Stages in the Evolution of a Business A Primer on Change Management
Every business, company or organization goes through cycles in its life. At any point, each program or business unit is in a different phase from others. The astute organization assesses the status of each program and orients its team members to meet constant changes and fluctuations.
Strategic Planning facilitates disciplined thinking about the organization, its environment and its future. It identifies conflicts, reinforces team building and serves as a vehicle for monitoring organizational progress.
The planning process is then translated into a company Vision. With that Vision, the organization will evolve steadily toward success. Without any kind of Vision, management will continually apply corrective techniques (“band aid surgery”), while the company stumbles and falls. The price tag for false surgery is six times that of front-end Vision…a concept that I call The High Cost of Doing Nothing™.
I’ve talked with many entrepreneurs and founders of companies which rapidly grew from the seed of an idea they had. Most admitted enjoying the founding phase but lost interest shortly after giving birth. Over and over, they said, “When it stops being fun, I move on. “
After the initial honeymoon, you speak with them and hear rumblings like, “It isn’t supposed to be this hard. Whatever happened to the old days? I’m ready to move on. This seems too much like running a business. I’m an idea person, and all this administrative stuff is a waste of my time. I should move on to other new projects.”
When they come to me, they want the business to transition smoothly and still make the founders some money. They ask, “Are you the one who comes in here and makes this into a real business?”
I reply, “No. After the caretakers come in and apply the wrong approaches to making something of your business, I’m the one who cleans up after them and starts the business over again.” The reality is that I’m even better on the front end, helping business owners avoid the costly pitfalls attached to their losing interest and abdicating to the wrong people.
Most companies enjoy the early stage of success…and wish things would stay as in the beginning. When “the fun ends,” the hard work begins.
To “go the distance,” the organization must complete all seven stages of evolution. There are no fast-forward buttons or skipping steps inn developing an effective organization, just as there are no shortcuts in formulating a career and Body of Work.
In the first year or two, the character of the organization has not changed yet. It reflects what they started with and the first wave of people coming into it. Unfortunately, the founders also brought along the excess baggage of the previous corporate cultures in which they worked. They don’t want to be like company X, but, in swinging the pendulum in the opposite direction, they are more like the old company than they realize.
In the beginning, the founder projects his-her vision into others in the founding team. There is an exchange of egotisms from one person to the other. Pleasures are plentiful in the beginning because great responsibilities are to follow.
If management is willing to “stick it out,” many strengths and an organizational character will soon be revealed. Founders must reaffirm their commitment toward themselves, the organization and the quest. They start seeing the company (mainly its people) as resources to be cultivated, not exploited.
Now come the “band aid surgery” approaches that plague otherwise clear thinking. Management begins taking wrong courses of action. Certainly, “trial and error” is admirable and to be expected. Band aid surgeons usually pursue surface remedies for the pain.
Many people want quick, easy, flashy fixes…without doing the things necessary to maintain staying power. Thus, they move from venture to venture. The realities of doing business for the long-term have now set in.
After enduring the crisis and realizing the extent of the pain, rational managers start to see the reasons why they went through this process. They achieve the knowledge and understanding that an evolution has just transpired. Effectively treating the pain and learning from it serves to reinforce the will and zest to achieve further.
There is a difference between knowing a product-industry and growing a successful business. It is possible for a company and its managers to know much about certain arts and sciences without having the will to pursue them.
Organizations do not set out to go bad. They just don’t “set out” (little or no planning). Thus, they go off course.
Much of the wisdom to succeed lies within. It must be recognized, fine-tuned and utilized. Much of the wisdom to succeed lies outside your company. It must be called upon, sooner rather than later.
People under-perform because they are not given sufficient direction, nurturing, standards of accountability, recognition and encouragement to out-distance themselves. Organizations start to crumble when their people quit on each other.
Unhealthy organizations will always “shoot the messenger” when change and improvements are introduced. Healthy organizations absorb all the knowledge and insight they can…embracing change, continuous quality improvement and planned growth.
Anybody can poke holes in an organization. The art-skill is to create programs and systems which do something constructive. The level of achievement by a company is commensurate to the level and quality of its vision, goals and tactics. The higher its integrity and character, the higher its people must aspire.
