PART FOUR Stage Three: Adolescence Flashcards
1
Q
What is the main problem faced by a company in Stage Three?
A
Your systems are strained, and customers are noticing.
2
Q
What is the main challenge during Stage Three of business growth?
A
Turning the chaos into order.
3
Q
What is the main opportunity in Stage Three?
A
Learning how to establish useful protocols and manage processes and procedures.
4
Q
What additional skill is needed in Stage Three?
A
Running your business with just three or four simple management reports.
5
Q
What data is crucial for assessing future opportunities?
A
The lifetime value of your customers.
6
Q
True or False: In Stage Three, the entrepreneurial skills that helped start the business are still effective.
A
False.
7
Q
What happens to new product launches in Stage Three?
A
Some are working, but an increasing number are failing.
8
Q
What transformation is needed in Stage Three?
A
Introduce more structure to the way you do things.
9
Q
What approach needs to be modified in Stage Three?
A
The Ready, Fire, Aim approach.
10
Q
What must be established to manage a growing business effectively?
A
Stronger controls and better accounting procedures.
11
Q
What creates a communication gap in a growing company?
A
Many new employees are directed by others, leading to different ideas.
12
Q
What is a sign that you are violating the new organizational structure?
A
One of your managers’ subordinates is regularly speaking to you.
13
Q
What should you focus on spending 80% of your time on?
A
Your marketing manager.
14
Q
What are the two reasons for focusing on the marketing manager?
A
- Marketing is your main job. * You know much more about marketing than anything else.
15
Q
What should be the limit on the number of reports from each manager?
A
Three numbers every month.
16
Q
What is the purpose of limiting the number of reports?
A
To avoid overwhelming yourself with information.
17
Q
What are the three key indicators from a profit center manager?
A
- Revenues * Profits * Deferred income or inventory
18
Q
What should you do if you want more detailed information beyond the three-number reports?
A
Call them up and ask more questions.
19
Q
True or False: You should micromanage your subordinates in Stage Three.
A
False.
20
Q
What is necessary to handle the third stage of a company’s growth?
A
All operational activities running smoothly.
21
Q
What is the role of professional managers in a growing business?
A
They help solve problems and support the entrepreneur’s goals.
22
Q
What is the importance of retraining key people during Stage Three?
A
To develop and implement necessary controls.
23
Q
Fill in the blank: In Stage Three, you need to establish a _______ to manage your business effectively.
A
traditional corporate structure.
24
Q
What is the primary focus for a CEO during the transformation in Stage Three?
A
To convey their vision to everyone in the business.
25
What is crucial for understanding operational aspects of a business?
Concise, three-number reports
## Footnote
These reports provide vital statistics to stimulate conversations.
26
What message does neglecting operational reports send to managers?
Their work is unimportant
## Footnote
This can lead to decreased motivation and performance.
27
What is the risk of only paying attention to managers when they err?
Managers may cover up mistakes or blame others
## Footnote
This behavior can foster a toxic workplace culture.
28
What do 'Big Idea' entrepreneurs often fail to appreciate?
The importance of operational issues
## Footnote
They may view themselves as creative geniuses, neglecting management.
29
What is necessary to grow a business beyond $50 million?
A well-balanced organization
## Footnote
It should not be hamstrung by operational problems.
30
What roles should be grouped under a chief operating officer (COO)?
Operational functions
## Footnote
Marketing and product-development activities should be organized as separate profit centers.
31
What is the recommended organizational structure for a business at Stage Three?
CEO at the helm with a COO managing operations
## Footnote
Profit center managers report directly to the CEO.
32
What is a key benefit of the proposed organizational structure?
No one person has more than six direct reports
## Footnote
This prevents micromanagement and allows focus on growth.
33
What should you do if profit center managers are unhappy with centralized support?
Allow them to seek outside vendors
## Footnote
However, warn them of potential downsides.
34
What two types of people do you need to grow your business from $10 million to beyond?
Professional managers and intrapreneurs
## Footnote
Professional managers run operations; intrapreneurs drive profit centers.
35
What is the difference between entrepreneurs and intrapreneurs?
Intrapreneurs take direction and stay loyal to the company
## Footnote
Entrepreneurs often leave when successful.
36
What are the six skills needed to run a growing Stage Three business?
* Controlling operations
* Managing your managers
* Communicating your vision
* Networking for joint ventures
* Negotiating deals
* Being good at hiring
## Footnote
These skills are essential for growth.
37
What is essential for controlling operations during business growth?
Structure for growth and hire professional managers
## Footnote
This allows the CEO to focus on product development.
38
What qualities should a COO possess?
Competence, flexibility, and loyalty
## Footnote
They should align with the CEO's vision while managing operations.
39
What should you do to avoid micromanaging as a CEO?
