In a near perfect world we all eat only healthy food, get lots of exercise, go for regular medical check-ups and undergo preventative testing to catch things before they get out of hand. But more people than not don’t adhere to that lifestyle – they do some but not all and most inconsistently. We’re human, we make mistakes, we get caught up in the business of living and little things start to slide here and there – and out of the seeming blue we’re faced with a problem. And so it goes for businesses as well.
In a near perfect world businesses are continually monitoring and adjusting processes, practices and people to meet the business of today and the expected business of tomorrow. But most don’t – business is going well and so we get distracted from the core foundation. Growth is what all businesses want but the stress it puts on existing process is often overlooked because leadership is focused solely on the benefits of growth. Mergers and acquisitions naturally result in duplication and overlap. Downsizing results in processes that no longer fit a smaller workforce. In all of these situations you have the additional burden of entrenched processes – piece parts owned or created for political purposes – to fulfill a contrived need rather than a sound business basis.
When a business is young the stakeholders treat it as they would an infant. It’s the rare person who fails to take their baby to every milestone check-up, assuring all immunizations are properly administered and all tests are not only scheduled but followed through. Businesses do the same in the infancy of the company – constant monitoring, tweaking, adjusting to the market, their customers and suppliers to assure best practices are in place to meet all needs and provide robust revenue streams. But so often confidence in the business slides into complacency – monitoring, tweaking, and adjusting start to take place only at high levels. The stakeholders get farther and farther away from the foundation upon which the business runs and too often take it for granted. Health checks for best practices and processes fall further and further down the list of priorities.
Enter the Revenue Gap
Revenue gaps result from sliding health checks. As the revenue gaps grow or continue, the pain of missing money can no longer be ignored. Never has a client engaged me to improve processes – a few have engaged me to create a new process – but no one ever started out asking for process improvement, management or reengineering. What they all had in common was missing money – a revenue gap. They had become aware they were losing money in a specific area and wanted/needed the problem fixed. Fix it – get me my money – can’t be much clearer than that! That’s the pain that drives change – and it’s most readily diagnosed by an impartial, outside perspective.
When that occasional ache in your foot becomes a constant, nagging, red hot and swollen pain – you head for the doctor. Businesses are the same. Someone, somewhere within the business noticed a down tick in an area. First they noticed, then they watched it, then they shared the information. Without the resources and much needed management support to do more than a cursory investigation, the problem just grows. One day it lands on the CFO’s or CEO’s desk and the pain is so glaringly evident that it must be addressed.
This is where the process improvement comes in. You might not agree to those preventative health care appointments and suggestions but you will agree to surgery, treatment and physical rehabilitative care when that swollen foot is so painful you can’t walk on it. Pain and fear are tremendous motivators and losing money generates a lot of pain and fear.
A classic example is a client who contacted me because of a $500K revenue gap. Middle management did nothing, but when it hit the CFO level, I was hired to investigate, determine the underlying cause and close the revenue gap. By the time I’d dug to the bottom, I had a list of problem areas and improvements to create a permanent resolution not only for the original gap, but also for additional unknown leaks and revenue gaps.
Revenue gaps are most often created by any new effort that isn’t fully considered for integration into the current business. The effort is initiated without assuring the existing processes and practices will meet that new effort. The current processes are usually down deep in the organization where those who initiated the new effort don’t look and aren’t overly concerned about.
Taking action on Revenue Gaps
Every business has revenue gaps – those places where people and processes are no longer aligned to operate effectively and efficiently – where business health has broken down. What does your business health look like? What got lost in the latest downsizing, merger or acquisition? How long can you afford to let it slide? Are you billing all of your customers completely and accurately? Are your suppliers billing you accurately? Are you maximizing and capturing all of the incentives from your suppliers? Where are you losing money and how much can you afford to lose?
Revenue gap recognition – and proof of what’s causing it – is the major driver for a commitment to innovative change solutions. In the same way that a person faced with a serious illness commits to treatment and rehab, a business will commit to doing the hard work – making necessary changes when they come face to face with their revenue gaps. Change is difficult – revenue gaps are far more painful and have the potential to be fatal. If you’re feeling the pain, give me a call.
Until relatively recently I was unfamiliar with the term ‘change agent’. If I’d heard it before it most likely hit my internal anti-buzzword filter and fell meaninglessly to the ground. And then in the midst of research I was doing for a project I came upon a description of a change agent and realized it described what I’ve been doing for the majority of my career. Some highlights from that description:
• Change agents are individuals who have the knowledge, skills and tools to help organizations create radical improvement
• They choose the right improvement projects to work on by diagnosing the real issues effecting the organization
• Organize the project so that it has the best chance to succeed, by uncovering the projects success criteria, securing management support, and building the right team
• Navigate the politics of change; ensuring radical ideas become radical improvements that dramatically impact the bottom line
• They have the ability to do very unstructured work, to custom design processes to meet the goals of an organization, and are able to inspire people through self confidence balanced by humility and a sense of humor
I solve business problems. I’m really good at finding a clear path through obstacles – finding patterns in chaos and reducing it to its simplest elements. Even the most complicated relationships and problems have an identifiable underlying pattern. Whether the issue is in the front office or the back office – or the disconnect between the two – there is an underlying pattern to be teased out and addressed so that your business operates effectively. Doing this takes a particular type of personality and business experience – you have to be really interested in people and processes because it’s a balance between deliberative and instinctive thinking to find the right solutions for each situation. You won’t find your answer in a book, box or a pre-packaged 6 point plan – you’re unique, your business in unique, your people are unique and so is the product and/or services you sell. Trying to make people fit into a cookie cutter solution is a whole lot like herding cats – very frustrating and extremely unproductive.
Another reason you have to be really interested in people and processes is because the end result is about aligning people and processes with the business goals – finding the right (unique) business solutions for your company. Listening skills – the ability to connect with people – is essential. Only when you have established that connection will you be able to effectively collaborate and ensure buy-in to make necessary changes. Your business has to have a solid foundation of process and practices that are results driven – otherwise you will struggle, falter and ultimately fail. And your people have to believe in and support those processes and practices – if they don’t have a sense of ownership in the processes they won’t commit to making them successful.
The decision to bring in a change agent – specifically one who focuses on process improvement – happens when you know that you need an outside, impartial perspective to assist you in getting your people and your business unstuck. When you’re feeling a sense of déjà vu during staff meetings held to address the current problems and potential solutions or feeling a bit like Bill Murray in Groundhog Day as you’re reading the latest customer satisfaction, upward feedback or production statistics, you need a change agent.
When you’re looking for better ways to work, to improve performance and customer satisfaction – either in reaction to the external environment (economics, politics, legislation, competition) or the internal environment (processes, structures, people) – you need a change agent. The outside, impartial change agent works with you by analyzing the existing problems, current reality, desired future goals, and potential barriers to those goals. Once determined, the change agent works with you to organize and implement the new processes, train employees on new procedures and acts as a role model to demonstrate new and better ways to work. Your best change agent will stand beside you in persevering in the face of challenge or ambiguity, dealing with conflict constructively, assuring employee buy-in and gaining commitment to taking the relevant actions to assure success – from concept through implementation.
