Leadership

The activity of leading a group of people or an organization, or the ability to do this. In its essence, leadership in an organizational role involves
(1) establishing a clear vision
(2) sharing that vision with others so that they will follow willingly
(3) providing the information, knowledge, and methods to realize that vision and
(4) coordinating and balancing the conflicting interests of all members or stakeholders.

A leader comes to the forefront in case of crisis, and is able to think and act in creative ways in difficult situations. Unlike management, leadership flows from the core of a personality and cannot be taught, although it may be learned and may be enhanced through coaching or mentoring.

The individuals who are the leaders in an organization, regarded collectively.

Leadership is in the Entrepreneurship, Management & Small Business and Information & Knowledge Management subjects.

Leadership appears in the definitions of the following terms: dominant leadership, Harvard Business Review, coach, paternalism and criterion-related validity.

Top 5 Must-Read Books for Business Leaders

Running and growing your business is a time-consuming effort that saps you mentally and physically. You might think taking time out of your busy week to read would fall so low on the list of priorities that you would never do any reading at all! However, great business leaders know that one of the tasks you can get the greatest boost to your bottom line from is reading great books. By furthering your business education and knowledge through reading, you can implement what you learn in your business and reap significant rewards.

Here are our top 5 books on leadership in business.

Good to Great by Jim Collins

This incredibly well researched book — 5 years of research — takes Collins and his research team through a list of 1,435 companies in an attempt to narrow down why some companies made it and others didn’t. They end up with 11 organizations that beat out other organizations that often started out in better position. The research goal was to determine what characteristics, including those of the leaders within the business, enabled the firm to survive and thrive while competitors failed. Don’t let the word research fool you; this is an engaging read that tells 11 fantastic stories.

Wooden on Leadership: How to Create a Winning Organization by John Wooden
John Wooden won an unprecedented 10 NCAA basketball championships during his coaching career. He brought together players of differing backgrounds and extracted every last drop of effort from them. Wooden’s success was built on his 12 Lessons in Leadership and his Pyramid of Success (25 habits that lead to personal excellence), and this book takes you through his thoughts on leadership.

The Five Dysfunctions of a Team: A Leadership Fable by Patrick Lencioni

This book was written in a fictional style to best deliver some hard truths to business leaders. Sometimes it is easier to know what not to do than to determine everything you should do. Limiting your biggest mistakes can engage your team better and lead to great results. You’ll learn the 5 biggest mistakes failing teams make, and be able to learn how to avoid them.

The 7 Habits of Highly Effective People by Stephen Covey

Originally published in 1990, this book has topped many best selling lists and has sold over 10 million copies world wide. While focusing not on leading a team or organization, this book will aim to make you personally better both in your job and outside the workplace. However, the great lessons to be learned can be applied to your team back at the office.

First, Break All the Rules: What the World’s Greatest Managers Do Differently by Marcus Buckingham

The rebel inside you has to be drawn to the title of this book. Breaking rules? Sounds great. This book, published in 1999, isn’t based on one person’s perspective of leadership or running an enterprise. Instead the well researched title is culled from over 80,000 Gallup interviews over 25 years. The lessons were taken from both inside the business world and outside in other competitive industries. This book should help you improve in the management of your team.

Management vs. Leadership

Management and leadership skills are often regarded as one and the same to many businesses. While the two inherently share many similar characteristics, they differ in that not all managers are leaders, but all leaders are managers. They are complementary qualities inexorably linked to each other, and any attempt to extricate one from the other is impossible. Whereas the manager exists to plan, organize and coordinate, a leader serves to inspire and motivate. Militarily speaking, a manager is the battlefield general while the leader is the commander-in-chief.

Qualities of a Manager

A manager is considered a copy of the leader, responsible for communicating the rules and philosophies of the company to individual employees, and insuring that they abide by them. For a manager, his or her relationships with employees are determined by a hierarchical management system, and rarely through personal ones. They are responsible for maintaining the day to day operations of the company so the cogs of the operation stay well-oiled. Managers are generally more concerned with the quarterly bottom line, and will often base decisions based on these calculations. Good managers are often considered “good soldiers” in that they rarely question the decisions of the higher echelons of the company, and only serve to enforce the execution of its policies.

