One of the riskiest points in a company’s life cycle is when it decides to implement a broad change, as history shows many of these initiatives fail.
Firms either allocate too many existing resources to the new strategy – leaving current operations hampered and existing clients underserviced – or too few resources, which prevent any meaningful improvements from taking place.
In this post we explore the factors that contribute to the failure of organization-wide change, and show you how to successfully execute strategic changes in your company.
Fighting a war on two fronts
As our CEO Gary Harpst explains in his book Execution Revolution (available here for free download), “organizations, large and small, struggle to execute strategy and deal with unexpected challenges. It’s similar to fighting a war on two fronts. This is the biggest problem in business.”
Many unexpected circumstances are likely to develop while implementing change, even in established companies with the best thought-out plans. Organizations that are holding steady do not experience much chaos, as everyone is in their groove through sheer repetition of the day-to-day functions of their respective roles. In short, there is nothing that rocks the boat too much.
But when your strategy requires you to add new products, install new layers of management, develop different processes, or even just results in a significant boost in orders – you interfere with the order of things and operations can break down.
It is doubly difficult, then, to keep a business running while simultaneously trying to implement some form of change strategy. There is just too much going on.
More resources aren’t the answer
You would think that simply adding more resources to both running the existing business and implementing change would solve everything, but this is rarely true. You could hire more people, but onboarding them and getting them into carrying out their day-to-day functions will only add to the complexity.
Allocating more dollars at the change program will put a strain in other areas which depend on their budget to accomplish their functions. So doing this will, you guessed it, result in even more
“firefighting” and problems.
In our experience, the answer is seldom more resources, but rather the better allocation of existing resources.
The answer is to do what’s important
The key to allocating the proper resources to the new strategy while maintaining current operations is to get better at choosing what’s important to the long-term success of the organization. Once you identify them, you have to make these things urgent enough so that they get done, while filtering out the wasteful activity at the same time.
This may sound too basic and easy to implement, but I assure you that this can be a humbling exercise. This is because there’s a lot more wasted activity in your organization than you imagine – and many of the things you think are critical to your business really aren’t. This can be quite a humbling realization if you’re responsible for implementing or stressing these activities, but you have to get over this and cut your losses rather than insist on “being right” by continuing to push wasteful pet projects.
Here is an anecdote taken from the book Six Disciplines for Excellence: Building Small Businesses That Learn, Lead and Last where a focus on doing what’s important was implemented in the real world and the results obtained:
“Whatever amount of resource you think is critical-I guarantee you, it’s significantly less than you think. We analyzed our expenses and concluded we could cut about 25%. However…we also assumed we were probably underestimating; so we set our target at 40% reduction…
“…The results stunned me! Sales didn’t decline; they increased! Our performance went up, not down! We were actually getting more of the important things in the organization completed faster and easier. The reason for all this startling success? We were finally willing to stop the activities that were not important. I couldn’t believe how much waste we had built into the organization over time. As a result, we had the cash and the people available to work on developing new products and still have competitive profitability.
“Over the next 10 years, the company grew to six times the size it was, as a result of getting our resources aligned with our priorities.”
How to better allocate resources in your organization right now
1. The first step is to think of the existing resources and activities as being belonging to one of three categories: “critical”, “discretionary”, and “available for reassignment.” Scrutinize every expense, position and project, with the view of freeing up resources for redevelopment of the company. This requires an honest look at areas of potential waste. If you have trouble, an external coach or consultant might be able to put things in proper perspective.
2. Consult your team leaders and ask, “Are there any projects, policies, product lines or other activities that are not aligned with our vision and could we therefore stop those activities?”
3. Next, based on what you have uncovered in the first two steps, reallocate as many resources as possible from the discretionary, available for reassignment, or outright wasteful categories to the critical. As an example, you could reduce some discretionary client lunch expenses and invest that money into building up your website’s blog to drive more organic traffic and leads.
4. For activities and functions you cannot stop immediately, develop plans to phase them out over time or at least stop allocating resources to them in the future beyond what is absolutely necessary.
5. Instill a viewpoint in the organization that eliminating projects or activities is not failure and that people should be rewarded for identifying wasteful processes, procedures, etc. to stop.
By the time you are done with the above steps, you will have freed up enough resources to bolster your existing operations while uncovering the materiel, time and manpower needed to implement your change strategy. Now, you stand a much better chance of “waging war on two fronts” without being spread too thin to succeed.
If you need more advice, please ask your questions in the comments below or shoot us a tweet @SixDisciplines.