Continuous improvements or breakthrough ambition?
Most companies continue to fine-tune and refine what they have. Especially when they have made it, launched successfully – and have managed to turn a real profit from their products. But sometimes it’s just not enough; a lack of measurable progress may indicate that there is a need to take a bit more risk and initiate more significant changes, in order to achieve bolder breakthrough-type goals.
There are many ways to improve. For a well-oiled machine, the obvious thing is to make sure that all improvement opportunities are pursued. For companies in a technology-heavy market it is almost a given that the product(s) need constant refining and improvement. Ideally, everyone in a company shares the responsibility to address these opportunities to improve.
These regular, continuous and relentless efforts should be supported.
Sometimes, however, there is a need to take bigger leaps and address the “machinery” in more fundamental ways.
Technological evolution is a driver for many of these changes. Cheap computers and software opened for the way for a radical shift from hardware to software. Software development then changed from “waterfall” to lean/agile.
These types of more fundamental changes will affect the entire company machinery; the way that we develop, sell, and distribute resulting in changes to how people work and how customers buy.
The benefits side is often clear, but the other part of the equation is the effort and cost. Radical changes are costly and disruptive – and the decision-making process is tough even for companies with good financials and a secure market position.
Radical changes in tough times?
The situation is clearly worse if a company is already in a tight spot and struggling. How can we justify or even consider major improvements that are costly, when this process might take away focus from what is still working and (as always) comes without a guarantee of success?
How do we know when it’s time to leave the fine tuning and consider something more radical?
It’s a tough question – and one where it’s hard to be certain…
Indicators that a breakthrough ambition is needed
Luckily, there are a few tell-tale signs that the machinery needs a more radical overhaul.
Based on experience, the main indicators for owners and boards are:
- A strong proud culture of improvements, established over years
- Wide variety of improvement activities and projects completed or ongoing
- Hard/impossible to correlate company performance to improvement activities undertaken
- Every year/board meeting yields a new list of improvement possibilities
- Reactive behavior – when problems/issues go all the way to the board, actions quickly follow, in other words: “fire-fighting”
- Negative events (lack of salespeople, unfortunate events in R&D testing, a customer changing their mind etc.) are accompanied by an explanation of “needing a small fix in the machinery”
Viewed in isolation, these items do not make a case, but if there’s a pattern, we strongly suggest that the board takes the initiative to look at the bigger picture.
The reason? These numerous, constant small improvements may be what is effectively clouding the real issue(s), preventing them from being addressed.
The challenge and potential need for outside help
The challenge is in decision-making. When barely getting by, do you dare to set challenging goals and set aside significant resources for more radical projects? There’s a lot of risk to consider.
One key challenge lies with job security at all levels of the company. When limiting improvement efforts to “tuning the machinery” there is minimal risk for people in the company. This is no longer true when attempting major, radical changes.
The owner/board role is fundamental in:
- Understanding that the situation may require breakthrough, radical thinking
- Shaping the ambition and goals
- Making resources (time, people, budget) available
- Maintaining a very tight connection with the CEO
- Permitting an outside perspective and getting specialists involved
Facing a delicate situation, it will be beneficial to take advice from an external, objective party.
Sometimes tuning and tweaking is what is just what a company needs. But when not – when bigger efforts are called for, the board is crucial in facilitating this transformation.
There is also often a need for the board to obtain external help, purely because addressing large breakthrough targets is often not (and perhaps should not be) part of the normal skill set of a company. These “breakthroughs” might happen just once or twice in a company’s life span.
This is when everyone gains from employing specialists who do this on a regular basis and who are comfortable with the wide range of challenges that arise from a decision to go for breakthrough targets. This might just be the spark that ignites the right ideas and ambitions that were there inside the company all along…