Change is a fundamental and common element to our business environment and this will continue to impact on the whole Australian economy for the next few years. As we have discussed previously, both the volume and rate of change are growing exponentially. Very few businesses proactively plan to overcome or respond to the opportunities that change creates.
A business’s ability to manage and implement change effectively is critically important, now more so than ever. To remain competitive and sustain vibrant businesses, quick and effective action is required to maintain long term financial viability. Major changes include:
the impact of globalisation
the adoption of innovation and technology
the change in the demographics of our target markets
the change in labor dynamics
the personalised marketing demands of customers
the ecological issues and changing government regulations
These changes have had wide reaching implications on how businesses must develop to remain competitive and effective in the future.
Why is change so hard?
Have you ever wondered why some companies seem to thrive despite economic uncertainty, while many of their competitors seem to struggle for survival? Is it that one company’s products are so much superior to that of another? Possibly, but not likely.
The fundamental problem in many companies is an inability to adapt to current changes in competitive forces and buying behavior. As humans we have a natural instinct to resist change.
Change can be uncertain and uncertainty breeds insecurity. Therefore, the instinct to resist change is the result of our basic need for security. We will change only when our dissatisfaction (or discomfort) with the status quo becomes so great that we can no longer tolerate the results (and missed opportunities) that come from practicing our old and established ways. Then and only then can we implement and sustain a process of change.
How do we embrace change?
What drives humans to change is also what drives companies to change. Companies that have embraced their dissatisfaction and developed a process of continuous improvement (i.e., change) that has resulted in streamlined business processes, greater competitive advantage and improved decision-making are the growing and successful companies we observe today.
Take their example and take note that the future is not a random event. Act now to influence your own future because if you don’t then someone else will. Planning is all about creating your future. Your vision is your future. If you believe it, you can see it and if you can see it, you can influence it.
To assist your business in adapting to change, we have developed a Change Success Diagnostic based on Chris Mason’s PhD research. Chris’ model is a simple and elegant approach to managing change that highlights 10 key elements in successful change projects. Use it to lift your potential success rate above the standard 30%.
Discover your potential for change success in under 5 minutes with our free Change Success Diagnostic Tool – http://www.sbdbusiness.com.au/change-success-diagnostic/
“Traditional ways of managing a business are coming to an end.” – Gary Hamel, The Future of Management
It has been a recurring theme in our blogs and webinars that we are in a fast-changing business environment and that we need to update our processes and systems within our organisations for us to cope.
The quote above is taken from the best-selling book “The Future of Management” by World strategy guru and author, Gary Hamel where he adds, in direct quote,
“New problems demand new principles. Put bluntly, there’s simply no way to build tomorrow’s essential organisational capabilities—resilience, innovation and employee engagement—atop the scaffolding of 20th century management principles.”
Another business thought-leader, Alex Osterwalder talks about the urgent need for ‘business model innovation’ in his publications where he states that:
“Companies that aren’t able to systematically rejuvenate their business model will struggle to survive and thrive in the future.”
When you combine the innovative, clever thinking from these gurus with other new management thinking over the past 10 years, the big question is this:
“What is a Business Leader of the future supposed to do next?”
While it is inspiring to hear stories of Steve Jobs from Apple or how Google drive their operations, how does the leader of a successful small to medium-sized business decide what latest thinking to take on board? How do they decide what is right for their business?How do they make it stick?
Adopting all of the new management thinking available from books, the internet and other resources would have any Business Leader twisted into knots attempting to be the world’s best motivator, creative thinker, leader, strategist, team player, coach or lean specialist. So to assist Business Leaders determine what first steps to take for future success, we have compiled the 10 key traits of a future business leader.
1. I act as a ‘coach’ rather than a ‘manager.’
What is the difference between coaching and managing? Managing requires a Command and Control Culture while Coaching requires a Success Culture.
The Command & Control Culture is where ideas, policies, directives, and initiatives flow from the “top” of the organizational pyramid downwards.
The Success Culture, on the other hand, adopts a mutual relationship and is where ideas, policies and initiatives are mutually generated and considered.
2. The business can function effectively without me.
Do you give members a chance to be their own bosses by letting them work with autonomy and self-control so they can develop new skills and increase job satisfaction?
3. I have a simple, clear approach to developing strategies.
Understanding that a clear business strategy is critical for the success of your company, you are providing focus to your business and aligning resources to achieve expected results.
4. I have a high level of ‘self-awareness’ or Emotional Intelligence.
You develop tools for leveraging strengths and confronting weaknesses by fostering self-awareness. Leaders with self-awareness earn credibility and cultivate relationships based on trust and respect, and they remain open to new ideas, inquiry, and constructive criticism.