(with their percentages per role-function-activity on Hank Moore’s Business Tree)
Branch 1. The business you’re in (10%)
Rendering the service, manufacturing the products (5%)
Core business abilities, specialties, skills, expertise (5%)
Branch 2. Running the business (14%)
Administrative practices, procedures, operations, structure, review (4%)
Physical plant to produce products and services (3%)
Technologies (1%)
Equipment, supplies, systems (2%)
Distribution (4%)
Branch 3. Financial (10%)
Cash flow, forecasting, budgeting, tracking money trends (4%)
Equity and debt financing (1%)
Accounting and record keeping (4%)
Banking and investing (1%)
Branch 4. People (28%)
Recruiting, hiring and supervision (5%)
Human resources management (3%)
Empowerment, team building (7%)
Training, incentives, involvement (10%)
Professional-executive development (3%)
Branch 5. Business development (23%)
Corporate imaging (4%)
Perceptions and realities (1%)
Marketing (5%)
Sales (7%)
Promotional techniques, strategies (2%)
Tactical reviews, modifications (2%)
Marketplace sensitivities, adaptabilities (2%)
Category 6 (trunk). Body of Knowledge (8%)
Category 7 (roots). The Big Picture (7%)
The Corrective Action Process applies to all individuals operating in a business environment, divisions and entire companies. By employing these analytic tasks, problem solving may be turned into a marketplace advantage:
Analyze accomplishments in terms of overall organizational Vision and implications for successful achievement of long-term company objectives.
Stick around by default. Some companies are One Hit Wonders. They have limited utility and don’t have what it takes to go the distance. They live short lives because that’s all they’ve got in them. Some One Hit Wonders stay around a little longer than they should have, not because they are doing right things but because they have just stuck around.
Needed for a Particular Niche. They don’t try to be all things to all people. They have a specialized market.
Show Promise to Develop into a Longevity Company. Made an effort to justify their niche…not just to fill it by default. Take pride in being the best in their area of expertise. Do business with other quality-oriented companies.
Time Tested Products, Processes. They are good and plan to get better.
Willing to Do Things Necessary for Growth. Products and processes only represent one-third of a company’s picture. Growth companies take risks and address the other two-thirds on a regular, systematic basis.
Earned Respect to Continue in Business. Dare to innovate. Commitment to Continuous Quality Improvement. Also look outward, rather than focusing all resources internally. View their products, processes and people as a holistic organization.
Contributions Beyond the Bottom Line. Understand other reasons for being in business than just the dollars. Make healthy profits, while creating the best products, being a learning organization, setting-upholding standards and continuing to justify leadership position.
In order to progress and successfully navigate through the pains, changes and remedies, every organization has to develop its core values and a corporate culture. Though not a part of the initial pleasure phase, having standards and ethics will navigate the journey to success more forceful and surely. Here are seven progressive levels of standards and ethics:
Base Level. Just needing and attempting to get by. Basics of food, clothing and shelter. Knowing right from wrong. Trying to pursue a good life and aspire to something higher.
Lowest Common Denominators. Although knowing better, subscribing to prevailing philosophies and behaviors of others. This leads some to take advantage of the system, want more than one’s share and fail to be accountable. Sadly, the common denominators are below what they used to be, and society continues to lower them. The mission of a successful person or organization is not to succumb quite that low.
Lessons from the School of Hard Knocks. Learning by experiences, trial and error, successes, life skills. Becoming more familiar with one’s strengths, weaknesses, opportunities and threats. Understanding what an organization can and cannot accomplish, represent and become. Maximizing one’s resources to the most practical advantage.
Launching a Quest. Striving to learn more and go further. Includes intellectual pursuits, professional realities, nurturing of people skills and executive abilities. At this point, people change careers, and organizations revisit their goals and crystallize new visions.
Standards. Set and respect boundaries. Many times, people and organizations will attempt to violate those standards or fail to acknowledge their existence. The test is how consistently one sets, modifies and observes one’s own standards.
Values and Vision. No person or organization stands still. It is not enough to accept change but more importantly to benefit from it. It is not enough to see yourself on a higher plateau and quest for more. Success comes from charting a course, encompassing value systems and methodically reaching goals.
Code of Ethics. Fundamental canons, rules of practice, professional obligations, accountability-measurability, professional development, integrity, objectivity and independence. Commitment to uphold and enforce codes of ethics (yours and those of others) and the ethical responsibilities of members in business.
