movers also have more time than later entrants to perfect processes and systems, and to accumulate market knowledge. They can also secure advantageous physical locations (a prime location on a main street), secure the employment of talented staff, or access beneficial terms with key suppliers. Additionally, first-movers may be able to build switching costs into their product, making it expensive or inconvenient for customers to switch to a rival offering once an initial purchase has been made.

P&G prefers only to enter those markets in which it can establish a strong number one or two position over the longterm — rarely is this achieved in a blind rush to be first.

At its heart, risk is a strategic issue. Business owners must carefully weigh the operational risk of start-up, or the risks of a new product or new project, against potential profits or losses — in other words, the strategic consequences of action vs inaction. Risk must be quantified and managed; and it poses a constant strategic challenge.

Luck is a dividend of sweat. The more you sweat, the luckier you get.

For most small-business owners, this means employing the first nonfamily member and beginning to acquire the necessary leadership and management skills to scale the business and manage the people, systems, and processes.

Many small-business owners are content with the lifestyle the business allows them, and have no desire for growth. But the biggest reason for a lack of growth is finance. Growth requires access to capital, which is difficult and expensive to access for small companies.

Critics suggested that the brand was so focused on growth that it had forgotten its fashion roots, failing to update products on a seasonal basis. Other reasons for the decline included supply issues, accounting mistakes, and an inability to react quickly enough to fierce competition.

The role of the CEO is to enable people to excel.

As a business grows, its demands change. Entrepreneurship is needed to spark a business to life, but management discipline is required to support that growth and leadership skills are required to maintain long-term growth. Founders must adjust from being the sole decision-makers to delegating and make the transition from entrepreneur to leader.

The function of leadership is to produce more leaders, not more followers.

Chains of habit are too light to be felt until they are too heavy to be broken.

Enterprise capabilities stem from senior management, and include culture, tight governance mechanisms, and strategic vision. Enablers, however, are the task of middle management. They include design, infrastructure, process, protocol, responsibilities, and performance management. The enablers turn vision into reality.

While the aspiration for business growth might come out of the boardroom, it is a company’s infrastructure — designed and implemented by middle management — that makes growth possible.

The true science of management is the conversion of experience into repeatable and reliable process — today’s problems become tomorrow’s processes and next year’s capabilities.

If you can’t describe what you are doing as a process, you don’t know what you’re doing.

Markets are never static — change is inevitable and continuous. Businesses must respond to change through innovation in thinking, product, and process. This flexibility allows companies to respond to the market and gives them a competitive edge. Adaptation and reinvention are necessary for business survival.

One can choose to go back towards safety or forward towards growth.

At this point a startup faces perhaps the biggest crisis of all: a crisis of control. The founders or senior management may find it hard to give up responsibility for decision making, even to trusted boards. When this happens, the founder may decide to remain small — in essence, to limit growth to the extent of their own control.

An organization must manage its way through such transitions and growing pains as it continually defines and redefines the scope of its operations, its values, and its overall purpose. Without continual growth and progress, such words as improvement, achievement, and success have no meaning.

All growth depends upon activity. There is no development physically or intellectually without effort, and effort means work.

Higher pay might encourage an individual to take a new job, it might encourage people to move a little faster or to work a little harder, but people soon forget about the money and start to focus on other things — such as job satisfaction, challenge, and respect from managers.

Leaders have to be brave in the face of uncertainty, standing firmly behind their vision for the company. They need to hold staff accountable when things do not go as planned, and make difficult decisions about who to hire or fire in order to develop an organizational culture capable of achieving their strategic vision.

If the idea can’t survive a spirited argument, the marketplace will surely kill it.

The universe rewards action, not thought.

The box itself, it seems, is perhaps a distraction.

You cannot lead from the crowd.

Walt Disney’s studio went bankrupt in 1923; and Henry Ford had 3 failed businesses before finding success. Game changers such as Einstein (labeled “slow” by his teachers) and billionaire Oprah Winfrey (told she was not “fit to be on screen”) seem to defy the future mapped out for them.

The worst disease that afflicts executives is egotism.

Visible aspects of culture, such as an organization’s rituals, stories and symbols, are only the tip of the iceberg. Its beliefs, values, attitudes, and basic assumptions are hidden but definitive.

His first response was to “unfreeze” their panic by addressing each of their concerns individually.

Emotional intelligence has 5 components:

  • Self-awareness: the ability to recognize and understand emotions.
  • Self-regulation: the ability to control impulses and emotions.
  • Motivation: a desire to pursue goals with energy.
  • Empathy: the ability to understand other people’s emotions.
  • Social skills: an ability to find common ground and build rapport.

Organizational effectiveness does not lie in that narrow-minded concept called rationality. It lies in the blend of clearheaded logic and powerful intuition.