Qualities of a Leader

In contrast, a leader focuses on interpersonal relationships with other important contacts in other companies, as well as promoting promising individuals within the company to foster innovation. A leader bases his or her decisions on reports from department heads to assess the entire company’s situation, and future strategies. A true leader will also be willing to ignore the company’s quarterly bottom line for several quarters – much to the chagrin of shareholders – and make investments for a long-range growth perspective. A leader is considered a “fearless innovator” in that he or she challenges the status quo and is unafraid to take high risks in search of high rewards, for customers, employees and shareholders alike.

Comparison Between Managers and Leaders

It is said that a manager asks “how” and “when”, whereas a leader asks “what” and why”. In many professions, managers and leaders assume the same role. However, if a leader of a business simply manages a company – rather than challenge its true potential – then it will likely fall behind its industry peers. Likewise, if managers overstep their bounds and attempt to revolt against the company, then they may soon find themselves out of the job. In some cases, where micromanagement is essential to maximize efficiency, nurture skills and keep employees organized, strong managers are an absolute necessity to prevent high turnover rates and the “brain drain” of a skilled workforce. A good leader will also stay in the front line of battle, and be familiar with every aspect of the company, leading through inspiration rather than coercing through hierarchical control. A perfect manager who attains the status of a true leader will be able to lead people effectively and draw on the correct strengths and knowledge of every key individual in the company. Many managers will struggle for their entire careers and never attain this, but a skilled few will evolve into true leaders.

Keeping an Eye on Your Competitors

It is said that “imitation is the sincerest form of flattery”, but in the world of business, imitation is inevitable, and hardly flattering. For example, Apple’s iPhone and iPad products have been imitated by a number of competitors, such as HTC and Samsung, which have incurred the legal wrath of Steve Jobs and company. Meanwhile, in the video game industry, cookie cutter genres are the norm, with each studio imitating a popular franchise – such as Call of Duty, World of Warcraft or Grand Theft Auto – in an attempt to cash in on current popular trends, rather than shoulder the inherent risks of innovation. Competitors in China have taken imitation to extreme levels, with fake iPods, iPhones and iPads freely available at any major street market. In this world which relies on low-risk and high-rewards, imitation clearly trumps innovation.

However, truly learning from competitors doesn’t mean flat out imitating them. While there is no fault in following the successful trend of a market leader, such as Apple, there is a flaw in slavish imitation. In Apple’s case, its cheaper Android imitators have given Apple the unintended gift of free advertising. People buy Android phones because they resemble iPhones at a cheaper price, but it ultimately fails to satisfy their desire for the real iPhone, which leads to a high turnover rate which benefits Apple. You don’t want to create a product that so closely resembles a competitor’s higher priced model that it causes your customers to view yours as an inferior, cheaper model. However, that’s only a rule of product design.

First of all, be aware of your competitors. Companies often get blindsided by a company which wasn’t perceived as a real competitor until it is too late. An obvious example is cell phone maker Nokia’s fall at the hands of Apple, which had long been perceived as a personal computer company with no interest in mobile handsets. Google also blindsided invincible software giant Microsoft by rapidly transforming from a search engine into a cloud-based software company. In turn, social networking site Facebook hit Google in a blind spot by outgrowing its status as a social site and branching out into all the nooks and crannies of the web, a final frontier which Google had laid claims to. The lesson gathered here is that your competitors aren’t always who you think they are. Besides your normal industry peers, be aware of which hidden companies are threatening to cross over industry lines to threaten your business.

Find several major competitors to follow. Commit your workforce to follow their every move, and try to gauge their business strategies based on their current products, supply chain, pricing and financial condition, if the company trades publicly. For example, Google has been struggling to follow in Facebook’s footsteps with its social network, Google+. You can bet that both companies are thoroughly evaluating the strengths and weaknesses of the other. Facebook has “Like”, therefore Google has “+1”. Google is changing groups into a more user-friendly “Circles” format, so Facebook strikes back by revamping its Groups pages into a new, simpler format. iPhone and Google Apps? Check. Instant photo sharing from smart phones? Check. This kind of rapid fire tit-for-tat is what your company needs to stay competitive and ahead of your competitors. Make sure your products have everything your competitor promises and more – hopefully at a lower price.

