Most business owners learn essential management principles on the job, often after making many mistakes, each with a degree of pain. That is how I did it over my 35 years of managing a mental health practice. I would make a management mistake and then seek to educate myself by reading business books and talking with others. I found CPAs, financial advisors, attorneys, and other practice owners to be my best teachers.
Furthermore, I see now that I was taking what I knew from my training as a therapist and blending it with what I learned from reading business management books. Much of this website is a summary of these management principles I learned.
Table of contents
- 1: Learning what our business is
- 2: Overcoming whatever “Makes Our Day Difficult” (MODD)
- 3: The decision-making continuum
- 4: Lead people and manage tasks
- 5: Good managers help everyone to manage themselves
- 6: Leaders teach values with stories
- 7: Build a robust process for hiring, training, and firing
In this post, I extract seven of my favorite business management principles from two classic books:
- Joan Magretta with Nan Stone. (2002; Reissued edition 2012). What Management Is: How it works and why it’s everyone’s business. New York: Free Press.
- Dean Hohl & Maryann Krinch. (2003). Rangers lead the way: The Army Rangers’ guide to leading your organization through chaos. Avon, Mass: Adams Media Corp.
1: Learning what our business is
A group of people get together and exist as an institution that we call a company so that they are able to accomplish something collectively that they could not accomplish separately–they make a contribution to society, a phrase which sounds trite but is fundamental.David Packard, co-founder of Hewlett-Packard, quoted in Magretta & Stone, pg. 17.
Management’s mission, first and foremost, is value creation. . . . Value is defined not by what an organization does but by the customers who buy its goods and services. . . . There is really only one test of a job well done–a customer who is willing to pay for it. . . . Only by meeting the needs of customers, as customers themselves define those needs, can an organization perform.Magretta & Stone, pp 20, 23-24
When I first began to practice independently, there remained a rebelliousness within me. The concept that psychotherapy should be about the customer seemed too commercial and grubby. After all, I thought, “I am a therapist who knows stuff. I have a better idea than the client about what needs to occur in therapy.”
Compounding that problem, I yearned to have my skills validated and feel in charge for my sake. The blending of these two problematic motivations together meant that I wanted to define what problems needed to be solved. My attitudes were a problem. I needed to change.
I now see that I did not correctly appreciate the meaning of psychotherapy for my client.
Our business reality
Eventually, I came to accept this reality:
- All psychotherapy businesses sell a service to clients–psychotherapy sessions.
- Clients have many options to solve their problems. Psychotherapy is just one of those options.
- Clients also have many clinicians they might select for their therapy. Therefore, I needed to give them a reason to pick me.
This reality has some harsh implications:
- Psychotherapy is a commodity.
- My client purchases it for their reasons.
- Consequently, psychotherapy has value to my client only if it solves their problem.
- Furthermore, if the value of what I offered does not measure up to clients’ expectations, they leave.
When one grasps these truths, psychotherapy as a business makes more sense. Consequently, the first management principle is about what our business is–a service that must create value for our clients.
Interestingly, accepting this reality helped me give up my need to control the course of therapy. As a result, my retention rates improved. So did my bottom line. It was all coming together.
2: Overcoming whatever “Makes Our Day Difficult” (MODD)
Every business has a set of repeated processes and procedures for getting the work done. Optimally, we create standardized ways to do most of the routine tasks. When we succeed, we have a smooth-running operation. For more on these tasks, see:
- How to master the unrelenting business demands of practice
- Standardizing Everything & Cross-training Everyone Adds Practice Value
And yet, inevitably, some glitches need attention. Let’s call them anything that “Make Our Day Difficult” or MODDs. These can be simple things like running out of printer ink or big ones like the phones stopping working. Whatever these MODDs are, we want to focus on them to eliminate them.
I picked up this concept of MODDs from Rangers lead the way: The Army Rangers’ guide to leading your organization through chaos by Dean Hohl & Maryann Krinch. Hohl is a retired Army Ranger who uses what he learned during combat training to teach corporate executives about leadership and teambuilding. He considers a MODD as anything that prevented a team member from observing and reporting SALUTE, i.e., size, activity, location, uniform, time, & equipment. Interesting, right?
Dealing with internal MODDs
Hohl’s management principle is that we must deal with the internal MODDs before fixing the external ones. I found that to be true with me as well. My most challenging MODDs were inside myself. My personal and mental obstructions to seeing and figuring out an appropriate response were the biggest problem. It was not until my attitudes were right was I able to sort out how to handle the external challenges.
For example, there was a time when I was mad that insurance companies controlled so much of my livelihood. They decided if I was on their panel; the rate I got paid; what hoops I had to jump through to get paid, and the length of treatment in some cases. It all made me angry. I did not want to be a servant of an insurance company. And I am embarrassed to say, some of my conversations with insurance company employees were more aggressive than they needed to be.
Once I could accept that the insurance company employee was simply doing their job, mine got more comfortable. Acceptance of reality always works better than inwardly fostering a sense of grievance that leaks out at the wrong targets.
