Changing From Owner-Manager to Owner

As a business owner you should recognize that you will receive more for your business interest if you are not a manager in your business. If now you are a manager, your interest is worth less. You should know that if the business had to transfer now because of your illness or death, the amount your family would receive would be much less than if you were not a manager.

You know an owner approves policy and allows others to execute the business operation. As an owner-manager you should delegate management activities. You know you should find a chief executive officer to run the business. You know you will not be able to run the business forever. You know you could die or become disabled and may be forced to transfer the interest at any time. You know you have competitors with younger owners with new ideas and looking to lower your profit margins.

Why haven’t you acted? You say you have taken this management role for the sake of the business. You created the business and this role. You have not found anyone else who can do what you do to create the success. Are you comfortable that these are valid reasons for not getting maximum value for your business interest? Could it be that you are afraid of losing control? Are you flattering yourself that there is no one else who could do what you do?

You are not alone. Many founders, even though they know they could fail to realize maximum value from their business interest, continue to be owner-managers instead of owners. If you want increased value and wealth for you and your family, stop your management activity. Here is how to make that change.

First, gather the resources and information you need. Assemble the information by listening to business stakeholders and those operating the business. Seek out those who have accomplished the change and find out how the change was accomplished. Do not be reluctant to ask for help and advice.

Second, create a written plan with the other owners and the stakeholders of the business. State the goals clearly and establish mileposts for performance.

Third, understand that change cannot occur where discipline and focus are weak. If you are not disciplined against the seduction of the irrational notion that you are the only one who can do the management work in the business and if you do not continually focus on finding one or more people to do the management tasks you are now doing in the business, the change will not occur.

Fourth, Take the change in steps over a time period that allows for the complete process to come into place and be effective. Since you founded the business or the position you have, the right person with the right set of skills may be hard to find, or it may be necessary to refine job descriptions so that more than one person does those duties. Do not think that you can do it all at once, that it will be easy, or that it will be immediately successful. Citing early difficulties as failures to stop the change process is a failure of discipline – a way to go back to the fallacy that you are indispensable to the business success.

Fifth, be accountable. Make a written plan with the other owners. Let the other stakeholders in the business know what are the goals and how they are to be accomplished. Allow the other stakeholders in the business to help, but understand that if the process fails, it is you who are accountable for the failure. Owners often procrastinate or derail management change based on fear that they will no longer be able to control the business. This is less likely to happen where stakeholders are aware of the process.

The change from owner-manager to owner creates wealth for the owner and the owner’s family. It is not easy, but neither is founding and maintaining a successful business. Generally, owners have created a successful business and are quite capable of executing this change to create increased value in the business interest. To realize maximum value from your business interest, change from being an owner-manager to being an owner.

Distinguishing Features of Project Management in the 21st Century

The purpose of this article is to investigate the current hot topics of project management. In the 21st century, there is a clear swift from hard systems approach of project management to soft factors, a demand for strategic thinking in project management (Buttrick, 2000), new success factors (Atkinson, 1999) and project uncertainty management (Ward & Chapman, 2003). Broader project management theory and more intense research efforts are also a trend in the field (Winter & Smith, 2005).

Human beings have been executing projects from ancient times (Kwak, 2003). From relocating a tribe to constructing enormous buildings such as the pyramids, projects were a dominant element of history. Not long ago, those involved in projects understood that they needed methods and processes to help them manage these projects more efficiently. To meet this need, scientists and practitioners worked together to form a new concept which was called «project management». According to the PMBOK’s definition “project management is the application of knowledge, skills, tools and techniques to project activities to meet project requirements”. (A Guide to Project Management Body of Knowledge, 2004). There are many different views in the literature concerning the birth of project management. Maylor (2005) mentions that “project management in the way that we would understand it today did not exist until the 1950s” and Wideman (2001) tracks the first use of project management in the UK’s Institution of Civil Engineers report on UK post war national development first published in 1944.

