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Proactive or reactive management?

March 1, 2004 By    

The theme of introducing effective habits to improve your business is credited to the concept created by Stephen R. Covey, chairman of Franklin Covey. He has developed a simple yet profound and principle-based framework that helps individuals and organizations be more effective.

His book, “The Seven Habits of Highly Effective People,” has been a top seller among non-fiction for more than 10 years.

I’d like to introduce these habits to you and show how they can apply to your management team in an upcoming series of articles. It is my objective to introduce you to the concepts, provide one or two applications on each habit for your management team to ponder, and leave you with valuable tools that you can put to use.

The first habit, understanding the concept of proactive vs. reactive management styles, is an underlying fundamental for the series. The following six columns will address a single topic or ‘habit’ that will help you transform your management team from one that is reactive to a more effective and powerful proactive culture.

Habit 1: Management team effectiveness

Organizations of all sizes are led by a small nucleus of individuals, generally no more than a handful. The driving philosophies of each leadership team determine, to a great extent, the culture of the company as a whole.

Because the success of any organization can be tied to the effectiveness of their leadership team, let’s focus on two extremely opposite types of philosophies that can drive cultures.

Management teams, like individuals, can choose between opposite management philosophies as to how they view and interact with their environment. Let’s examine the choices of operating under a proactive or a reactive management philosophy.

Reactive teams believe they are completely dependent on the external environment for the outcome of their activity. Reactive philosophy says you should show up for work prepared for the onslaught of what the customers, competition, and other external factors may deliver. Reactive teams are at the mercy of what the outside world delivers to them.

A classic example in our industry is the importance of weather and how it affects retail demand. We all understand that the colder it is, the more Btu’s are required to heat a house and the more gallons we sell. Warmer-than-normal weather results in fewer gallons.

A reactive team’s attitude is that its retail propane business is completely at the mercy of the weather. Fewer degree days, less Btu demand, fewer gallons sold. Not much you can do about that. “We had a bad year because it was warm. Hopefully next year will be colder.”

There are plenty of other factors besides weather to which reactive management teams shackle their outcomes.

Wholesale price increases: “We had a cold year, but our wholesale costs shot through the roof, and we didn’t make much money.”

Customers: “They are less loyal than they used to be.”

Employees: “They don’t work as hard as they used to.”

Starting to get the picture? Reactive management teams don’t believe they have control over events and circumstances and allow outside forces to drive their business. Hopelessness is imbedded in this culture.

On the other hand, the proactive leadership team recognizes that it is not the outside influences – the things outside of our control – that drive successful businesses. Proactive teams understand that it’s their response to the uncontrollable events that is most important.

Proactive management teams understand and accept that weather and wholesale prices are fickle and unpredictable. Yet they focus on the internal, controllable factors that allow their business to be effective in all types of weather and price conditions.

Proactive teams don’t abdicate the outcome to the whims of weather or other external factors. They operate in the exact same environment, yet succeed far more than reactive teams because they understand that it is how they respond to their circumstances that provides the direction and power to the organization.

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