Posts

Why strategic thinking was a $10m game changer for this client

Even when your business is going well, spending time to take a step back and address the current market climate, and your company’s strategic priorities and direction is a must do for any senior manager. But when turnover is growing and profit margins are good, it can be very easy as a manager or business owner to fall into the trap of becoming too hands on. You end up spending your time focused on the day-to-day business operations without giving much thought or time to the company’s future strategy.

Without a strategy for the future of your business, the company and its management will be ill prepared to address issues as they may arise. A lack of direction and clarity in the company’s focus and objectives can result in poor decision making and inappropriate business systems and processes.

A lack of strategic direction is very common and will undermine the real potential of any business. Without a plan and a deliberate focus on where your company is going and how it will get there, it’s unlikely ever to be achieved.

Gibsons was engaged to support a heavy earthmoving equipment company with exactly this challenge. Involved in the repair, overhaul, field service and spare parts for heavy earthmoving equipment, the company’s National General Manager had become too involved in the business’ daily operations. He had no time to work on high priority strategic concepts for the business. He saw the benefit of having an experienced person to act as a sounding board to challenge and discuss his ideas in helping the business prepare for the future.

The company had built a reputation for high quality services and parts across a diverse portfolio of sectors with another division planned. Turnover was at $8m but the company was keen to grow. The need for an external expert with extensive experience in business improvements was sought. Gibsons was able to bring confident insights, ideas and techniques from decades of experience in supporting clients develop the most appropriate business strategies. Stimulating and challenging management team thinking, and ensuring the best approach was actioned.

Gibsons developed an aggressive growth strategy underpinned and supported by significant organisational changes. A management review process was implemented; and mentoring and coaching for Senior Executives commenced. A new Human Resources structure was embedded into the organisation accompanied by a change in company culture. Several process improvements were initiated to streamline operations and provide staff accountability. The resulting impact of strategic change to this company – a growth from $8m to $18m in only 4 years.

During a period of change management, it is essential to get the structure right – management, Human Resources and processes. This is even more significant during a period of growth.

During Gibsons’ work with this company, a significant risk was identified. The company had a large customer who was contributing a third of the organisation’s turnover. The impact on the company of losing this client was significant, and at the time of Gibsons’ engagement no strategy was in place to mitigate this risk, or what to do if it was realised. With Gibsons’ help, the dependency on this one client was reduced over time and measures were put into place should the client be lost. As a result, when the client did leave years later, the company was able to compensate for the loss due to this extensive planning and preparation work.

Gibsons Senior Consultants bring with them decades of experience and are valued for their extensive knowledge and insight into business improvement initiatives. Providing ideas, tools and techniques to challenge the status quo and enact considered change as needed, Gibsons continues to be an indispensable business advisor to this company.

Managing Organisational Change

Organisational change programs to improve business performance are increasingly common yet notoriously difficult to implement. Successful change management depends on management persuading employees to change the way they work, a transformation staff will only accept if they can be persuaded to think differently about their jobs.

CEOs can make things easier if they determine the extent of the change required to achieve the business outcomes they seek. They can choose from three levels of change:
1. Companies act directly to achieve outcomes without having to change the way people work. For example, divesting non-core assets to focus on the core business.

2. Employees may need to adjust their practices or to adopt new ones in line with their existing mindsets in order to reach, say, a new bottom line target. An already ‘lean’ organisation would encourage staff to look for new ways to reduce waste.

3. But what if an organisation can reach its higher performance goals only through changes to the way its people behave across the board?

Suppose the organisation can only sustain a competitive position by fundamentally changing its culture. The collective culture of an organisation is the aggregate of what is common to all of its groups and individual mindsets. Therefore, such a transformation would entail changing the minds of all the individuals within the organisation.

4 Conditions for Changing Mindsets

Each of these conditions is realised independently, and together they add up to a way of changing the behaviour of people in organisations by changing attitudes about what can and should happen at work.

1. A purpose to believe in – what’s in it for me?

Employees will alter their mindsets only if they see the point of the change and agree with it, believe in it, at least enough to give it a try. Staff must understand the role of their actions and believe that it is worthwhile for them to play a part.
For staff to buy in, they must be able to see and relate to the benefit for them – the WIFM (What’s in it for me?). The WIFM will get more traction if it can be presented on an emotional as well as a rational level.

2. Reinforcement systems in tune with the new behaviour

Change management experts agree that reporting structures, management and operational processes, and measurement procedures (i.e. setting targets, measuring performance, and granting financial and non-financial rewards) must be consistent with the behaviour that people are asked to embrace. When an organisation’s new behaviours are not reinforced, employees are less likely to adopt change and new behaviours consistently.

3. Employees must have the skills required for the change

Many change programs ask employees to behave differently without teaching them how to adapt general instructions to their individual situation. Adults cannot learn merely by listening to instructions; they must absorb new information, use it experimentally, and integrate it with their existing knowledge. This means we cannot teach everything there is to know about a subject in one session. Instead, break down the formal teaching into chunks, with time between for learners to reflect, experiment and apply new principles. Large scale change only happens in steps.

4. Consistent role models who ‘walk the talk’

To change behaviour consistently throughout an organisation it is not enough to ensure top level managers are in line with the new ways of working; role models at every level must ‘walk the talk’, with consistent underlying values informing their behaviour. Behaviour in an organisation is deeply affected not only by role models but also by the groups with which people identify. Role modelling must therefore be confirmed by the groups that surround them if it is to have a permanent or ‘deep’ influence (most teenagers can tell you about this).

SUMMARY

It is neither easy nor straightforward to improve an organisation’s performance through a comprehensive program to change the behaviour of employees by changing their mindsets. Nor should it be attempted without first exhausting less disruptive alternatives for obtaining the desired business outcomes. Sometimes tactical moves will be enough; and sometimes new practices can be introduced without completely re-thinking the organisation’s culture. But if the only way for an organisation to reach a higher level of performance is to alter the way people think and act, it will need to create the four conditions for achieving sustained change.