Article provided by Business Doctors
Alchemy was an ancient branch of natural philosophy, that attempted to purify, mature and perfect certain materials. It is most commonly known for its attempts to purify base metals – turning lead into gold, creating an elixir for immortality, panaceas to cure any disease and the development of a universal solvent.
Modern views on the validity of alchemy vary greatly, especially after it popularly became associated with esoteric practices, mysticism and magic in the late 18th century. Notwithstanding, it is clear that this centuries-old search for knowledge, specifically knowledge to make things better, purer, longer-lasting has had a profound impact on the development of our physical sciences, in particular chemistry and medicine.
In modern business technology, there are as many if not more different schools of thought as one would find in ancient alchemical studies. Some of these relate strategy and success to spiritual and esoteric practices, some view it as a hard science that require the rigorous application of data and proven methodologies, and you might even find some who will sell you “magical thinking” as a good strategic approach.
Our view is that successful businesses are very similar to complex chemical compounds. There are many components that make up a successful compound, including the types of molecules that should be present (in business, this would relate to individuals, tasks, activities etc), the strength and structure of the bonds between these molecules, the ability to adapt to external changes in environmental composition, pressure and heat, and the specific purpose of the compound. It should also be said that molecules are composed of atoms, electrons and a wide variety of smaller elements that make up the molecule.
In order to have a successful and growing business, there are only four types of molecules that you need to get right. These are a clear strategy, the right people, excellent execution and managing your cash. The way in which you bond these molecules will determine if your business can deal with inevitable change.
Your strategy is a molecule – be clear on its purpose
Words like vision and mission have been so overused that our eyes glaze over when the annual strategic planning exercise comes around. I find it more useful to talk about the purpose of the company’s existence – the answer to “Why are we here?”
Successful companies spend a lot of time and energy defining, understanding and communicating this purpose with their customers, their partners, their staff and the broader world out there. It is in the field of strategy development where a LOT of magical thinking can creep in. In our experience, the use of some superb thought frameworks and analysis tools generate significant value in making sure that the strategy molecule is the right fit for your specific business.
Your strategy is a molecule – bond it to your leadership team
One of the key characteristics of highly successful companies is the value and importance they place on having the right people in the right seat doing the right things. However, we often fail as business leaders to treat this molecule with the respect it deserves, and it is almost considered normal that a large portion of employees are unhappy, unproductive and disconnected from their jobs.
Unless you are the owner of a micro business with less than about 10 employees, there is no way that one single human being can keep track of everything that happens in the business every day. All teams have leaders, whether they are in formal management positions of authority or just the person who knows how to get things done in a specific portion of the business.
It is therefore almost critical to be clear, and to determine upfront, the types of leader molecules you want to have in your organisation in general, and specifically how strongly they bond to the other molecules that make up your complex compound. Fortunately there has been a lot of development in this field over the last few decades, and it is no longer good enough to hire or promote people based on just gut feel and seniority. There are many tools to help you design the molecules and bonds that will give you an organisation that will survive and thrive.
Your strategy is a molecule – bond it to your cash
Cash is clearly the lifeblood of any organisation. Without enough of it you will become anaemic and die. Conversely, if you are producing enough new blood it enables growth and health.
The science of managing finances is very well developed, and this molecule often gets a very prominent position at the table. What is often overlooked is the need for this molecule to be well connected to the other molecules in your business. Many organisations do not even do a cursory examination of how changes in strategy or people influence the need for cash, or how much cash will be generated from decisions. I am, of course, talking about the much loved activity of setting and managing budgets.
Therefore, our focus in looking at the cash molecule is often not so much on how the atoms and electrons of the actual cash molecule are doing, but more often looking at the connection of the cash molecule to the other 3 areas of your business.
Your strategy is a molecule – bond it to your operations
There is some fascinating research that shows that one of the core differentiators between market leaders and their competitors is how regular and structured they are in the conversations they have. This is also known as having efficient meetings, or improved communications. We all know of the benefits of programs such as LEAN, Six Sigma, Agile project management and a host of processes, tools and techniques to manage HOW we do things.
In looking at diagrams of complex molecules, for me this area, more than any other, represents the links between molecules. It represents how information, value, products, inputs and outputs are generated and passed along to other parts of the organisation that need them. Very often our role as strategic consultants is to improve the efficiency of these links, or establish new links that do not yet exist where they should.
Do you need an alchemist to re-arrange your molecular structure?
Most organisations start from a small core of loosely connected molecules, and ossify into a structure as it grows. My mental picture of this is of random molecules, drifting around in the chemical soup, that randomly bump into other molecules and stick there through a strong or loose link. At some specific points during the life of an organisation, this structure is no longer able to fulfil its purpose.
These points typically occur at breakpoints of around 10 employees, 50 employees and 500 employees. It has to do with the size of efficient teams, which are typically 7 plus or minus two people – so an organisation of 50 people will have an owner managing 5 -7 managers who each have teams of 5-10 people working for them.
All of the art and science of management consulting alchemy is focused on either getting you TO the breakpoint (growth), or at getting you THROUGH the breakpoint (transformation).
Successful people understand that they need many teachers and advisors, i.e. alchemists, to accompany them on this journey of personal and business growth. The role of the alchemist is to change the structure of the compound to something that is better than it was before.