Limit meetings and accept diverse management approaches
## Footnote
Allow managers to make decisions on how to achieve goals.
40
What should you avoid doing in front of your managers?
Correcting their mistakes
## Footnote
This can undermine their authority and create a negative atmosphere.
41
What is a key strategy for managing criticism effectively?
Express criticism after something positive and phrase it as a question
## Footnote
For example, instead of stating a mistake directly, ask why a decision was made.
42
What is a recommended approach to corporate communication during Stage Three of business development?
Send regular letters to employees updating them on changes and plans
## Footnote
This helps ensure that core ideas are communicated clearly.
43
What should each business memo focus on?
One and only one topic
## Footnote
This ensures clarity and effectiveness in communication.
44
What is the importance of keeping paragraphs short in business memos?
Limits each paragraph to a single idea
## Footnote
This enhances readability and comprehension.
45
Fill in the blank: Good writing is good thinking ______.
clearly expressed
46
What is the primary consideration when considering a joint venture?
The long-term potential of the relationship
## Footnote
Focus on sustainable partnerships rather than immediate gains.
47
What is the author's personal business goal regarding joint ventures?
Work less and gain more in the future
48
True or False: Good business deals are those where one party benefits more than the other.
False
## Footnote
The author believes in mutual benefits over competitive gains.
49
What is BB's approach to negotiation?
Accepting offers within a predetermined acceptable range
## Footnote
This fosters trust and long-term relationships.
50
What does BB believe about the nature of a good deal?
A good deal is one that lasts
51
What should one do before entering a negotiation?
Prepare by figuring out a range of acceptable outcomes
## Footnote
This helps in understanding one's own limits and expectations.
52
What is the consequence of entering negotiations without preparation?
Lack of clarity on what is wanted or deemed fair
53
How did JSN's negotiation style differ from BB's?
JSN aimed for the best deal for himself, while BB focused on mutual fairness
## Footnote
This led to different reputations and long-term relationships.
54
What does the author suggest about the relationship between hiring and business success?
Being good at hiring may be the single most important skill for business success
55
Fill in the blank: Good writing should avoid ______.
ornamentation
56
What is a common complaint among businesspeople regarding employees?
They need more really good people.
57
What is one of the two most important jobs of a Stage Three entrepreneur?
Overseeing the process of hiring extraordinary people.
58
What can a single great employee be worth to a business?
Easily $10 million or more.
59
What is the financial impact of bad employees?
They can cost millions.
60
What is a crucial step in recruiting great employees?
Devote serious time and attention to finding them.
61
What analogy is used to describe the process of recruiting great employees?
Running a successful direct-response advertising campaign.
62
What does a well-designed recruitment plan include?
* Great sales pitch
* Aggressive ad placement
* Personal canvassing at professional events
63
What is a key difference between a conventional ad and a better ad for recruitment?
The better ad focuses on what the job offers the candidate.
64
Why should you ask for a letter instead of a resume in job applications?
It weeds out lazy candidates and gives insight into personality.
65
What should be the goal when placing recruitment ads?
Establish a significant pool of potential candidates.
66
What qualities should you assess from the letters of job candidates?
* Personality
* Ability to communicate
* Vision
* Ambition
* Intelligence
67
What should interviews with finalists include?
Substantial conversation and introductions to team members.
68
What is the suggested approach for interviewing job candidates?
Spend several hours getting to know each prospect.
69
What is the ideal outcome of the hiring process?
Select one candidate for a trial basis.
70
What is recommended for filling a business with extraordinary people?
Attend trade shows and industry events.
71
What is the difference between stars and superstars in the workplace?
Stars are reliable workers, while superstars can create corporate growth.
72
What is necessary to create stars and superstars?
Hiring very good and great people and providing training.
73
What should you do if you spot bad employees?
Try to make them good fast or fire them.
74
What is the advantage of hiring very good and great employees?
They require minimal conventional training and motivation.
75
What is the myth about job descriptions?
Employees need job descriptions to know their responsibilities.
76
What is the reality regarding job descriptions for innovative roles?
They are unneeded and can be counterproductive.
77
What should be the attitude of great employees towards limits on their work?
They don't want limits, as they see them as boundaries.
78
What is the author's philosophy about responsibility?
If you are responsible for growth or management, you should be willing to do anything
## Footnote
Saying “That’s not my job” indicates a lack of commitment to the organization.
79
What is the common myth about employee motivation?
Employees are always motivated by money
## Footnote
This myth is prevalent among inexperienced CEOs and entrepreneurs.
80
What is the reality regarding money as a motivator for good employees?
Money is not even the second most important motivating force for very good people
## Footnote
Good employees are primarily motivated by opportunities for growth and recognition.
81
What does the author suggest about making employees business owners?
Most employees don’t want to be business owners
## Footnote
Employees often prefer being part of a larger organization rather than taking on ownership responsibilities.
