Archive for January, 2016

Business models cannot materialize without appreciating the concepts of facilities management which is continuous improvement through constant adaptation and empowerment. Facilities management and business models are two different terms; however, similar, simply because these two refer to the entirety of the company and how will it be successful. It was once discussed and made realized to us by Mr. Louie San Juan that “facilities management is everything and pertains to the company itself!” Likewise, the business model of the organization becomes the guideline in distinguishing the company in its own unique way.

 

First, let us relate the business model to facilities management. The business model serves as the guiding principle of how an organization should operate. As Joan Magretta (2002) noted in her article entitled Why Business Models Matter:

“A business model’s great strength as a planning tool is that it focuses attention on how all the elements of the system fit into a working whole.”

As reflected in the line “how all the elements of the system fit into a working whole”, business models observe the full picture of the business. In relation to facilities management, business models similarly look into all aspects of the company: the products/services it provides, its available resources, the market and consumers, the industry and the competition, etc.

 

Second, business models of the companies create differentiation – competitive advantage, from which the company is identified for its “trademark” of doing things. As Chris Zook and James Allen (2011) conversed in their article entitled The Great Repeatable Business Model:

“The power of repeatable model lies in the way it turns the sources of differentiation into routines, behaviours, and activity systems that everyone in the organization can understand and follow…”

The statement above show how repeatable business model works. It is about focusing on the company’s competitive advantage and its continuous improvement. Making it materialize for the organization, means adapting and incorporating it to the culture of the company.

 

Lastly, an effective business model is not created and implemented by CEOs alone; rather, it is realized and achieved through the collective effort of all the members in an organization. As Chris Zook and James Allen (2011) discussed in their article entitled The Great Repeatable Business Model:

“When people in an organization deeply understand the sources of its differentiation, they move in the same direction quickly and effectively, learning and improving the business model as they go.”

Human resource is one of the most important factors in running a business. Without the appropriate talent, the CEOs’ 3 boxes as discussed by Vijay Govindarajan and Chris Temble in the article entitled The CEO’s Role in Business Model Reinvention (“Manage the present, selectively forget the past, create the future”) will not materialize. Hence, by empowering your employees, letting them grow by knowing what their purpose and contribution to the organization gives them a sense of importance to what they are doing for themselves and the company. This will eventually result to the success of the firm.

 

To sum it up, business models cannot materialize without appreciating the concepts of facilities management which is continuous improvement through constant adaptation and empowerment. This is through: (1) looking into all aspects of the company and making it work; (2) realizing company’s differentiation by integrating it to the philosophy of the company; and (3) empowering the people which comprises the organization. No matter how good the business model nor the CEO of the firm, it will not materialize, if employees do not appreciate it and implementation is not observed accordingly. Likewise, the practice of facilities management can only be observed by knowing what and for whom the company stands for. In the end, both the facilities management and the business model make everyone thinks: “How will I become better?”

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THE FLAW OF ENTREPRENEURIAL MODE

Posted: January 14, 2016 in Uncategorized

Managers handling small/starting businesses do not have to always rely in entrepreneurial mode; rather, they can also employ the adaptive and planning modes as their view in strategy- making immediately. Why? It is because growth (the dominant goal of entrepreneurial mode) can also be achieved through either careful planning or constant adaptation to the environment of the industry the firm belongs to. Bold decisions, usually associated with high-risk consequences, are not actually ‘practical’ simply because we are not certain of its outcome. And the ideas of innovation may take part through the adaptive mode by continuously adjusting to the varying demands of consumers. Furthermore, growth and/or expansion, decision-making, and innovation are all can be realized via the combination of the two other modes: adaptive planning.

 

First, managers may improvise and adjust as to what they see best in organizing the firm. As Henry Mintzberg and Joseph Lampel (1994) cited in their article entitled Reflecting on the Strategy Process:

“The evolution of strategic management obeys different principles because it is driven by ideas and practices that originate from qualitatively different sources… Strategy is pushed along by sheer creativity of managers, because they explore new ways of doing things.”

