What Management Is (How It Works and Why It’s Everyone’s Business) | Joan Magretta

Summary of: What Management Is (How It Works and Why It’s Everyone’s Business)
By: Joan Magretta

Introduction

Welcome to the summary of ‘What Management Is (How It Works and Why It’s Everyone’s Business)’ by Joan Magretta, a book that explores the often misunderstood profession of management and its importance in driving progress in modern society. This summary highlights key insights into the true purpose of management, which goes beyond supervising others and is primarily focused on creating value. You’ll learn about the different interpretations of value, what constitutes a solid business model, the role of strategy, and some essential performance disciplines. Additionally, delve into techniques for managing people and fostering a culture driven by shared values to pave the way for consistent excellence and success.

The Real Business of Management

Management is a crucial driver of progress in modern society, yet its reputation continues to decline due to misconceptions about its purpose. It’s not just about supervising others, it’s about creating value for customers, stakeholders, and the marketplace. This book explains the theory and practice of management, emphasizing the importance of defining value and focusing on the external customer. Management must continuously remind the organization of this goal to succeed.

Crafting Successful Business Models

A good business model should be clear, simple, and make sense to investors and customers. It is the foundation of every successful enterprise as it animates the principle of modern management. Companies must develop stories that reflect their personalities and priorities to shape their value creation mission. Crafting a new business model is like writing a new story, variations of old ones. Successful companies like 3M and Southwest Airlines relate stories that celebrate their inventiveness and extraordinary customer service, respectively. These stories make the business proposition easy to understand, creating a good business model that tells a good story.

Strategy – The Key to Business Survival

A solid business model is fundamental to an organization’s survival. One crucial aspect of this model is strategy, which acknowledges competition and helps companies stay ahead of the game. Although everyone agrees that strategy is vital, there’s no agreement on what it means. Everything from strategic plans to mission statements is often mistaken for strategy. Management must remind everyone of the importance of strategy constantly and have an external orientation. Ignoring strategy would be ignoring your company’s performance.

Keys to consistent excellence

The keys to consistent excellence lie in basic performance disciplines, according to this book. One such discipline is the 80-20 rule, which states that a small fraction of effort generates a disproportionate amount of results. This principle has many applications, such as identifying the most profitable customers or products and improving product quality by focusing on a small number of issues. Former General Electric CEO Jack Welch also applied the 80-20 rule to allocate resources to the areas that promised the greatest returns. This book offers insights into how basic performance disciplines can help managers achieve consistent excellence in their work.

The Power of Quality and Continuous Improvement

Discover how identifying critical quality elements and applying Pareto’s Law and continuous improvement can significantly benefit your business.

In today’s competitive business landscape, organizations are always looking for ways to improve performance. One way to begin is by identifying what customers value and referring to them as “critical to quality” elements, or CTQs, according to G.E. By focusing on these elements, organizations can strive towards greater quality.

Unfortunately, most of the time, effort is wasted, with only 20% of it bringing about 80% of the results, explains Pareto’s Law. The good news is that by redirecting even a small amount of energy into more productive pursuits, significant benefits can be enjoyed.

Consistently applying the 80-20 principle may not seem intuitive, which is why it is important to avoid scattering your attention among various issues. Instead, use the 80-20 insight to become more effective and work smarter, not harder.

Another fundamental business concept to keep in mind is continuous improvement. Whether referred to as Moore’s Law or kaizen, the idea is to not only improve but to improve the rate of improvement. Continuous, gradual improvements every day will lead to significant long-term benefits for any organization.

In a world where the bias is already against large corporations, striving towards quality and continuously improving may be the key to standing out from the rest.

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