Every business needs a transformation plan
The most heard question these days that you hear in the boardroom is if the company needs to transform. Sometimes mixed with a flare of imbelieve as the company already exists for decades and we'll survive this and next crisis as well. So let me share you my personal take on the engine of Belgium, small and medium sized companies.
Most small and medium sized companies in Belgium are privately owned or owned by a small group of investors and did quite well the past decades. They "survived" most of the past crisis periods and this was proved in the last one, where the Belgian economy was hit the least compared to other countries in the EU. This also means we have a very rigid (or some people their eyes a stable one) commercial organisation on a Belgian level. Which is a huge problem for the future. The speed of change has hugely changed the past couple decades, so if you have a rigid system, this means it will have problems coping with the speed of change. Just an easy comparison (we always like to compare ourselves with our neighbors in the North) with The Netherlands, they have 4 time more flexible FTE's in their companies compared to Belgian companies.
And yes we love to critise all factors that we think we cannot manage, e-commerce being one of them. If you are a bakery or butcher or even a small store in the highstreet, you can't win from the amazon's or Coolblues on this planet... wrong! Plenty of examples that did. Why should I as a consumer be satisfied to only buy one size fits all shoes from Torfs at 200€ as I can do the same online, fully personlised (with even my name engraved in the sole in Portugal - www.undandy.com). Or why should I buy my flatpack furniture in OK Meubelen or Heylen, if I can personalised them online and shipped straight from where it is produced (www.sofacompany.com).
Two examples where small companies changed their way of doing business. Two small and medium sized companies that changed from following the "highstreet" or "the norm" and started paving their own way. Even in Belgium where you can order your meat online at www.timetomeat.be . Any business can change this way, whatever the size and today's technology allows you to be up to date with almost no investments. It's wrong to think that people can be forced to buy local, that's just an excuse by avoiding the more difficult question, why can't Belgian companies be more adapted to the needs of their buyers. We need much more change in our SME segment!
But it's not going to be easy! Yes, that's true. It's an uphill battle and one you should plan as you have some challenges...
The top of the company
A challenge, let's be honest, most companies are managed a long time by the same person or people. The reason because we have a rigid way of working is because of outdated strategies (no you don't have to wait for the legislator to change your company ;-) ). And most family owned organisations are way behind evolution, let alone do they have a succession plan in place? It's not because you did business for the past 20 years, you'll survive the next 20. On the contrary, this way of thinking is the start of failing margins and an ebitda evaporating. It's not because your ebidta of the past 5 years was above 10 million € that you can't go broke. (just look at Thomas Cook, it took them only 5 years to break the machine, where only 1 group was to blame, the top). As I started, a real challenge and you'll need help, certainly if you are the "padre famillias" who owns the company. Ask help from professionals outside your inner circle (friends and family) and start building trust with the next generation of leaders in your company.
The middle of the company
Middle management should be your change ambassadors. They must be your generals in your army. So before you start marching, ask yourself the question, do I have the right team in place. The first change you make is not on the ground, but in the middle. This also means that they should fully understand your vision or change for the future. If you are not critical for your generals, by having a lack of consequence management, you will see that the belly will start rumbling. Be very critical on...
- promoting people from the belly up: you need a good balance and not an industry tunnel vision in your middle middle management. Getting people from outside your business is sometimes a quick start for new ideas.
- performance: under performing is quickly detected by the belly and they'll start having the idea that you lack any sense of consequence management, so why should I than go a mile further?
The Belly of your company
This is the easiest and hardest part. Yes, a ying and yang balance. They probably know much quicker than any board or manager that things have to change and yes, probably you didn't listen enough to the belly or in some cases the remarks are seen as "wining employees". Except that those employees order every day online (just monitor the amount of blue, orange or other fancy box deliveries at your reception) and together they are much more in contact with digital evolution than any management (who tend to be a little "behind" when it comes to ordering online). So they know it needs to change, but than the yang kicks in, your colleagues are human. And humans are born with one very clear malfunction (well, in prehistoric times this was not a malfunction, but rather a solution): we hate change. The word "hate" is correct as our brains are made like most animal brains (did you know that a huge whale runs on a 9 volt battery) are made in such a way that our energy consumption is optimised to the fullest, this means that our brain is programmed to organise our body, in such a way that it consumes the least amount of energy, any change means extra energy, so we basically "hate" it.
That's why I strongly believe that if you want to be successful in any change program, you not only need to involve your "belly" but also communicate openly and transparently to them. If you think that just sending 1 message to announce a change program will be successful, than you are wrong, you'll need to repeat it and probably say it 10 times before it's understood. And by "involving", I really mean giving them decision power to change plans, not just telling them what they should be doing. This also means that you will have to be very clear where you want to plant your flag as a company, what's the end game or where do you want to go as a company and why they would want to follow you! It's like the engine of a sports car, if you don't have the right oil in the engine, it won't go, it will break down.
The existence of your company
Like the butcher that can't sell online, you 'll probably encounter that your management is not critical enough for itself. Millennials are much easier in questioning the status quo, but that generation only resides in start-ups or your belly. There are certainly 2 "P's" very important in your transformation. The P from Product and the P from Place. What are you going to sell and where. It's not because you are a retailer for the past 20 years that you can't become a production company. It's not because you are now one of the best companies or one of the best places to work, that in 3 years time it will be the same.
As they say, if ebidta permits, only the sky is the limit!
So I never answered the question from the first paragraph, but I hope you understand that my answer is quite clear, yes! You will have to transform and no you are not ready for what's coming. It's not a doomsday thought, but rather a reality. Start today to think about the day after tomorrow and as somebody once said, the journey is more important than the goal!