82
What is the myth regarding flat organizations?
Flat organizations create happier and more efficient employees
## Footnote
The idea is that eliminating management tiers improves effectiveness.
83
What is the reality about employees’ preferences for organizational structure?
Employees like hierarchy
## Footnote
Hierarchy provides a sense of structure and clarity in reporting relationships.
84
What is the myth about making work fun?
Filling the workplace with amusements makes work fun
## Footnote
This was a popular belief during the Internet boom.
85
What is the reality regarding fun in the workplace?
Fun comes from doing good work, not from distractions
## Footnote
Productive work leads to satisfaction rather than amusement.
86
What is the myth about a good boss?
A good boss is a sensitive boss who responds to employees’ personal problems
## Footnote
This view equates friendship with effective management.
87
What is the reality about mixing business with friendship?
Mixing business with friendship is always a bad idea
## Footnote
Prioritizing employee personal life over business objectives can harm customer service.
88
What is the myth regarding listening to employee complaints?
A good boss listens to employee complaints and responds to them
## Footnote
The assumption is that resolving complaints improves job performance.
89
What is the reality about handling employee complaints?
Some complaints are better off ignored
## Footnote
Personal complaints should be redirected to focus on work-related issues.
90
What is the primary purpose of every business?
To improve the lives of its customers
## Footnote
Employee interests should not supersede customer needs.
91
What is Elliott Jaques' theory about corporate culture?
There are five levels (strata) of work in sizable businesses
## Footnote
Different strata have different roles, tools, learning styles, and problem-solving strategies.
92
What is stratum one in Jaques' theory?
Rank-and-file work involving routine physical and rote mental tasks
## Footnote
Examples include machine-shop workers and data-input operators.
93
What distinguishes stratum two workers?
They ensure routine and rote work gets done
## Footnote
These roles are akin to first-level managers.
94
What do stratum three workers do?
They create the work that stratum one and two workers do
## Footnote
These roles may include directors or middle managers.
95
What is the primary function of stratum four workers?
Supervising the creation of work and ensuring its usefulness
## Footnote
They hold higher-level supervisory jobs.
96
What is the role of stratum five individuals?
They manage the supervisors of work creators
## Footnote
This includes CEOs.
97
What does Jaques suggest about time-span thinking?
Different strata think in varying spans of time
## Footnote
Lower strata think in days, while higher strata think in months or years.
98
What is the secret to effective employee placement according to Jaques?
Identify potential employees’ time-span wiring and match them to suitable jobs
## Footnote
This approach aims to maximize employee effectiveness.
99
What does the author believe about training employees?
Employees should be trained according to their ability to learn
## Footnote
Assigning tasks that match their natural inclinations is crucial.
100
How can organizations best identify potential superstars?
By observing their responses to challenges and obstacles
## Footnote
High-performing individuals tend to stand out in difficult situations.
101
What is the ideal ratio of stars to superstars in an organization?
92 stars and 8 superstars out of 100 employees
## Footnote
This balance is essential for solving business problems and fostering growth.
102
What is the ideal composition of employees in a company aiming for growth?
About 92 stars and 8 superstars.
103
What is the single most powerful way to solve business problems?
Finding great people and converting them to superstars.
104
What stage of business growth typically experiences bottlenecks and bureaucracy?
Stage Three, between $10 million and $50 million in revenues.
105
What are the primary viruses affecting Stage Three businesses?
Bottlenecks, bureaucracy, and politics.
106
Define bottlenecks in a business context.
People or procedures that slow things down.
107
Define bureaucracy.
Any system or protocol that exists independent of the core purpose of the business.
108
What is the definition of politics in a business environment?
The destructive dynamic that results when people pay more attention to power than profit.
109
What is a common bottleneck in entrepreneurial businesses as they grow?
Legal compliance.
110
What should a CEO do to prevent bottlenecks in legal compliance?
Streamline the process by educating marketers, developers, and salespeople.
111
What are some other common areas for bottlenecks in a business?
* Accounting department
* Data input department
* Information technology
* Quality control functions
* Editing and amending functions of marketing.
112
What is the 'invisible bottleneck' mentioned in the text?
The CEO themselves.
113
What is one way to identify if you are a bottleneck in your business?
Assess how you spend your time on quality-control activities.
114
What is a second method to determine if you are bottlenecking your business?
Ask your top people what you can delegate or stop doing.
115
How does bureaucracy differ from bottlenecks in terms of visibility?
Bottlenecks are easy to spot, while bureaucracy is often invisible.
116
What is the analogy used to describe bureaucracy?
Hardening of the arteries.
117
What should be established to prevent bureaucracy in a business?
A culture of efficiency.
118
What is the detrimental effect of bureaucracy buffs?
They have an unhealthy attraction to formalities.
119
What is the analogy used to describe office politics?
