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Have Businesses Stopped Transforming and Started Optimising?

10th September 2018

Have Businesses Stopped Transforming and Started Optimising?
Have Businesses Stopped Transforming and Started Optimising?

Having been working for a period of time I have seen a number of trends (some trendy) which have come and gone… “Blue Sky Thinking” anyone? Others, that had more substance and clear benefit and have become the mainstay and pivotal to most firms’ business operations. I wanted to cast a critical eye over a shift on Business Change which I think has gone under the radar but I believe is seismic but let’s start with something which has been around for a while.

Outsourcing business tasks

I am old enough to remember the push in the 90’s towards firms selling or just disposing of non-core divisions and focusing on a central business activity. This in turn led to organisations reviewing what ‘back-office’ and head office functions could be given to specialists to run and the FM and Outsourcing markets grew off the back of this.

Fun Fact… the term Outsourcing became a thing in 1989.

Let’s look at its evolution. Firms wanted to reduce cost, they started to contract services such as Finance, HR, Security, IT to emerging Service organisations who had been Suppliers and suddenly had a brand new income stream in Services!  In turn this developed into Strategic Relationships where that phrase ‘added value’ or ‘value-add’ (which is it??) where ‘owning’ core activity is less important if you can pass it to someone who can drive cost down and enhance delivery and/or create additional resources often with high flexibility. During this shift, we have seen other trends running alongside, off-shore, near-shore and one firm I met earlier in the year who were on-shoring after a mixed experience of off-shoring.

Change and Transformation management

A huge theme particularly since the Financial Crisis of 2009 has been organisations looking at Change and Transformation, this has been driven by a number of factors, technology, regulation, economic and not to be under-valued customer demand. Some companies have decided not to embrace any of this and have fallen by the way side or seen their business contract and others have grasped the nettle and driven huge Change and Transformation programmes. The classic example of a failure to change is Blockbuster, at its peak it employed 85,000 people and had over 9000 stores. It famously had the option an to buy Netflix $50m. I will repeat that, Blockbuster had the opportunity to buy Netflix for $50m, it was passed up. Today Netflix has a turnover approaching $9bn and Blockbuster is a fading memory.

On the flip side, a business that decided to radically change what it was doing is Apple. They had built a great reputation for small, niche products sold to a handful of people, however, this meant that income was unpredictable, changes at the top meant that strategies came and went. A decision was made which was about producing beautiful products but for a mass market and to operate at the top end of the market, with higher margins. In addition, they went on an acquisition path to buy small innovative businesses which added to the overall service offering. So no big slamming together of large acquisitions for Apple, small incremental gains through minor acquisitions that don’t become distractions.

Has Transformation and Change disappeared?

So has Transformation and possibly Change quietly disappeared off Company’s agenda and been replaced by something else? I no longer see many cvs or LinkedIn profiles talking about Transformation. You can’t run a business for years and years in a Transformation or Change mode. If we are not in Transformation mode are we in business as usual? BAU has become a phrase for laziness and complacency but is it really? That is really a discussion for another day. I spoke to a colleague a few days ago about whether there had been a shift in how firms are evolving and how they operate or was it just me? She hadn’t really thought about it but she said that companies are hiring more people to improve the business rather than just administer or sell more stuff. This is an interesting position to be in. It also requires a different skill set and quite a new and rare one.

If we are not Transforming and not Changing and not in BAU, then firms have to be doing something else. They are, in my view.

The age of optimisation

Firms are innovating and optimising. Companies today are reviewing existing processes and procedures, products and the customer experience and seeking ways to make them faster and more cost-effective. Where Apple moved from niche products to mass market that looks like transformational change to me. Putting a camera in a phone way back when, that is transformational whereas, improving the camera on the phone is pure innovation. There is a difference. Firms bundle all of this stuff together as Change and Transformation, it isn’t and I think it is becoming a bit dated.

I met with someone recently who has taken on a newly created global role as Head of Business Efficiency. This is role that will focus on optimising a business. Some people might see the role as Change and Transformation but this firm have moved on from that, they are now all about making what they have even better. I like this. Real Change and Transformation is highly expensive and highly risky to do and can be a huge distraction whilst it is going on. Business optimisation is less intrusive but can create an equal impact over time. I think it will also be easier to communicate to employees and the wider world and customers are more likely to come along for the ride. I expect to see more people taking on these type of roles. Also I speak to organisations who don’t want to see long-term plans that are going to take a long time to see if they work. I am seeing a lot less 2020 plans probably because it is now only 18 months away.

Also, the range of topics that can be addressed under the Optimisation banner can be far-reaching and exciting. It can be people, ethics, apps, social media, believable MI, a revamped rewards scheme rather than huge industrial scale programmes. However, put them together and they count for a lot. Whichever way you measure it, there is a lot to run at.

Let me know if you agree with me that the Change and Transformation ocean going liner has sailed out of sight and the optimising speed-boat is now tearing through the waves. I think it is.