What You Can't Learn from Management Books or an MBA.
Books on management, such as on corporate strategy or MBA skills, remain popular.
However, there is also plenty of “living know-how” that is not written in, or cannot be learned from, these books.
I myself have obtained an MBA (Master of Business Administration) and a DBA (Doctor of Business Administration) as part of studying management, so I have come to believe that for those engaged in management, acquiring management-related knowledge is “something you should do” and also “something that goes without saying.” I therefore affirm the value of these management books and the MBA, and by no means deny it.
However, the knowledge learned from books is merely the foundation, and it is also necessary to learn the “application” cultivated through practice.
You may scold me, saying “application is something you learn through work,” but I think that at least sharing these “application” techniques can be extremely useful.
Many of the books and MBA programs mentioned above contain almost nothing resembling this “application.” So I think reading the autobiographies of (not famous but relatable) business owners would be far more educational.
That was a long preamble, but this time I will introduce one technique that can improve business performance in a relatively short time.
Change the Companies You Deal With, and Your Company Will Improve.
What I can say with certainty, through my experience supporting 1,000 companies and running my own company, is this:
The quality of internal and external stakeholders (all people and companies involved with the company)
determines the company's value (performance, ES, etc.) with a very high probability.
Therefore, simply taking stock of these stakeholders will improve performance in a short time.
“I get what you're saying. It's about hiring, right? If good people joined us, we wouldn't have any trouble.”
Isn't that what you're thinking? (lol)
Of course, internal talent is important, but
this time the focus is on reviewing your business partners.
Does your company have “criteria for accepting work”? Surprisingly, many companies have “hiring criteria” or “(supplier) business partner criteria,”
but few companies have “(client) criteria for accepting work.” If you do not clarify these “criteria for accepting work,”
(1) Business performance deteriorates
(2) ES (employee satisfaction) declines and turnover rises
and in some cases, I believe, bankruptcy occurs.
70% of bankruptcies in Japan are attributed to “deteriorating business performance,” but this is merely the official description, and it does not explain the underlying causes.
In my experience, the initial cause of (1) and (2) occurs most often at companies that had no such “criteria for accepting work.” Let me introduce some examples right away.
The Fate of a Company That Didn't Choose Its Clients
This was about ten years ago. I was called in by a person in charge at a major advertising agency. It was a job request: event & system production work for a major telecommunications company. The budget was large and it was a company with a brand, so
at first I was excited.
Apparently, the job was held every year, and for some reason the vendor changed every year. I asked, “Why does the company in charge change every year?” but I could not get a clear answer from the agency's person in charge.
Feeling suspicious, I turned down the job. The company that took it instead was an event company known to a colleague of mine.
A few months later, I got a call from that friend. The event company I mentioned had gone bankrupt. As I heard more, it turned out that the event company had been thoroughly jerked around by the major telecommunications company and the advertising agency, and despite mobilizing almost all of its employees, the system did not meet the requirements (it was actually usable in the end; only some of the conditions were incomplete), so it could not bill for the work, and even the president and employees ended up suffering from depression.
Yes, just as I had predicted, it was a “black” client. (Apparently there was nothing wrong with the event company's technical capabilities.) I still remember feeling relieved that my decision to pull out of this project had been very much the right one.
Now let's talk about something brighter. When I had just become a commercial producer, I made sales rounds everywhere. My sales efforts paid off, and I was contacted by a certain client. When I gladly went to see them, the order amount for the job was a mere 100,000 yen. The job was an event in Ginza turning a lottery drum (garapon) (lol). Although I thought, “But I'm a commercial producer...,” I worked as hard as I could on that job.
Several jobs like that followed, and then I was called in again. Perhaps half out of desperation, I went thinking, “Next time, let's use an even bigger lottery drum,” only to be asked, “It's a commercial job. Do you want to do it?” I was given a generous budget for that job,
and as a result it won an international advertising award.
I heard later that the person in charge said, “I asked Ashida to do the commercial because he works hard even on a 100,000-yen budget.” And because I respected that person in charge, I had come to enjoy the work even on a 100,000-yen budget. This is one example of a 100,000-yen job leading to a job worth tens of millions of yen.
I have many more episodes like this, but there would be no end to it, so I'll stop here. Now, which is better, the former or the latter? The answer is crystal clear.
From these experiences, I learned that:
“If you choose good clients, your company will prosper and your employees' motivation will rise.”
“If you choose bad clients, your company will decline and your employees will lose their drive.”
That is what I learned.
This lesson could not be learned in an MBA program, and considering that many companies have no “criteria for accepting work,” I think it is a concept that many businesspeople are not conscious of. (Although many people deal with it unconsciously...)
Based on these experiences, and through analysis of our past client patterns and so on, our company created its “criteria for accepting work.” So, as a reference for your company in creating its own “criteria for accepting work,” I will introduce ours.
