What Management Is: How It Works and Why Its Everyones Business
By Joan Magretta
It seems so obvious what management is. Or does it? Magretta explains in straightforward language basic terms like Value Creation, Business Models, Strategy and Organisation. We tend to use these terms so often without quite really understanding their significance. is a must-read both for beginners and practitioners.
Writing about business models, Magretta writes:
A business model is a set of assumptions about how an organization will perform by creating value for all the players on whom it depends, not just its customers. In essence, a business model is a theory thats continually being tested in the marketplace.
A business model is a story of how an enterprise works. Like all good stories, a business model relies on the basics of character, motivation, and plot. For a business, the plot revolved around how it will make the money. For a social enterprise, the plot is how it will change the world (or at least its targeted corner of the world). In both cases, the characters must be precisely delineated, their motivations must be plausible, and the plot must turn on an insight about value.
Many a time, we end up managing by trial-and-error (not all of us are fortunate enough to have formal a management education). There are times when we feel that our choices would perhaps have been different if only we knew then what we know now, or if we had spent that little extra time thinking on some of the fundamentals of the plan. Magrettas book makes us think on some of the most basic principles on our business runs. And therein lies its success.
Managing in the Next Society
By Peter Drucker
Druckers book begins with I did once believe in the New Economy. The year was 1929. For those among us who have only known the New Economy, Peter Druckers newest book (a collection of recent essays and interviews) needs to be read! Drucker has seen the world of all of business for the better part of seven decades. In his book, he talks about the information economy and what has changed (and what hasnt), and the social trends (demographics, for one) which portend huge change in the coming years.
Heres what Drucker says about one of four entrepreneurship pitfalls where the new and growing business typically gets into trouble:
The [pitfall] comes when the entrepreneur has to face the fact that the new product or service is not successful where he or she thought it would be but is successful in a totally different market. Many businesses disappear because the founder-entrepreneur insists that he or she knows better than the market.
The majority of successful new inventions or products dont succeed in the market for which theyve been originally designed. [Entrepreneurs reject unexpected success.] Because itsnot what they had planned. Entrepreneurs believe that they are in control. And that leads to the [next pitfall]. Entrepreneurs believe that profit is what matters most in a new enterprise. But profit is secondary. Cash flow matters most.
My recommendation for entrepreneurs and managers: take two days off from life, read both the books, think, and live them.
Tomorrow: Warren Buffet and Nexus