Managing

"Management must manage! It's a very simple credo, probably the closest thing to the secret of success in business, in professional life and in almost anything you undertake. Management must manage means you have to get results."

— Harold Geneen

Geneen ran ITT from 1959 to 1977 and turned it into one of the largest conglomerates in the world, with around 350 acquisitions in 80 countries, in businesses as different as telecommunications, insurance and Sheraton hotels. He studied accounting at New York University and before ITT was a vice president at Raytheon. Managing, written with journalist Alvin Moscow after his retirement, is his manual on how to lead with discipline, numbers and personal responsibility.

Geneen opens with a provocation against the management fads of his era, like Theory Z. He holds that you can't run a business with a theory, and proposes his own, Theory G, which boils down to one sentence: management must manage. For Geneen, managing is deciding and making sure what was decided gets executed.

The lessons on how to run a business are direct:

• A book is read from beginning to end; a business is run the other way around. You start with the end, the result you want, and then do everything necessary to get there.
• The executives at many companies don't achieve results because nobody forces them to. The leader's job is to demand them.
• Every company has two structures: the formal one, on the org chart, and the informal one, which is how people really relate and decide. You have to know both.
• Being surprised by a problem that could have been anticipated is an executive's gravest failure; planning exists so that doesn't happen.

On people and leadership, he recommends:

• In business everyone is paid in two currencies, money and experience. Early in your career, take the experience; the money comes later.
• Leadership isn't taught, it's learned, and it's practiced more through attitudes and actions than through words.
• A leader needs a real open-door policy, so that people aren't afraid to approach for any reason.
• Performance shows on its own; the hard part is detecting the lack of performance, which hides better.

On the risks to the executive himself, Geneen devotes a whole chapter to an unusual diagnosis. The worst disease of an executive is not alcoholism, as people believe, but egotism.

On growth, Geneen defends the route he followed at ITT, which grew mostly through acquisitions: it's better to take a business that already exists and build on it than to start a new one. In his logic, the purchase is only the starting point; what creates the value is the management discipline applied afterward, with plans, goals and clear owners.

The concept to master is the numbers. At ITT, Geneen ran around 250 profit centers, and demanded from each a detailed plan and growth and profit targets for which its head was accountable. His point is that numbers have a language of their own: when you master it, you stop reading numbers and start reading meanings, and you know where to ask the next question.

A simple place to begin: write on a sheet the result your company must achieve in three years, as one figure. Below it, note what would have to be true in two years, in one and this quarter to get there. Compare that list with your current priorities and adjust those that don't connect.

As a founder it will help you lead from the result and not from the activity, and to build early the habit of reading your company's numbers with the depth of someone looking for what's behind them.