Swissair went into liquidation in 2001. Once labeled “the flying bank” due to its profitability, the airline’s executive structure displayed groupthink traits, such as a sense of invulnerability.

In a world where a quicker, bigger buck can be made from money than from manufacturing, playing by the rules may seem a poor choice.

The first dividend payments were made in the 17th century by the Dutch East India Company, which was the world’s first company to issue shares in exchange for capital. To encourage investors to buy shares, a promise of an annual payment (called a dividend) was made.

In contrast, Apple did not pay dividends from its formation in 1977 until 2013. The directors, led by Steve Jobs, argued that shareholders would benefit in the long term by allowing Apple to reinvest profits. Only in 2013, with its growth rate beginning to fall, did the company announce dividend payouts.

Making money from money is a risky, short-term strategy.

Some companies opt to “make money from money.” This means they use their cash assets not only to further the development of their products, but also to generate money through the financial markets. Some companies believe that by making hedges (bets) on the fluctuations of the currency markets, for example, they can gain access to a new source of profit. The 2 terms that exemplify the idea of making money from money are “treasury function” and “shadow banks.”

Other companies, however, have extended the treasury function to become a major, or even majority, profit center for the business. Companies such as GE have developed this function into an effective “shadow bank.”

The line separating investment and speculation is never bright and clear.

In Asia, no more than a third of a board’s meeting time was spent scrutinizing management actions and decisions; far longer was spent on strategic planning. Although this sounded sensible, it suggested that accountability and governance received less time. By contrast, in NA nearly two-thirds of board time was spent on scrutiny.

In the UK, a struggling company can choose to enter a phase of “pre-pack administration,” in which the business’s assets are sold after it has entered bankruptcy. The assets and operating models are sold to new owners, leaving the original business entity behind. Suppliers and other creditors may receive no more than a token payment, such as 10% of the value of their claims on the business. The new shareholders then have a debt-free business with all the assets of the old company, but with none of the liabilities. This method can be especially controversial, since it can allow the owners of the original business to sell the “pre-packaged” new entity and still be involved in the business.

Suppliers are among the last to receive compensation for their goods or services if a business goes bankrupt.

Unlike the senior executives, rank-and-file staff had been part inspired and part browbeaten into “showing faith in Enron” by investing personal pension funds in Enron shares. When the business was liquidated, employees not only lost their jobs, but also their pensions.

Employees can also be vulnerable due to the predations of the investment market. If a company is bought through private equity, employees can find themselves worse off if the business fails. A private-equity purchase is when a publicly traded company is bought by a “private-equity group,” often through a leveraged buy out, where the assets of the purchased company are used as security to borrow funds with which to finance the purchase. In so doing, the burden of risk is on the business (and its employees), not on the owners.

Private-equity ownership is typically structured in an asymmetric way. If things go well the private-equity owner gains, and if things go badly the subsidiary business loses.

When publicly traded soccer team Manchester United was purchased by Malcom Glazer in 2005, the transaction was effectively a private-equity deal. The Glazers followed standard practice, buying the publicly-listed company for $1.3B, then put the debts onto the balance sheet of the new Manchester United Ltd. Private-equity owners suggest that debt is an effective means of forcing employees to work efficiently to make a profit and meet interest payments. More plausibly, though, it is a way of transferring risk from the private-equity owner to a limited liability subsidiary. If Manchester United Ltd. were to enter financial trouble, the liability of the Glazers would be minimal due to the protection of “limited liability,” which limits the owners’ liability to the value of their investment, not the total debts of the business.

Remarkably, all these bosses enjoy favorable tax treatment in both the US and the UK. This became an important issue in the 2012 US presidential election, when Mitt Romney had to admit that his income tax rate, at 14%, was lower than that of average, working Americans.

In this case, business leaders worry that if they do not buy a rival, someone else will and perhaps create a bigger, more difficult competitor. At such times, there is much talk of synergies (the sum being worth more than the parts) but little mention of long-standing research, which suggests that 60% of all takeovers destroy shareholder values for the winning company. In other words, most takeover bids prove to be a disappointment.

Debt is the worst poverty.

Broadly speaking, it is wise to restrict borrowings to around 25-35% of the total long-term capital employed in the business. Any higher than 50% is regarded as carrying too high a risk level for a normal business. After all, while the directors need to aim for maximum profits, they are also responsible for the long-term health of the business, together with the welfare and security of staff, customers, and suppliers.

In a leveraged buy-out, a business is acquired by a company or a group of individuals using a large amount of borrowed money, most often from bank loans or bonds. Typically, the buy-out may be paid for with a ratio of around 90% debt to 10% equity, and the assets for the loans are those of the company being acquired. In other words, the theory is that the debt is later repaid by money raised from the acquired business. Leveraged buy-out investment companies are today known as private-equity companies.

