Recent consulting studies have re-confirmed that most performance improvement programs fail to achieve their stated goals and improve the business. These change initiatives are worse than “much ado about nothing”, as they divert attention and resources away from more critical needs and frustrate and exhaust the employees who worked on the initiatives.
In general, when undertaking change, companies often make one of three critical mistakes right at the outset.
- Companies try to change too much.
- Companies change the wrong things.
- Companies try to skip bases and implement change that the business is not capable of doing.
Change Too Much
Businesses undertake too many changes for several reasons.
Businesses over-estimate their capacity to change. In looking at the business and the competitive landscape, top management often realizes that there are many areas to improve. While it is true that each one of these areas needs to be improved, people do not have the attention and perception span and the time to improve all these areas at the same time (while focusing on their “real jobs”). In one extreme case that I have experience with, a $20M business unit was working on 26 performance improvement and change initiatives at the same time! By default, too many priorities become no priority.
Top management and their staff pride themselves on their bias for action. So, they introduce changes and initiatives to “make it happen.” For staff people, “high potentials” who are rotated through jobs every few years, or people in middle layers in a bureaucracy, these initiatives become justifications for the importance of their job. Further, top management may not realize that the time it spends on any one initiative is multiplied several times over as the initiatives extend down into the trenches to the people who will really do the work.
- Poor management and poor execution is not dealt with directly. Instead, it can become a reason for a change initiative or training program. A poor performance in sales may not require a “sales training” initiative. It may just require having better sales managers and holding them accountable.
Change the Wrong Thing
Business leaders will often focus on improving what they know and understand (and like to do). As such, they may neglect to focus on the change in an area of the business that is outside their comfort zone, even when that change could have the highest impact on business results.
I give an example.
An operational consultant friend of mine (schooled in Theory of Constraints, Lean, Six Sigma, Quality, etc.) was invited into a plant in central Pennsylvania to see what he could do to improve the operations further. The plant manager already had a number of initiatives under way and was genuinely open to new ideas. My friend was impressed; the plant was clean, well-laid out, and efficiently produced a quality product. Afterwards, he met with the President who was excited to know what more could be done to improve the plant.
My friend’s answer was quite simple. “Don’t do anything more in the plant. The plant runs very well. But, the most important thing that can be done to improve the business is to bring in more sales. Any tweaks and slight improvements in the plant would be minor compared to the improvements in the business with more sales.”
In this case, the overall constraint (what is holding the business back) is not the plant, it is sales. By improving the plant further, you make the plant better. But, that does not necessarily make the business better. It is great to have an excellent plant. But, the goal is not to have the best plant. The goal is to have the best overall business with the best competitive position.
This concept of “change the wrong thing” often occurs when management trained and promoted under one set of business conditions needs to respond to different business conditions. In the example above, the production focused President wanted to solve the company’s problems by focusing on what he knew best (production) instead of what was needed (additional sales). To a leader comfortable and confident in swinging a hammer, every problem will look like a nail.
As such, many companies do not focus their change and profit improvement efforts on the most important and highest value added area of the business.
Baseball is reasonably simple. You get a hit. You run to first base. If it makes sense, then you run to second base. Then to third base. Then to home. You do not skip bases.
In change and change initiatives, people often skip bases. They try to go from the batter’s box to third directly without going to first and second. Most often, you will see this in change initiatives undertaken with the help of consultants, who are peddling a “solution.” This solution has to be reasonably complex or the company will not perceive that the consultant is adding any value. Unfortunately, the company may not be prepared for the solution that the consultant has to offer.
Let’s give an example.
A company is struggling and realizes that it has a weak sales team and poor sales and marketing presence. The solution is to immediately implement a CRM (Customer Relationship Management) program like Salesforce.com. With it, the sales team will all be able to track customers and customer activities better and everything will be great!!!
The company cannot skip bases. As described, the company is barely out of the batter’s box on sales and marketing. Full implementation of a productive sales and marketing effort with Salesforce.com is third base. To even begin working on a CRM solution you need to be at second base. But, to get to second base, you need to, first, ensure that top management has a commitment to customer service and sales. Then, get decent sales management in place that will over-see and evaluate the sales team. Then, ensure that you have the right people on your sales team. Then, ensure that the team is properly trained on how to sell the product or service. Then, develop the discipline in the sales team to diligently record their contacts in a simple database or Microsoft Outlook and to write sales reports. By this point, you may finally be ready to implement Salesforce.com or another CRM program.
In short, companies need to undertake improvement initiatives appropriate for their current capabilities; they need to walk before they can run. Such initiatives may not seem ambitious enough for some in top management. But, they have a far higher probability of being successful in making the business better.