Research shows that change is 90% positive and that individuals and organizations change at the rate of 71% per year.
Change is necessitated by a natural flow of events, stemming from changes already made and realized. Some changes are mandated by others in control, and others are necessitated by circumstances outside your control.
The worst blockages of change come from people who possess the “been there, done that” attitude. 87% of the time, they really haven’t. Other preventers include middle managers who can’t see the forest for the trees, don’t want to see beyond the scope and are proud of it.
Young generations who grow up in the houses of the above group see and emulate the anti-change constituencies. They grow up not knowing any better, clinging to the status quos and acting out their limited scope in the classrooms, in social settings and in their early business careers (until they learn better).
Young people in the business world (up to age 40) tend to want instant results, instant gratification and the success of people their senior who have paid substantial dues. As they learn to benefit from change, they mellow into savvy business executives.
To those who block processes of organizational change, things will pass you by, with or without your efforts. Negative efforts will harm your potential for success. Mastering change sooner rather than later has beneficial effects, with no down side.
Low-Power:
Maintain the status quo.
Technical proficiency skills.
Caution. Don’t rock the boat.
Dependency.
Survival.
Bureaucracy.
Fulfill tasks, schedules.
Live and let live.
Learning.
Entrepreneur:
Carve new opportunities.
Develop to an art.
Take bold steps to lead and create new things.
Autonomy.
Risk and expansion.
Customer orientation.
Honor-exceed commitments.
Our corner of the world.
Knowledge.
Innovator:
Create future paths for others.
Create new modules.
Courage of convictions, ideologies.
Self-reliant.
Vision, philosophy, future of the business.
Provide value-added.
Leading-championing the marketplace.
The global village.
Wisdom.
People make voluntary and necessary changes everyday. Those who have learned to benefit from change retain a profound commitment to the process, reaping the benefits of continually changing opportunities.
The steps toward mastering change include:
To realize full benefits from change, be real with yourself about the changes. Confront what has been done to sabotage success. Be willing to make changes. Benchmark the changes.
Be accountable for fallout, by-products and after-effects of change. Advocate future changes…to yourself and others. Continually re-enact this process with other change management opportunities.
Changing with successful results beats the alternative. Organizations and professionals who become stuck in ruts and stubbornly cling to the past are dinosaurs, whom the marketplace will pass by.
Research shows that change is 90% beneficial. So why do people fight what’s in their best interest? Change management is an art, not a death sentence.
Professionals, specialists and technicians owe their careers and livelihoods to change. Because they are educated and experienced at new techniques, they have market power.
Change is not as high-risk as some people fear. Failure to change costs the company six times more. Lost business, opportunity costs and product failures are signs of neglect, poor management, failure to plan-anticipate and grow the company.
Those who champion change will positively advance their companies and careers. It accelerates the learning curve and success ratio. Those who do not get on the bandwagon will not last in the company. Those who excel develop leadership skills, empowered teams and efficiencies.
Leaders who expose their teams to new territories helps them see how they adapt within that framework. Championing change can mark the next tier in an executive’s development.
A well-intentioned person may want and try so hard to do the right thing that he-she makes mistakes and ultimately does the wrong thing. It is the mark of a great person to admit mistakes, correct the course and move on. Another mark of a great leader is to let his people lead too…and give them the reins to do so effectively.
Change helps you do business in the present and helps plan for the future. Without mastering he challenges of a changing world, companies will not be optimally successful.
The company-organization which manages change remains successful, ahead of the competition and is a business-industry leader. Meanwhile, other companies will have become victims of change because they stood by and did nothing.
“Nature’s mighty law is change.”
“Nothing’s the same when you see it again.”
“Change is inevitable in a progressive society. Change is constant.”
“Change is not made without inconvenience, even from worse to better.”
“You can’t step twice into the same river. Everything flows, and nothing stays still.”
“The basic fact of today is the tremendous pace of change in human life.”
“He that will not apply new remedies must expect new evils. For time is the greatest innovator.”
“All progress is precarious, and the solution of one problem brings us face to face with another problem.”
“Human progress is furthered, not by conformity, but by aberration.”
“Chaos often breeds life, when order breeds habit.”