Proactive approach versus reactive approach (version B1)

 1.     Book keepers

We are living in a world of academic recognition, i.e. many people judge your intelligence by looking at your achievement in school, college, or university, i.e. your diploma, certificates, or degrees.

Is it true that people with high level academic success are smarter than others?

It is not necessarily correct. Any degrees including science Ph.D. degrees, medical degrees, or law degrees only show that the degree holders were able to digest a lot of specialized academic books and passed all exams for required courses.

The critical skills for successful people would be analytical skills and ability to collect relevant data/facts for a specific project or task. For example, a smart person could read user guide and instructions to assemble/install laminate floor, change light switch, or fix simple problems of a personal computer/phone, etc. This means the person is able to perform research on a subject for relevant information, and then analyze those to perform a task. A Ph.D. person may not know to do other jobs well except his/her field of study.

Data and facts keep changing everyday, weeks, or months. Therefore, a smart person would need to collect new data and fact in order to analyze and update his/her plan/actions. This is what I called dynamic planning and dynamic actions. For example, in August 2022 the inflation rate is very high. Central banks collect data/price of core items, which contribute to inflation rate, regularly as well as overall economic performance such as unemployment rate in order to set the base interest rate. By the way, the higher base interest rate would bring down inflation, but it would low down economy too.

Judging person intelligence by looking at his/her academic achievement would be a stupid thing to do.

Don't get it wrong, because you would still need a degree, certificate, appropriate training/experience to get an interview and step in a corporation for work. Unless you started your own business, you would need to follow the game set by many academic achieved bosses out there. If you’re over qualified, you must figure out a way to lower your qualification. Don’t try to out smart or over impress the interviewers, because they may afraid that you would take over their job, if hired.

Currently many senior managers are judging their staff or a business by looking at the Key Performance Indicator, KPI.

What is a KPI? KPI stands for key performance indicator, a quantifiable measure of performance over time for a specific objective. KPIs provide targets for teams to shoot for, milestones to gauge progress, and insights that help people across the organization make better decisions. (Internet source)

Anyway, the four KPIs that always come out of these workshops are:

Customer Satisfaction,

Internal Process Quality,

Employee Satisfaction, and.

Financial Performance Index. (Internet source)

 

What Are the 5 Key Performance Indicators?

Revenue growth.

Revenue per client.

Profit margin.

Client retention rate.

Customer satisfaction. (Internet source) 

Unfortunately there are many people following any books step by step. They're proud of having a certificate, but they didn't realize that instructions or information learned from class were mainly guidelines.

Those guidelines only help them to organize data and fact, and then analyze those effectively.

Collecting data for a KPI is an easy task. For example, getting total revenue reported by the sale department, which was stored in database, and dividing it by the total number of clients would yield the “revenue per client”. “Revenue per square feet” would be the total revenue divide by the total square feet of the retail store.

Most of senior managers of large chain retailers would look at the “revenue per square feet” of each store in order to decide if its business is profitable for retaining it or selling it off. Collecting data about the store and local residents’ interests or tastes in order to tailor its business to the local population for improving revenue per square feet would require a lot of work and analysis. Those under performance stores would be in the market for sales at lower market price for smart people to pick up its store, which could be at good location and infrastructure.

Smart managers would base on the collected KPI and try to figure out how to improve it instead of criticizing the under performed staff or business.

2.     Have you heard of proactive and reactive approach?

The examples in section 1 showed reactive approach, i.e. collect data and fact then perform actions to rectify the issues.

The best approach would be proactive or root-cause analysis to find the source of problems and perform tasks to prevent those happened again, or to improve it permanently.

a.       Speaking of central banks increasing interest rate to lower inflation rate, which would slow down economy and tip down real estate market, which is currently over prices.

During COVID-19 pandemic shut down, governments have printed an enormous amount of money for a long period of time, which resulted in large surplus of cash in hands of many people. After the shut down plus the negative effects of supply chain issues, the supply could not keep up with local demand, which drove up inflation rate. By limiting power of printing money by governments and manufacturing key products locally would help to avoid similar problems in the future.

