Monday Mornings with Madison

Capricious or Cutting-Edge: When Should a Business Make Changes?

It’s been said that “if you always do what you’ve always done, you’ll always get what you always got.”  The point is that sometimes you have to break routines and try new processes, products, systems or strategies to find better ways of doing things.  Innovation usually leads to improvement, and refusing to ever try new things is futile and foolish.  Consider the Luddites.  The Luddites were 19th-century English textile workers and weavers who, fearing the end of their trade, protested against newly developed labor-saving technologies between 1811 and 1816.  New inventions such as the stocking frames, spinning frames and power of the Industrial Revolution threatened to replace Luddites with less-skilled, low-wage laborers, leaving them unemployed and obsolete.  The Luddite movement culminated in a region-wide rebellion in Northwestern England that required a massive deployment of military force to suppress.  So famous was their rebellion that today the term Luddite has become synonymous with anyone opposed to industrialization, automation, computerization or new technology, in general.

Of course, there is also an argument to be made that a business that is always changing processes, products and strategies may find itself wasting both time and talent.  It can be expensive to constantly be shifting gears and updating systems.  Learning new software or revamping procedures takes time and can be confusing – and even frustrating — for employees.  So change for the sake of change can also be counterproductive and costly.  It is important for businesses to evolve, but it should be done carefully and thoughtfully to ensure it causes the least amount of disturbance, distraction and distress internally and externally.

10 Reasons Companies Change

Whether it’s switching business models or reorganizing department structures or adopting new marketing strategies, changes in business are inevitable.  Making those changes, however, are typically easier said than done. According to a study by Robert Half Management Resources, nearly half of business managers said transition efforts typically falter at the execution stage.  That is, in part, because top management will decide to make changes unilaterally, without even determining if the changes really make sense.  So how do business leaders and managers know when a change is needed to stay cutting-edge and when it is just capricious and arbitrary? According to change management experts, there are seven good reasons for a business to make changes.

Good Reasons for a Business to Change

1.  New Technology or Innovation

New technologies and more efficient and economical methods to perform work prompt companies to change.  Failure to innovate in the face of new technology can be catastrophic.  Borders Books failure to develop its own ability to sell books online resulted in its demise and the rise of Amazon.

2. Performance Gaps

The company’s goals and objectives are not being met or other organizational needs are not being satisfied. Changes are required to close those gaps.

3.  New Opportunities

Opportunities are identified in the market place that the business needs to pursue in order to increase its competitiveness, expand its market share or expand into a complimentary line.

4.  Internal or External Pressures

Management and employees — particularly those in organized unions — often exert pressure for change. External pressures come from many areas, including customers, competition, government regulations, shareholders, financial markets, economic forces, and other factors in the company’s external environment.

5. Crisis

Events like September 11 are examples of the kinds of crises which have caused countless organizations, and even entire industries, such as airlines and travel, to make dramatic changes. Similarly, the Great Recession obviously prompted many changes in the financial services and real estate industries as businesses sought to recover and avoid repetition of the same situation in the future.

6.  Mergers and Acquisitions

Mergers and acquisitions create change in a number of areas often negatively impacting employees when two organizations are merged and employees in dual functions are made redundant.  These changes are often traumatic but unavoidable.

7.  Planned Abandonment

Changes take place as a result of abandoning declining products, markets, or subsidiaries and allocating resources to innovation and new opportunities.  Many companies have wisely abandoned products or subsidiaries.  Netflix abandoned Qwikster in 2011.  Toshiba abandoned its HD DVD when Sony Blu-Ray won the format war.  Even social media behemoth Facebook abandoned its subsidiary, Poke, after Snapchat crushed it days after launch.

While there are many legitimate reasons for a business to make changes, there are also unsound reasons that companies change.  Beware that such changes can be useless at best and destructive at worst.

Bad Reasons for a Business to Change

8. Change for the Sake of Change

Often, a company’s leader will make changes just to show either the owner or Board of Directors that he is doing something.  He will make changes just for the sake of change.

9. Trendy

Another reason organizations may institute certain changes is that other organizations are doing so.  This is similar to old quality circles and re-engineering fads.  Educational institutions are known for making changes to curricula or exams based on fads or trends.

10. Sounds Cool

Many companies fall prey to trying new strategies, especially sales, marketing and management strategies, because they sound edgy and cool.  It sounds good, so the organization tries it.  Six Sigma and Matrix Management are good examples of management fads.  The latest in sales fads are flash sales.

Implementing Change

When a company wants to make a change to process, product, system or strategy, the key to success is effective communication. Studies have found that 65% of managers say clear and frequent communication is the most important aspect of leading a team through a transition.  Managing expectations, outlining goals and delegating effectively were also key.

While change is never easy, it’s hardest on employees.  People naturally worry what a change will mean for them.  To prevent rumors, resentment and stress, managers should quickly and continuously update staff, not just on the nuts and bolts of the change but also on how team members will be expected to contribute and how might they benefit from it.  Here are some tips on how to implement change successfully.

Change Checklist

  1. Communicate early.  Don’t leave employees out of the loop and let rumors spread.
  2. Consider the volume of communication.  Don’t share limited information or, conversely, overwhelm people with irrelevant details.
  3. Manage expectations.  Continue communicating after the change is implemented.
  4. Bring in only project professionals with specific expertise.
  5. Communicate the benefits of the change to the team.
  6. Recognize that implementation is only the start; a new process or system requires ongoing communication and training for employees.
  7. Celebrate success, and reward those involved.  Acknowledge staff contributions.  Remember that the success of the business depends on its employees.
  8. Don’t sugarcoat issues or set unrealistic goals and time lines.

Quote of the Week

“It is change — continuing change, inevitable change — that is the dominant factor in society today. No sensible decision can be made any longer without taking into account not only the world as it is, but the world as it will be.” Isaac Asimov

 

© 2016, Written by Keren Peters-Atkinson, CMO, Madison Commercial Real Estate Services. All rights reserved.

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