Lastly, follow public opinion regarding your competitors. Read its product reviews, and comments posted by real users. Take note of the good reviews as well as the bad, and see how you can use this free advice to modify your own products. Keeping your finger on the pulse of the everyday consumer, who cares enough to post his or her opinions online, can help avoid disastrous product design mistakes. Setting up social networking pages – on Twitter and Facebook – and inviting public discussion regarding your products can keep you well informed about your strengths and flaws compared to the competition.

Developing Organizational Systems for Better Efficiency

Have you ever felt like your business will stop the day you don’t show up? This happens to almost all entrepreneurs at first. Sometimes it’s because entrepreneurs begin by filling every function their business has to offer, from answering the phones to actually making the product. The business actually winds up getting limited by the number of hours the entrepreneur is capable of putting in. Unless something changes, the business stops growing. It also begins to resemble a job—something the entrepreneur absolutely cannot escape from.

This is usually the point where the entrepreneur hires his or her first employee—but often, this doesn’t solve the problem. The entrepreneur gets caught up in trying to make sure the employee does things “right.”

Systems Are the Answer

A system is a specified way of doing things, and it can apply to every single part of your business. You can develop the “best way” to answer the phones and then you can write that way down in the form of a script. From then on out, anyone who answers the phone need only observe the script to answer the phones just like you would. If the employee leaves the company, the next employee just needs to stick to the script. There can be scripts for sales presentations. There can be specific instructions for marketing. These instructions can be as simple as noting that blog posts are written every Monday, direct mailers go out once a month, and follow-up calls happen every Thursday.

As you develop more and more systems you free yourself more and more. You can turn your attention away from performing each function of your business. Instead, you can work on finding other people to perform those functions. You can verify they are following your systems and then you can work on more systems. This is what working “on” your business, instead of “in” your business, is all about.

Systems Give Your Business More Value

When someone buys a franchise they aren’t just buying a brand name—they are buying the specific systems that led to the franchise’s success. Systems are the exact reason why companies like MTN, Chevron, Coca-Cola etc are such as successful today—most of their franchises runs exactly the way every one of them does, regardless of who owns or manages any individual branch. If you develop systems for your company you are opening up the possibility of turning your company into a franchise, creating a lucrative opportunity for your future.

If you’re not interested in franchising, you should know that you may be interested in selling your business one day. Having systems in place, all carefully recorded in an operations manual, will make your business far more valuable.

A lack of systems means you’re really just selling “FFE”—furniture, fixtures and equipment—as well as, perhaps, a location. Offering systems means you’re selling a turn-key business that has been a proven success. The latter is worth a lot more money, meaning you’ll enjoy a much higher return on your hard work and creativity than you might otherwise have.

What is a Sole Proprietorship?

As the name suggests, “sole proprietorship” refers to a business that is owned by a single owner and should not be confused with a corporation. There are no corporate taxes involved and the sole proprietor pays income tax on the profits generated. The person who organized the business pays personal income taxes on the profits made. This makes the accounting procedure relatively simple for the sole proprietor, who also enjoys complete autonomy in terms of making business decisions.

Setting up a sole proprietorship is easy. One of the main steps is to obtain a local business license (a sales tax permit may also be required). For certain businesses, such as restaurants or legal practices, you may need additional local or state licenses. Legal regulations and licenses aside, there are other major factors to consider when setting up a sole proprietorship. You will have to create a business plan, develop marketing and advertising campaigns, set up a budget, and find ways to fund your business.

Advantages and Disadvantages of a sole proprietorship

Many business owners choose to operate as a sole proprietorship to alleviate the difficult tax procedures that go along with other forms of operation. As a sole proprietor, you would simply have to file an individual income tax return (IRS Form 1040) including your business losses and profits. There are no restrictions on the number of people you can hire, and from the tax and legal perspective there is no distinction between you and your business. You can therefore hire as many people as you want and also recruit independent contractors if need be. Being in complete control of their business, sole proprietors make all the business decisions keeping law in mind.

