Catch Phrase #4: Because we have always done it that way!
CFO’s Response: Yes, but we need to change to be scalable!
While catch phrases always contain an element of truth; using them as a justification for a business decision can sink a company. Catch Phrases and the CFO’s Responses are usually based on the different motives and personalities of the players involved. Avoiding the “sound bites”, understanding the underlying motivations and fears of each member of the team always leads to better outcomes.
Initiating any major change in an organization is hard work and frightening to many employees. Yet without change the company cannot grow. Or worse yet, will be pushed aside by competitors who have adapted new technologies or responded to market shifts.
The call for drastic change typically occurs when either the company has hit its organizational ceiling and growth has flat-lined for a number of years or they are in crisis mode due to missteps or influences outside the organization’s control. The management team is frustrated and wants change but individual team members can suffer from the “Not-In-My-Backyard” syndrome when it comes to actually implementing the needed corrections.
- Hitting organizational ceilings are usually an issue of scalabilty which can be caused by outdated or outgrown systems and technology as well as lack of standardization in policies and procedures uniformly practiced across the organization. The top operations officer or the CFO will usually be driving the change necessary to correct scalabilty issues as these individuals see the “mechanics” of how the organization works and what is broken.
- The head of sales and marketing will need to spearhead organizational change when the market, products, distribution or marketing channels have shifted as they are in the best position to see those changes and react quickly.
Organizations fall somewhere on a “Change Scale” with resistance and defensiveness at one end to embracing and fostering new ideas and ways of doing things on the other. Where they fall is dependent upon the collective adaptability of the individuals in the organization. The organization will ultimately lean, and move, in the direction of the Owner/President and the senior management team as they make hire/fire decisions and stonewall or champion the changes needed.
For any initiative to be successful the person tasked with the project must first understand where the organization as a whole and the individuals stand on the “Change Scale” and adapt the project implementation accordingly. Some of the factors making people resistant to change:
- Fear of job loss to automation
- Fear of exposure for inadequate performance
- Fear of moving outside their comfort zone
- Natural human defensiveness that whatever systems, procedures, assumptions, etc. that an individual previously developed are now outdated or wrong and can be replaced with something better
- Basic lack of understanding that what may have worked in the past won’t work in the future. They don’t see a need to change.
- Lack of organizational empathy. The individual doesn’t care that by changing the way they do their job it will make another department or person’s job easier.
- Employees see that there is an atmosphere and culture of “punishment for failure” rather than “rewards for innovation”
Implementing a successful change project that crosses the entire organization requires the full-hearted commitment of the senior team. Each member must see the vision and benefits to the organization as a whole and set aside departmental biases. To be successful the team collectively must:
- Accept and address the employees’ fears
- Understand that most times it is a one step back to go two steps forward process and communicate this to employees at each setback
- Accommodate the learning curve
- Engage all levels of the organization for input and insight into how they perform their job; but make all decisions based on the benefits to the company as a whole
- Accept that there may be organizational “holy grails” that will be challenged, tested and sometimes found to be wrong in the process. Be willing to modify your belief system when proved wrong.
- Never, ever modify a system, policy or procedure to accommodate one person who won’t change. Nothing kills scalability faster or creates more resentment.
I’ll Leave You With This….
- Most business owners say they want continued growth for their companies. Continued growth requires continual change. Continual change means addressing scalability as each revenue ceiling is hit.
- If you don’t have a “Change Culture” in your organization then be honest with yourself that you are ok with things as they are and with the size of your company. There is nothing wrong with making a good living, running a successful company and staying small; just don’t fall for wishful thinking that you can grow without constant structural change.
If your team could use some assistance with scalability and structural change please feel free to contact us at IFI.