I’ve been thinking a great deal about organizational change. I would like to share my thoughts on the three ways to realize huge change in a business. Change is going to happen. Is the change going to be thrust upon your organization or is it going to be something you bring about? All three of the ways we look at here, are change initiated within the organization. Perhaps we will talk about dealing with change from external sources another day.
Transformational Change – This is the most obvious of the three. It requires an organization to plot a new course. This type of change is challenging and certainly not for the faint of heart. If you have a successful business, it takes a strong will and perhaps even more, a strong vision.
Sometimes, transformation happens when a new player comes into an industry with a game changing approach or technology. Let’s look at Google to illustrate. In its infancy, the way Google ranked search results was completely different from methods used by the existing search providers. It was based on using backlinks as a sort of voting mechanism. The reasoning was that the more members of an online community that felt a particular page was worthy of reference and therefore linked to it, the higher it would rank in their search results. Google’s methodology has evolved, but this simple approach resulted in their climb to number one in search. When Apple introduced the iPhone, it was unlike anything that the industry incumbents were offering. They changed the industry.
A local example is the Calgary Parking Authority’s ParkPlus System. Prior to the system introduction in the fall of 2007, on-street parking in Calgary relied on parking meters. Enforcement was handled by a team of officers that patrolled the streets on foot, checking each individual meter and hand writing a ticket when a vehicle occupied a spot where the time had expired. ParkPlus introduced a different approach. Parking meters were removed and all parking zones are assigned a 4 digit number. Payment is handled at a self serve pay stations located on the street, by cell phone activation, by text or by smart phone app. Enforcement is conducted by camera equipped vehicles that patrol all parking zones. Labour costs for patrols and to collect coins from meters has been reduced. Parking spots are no longer defined by the placement of a meter. The resulting flexibility means the number of spots on a street is a little more fluid.
The book Blue Ocean Strategy looks at businesses that execute this to its highest form and create what the authors call “an uncontested market space and make the competition irrelevant.” Their quintessential example is Cirque du Soleil. The circus industry was dominated by Ringling Bros and Barnum & Bailey, now celebrating 145 years. They bill themselves as “The Greatest Show on Earth.” Cirque didn’t take customers away from Ringling Bros they developed their own market space.
Small Change Plus Time/Distance – This method is based on Chaos Theory. Referred to as The Butterfly Effect, we see small change at a very early stage, that leads to large change at a much later stage. I wrote about this in an earlier post. The point I was making at that time was that because there is time between an action and the consequence business owners don’t connect the two. The example here is to illustrate how dramatic the result can be from a small change at the beginning. Imagine a flight from New York, intended to end in Paris, France. An error in heading is made. A minor error of just one percent in the near term seems insignificant. After one meter it is just ten centimeter off course, and one kilometer just 100 meters. That’s about the width of a typical runway at a major international airport. Now left uncorrected the error results in the flight missing the destination by 58-kilometers.
As discussed in the previous post, as a business owner you need constantly look at the possible long term results of the changes you implement. If you take away something that customers used to always get, make certain that it’s something they don’t care about, that you explain the change to minimize fallout or that you replace it with something else that is better. When I was young, and money was tight, I used to do a lot of auto repair. Of course, all one could afford was an older vehicle and repairs were needed along the way. It was also a time when vehicles were simpler and DIY repairs were a common practice. A auto parts store I frequented carried lots of inventory and was open “8 to 8, 7-days a week.” You could buy a starter at 7:30pm on a Sunday if you needed to. The owner had what I call Retailer DNA, and he was always thinking about what was good for the customer. When he retired, the gentleman that bought the store must have looked at the sales that were coming in during the odd hours and decided that the hours had to be cut. Sometimes changes like this need to be made. How they are handled is very important.
Incrementalism – Here we are looking to making a small change, followed by another small change and another, and another. When these changes are done on top of one another you engage the magic of compounding. An excellent read on this concept is Darren Hardy’s book The Compound Effect.
Let’s go back to the illustration of the flight from New York to Paris. Imagine that the same one percent error in heading was made. After one kilometer you are 10 meters off course and at this point you make another one percent change. After two kilometers you would have been 20 meters off course but you’ve added another 10 meters resulting in a total of 30. You make another one percent change. After three kilometers you are 70 meters off course. As you continue you will find after 10 kilometers you are more than (bear with me I am still calculating this) off the intended flight path.
An example in business is the evolution of the Toys “R” Us chain. It began in 1948 as Children’s Supermart, a single location retail store selling children’s furniture. Toys were added and over time became the focus. The name was changed in 1957, the business expanded and for a time Toys “R” Us was the dominant player in the category.
Change is going to happen. It’s best to be in charge of the change. When change happens outside your organization that affects you, go to work at minimizing the negative effect or better yet capitalizing on the change. The name of the blog is “Retail Reboot” and if a reboot is what is in order for your business, maybe it`s time to talk to us.