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Tables of Contents for Business Sense
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Credits Foreword Preface Acknowledgments

Chapter 1: What Is Business Sense?

What can management do to make the most difference between success and failure in a business? Management has Five Freedoms that, if exercised effectively, can create and sustain success.

Freedom #1: Choosing the Right Business

When you have the choice, the single most important thing you can do is choose a great business -- one with growth, profit, and diversification potential. Some businesses are lousy businesses. They don't give you much chance to be successful. It's important to be realistic about your business' potential.

Chapter 2: What Is a Business?

Contrary to popular belief, "transportation" is not a business. It is a sector of the economy that contains over a hundred businesses. Many managers underdefine their businesses and make serious strategic mistakes that lead to poor performance, or failure.

Chapter 3: How Much Growth Potential Is There?

If you can only have one positive factor in your business, choose growth potential. Growth is the elixir of business. It can free you to make many mistakes and still succeed.

Chapter 4: What Is the Profit Potential?

Profit is essential. But profit comes in many forms and you may try to make the wrong kind. In assessing the profit potential of a business you need to understand its profit model and financial structure.

Chapter 5: Where Is the Diversification Potential?

No business lasts forever. When your current business matures, you need to know what your next one will be and have a clear path to it.

Freedom #2: Creating the Right Strategy

The right strategy for your business is the one that will take maximum advantage of its potential. That's true whether you are in a great business or a lousy one. A brilliant strategy can make you a winner in even a mediocre business.

Chapter 6: What Is a Business Strategy?

"Strategy" is the most overused and least understood word in the English language. A practical, operational approach is required.

Chapter 7: What Is the Future of the Industry?

No crystal ball is necessary. You can predict the future of any industry by using structural analysis. Tear it apart, put it back together, and you'll see how it works.

Chapter 8: How Good Is the Strategy?

The old strengths and weaknesses test didn't work very well. Instead, you must apply nine tests to thoroughly evaluate any business' strategy. Failure to apply all nine could cause you to miss a golden opportunity or fatal flaw in your business.

Chapter 9: What Are the Alternative Strategies?

What is the "performance envelope" of feasible alternative strategies for your business? Tighten your seatbelt, we're headed for the outer reaches.

Chapter 10: What Strategy Should We Follow?

Effectively selecting a strategy from the many alternatives available is a challenge. To do so you will need to understand the boundary and specific objectives for your business. All objectives are subjectively created, but there are some guidelines.

Chapter 11: What About Missions and Visions and Such?

Missions and visions are all the rage in management books and articles. Every company has to have one or both. An examination of a few shows that most look alike -- the genetic mission or vision statement. To be effective a mission has to go somewhere, and a vision must be visionary. When they are, they are great bridges between your strategy and its implementation.

Freedom #3: Developing the Right Systems

Most management information systems contain excellent information on yesterday's business. Unfortunately, many lack crucial information on customers and competitors. Since systems provide the navigational information for your business, it's important to have the tight ones.

Chapter 12: What Systems Do We Need?

"Systems" are routine ways of doing things in your business. They include information, decision making, and incentive systems. The most dangerous systems are the incentive systems. They're dangerous because they often work too well -- and get the wrong results in the process.

Freedom #4: Designing the Right Organization Structure

The tight organization structure for your business is the one that uses the systems to create and implement the tight business strategy. To be fully effective, the structure must be linked directly to your systems and strategy.

Chapter 13: How Should We Be Organized?

There are only four ways to organize any business. There are, however, a number of combinations, permutations, and, some would say, mutations of these four that add complexity. Ideally, the business' strategy and systems should drive the organization's structure. Unfortunately, in most companies it works the other way around.

Freedom #5: Getting the Right People

The right people can make all the difference between success and failure. If you don't have the right people, it's impossible to turn the tight strategy into actions that get the results you want.

Chapter 14: What About People?

Many managers believe that their biggest problem is getting and keeping enough good people. It can be, but it is much less of a problem if you've exercised your first four freedoms effectively. Great people flock to great businesses with brilliant strategies, systems that support the work they need to do, and clean organization structures. If you've exercised your first four freedoms, you can get and keep all the great people you need if you know how to assess their motivation as well as their skills.


The key to keeping your Five Freedoms in great shape is to exercise them regularly. If you don't use them, they won't do you much good.

Notes Index