Implementing Changes to Your Business Model
In the previous two parts of this article, the challenges of making changes to a firm’s business model were documented, and the importance of taking action to gain internal buy-in was spotlighted. Closely linked to the need to create a culture supportive of the new elements of the business model was the challenge of managing the implementation process. Failures to do so were cited as the second most frequent cause of disappointing results. Recommendations to avoid this outcome fell within five categories. These recommendations were focused on multiple dimensions of the implementation process. The suggestions outlined in the paragraphs below are ones that can raise the probability that the new business model delivers rewards to your customers and shareholders.
A focus on “Testing, Risk Identification, and Adequate Funding”, reflects responses that cited “the unknowns” as the key source of implementation failures. One executive emphasized the need for some version of beta testing, from both an internal and an external perspective, of the planned changes before wholesale implementation was approved. He argues that there will always be surprises, and that you can often learn them through some form of beta testing. Another executive tied together the concepts of risk assessment and adequate funding. This individual argues that no plan ever goes as planned, but that funding levels typically assume a smooth path from start to finish. A third recommendation within this category emphasized the need to pre-test key systems and processes within the company. This executive noted that while the change might be centered elsewhere, virtually every change these days impacts on financial systems, enterprise IT systems, fulfillment systems, etc. Unless the implementation team can be confident that key systems are “change-ready”, the likelihood of problems is high.
Many arguments were provided in support of the need for a “Detailed, Fact-Based Strategy”. One argument began by noting that off-the-cuff strategies have such a high failure rate that it’s impossible to discern exactly where things went wrong. But when the strategy is defined in careful details that lead to a meaningful “What-Who-When” action plan, the implementation team has a genuine roadmap to follow and a basis for assessing progress and problems. Another executive noted that a good strategy will not only say what to do, but also what not to do – a tool that can be critical in helping the project team avoid heading down blind alleys.
Another set of recommendations advocated a “Full Time Project Team with the Right Skills”. Quite frequently, we heard examples of failures due to the fact that there was no time to manage the implementation project due to the commitments of “day jobs” or the “real jobs” held by project team members. “If it’s important enough to do, it’s important enough to put people on the project full time” was one executive’s observation. The “right skills” was another important theme. One executive observed that it was often the case that the new business model required skills not resident in the firm. But too many firms assume that these skills can be quickly learned, and fail to source individuals with the necessary expertise to be successful. This executive emphasized the need to think through the team’s composition and be realistic about whether the available talent pool is up to the task.
“Monitoring, Learning, and Removing Barriers” was cited as important from two main perspectives. The first is that no major project goes without surprises, and best practices dictate the need for processes to identify and overcome such surprises. The second is that monitoring processes typically ensure the involvement of key members of the management team, which is essential when barriers need to be removed. One piece of advice emphasized the need for learning and evolution: “Keep true to the vision, but be prepared to alter course…”.
Observations related to the importance of “Best-in-Class Project Management” emphasize the fact that the skills and competencies associated with implementation are every bit as demanding and complex as those associated with strategy development. Those firms that develop these skills within their firms will be well-equipped to manage complex changes to business models required from time to time. Specific recommendations involved almost every phase of project management, but the one given most weight was developing metrics through which progress can be measured and managed. One executive commented “If there is ever a time for a dashboard, this is it. You’re going to have ‘red light situations’ for sure, so you need a process that spotlights them early and allows you to address them.”
Elements of your growth strategy and of your strategy to improve results in an underperforming division are inevitably going to require that you define and implement changes to your firm’s existing business model. You can’t avoid them – and probably don’t want to avoid them in your efforts to drive growth and improve profitability.
Tell yourself and your management team that “You know it ain’t easy”, as that is a fact of life associated with essentially every dimension of change to a business model that can be identified. And recognize that at the top of the list as to why “you know how hard it can be” are things you can control – the implementation process and internal responses to the change. The results can be all that you had hoped for when you defined your strategy to drive growth and improve profitability, but that will only happen if you and your executive team take on the major responsibility of managing a change in your firm’s business model.
George F. Brown, Jr. is the CEO and cofounder of Blue Canyon Partners, Inc., a strategy consulting firm working with leading business suppliers on growth strategy. Along with Atlee Valentine Pope, he is also the author of CoDestiny: Overcome Your Growth Challenges by Helping Your Customers Overcome Theirs, published by Greenleaf Book Group Press of Austin, TX. See www.CoDestinyBook.com for more details.