Self-Taught MBA: Developing Executive Thinking - Fine Homebuilding

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Building Business

Building Business


Self-Taught MBA: Developing Executive Thinking

comments (0) November 1st, 2012 in Blogs
FPR Fernando Pages Ruiz, contributor

Like most builders, I came into the business as a manager, with an intimate knowledge of the trades and a good handle on running a job site. From the beginning, I was fortunate to work for bosses and with partners that had a different set of skills. They had learned to make something out of nothing by using their imagination to see an opportunity, envision how to develop it, and then gather the resources (people and money) to do it.
The most difficult step for any manager moving into leadership is to allow others to manage. Once you have assigned good, skilled people to take over the details as you train your focus on the big picture, you have made the transition from manager to executive. 
Like most builders, I came into the business as a manager, with an intimate knowledge of the trades and a good handle on running a job site. From the beginning, I was fortunate to work for bosses and with partners that had a different set of skills. They had learned to make something out of nothing by using their imagination to see an opportunity, envision how to develop it, and then gather the resources (people and money) to do it.Click To Enlarge

Like most builders, I came into the business as a manager, with an intimate knowledge of the trades and a good handle on running a job site. From the beginning, I was fortunate to work for bosses and with partners that had a different set of skills. They had learned to make something out of nothing by using their imagination to see an opportunity, envision how to develop it, and then gather the resources (people and money) to do it.


A buddy called to shoot the breeze and tell me about his current job. "I'm framing houses again," he told me, then complained about the hardship of doing physical labor on aging knees and elbows. "But it's work, and I'm glad to have it," he added. Then he confessed that he would rather become a builder than be a carpenter, and he asked me how to make the transition. I told him there were two answers: One was the practical aspect that had to do with things like identifying property to develop, buying it, drawing up preliminary plans, writing a financial pro forma, and taking it to the bank, but these details were easy to work out once you had the fundamentals in place. There's also a fundamental change in your thinking, the subtle but significant difference between thinking like a manager or an executive.

Like most builders, I came to the business as a manager, with an intimate knowledge of the trades and a good handle on running a job site. From the beginning, though, I was fortunate to work for bosses and with partners that had a different set of skills. They had learned to make something out of nothing by using their imagination to see an opportunity, envision how to develop it, and then gather the resources (people and money) to do it.

In recent posts, I profiled several businessmen who embody these entrepreneurial qualities--the ability to see what needs to happen and the ability to make it so. Some of them actually lack an intimate knowledge of the raw materials, tools, and calluses that transform a pile of lumber into a house, but often they do better in business than many of us who work our way up through the ranks. In fact, it's the lack of first-person job-site empathy that helps them to think freely and creatively. Those of us who know the trades well tend to limit our vision to the best we can do rather than the best that can be done.

The manager focuses on doing things right; the executive focuses on the right thing to do. The manager asks how and when; the executive asks what and why. If you have done any reading in business, you recognized my paraphrase as the words of the late Peter Drucker of Harvard University, the father of management sciences to whom we owe the existence of the MBA. The best advice I could give my friend wanting to become a builder and developer was to read Drucker's The Effective Executive (HarperBusiness, 2006), a book that has nothing to do with real estate or construction, but will change your way of thinking about your business and your job.

Not that thinking like a manager is bad--a business needs both managers and executives--but it's important to know the difference, especially if you have ambition but are someone who wants to build the best house or the perfect remodel, like me. We tend to get into business deals that challenge our building skills rather than make good business sense. We feel like we're not working unless there's a tool in our hands and sawdust in the air. We often fail, tripping over the Peter Principle that says each individual has a limitation to his skills and once promoted to a position beyond his ability will stumble.

I don't believe this limitation is innate; it comes from an ingrained way of thinking. As an executive, you have to focus on the landscape of opportunity, asking about what the market needs and whether customers will buy what you are building.

If you think like a manager first and an executive second, you're liable to do what I did at the outset: build the best possible house in exactly the wrong place and at the wrong time. None of us who love craft like to admit this, but there are many examples of successful businessmen that do the exact opposite: build a lousy house in right place and at the right time and do well. You can learn from this example, though, even if you find the notion of building anything but the best house repulsive. You need a little bit of executive thinking to build the best business, and this is important, too. 


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