11 Lessons in Business Management from Sir Alex Ferguson

I read a piece about Sir Alex’s class at Harvard in ESPN the other day, which made me go back and read the case study about him again. Below are some of the lessons I learned based on the case study [1] which can be applied to business.

But first, a quick introduction: Sir Alex Ferguson is one of the most successful and longest serving managers in Football. He managed Manchester United for over a quarter of a century, during which period he won 38 trophies. The below chart [2] shows just how incredible his reign was:

On Managing People

1. Treat everyone in your organization with respect and make them feel valued.

“He made efforts to establish a ‘family atmosphere’ where everyone from the star player right through to the kit washer was considered a valuable part of United’s organization.”

2. Young employees learn best when working with more experienced employees, so ensure they have the ability to do that.

“Ferguson also made United’s youth program visible in the organization: for example, he ensured that academy players warmed up alongside senior players every day in order to foster a ‘one club’ attitude.

3. The most important job of a manager is to motivate the employees they manage

“Seeing the prized trophy slip away before his eyes, Ferguson reminded his players at halftime of what was at stake, telling them: “When that cup is going to be presented just remember that you can’t even touch it if you’re the losers — you’ll be walking past it with your loser’s medals, knowing someone walking behind you is going lift the cup.” A player later recalled Ferguson’s words as “one of those inspirational speeches that turn fearful men into world beaters.” As time ticked away in the second half Ferguson threw on two more strikers as substitutes, but United remained behind as the match entered injury time. With many Bayern supporters already celebrating, a David Beckham corner produced a scramble in front of the goal, and Teddy Sheringham, one of Ferguson’s substitutes, tucked away the loose ball to score the equalizing goal. Incredibly, one minute later, another substitute, Ole Gunnar Solskjaer, scored the winner after getting on the end of one last Beckham corner. In a span of 107 seconds, United had grabbed victory from the jaws of defeat.”

4. Have one on ones with the employees you manage. These meetings are for them, not you.

Over the course of a season, Ferguson had numerous short meetings and conversations with his players, in his Carrington office — where they walked past dozens of pictures of Ferguson’s captains over the years to reach his door — in the hallways, in the cafeteria, on the training pitch, or wherever else the opportunity may arise. “Some players like to have the coach’s shoulder,” he said. The nature of managing a football club meant that dozens of issues could pop up on any given day.

5. It is vital to have a well functioning team, and no one person, however talented, who jeopardizes that is worth it.

When United’s captain Roy Keane publicly criticized his teammates, Ferguson quickly agreed to terminate his contract. The following off-season Ruud van Nistelrooy, United’s leading goal-scorer, made it clear he was hoping to leave, and was promptly sold to Real Madrid.

On Running a Company

6. To grow your organization, you should invest some of the profits you generate back into the business and you need to be willing to make risky decisions.

Ferguson had already sold Stam in 2001 … Real Madrid acquired Beckham for $46 million. Ferguson put the revenues from those player sales to good use. He invested close to $68 million, in two promising, but mostly unproven youngsters

7. Spend most of your time focusing on your own company/product, and the remaining little bit of time on your most fierce competitors

“I tend to concentrate on one or two players of my opponents — the ones that are the most influential. Who’s the guy who is taking all the free kicks? Who’s the guy who’s on the ball all the time? Who’s the one urging everyone on? The rest of the time I concentrate on our own team.”

8. Resources are scarce. Plan ahead and learn to make trade-offs.

The demands of competing for multiple trophies meant Ferguson had to make tradeoffs. “I work sometimes two games ahead — I might rest key players for a game that may be less important. There is a risk element in doing that, and it can backfire, but you have to accept that. You have to trust your squad.”

9. Delegate

Ferguson had delegated more of the training sessions to his assistants over the years. He explained that taking a step back allowed him to better observe the players and their performance: “As a coach on the field, you don’t see anything.”

10. Focus on the long term

The first thought for 99% of newly appointed managers is to make sure they win — to survive. They bring experienced players in, often from their previous clubs. But I think it is important to build a structure for a football club — not just a football team. You need a foundation. And there is nothing better than seeing a young player make it to the first team.

11. Be flexible and learn to adapt and embrace new technologies

More generally, in his quarter century at United, the world of football had changed dramatically, from the financial stakes involved (with all its positive and negative consequences) to the science behind what makes players better. Ferguson had massively expanded his backroom staff, and had appointed a team of sports scientists to support the coaching staff. He could talk enthusiastically about the new Vitamin D machine (which perhaps most resembled a tanning both) in the players’ dressing room at Carrington, put there to help them counterbalance the lack of sunlight in Manchester, or his plan for the new season to give players staggered one-week breaks in the winter months to replenish their Vitamin D. And he embraced sports science’s discovery that players should avoid running long distances ahead of a new season (as was traditionally done) and instead focus on sprints, and had championed the use of player vests fitted with GPS systems that enabled an analysis of a player’s physical performance a mere twenty minutes after a training.

1. All passages are from the HBS Case Study about Sir Alex Ferguson
2. Courtesy of The Economist

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