PREFACE:

Every organization requires some materials for operation.  Whether it is just a few pens, pencils, and paper or million dollar machines, there is stuff to every business. That is true whether you are in business by yourself, a teacher, a preacher, a small business owner, a not-for-profit, a service club, or a manufacturer employing thousands of people. Stuff is needed to make your operation work.

A common mistake that many leaders make is not fully understanding what all that stuff might be.  We get the big things but sometimes we overlook the little things that can trip us up. This is especially true for big picture people; the people who tend to be more visionary in their leadership style.  We quite often find that some pieces of the puzzle are put into the category of “assumed presence.”  What that means is that it just always seems to be there so we ignore its importance to the operation. 

Not paying attention to these details can result in a failure at some point.  If you are one of those more “heads in the clouds” type of leaders, you will probably want to make certain you have the person you can rely on that will take note of every detail regarding what is needed for the business to succeed. Unfortunately, too many leaders fail the delegation test, which is something we’ve already reviewed.

As we have seen throughout this book and throughout our life experiences, we each tend to have a primary focus.  That focus is usually either people, things, or ideas.  If you are a people or idea type of person, there is a strong chance that there are things that are part of your business that you may not be fully aware of.  If you are a small business, one where you are the primary manager, there is a chance that you will miss something.  If you are a people oriented or idea oriented individual it will become very important that you have someone that can maintain the material assets focus for your business.  We at Culture by Choice™ understand this very well.  None of us is particularly enamored with the asset end of our business.  It’s not that we dislike that end of the business, it’s just that we are much more focused on the people and ideas.  For that reason, it was important for us to have someone watch after the more material side of our business.

This lack of material asset focus is not unusual for many entrepreneurs.  Many entrepreneurs have wonderful ideas that they are very excited about.  These idea people can talk a mile a minute when you get them going about the core of their business.  But shift the focus form the idea to the material aspects of making this business a successful reality and many will falter a bit.  We’ve seen this many times in the new start-up clients we have worked with through the Central Michigan University Research Corporation (CMURC), an organization that helps launch new business ventures in the Central Michigan region. In many of these businesses they have wonderful ideas about a much needed new business but when it comes to the details regarding how to make the business succeed many lack the detail orientation needed to make it a reality.  CMURC, through their classes and seminars helps these fledgling businesses put the entire package together before they venture off into uncharted waters. 

We have helped those entrepreneurs acquire a better understanding of who they are and very critically, who they are not.  The blind spots they have, and believe me we all have them, are the parts of their intellectual, psychological, and emotional makeup that can trip them up because we each have biases about what we prefer to do and pay attention to and if we  let these remain a mystery to ourselves, they can come back to haunt us.  If the blind spot is that we really don’t like the material details of the business that can be our undoing.  Knowing that we rarely become proficient at something we really don’t like that much, our advice is usually to find someone to partner with or to contract with that can take care of these details.

THE ARTICLE: Identifying Assets: Material Based Assets

During the economic down-turn, there have been thousands of businesses that went belly-up because their customers lost their customers.  Consider the Big Three Automakers in the US.  Their inability to sell cars resulted in the cancelling of orders from parts suppliers all over the country. Many of these teetered on bankruptcy and numerous businesses were plunged into the abyss.  And it’s not just the suppliers; What about the companies that make the equipment that are used in the manufacturing processes?  This is a real domino effect!

