The multi-millionaire developerhad long track record with investments in number of large resort properties. He thought that when he hired Fortune 500 hotel chain to manage his latest development he would free himself up to do what he did best – build and create – while they did what they did best: make profit.
He was right: sort of. He found time to focus on the next big project. And the hotel chain started making money. The problem was, as he discovered through his year-end audit, their idea of profit centre was him. They billed everything they could – services, repairs, and sundry unexplained items – to his half of the partnership.
The developer learned his lesson. For his next project he hired an overseer – someone to manage his assets on site, in real time.
Trust, but verify!
Big or small, enterprises exist in web of relationships that thrive on three-word philosophy made famous by former US president Ronald Reagan – “trust, but verify”. Reagan was talking about nuclear missiles, but the principle holds true for business.
Generally speaking, the more we trust the less we verify. At the CEO-to-CEO level, handshake can still seal deal and, depending on how many details the two have agreed upon, may be sufficient foundation for partnership. But when most of us are working on shared projects, trust shouldn’t be granted outright – it must be earned. Earning trust requires period of vigilance, transparency, and scrupulous behaviour by both parties.
The question of when you require “your guy” to be part of project is not as difficult to answer as the question of “which guy”. If the project is big, important, geographically remote or blend of different company cultures – you need an overseer.
The “which guy” question, however, is trickier. There are very few no-brainer decisions in daily management. Success always depends on those 40-to-60 percent decisions that are essentially judgement calls. Putting an aggressive person inside project with mandate to look for trouble can cause trouble, prevent trust from growing, or maybe lead to litigation. On the other hand, passive overseer may be unable to evaluate practices that straddle the borderline. The worst kind of overseer buys into the other side’s reality to the point of slighting your interests.
Most companies are hard-pressed to find trusted, ready-to-go candidates for the job. But, if you’re knowledgeable about the industry, it’s less important to be knowledgeable about the person you employ. Why? Because you will know what it takes to succeed. You’ll know what traps, pitfalls and opportunities lie ahead. He’ll be your eyes and ears, while you provide the interpretation – at least, until he’s caught on.
If, on the other hand, you and your overseer both know the industry, you can give him latitude enough to decide when to bother you and when not. This solution delivers the best of both worlds and your main concern is to avoid taking the smooth running so much for granted that you lose your feel for the project.
Then there are the times when you don’t know anything. It could be new venture into interactive fulfilment or foreign licensing agreement. Now you’ve got to find the right person with the specialised knowledge, give him or her primer on company culture and lesson in cost consciousness.
Overseeing the overseers?
So when do you “second-guess” your adviser? The answer depends partly on your level of knowledge, but also on instituting system of checks and balances. You don’t want to wait until the year-end or even quarterly report to discover “your man in Havana” has misconstrued his instructions or lost control of the situation. It’s best to have regular briefings in which your role is clearly that of devil’s advocate. This helps keep everyone sharp, yourself included.
Keep in reserve the temptation to wade in, take charge and re-direct strategy – it prevents complacency from setting in.
But be careful before making good on any threat to seize the reins. If you’re David Ogilvy worrying about an ad campaign, there’s good reason to second-guess – because you’re one of the guys who wrote the book on advertising.
If, however, your advertising expertise is based on reading lots of magazines and watching hours of TV, that’s another kind of second-guessing. Amateurs do have accurate insights and good gut instincts, but the instances are few while the examples of failure are many.
Mark McCormack is the founder of International Management Group. www.successsecrets.com.
