Wednesday, March 18, 2020

5 Forces That Kill Momentum For Business First-Movers

Business men raceIs your strategy as a business leader to be a first-mover or a follower? Despite the fact that most of the CEOs I advise would claim to be in the first category, when I dig deeper I find that at best they are fast followers, due to the time consuming challenges of transforming any business in this digital age. Fast change today requires commitment and an adaptive learning culture at all levels.

I found this reality addressed well in a new book, “Fast Times,” by McKinsey Partners Arun Arora, Peter Dahlstrom, Klemens Hjartar, and Florian Wunderlich. They outline and give some positive recommendations to counter the key organizational impediments to fast transformation that I see all too often, even in businesses with top management committed to first-mover speed and agility:

  1. Passive resistance to change from within the organization. Concern about what the future might hold often results in hidden waves of passive resistance. These must be countered by a focus on changes and training that benefit your people, as well as your business. Set up training courses that highlight agility, and adopt agile working practices.

    For example, when I was with IBM, in an era where constant change was necessary to compete, we made job rotation and training a prerequisite for good performance ratings, so that team members sought change and new learning, rather than passively resisting.

  2. Transformation fatigue from continual challenges. The passion and commitment that characterizes startups inevitably fades, particularly if things aren’t always going well. It’s important to note slippage indicators, including less internal feedback on requirements to fight competitors, and more focus inward than outward on customers needs and trends.

    One effective intervention is to take a step back every few months, and review how things are going. Assess many change initiatives have come to fruition from your team, visit a couple of key customers and listen for future needs, and study your newest competitor.

  3. Difficulty in securing and protecting funding. Even in the best of times, funding for change initiatives can become a tempting target. You need to maintain explicit C-suite and Board buy-in for constant transformation through effective communication, highlighting the struggles of peer businesses, and establishing the right metrics.

    The authors recommend, and I support, the establishment of a transformation advisory board, including key board members, the CEO, and a couple of outside experts who understand the market, to set mandates, define milestones, and make funding decisions.

  4. Keeping priority on what matters for long-term success. By default, short-term-wins get the priority, as we all get drawn to the “crisis of the moment.” Future growth and vitality requires equal attention to different metrics, including customer satisfaction, partnership growth, time to market tracks for new products, and internal change counts.

    Other experts point that your employee improvement culture, sense of direction, personal purpose, and job satisfaction may be more important than any metrics. It is your responsibility as a company leader to communicate a winning long-term strategy, and then put into the place the incentives to drive team behavior to deliver on the strategy.

  5. Maintaining digital transformations through a downturn. While many leaders minimize new initiatives during a business recession, the best ones expedite changes to accelerate scaling, acquire assets more cheaply, and divest poor-performing business elements. They view downturns as an opportunity to get ahead of key competitors.

    Amazon, for example, “grew up” in the last recession by continuing to expand their range of products and focused on automation. They grew sales by 28% in 2009, while most companies were hunkered down and losing share. In the same year, Lego's profits soared 63% as they expanded their initiatives and operations in Asia and Europe.

In my experience, every business transformation will take longer to implement than you expect. You and your team both need that sense of momentum and having the wind at your back to carry you through the challenges and tough times. The only way to build that momentum, and stop it from evaporating over time, is to drive through the challenges outlined here, no matter what.

Marty Zwilling

*** First published on on 03/03/2020 ***



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