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« Single Distributor Per Market Model | Main | Time to batten down the hatches or turn up the heat? Part 1 »

Year-end planning 2... Change the Question

During “normal” year-end planning you probably:

·                    review the year’s results

·                    gaze out into the future to determine what is the most likely operating environment you will face in the coming year(s)

·                    develop your objectives for the upcoming year(s)

·                    determine a plan and strategy to achieve these objectives

This is all well and good but every so often, I recommend every 3 – 5 years, you should step outside of this mode and attack year-end planning from another angle.  Have you ever noticed that if you continually ask the same questions, you generally get the same answers?   Well change the question.  Instead of reviewing your operations from a “how are we doing” viewpoint, review them from a “what should we be doing” viewpoint.

Don’t start from where you already are and plan from there… ignore where you already are.  Instead analyze your organization as an entirely new entity.  It has no employees.  It has no routing.  It has no compensation systems.  The warehouse is where it is, but that can be changed.  The roads are where the roads are.  The bridges are where the bridges are.  And the retailers are where the retailers are.  Everything else can be changed.

 

Far too often, insightful corporate planning is hindered by being tied to the present ways of doing things.  I don’t really care how things are presently done… how should they be done?  If this were a brand new company with absolutely no present operations, how would it be designed to meet the realities of the marketplace and your corporate goals?  This can be a very valuable process.

Analysis which is tied to the past:

·                    We can’t do that, it would change our routing

·                    We can’t do that, it would mess with the sales rep’s pay

·                    We can’t change the org design, what about old Joe?

·                    We tried that before and it didn’t work

New entity freedom

·                    We have no routes so we can do whatever makes the most sense

·                    We have no employees or compensation systems so we can do whatever makes the most sense

·                    We have no employees so we can do whatever makes the most sense (and if old Joe has been a loyal dog and ownership believes he needs to stay, we’ll find him a home… let’s just not let old Joe determine our organizational design, instead let’s do whatever makes the most sense.

·                    If some of the “consultants” who are helping you in this process (that’s what I call your management team since this new organization has no employees… plus if you’re wise, you’ll also use a sharp dressed, smooth talking management consultant like me), have had prior experience with an idea we are considering, let us discuss it.  What was tried?  How was it tried?  Why did it fail? What even was the definition of failure?  What did we learn?  Was it a fundamentally bad idea or just a failure due to other factors?  Can we change these factors so that it can now be successful?

Quite often a question or statement is built on a foundation which, although unstated, is implicit in the question.  The old gotcha question, “Do you still beat your wife?” is a perfect and clear example… implicit in the question is that in the past you have beat your wife.  You can’t directly answer the question since it is built on a foundation of falsehood - hopefully ;-)

When you review your organization from where you already are, a similar process occurs.  Implicit in using the present structure or policies or procedures as a starting point is that they are the best possible options.   This may or may not be true and it is a mistake to make this assumption.  You might end up with exactly the same structure or policies or procedures, but this is an end result, not the starting point.

Going through this process every 3 – 5 years can be very beneficial to the entire organization.  The world changes. Although our organization was OK for yesterday, what about today and tomorrow?  Systems and policies and procedures often evolve over time - I don’t like this, but it is true.  Re-examining your organization from a completely fresh outlook helps identify these evolutions and ensures the entire system is working as a cohesive, single unit.

You don’t want to go through this every year since this process can generate significant change and all change has a cost… think of organizational change as an investment where the cost is upfront and the returns happen over time.  Therefore if you are one of those owners who LOVES to constantly change your organization, you get all of the costs of change but you don’t leave it in place long enough to generate the positive returns you should have obtained from these changes.  For those years between this analysis, spend your efforts improving execution, not twiddling with constant system changes.

Remember that change is different if you’re the one directing it (i.e. the boss) or you’re the one experiencing it, i.e. everyone else.  In my many years of consulting and being an entrepreneur I have found that employees can handle a lot of things – good news, bad news, terrible news.  They might not be happy, they might not be overjoyed at that moment but this generally passes as people make peace with whatever change has occurred.  As the saying goes, life goes on.  But one thing that is extremely detrimental to employees (and thus detrimental to your entire business) is constant change.  People do not handle the uncertainty of constant change well.  People do not handle extended periods of uncertainty well… this is true in all aspects of life.  Too frequent change (this is the definition of uncertainty) takes a tremendous toll on your organization… and in many ways that you can’t clearly observe. 

You find it often in larger organizations which spend their time chasing their tails with constant change… employees get a plan-of-the-week type mentality.  They learn to take each change in stride, of course ignoring whatever they can and never truly committing to whatever change has been made, since they know another change is coming right around the corner.  We’ll do this for awhile, then decide that was a bad idea and do something else for awhile, until that too is determined to be a bad idea, and on and on and on.  Generally circling back to where we started every so often. 

Those battle-hardened employees who have seen it before do what I call the turtle.  Just like a turtle, when the change wave is crashing around them, they pull in their legs and head and wait for it to pass… and once things calm down, they go back to doing things just like they have always done… until the next turtle moment arrives.  Water cooler discussions shoot through the roof while productivity tanks.  Group bitch sessions out on the street or in the warehouse don’t get a lot accomplished… but they will be occurring.  Do not put your people in a situation where they face unnecessary uncertainty.  And remember, this advice is from a guy who makes his living changing organizations.

Remember that employees aren’t a cost.  They are a resource, the most valuable asset of your organization.  Having them contribute at 70% capacity because of constant change and the uncertainty it brings is extremely costly.

 

This type of “blank slate” analysis also takes a confident and secure senior management team.  I’d go so far to say it takes courage for your managers to truly commit to this analysis.  Changing the org chart is always a big deal since quite often it directly involves those people conducting the analysis.  It is easy to do in the abstract, but when you are an employee discussing organizational design changes and some of the designs don’t include the position you presently occupy… it takes individual courage and character and also confidence in the owner to truly think about what is best for the organization, as opposed to “where the heck do I fit in this design and how can I direct the discussions so I come out OK?” 

This is one of the major problems with self-directed, organizational review and change… if there is change it almost always is one of slight modifications at the bottom of the org chart, or power plays at the top which are not based on what is best for the organization and its future… rather they are based on who has the power to stick it to someone else and get their way.  Neither of these is a path to excellence nor do they lay the ground work for a strong and positive corporate culture.

So every so often, change the question (this is also a useful strategy in employee communications and dealing with communication problems with your children or spouse).  Look at your company as a blank slate.  You have a certain territory for certain brands… and the roads are where the roads are… the retailers are where the retailers are…  Start fresh and you may be surprised where you end up.  And if you do make organizational changes, spend the next few years fine-tuning your design and focusing on improving execution, not change.  You’ll be glad you did.

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