The “stuff” that makes business possible, the material assets, has a major impact on the success of any business.  Taking full stock of even the smallest items and understanding how those items influence success is a critical exercise for several reasons.  Among those are:

  1. Making sure all that “stuff” is really necessary. Do you have bells and whistles because someone thought it was a good idea or do those things really contribute to productivity and profitability
  2. Are all these things in good running order? How much time is wasted because a machine continues to go down or because a computer is running way too slow?  We recall the company that had several clerical staff members that had to wait on average 30 seconds for a process to complete before they could move on to the next task on their computers.  They were doing between 20 and 30 tasks a day.  That meant that they were losing between 10 and 15 minutes a day waiting for the computer to process data.  With ten people doing similar data entry, that means a loss of 100 to 150 minutes of work a day.  For a work year that is 430 to 650 hours.  At a cost of $20 per hour that equals $8,600 to $13,000 plus benefits.  Simply upgrading a server to increase response time can save money in the long run.
  3. One of the critical things in all businesses is money. Leaders need to know whether or not their business is adequately capitalized.  Do you even know what adequate capitalization is?  What would it take to keep your business alive for 6 months during a serious financial crisis?  How about 12 months?  Our experience is that many small businesses (and quite honestly more than a handful of big businesses) have not fully thought through the capitalization puzzle.  With small businesses there is often an inability to get the type of financial guidance that comes from a good CFO.  To be able to take advantage of the power of such a person, there are options.  One of these is an organization like The Profit Experts.  Fred Parish and his group of CFO’s for hire can provide an affordable view into quality financial management for small businesses and help a business gain control over their “Capitalization” issues.

There are many more reasons to be aware of your material based assets but I believe these three give you a good start for looking at your own.

SUMMATION:

Helping any organization succeed is a 3 pronged process.  Leaders must pay attention to all of the assets of the organization which includes the people, material, and intellectual assets.  Most of us have a stronger affinity to one of these three than we do the other two.  But organizations do not function solely on any one of these three.  It requires attention in all three areas.  W\Leaders often have a bias towards one of these and as the word suggests, those who are biased towards one over the others will have a tendency to focus more on the area of their bias.  Leaders that are more materially focused run the risk of downplaying people and ideas.  Leaders that have a strong ideas bias will put the concepts of the organization above the people and the materials.  And those more biased towards people may ignore the ideas and materials.

Let’s take a quick look at what it might look like if one of these three is allowed to overshadow the other two by an excessive amount.  Let’s assume that a leader is very materially focused or in other words has a strong bias towards things.  If this goes unchecked that leader will pay very close attention to the material assets of the organization and will tend to think of the people assets in the organization more as things than as people. On the idea side of things this leader may discount ideas that can have a positive impact on the organization.  In fact, there are instances where highly materialistic people will begin to look at ideas as tools and will change philosophical or moral stances as they perceive that a new “philosophy” can help them achieve material gain.  These are the “The End Justifies the Means” people.

There are also problems if the leader possesses a strong ideological bias.  These leaders will adhere to ideas even when those ideas may cause the eventual demise of the organization.  Being principle centered is a great asset but if the principles you adhere to runs in contradiction to the needs of people and if those “ideals” discount the importance of the material needs of the organization, the organization is in trouble. When ideologues demand strict adherence to “the idea” and ignore the impact of those ideas on the rest of the world around them, a day of reckoning will be at hand.

Finally, leaders that are so focused on people that they play it too loose with principles and denigrate the need for materials end up being unable to meet the needs of the very people they wish to serve. We have seen these “bleeding hearts” run their organization into bankruptcy because they failed to take care of the day-to-day business that allows the organization to be sustainable.  It is in balance that organizations succeed. You can have a people-focused organization but it had better not be so biased in that direction that you lose sight of your principles or so much so that you spend your way into oblivion.  

As is the case with so many leadership qualities, when we consider the three legged stool of people, things, and ideas, balance is essential. Too much emphasis on any one of the three legs creates an organizational bias that can be detrimental to the organization as a whole.  Each of us will have our own personal biases in these three areas and if we allow our own bias to color the organizational focus we run the risk of alienating some of our team members.  By letting everyone know that the intention is to maintain a balance between these three aspects of the organization, a clear message is sent that leadership intends to remain unbiased in their approach to operations. Now it is incumbent upon the entire team to stay open minded and to hold one another accountable for remaining unbiased.

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