Transformation lies at the heart of most TMT businesses but making a major change to the direction of your company or changing your modus operandi can be risky and stressful.
During your period of growth, a continuum that exists until the time you exit, it will be necessary to effect change to make your business more profitable and valuable. Every company, irrespective of size, needs to constantly evolve. Whether it is new operating systems, new technology or even a new management team – transformation creates impact and needs to be planned for. When it is managed properly change becomes an opportunity to progress the business. Conversely, if you get it wrong it can create real problems.
Robert Walton, CEO of hosted communications provider VTSL, says: “Two years ago we planned to refocus the business from a sales-led, software integration specialist to a software development business with some niche products. We were competing in a highly congested space and decided to make a major pivot. We can now target larger customers across different markets which in turn is leading the way to an acquisition programme and much bigger premises.”
The definitive report by IBM Global Business Services titled Making Change Work (2008) reported that 87% of respondents stated not enough focus is placed on managing change in critical projects and that 65% of change projects fail to meet their objectives. These statistics hold up over a decade later as businesses constantly strive to create value through change.
As advisers to TMT businesses for over two decades, we have seen what works and what doesn’t when it comes to change management. Here is the Evolution Capital view:
1) Define the compelling event
The gap between extinction and market leadership can often be the ability to anticipate and manage change. This ultimately provides your customers with an enhanced level of service, and you with increased revenue generating opportunities. One such change was considered and implemented by a highly innovative MSP, which has an impressive and growing list of customers throughout the UK.
Its CEO explains: “Perhaps our biggest change was to our internal systems and technology platforms. The company had grown organically since 2011 and in that time built up a good deal of stand-alone technology silos. Since we migrated the whole of our back office into a single business management solution, we can now sell, service and support our customers much more efficiently and profitably. When it comes to planning for change we need to be innovative and always be looking for new ways of demonstrating value. After all, our business is all about helping our customers achieve more.”
2) Separate what is working from what is not
Even in the toughest of times it is probable that not everything needs changing. It is at this point that owners need to identify what works and what does not. Unless you want to do a 100% pivot it will be critical to identify the things that need to stay where they are. If “it ain’t broke don’t fix it,” unless you want to remodel your complete enterprise.
A key benefit of investing time here is that you may find that you simply need to do less to improve the situation. Perhaps a business process has too many moving parts and needs a few removed or a business service needs the user experience to be tweaked. Make sure you do not miss an opportunity to do more with less when you implement those changes.
3) Consider the impact and create a plan
Since your inception you will have collected a lot of data on your business and it is important to use it to evaluate the feasibility of your change plan. By using all the information and the lessons learned you can avoid the bear traps and evaluate each step. When it comes to risk vs. impact you will need to judge how the changes will affect your customers, your staff and your management team.
Understanding this is vital to identifying the areas of high risk and preventing a negative impact.
Tom Carroll, CEO of Our IT, says: “If you have no customers, you have no business. If you have no-one to service the customers, you have no business. Always keep that at the forefront of your thinking before implementing changes to the business, whether they are either operational or financial. It will help you to plan them properly and consider the changes and their implications before you make them. Knee-jerk changes are prone to fail.”
4) Communicate & keep everyone in the loop
Transparency and proactivity with customers and staff is all-important to business transformation, and even more important when owners are trying to turn the ship around.
Changes to business structure, key staff, or program support can be construed negatively unless you get your messaging right. Customer acquisition is a challenge that is both time-consuming and expensive but losing customers through poor communication of your change programme is easily avoidable.
A proactive approach will allow you to control the narrative and be seen in a good light even when the message is less than positive
Most successful businesses have spent a good deal of time and effort recruiting their employees and stealthy changes to the business can be perceived in a negative manner. For example replacing an inefficient sales commission plan could be perceived as demotivating by the sales team if it is not communicated properly.
If you need to radically pivot your business your team is absolutely critical in executing your plan and it is good practice to communicate everything. Resist the temptation just to tell your team what is happening and engender a positive atmosphere in which you can invite input from everyone.
This can only help in keeping things positive and constructive and will assist in considering the change plan, identifying any obstacles that you may have missed.
Matt Harper-Ward, Group Director of UC supplier the Sprint Group, says: “The biggest change to our business was probably integrating all of our brands under a single umbrella. There was a great deal of thought and planning and the cycle took 18 months to complete. The change was driven by the previously convoluted and complex nature of having lots of independent business brands but we took time to ensure that the integration was a success. The results have been very pleasing engendering a co-operative and opportunistic environment. We also made sure that our customers and staff knew exactly what was going on and even appointed a new marketing manager to ensure that the right messages were sent out.”
5) Take it slow
In a similar way that owners have built their business, making major changes to yours should be just another process. Invariably it will take you longer than you think even if you have factored for slow progress. Forecasting the take-up of a new product or service is not an accurate science and to achieve the desired traction has always taken longer than anticipated.
Those with longer memories might remember when Apple was on the brink of collapse. Throughout the 1990s it struggled with everything from profitability to delivering product and ousted Steve Jobs. When he returned in 1997 he instituted a bold change of direction delivering first the iMac, then the iPod and finally the iPhone. The company in 1993 bore little resemblance to the Apple which we behold today and it all came about by planning changes, planting the seeds and watching them grow. It did not happen overnight and the rest is history.
The process of any business change is a long one and it is certain to take you longer than you want. It is worth taking the time to gather data about how well each step is progressing and what adjustments need to be made along the way.
Avoid getting into a cycle that dictates continually altering the direction of your plan as this is a good way of getting into a worse place than when you initiated your first change.
Organisations that plan and implement successful strategies unlock new dimensions of operational gains, revenue and profitability: heights that will not be reached under the status quo.
To make a success of your plans for change you will need to decide that your existing models, processes or programmes are unsuitable to determine future success. It will require discipline and planning to enact a correct and successful shift in the focus of your business. Everything is possible, with a good plan.