Cancer.
120
What often motivates office politics?
The desire for power.
121
What is a critical flaw of political activity in business?
It is fundamentally flawed and based on power.
122
How do politics and business differ in their ultimate purpose?
Politics is based on power, while business is focused on profit.
123
What does power do according to the text?
Power corrupts.
124
What is a common misconception about politicians?
Not all politicians are evil; some are naive.
125
How do politicians and businesspeople differ in their approach to doing good?
Politicians need power to do good; businesspeople need to do good to generate profits.
126
What is a key difference between politics and business?
In politics, the focus is on acquiring power; in business, the focus is on providing customer benefits.
127
What can result from a politician's desire to do good?
They may deceive voters to gain power.
128
Why did some founding fathers seek to limit federal government power?
They understood the fatal flaw of politics.
129
Why is business considered better than politics?
Business does not pretend to know what is good for the world.
130
What does profit represent in a business context?
The measure of the good done for customers.
131
How do political employees typically affect a business?
They prioritize personal power over customer benefits.
132
What are the two ways political employees can corrupt a business?
* Internally, by setting personal agendas
* Externally, by trying to control competition
133
What should you do to prevent political employees from damaging your business?
Recognize and reform or remove them.
134
What is a sign of a political personality in management?
Complaining about others rather than discussing problems.
135
What is the ultimate solution to combat politics in a business?
Establish freedom.
136
What does freedom mean in the business context?
Opportunity for competition in a shared information environment.
137
What is suggested for product development and marketing management?
Adopt a laissez-faire attitude.
138
What should be avoided to promote a healthy competition among profit centers?
Curbing or controlling information.
139
What is essential for maintaining business growth?
Constant maintenance of a free and cooperative environment.
140
What should the mission of a business focus on?
Creating new and better products for customers.
141
What is a significant milestone for a Stage Three entrepreneur?
Revenue growth beyond $10 million and approaching $50 million.
142
What is a key challenge for Stage Three entrepreneurs?
Recognizing when their business is ready for change.
143
Why should an entrepreneur avoid having more than six or seven people reporting to them?
To prevent management overload and inefficiency.
144
What is a crucial skill for a Stage Three entrepreneur?
Managing operations professionally.
145
What can happen if an entrepreneur neglects operational details?
It can lead to significant business mistakes.
146
What is the difference between an entrepreneur and an intrapreneur?
An intrapreneur operates within a larger organization.
147
What should entrepreneurs focus on to find extraordinary employees?
Dedicate time and attention to the search.
148
What is essential when hiring employees?
To maximize their potential by placing them in suitable roles.
149
How should a CEO handle underperforming employees?
Help them improve and fire them if there is no improvement.
150
What are two secrets for maintaining control in operations?
* Creating a core structure for management
* Staffing with capable professionals
151
What organizational structure can facilitate growth in a business?
Organizing around profit centers.
152
What should the CEO avoid to prevent bottlenecks in the organization?
Being the sole decision-maker in every issue.
153
What can lead to bureaucracy in a business?
Incremental changes over a long period of time.
154
What determines whether a bottleneck becomes a minor irritation or a major problem?
How it is dealt with
## Footnote
The approach taken to address bottlenecks is crucial in determining their impact on the business.
155
What should CEOs remember when looking for bottlenecks in their company?
To look in the mirror
## Footnote
CEOs should ensure they have the right people in place to make decisions.
156
What can take over a business incrementally and is hard to notice?
Bureaucracy
## Footnote
Bureaucracy develops slowly over time and can hinder efficiency.
157
What is the remedy to prevent bureaucracy in a business?
Instilling a strong corporate culture based on efficiency and service
## Footnote
A focus on efficiency and customer service from the beginning can prevent bureaucratic growth.
158
What should business leaders avoid being obsessed with?
Formalities and protocol
## Footnote
An overemphasis on formalities can hinder business operations.
159
What is described as a cancer that can kill a business?
Office politics
## Footnote
Office politics diverts focus from the main business goals.
160
What shifts focus away from creating and selling new ideas?
Personal agendas and office politics
## Footnote
These behaviors can undermine the purpose of a business.
161
What type of managers should be watched out for?
Those who covet power and hire order-followers
## Footnote
Managers focused on personal prestige over profits can harm the business.
162
What should be destroyed to eliminate office politics?
The environment that breeds office politics
## Footnote
Addressing office politics on a case-by-case basis is inefficient.
163
What management style is considered the best antidote to office politics?
Laissez-faire management style
## Footnote
This style encourages creativity and contribution from employees.
164
What should be taught to managers and employees to improve idea generation?
To compete in an environment where they cooperate for the greater good
## Footnote
Cooperation among employees can lead to better ideas.
165
What should the first priority of staff be?
Creating value for the customer
## Footnote
This principle should underpin any business strategy.
