In Business, it is always wise to take balanced decision. Resources should be used cautiously to optimize the profit.
--BY MAHENDRA SHRESTHA
There are lots of theories in management by veteran management gurus from Peter Ducker and Tom Peters to modern management evangelists like Jim Collins and Simon Sinek offering us the best of the perspectives of management backed up with research conducted and being relevant at various global economic ecosystems. Some of them are outdated whereas some are still relevant for current practices of management.
When we talk about any kind of management, we are basically talking about the management of resources for best of the productivity and efficiency to create values that can be sustained. Resources mean human capital, infrastructure, system, machines, properties and cash, and many more that any organisation requires to generate values. By its nature, it is always limited and scarce for any scale of business.
With the best of management practices, it would get compounded and with the worst or mediocrity, it evaporates. In any business ecosystem we have observed, firms are after the resources for their prosperity either by stealing from competition or by creating new ones. Each tendency is natural in any fair competitive or monopolistic situation as long as you have a growth mindset.
The beauty of the resources stays at the dynamic nature of its form because it has to be always at the flow and velocity of its movement depending upon the scale of the business and its ecosystem. Therefore, we need a crafty management approach to save it and optimise it. An organisation, at times, has to pass through various kinds of turbulences like recession and economic turmoil as well as safe as heavens that bring hyper-growth.
Now the challenge for management practitioners, whether they are at the helm or at the bottom, is either to save the resources or optimise the resources or do both.
As there are some who steal the resources for their own gain, organisations should have the practices that would save the resources so that they can save it from over leverage, wrong negotiations, and deals that would contract resources. It may come at different appearances like higher interest rate in debt, negative public image, higher rates of procurement, losses in takeover deals, overspending on properties, machines, unnecessary R&D, including wrong recruitment, and overspending on development costs and carefree promotion. I’m not in favour of creating a great wall to save the organisation's resources from intruders or creating a never-ending bureaucracy. However, I am strongly recommending incubating management practices that could save our resources to the best of our abilities as we all know resources are limited and scarce.
I am very fascinated with enthusiastic and exuberant managers, serial entrepreneurs and startup founders for their hyper growth approach. There is nothing wrong about it but one thing that they have to keep in mind is that they can’t reach anywhere when they run out of fuel.
At the flip of the coin, all the management responsibilities are towards resources optimization so that the best values can be created from the available resources. With this management practises, company confects growth in sales, profit, improvement in competition pole and all other prosperities.
It may appear in different forms like: market share improvement, bottom line and top line improvement, productivity and efficiency in production cost, lower interest rate in debt, positive PR management and image enhancing creative promotion. Managers are fascinated with this adrenaline rush because the enjoyment of positive results and enjoyment of couching the resources offers unique kick.
Many entrepreneurs are habitual with taking lots of risk by over optimising resources and they end up being flat, vaporising resources. I am not at all to a conservative approach to various kind of growth approaches bubbled by startsup and high-spirited entrepreneurs. But they also need to check back their resources at times to understand how much they need to leverage.
Saving resources are defensive approach whereas optimizing resources are offensive approach. Organisation do not have a choice to remain at one approach because they have to practise both approaches to create values and maintain their treasury.
Let’s take an example of competitive sports like football where we see the uses of both approaches. You take any popular league in the world, top four teams that end the season are neither best defensive team or best offensive team. They have balance of both defensive and offensive approach. Those top four teams are best user of their resources as per the game and as per the situation that rolls out week in and week out. They are completely defensive in the first half and suddenly they are offensive to score the points and finally win the game.
Saving and optimising resources also depends upon the company’s shared values, culture and leadership style. A company might have values that will automatically put management practices in a saving approach in everything they do or they might also have the culture of hyper-growth that they perpetuate that would lead them to an optimising approach in everything they do.
In business, every body works in a matrix. Nobody knows the perfect balance of safety and optimisation. However, if we keep the spirit of harnessing the management practices in anything we do, in any scale of organisation of any type, I am assured those resources will be better optimised and saved for prosperity.
(The author can be reached at [email protected] for comments)