5. I have strong financial management skills.
Financial managers oversee and direct the financial activities of their organisation.
6. I am a good communicator.
One of the most important aspects of leadership is communication. Without good communication, you can fail to gain commitment from your employees, fail to achieve business goals and fail to develop rapport with the people on your team.
7. I am good listener.
Understanding that listening is also crucial from a business perspective. When emotions are high, it can interfere with clear thinking so you allow employees to address their emotions and help them move beyond the situation at hand in an effective way, so they can get back to business.
8. I have a strong network of peers to use as a strategic sounding board.
Leveraging the elements of networking—seeking out personal contacts who can be objective and be strategic counselors, or be able to transform colleagues in adjacent functions into a constituency.
9. I am a good implementer, things get done when I’m involved.
You encourage your team to be creative and allow out-of-the-box thinking to find solutions to problems.
10. I have strong life-balance.
You live by example and promote a balance between work, family and outside interests in your staff. By doing so, you develop stronger loyalty and achieve higher retention rates.
Now, analyse WHERE you want to be as a business in 5 years’ time. This will provide a peg in the ground for the amount of evolution required for you as a Business Leader. Use this to help in the gap analysis exercise below.
Top 10 traits of a Future Business Leader – GAP ANALYSIS
Rate on a scale of -5 to +5 with -5 being ‘Very Low’ and +5 being ‘Very High’ how much you agree with each statement below? First complete it for where you are NOW and then WHERE you want to be:
Once you have completed the gap analysis, identify your top three largest gaps. These should now become your three strategies to work on to become a more effective ‘Business Leader of the Future’. Implementing these strategies effectively with robust actions is your next challenge.
While it is inspiring to read the latest management books and new management thinking articles, it is critical to remember that it is a journey and there are clear steps that need to be achieved first before you can reach your end goals. And, attempting to race straight to the perceived finish line will have a negative impact on yourself, your team and your business.
In previous posts on this blog, we have highlighted the reasons why you might want to engage a VA and the detail of the process you might use to find one. In this short video, we highlight the Why, How and What of engaging a Virtual Assistant for your business
Most of us are working too long and too hard. This short video highlights the key elements in how to improve productivity and save 8 hours in every week. This is based on Russell Cummings’ experiences in improving his personal productivity. The video is a companion to our webinar on this topic – http://www.sbdbusiness.com.au/webinars/improve-personal-productivity/
The term “Family business ” usually refers to a small or mid-sized company that has a local focus and is plagued with a familiar set of dilemmas such as succession. In spite of that very simple description, family businesses have played a powerful role in the world economy and have included, through the years, big businesses worldwide. Some examples in Australia of successful family businesses are linFox, smorgon group, cooper’s brewery and there are plenty of others.
Most of the time, the key to success of a family business lies in its unique ownership structure that allows them to plan and thrive in the long-term. But other researchers believe that it is also this structure that causes many of them to fall. So what’s really the case?
In a recent article from Harvard Business Review, What You Can Learn from Family Business by Kachaner, Stalk and Bloch, presented a rigorous analysis of how family businesses and non-family controlled businesses differ in management and performance.
And from this article, we’ve derived seven points on how family-run businesses manage for resiliency and how business managers can benefit from these principles.
1.Family business is frugal in good and bad times.
In most cases, family businesses view their money as “the family’s money” which is why they often do a better job of keeping expenses under control. This can be a weakness as often, to save a buck, they invest with shorter timeframes in mind rather than thinking of the long term.
2.a family business keeps their bar high for cAPEX.
Family-run firms have a simple rule when it comes to capital expenditures – they make sure they do not spend more than they earn. They often run “leaner” than their corporate cousins.
3.a family business has little debt.
Family businesses, because of their close-knit and simple structure usually associate debt with fragility and risk, and tend to avoid it. They usually have very strong balance sheets.
4.Family business make few and small acquisitions.
Although an acquisition can transform a company and pay large rewards, it can carry a high risk. And this is why family businesses shy away from large acquisitions and prefer to make few of these deals and only favor companies that are close to the core of their existing businesses.
5.a family business is diversified.
In this day and age, diversification is important to keep a business alive and it is no different with a family-run business. Diversification has become one of the key ways to protect family wealth. In fact, the Smorgon Group in Australia is an example of a diversified family business that went from meat to steel, and paper.
6.a family business is more international.
Contrary to what most people know, family businesses are ambitious about expanding overseas. In fact, they often generate more sales out of the country (USA) than other businesses do.
7.a family business is better at keeping talent.
Businesses that are family-owned prefer to extol the benefits of longer employee tenures thus creating a stronger culture.
