With the proliferation of statistical data available online, mathematics is playing an increasing role in how companies are run. Risk management in insurance, finance and other industries has never been more complex – a dream come true for the actuarial scientist and the Wall Street quantitative analyst, but overwhelming for the majority of executives and entrepreneurs who wrestle with a shifting set of variables in business.
While no one is denying the value of smart analytics, the time seems right for a short math lesson in management for those who like to keep things simple. So here it is:
There are 5 points that add up to a successful business:
Someone has a dream
They realize they can’t do it alone
They bring on others to figure out how to do it
They build it & sell it
They grow and thrive
I realize there’s an immediate impulse to add things to this list, to make it more complex, but if you take a moment to really look at it, the list actually holds true. Whatever else is added is just a way of implementing one or more of these 5 points. Strategies, programs, policies, accounting practices etc. – the usual corporate agenda – are there to support these 5 points.
If business math is as simple as counting from 1 to 5, then why do so many companies struggle? A fair question, so let’s start with point # 1 – “Someone has a dream.”
What is a “dream”? It’s a passionate desire to create something that inspires and motivates. It’s a purpose worth devoting your time, energy and resources. It’s not a corporate mandate to produce so many widgets, or a generalized wish to start a retail store. It’s something that excites beyond the goal of making a buck because it aligns with who you are and what you want to achieve in life.
Is it your “dream” to start another rental car business, or are you setting out to change the way people meet their transportation needs? The difference is vast.
Moving on to # 2 – “They realize they can’t do it alone.”
Few people are open to sharing their dream. They worry about profit splitting, and fear that collaboration will dilute their own contribution. They would rather hire than partner, as the perceived ‘risk’ is too great. So they often end up soloing at the helm, instead of inviting the most creative to help build their dream, and share in the upside. The result can be high overhead costs, and management headaches, and a gradual slide from their original purpose.
# 3 – “They bring on others to figure out how to do it.”
If you build it, they will come. It’s true of any business that the clearer the game (your dream), the easier it is to attract people who want to play with you. But the game must include incentives, and be of a size and scope to motivate the best to join. Or they would rather start their own game, and do if you can’t keep their attention. A dynamic dream promises purposeful work and a challenge to be met by the very best. Short of that, it’s just a job for those you bring aboard, and they don’t stick around when the seas get rough.
Looking at # 4 – “They build it and sell it.”
Production is a true team effort - not an exercise in who’s the boss? Attracting the best minds generates the best work solutions, and morale is high because everyone takes real pride in the product. Placing team members in their most skillful positions, affirming their contribution, and promoting by merit, creates an upbeat corporate culture that translates into a positive market perception and strong sales.
And finally # 5 – “They grow and thrive.”
With an impassioned management and dedicated personnel, the company can’t help but grow. With no limits on contribution, no restrictions on airing issues of concern, and a generous sharing of the rewards of hard work, the dream remains alive and well.
If your company is having a tough time, if quotas aren’t being met, if shareholders are on your back for poor performance, if your start-up is faltering, just do the math – simple math – and watch things start to turn around.