Sole proprietorship is not for every business owners especially business owners that are not willing to assume all risks. Unlike a corporation or LLC, your business doesn’t exist as a separate legal entity. All your personal wealth and assets are linked to the business. Another downside is the inability to raise capital easily. Proprietors cannot sell shares the way other corporations do, so they have to seek out alternative methods to raise the necessary capital to expand their business.

Choosing the best business structure will ultimately impact the success of your business. Setting up a sole proprietorship is the easy and quick way to setup a business, but may not be the best structure for your operation. Make sure you weigh all the pros and cons before deciding if this structure will work for you.

Creativity and Innovation in the Workplace

There was a time when the concept of creativity was only associated with writers, painters, musicians and similar people in artistic professions. But with the ever-increasing necessity of cultivating a unique brand personality, the need for creative thinking has transitioned from the arts into everyday business. In addition, the act of producing a product that distinguishes itself from competitors in a marketplace where differences are often hard to come by demands a high degree of creativity both in innovation and marketing.

As a result, it’s now become commonplace for companies – both large and small – to adopt policies that foster creativity and thereby promote innovation.

But what is meant by creativity? And how can it be harnessed effectively?

There was a time when the concept of creativity was only associated with writers, painters, musicians and similar people in artistic professions. But with the ever-increasing necessity of cultivating a unique brand personality, the need for creative thinking has transitioned from the arts into everyday business. In addition, the act of producing a product that distinguishes itself from competitors in a marketplace where differences are often hard to come by demands a high degree of creativity both in innovation and marketing.

As a result, it’s now become commonplace for companies – both large and small – to adopt policies that foster creativity and thereby promote innovation.

But what is meant by creativity? And how can it be harnessed effectively?

Defining the Creative Environment

Creativity is the mental and social process used to generate ideas, concepts and associations that lead to the exploitation of new ideas. Or to put it simply: innovation. Through the creative process, employees are tasked with exploring the profitable outcome of an existing or potential endeavor, which typically involves generating and applying alternative options to a company’s products, services and procedures through the use of conscious or unconscious insight. This creative insight is the direct result of the diversity of the team – specifically, individuals who possess different attributes and perspectives.

It’s important to note that innovation is usually not a naturally-occurring phenomenon. Like a plant, it requires the proper nutrients to flourish, including effective strategies and frameworks that promote divergent levels of thinking. For example, by supporting an open exchange of ideas among employees at all levels, organizations are able to inspire personnel and maintain innovative workplaces.

Therefore supervisors must manage for the creative process and not attempt to manage the creativity itself, as creativity typically does not occur exclusively in an individual’s head but is the result of interaction with a social context where it’s codified, interpreted and assimilated into something new. Within this system, incentives are paramount – ranging from tangible rewards such as monetary compensation to the intangible, including personal satisfaction and social entrepreneurship.

How to Set Up a Creative Work Space to Foster Innovation

Establishing a creative environment takes more than just turning your employees loose and giving them free reign in the hope they’ll hit on something valuable. As with any other system, the process of creativity requires the proper framework to operate effectively, which also enables management to evaluate the profitability of the results.

Popular approaches to fostering innovation through creativity include:

• Create a stimulating environment. Offices that include stimulating objects such as journals, art, games and other items – some of which may not even be directly related to your business – serve as sources of inspiration. In addition, structuring the work area by removing physical barriers between people will improve communication and promote creative interaction.

• Reward efforts through positive psychological reinforcement. Encourage your employees to take risks, rewarding them for creative ideas and not penalizing them when they fail. In doing so, you’ll enable people to more readily take on assignments that stretch their potential (and that of your organization), discussing in advance any foreseeable risks and creating the necessary contingency plan. Encourage employees at all levels to contribute suggestions for improving current business operations.

• Foster different points of view through outside perspectives. Innovation can often spring from a review of how your customers view and use your products and services. Soliciting their opinions can provide valuable insight into potential areas for improvement as well as areas where you’re succeeding (essential knowledge for positioning against competitors). Other perspectives might include: vendors, speakers from other industries or consumers using a competitor’s products or services.

