3-5-7 management

Most of us are very much aware of the balance between focus on management and leadership. How you manage your business is how your company perform, the conditions your market and surroundings give you providing all your key figures in your annual report.

Leadership is your power to develop your company and secure execution of your strategies and plans. Most of your differentiation in your company comes from your people. Therefor developing your business through organisation and people is essential, starting with focus on your leadership.

Both the management and the leadership are important. But I believe we sometime focus most or even get lost in the management side. We have so many models and theories to describe our management. Just try to think about how you spent most time with your Board. Or with your management group? We even often name it management group and not the leadership group.

As a recommendation the management part I suggest remembering three numbers 3-5-7 as a rule for a fair and simple way to management.

3 flows in your value stream.  Goods, information, and money

Our daily business from sourcing to selling and delivering your goods and services to your customers is your value stream. Here we have 3 flows to work with. The flow of components and goods. The flow of information in the organisation and your money flow. How this work is essential for your earnings. You can fill out so many excel sheets with figures and key indicators. Here it is important to point out a few which describe the relation between input / output and waste of resources.

5 forces evented by Michael Porter nail the focus. Competitors, suppliers, clients, new entrants, and substitutes

Porters model gives us a fantastic overview. Of course, we can go very deep in evaluating our business situation. But we can also point out a couple of key indicators and use the model to have a very fine debate with our team and Board about our situation and how we want to navigate in it. Overview is essential here.

7 key figures to evaluate your business on: ROI, profit ratio, ROE, CTR, assets turnover ratio, solvency ratio and quick ratio.

These figures are an integrated part of any annual report and they can be split into 3:

ROI, Profit margin and ROE express how good you are in earning money

CTR and Assets ratio gives an indication of your efficiency

Solvency and Quick ratio indicate your company’s health and resilience

People and leadership make the real movement and execution in your organisation. You need to attract the right people for the culture and behaviour you want. You must balance the strategic management debate with the human side of what to be expected from your leaders and leadership and make sure you have the right muscles to execute your plans.

Kim Hansen
+45 21 32 89 72
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