I have written about some MODDs in this post:
- Overcoming false beliefs about money, business, and selling
- Mistaken ideas that I needed to overcome
- Overcoming bottlenecks in mental health practice
3: The decision-making continuum
I frustrated my staff for decades, often without understanding why. Then I ran across the management principle of a decision-making continuum. This concept, too, I learned from reading Hohl.
I would irritate my staff by my lack of clarity with my teams about my expectations. For example, I would bring up a topic for discussion without specifying, and sometimes not knowing, what kind of feedback I wanted. They would do their best and give me their thoughts. I would then take them and do what I wanted, often confusing them and sometimes offending them.
Hohl & Krinch’s Decision-Making Continuum
The continuum moves from the left side, “Limitations on people, equipment, or time” to the right side, “Stronger teams and/or more time.” In most of our situations, we have plenty of time to deliberate. Therefore, most of our decisions will be toward the right-hand side.
Before encountering this concept, my thinking about decision-making processes had been too simple. I certainly knew about “I tell, and you do” and “I delegate to you.” But I had missed the nuances in the middle. Those middle styles (2, 3, 4 & 5) caused most of my trouble. Specifically, my lack of understanding of the middle styles meant my biggest failure was not defining what sort of decision-making process I expected.
Staff members were especially lost when they thought I was asking for a “majority vote” or “consensus” when, in truth, I only wanted to know, “what are your concerns about my decision.” Moreover, I often found that I was hoping for “what are your concerns” and “your input could affect my decision.” The staff members often wanted a vote or consensus. We were struggling over decision-making authority.
Clarity, clarity, clarity. How often I regret not thinking through what I was genuinely wanting. Here, the management principle is that an excellent manager understands the nuances and then clearly communicates any feedback expectations.
4: Lead people and manage tasks
Leadership: the process of influencing others to accomplish their mission by providing purpose, direction, and motivation.Hohl & Krinch, pg. 123
Somewhere along the way, I figured out the management principle that a leader cannot lead others where they are unwilling to go. As Hohl says, a leader can lay out a purpose, give direction, and motivate, but we cannot make people do things.
Instead, leaders should focus on the next tasks for the team. We were always working on how to improve some aspects of what we did. Doing so fosters a sense of purpose, teamwork, and accomplishment.
And yet, what we can accomplish is always constrained by the limits of our staffs’ time and abilities. The next few management principles help us understand those limits and how to work around them.
5: Good managers help everyone to manage themselves
Most people are deeply—and rightly—resistant to being managed. In fact, the real insight about managing people is that, ultimately, you don’t. The best performers are people who know enough and care enough to manage themselves. . . .Management [has the] responsibility to provide a context of values within which individuals can manage themselves and . . . take responsibility for their own performance.Magretta & Stone, pg 195
No one wants to be managed. Instead, we prefer to be inspired. When leadership focuses on the next tasks and why we are doing these tasks, people want to get on board. Furthermore, as a byproduct, everyone enjoys their work more.
Part of the leadership’s job is locating the sweet spot for each employee. In my experience, all employees want to do a good job. But they stumble when in the wrong place.
I can think of several struggling employees who thrived once they moved to another position. For example, in one case, the role was too isolating. When they moved to a more social spot, they did well. And in many cases, the solution is to come alongside the employee and work through the issues together.
The management principle here is for leaders to help employees to manage themselves. Managers and employees both do best when the employee is tapping into their natural strengths.
6: Leaders teach values with stories
Values are abstract. Set in stories, they come alive, and the stories become parables for right action.Magretta & Stone, pg 200
You may notice that the focus on values keeps recurring in these quotes. Our authors agree that one of the central requirements of good leadership is “providing a context of values” that make the work worth doing. And nothing conveys values better than the stories we tell.
For example, I often told stories of conversations with referral people about how they appreciated us. And stories about marketing events that went well. And we shared stories of our successes in battles with insurance companies or in collecting old money.
The point of all the stories was to encourage and reinforce the behavior that we wanted to see. They also put a spotlight on many behind-the-scenes successes that could easily be missed.
Again the management principle here is to articulate why we are doing what we are doing and inspire excellence.
7: Build a robust process for hiring, training, and firing
Look at any organization known for its ability to execute, and you will find a robust process for hiring, promoting, and firing people.Magretta & Stone, p 207
In most organizations, too little time is spent on hiring the right people and understanding their talent, while far too much time and energy is wasted trying to fix unfixable weaknesses.”Magretta and Stone, p 208
These last quotes may seem out of place. What do the tasks of hiring, training, and firing have to do with creating a context of values? In a phrase, one’s commitment to excellence. We cannot nurture an excellent workplace without hiring and training our employees to do their best. And we cannot keep a healthy environment without weeding out those who compromise the excellence we are striving for.
I have written many posts on how to hire, train, and fire. To see more on these topics, see:
- The ultimate guide to building your staff and culture
- Five ideal employee types in mental health
- Staff development: How to build excellence into your current staff
- When we need to fire an employee
- Addition by subtraction: Types of difficult, disastrous employees
All seven of these management principles are time-tested and yet well within reach of all managers. So while an MBA may be an option for some, most of us will learn on the job. These seven management principles are a good start toward building the excellent workplace we all desire.