Since then, there have been a lot of changes. “The hard systems approach, which treated the project as a mechanical activity, has been shown to be flawed” (Maylor, 2005). The soft skills of project management are getting more attention because it is now clear that “the ability to apply these skills effectively throughout the life cycle of a project will enhance the success of a project exponentially” (Belzer). In spite of the perfect understanding of planning, scheduling and controlling, projects have still a high rate of failure. Belzer points out that “more often they fail because of a project manager’s inability to communicate effectively, work within the organization’s culture, motivate the project team, manage stakeholder expectations, understand the business objectives, solve problems effectively, and make clear and knowledgeable decisions”. To address these problems in the 21st century, a project team needs to develop a series of soft skills such as “communication, team building, flexibility and creativity, leadership and the ability to manage stress and conflict”. (Sukhoo et. al, 2005).

In addition, project management requires a stronger strategy orientation. “More than 80 per cent of all problems at the project level are caused by failures at a board level in firms to provide clear policy and priorities” (Maylor, 2001). The approach that Maylor suggests is very different from the traditional link between strategy and projects, as he proposes a “coherent, co-ordinated, focused, strategic competence in project management which eventually provides source of competitive advantage”. This two-way methodology that relates organisational and project strategy is illustrated in figure 1. To better understand the project’s strategy, there is also a need to analyse “the experiences from past activities, politics during the pre-project phases, parallel courses of events happening during project execution and ideas about the post-project future” (Mats Engwall, 2002).

Moreover, Maylor highlights a change in project’s success criteria, from conformance to performance. In 1960s project managers seek to comply only with the documented specifications of the project, while current projects require real performance. In other words, the success criteria of the 21st century as indicated by Maylor have changed to as short time as possible, as cheaply as possible and towards a maximum customer delight. Other academics imply nowadays a much simpler view of success criteria which is focused only in keeping the client happy (Ferguson, 2005) in contrast with the 90s view of just finishing the project on time and on budget.

Changes in risk management are also one of the hot topics of project management in the new century. Ward (2003) propose the term «uncertainty management» and recommends that a “focus on «uncertainty» rather than risk could enhance project risk management”. Adams has an interesting view of risk as he describes it as “a reflexive phenomenon – we respond to perceived probabilities and magnitudes, thereby altering them”, a definition that differs from the traditional quantitive analysis of risk. Green broads even more the scope of risk management and includes the clients. He thinks that “the process of risk management only becomes meaningful through the active participation of the client’s project stakeholders”. In his point of view there is a new way of assessing risk management that “depends less upon probabilistic forecasting and more upon the need to maintain a viable political consistency within the client organisation”.

The conventional theory of project management consists of a narrow focus on projects as unique and totally separated units of work. But current projects tend to be integrated smoothly in the general context of organizations in order to “develop the «management of project portfolios» and «programme management» which are more strategically orientated towards «doing the right projects»” (Winter & Smith, 2005).
It is common ground in the literature that the theory of project management needs more research. Koskela and Howell (2002) suggest that the theoretical base “has been implicit and it rests on a faulty understanding of the nature of work in projects, and deficient definitions of planning, execution and control”. From their point of view, enrichment of project management with new methods and techniques cannot be done with any stable theoretical background. As a result, there is a trend of putting more effort in research and rethinking the way which «bodies of knowledge» is written so that complex projects’ actions will be better documented.

As a conclusion, we could use the words of D.T. Jones (2005) who writes that “project management is no longer about managing the sequence of steps required to complete the project on time”. He adds that “it is about systematically incorporating the voice of the customer, creating a disciplined way of prioritising effort and resolving trade-offs, working concurrently on all aspects of the projects in multi-functional teams”.

References

1. A Guide to Project Management Body of Knowledge, 2004, 3rd Edition, Project Management Institute

2. Adams, Review for THES Risk Decision and Policy, Cambridge University Press, [Electronic]

3. Atkinson, 1999, Project management: cost, time and quality, two best guesses and a phenomenon, its time to accept other success criteria, International Journal of Project Management Vol. 17, No. 6, pp. 337±342, [Electronic]

4. Belzer, Project Management : Still More Art than Science, [Electronic]

5. Buttrick, 2000, The project workout, 2nd edition

6. Engwall, 2003, No project is an island: linking projects to history and context, Research Policy 32, pp. 789-808, [Electronic]

