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Thompson’s unconventional wisdom Featured

10:07am EDT July 22, 2002

Despite Kenneth Thompson’s maverick attitude, he’s a straight shooter who’s spent more than 20 years figuring out what works in business and what doesn’t. Here are the principles he follows. Read them here, because you won’t find many of them in the textbooks.

  • Centralize administrative functions such as HR, information technology and accounting. Meanwhile, keep decision-making entities “that make you money” separate.

  • Run a loose/tight operation. Let employees who are effective take as much rope as they need, but make sure the essentials—like depositing money in the bank and keeping accurate records of employee’s time—are tightly controlled.

  • Don’t concentrate resources on the weakest operation. Thompson calls it the “save the baby” syndrome. “But it’s something you have to be willing to fold when the time comes to give up,” he says. “If you take the same time and money, and maybe invest it in your best location or product line, it might have a far greater pay back.”

  • Visit all your locations regularly and observe the troops in action. Thompson recommends more time and less frequency instead of high frequency and short duration because a clearer picture of operations results. “It’s better to spend two full days instead of four half-days,” he says. “That’s because after a while they forget you’re there and get back to doing whatever it is they shouldn’t be doing.”

  • Resist the urge to jump in and help. Whether it’s bussing tables during a lunchtime rush or answering phones, don’t do it, Thompson warns. “Those things happen when you’re not there. It’s an extremely awkward situation for most everybody if you get involved.”

  • Be the first in and the last out. Watching how a business shuts down each evening and starts each morning provides the clearest picture of how things run and how employees behave.

  • Sleep cheap. In the early stages of business, watch your cash and be willing to reinvest it instead of pulling it out. Otherwise, you could starve the company of operating capital. This is especially true in multiple businesses, when there’s a danger of bleeding one company dry in support of another.

  • Learn to hear jungle drums. Recognize the signals that something is amiss in the organization. They could come from within the company or from suppliers or customers. “There are signs when there are some problems in your facility,” Thompson says. “You have to be aware that they’re going on and be ready to do something about it. You have to recognize trends and be willing to make a change.”

  • Take in laundry before you take in partners. Thompson would rather take on debt than give up any amount of control to new investors. “You’re better off with all of a $1,000 deal [than] half of a $2,000-dollar deal. You seldom get the right blend.”

  • Eliminate synergy as the basis for buying or owning a business. “It seldom happens,” Thompson says.
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