Business Finance 101

Owning a business can be one of the most rewarding and satisfying ways of meeting financial goals and ensuring that a person’s future is secure and fulfilling. Today’s economy yields many opportunities to people with different skills and strengths. One of the most basic aspects of running a business that is often left by the wayside is that of financial management. Usually only an afterthought, it is the financial management of a company that determines success. The perfect product or service doesn’t mean anything if the money generated goes into the business only to be misused or unaccounted for. Spending the money earned wisely and knowing when to save or invest in growth should be of paramount concern for a business.

Everyone is aware of the fact that most businesses fail within their first year of operation. Often a major contributing factor that leads to failure is poor financial management. A review of the financial information for many failed businesses shows that the business would have actually been quite successful if the owners had just made sound financial decisions in all aspects of the business. It is always recommended to employ the help of a professional like a banking institution, financial planner or accountant. However, a business owner should understand, at the very least, the basic principles regardless of whether a professional is hired or not. This protects the business and the business owner from fraudulent activities. Keeping up to date with the finances and being aware of the principles involved will also beneficially affect other aspects of running a business.

For smaller businesses it may not be practical to hire a professional for all of the financial work, but there are several software programs available that help to educate the owner on basic bookkeeping techniques.

A business owner should be familiar and comfortable with using the following:

• Day to day expense tracking – an owner needs to be able to create and analyze reports that give an idea of the health of a business.
• Accounts Receivable and Accounts Payable – An owner needs to be able to tell when payment is expected and prepare for any outgoing expenditures.

Of equal importance is the ability to determine the current financial state of a business and whether expansion is possible or even necessary due to competition. Being able to identify future trends that can positively or negatively impact a business will go a long way toward helping a business develop staying power in ever shifting market places.

Regardless of the size of a business, the goals of the business and the owner should be kept firmly in mind. While smaller businesses may not immediately benefit or be able to afford an accountant that is an expense that should be worked into a budget as soon as possible. Accountants and even financial planners are able to keep a business on track. They can help to establish realistic long-term goals to increase the chances of success. With the help of a financial professional, cash flow problems can be spotted and tackled.

How a Business and its Employees Can Benefit from Working from Home

Many employees in the everyday grind dream of working from home. Depending on your work responsibilities, however, this can either be a true possibility or a fanciful dream. Home offices can benefit both employees and employers, and lead to decreased costs and increased productivity. Here are some advantages to allowing your workers to stay at home.

For Employees

First, working from a home office is not suitable for all workers. However, with more work being done digitally, huge amounts of work can be completed from a home computer and simply uploaded to the company server or e-mailed to a supervisor.

Obviously, strict deadlines must be set by your supervisor before allowing trusted employees to take company files home. Some companies even use specialized software installed on employee home computers to insure that company secrets are not replicated or stolen.

If you have children, a home office can be a godsend – allowing you to spend more days around them while working. Although you may not be able to do anything extensive with your kids – like take them out to a baseball game – just being around them more is likely to improve your family relationships.

Working at home will also free you up from office distractions – such as chatty co-workers – and allow you to concentrate on the tasks at hand. You may find that you can accomplish much more in the same amount of time at your home office than at your regular workplace. Finishing all your work ahead of schedule can free up the rest of your day – which you can take for yourself or spend with friends and family.

Most companies don’t reimburse their employees’ fuel bills, and working at home can reduce gas bills considerably. It also helps contribute (on a minuscule scale) to sustaining our environment by reducing carbon emissions.

For Employers

Letting your employees work from home might be a micromanaging supervisor’s nightmare. It’s important to make sure you’re sending trusted, experienced employees home, and not the newest guy at the office. Make sure these are people who have consistently made deadlines in the past, and have earned the right to telecommute.

With fewer people in the office, the cost of office materials and utility bills should decrease. Less coffee/tea, toilet paper, pens and paper clips coupled with lower water, phone and electric bills should make any employer smile. You can even reduce the amount of available desks and computers and rotate them among the staff working at the office and the ones working at home. You may even be able to cut out cumbersome phone lines and extensions altogether and opt for an all-Internet workplace, in which office staff and home staff can seamlessly interact with each other via e-mail, instant messaging or Skype.

