The Tribune - Spectrum

Sunday, September 30, 2001

Simple rules of business management
Review by Chandra Mohan

The Power of Simplicity
by Jack Trout and Steve Rivkin. Tata McGraw Hill, Bombay. Pages 205. Rs 225

THE latest buzz-words, fancy pictograms and charts by the mile have virtually become standard fare of modern management literature. Trout is great and merciful, he goes in the reverse direction. He reduces management to basics and in easy-to-understand lingo. Average, run-of-the-mill fellow humans invariably constitute most organisations, not Newtons or Einsteins. Their understanding does not extend beyond simple and easy words. If such is the reality, is not Trout on the right track?

Management schools, consultants and gurus by thousands are the most recent phenomena of the management world; each with their hype and glossy literature; delivering their own pitch of fancy pearls of wisdom. But remember, all of them have only one goal, earning their Rolls-Royce. If fancy preachings were to guarantee success, the world would be chokeful of billionaires. Remember, do not trust anyone whom you do not understand.

Business goes by simple rules. Competitors are enemies; find out and curb their strengths; exploit their weaknesses. Success lies in differentiation from competitors; strategy is thinking of customers and managing money wisely. Prices will never be what you wish; price is whatever your buyers will pay and competition lets you charge.


Leadership is leading the charge, no fancy mission statements. It is all simple ideas; no long-term plans. It is picking right people and trusting them with what they do best; not fancy organisation charts. It is to know where you are going and enthusing your team with your dream.

Business success is people, people and people — trained, skilled and motivated. People who work smart. People who act and do. People who never stop learning.

* * *

Extreme Management
by Mark Stevens. Harper Collins, New York. Pages 184. Rs 195.

Harward’s Advanced Management Programme (AMP) is for aspirants to CEO Chief Executive Officers positions is the most sought-after course in business education across the world. What makes AMP so outstanding in grooming future CEOs is a fascinating insight which Stevens provides.

AMP’s distinguishing feature is its teaching based on case studies stemming from research, interaction and actual involvement of faculty in diverse businesses around the world. Their experience has been unique, built step by step through new exploration, trial and error.

Its very first step is conversion of a specialist into a manager of business in totality. Without such conversion, failure at higher levels is inevitable. The change is also the most difficult; it is not easy to shed the comfort of the familiar turf and decades of expertise. It is also a shift from looking at leaves, to a look at the forest itself; recognising symptoms instead of curing disease; understanding the game of numbers and money; understanding customer, market and environment; decision-making in ambiguity and on intuitive judgment; depending upon need, creating a new mission; infusing a new spirit and meaning into large groups of varied talent and diverse interest; and, leading action into delivery;

A new and interesting discovery for me was the du-point CEO tool for quick analyses of enterprise health:

Profit into sales into assets, assets shareholders equity is equal to return on equity.

On the face of it, it appears to be a very ordinary and innocuous equation. The CEO eyes however lend it altogether a different quality; it spells survival or death. Looked at under the AMP managerial lens, the same equation becomes: sales margin into turnover of assets into leverage is equal to return on equity.

Low margins coupled with low asset-turnover is a sure recipe for death, in the same manner as low margins coupled with high leverage. Increasing asset-turnover must be the first priority. A look in this fashion could lead to radical paths; the true CEO role. Stevens elaborates it with plenty of examples.

Another problem which the CEOs invariably face is stagnation in market share, turnover and profits. It is like what we are passing through. Dominant thought in every CEO’s mind is how to stalemate competition. Head on war has failed. Growth in such a situation can only come through changing the equation. Success will only come through a new strategy, and then only if the entire team embraces it: change is equal to dissatisfaction into business model into process.

The toughest issue is men. How to make thousands in the team not only embrace the new strategy, but enthuse them to propel it. Managers are the toughest nut to crack in this new game. That the new strategy also holds no guarantee compounds the difficulty.

Success could place you on the pedestal of Jack Welch, Jamshed Irani or Verghese Kurien. But the list of fallen warriors also stretches a mile.

Reading in today’s regime of brutal competition could even breathe new life into you.