Leadership

What makes a good manager – Part 2

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What Makes a Good Manager? By Frank of Business Rhythm

In a previous podcast, we discussed about what makes a good management, where we cited operational management and resource allocation as two key elements of good management. In this short article, we zoom in on the key qualities of an individual that makes him or her a good manager. We borrow from the observations and experiences of Warren Buffett and Charlie Munger, two great investors of our time, in judging the quality of managers. Spotting a good manager of a company is important if you are an investor or owner of a company. A group of good managers comprise high quality management that is a critical element to the success of a company.

The primary quality is the interest and habit of continuous learning. The world is complex. The more we know about ourselves and the environment, the more effective we are in shaping the world around us. The world also changes, and it is important to know how the world is changing in ways that affect our lives and organizations. Managers who constantly learn and adopt to new things have an edge over those who stops learning after leaving schools.

Second is resource allocation. We provided examples in podcast no. 34 about choosing the most profitable clients or products. But in addition to this, resource allocation is also about effective investment of retained earnings of a company by channeling the excess funds to the most profitable investments. In practical terms, resource allocation also means choosing the right people to hire, promote, or assign to specific tasks. Successful managers are very good at channeling all types of resources to where they count.

The third quality of a good manager is being a Level 5 leader. Introduced by leadership author Jim Collins, level 5 leadership means answering the question of whether the person prioritizes the company or the self? Level 5 leaders puts the health of the company and other people as the primary goal for leadership and management. Conversely, lower quality managers put the self above all else. Level 5 leaders are uncommon, but the outcome of the two opposing orientation can be staggering.

The last quality is track record. We should not discount the basic value of track record. Managers who have succeeded in managing complex organizations and projects with consistency are poised to do well in future projects. Without the outcome of management in practice, it will be difficult to gauge the effectiveness of a manager. A manager can try to impress other people about his knowledge of management, but unless he applied them successfully in an organization, no one would know for sure whether he can pull it off in the future.

These four key elements will be very useful to any investor or business owner in their goal to maximize the value of the company they own.

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Podcast #38: The key to executing projects well

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From Business Rhythm with Frank & Jamie – “A great idea also needs passionate and committed leaders who will seriously pursue, sustain, and scale it up. Further, the leader should be able to motivate his or her team and help overcome obstacles and challenges along the way.”

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Podcast # 36: Organizing and Leading for Innovation

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From Business Rhythm with Frank & Jamie – “Innovation serves as a powerful means to drive business growth in today’s challenging economic environment and information driven marketplace. Companies must not only figure out what their current sources of competitive edge and examine their business strategies, but they must also find new ways to innovate and revamp their business models to sustain competitive advantage. In today’s podcast, we will discuss how business executives can organize and lead for innovation. “

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Podcast # 35: CEO in Battlefield from Business Rhythm with Frank & Jamie

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From Business Rhythm with Frank & Jamie – “The conventional image of a CEO is someone in a formal suit, sharp, eloquent, and decisive. He is either feared or respected. Everything looks calm and in control within the CEO’s immediate vicinity. Little do people realize that a CEO is often engaged in battles – such as business disruption and survival, leading people towards change or a new vision, dealing with internal conflicts, and struggle with government and regulation.”

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Podcast # 34: What is Good Management?

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From Business Rhythm with Frank & Jamie – “Let’s talk about operational management. A critical aspect of operational management is matching supply with market demand. If you have too much capacity, you have very expensive idle resources that will weigh in to the profits you generate from a few clients. It is often tempting to build so much capacity in a false hope that the company can generate demand very quickly. In reality, it is more difficult to grow a business in a short period of time than it is to add capacity. Needless to say, the traditional aspects of operational management such as ensuring quality of products and services and keeping the motivations and productivity of people are equally important in managing a business.”

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Fresh Pick of the Day, October 26, 2016: “The Best-Performing CEOs in the World”

From Harvard Business Review Online – “There are so many reasons for leaders to focus on the short term: slow growth, shareholder activism, political turmoil—to name just a few. Yet some CEOs still manage to train their sights on the long term and deliver strong performance over many years. Our 2016 list of top performers reveals who they are.”

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Fresh Pick of the Day, September 29, 2016: “The Right Way to Take Risks — in Business and Life”

From Knowledge@Wharton – “What I tried to do in my book is describe these tenets of risk-taking that apply across business and investing in life. There are four tenets: right-sizing the risk; right-timing; relying on knowledge and experience; and remaining skeptical of promises and projections. Those apply to investing tremendously. I think all the time about the right size of the positions that we take in companies; whether it’s the right time, because timing of when you buy or sell is critically important. How much we know about the investment, and then being skeptical about what we hear from Wall Street or what we might hear from the companies. But if you think about how we apply those in our life, take just some simple examples.

Right-sizing: If you’re going to buy a house, you want to make sure that you’ve got a house that’s the right size, not too big, not too small. Otherwise, it will be a mistake. It’s getting a mortgage that’s of a size you can handle; the size of your investment in that property is really important. So that’s something that everybody deals with involving size, whether you’re buying a house or you’re renting a place. There are four tenets: right-sizing the risk; right-timing; relying on knowledge and experience; and remaining skeptical of promises and projections.

Right-timing: You definitely don’t want to open an ice cream shop in November, if you have a choice. If you’re living in the Northeast, or you’re living in Philadelphia, you would rather open it in April or May. Timing affects many decisions, no matter what they are. When you’re getting married, when you’re getting engaged, when you’re having children, timing is just a factor. Sometimes it’s more important or less, but it’s definitely a risk factor.

Relying on knowledge and experience: You don’t want to, for example, take on an intern at your show if that person has only worked in an art gallery, and they say, ‘Oh, but I’m really, really interested in broadcasting and radio’ but they’ve shown no interest before. Is that something you should know about or not? I would say yes, because it’s a risk that you hire somebody who isn’t capable and doesn’t show any aptitude. So you’re relying on knowledge and experience.

Remaining skeptical: If you’ve got a buddy and you’re out to dinner with him, and he says, ‘I’ve got a great new idea for a restaurant and bar that I would like to open downtown, and I would like you to invest this many thousands of dollars.’ If you don’t ask a few questions about that, it would be pretty illogical. You better not be too credulous and say, ‘Hey, Jason’s a great guy, I really think that he’ll be a great bar owner.’ That would be silly — and it would be a lot of risk. That’s exposure to danger and uncertainty; that’s what risk is. You do need to be exposed to uncertainty to make any money or to make the right decision, but if you don’t think through why it might go wrong, you would be pretty gullible.”

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Fresh Pick of the Day, Aug 12. 2016: “Kathryn Shaw – Three Things All Good Bosses Do”

From Stanford University – “A good boss can make a big difference. But what makes a good boss? Stanford Graduate School of Business Professor of Economics Kathryn Shaw found effective managers use similar strategies and have a lasting positive impact on their employee’s careers. Here’s how they do it.”

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