Our Criteria for Accepting Work
Appropriate Criteria for Accepting Work Make a Good Company
As you continue working, you will meet all kinds of clients.
- Famous companies,
- Large companies,
- Big budgets,
At first, you are overjoyed to win orders from such companies, but there are many mistakes in deciding to accept work, and you may be jerked around by the client, not get paid even after delivery, or have responsibility shifted onto you. Working with such clients brings nothing but bad things: lower employee motivation, exhaustion, deteriorating finances, and so on.
That is why our company has established clear criteria for accepting work. These were formulated by analyzing various cases from our PQC data. In fact, if we carry out work without adhering to these criteria, the troubles described above occur almost 100% of the time.
The foundation of our criteria for accepting work is the client's courtesy and sense of morality. It comes down to whether the qualities necessary for people's social activities, such as courtesy and morality, have properly taken root in the executives and employees of the client company. Of course, we do not only demand courtesy and morality from clients; please do not forget that our company is also expected to meet these standards by our external partners.
Strategic Partners' Criteria for Accepting Work
Good clients: Good clients have the following attributes. Please keep these requirements in mind when starting a business relationship.
Doing business with clients like those below, even if they are small companies or the order amounts are small, will bring great, great benefits to our company well into the future. Business with such clients increases bottom-line profit, raises staff motivation, and expands project opportunities, creating favorable circumstances for our company as well.
[Hard]
- Companies whose business results are not falsified
- Companies without enormous debt (money)
[Soft]
- Companies with accumulated know-how (explicit and tacit knowledge)
- Companies with extensive networks (information)
- Companies that have accumulated brand facts (brand)
- Companies that own products and services (things) that truly shine
[Human]
- Companies whose executives / senior management always aspire to the company's growth
- Companies that are not fixated on making money and act toward their corporate mission
- Companies whose executives / senior management have the passion and spirit to get those around them involved
- Companies with an attitude of growing together
- Companies that value their employees (people)
- Companies that value their partner companies
- Companies with solid manners and courtesy
Conversely, clients to be wary of:
Clients to be wary of have the following attributes. In dealing with clients, it is essential not to be swayed by company size, brand power, or large order amounts. Business with such clients lowers bottom-line profit, increases workload, lowers staff motivation, and causes loss of other project opportunities, and in some cases can put our company in a critical situation. Caution is required when starting a business relationship.
- Companies with many employees who badmouth their own company: they are not united, and think anything goes as long as they can blame the company.
- Companies that settle things with thanks: they think saying “thank you” means they don't have to pay.
- Companies that ask for success-based fees or “pay you when we make it big”: they are not prepared to pay for services.
- Companies that blame external factors: they always look outside for their own responsibility. (A blame-shifting culture)
- Companies that cherry-pick knowledge: a petty mindset of dangling the prospect of big jobs to extract know-how.
- Companies with a bad attitude and a lack of courtesy: they look down on partners. An icon of treating subcontractors like slaves.
- Companies with no drive: without a spark, results will never come.
- Companies that do not keep promises: those who cannot keep small promises cannot achieve big goals either.
- Companies that haggle over prices: they see no value in the service.
- Companies whose words and actions do not match: people who are all talk take no responsibility for their orders.
- Companies that hold competitive pitches: a sign that they do not want to take responsibility for the work. (A culture of discriminating against subcontractors)
In Closing
Some of you may have thought, “What a cheeky company!” However, in the past I myself worried about reading between the lines, being considerate, commercial distribution channels, and so on, and felt suffocated both inside and outside the company; even though I was the president, there were times when I hated going to the office.
Time and money were indirectly taken away, and even our finances deteriorated. The conclusion I reached after thinking hard about the cause was the decision to (be honest with myself and) distance myself from unpleasant people, or to stop trying to read between the lines and to speak up with advice instead.
Around the same time I made that decision, I was called out by one of our partner staff. Apparently they had been treated carelessly by our staff and had come to appeal directly to the president (me). External partners are a great asset to our company, because without them our business cannot function.
(https://toyokeizai.net/articles/-/258196?page=3)
Our staff had been rude to that external partner. This came as a great shock to me. From then on, we temporarily stopped our expansion strategy and
decided to switch to moral management (/column/column-3723).
Today I am very grateful to that external partner, because they showed me the company's vulnerabilities. From then on, I made a point of saying what I noticed, whether to clients, employees, or friends.
What I created as a result (for the company) is the “criteria for accepting work” above. Then, gradually, something strange happened. Friends became even closer friends, good companies brought even more benefit to us, and conversely, free riders and people and companies with parasitic tendencies drifted away.
This is the background embedded in our “criteria for accepting work.” I encourage all of you to try creating your own “criteria for accepting work.” However, it would be wise not to make them public as we have... Thank you for your understanding.
Text: Hiroshi Ashida
●Column articles are scheduled for publication on the 1st of each month.
Column scheduled for April: “The Leadership Most Presidents Don't Know About”