The house prices have been shooting up for many preceding years due to speculation and foreign speculators. Many foreigners didn’t even look at the properties, but they paid cash for a “real” property in a developed country. Buyers had pocketed enormous cash from gambling with bit coin, which is “imaginary” cash or non-productive asset. By limiting foreigners in purchasing residential houses and increasing non-resident taxes would help to maintain adequate housing inventory for local residents. Residential houses in Greater Toronto Area (GTA) are at over the roof prices, because Ontario government have lured many new businesses to Toronto instead of providing higher incentives, e.g. higher tax credits, for new comers to operate in surrounding cities, i.e. spreading jobs and population to other areas. Building new houses would face 2 problems, i.e. busy traffic and available lands for real estate developers

·         City doesn’t have a lot of lands at convenient locations for residents. Lands could be used or reserved for green space or parks. Lands could be in the West of city, and residents could have a job in the East end. In Greater Toronto Area (GTA), travelling by car during busy traffic hour would take 1.5 hours to work from the East to the West of the city, but it only takes around 20 minutes during off peak hours.

·         Due to crowded city and distribution of jobs and resident houses, busy traffic would be resulted in less time for leisure activities or family life. Higher stress for people or unproductive hours as well as cost in daily commute.

b.      Most of big (chain) retailers have ordered or offered the same products in each store regardless of its location. This helps to lower cost of products, because they have ordered in large quantity from suppliers, and then distribute to each store.

Lower cost but similar sale price as other local shops would produce higher profit margin as compared to their competitors.

What could senior managers do to prevent “lower revenue per square feet” by some of their shops?

Head office should give some of decision power to local managers to perform survey or research its local interests or tastes in order to tailor its products on sale in the shop. Of course, the shop would load common or signature products from the main retailer for lower cost and advertisement.

Innovation doesn't come from book keepers.

3.     Impact of society on personality

There are people, who are focused on their outside appearance at all cost. They have spent all of their income on expensive clothing, luxury car, etc. and lived on tiny apartment and inexpensive food such as instant noodles every day. Back in the 90’s, there were many cars without air conditioning but they closed the windows in order to make by standers believed that their car was equipped with an AC system. There were also people driving expensive Mercedes car, but only filled their gas tank with $5 gasoline, which ended up stalling engine on the road.

Why did this happen in society?

There is society or local people judging success of a person based on his/her appearance. Therefore local people have to pretend to be rich or successful. They are living a miserable life in order to get compliments of others surrounding them.

The root cause of this issue was opinions or views of society, personal thoughts about being successful.

Should we live a comfortable life for ourselves and ignore other people’s comments OR we live the way that others preferred or said?

We could choose to drive an affordable car, eat healthy food, wear affordable clothes, and ignore others comments. Don’t try to go beyond what we could afford, our life should be enjoyable.

Don’t forget that there are some sunny days, cloudy days, and rainy days. Our income or job is not guaranteed in this world. We should try to save some money for rainy days. It would be stressful to eat out regularly in luxury restaurants for years, and then suddenly live on welfare/unemployment pay cheques or instant noodles.

4.     Conclusion

Let’s take a look at the last 2 examples on 2 richest persons in the world, i.e. Microsoft co-founder Bill Gates and BRK’s founder Warren Buffett.

People have seen billionaire Bill Gates lined up on the street to buy hamburgers, while he could easily hired a chef cook to his house and prepared a delicious meal. He could go to any 5-star hotel restaurant at anytime.

“Billionaire Warren Buffett is famously frugal. In fact, the 92-year-old has lived in the same modest home for 65 years. The Berkshire Hathaway CEO still resides in the five-bedroom home in central Omaha, Nebraska, he purchased for $31,500 in 1958, which is about $329,505 in today's dollars.” He does not know computer and still used a flip phone made by Nokia for years while people used Blackberry or iPhone. He recently switched to an iPhone in the 2020’s for marketing purpose as he invested in Apple’s stocks. Apple makes iPhone.

Smart people couldn’t be judged by outside appearance. We need to engage in conversion with them and evaluate their answers and thoughts on various subjects.

We don’t want to spend money on expensive items or activities, if we don’t need. Life is not a fashion.

Author: Vinh Nguyen at canvinh@gmail.com