In the 1980s, leverage buy-outs became notorious, as some acquirers used a borrowing ratio level of 100%, and the interest levels on debt repayment were so large that cash flows crashed and companies went bankrupt.

For new businesses, fast-growing companies, and in times of recession, cash is king. In other words, profits take a back seat, while cash flow becomes the critical factor. In accounting, profit is an abstract concept based on matching costs to the revenues generated within a period of trading. This sounds fine, but in practice it can lead to a huge cash shortfall.

In times of economic stability companies focus on profit; credit is cheap and readily available. Companies with weak cash flow operated by using supplier credit and overdrafts. But in times of recession, relying on credit is dangerous. Cash is king.

Many stockmarket analysts regard “return on equity” (ROE) as a vital measure of business success. ROE measures profit as a percentage of the shareholder’s equity on the balance sheet. This “equity” is comprised of share capital (capital raised from selling shares) and reserves (the company’s accumulated, retained profit).

Determine that the thing can and shall be done, and then we shall find the way.

Its first car, the Model A, was followed by several other models until the company struck gold with the Model T: “a motorcar for the multitude.”

Ford did not invent the automobile, but he did develop the first affordable car for middle-class Americans. Most people had never aspired to owning a car because they were seen as a luxury item for the wealthy, and most people would have been happier with “a faster horse.”

Yarn spinning was the first activity to become entirely mechanized.

It’s not the consumers’ job to know what they want.

But consumers are not concerned with reality; they make purchases based on perception. “Being first in the mind is everything in marketing. Being first into the marketplace is important only to the extent that it allows you to get into the mind first.”

The main thing to remember is, the main thing is the main thing.

The trend of outsourcing gathered momentum as companies realized they could cut their business back to the core and achieve leaner, more efficient, cost-effective operations.

Outsourcing is useful for lesser functions, but only as long as it works well — if it fails, it can adversely affect the core business.

Whenever companies outsource or acquire a separate business to take over a peripheral function, it is vital that management take steps to protect the “main thing.” Any secondary units or third parties must be fully aligned with the vision and values of the organization.

Companies pursing a focus strategy choose a particular niche market. They have to understand the dynamics of that market and the unique needs of customers within it, and then develop either low-cost or well-specified products or services. They also tend to serve their customers well, and so build strong brand loyalty. This makes their particular market segment less attractive to potential new entrants.

The notion of a low-cost airline was pioneered by Texas-based Southwest Airlines, and Ryanair followed with similar principles: use a single plane type to keep costs down, constantly review overheads, turn aircraft around as quickly as possible, and do not offer a loyalty plan.

Singapore Airlines by contrast, pursues a differentiation strategy. The brand’s major drivers are groundbreaking technology, innovation, quality, and excellent customer service. It maintains the youngest fleet of aircraft among major air carriers, and keeps to a stringent policy of replacing older aircraft with newer, better models. SIA has always been first to take delivery of new aircraft types.

Strategy is a concept with its roots in military history, when army generals planned campaigns of war. Today, is an overused and often misunderstood word in business theory. Put simply, strategy is the way a business gets from where it is to where it wants to be; it involves identifying the choices that must be made to overcome the obstacles that lie in the way. Often, choosing what not to do is as important as what to do.

If a company only thinks short-term about immediate issues with customers, wages, suppliers, and staff… it becomes outdated and creates no new opportunities for growth.

If a company only thinks long-term about new products, new markets, innovation and growth… it runs out of capital to fund investment.

Successful companies have to balance short-term and long-term thinking.

You can’t grow long-term if you can’t eat short-term. Anybody can manage short. Anybody can manage long. Balancing those two things is what management is.

Until the mid-20th century, many businesses were simple companies selling 1 product. However, from around 1950, large corporations emerged, which were divided into business units. It was difficult to manage these different units profitably, so management consultants began to develop frameworks to address the new complexity.

It is human nature to relax when things are going well, but history shows this is the very moment to be wary. Success breeds complacency. Complacency breeds failure. Only the paranoid survive.

Grove had fled the communist regime in Hungary and learned from a young age that paranoia could be a useful survival skill. Many years later, he transferred the skills of watching out for himself to monitoring the company, steering it safely through a series of threats.

It is not the strongest of the species that survive, nor the most intelligent, but the one most responsive to change.

The most serious mistakes are not made as a result of wrong answers. The truly dangerous thing is asking the wrong question.

It is extremely important to be able to listen to the people who bring you bad news.

Mental models refers to ingrained ways of thinking, which should be challenged so that individuals become aware of why they think in a particular way, and of the effect this has on behavior.

