How change can keep your business thriving
Change seems to be a way of life today, regardless of how the economy is doing. Changing regulations, changing competition and technological advances, among other things, have required executives to transform their businesses in one way or another on what seems like a constant basis. The days where you could develop a business plan and run it for a number of years with only incremental modifications are long gone.
The companies that can manage change more effectively are those that will thrive today and going forward. Identifying a need for change can be easy, but implementation can be difficult. The inertia in a company is difficult to overcome, because you need to change the way people do their jobs. In many cases, change is seen as a threat to your employees, because it is a shift in the status quo.
In August of 2001, I took over a business that was losing $6 million on $38 million in annual sales, the last two audits by our CPA firm were disasters and a large portion of our business was in threat of being closed down by the government agency that regulated our industry. We needed change, and we needed it fast!
I started working with the management team immediately and set on a path to improve the business. The results included a company profit of $800,000 in the next calendar year, all audit findings by our CPA firm were cleaned up after three months and we totally turned around our position with the government regulatory agency within six months.
Here's how we did it:
1.) Identify the current status quo and why it needs to be changed -- In my example, it was easy to identify why and what needed to be changed. In another business I ran it was a little more difficult. The company was a small manufacturing business that had fairly constant top-line revenues, a respectable bottom line and was well respected in their industry. We found the company’s products and industry perception of their solutions where outdated and being passed by others in the industry. The problem was not an immediate issue, but the long-term consequence of not changing.
2.) Create a vision of what the company can be after implementing change -– Create a vision of how the company could look in the future and develop a roadmap to get there. Develop a long term ideal situation that has interim goals that need to be obtained. In my turnaround example, we created a vision of what the company would be over many years, how we would distribute product, how the company would be viewed by external organizations … really defining the direction of our systems, culture and brand. After we created the long-term vision, the management team and I set about hitting the tactical items that needed to be addressed.
3.) Communicate with your stakeholders -– Communication with your key stakeholders is an important step in the early part of the process, as well as during the implementation. The key stakeholders may be the board of directors, your direct manager(s), your distribution channel, key vendors, your accounting firm and, in some cases, regulatory agencies. You cannot over communicate with stakeholders.
4.) Communicate with your employees -– Employee communication is the most important part of a change management plan. This is where your discussion of the status quo and future vision of the company becomes very valuable. Regular all-employee meetings allow you to paint a picture of how the company will operate and how the employees will play a role in the transformation, as well as the new company going forward. Your employees are the resources necessary to implement your plan and it is best to communicate with them personally at least once per month in all-company meetings and interim meetings to discuss major changes or milestones. This may seem extreme, but I have found that this frequency of communication headed off larger problems.
Managing change is a difficult process, but can be made easier through these tactics. Focusing on the end-game is critical to keeping your management team and employees headed in the right direction. I’m not sure there is every really an end to change, but as you transform your organization, it is truly gratifying to see what can be done.