Managers Must Manage
by CRP Partner Gene Baldwin
as published in Franchise Times
Do you ever look through the old books gathering dust on the bookshelf in your office? That’s what I did a couple of weeks ago and found the following two books right next to each other, Bankruptcy 1995 and The Roaring 2000s: Building Wealth and Lifestyle You Desire in the Greatest Boom In History. I took them both to the used book store. However, just down the shelf from these two unreliable prophecies was Managing by Harold Geneen.
For those who do not remember, or have never heard of, Hal Geneen, let me fill you in. Geneen was hired as CEO of International Telephone & Telegraph in 1960. He served in that position until 1977. During that 17 year period, he guided ITT from sales of $750 million to over $16 billion and net earnings grew from $29 million to $560 million – a compounded annual growth rate of more than 20%. ITT grew net earnings at a rate of at least 11% annually in 15 of 17 years. During his tenure, ITT acquired and assimilated more than 350 businesses into 250 profit centers. When he retired in 1977, ITT was the ninth largest industrial company in America.
Geneen was arguably one of the toughest managers in modern business. He may have been the originator of the management philosophy termed “Management by Objectives”. His objective was to grow net earnings by 15% per year – NO MATTER WHAT. Geneen had no magic theory of management to achieve this outstanding success other than to set his goal for the year and then work as hard as he could to achieve that goal. To Geneen, performance was everything. At the end of the day, Geneen reasoned, no one will remember anything about you except whether or not you were successful in achieving your desired result. No excuses, no whining, no blaming the weather, economic conditions or competition. At ITT, the annual business plan was not a target to shoot for, but a solemn commitment on the part of the business unit manager to achieve the goal.
A person was not a manager unless he hit the target. Managers manage their business units and achieved their goals. They are not controlled by outside forces. To Geneen, managing means, “To get something done, to accomplish something you or your team of managers, set out to do, which presumably is worthy of your effort”. The mantra of the organization was “Managers Must Manage”. Managers must achieve their goals and must means MUST. There was no limit to the effort expended by either Geneen or his management team. If results were not going well, Geneen would muster all the energy, intellect and common sense at his disposal to make get back on track. In Geneen’s world, the secret of how to succeed in business or life was that there is no secret. No secret at all. No formula. No theory. You have to figure out everything yourself. He had no magic formulas other than hard work and desire.
Geneen maintained that you read a book from front to back and manage a business from back to front. You set your goal and then work backwards through all steps necessary to achieve that objective. To achieve your goals you must be in control of your operations. If something goes wrong your probe until you find the cause and if one solution does not work you try another, and another and another. Try until you find the answer. According to Geneen, managing does not mean you are perfect and able to solve every problem and reach every goal. You must be good enough to win most of the time. There will be times you cannot win. If you cannot win in the environment you are in after you have exhausted all options, then change the environment. That is management. You do not go on accepting inadequate results and explaining them away.
This all sounds pretty tough. Geneen believed that most companies and business units do not make their budgets because no one makes them. He also thought very few people have the resolve and kind of high standards of performance to put aside a lot of pleasurable aspects of life and become a manager who MUST succeed.
In today’s world I think we sometimes spend too much time affirming feelings and building self esteem and too little time demanding the whole organization (including ourselves) achieve the company’s goals. Maybe the pendulum should swing the other way a little. As Geneen puts it, “Performance is your reality. Forget everything else. The good manager is defined as one who turns in the performance. Only performance will give you the freedom to grow”.
Something to think about as you put the finishing touches on next year’s business plan.
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