ED is sponsoring the Industry Training Federation’s Vocational Education and Training Research Forum today and tomorrow. The ITF has provided three research summaries that we are running as guest posts - this is the first one. Dr Ken Simpson from the Department of Management and Marketing at Unitec Institute of Technology is presenting a paper today on Building Management Capability Through Performance Diagnostics.

I wanted to begin this piece with a question that will sooner or later trouble all small business owners – how come some businesses grow and prosper, almost from the day they are born; and others are almost immediately fragile, quickly become flustered, and ultimately pass quietly into the great business graveyard in the sky? As a small business owner of twelve years standing myself, this is certainly a question I wished I had an answer to … and, I have to say, one I never really came close to resolving. Now though, with the wisdom of hindsight and 20 years of academic navel gazing under my belt, I have concluded that some business owners know what they are doing and others don’t!

A-hah, I hear you say, rocket science this is not, and of course you’d be right. Nevertheless, that apparently simple observation has a few hidden fish hooks – what is the “what” that these successful business people appear to know all about, and just exactly how do we go about developing the “knowing”? This is the question I have been wrestling with over the past 15 months or so.

Assisted by the Tertiary Educations Commission’s Sector Leadership Investment Fund, I’ve been part of a public/private sector partnership that has included an Industry Training Organisation (Flooring ITO), a government owned tertiary educator (Unitec Institute of Technology) and a small number of committed postgraduate students of business at that institution. The whole project has been managed by Martyn Baker of MWB Consultancy in Palmerston North.

Over much of 2009, Martyn and I toured the length and breadth of the country, talking with flooring industry firms both large and small, domestic and commercial, urban and rural – asking those questions and trying to make some sense out of the answers. At the end of all this, we thought we had been able to identify what the “what” is, by isolating eighteen specific points of difference between successful and unsuccessful firms – at a bit of a stretch, you might say that these are the things that successful firms do well and that unsuccessful firms do badly! That brings us up to date with the current phase of our project.

The paper we are presenting to the ITF Research Forum is about a business improvement model that uses these 18 points of difference as the basis for a type of “warrant of fitness” check on the current health of a specific business. The WoF check is first of all completed by the business owner, according to his or her own perceptions of how the business is performing; then these opinions are cross-checked against the fresh eyes and ears opinions of a student researcher who works inside the firm on an irregular basis over a 6-8 week period.

So what have we found so far? As you might expect, there are of course some predictable differences between the two sets of evaluation, but some less expected issues have emerged. For example ….

• Business owners tend to operate across a very short term and nearsighted planning horizon
• Many business owners are technically very competent, much less so as business managers
• Firms who are members of franchise chains or buying co-operatives are typically more proficient than those who are not
• Rather than there being a single profile of need within the firm, there are several small pockets of need – i.e. things that the boss can do better, things that the sales staff can do better, things that the technical operators can do better. Very much a case of different strokes for different folks.
• There is a very common managerial reliance on “learned it the hard way”, and owners are often sceptical about the ability of coaching, training or mentoring to improve performance.
• However, coaching, training, and mentoring are widely accepted as relevant for others …. but not for me!

So where to from here? Right now, we are in the middle of our first set of five test case applications of the process, with another five test cases to be carried out in the second half of 2010.  If training is the answer, what’s the question? The answer for that will I think have to wait till 2011.