This statement could pertain to entrepreneurial mode since it show that the power/decision lies with the manager. However, the “new ways of doing things” may refer to unconventional approach such as planning or adaptation. This could lead to discovery of new things: innovation.

 

Second, patterns affects the strategy-making of a manager who practice entrepreneurial mode. As Henry Mintzberg (1973) noted “Some organizations appear to develop cyclical patterns in which periods of entrepreneurship are alternated with periods of adaptiveness…” Due to the “cyclical patterns”, managers will eventually adapt to the changing atmosphere and perhaps, even create plans to guide the organization as it operates. Those patterns, once figured out, will eventually result to the continuous improvement of the organization: growth and development.

 

Lastly, risk is something that managers should avoid as much as he/she could possibly can, if not, minimize it. As stated by Henry Mintzberg (1973) in Strategy-Making in Three Modes:

“Formal planning follows a stepwise procedure in which particular attention is paid to the cost-benefit… the entrepreneur, but to avoid risk and move in incremental steps, like the adaptive strategy-maker.”

Executive officers/managers want the best for their companies. By observing the combination of adaptive planning, they could create a win-win situation where risks will be eliminated, if not minimize.

 

To sum it up, managers handling small/starting businesses do not have to always rely in entrepreneurial mode as their general view. Growth, opportunities (innovation), bold moves (risk-factor), and centralized authority are the chief characteristics of this concept. All these can also be accomplished, if not superior, through the use of adaptive, planning, and adaptive planning modes, respectively. Such measures will create innovation, promote growth, and minimize risks. In the end, only the strategy of the manager will dictate the outcome of the company and its stakeholders.

Facilities management is taken for granted by some companies nowadays. This often results to the company’s disadvantage, if not, closure. It was once discussed to us that Facilities Management defines the organization. It is all about what the company believes in (culture/philosophy), what does it provides (products/services), how does it avail the resources they need (raw materials/assets) and utilize it according to the needs/demands of the consumers. Yet, some firms tend not to understand the importance of this concept.

First, organizations must identify what their “Theory of the Business” is. As cited by Peter F. Drucker (1994) “… what company get paid for. They are what I call a company’s theory of the business.” Theory of the Business therefore is the reason why the business exist: revenue. It focuses on the product/service-perspective of the company. To relate this to facilities management, what you provide your consumers determines the identity of the company. Hence, your products/services IS the company; likewise, facilities management IS the company.

Second, organizations should understand the concept of “Resource-based View of the Firm”. As Birger Wernerfelt (1984) stated “By a resource is meant anything which could be thought of as a strength or weakness of a given firm… Examples of resources are: brand names, in-house knowledge of technology, employment of skilled personnel, trade contracts, machinery, efficient procedures, capital, etc.” Companies should understand that they cannot provide the outputs (products/services) without the necessary inputs (resources). It is what the company CAN do. In relation to facilities management, this concept is the proper utilization of the available resources of the company to deliver its output. Similarly, facilities management states the capacity of the firm to provide its services/products, in which will define the company’s ability to compete.

Lastly, when the organization is able to understand its “Theory of the Business” and the “Resource-based View of the Firm”, it does not mean that the company will not fail anymore. As mentioned in the article “Theory of the Business” by Peter F. Drucker:

“…, GM never suffered a loss while steadily gaining market share. But in the late 1970s, its assumptions about the market and about production became invalid. The market was fragmenting into highly volatile ‘lifestyle’ segments…”

This simply means that there is no fixed “Theory of the Business”. It is constantly changing according to the varying demands of the consumers. Due to such drastic circumstances, continuous improvement is the key and the resources of the company will be vital as it determines the capacity of the company to compete.

To sum it up, some companies tend to fail because they underestimate the importance of facilities management. Facilities management is incorporated with the “Theory of the Business” and “Resource-based View of the Firm” which refer to the input (resources) and output (products/services) factors of the company. Perhaps, some of them does not practice it at all as they do not know what it is all about or believed in an outdated “Theory of the Business”.