In this post I share my speech at Baku Regional Entrepreneurship Conference (01.10.2016).
Today I talk about change. Why businesses need change? Why it is important.
I have some reasons to talk about change.
Firstly, today’s business environment, turbulent situation in our business creates the necessity of change. You must change in order to survive. It is impossible to work as before.
Situation changed sharply. Business climate, business environment have changed.
You have to adapt to the new environment.
-new challenges of the market
-new trends…
Those businesses which will make a change according to new situation will become successful, competitive, and alive in the long run.
Secondly, this is the fact that even if we don’t have crisis, change is necessity in business. Change is your struggle to survive.
There is a popular saying that – Change is only constant in business.
McKinsey – one of the biggest consulting company in the world found in a research that average lifespan, lifetime for businesses is 14 years. This can be sound strange, but it is reality.
Why cannot survive more? Because most of those failing businesses cannot realize the truth in time. They cannot see the truth in time.
They cannot understand the necessity to change.
Of course, change is important. But more important one is realizing necessity of change in time.
This is called MOT – Moment Of Truth – when you realize the truth.
When you understand that it is time to change.
On the other hand, how you can work without changing?
-everyday new rivals
-new products
-new technologies
-political forces change
-new business trends
-business practice is changing
-management tools and techniques are changing.
OK, I say change, change, change,…
Making change is so easy?
– NO
Again let’s see what McKinsey found. Finding of McKinsey is that only 30% of change initiatives become successful.
Why fails? This is Change Management issue. I am not going to talk about change management details in our limited time today.
Instead now I want to share some common problems of businesses in Azerbaijan. Most of our SMEs need to make change in this areas. In other words, in these areas I see room for improvement, room for change.
As I provide business consulting services to small and medium businesses (SMEs), I have a lot of common findings from our businesses. Let me summarize some of them.
1) Absence of clear vision and strategy. They work without clear vision, road map. There is no long-term planning. They don’t know where they are going. Even if top management know, employees don’t know. Strategy is strategy when it is well understood by all employees.
2) Data management problem. More truly, absence of data management. Management decisions are not based on data, decisions are not based on research. Can you imagine prospects of blind decisions?
I don’t claim that all decisions must be data-based. Managers sometimes can make decision coming from feeling, intuition and past experience. But it doesn’t mean that we can work without data.
Data, analytics tools enables us to know
-what happens in our business ?
-where we are going?
-How well we are performing? What areas need improvement?
-who is our customer?
-what gaps are observed in different KPIs, etc.
3) Another most observed problem is lack of strategy-driven, planned sales and marketing system.
In most businesses I see no or very weak linkage between sales and marketing. Because marketing activities are not driven by strategy. Marketing decisions don’t come from strategy.
Marketing function fails to answer the following questions:
-what is expected by marketing?
-why we need marketing?
-how I will measure effectiveness of marketing?
-what are our main sales drivers?
-which actions drive our sales more?
-whether marketing efforts are consistent with sales targets?
-what sales and marketing KPIs we have?
-what we need to ensure continuous sales? etc.
4) Motivation system, work climate.
Employees are not happy in their works. This is fundamental reason for most problems. Unhappy, dissatisfied, unempowered employees can never generate satisfied customers. And their performance will not be at the desired level.
5) Businesses don’t care about operations management issues. In order to become competitive you must have good operations management system. Your competitiveness has strong correlation with – how effective and efficient operations you have. How agile you are. How flexible you are. To which extent you follow quality standards.
They fail to understand what operational improvements they can make in terms of efficiency, effectiveness, quality, flexibility, time, etc.
6) CRM problems.
You know CUSTOMER is king in any business. CUSTOMER ensures existence of any business. In order to be successful you must have CRM strategy, including customer-centric culture, customer-centric thinking, better customer service. No business can survive without customers. And you know retaining customers is much more easier than to find new ones. That is why businesses need better CRM system, CRM strategy.
AND here a question arises. How these businesses could become alive?
Only, only reason is competition level. They didn’t face with real competition. You know we have had a lot of oil dollars. There were room for these businesses.
BUT now it is time of real business. We can call it post-devaluation era.
In this era those businesses are forced to change. They have – nothing but – to change.
Of course we understand that they have their way of working, way of doing business. They don’t want to change this way of working so easily. At the same time their workers will resist to change. They know they will face resistance to change by employees.
BUT change is not matter of choice. Change is necessity.
There are ways to manage employee resistance.
-You must clearly communicate with employees that why you make change.
-You have to convince them that this change is for prosperity, is for development, is for survival.
-It is good idea to achieve some quick ideas in order to show practically that change is good for everyone.
-You have to involve them to the change process. Involving them will cause participation sense and thus motivation in employees.
-…..
Anyway no resistance should decrease importance of change.
Finally I want to underline that: WE MUST EMBRACE the CHANGE. CHANGE is NECESSITY.