Business Sense: Exercising Management’s Five Freedoms

In this brilliantly conceived, practical book for managers, Dan Thomas shows how general managers can take advantage of core management processes-what he terms management’s five freedoms — that make the most difference between success and failure. Thomas, who has been an entrepreneur, educator, consultant, and manager, has devoted over twenty years to studying the strategy, structure, and systems of successful companies. He explains how managers can exercise their five freedoms to choose the right business, create the right strategy, implement the right systems, design the right organizational structure, and get the right people. The single most important freedom for management, Thomas argues, is to choose the right business. He suggests that there are great businesses and lousy ones, and managers should choose a business with growth, profit, and diversification potential to drive shareholder wealth. Next, Thomas shows how, even in those businesses with a lower potential for success, creating the right strategy can produce superior results. Companies such as Wal-Mart in the otherwise faltering discount retail industry and Southwest Airlines in the ailing passenger airline business are cases in point. Management’s third freedom, developing the right systems, is illustrated by examples from successful companies such as Frito-Lay, and unsuccessful companies such as Micropolis, that have employed different types of information, incentive, and decision-making systems. Thomas discusses management’s tendency to look for “quick fixes” through changes in organization structure that promise overnight success. He explains that realigning a company’s organizational structure, the fourth freedom, must be based directly on the strategies being employed in the business, not the latest fad. The fifth freedom-getting the right people — is perhaps the biggest concern of top management. Thomas illustrates how general managers who have exercised their first four freedoms effectively do not have much difficulty in getting and keeping the right people. By providing techniques that allow managers to assess a person’s skills and motivation, Thomas enables managers to exercise their fifth freedom by matching these assets to the business, its strategy, systems, and structure.