Managing Change
To manage change you need a plan. Some people see them as a useless part of planning because as soon they are finalised, they are out of date by circumstances.
This attitude misses the point that they function as key indictors to measure progress. What is more they help us change from one state to another better state using clear matrix and defined pathways.
Continuous change or transformation is not a one off, it should be how businesses operate and build into their DNA.
It is not easy, it demands an open mind to keep improving outcomes and meet customer needs. It accepts that some things will fail but we can learn from them. To do these you need a set of internal benchmarks, and this is provided by a business plan.
What is business plan?
A business plan is a written document of your ‘intentions,’ what your business intends to do you achieve with specific aims or gaols and limitations. Businesses operate in constantly changing environment, tastes, markets, legal constraints and societal expectations. These are impossible to predict in your business plan, even if you are Nostradamus.
What good plans have is a flexible mindset to keep them relevant to changing business conditions and future impacts. The ‘plan’ consists of three main elements;
1. The business plan narrative
2. Projections of income costs and revenues
3. Risks the business face part of their operating environment
This is the first step to helping understand and transform your business. Let us call these a change management mindset.
Change Management
In terms of change management, the three strands are
What environment do you operate in?
Outcome you want?
How do you get their?
As threats, opportunities and markets change it shifts our aims, needs and operating processes that must also adapt to technology. The realisation that something is wrong is one that a human can see, sense and factor into development when measured against outcomes you expect. It is not just about numbers but more soft skills such as empathy, perception, and leadership.
This demands a flexible mindset on the businesses owners or directors have as part that drive existing processes but then can make change due to reality of facts.
One reason that senior leaders or managers fail is they get into a comfort zone of high salaries, perks and expectations from their peers that they fail to keep the entrepreneur spirit alive. Some is by training the wrong people, some by chance.
Let me take one example. Often MBA’s or managers are not really up to the grade as they lack the vision and motivation for business flexibility. The main motivations for high salaries, which I believe they do not deserve, is that the reason the board chooses such people in high positions is that the board want a ‘save pair of hands’ rather than some one who will radically change direction or has the flexibility of mind to create new paths.
Some examples from three different sectors will show this.
1. US Policy making 1968 | Theory | Issue
|
Strategic Policy making by McNamara 1961-68 | Our superior technology can kill more of them then they can of us. How do we know that we are killing more of them? The KPI is the body count theory. This KPI number to beat the Vietnamese. Using superior technology to beat a peasant army into submission: | The McNamara fallacy refers to the tendency to focus on numbers, metrics, and quantifiable data while disregarding the meaningful qualitative aspects to measure success. Numbers can also be doctored to suit whatever purpose. |
Result | America lost the war to North Vietnam, and by its brutality lost the moral war, by 1973; to a technological inferior but more motivated power. | |
Lesson | Will power, a good cause and determination wins wars. |
2. Banking Crises 2007-2008 | The theory | Issue
|
Too aggressive sales drive by Fred Goodwin (MBA) Buying other banks | The purchases would help RBS to add more assets to its balance sheet. Increase shareholder value and his salary! | The downturn in the US housing market was a catalyst the UK property collapse in 2007-2008. Values where inflated to cover up cracks. This caused collapse in confidence in other companies and spiral downwards. |
Result | UK government bailed out RBS with £45billion of taxpayer’s money. | |
Lesson | Never hire idiots or MBA’s to run businesses |
3. Technology 1974 | The theory | Issue
|
Few corporate blunders as staggering as Kodak’s missed opportunities in digital photography, a technology that it invented. Kodak R&D department invented the digital camera process. | Let’s not change as old ways is making money.
Old process was to take your film roll to the Kodak store and get a printout on special paper. With delays or mistakes by the picture taker! In increased sales
New digital process threatened to do away with all this.
| The board was tied to old processes which had helped them before but failed to see that the advent of mobile phones and digital photography upended their 100-year-old business models and assumption. They failed to focus on new technologies and customer needs that mobile technology offered. Other companies got a head start, Kodax stuck to its old model. This limited them to a fundamentally flawed path. |
Result | Kodax collapsed into bankruptcy. Has never recovered. | |
Lesson | Be flexible and nimble and take risks. Change is a fundamental aspect of the business process. It not really taught in business schools. |
Conclusion
The higher you are on the food change does not mean you know more or better. Therefore change management needs;
1. Having an enterprise mindset that is open to change. Unless those at the top are sufficiently open and willing to consider all options, even a nuclear option, the decision-making process soon gets distorted by wishful thinking.
2. Think holistically when thinking of strategic issues. The RBS and and Kodak cases show how the board, when acting within the framework of the existing mindsets leads to systemic failures.
3. Have the ability to adapt your business plans to changing market conditions and technology. The right ‘processes’ depends on the predictability of the market. All three cases show that ‘predictability’ is one thing you cannot predict!
4. Decentralised and inclusive decisions making using a variety of methods. That is the ability to incorporate a range of sophisticated decision support tools when tackling complex business issues and aims.
It is better to keep these failures in change management in mind to help us guide business people and managers when dealing with ever-more disruptive rapid changes, such as AI, consumer needs or digital paradigm shifts such as AI and robotics.
Given that there are few sectors not grappling with disruptive change it is critical to keep the idea of an enterprise mindset and understand reasons for failure. Hopefully, it will help you keep on step ahead.
By Zulf Choudhary
Contact me if you want a free chat with any changes, yu can use me as free sounding board.
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