Category Archives: Transformation and Change Management

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Company Pulse business health check

Benchmarking is not just for large corporations

Benchmarking is a well -known and oft-used technique in large corporations, but relatively few smaller companies take advantage of this valuable business tool. Many SMEs think it is too difficult, too expensive or not worth the effort. This is a missed opportunity as SMEs often benefit more from benchmarking than their larger counterparts.

Benchmarking is a technique for comparing various aspects of your business (such as financial results, input costs or process outputs) with those of other businesses, ideally of a similar size or in the same industry. Performance benchmarking is one of the best ways to see how your business compares with best practice and therefore understand your relative strengths and weaknesses. Best practice refers to a process or methodology that delivers better results and is consequently the target benchmark to aspire to. There is a whole industry of management and process consultants who can provide benchmarking tools and/or advice on best practice. And because there are many benchmarking consultants, competition keeps prices keen – although you need to be careful in selecting the right advisor.

The advantages of benchmarking are clear: it provides quantifiable targets for business improvement; allows progress to be measured; and provides estimates of the benefits that should be realised (so the most valuable improvements can be prioritised) – all of which should enhance competitiveness and improve returns. Benchmarking also tends to have a positive impact on business culture: by opening minds to new ideas, it sets your company further on the path of continuous improvement that leads to a learning, and therefore healthy organisation (See our previous blog on the key indicators of business health).

SMEs have relatively more to gain from benchmarking than larger organisations: many don’t have the embedded systems and processes for continuous improvement and first steps in this direction often deliver large benefits; SMEs can usually set clearer objectives and targets more complex businesses; and, if their peers aren’t doing much benchmarking, the competitive advantages are likely to be more significant. (If all the competitors in an industry achieve best practice, doesn’t that make best practice is just average?)

However, there are some disadvantages: benchmarks need to be relevant, and therefore be derived from a similar peer-group – if not, inappropriate practices may be proposed or unrealistic targets set; benchmarking has a tendency to become an end in itself, and not a means to business improvement; and, probably most importantly, benchmarking and related business improvements tend to focus on specifics but need to be managed holistically – otherwise, the business can become lop-sided with a few best practices constrained by many mediocre processes.

SMEs should worry less about this last point than larger, more complex, organisations. Having a single line of business makes concurrent management of the specifics and the whole a lot easier. The second reservation is also less of a problem for SMEs, where the risk of building a bureaucracy is lower.

SMEs do, however, suffer from a lack of relevant and comparable benchmarks. Not because there are few comparable companies (there are usually many) but because the population of SMEs as a whole is less engaged in benchmarking. This can be overcome by starting with benchmarks that are readily available for your relevant peer-group (such as financial benchmarks) or by carefully selecting a benchmarking advisor who has access to a relevant data set.

Indeed, for SMEs who are new to benchmarking, it is often advisable to start with high-level benchmarks and then to drill down into more detailed and specific measures when you become familiar with the benchmarking process. Our business health checks also provide an entry point by benchmarking all key areas of the business against comparable organisations and presenting the results in a balanced scorecard format.

SMEs shouldn’t miss out on the opportunities afforded by benchmarking. It’s a cost-effective way of prioritising what and how to improve in your business. And SMEs often generate proportionally greater benefits from benchmarking than large corporations do.


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Company Pulse business health check

Business Transformation – ‘Eating The Elephant’

At some point, whether due to mergers, cut backs, new products, new business models etc. most organisations at some point will initiate a “Transformation Programme” or “Change Programme” in which, as George Harrison put it, “All things must pass”. Unsurprising perhaps in the ever moving 21st Century business environment? Maybe not but what is surprising is that, in many cases, more thought and planning is out into deciding a sufficiently impressive name for this magnum opus than into a comprehensive design and delivery plan for it. For instance:

  • It is not uncommon to see the posters go up, the press releases out and the mouse pads imprinted for “Programme GeeWhiz” while management still haven’t decided what this actually is and most staff are completely unaware of the existence of it at all or what role they might have in it.
  • If anyone does have an idea of what its about then it is probably only a small part – they can only see a part of the “Elephant” so no one knows what the whole one really looks like yet.
  • Most of all the management team can fail to realise that a transformation programme is not just another change project – by nature it is holistic – impacting on all areas of operations with many interdependencies and complexities so no area or persons can opt out or assume non involvement.
  • If any transformation start off this way then it is almost certain this uncertainty and communicative confusion will remain throughout the programme up to and including the acceptance of, recognition of and quantification of success for any outcomes.

To avoid this sorry state takes only a few underlying pre-requisites:

1) Forget the Name – start with REALLY understanding why you want to start this programme – “Why are we doing this?” Amazingly many organisations can’t clearly articulate this. Consequences of starting in this way will be endless scope creeps and uncertainty that nobody will feel satisfied at any stage. You simply can’t do a “design and build’ make it up as you go approach with such comprehensively impacting change. You must have a clear reason/driver for it and a clear vision of the end state before starting.

2) Have a champion with real clout in the organisation – preferably the CEO – A high-level executive buy-in for the change will help both sell and maintain enthusiasm and support for the duration of the programme. If this person can regularly and clearly state the vision in terms all can relate to then it will be worth ten project managers working in a fog.

3) Ensure the senior and middle management really understand the impacts on their areas and don’t just pay lip service to the Chief Executive:

  • This is the holy grail of a successful transformation programme. Many programmes fail or drag because these people only realise the impacts well into the programme and then start withdrawing support or making changes.
  • At the outset, change is as much about ensuring buy-in from executive and functional leaders within the organisation than actual operational changes themselves. Each of these managers need to fully understand and buy in to the implications of the programme for them and what is required in the programme of them, their business areas and their people.
  • This will also have an added benefit in driving the overall behavioural/cultural change which is often required to work within the new operational environment. The supportive and “lead by example” visible behaviour of leaders and key role players will visibly speak to the new way things should be done. Over time staff will mirror this until the new ways will become “emprinted” permanently.

4) Build a Foundation of Good Governance bare essentials to ensure a successful achievement of the goal are:

  • A clearly defined, scope managed business case – i.e. you know what you are trying to achieve and what it will look and feel like when you do achieve it and any changes to the goal in flight will be reflected in the expectation of the look and feel of the outcome. An overall programme manager who understands all the disciplines involved and how to manage them all holistically towards the end goal
  • Relevant numbers of project managers to take responsibility for specific outcomes within the overall delivery of the goal.
  • Defined best practices, controls and measures for Project progress, review and tracking governance.
  • A programme management office to set, and report on those PM governance practices.
  • Be happy with your success – if you achieve what your vision was then acknowledge it – don’t look for additional benefits that were never promised – the “ Oh I thought you said we would get xxxx from this…” crocodile tears disappointments stated are often from managers who did not fully participate in all of the previous steps above.

But as a last word on governance – I return to the first words: ” A clearly defined, scope managed business case”. If you’ve defined what you want and managed as above you will get it – so be VERY clear on the what……….

“As long as I sit in this chair, all future catastrophes will be planned by me.” (‘allegedly’ – President George W. Bush)

“Don’t worry, I have plans: Plan A – Mess up a perfectly clean house. Done that.” (The Cat in The Hat (movie) – Dr Seuss) –

 

 


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