Productivity comes from challenged, empowered, rewarded teams of people.

To be an optimist: have a contingency plan for when all hell breaks loose.

The Japanese government’s contingency plans for earthquakes – from earthquake-resistant buildings to and early-warning system and rapid-response coordination — saved countless lives. Many companies, such as NEC, were able to restore operations within minutes thanks to their prepared emergency plans.

The profitability of an industry is shaped by 5 competitive forces:

  • The bargaining power of suppliers.
  • The bargaining power of buyers.
  • Rivalry among existing competitors.
  • The threat of new entrants.
  • The threat of substitute products or services.

The strongest competitive forces — which varies according to the industry — determines the overall profitability of the industry.

Primary value activities include inbound logistics, manufacturing, outbound logistics, marketing and sales, and after-sales services.

Secondary value activities include procurement, HR, technology, and infrastructure.

Through analysis of its value chain, a company can identify where to achieve cost or differentiation advantage on its products.

If you don’t know where you are, a map won’t help.

The whole idea was to motivate people to think about who they’re working, and how to improve it.

Effective leadership, clear vision, open communication, and strong values are necessary to deal with such complexity. Leaders need to set clear boundaries, then allow individuals and teams enough space to self-organize, self-regulate, and make their own decisions. Creativity and growth are enabled because employees have a higher level of responsibility and accountability for their work, as well as a bigger investment in the outcome.

Chaos bring uneasiness, but it also allows for creativity and growth.

Don’t find customers for your products, find products for your customers.

The marketing environment is the world beyond the confines of the organization — the world that its customers live in — and includes the sate of the economy, government regulations, social attitudes, current issues, competing companies, distribution infrastructure and partnerships, and technological changes.

Research is formalized curiosity. It is poking and prying with a purpose.

Marketing is not the art of finding clever ways to dispose of what you make. It is the art of creating genuine customer value.

The cash cow is typically a product that has reached maturity in its life cycle. Like its real-life counterpart, its initial cost has been paid off, it needs little maintenance, and it can be “milked” for the rest of its life.

  • Bonding: This is definitely my kind of brand.
  • Advantage: I can see how this brand fits me better than others.
  • Performance: How well does it compare with other brands?
  • Relevance: Does this brand fit my needs and budget?
  • Presence: I have noticed the brand.

Remember always that the recollection of quality remains long after the price is forgotten.

The customer can fire you by simply deciding to do business elsewhere.

Early to bed, early to rise. Work like hell and advertise.

Consumers no longer go shopping, they always are shopping.

Trying to predict the future is like driving with no lights looking out of the back window.

Predicting the performance of a product in the market relies on:

  • Qualitative analysis of behavior in the market.
  • Quantitative analysis of sales data.
  • Simulations of the effect of external factors on sales.

However, forecasting can never take unforeseen events into account.

Qualitative forecasting relies on the expertise of managerial staff and their acquired knowledge about market reactions.

Quantitative forecasting uses numerical data such as sales patterns.

The first includes ingredients seemed essential if the company is to win sales — product planning, pricing, branding, distribution, promotion, and so on.

The second list includes market forces, such as the behavior of consumers, retailers, competitors, government policy, and other external factors.

The marketing mix:

  • Product: Evaluate customer needs; establish where and how the product will be used; decide on branding and packaging, and how the product will differ from others in the market.
  • Place: Decide how the product will reach the market; the channels of distribution; methods of storage; handling and transportation; and how to emulate or differentiate from the competition.
  • Price: Set the price based on market norms; perceived value by the customer and how sensitive they are to price; and competitors.
  • Promotion: Look at when and where to reach the target market; the optimum medium (TV, radio, or press); and evaluate the techniques of competitors.

Waste is anything that adds to a company’s cost which is not valued by the customer, including:

  • overproduction
  • inventory
  • movement
  • waiting
  • transportation
  • overprocessing
  • defects

Lean producers try to eliminate these wastes to boost profits.

Dell specialized in selling custom-made computers; customers could design their own machine, which Dell assembled in response to a specific customer’s order. Dell held virtually zero stock and production was pulled through by the buyer. The main advantage of this JIT method was that Dell no longer had to pay the costs associated with storing stock.

Simple can be harder than complex: you have to work harder to get your thinking clean.

In 1992, Dell became the youngest-ever CEO of a Fortune 500 business at 27.

Big data was also used to make production decisions, including choosing director David Fincher.

When the world-famous performing arts center was opened in 1973, it was 10 years later, and had cost 14 times more than its original budget.

In an attempt to open the building to the public as soon as possible, the government ordered building work to commerce before the architect had finalized his drawings. The decision led to a series of problems. For example, the podium columns that were initially used proved to be too weak to support the roof. As a result, time and money were wasted replacing these columns.