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Institut for Produktion og LedelseDanmarks Tekniske Universitet
John Heebøll
Business Management
R & D
Shareholders
Board
Director
Sales & Marketing Production
Country A Country B Product A Product B
Admin
Institut for Produktion og LedelseDanmarks Tekniske Universitet
John Heebøll
VÆKSTHUS+
Management is --- --- the Noble Art of --- ---- achieving Results --- by Means of other People
Institut for Produktion og LedelseDanmarks Tekniske Universitet
John Heebøll
VÆKSTHUS+
Man’s Behaviour is a Result of--- CONTEXT!
Sigmund’s Personality Model
Super I
I
It
Unc
onsc
ious
laye
rs
Culture Norms Rules
Common sense Rationale Logics
Feelings Intuition Impulse Instincts
Cons
ciou
s
laye
rs
What is sensitive to CONTEXT?
By example:
Institut for Produktion og LedelseDanmarks Tekniske Universitet
John Heebøll
Milgram’s Obedience Study:What proportion of a group of normal adults would voluntary deliver whatever they believed to be a fatal electric shock chock to another human being? 65%
Institut for Produktion og LedelseDanmarks Tekniske Universitet
John Heebøll
Create the Appropriate CONTEXT
1. Communicate realistic and logic objectives
2. Set your team: be specific when hiring (and firing)
3. Set the standards by being a role model yourselfa. High self-esteem is a precondition for being appreciative
b. Trust is usually self-fulfilling and rewarded by trustworthiness
c. Competence is crucial - in particular management skills
d. Everybody love succesfull generals
4. Monitor, maintain and develop the corporate culture
5. Errors and failures happenActive and independent people make more errors than passive and
cautious people – and they do it for the cause
Institut for Produktion og LedelseDanmarks Tekniske Universitet
John Heebøll
The Balance of Power
EUROPE ENGLAND/USA
Shareholders Shareholders
Management Management
BOARD
Director(s)
Board of Directors
Institut for Produktion og LedelseDanmarks Tekniske Universitet
John Heebøll
The Balance of Power
EUROPE• Alliance between board and directors => stability and long-term
objectives. • Higher rate of survival• Distribution and shareholder value adjusted to long-term
objectives• Companies are governed by their objectives.
ENGLAND / USA• Board of directors are hired by the shareholders => shareholder
values govern the management• Often very efficiant and productive companies but vulnerable due
to high distribution and strategic manouvering to increase share prices
• Companies are governed by their profitablity.
Institut for Produktion og LedelseDanmarks Tekniske Universitet
John Heebøll
The Balance of Power in the Large Company
The roles and assignments of the board: Control and management
• Return on invested capital = distribution and price of shares
• Longterm development
• Order
• Supervision of directors
• Strategic issues and decisions
Management
DIRECTOR(S)
BOARD
Shareholders
Institut for Produktion og LedelseDanmarks Tekniske Universitet
John Heebøll
The Balance of Power in the Start-up Company
A variety of interests are represented
The assignments of the board are unclear. Yet full responsibility, hazy insight and limited influence.
Main assignments:• Competencies• Experiences• Inspiration• Consultancy• Networks• Capacity• Control and supervision
Management
DIRECTORSHAREHOLDERSBOARD
Institut for Produktion og LedelseDanmarks Tekniske Universitet
John Heebøll
BOARD ASSIGNMENTSImplementation of SUPERVISIONINFORMATION• Sales and production: actual results rel. to. projections• Daily management: transactions recorded?• Contracts: duties met?• Creditors and debtors • Staff: employment, business culture
CONTROL• Auditor’s reports• Asset management• Relations to authorities• Relations to stakeholders and employees
Institut for Produktion og LedelseDanmarks Tekniske Universitet
John Heebøll
BOARD ASSIGNMENTS
Implementation of MANAGEMENTDECISIONS• Hiring /firing daily management• Major financial transactions – like funding of loans• Major new responsibilities – like contracts, projects etc.
BUSINESS DEVELOPMENT• Major changes in preconditions
(Threats & opportunities)• Revision of the business plan
MENTORING• Formal tasks – as ordered by the board• Informal action – case by case as required.
Institut for Produktion og LedelseDanmarks Tekniske Universitet
John Heebøll
BOARD Legal ResponsibilityIn Denmark: the Danish Companies Act. § 54CULPA! Display Due Diligence, and Yee shall not be Condemned
• Read the Auditors Reports – and react when necessary• Make sure that minutes reflect actual decisions and statements• Make sure that minutes are signed by all boardmembers• Study the backgrounds for major decisions carefully• Insist on updated quality economical reports• Insist on dissent notes in minutes if you disagree or if decisions are illegal• Check cash ressources and relate them to obligations• Insist that the board’s specific instructions to the director are written into the
minutes – in particular when cash ressources are low.• Reject transactions that the company cannot pay for• RESPONSIBILITY requires INSIGHT and INFLUENCE. Resign if this
precondition is not met, (Use resignment with caution – not as a threat but as a consequence following a legitimate though unmet request for change)
Institut for Produktion og LedelseDanmarks Tekniske Universitet
John Heebøll
BOARD work: MEETINGSSTRUCTURE; ORDER & DISCIPLIN!• Board-activities are traceable. Meetings are numbered for reference• Call meetings at least one week before meeting time• Send out minutes no later than one week from meeting time• Be on time and well prepared• The chairman runs the meetings according to the protocol• Minutes and notices incl. enclosures are filed in a separate binder
STANDARD ATTACHMENTS to Notice of Meeting1. The Directors report to the board (situation report)2. Economical report
1. Budget2. Realised3. Forecast
3. Individual case memoranda for all essential decisions
Institut for Produktion og LedelseDanmarks Tekniske Universitet
John Heebøll
The IDEAL Board
A Professional Management Unit
1. Board members are chosen from1. Experience2. Networks3. Character
2. Competencies cover all importent aspects:1. Sales & marketing in the domain2. Human ressources3. Finance4. Business administration
3. The board is a smooth running team
4. The chairman and the director have frequent contacts and work well together
5. ONE dominant objective only: make the company a SUCCESS
Institut for Produktion og LedelseDanmarks Tekniske Universitet
John Heebøll
The IDEAL Board: what is it worth:
Management
Mar
ket P
oten
tial
Sal
eabi
lity
Valua
tion
Investment Domain, Competent Capital
Found
ing T
eam
Board
Institut for Produktion og LedelseDanmarks Tekniske Universitet
John Heebøll
Find Your Board Members
It’s a marketing job!• The Business Plan must be finalized• Find your chairman at first. Look for a real networker with general management
experiences + an interesting position in the business community• Start your quest for board members in the chairman’s network – together with the
chairman• Aviod conflicting interests = no competitors, no suppliers and no customers in
your board or your founding team
- And they cost!• Quality is related to price in this game• Pay when your company is capable. By example:• Profits < ½ Mio DKK: 10 .000 DKK per member per year. 20.000 to the chairman• Profits > ½ Mio. DKK: 2% of annual profits to each boardmember. 4% to the
chairman.• You may consider stock option programs and bonus. E.g. After a succesfull
funding round, boardmembers are paied a bonus = DKK 10.000. Chairman gets 20.000
Institut for Produktion og LedelseDanmarks Tekniske Universitet
John Heebøll
TIP of the Day
1. The Chairman and the CEO must work well together: they are the core management team
2. The Chairman must operate in the interest of the company, considering all legitimate interests of the stakeholders
3. The board has one single objective: the interests of the company and it must work for the benefits of the company only.