Tag Archives: Management Team

Competition

Competition within business organizations

Milo Competes at Lacrosse

Competition. Where does it fit in your company culture?

It might be helpful to step back a couple paces and consider where competition exists within organizations in a healthy, thriving American culture? How about on a sports team? Within the military? In school? Within a family? In a government organization?  A hospital? A medical research team?

Most reasonable people seem to conclude that competition is a good thing under certain circumstances and a bad thing under others. But the general concept is contentious, more so than in the past. And I have witnessed the swing of the pendulum over my lifetime, with an increasing number of people finding an increasing number of circumstances under which they believe competition is not good.

I began my business career with GE, and I was reminded of the competitiveness of that environment recently when I listened to a Freakonomics podcast in which Michael Dubner interviewed Jack Welch, retired CEO of GE. The following is a verbatim, unedited, transcript of one of the points that Welch made during that interview.

Look, differentiation is part of my whole belief in management. And treating everybody the same is ludicrous. And I don’t buy it. I don’t buy what people write about it. It’s not cruel and Darwinian and things like that, that people like to call it. A baseball team publishes every day the batting averages. And you don’t see the .180 hitter getting all the money, or all the raises. Now that’s the purest form. Athletics is the purest form of differentiation, because it’s public. Everybody understands it, the fans understand it, the people understand it. Big business is more subtle and it’s more qualitative. So the precision isn’t there to differentiate. So judgment’s important. But you don’t win with a gang of mediocre players in business or in baseball.

Welch believed and clearly still believes in “radical candor” when it comes to evaluating individual performance, and in rewarding the best performers while helping the worst performers find a different career.

Where do you stand on competition within a business organization? Is your position significantly different when it comes to non-business organizations or communities? Why not bring this up for discussion the next time you socialize with some of your business peers? Better yet, share your thoughts below.

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By the Numbers

I’m going to go out on a limb. I know what talent is lacking in more of your employees than any other. It’s an ability to understand and work with numbers. Expense budgeting, price analyses, sales forecasting, reviewing a profit and loss statement or a product line margin analysis, understanding cash flow or a balance sheet, comprehending both the value and the burden of debt.

Whatever your business, I’m sure you have some really good employees,who do their jobs really well, whether they are dealing with operations or marketing or whatever. You’re able to get away with financial incompetence in most positions in your company. But if your management team lack facility with the numbers, we probably have a problem, Houston. 

If your succession plan or exit strategy relies on managers who are not able to read a balance sheet; who do not understand the long term impact of pricing to achieve volume; who do not appreciate the value of debt as a tool, or the suffocating crush of too much debt – if the keys to your successful retirement are in the hands of such staff, then both you and your business are in a bit of trouble.

If you are guilty of tolerating financial ineptitude, you owe it to yourself, your business, and your employees to turn it around. You may not have the capacity to personally teach a key employee how to deal with the numbers, but it really is your job to find some thing or some body that can.