Some people like to say, “If it ain’t broke, don’t fix it,” but I believe all businesses need to be shaken up and transformed every five to ten years in order to stay competitive. I say this partly because if you don’t, you won’t actually know that something is “broke.”
I found this need to transform to be necessary during the 15 years that I ran Roth Bros., Inc., a national service contracting firm founded in 1923. You do not stay in business for over 90 years without changing and adapting. I led three of these transformational periods and each resulted in a shake-up of the organization, a new course charted, and increased growth and profitability. Were they easy? No. Were they needed? Yes.
The need for transformational change normally arises from the inertia of a successful business, management realignment or customer opportunities. It is easy for successful companies over time to add overhead, to accept mediocrity because “this person has been with us for a long time,” or to start taking customers or business processes for granted.
In my own experience, the first transformational period happened when I joined Roth. I needed to restructure one division by closing two offices, exiting some management and staff, and refocusing the sales strategy. It was very unpleasant to do but I always had the mentality that I had to protect the beehive. Allowing poor or low performing areas to impact the rest of the company was not acceptable to me.
A few years later, the second transformational change involved combining businesses that were in complementary segments but led by people who didn’t work well together. I brought in a coach to help my team with the transition, as they needed to assume more responsibility and integrate the separately run businesses. I had a sense that restructuring my direct reports was going to bring about positive results, but the actual results far exceeded my expectations. Once the teams of the divisions involved started working together, we cross sold more, developed new services and increased results. Morale also improved because it stopped being dragged down by the conflict between the leaders.
In this case, I probably should have acted sooner to bring about the transformation. I actually waited too long to execute the restructuring because I hoped I could get the leaders to work well together. I quickly learned hope is not a strategy.
The last transformational change involved major opportunities to significantly grow two of our service products. To win both opportunities, we had to invest heavily in IT systems, reassign existing staff and bring in many new staff. Basically, the way we had been doing almost everything had to be changed to absorb the increase in volume. There was a serious amount of change management and training required to pull it off, but we did it.
So how does a CEO know what needs changing? If it’s not obvious to you, do some digging. To identify ideas that could lead to transformational change, I regularly met with a cross-section of approximately 20% of our people and asked them the following questions:
- What three things would you like me to change?
- What are the three things you would like to make sure we don’t change?
- What are you concerned I will change?
- Anything else you want to talk about?
- Anything else I need to know?
These questions are not my creation, but like so many tools I have picked up over the years, I can’t remember where they came from. In addition to asking these questions, I reviewed why we lost RFPs and bids, as well as surveyed customers to find out where we needed to improve and what they wanted that we were not already providing.
The big transformational type change I talked about at the beginning of this post should happen every five to 10 years, as I said. However, doing this less-involved process every 18 to 24 months will give you insights into what your people think, what your competition is doing to win business, and what your customers expect and want. Reflecting on the information you gather from this process will help you see where and how you need to transform your business to position it for long-term growth and success.