by Paul R. Brown
I've helped restructure the operations and business development practices of a number of financial advisory and other professional service firms. I'm starting to believe there is a secret manual on terrible ways to change an organization. I say this because I usually work with businesses after they already have attempted to change. Most have failed for the same reasons. By sharing these reasons I hope to reduce the number of failures other business owners experience.
If you have directed a change initiative or been involved in one-whether that initiative encompassed your entire organization or just part of its operations-you may have fallen into one of these traps:
Drive Change from the Top Down
Question: In a bacon-and-egg breakfast, what's the difference between the chicken and the pig? Answer: The chicken was compliant, but the pig was committed.
Nothing turns off a professional staff more than announcing a change in the organization's strategy and operations than being given a new task and told, "Make this happen." When the change initiative is forced from the top, you may see compliance, but rarely will you experience commitment.
Earlier this year, I met with the owner of a large financial advisory firm. Clients were starting to question the value of the firm's services. Some had left. Others were negotiating lower fees. We agreed it was time to change the core business model, including the services clients received and the fees they were expected to pay.
The owner had attempted to make changes before, but discussions with key employees usually ended in frustration. Now, he believed, it was time to "tell them what the changes are, and they will do it."
He was partially correct. Good professionals usually will follow direction-at least until there is resistance. But without ongoing training, discussion, support, resources and accountability most-if not all-will go back to their former ways. Lacking commitment, the changes made will not stick.
Do It Yourself
We cannot solve our problems with the same thinking we used when we created them. -Albert Einstein
In most private companies, the owner's role is largely undefined. At times, he or she may assume any high-level job that needs doing or any low-level job that needs filling. Naturally, then, owners believe they should be the ones at the forefront of any change initiative. They could be wrong.
The basic DNA of any privately owned business consists of the vision, influence, desire, drive, personality, strengths and weaknesses of its owner(s). These elements form the filter through which organizational change is viewed and the tactics used to bring about change.
A motivational owner will, therefore, seek to rally the troops toward a new set of goals and accomplishments. An analytic owner can provide factual points, detailed reports and compelling arguments showing the importance of leaving one direction for another (unfortunately for most analytics, there is never enough information to make a firm decision toward any new direction). Owners who are "drivers" will try to force everyone to change, using their personality and position to enforce compliance.
An outside expert can bring a different perspective and the energy the change process needs to get started. An outside expert also can bring an element of leadership that builds trust and influences new behaviors.
In my company's work with businesses that are taking on change initiatives, we are frequently brought on as interim executives. In this role we have the responsibility and the authority to design and execute the change process required to meet the objectives of the business we are serving.
Rely on Your Industry Only
A jury is a group of 12 people of average ignorance. -Herbert Spencer
If you want your business to be average, never look beyond your industry and competition for insight into your organization.
In recent years, leading health care providers have significantly improved operations by borrowing heavily from the manufacturing industry. Because "the Toyota Way" has become popular, a growing number of manufacturers have improved their performance by adopting "lean thinking" throughout their organizations. The health care industry took note and looked beyond themselves to adapt processes more aligned with building cars than repairing bodies. They looked outside to improve within. Surprisingly, not every industry has followed this lead.
Execute Poorly, If at All
If you tell people where to go, but not how to get there, you'll be amazed at the results. -Gen. George Patton
Let's assume you have successfully avoided the first three traps. Instead of a top-down solution you gained firm-wide support for the changes your firm needs. You brought in a neutral third-party to help you, and you looked beyond the financial profession for inspiration. One important element remains that will drive or limit your success: Unless people are trained and then held accountable for their actions, nothing will get done.
Too often, the bridge between great ideas and consistent execution is missing. Last year, I met with the leaders and employees of a professional firm. After another disappointing year, the firm's owner had me assess the firm's situation to see why it had stopped growing. After spending the day interviewing leaders, producers and other members of the staff, I felt they needed to revisit their core practices and dramatically change their organization, including their fee structure, service model, client service experience, hiring procedures, job descriptions, marketing, business development, regional influence, targeted audience, training and finally-this would drive the behaviors holding the process together-the compensation model.
As you would expect, the employees responsible for generating the firm's income had questions. To my surprise, they weren't resisting change, they were skeptical as to whether or not change would even come about.
For several years this group had been given annual production goals, including the number of new clients they would obtain, the amount of revenue they would generate, their client service scores, etc. Then, 12 months later, they all were given raises, even though none of their goals had been met. The firm had created a culture in which accountability was an idea without substance.
In their minds, the change initiative would be the same.
To succeed, owners have to make certain the environmental factors that support performance are in place. Many fail. They don't set clear expectations. They don't give feedback. They don't provide tools, resources and training. They don't provide incentives and consequences to guide behavior. And finally, they do not make certain the people responsible for the changes have the skills and knowledge needed to excel.
At some point your organization will need to change. Whether these changes occur over time, encompass your entire operation or are limited to a few areas, your efforts will likely fail without commitment, without insight and without building a stable bridge of execution and accountability between your ideas and your results.
Paul R. Brown is managing principal of Brown Advisors LLC (www.brown-advisors.com), which helps start, build, grow, expand and operate businesses through a variety of transitions and challenges. Follow Paul on Twitter @BrownAdvisors.