Friday, 13 July 2007

Will You Make The Changes Before It Is Too Late!

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Over the past few months I have written about major initiatives underway at both Boots Plc in the UK and at Volkswagen Us. In both cases the companies were looking to use Business Process or Business process combined with Enterprise Architecture as a guide to managing change. In what might become an expensive lesson for those who believe that it is not appropriate for them, this month sees the news that Volkswagen US have dipped into the red for last year and do not see profit re-appearing for another year, while Boots plc, despite reporting some good sales for the last quarter is now coming under attack from the UK's leading supermarket chain, Tesco.

In both cases it would appear that the boards of both companies might have left it too late to make the changes required in order to remain competitive. The long term future of both operations must now be in great doubt. Boots must surely become a takeover target very soon, and will probably find itself the subject of some kind of break-up. While car workers in the UK know only too well that things can get difficult when foreign management sees that their traditional style of management is not working so well abroad and although not easy to sell it is very likely that we will see operations scaled back in the very near future.

The interesting point in both of these examples, and a salutatory point for others who might not consider that they need to invest in programs of change, to re-align their businesses or to take stock of their strengths and weaknesses, is that in both of the above cases the company management started the initiatives as a response to impending problems.

Of course by then in their cases, and in others, it may already be too late, the actions may simply slow down a slide of prolong potential agony. The worst thing of all though is that as a result of such stories it may be that others pick up on the idea that Business Process Management (BPM) or Enterprise Architecture do not work. Of course such approaches, can and do work, but, it is true that they cannot be used to perform miracles.

In many ways corporate change projects such as Business Process management are the exact opposite of what marketers see. In marketing it is the company who has the vision and strength to continue to pour money into marketing during an economic downturn that truly cashes in when the market takes an upturn. In this case, these companies recognize that a) they can very often buy their marketing at significantly reduced cost and b) realize that they get much greater exposure as there tend to be fewer advertisers to compete with and so they get far greater awareness, leading to greater sales when buyers return to the market.

In the case of Change programs the very opposite is true. It is the companies who are constantly striving to improve themselves while seemingly strong that win out in the long term. Such companies are always moving the barriers and making it harder for others to compete with them. On the other hand companies who wait until they have serious problems before undergoing such change will more often than not run out of either time or money before the positive effects can truly kick in.

An example of this in the UK would be Marconi, the former electronics and defense giant. The company had for years been seen as a stalwart British company, no one could ever have imagined it going under. But, sure enough after a couple of wrong moves the company was in trouble. Pure speculation of course but, if the company had made changes faster, recognizing the changes that needed to be made while it was still strong enough to act it may well have survived. To be accurate of course many would say that the company is still alive and continuing to do business, true, but the shareholders lost most of their money in the refinancing and most of the staff lost their jobs too.

Now, I would be wrong and a fool to suggest that companies in trouble can't successfully undertake change and survive. But, as in the case of Marconi, the cuts and changes have to be far more dramatic than they might otherwise be and I think it is true to say that whilst such companies might "survive" very few attain the heights from which they might have fallen.

Many reading an article such as this will undoubtedly think yes well that is for them it does not apply to me or my company. That would be a grave mistake. The last 20 years have shown that all companies large or small, new or long established are vulnerable to both new competitors and of course the new world economy. Nothing is the same now and nothing will remain the same in the next 5 or 10 years. All companies need to have a clear idea on what their value chains are and how their business processes operate and are managed, without such knowledge it will likely prove impossible to be able to make or respond to change quickly enough, it will likely prove impossible to work out how to reduce cost without reducing capability and it will likely prove impossible to satisfy regulators that you actually understand how your business operates!

Note: This article first appeared in January 2004 on Mark McGregor's "Postcard from Europe" Series of articles on BPTrends

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