7. Ferguson, 2005, First Tutorial on Strategic Management, Full Time MSc in Project Management, Lancaster University

8. Green, Towards an integrated script for risk and value management, Department of Construction Management & Engineering, The University of Reading, UK

9. Jones, 2005, Foreward to Maylor’s book Project Management, FT Prentice Hall, UK

10. Koskela & Howell, 2002, The underlying theory of project management is obsolete, Project Management Institute, [Electronic]

11. Kwak, 2003, The Story of Managing Projects, Quorum Books, [Electronic]

12. Maylor, 2005, Project Management, FT Prentice Hall, UK

13. Maylor, 2001, Beyond the Gantt Chart:: Project Management Moving on, European Management Journal Vol. 19, No. 1, pp. 92-100, 2001, UK, [Electronic]

14. Sukhoo, Barnard, Eloff, Van der Poll Accommodating Soft Skills in Software Project Management, Issues in Informing Science and Information Technology, University of South Africa, Pretoria, South Africa, [Electronic]

15. Ward, 2003, Transforming project risk management into project uncertainty management, International Journal of Project Management vol.21, pp. 97-105, [Electronic]

16. Wideman, 2001, Criteria for a Project Management body of knowledge, [Electronic]

17. Winter & Smith, 2005, ‘Rethinking Project Management, Making Sense So Far: Emerging Directions and Future Research’, Rethinking Project Management (EPSRC Network 2004-2006)

Competition Can Help an Owner-Managed Business

The owner-manager of a business may not readily recognize the benefits of having competition. Many owner-managers would say they want no competition at all. In the economy of the United States, and in most free market economies, a market with perceptible demand will be served by more than one business. Given that competition is inevitable, it is helpful to understand how to benefit from competition. Generally, the benefits of competition are in market analysis, employee acquisition, and sale of the business.

The function of a business is to meet the needs of its customers or clients. The critical question for every business is: what does the customer or client want? If the consumer is asked directly, the information derived is likely to be inaccurate. The actions of consumers provide more reliable information than their words. From the perspective of understanding the market for your business product or service, ask: why does my competitor have customers or clients? In other words, why have my competitors’ customers or clients made the decision not to be consumers of my business? Gathering this information involves data about consumers who decided not to buy your product. This information can be difficult to obtain but the effort will be worthwhile. This inquiry will lead to an examination of the competing products or services and an analysis of the consumer decision. For example, if your product or service is better, than the consumer is not receiving enough information from your business before the buying decision is made. If the competing product is of inferior quality but is sold at a lower price, this is valuable information about the elasticity of demand for the product or service. This information will help you make better decisions about the nature of your product or service and how it is marketed.

Training an employee is a significant cost to a business. Attracting new ideas and learning different methods of conducting the business is extremely valuable to the business. Sometimes competing businesses can cooperate, often through trade associations, in the education and training of employees. From time to time, the opportunity to assimilate new ideas and methods can come from hiring a former employee of a competitor. Often, the former employee will not be fully aware of the value of the employee’s experience to a competing business. It can be very advantageous to the business for the owner-manager to be aware of the employment activity of a competitor.

In a situation where there is a need to find a buyer for your business, the first choice is frequently a competitor. From the competitor’s point of view, it is easier to expand market share by buying the customers than by convincing customers to change their buying habits. From the business owners’ point of view, a competitor is already aware of the value of the business and is interested in the business. If there is already a relationship in place, it is easier to approach a competitor about a sale. In some situations, competitors have been able to enter into agreements providing for purchase and sale of competing businesses given certain owner events such as death or disability.

Competition need not be fierce. Competitors can benefit by sharing information and cooperating on educating the marketplace. Where a market is defined into categories, one business may be the acknowledged provider in one category, while another business may be the acknowledged provider in another category. Many times there are ways competitors may benefit through cooperation in raw material supply, marketing efforts, and training. For example, restaurants have discovered that having more than one restaurant in an area benefits all the restaurants located in the area.

Owner-managers of businesses can benefit by analyzing events at competing businesses and communicating with the owner-managers of those businesses. The result of such attention can result in benefits for market analysis, employee acquisition, and opportunities for the sale of the business.