Change is an inevitable part of life, and this is no exception for small businesses. At some point they’ll face the prospect of business change whether planned or unplanned.
Industrial age thinking focussed on creating optimisation. Create the perfect process and then to specialise each component of the process. Then ‘modularise’ it to require less and less skill from each worker.
The system would be then optimised for ‘economies of scale.’ The more produced, the lower the per-unit overheads. However, there were fundamental flaws with this. It assumed that there would always be demand for the product. If there wasn’t, the sales teams were sent out to ‘create’ it.
It measured ‘efficiency’ in terms of per-unit cost of and ignored the cost of inefficiency, of re-work, people, wrong pricing and waste. This idea of de-skilling and optimisation without change found its way into our education system and management culture which still heavily influences our thinking today.
Optimisation without improvement
Optimisation without consideration of improvement or change resulted in the huge shift in competitiveness from (most notably) the USA to Japan over the 70s and 80s. If we look at why this was, optimisation should not be confused with improvement. It is the difference between ‘doing things better’ and ‘doing better things’. The benefits of improvement at organisational level came clear over a few decades. We are at the beginning of a new revolution with change and adaptation at the centre of competitiveness and IT is accelerating the effects by orders of magnitude.
The winners now are not those who can optimise and drive down prices, they are those who know how to go about change.
Types of business change
- Emerging Change – Business change that creeps up on you as you attempt to optimise your processes. When companies become focussed on improving their existing model but lose touch with what the customer demands. Small businesses are susceptible as they keep the same structures and processes even as their business evolves. All of a sudden, finding they are out of shape for what they do!
- Unplanned Change – Business change that is forced upon you, either expected or unexpected, from the external environment. It could be new technology, shifting social norms, something as simple as the economic cycle or even a government imperative. The more of a surprise it is, the more disruptive the change.
- Planned change – This kind of business change is deliberate and internally generated. It can be large or small, and short or long term. The smaller and more often changes occur, the less disruptive they are. The larger and more complex they are, the more they have to me managed as a project. Planned change makes the other two types of change less frequent and or necessary.
Why planned change is better for businesses
Implementing change is best when planned. There are three strands to planned change.
- Changing incrementally and often will tackle the problem of emerging change. The business evolves with the market and the environment in a dynamic and consistent way. This can be achieved by putting management systems in place that ensure that the business and its activities are reviewed constantly. That there is a clear and efficient system for learning, and then integrating the knowledge into the process to produce the best possible value to the customer e.g. ISO 9001.
- Having a proper change management ‘process as a project.’ And making sure the team is familiar and trained in that methodology e.g. John Kotters 8-step model, and Lewins 3 Step Change Model.
- Using change to turbo-charge innovation. This means identifying possible changes and then running them as a series of rapid-fire ‘experiments’ where the learning itself is a key aim alongside rapid product or service development. This type of rapid development of solutions, getting them in front of customers fast and getting the feedback into the next viable product is conducted at speed. This is the basis of ‘Agile’ methods like Scrum which were developed in the computer software industry but are finding their way into other industries. It is a version of but deliberate change. It takes energy and risk but is the hallmark of the most competitive small business owners out there today.
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