[From iSource Business, July 2001] The Internet's juggernaut in the B2B sector within the last few years allowed a range of new technologies and untested business models to surface. From wiz-bang, just-because-we-can ideas to concepts formed on paper napkins, traditional business metrics were brushed aside, replaced by more dubious value measurements. What was once a well-honed path starting in research and development and ending in the sales department became a maze of unfounded expectations, wrapped inside unwritten rules and surrounded by hype. To some, the new game's objective was about recording meteoric growth and securing brand mindshare, not about building a sustainable business model. The Internet mantra that so many dot-coms adopted was, Build it and they will come worry about the profits later.
As once-soaring stock values of Internet darlings crashed down and private equity markets tightened for pre-revenue companies, it was only a matter of time before reality, like the proverbial hare, caught up to the hype. Thankfully, traditional business fundamentals and metrics real revenues, real profits, real prospects for growth are back in vogue, sidelining the hype du jour and musings about the next big thing. And as the markets take a renewed interest in profit potential, so too are they peering into the dynamics at the heart of value creation: management teams.
The fundamental questions about management have been around for decades: Who makes up management? What roles will each executive play? How do they work together? Is there a common vision and focus? Are they team players or individual stars?
Procuring the Right Management Team
Creating the right management team starts by clearly articulating the company's vision. If, as CEO, you're not clear about what you're building and where you're heading, management team members will be at a greater loss. Obvious as this may seem, it's not uncommon to see management misunderstandings blossom into full-blown confusion and company upheavals. Especially in emerging companies, the inclination is to try anything, go anywhere and get the ball rolling, even if the efforts are not strategic or profitable. For sustained success, focus is critical.
Once the vision has been set, it's time to fill out the team. Over the years, I've weighed character more than any specific skill set in the hiring equation. That doesn't mean I don't seek out the most talented professionals in a particular field. Talent is indeed important, but without character, work ethic, integrity and the intrinsic knowledge of what playing on a team means, even the most talented executive is bound to implode. Cutting corners on character means trouble down the road.
Fundamental to any management team is the sense of trust. As CEO, I have to trust that my fellow executives will play their positions and backup others when needed. Like a utility player in baseball, executives need to understand all roles and be ready to engage at any level, any time. Each needs to embrace the common vision, execute to a game plan and anticipate unforeseen needs. An effective management team understands how to work together as a single unit.
Empowerment is also key for a management team to be successful. To win, management can't be shackled to preconceived notions of how a job must be performed. Executives must be thought-leaders, applying the raw intelligence, experience and expertise necessary to meet specific objectives. They must be free to act, to take responsibility for success and failure, and to speak up without any fear of retribution or reprisals. Leave the politics to the politicians. Accomplishing nothing is the fate of those who fail to empower.
The desire to collaborate is common among seasoned executives. Individuals who seek out others to achieve a specific goal or solve a problem are the ones best suited to management. Mavericks who are set in their ways or disrespectful to others are to be avoided. Within managements ranks, collaboration not competition is what makes winning possible. Within the industry, the term c-commerce [collaborative commerce] has entered the lexicon. We view collaboration between companies as the next phase in e-business. I view collaboration between management as a core building block for a company.
Though some chief executives shy away from wanting a management team to have a shared sense of values for fear that homogeneity will stifle creativity, I believe that common purpose and values are essential to building an effective management team. Management must speak the same language. At Procuri, several executives coach Little League baseball teams, work at their churches and volunteer for non-profit organizations within their communities. Dedication to and respect for family is a sign of stability, balance and character, not a sign of weakness. A management team that intuitively understands each others' values leaves little room for resentment to creep in.
Building Your Own Value
There are many different ways markets measure the success of a company: return on equity, market capitalization, return on assets and price to earnings ratio, among many others. Depending on the type of business, different scorecards apply. Common to each, however, is the concept of value. A management team that understands how to increase the value of its company is ahead of the game. The common, collaborative drive to build real, tangible value for key stakeholders is what a management team should share.
As we look back on the past year's New Economy follies, it's refreshing to see a renewed appreciation for how a management team impacts value creation. Indeed, ideas matter. But without a solid management team to take them from the drawing board to reality, long term prospects for success are dim. The old adage survives: invest in the management team.
