In university careers related to business administration, basically, how to properly manage an organization is taught.
Everything is aimed at perfecting and improving techniques and procedures so that the production unit is as efficient as possible.
From the detailed analysis of costs, to the planned and careful commercial management, through a search for permanent quality, these are the axes through which our training passes.
Now, after twenty years as a consultant, I find that many highly disorganized companies still thrive. And not only that: companies that violate the most basic principles of quality and even seem to make fun of their customers, grow.
On more than one occasion, a colleague of mine has said sententiously "this business, like this, cannot last more than 2 or 3 years…" and the company is still there, multiplying its profits, after 20 years, without doing anything that the consultant said.
Recommendations that, in addition, were correct and consistent with the best business school.
Now, as experts, we can close our eyes, cling to our literature, and ignore these anomalies.
Or, at once, take the trouble to investigate them thoroughly.
Definitely:
Why are there companies that doing things wrong, do well?
Analyzing a dozen cases, which is obviously not a statistical basis, but can be useful from the empirical point of view, I found that these companies, let's call them "anomalous", present two basic situations:
-
They thrive on a market anomaly
This is much more common than you think. The "manual" conditions that managers rely on are rare.
Therefore, a company that, for example, provides a very poor quality of service and makes large profits, should be eliminated by a competitor willing to work better with a lower margin.
But for this, two conditions must be met: capital available to invest, and entrepreneurship. In other words, someone needs to see the opportunity and be willing to take some risk to take advantage of it.
In Argentina, for example, this is not abundant. What we would call "capital" in the abstract is extremely conservative, even more so than in other countries. This may originate from bad historical experiences, or an excess of regulations… but that is another matter.
What counts is that that company that profits by working poorly, can breathe easy for a long time: the most efficient competitors that the manuals describe so highly, well…. they take (sometimes years) to appear.
Another factor to take into account is the ignorance of the customer. Upssssss… did I say something wrong?. Sorry. But the customer, as a consumer, can, and is, quite ignorant. And it's not just inefficient companies that are going to help instruct you.
For this reason, it is essential (and this is if the State should intervene actively) to have a better educated population. Which, consequently, will tend to become better informed.
In our context it is possible for a company to offer a lousy service, and continue to catch the unwary through promotional actions, at a higher rate than it loses customers. If access to information is limited and biased, the non-conforming will not be very active, they will not be able to sufficiently publicize the situation, and above all, future buyers will not take these messages into account.
They thrive on special "skills"
Some time ago I worked with a cleaning products distributor, which from an organizational point of view was a real calamity. And as a consequence, the products were delivered badly, after the deadline, with quality problems, billing errors, delays in customer service, bad management information, zero human resources policy, etc… in short, one of the most complete catalogs management failures.
However, it grew at 10% per year, sustained for more than 15 years.
If someone's heart is not beating, but they are walking… we should ask ourselves what happens, right?
Well, the leading salespeople had created a network of relationships between customer employees. I said well, the employees of the clients, in a personal capacity, and not with the client company.
In fact, they functioned as a parallel job board, thus creating a chain of favors. Pedro wants to leave his job, I detect a possibility for him in another client of mine, I favor migration, and I have Pedro in debt to me installed in my other client.
They are more or less covert forms of bribery, made possible by the low loyalty of employees to the very company to which they belong.
This would also be a "failure" of the contracting company… from which it can be deduced that a flawed company will tend to hire flawed suppliers… because they have a common code. In this case, the "accommodation" of acquaintances.
If we look at it outside of ethics, this is the special skill my client developed, and the real cause of his growth.
In that field he had no competition, of course.
One of the special skills that inefficient companies develop is to keep the buyer / decision-maker (person) satisfied and not the client company.
Another company, in this case a manufacturer, had extremely developed its political relations. In fact, the owner was particularly dedicated to this activity, achieving a series of advantages in relation to his competitors.
The quality of the product and service was really bad from the perspective of an end user, however the billing grew month by month, due to recommendations of the highest level. Recommendations that responded to an exchange of favors (including support in this or that campaign). In a country where the public sector manages 40% of the economy, it is not surprising that it is successful.
Another special ability is to destroy competitors, rather than improve performance. This is more transparent, but it basically consists of draining the supplier's HR, or altering the relationship with its suppliers and / or customers, through more or less Machiavellian practices. Obviously, in a dynamic economy this would be ineffective, because hurting a competitor opens the door to ten new ones, and that is why companies focus on improving themselves. But in somewhat fossilized economies, where we know that a weakened competitor will not be replaced by a more vigorous one, what better way to divide the market between two or three?
In general, what we call special skills, end up "protecting" the inefficient company from its competitors, by moving it from the terrain of having to face the price / quality mix, towards darker areas.
In summary…. As the old Spanish songbook says… "the Saracens arrived and beat us to death, that God helps the bad, when they are more than the good ones…."
When we analyze a business, let's take a closer look, and put the manual aside a bit. Only in this way will we be able to overcome these perverse organizations, which block the passage of healthier enterprises, and ultimately fairer for the whole of society.
