To Build and Evolve a Machinery

1. Manager as someone operating a Machine to achieve a Goal

• No Matter how well you design the organization (machine) there are always going to be areas that require some fixing.
• Keep comparing the outcomes with your goals. For example, if your goal is to achieve 25% return per annum, review the performance at the end of every quarter to see if you’re able to achieve at least 6.25% or closer to it. If not, maybe your strategy requires a bit of tapering.
• A great manager is an organizational engineer. As you might remember from the beginning chapters, Ray used to take building of the organization as a science and used psychological techniques to keep the team motivated.
• Understand the difference between managing, micro managing and not managing at all. Micromanaging is a concept where managers track every detail of the employee and will not let it take any decisions on its own. A well-managed company will delegate almost everything except the most strategic decisions on which the future of the company lies.
• Recognize and deal with key man risk. Take the example of HDFC Bank. Aditya Puri, who was the founding CEO of the bank, was a very capable banker and had managed HDFC Bank very well. However, he has to leave some day. Hence a proper succession planning started almost a decade prior to his departure from the bank. This is required in every organization to ensure a smooth transfer of leadership.
• Hold regular meetings with the team in order to inform them about the performance of the company and their contribution in the same.

2. Perceive and don’t tolerate problems

• Watch out for the boiling frog syndrome. It is said that if you put a frog into  boiling water, it will jump immediately. However, if you put it in  water at room temperature and slowly start heating it, it will stay there till it dies. Similar is the case with managers. Small but unnoticed unacceptable things, can turn out into events that are disastrous.
• Beware, that if no one thinks something is wrong, it’s right. Basically, do not depend on others’ thinking. Have your own independent analysis of the case and come out with your own opinion.
• Don’t be afraid to fix difficult mistakes. Understand the problem and come up with a detailed solution.

3. Diagnose problems to get at their root cause

• A good diagnosis will get to the root cause of the problem to find out what actually went wrong with the people in charge that led to the issue.
• If someone isn’t suited for the job, the best decision is to let him/her go.
• To diagnose a problem, ask the following main questions:
  1. Is the outcome good or bad?
  2. Who is responsible for the outcome?
  3. If the outcome is bad, if the person in-charge is incapable or the organizational design was wrong.

4. Make necessary improvements

• Make the organization self-reliant that is able to sustain even in your permanent absence.

5. Don’t ignore governance: Ray has suggested the following organization structure which is necessary for ensuring smooth running of the organization.

• There will be 1-3 chairmen who are overlooking the board and the CEO. The board has the power to replace the CEO.
• The CEO will undertake the responsibility of managing a few cabinet members and a close team who may be the future group of leaders. 
• The CEO should not be given the responsibility of handling the entire organization. The line managers should be responsible to do so.
• As you can see the “Rest of Organization” is outside the third and last circle under the CEO’s control.