Allowing more experienced employees to work from home also increases their overall job satisfaction, and as studies show, also keeps them healthier. If your company is paying for their health insurance, your bottom line may benefit from reduced healthcare costs.

Don’t be afraid to renovate your offices to allow some employees to work from home. Studies show that a well-structured rotating office-home workforce can produce happier employees and cut office costs substantially in the long run.

Developing a Winning Strategy

Coming up with a strong, winning strategy for your company should be the backbone of your business plan. Strategies for each kind of company in different sectors will vary greatly, but there are some major recurring themes that all businesses can learn from.

History Repeats Itself

Students of history know this adage well, and use it as their fundamental reason for studying the past. Those who are not familiar with the past are doomed to repeat it, and this is extremely relevant to businesses. If you come out with a product that you believe is a game changer, only to find out that another company tried the same thing a decade ago and failed, would you be inclined to attempt it again? Has anything fundamentally changed in the years between that could give you success where your predecessors had failed? This is a common theme in tech companies – what was impossible yesterday becomes possible today. What if you found that a rising fad today is merely repeating a trend from decades ago? Would you be able to use your knowledge of that trend to forecast the next hot one? This occurs all the time in the cyclical world of fashion.

The first step to developing a winning strategy is to be an astute student of history. This will help you understand the desires of your targets (customers), the benefits receivable from your allies, and the weaknesses of your your opponents. These three are the holy trinity of establishing a winning business strategy.

Competitors’ Successes and Failures

While it’s human nature to marvel at your competitors’ products, grow envious, then try to copy them, it is not always the most profitable route. Take for example Apple’s seminal iPhone and iPad, which revolutionized smartphones and tablet computers, and the slew of imitators that followed. The imitators, mainly from Asia, were unable to match Apple’s numbers, and instead lost money while giving Apple free advertising with inferior products. On the flip side, however, Japanese automakers like Toyota and Honda were able to imitate American automakers Ford and General motors so successfully in the 1980s that they almost caused the collapse of the Motor City in 2008, and created the perception that Japanese autos are cheaper, better made and more fuel efficient, which persists to this day. Imitating your competitor’s success is a 50/50 venture, although the later entrant to the competition will always start at a significant disadvantage.

It is more important to learn from their failures. In the 1990s, Apple nearly collapsed due to the spread of a universal operating system – Microsoft Windows – across a fragmented hardware landscape of IBM clones, or PCs. Apple, with its closed hardware system using its own operating system, was unable to match the combined might of PC makers such as HP and Dell, and was marginalized by a software company which had never sold a single computer.

Who learned from Apple’s failure? Google. The world’s largest search engine, setting its sights on the throne shared by Microsoft and Apple, launched Android, a freely distributed operating system that was sprinkled all over the fragmented hardware landscape of smartphones and tablets from various vendors. Just as Microsoft did in the 1990s, Google captured a large portion of the smartphone and tablet markets through the combined might of a motley crew of hardware vendors using its operating system.

The lesson? Learn from your competitors’ successes, but also understand their failures. Mapping these out will allow you to succeed where your competitors have failed.

Make Sure Everyone is on the Same Page

Many companies have sallied forth, believing that they had an airtight winning strategy, only to have it all fall apart when it became obvious that no one was on the same page.

A perfect example is the “Google triumvirate” of “grown-up” Google looked like a streamlined monster – the world’s largest search engine which earned record revenue and record margins through advertising. Then that plan started to fall apart. Pardon the pun, but current CEO Larry Page was never on the same page as former CEO Eric Schmidt.

What can we learn from Google’s blunders? That everyone in your top-tier management must be committed to the same goals, and if they are not committed to your strategy, get rid of them, to avoid massive headaches down the road.

Plan Your Strategy – S.A.M.

No matter what industry you’re working in, the classic acronym SAM – Specific, Achievable, Measurable – applies to all winning strategies. Your ultimate goal, tempered by the lessons of the past and lessons from your competitors, must be all three. If they are not, start over. If they are indeed specific, achievable and measurable, then you have the foundations of a winning strategy. Just remember to stick with it for the long term.