Business improvement. It’s the slow strangler that can affect businesses large, medium and small in just about any sector. Let’s be honest. When the recession hit, most of us curled up into a cowering ball. We turned to the CFOs and FDs who slashed costs and tightened belts so we could all survive. They acted in the name of business improvement, and they were worth their weight. But to see real business improvement, this behaviour should not persist in times of opportunity. The accountants and micro-thinkers who saved us once should not be left to lead companies long term. When the goal is to thrive, not just survive, a business needs many other critical nourishments. And for that it needs visionary leadership.
To be a great leader you need to be multi-faceted. Imagination, creativity and delivery must all be part of your arsenal. You also need the ability to embrace the intangible, to make the difficult decisions and, in a world of challenger brands and disruptive business models, the curiosity to spot and develop opportunities. You cannot afford to be entrenched or resistant to change and innovation. Any business still making savings in these areas is operating in a false and very dangerous economy.
Of course, the start of any business improvement is number crunching. But the trick is knowing when to stop. Because when the austerity efficiencies begin to plunder innovation and marketing budgets for a short-term profit boost, the cost-cutting gains a destructive momentum that’s often the beginning of a slow death.
IT’S A COMMON PATTERN
Products and services begin to fall behind the competition. Prices drop in an effort to retain customers. Margins are hit. Brand value takes a nose dive. Morale and productivity closely follow. Staff turnover rises, taking coveted skills and insight. And to balance it all in the books? More cost savings. That’s not business improvement. It’s just the opposite.
THE TWO SORTS OF ENQUIRIES
The first are organisations that see the massive value of innovation, service design, product and brand development. They want to be the best the can be, and are often already market leaders. Their motivation is to remain on top.
The other sort are motivated more by desperation. They’re the Blockbuster Video-types, too slow or too blind to react as their industry changes beneath their feet. And when I lift up the bonnet to look inside, it’s teeth-sucking stuff. Often years of underinvestment and plundering has left a colossal black hole in the value perception of the organisation. The company has dropped off the radar. The brand is in the dog turd bin in the park. It’s all the things I mentioned above. So much for business improvement.
You can see this for yourself on a huge scale in the US motor industry. General Motors, Ford, Chrysler, hell, the whole of Detroit is now a desolate crack riddled ghost town. American car manufacturers ruled the world until the late 60s, when innovation stopped and the cars produced became the butt of jokes. Big pig iron V8s in an age of VANOS, multi-valve and fuel injection engines. Sure the accountants prolonged the inevitable, but finally, the consumer woke up to the reality the cars were nothing more than lash-ups of previous models with elderly tech, plastic for chrome and vinyl for leather.
NOKIA NO MORE
One minute pumping out the handsets of the generation, then nothing but a strong smell of aviation fuel as it crashed and burned with no answer to the smart tech dominating the industry. I remember the management looking for sympathy. They got none from me – they’d blindly stopped innovating.
In the end, business is a reflection of life itself. The only real way to improve is to grow and evolve and adapt to the environment. You can’t do that if you have both eyes looking down at the balance sheet.