With these seven points, we can conclude that despite its small and simple structure, family businesses have shown to be resilient in times of economic uncertainty. I think this is largely driven by a strong sense of ownership of the brand and finances. Yes, they are not without pitfalls, the largest being inter-generational transfer but they survive through the years by focusing more on resilience than performance.
The flipside of “success” is “failure” and it’s the latter that every business owner and manager strive hard to avoid. By definition, the term “business failure” refers to the cessation of a company’s operations following its inability to generate enough revenue to cover expenses without adequate reserves.
In the recent times, there are many examples of strong businesses that have failed to adjust to the changing markets and economic times or to take advantage of opportunities – and this has ultimately led to their downfall.
Based on my 26 years experience working closely with business owners, here are my 9 key tips to avoiding business failure:
1. always ensure that you target your marketing.
Too many businesses have an undifferentiated product/service offering and fail to understand who their target customer is and what they require. Don’t be undifferentiated, make sure you’re speaking the right language and using the right channels and/or media in targeting your main group of consumers. Focus on delivering exceptional value. ACTION:Develop a structured Marketing Plan for your business and revise it regularly.
2. always plan ahead.
Talk about what you want to do next and where you’d want your business to go by preparing strategies that will help you focus on your business goals and objectives and to make sure that appropriate and sufficient resources are in place. Be rigorous in your planning and hold yourself and your Team accountable. ACTION:Develop a 5-year Strategic Plan supported by Annual Plans. Have 90 Days Actions. Cascade your plans so that everyone in your business is part of a plan.
3. have great business models.
It is a fact that most businesses fail because of poor business models – a business model describes you will engage your target market to profitably generate revenue. To avoid this, make sure that you have great and well-thought pricing models and economic cost models that will help your business focus more on creating, delivering and capturing value needed by your customers. ACTION:Understand your Business Model – there are some great tools to do this.
4. have effective processes.
All businesses are driven by processes. However, few businesses have well documented processes. Many businesses fail to have any continuous improvement processes and have a well entrenched view that they are already efficient. The reality is far from this and many businesses can improve productivity by up to 30%. The challenge is to avoid waste in: time, resources, opportunities, materials, etc. caused by inefficiency – this results in higher than necessary costs and lower margins. ACTION:Apply simple Process Improvement Tools, like 7 Wastes to your business on a regular basis. Never stop searching for improvement.
5. engage your team.
As a leader, you should be a good example to your team. Teach them how to own issues, take responsibility, be accountable and model proper engagement, not only with their customers and clients, but also with each other. An effective team will overcome most business obstacles and enable your business to seize opportunity, when required. ACTION:Engage your Team by improving communication and feedback.
6. have great sales processes.
Sales is the engine that drives your business. Most businesses that fail do not have effective sales processes in place. So with that said, make sure you have great processes that your salespeople can follow. ACTION:Clearly define your Sales Pipeline and develop a Sales Model that delivers.
7. ensure you have adequate cash buffers.
“Cash is fact – Profit is opinion!” This great quote from Andrew Russo (Master Accountant) gets straight to the heart of the matter. Ensure you build adequate cash reserves in your business to ride out changing markets and economic conditions. Cash reserves also allow you fantastic flexibility when looking at opportunities. ACTION:Develop a plan for how you can build cash reserves in your business. Engage your Coach or Accountant in this process.
8. avoide uncontrolled growth.
Uncontrolled growth is often a pre-cursor to business failure. When business growth is “out of control” often cash flow is uncontrolled. Rising sales are barely enough to cover rising costs and cash is at a premium. Cash flow, staff, customers and production are all stretched often to breaking point. Avoid this by “taking your foot off the accelerator” – be more discerning in taking on clients – engage strategies that will slow demand (like lift your prices) – say “No” to opportunities that aren’t in your sweetspot – and introduce tighter financial controls and KPI’s. ACTION:Monitor key drivers in your business and ensure that you have the capability to meet demand. Develop strategies to maintain control.
9. take early action.
Too many businesses fail to “take effective action” until it is too late. Act early and avoid the Receivers! Set up effective monitoring systems. Plan for different scenarios (revenue, cost. Market conditions, competition, etc) and define “trigger points” – bank balance, sales$, profit %, market KPIs, etc – that will cause you to evaluate your options well in advance. These options should include plans for how you will address the challenge – reduce staff numbers, cut costs, close non-performing divisions/products, etc. Make these decisions now rather than trying to make them when under pressure. aCTION:Develop plans to address particular scenarios with effective trigger points.
Focus on ensuring that you have all 9 elements covered and you will do more than stave off failure you will be on the road to success.
What is the element that has the highest priority for you? Pick one and start working on it now.
