Wow, what a week this has been. We had found out that our bid on a team was successful, and we too have now been taken over. I certainly have not panned out as I foresaw at the start of the semester. These weeks have been much the same, with very demoralizing results which we did not foresee. Our profit is now into the negatives for the first time, and is something that will require urgent attention, something our new ‘mother company’ would probably agree with.
Highlighting that our conservative and often misinformed decisions (due to a lack of knowledge about MikesBikes, at least from myself) saw a mediocre run of results and we decided something was going to change. We decided to drastically increase expenditure to increase revenue in the hope of taking us to the side where the grass was greener.
I know the readings said the business must be looked at granularly in order to expose areas of promise and potential, but in doing this we neglected the interrelationship that existed within the organisation as a whole – once again lacking ‘conceptual skill’ (Baghai, Smit, & Viguerie, 2009; Katz, 1955). We failed to entirely realise in order to meet the planned demand (which in itself was somewhat of a gamble, albeit a successful gamble), we did not produce enough bikes to actually cover these costs, with around 30,000 lost sales. It could also be that we were been granular in the wrong kind of way – breaking the company down into departments, possibly to validate our roles, rather than seeing it as being made up of business units.
Clearly there is a balance or compromise to be met between conceptual skills and looking at a business granularly. Although it isn’t abundantly clear to me what this would look like in MikesBikes considering we are a ‘start up,’ perhaps we could look at the business in terms of product lines or business units. Perhaps this way our efforts could be focused and more effectively assess potential for growth. In a larger corporation, I suppose it would mean moving a centralized power structure to one comprised of a wide horizontal hierarchy of executives.
Anyway, what I am going to address these problems for next week? On a superficial level, make sure our revenue exceeds any extra expenditure that we make. On a more fundamental level, I will try look at everything in perspective of product lines, keep things focused enough to provide ample assessment of opportunities and challenges of growth, but also wide enough to associate all conventional departments with it as well, showing some degree of conceptual skill (Katz, 1955). For example, if I and my team want to increase sales for commuter bikes, we must look at how much factory capacity we have, how much spare cash we have for an increasing to marketing budget, and how many workers we have. Once this has been sorted, it must then be negotiated with the rest of the business unit’s. These things may seem basic but with so much pressure, often gets overlooked.
Let’s hope my team can turn this around next rollover!
Baghai, M., Smit, S., & Viguerie, P. (2009). Is your growth strategy flying blind? Harvard Business Review, 87(5), 86—96.
Katz, R. L. (1955). Skills of an effective administrator. Harvard Business Review, 33(1), 33--42.