One of my many passions in life is a love for strategic management.
Whether I’m teaching, reading or consulting businesses outside of nursing I find that far too many discount the practice and implementation of strategic management in their attempts to grow, sustain and protect their business. Strategic management can include such things as tactics, manoeuvres, general approaches or strategies to expose weaknesses of others and capitalize on strengths of your own. Business is not about lying, cheating or stealing as the only way to get ahead in business. My personal belief is how you do business impacts directly the success of a business. In most applications strategic management comes down to the ability of individuals to demonstrate exceptional leadership and cunning execution.
I’ve been fortunate enough in my young life to listen, learn and be challenged by a few key individuals who have made a lasting impression not only on my investing strategies and approach, but in life as well. During my third year of business school one of my business Profs pulled me aside and handed me a small book titled The Prince. I was instructed to read the book that night, return the next day and present with my thoughts on the significance it might have to the entire class; Strategic Management. I hadn’t even heard the name of the author before: Niccolo Machiavelli.
For anyone who hasn’t read The Prince, Machiavelli was an Italian diplomat during the Italian Renaissance and the book was written in its first form in 1513. The main purpose of the text was to illustrate the proper behaviour, thoughts and manner in which a prince should rule his kingdom. It discusses his thoughts on the conduct of military, reputation, compassion, rule, honour, deception and fortune. Machiavelli was a keen observer of human behaviour, politics and power. Although at the time his work was dismissed by his peers, the book went on to found the study of modern political science in Western civilization. Even when some of his thoughts are considered unethical by today’s standards many of the concepts can be applied with success to business practices today.
Management is Key:
As I’ve written in prior posts, when you pay attention to employees good things happen for a company. Any leader (business or political) must be keenly aware of all those beneath him/her during their time in power. The morale, spirits and confidence of individuals working for you is directly correlated to the productivity they generate for a business. What you never want is a rebellion on your hands (union, shareholders, junior management) due to dissatisfaction with how an operation is running. Any leader needs to learn quickly to have their fingers on the pulse of their business. Not only is it important for a leader’s security to remain at the top, but for the continued solid foundation of all operations near the bottom.
When you talk the talk and then walk the walk you quickly establish yourself as both competent and likely difficult to challenge from a position of strength. The simplest definition of management that I can give is: achieving results through others. When you are able to delegate, earn the respect of those working for/with you and possess a control or oversight over all activities then you make it very difficult for someone else to undermine your authority because of the created loyalty that exists through the ranks. For any who are not able to lead on their own they will passionately follow others in order to share in success.
Two Rights of Social Psychology:
You might wonder how psychology and business go hand in hand (my dual degree), but always remember that people are as predictable outside of work as they are at work. There are two social constructs that you should try to remember when engaging an adversary whether personal or business:
1. The Right to be Liked
2. The Right to be Right
Part of being social creatures is the understanding of how we behave and become motivated to do the things we do. Even on an unconscious level when placed in a group of individuals we seek to be liked and to be right. How often have you noticed people going out of their way to gain acceptance into a specific social group or argue until their blue in the face that their side of an argument is sound regardless of the facts staring themselves in the face? When marketing in a business try to focus on these concepts for main selling points by appealing to the emotions, security and acceptance of consumers to products.
Never Reveal Weakness:
You never show weakness or reveal your position before is ever necessary. Although others may come to a leader for guidance, opinions or their own initiative for a project the ultimate decision is left in the hands of those in a leadership role. You should always listen to what is being said or suggested by those beneath you, but never reveal your true feelings on the subject.
1. Never hate your enemies; it affects your judgement
2. Never let anyone know what you’re thinking
Number two is likely one of the most significant strategic advantages you can ever have in business. When you reveal to others your true intentions, thoughts or opinions on a subject you immediately weaken your position and put into danger the leverage you may have for an opportunity. As soon as someone takes note of your stance you’ve become predictable and your position of power decreases immediately. Business at times forces you to become a good poker game. You don’t lie, cheat or steal in poker but taking advantage of position, weakness and predictability goes a long way in determining your success. The best poker players understand that an element of their game includes chance or luck, but the majority of their success comes from the ability to undermine the position of their opponents and place them in situations where the stakes are in their own favour. Even if you know someone is gunning for you, you provide them the time to prepare to undo you. Once you step from a position of strength towards an action based on emotions you become exposed and predictable in your future behaviour.
One of Machiavelli’s core beliefs dealt directly with competition and that anyone who leads must always watch their back. Many leaders over history have developed an insatiable fixation with scepticism and paranoia to others challenging their authority and plotting their demise. Competing businesses, rising managers and significant shareholders who ascend to power must maintain their position of influence through certain means. Anticipation of the actions of those around you is pivotal in order to work towards disarming them. The tragic mistake many take in response to a challenge is that their actions aren’t simple, subtle or discreet and reveal their position much too early due to exposed emotions. Machiavelli viewed individuals who aspire for power as frequently gracious and trustworthy. They would befriend those with authority in order to position themselves for the best possible seat of influence. His solution, rather than paranoia, was to recognize the intents of others around you in order to prevent unpleasant surprises. Keep your friends close and your enemies closer.
Never Stand Alone:
A good prince must possess the wisdom to recognize wisdom. Machiavelli wrote that for those who take advice you have to know how to evaluate advice. As a CEO you are ultimately responsible for the operations of your business. You may have VP’s, department heads or key managers reporting to you on the progress of operations, but a CEO won’t necessarily count strictly on what they say or do. They are each held to a specific standard that is demonstrated in the CEO’s leadership. If you were to hire a consultant to advice you on a business decision, would you not look for the top expert in their specific field of knowledge?
A prince, or leader, needs to know when to listen to advice from the right people and when to ignore advice from the wrong people. Isolation can work against you when you find yourself out of touch with your forces (employees) and subject to limited information on those plotting against you (competition). You want to be ready for whatever comes at you. This is where my often used term of business instincts comes into play. Your gut at times can be the only refined business skill you may have in a situation where you’re uncertain of what outcome is best. The best leader will only venture into a situation where they control the environment and conditions are favourable. Your intent is to leave nothing to chance; so planning becomes paramount.
Fall of an Empire:
When you build something from the ground up, risk your own money and pour blood, sweat and tears into activities with no guarantee of absolute success you have a greater appreciation for what you’ve accomplished. Machiavelli felt that princes who demonstrate these skills over a period of time and become king are held in a higher regard by their people than those who simply take a kingdom over in an aggressive confrontation. When a CEO takes over a rival company in a hostile merger and the former management constructed the firm from the ground up the challenges to the new CEO can at times seem immense. Anything left from the old leadership needs to be removed completely in order to protect oneself from upheaval and revolt from employees loyal to the old state.
Machiavelli felt that any and all servants loyal to past leaders should be removed and replaced with their own regardless of their worth or resources. In M&A activities we can see this same mentality with quality managers from the old dispelled to make way for moderate managers of the new. No CEO from the lesser should gain control of the greater. If a predecessor was good, you must be great. If not, over time, the castle begins to crumble as people take less and less interest in sustaining the new regime.